0001104659-09-049820.txt : 20110621 0001104659-09-049820.hdr.sgml : 20110621 20090814134139 ACCESSION NUMBER: 0001104659-09-049820 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20090814 DATE AS OF CHANGE: 20090814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT SEVEN CENTRAL INDEX KEY: 0000809013 IRS NUMBER: 060974148 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-148564 FILM NUMBER: 091014253 BUSINESS ADDRESS: STREET 1: HARTFORD LIFE INSURANCE STREET 2: 200 HOPMEADOW STREET CITY: SIMSBURY STATE: CT ZIP: 06089 BUSINESS PHONE: 860-843-5910 MAIL ADDRESS: STREET 1: 200 HOPMEADOW STREET CITY: SIMSBURY STATE: CT ZIP: 06089 FORMER COMPANY: FORMER CONFORMED NAME: HARTFORD LIFE INSURANCE CO THOMSON MCKINNON SEPARATE ACCT DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT SEVEN CENTRAL INDEX KEY: 0000809013 IRS NUMBER: 060974148 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04972 FILM NUMBER: 091014254 BUSINESS ADDRESS: STREET 1: HARTFORD LIFE INSURANCE STREET 2: 200 HOPMEADOW STREET CITY: SIMSBURY STATE: CT ZIP: 06089 BUSINESS PHONE: 860-843-5910 MAIL ADDRESS: STREET 1: 200 HOPMEADOW STREET CITY: SIMSBURY STATE: CT ZIP: 06089 FORMER COMPANY: FORMER CONFORMED NAME: HARTFORD LIFE INSURANCE CO THOMSON MCKINNON SEPARATE ACCT DATE OF NAME CHANGE: 19920703 0000809013 S000002251 HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT SEVEN C000080961 Hartford Leaders Select III C000080962 Huntington Hartford Leaders III 0000809013 S000002251 HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT SEVEN C000061190 Hartford Leaders Series V-A 485APOS 1 a09-12980_1485apos.txt 485APOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 2009 FILE NO. 333-148564 811-04972 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ PRE-EFFECTIVE AMENDMENT NO. / / POST-EFFECTIVE AMENDMENT NO. 8 /X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 352 /X/ HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (Exact Name of Registrant) HARTFORD LIFE INSURANCE COMPANY (Name of Depositor) P.O. BOX 2999 HARTFORD, CT 06104-2999 (Address of Depositor's Principal Offices) (860) 843-1941 (Depositor's Telephone Number, Including Area Code) RICHARD J. WIRTH HARTFORD LIFE INSURANCE COMPANY P.O. BOX 2999 HARTFORD, CT 06104-2999 (Name and Address of Agent for Service) ------------ APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT. ------------ It is proposed that this filing will become effective: / / immediately upon filing pursuant to paragraph (b) of Rule 485 / / on , 2009 pursuant to paragraph (b) of Rule 485 /X/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485 / / , pursuant to paragraph (a)(1) of Rule 485 /X/ this post-effective amendment designates a new effective date for a previously filed post-effective amendment. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ PART A HARTFORD LEADERS HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 4/1/99) HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 12/8/86) P.O. BOX 5085 HARTFORD, CONNECTICUT 06102 - 5085 [TELEPHONE ICON] 1-800-862-6668 (CONTRACT OWNERS) 1-800-862-7155 (REGISTERED REPRESENTATIVES) [COMPUTER ICON] WWW.HARTFORDINVESTOR.COM [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This prospectus describes information you should know before you purchase Series V of the Hartford Leaders variable annuity. The prospectus describes a contract between each Owner and joint Owner ("you") and Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company ("us," "we" or "our"). This is an individual, deferred, flexible-premium variable annuity. This variable annuity allows you to allocate your Deposit among the following portfolio companies: X AIM Variable Insurance Funds X AllianceBernstein Variable Products Series Fund, Inc. X Fidelity Variable Insurance Products Funds X Franklin Templeton Variable Insurance Products Trust X Hartford HLS Series Fund II X Hartford Series Fund, Inc. X MFS(R) Variable Insurance Trust X Putnam Variable Trust You may also allocate your Deposit to the Personal Pension Account and/or the Fixed Accumulation Feature. The Fixed Accumulation Feature is not available for every Contract class. This prospectus refers to the following Contract classes: X B Share (Core) X C Share (Access) X I Share (Advisory) The Contract class will be selected on your application and identified in your Contract. Not every Contract class or optional rider may be available from your Financial Intermediary. The I share class is offered through registered investment/financial advisors. Other available Contract classes offered through select Financial Intermediaries are not described in this Prospectus and may be subject to different charges. Please read this prospectus carefully before investing and keep it for your records and for future reference. You can also contact us to get a Statement of Additional Information free of charge. The Statement of Additional Information contains more information about this Contract and, like this prospectus, is filed with the Securities and Exchange Commission ("SEC" or "Commission"). Although we file this prospectus and the Statement of Additional Information with the SEC, the SEC doesn't approve or disapprove these securities or determine if the information in this prospectus is truthful or complete. Anyone who represents that the SEC does these things may be guilty of a criminal offense. This prospectus and the Statement of Additional Information can also be obtained from us or the SEC's website (www.sec.gov). This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing. You will get NO ADDITIONAL TAX ADVANTAGE from this variable annuity if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account ("IRA")). This prospectus is not intended to provide tax, accounting or legal advice. We are not an investment adviser nor are we registered as such with the SEC or any state securities regulatory authority. We are not acting in any fiduciary capacity with respect to your investment. This information does not constitute personalized investment advice or financial planning advice. NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT] FDIC FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE [NOT] BANK
-------------------------------------------------------------------------------- PROSPECTUS DATED: AUGUST 14, 2009 STATEMENT OF ADDITIONAL INFORMATION DATED: AUGUST 14, 2009 2 ------------------------------------------------------------------------------- CONTENTS
PAGE -------------------------------------------------------------------------------- 1. INTRODUCTION 3 2. FEE SUMMARY 4 3. MANAGEMENT OF THE CONTRACT 10 The Company 10 The General Account 10 The Separate Account 10 The Funds 10 Fixed Accumulation Feature 12 Personal Pension Account 13 4. INFORMATION ON YOUR ACCOUNT 17 a. Opening an Account 17 b. Charges and Fees 24 c. Surrenders 27 d. Annuity Payouts 29 e. Standard Death Benefit 33 5. RETURN OF PREMIUM DEATH BENEFIT 34 6. FURTHER INFORMATION 38 a. Glossary 38 b. State Variations 40 c. Miscellaneous 41 d. Legal Proceedings 42 e. How Contracts Are Sold 42 7. FEDERAL TAX CONSIDERATIONS/ TAX-QUALIFIED RETIREMENT PLANS 44 TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 59 APPENDIX A - EXAMPLES APP A-1 APPENDIX B - ACCUMULATION UNIT VALUES APP B-1 APPENDIX C - FUND DATA APP C-1
3 ------------------------------------------------------------------------------- 1. INTRODUCTION HOW TO BUY THIS VARIABLE ANNUITY [Thumbs up] CHOOSE A CONTRACT CLASS
MORTALITY & MINIMUM INITIAL EXPENSE RISK DEPOSIT NON- AND MAXIMUM QUALIFIED QUALIFIED ADMINISTRATIVE UP-FRONT CONTRACT CONTRACT SALES & OTHER CHARGES CHARGES COMMISSION ----------------------------------------------------------------------------------------------------------------------------------- B SHARE $2,000 $5,000 8 year Contingent Deferred Sales Charge and 0.50% 5% Distribution Charge C SHARE $2,000 $10,000 1 year Contingent Deferred Sales Charge 1.35% 1% I SHARE $5,000 $10,000 None 0.30% 0%
This table does not show Fund expenses, Premium taxes, Distribution Charges, and optional rider fees. [Thumbs up] CHOOSE INVESTMENT OPTIONS X Sub-Accounts - Funds with different investment strategies, objectives and risk/reward profiles. X Fixed Accumulation Feature (B share class only) - A fixed interest account. X Personal Pension Account - A fixed interest account designed to provide lifetime payouts. Subject to limitations, you may move your investment among each of these options. [Thumbs up] CHOOSE AN OPTIONAL FEATURE (IF DESIRED) OPTIONAL FEATURE GENERAL PURPOSE ------------------------------------------------------------------------ Return of Premium Death Benefit* Guaranteed Minimum Death Benefit * Investment restrictions apply. Optional features may not be available through your Financial Intermediary. [In writing] COMPLETE OUR APPLICATION OR ORDER REQUEST AND SUBMIT IT TO YOUR FINANCIAL INTERMEDIARY FOR APPROVAL. $ PAY THE APPLICABLE MINIMUM INITIAL DEPOSIT. 4 ------------------------------------------------------------------------------- 2. FEE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ CONTINGENT DEFERRED SALES CHARGE (CDSC) (1) None 1 7% 2% 2 7% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0% SURRENDER FEE None None None TRANSFER FEE None None None
(1) Each Deposit has its own CDSC schedule. CONTRACT OWNER PERIODIC EXPENSES THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY AND ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ ANNUAL MAINTENANCE FEE (2) $30 $30 $30 DISTRIBUTION CHARGE (3) 0.75% None None SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily Contract Value excluding Fixed Accumulation Feature investments) Mortality and Expense Risk Charge 0.30% 1.15% 0.10% Administrative Charge 0.20% 0.20% 0.20% TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 0.50% 1.35% 0.30% MAXIMUM OPTIONAL CHARGES Return of Premium Death Benefit (4) 0.75% 0.75% 0.75%
(2) Fee waived if Account Balance is $50,000 or more on your Contract Anniversary. (3) The Distribution Charge is based on a percentage of Remaining Gross Premium. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge is reduced to 0% after the completion of eight years after each respective Premium Payment. (4) Charge based on a percentage of Premium Payments adjusted for Surrenders on each Contract Anniversary. Current rider charge is 0.30%. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM MAXIMUM --------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 0.44% 2.37% (expenses that are deducted from Underlying Fund assets, including management fees, distribution and/or service fees (12b-1) fees, and other expenses.
5 ------------------------------------------------------------------------------- THE LAST TABLE SHOWS THE TOTAL ANNUAL FUND OPERATING EXPENSES FOR EACH UNDERLYING FUND. ACTUAL FEES AND EXPENSES FOR THE UNDERLYING FUNDS VARY DAILY. AS A RESULT, THE FEES AND EXPENSES FOR ANY GIVEN DAY MAY BE GREATER OR LESS THAN THE TOTAL ANNUAL FUND OPERATING EXPENSES LISTED BELOW. MORE DETAIL CONCERNING EACH UNDERLYING FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. THESE EXPENSES MAY VARY FROM YEAR TO YEAR. ANNUAL FUND OPERATING EXPENSES AS OF THE FUND'S YEAR END (As a percentage of net assets)
DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 0.61% 0.25% 0.29% 0.01% AIM V.I. International Growth Fund - Series II 0.71% 0.25% 0.35% 0.02% AIM V.I. Mid Cap Core Equity Fund - Series II 0.72% 0.25% 0.32% 0.03% AIM V.I. PowerShares ETF Allocation Fund - Series II 0.67% 0.25% 0.89% 0.56% AIM V.I. Small Cap Equity Fund - Series II 0.75% 0.25% 0.34% 0.01% ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 0.55% 0.25% 0.22% N/A AllianceBernstein VPS International Value Portfolio - Class B 0.74% 0.25% 0.07% N/A AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 0.75% 0.25% 0.11% N/A FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.56% 0.25% 0.10% N/A Fidelity VIP Mid Cap Portfolio - Service Class 2 0.56% 0.25% 0.12% N/A Fidelity VIP Strategic Income Portfolio - Service Class 2 0.57% 0.25% 0.16% N/A FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 0.68% 0.35% 0.31% 0.04% Franklin Income Securities Fund - Class 4 0.45% 0.35% 0.02% N/A Franklin Rising Dividends Securities Fund - Class 4 0.60% 0.35% 0.02% 0.01% Franklin Small Cap Value Securities Fund - Class 4 0.52% 0.35% 0.16% 0.01% Franklin Small-Mid Cap Growth Securities Fund - Class 4 0.50% 0.35% 0.28% 0.02% Franklin Strategic Income Securities Fund - Class 4 0.37% 0.35% 0.25% 0.01% Mutual Global Discovery Securities Fund - Class 4 0.80% 0.35% 0.18% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 1.16% 0.01% N/A 1.15% (1)(2)(3)(4) AIM V.I. International Growth Fund - Series II 1.33% 0.01% N/A 1.32% (1)(2)(3)(4) AIM V.I. Mid Cap Core Equity Fund - Series II 1.32% 0.03% N/A 1.29% (1)(2)(3)(4) AIM V.I. PowerShares ETF Allocation Fund - Series II 2.37% 1.38% N/A 0.99% (1)(2)(4)(5) AIM V.I. Small Cap Equity Fund - Series II 1.35% N/A N/A 1.35% (1)(4)(6) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 1.02% 0.02% N/A 1.00% (7) AllianceBernstein VPS International Value Portfolio - Class B 1.06% N/A N/A 1.06% AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 1.11% N/A N/A 1.11% FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.91% N/A N/A 0.91% (8) Fidelity VIP Mid Cap Portfolio - Service Class 2 0.93% N/A N/A 0.93% (8) Fidelity VIP Strategic Income Portfolio - Service Class 2 0.98% N/A N/A 0.98% FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 1.38% 0.31% N/A 1.07% (9)(12) Franklin Income Securities Fund - Class 4 0.82% N/A N/A 0.82% (10) Franklin Rising Dividends Securities Fund - Class 4 0.98% N/A N/A 0.98% Franklin Small Cap Value Securities Fund - Class 4 1.04% N/A N/A 1.04% (12) Franklin Small-Mid Cap Growth Securities Fund - Class 4 1.15% N/A N/A 1.15% (12) Franklin Strategic Income Securities Fund - Class 4 0.98% N/A N/A 0.98% (12) Mutual Global Discovery Securities Fund - Class 4 1.33% N/A N/A 1.33% (11)
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 0.60% 0.35% 0.13% N/A Templeton Foreign Securities Fund - Class 4 0.64% 0.35% 0.15% 0.02% Templeton Global Bond Securities Fund - Class 4 0.47% 0.35% 0.11% N/A Templeton Growth Securities Fund - Class 4 0.74% 0.35% 0.04% N/A HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.61% N/A 0.03% N/A Hartford U.S. Government Securities HLS Fund - Class IA 0.45% N/A 0.01% N/A HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.65% 0.25% 0.09% N/A American Funds Blue Chip Income and Growth HLS Fund - Class IB 0.75% 0.25% 0.17% N/A American Funds Bond HLS Fund - Class IB 0.50% 0.25% 0.05% N/A American Funds Global Bond HLS Fund - Class IB 0.75% 0.25% 0.10% N/A American Funds Global Growth and Income HLS Fund - Class IB 0.80% 0.25% 0.06% N/A American Funds Global Growth HLS Fund - Class IB 1.00% 0.25% 0.12% N/A American Funds Global Small Capitalization HLS Fund - Class IB 0.80% 0.25% 0.11% N/A American Funds Growth HLS Fund - Class IB 0.75% 0.25% 0.03% N/A American Funds Growth- Income HLS Fund - Class IB 0.70% 0.25% 0.04% N/A American Funds International HLS Fund - Class IB 0.85% 0.25% 0.04% N/A American Funds New World HLS Fund - Class IB 1.10% 0.25% 0.09% N/A Hartford Capital Appreciation HLS Fund - Class IA 0.63% N/A 0.04% N/A Hartford Disciplined Equity HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Dividend and Growth HLS Fund - Class IA 0.64% N/A 0.03% N/A Hartford Global Equity HLS Fund - Class IA 0.95% N/A 0.07% N/A Hartford Global Growth HLS Fund - Class IA 0.71% N/A 0.04% N/A Hartford Growth HLS Fund - Class IA 0.80% N/A 0.04% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 1.08% N/A N/A 1.08% Templeton Foreign Securities Fund - Class 4 1.16% N/A N/A 1.16% (12) Templeton Global Bond Securities Fund - Class 4 0.93% N/A N/A 0.93% (13) Templeton Growth Securities Fund - Class 4 1.13% N/A N/A 1.13% (10) HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.64% N/A N/A 0.64% Hartford U.S. Government Securities HLS Fund - Class IA 0.46% N/A N/A 0.46% HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.99% 0.40% 0.32% 0.91% (14) American Funds Blue Chip Income and Growth HLS Fund - Class IB 1.17% 0.50% 0.43% 1.10% (14) American Funds Bond HLS Fund - Class IB 0.80% 0.25% 0.40% 0.95% (14) American Funds Global Bond HLS Fund - Class IB 1.10% 0.50% 0.59% 1.19% (14) American Funds Global Growth and Income HLS Fund - Class IB 1.11% 0.55% 0.62% 1.18% (14) American Funds Global Growth HLS Fund - Class IB 1.37% 0.75% 0.55% 1.17% (14) American Funds Global Small Capitalization HLS Fund - Class IB 1.16% 0.55% 0.74% 1.35% (14) American Funds Growth HLS Fund - Class IB 1.03% 0.50% 0.33% 0.86% (14) American Funds Growth- Income HLS Fund - Class IB 0.99% 0.45% 0.28% 0.82% (14) American Funds International HLS Fund - Class IB 1.14% 0.60% 0.52% 1.06% (14) American Funds New World HLS Fund - Class IB 1.44% 0.85% 0.81% 1.40% (14) Hartford Capital Appreciation HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Disciplined Equity HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Dividend and Growth HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Global Equity HLS Fund - Class IA 1.02% 0.10% N/A 0.92% (15) Hartford Global Growth HLS Fund - Class IA 0.75% N/A N/A 0.75% Hartford Growth HLS Fund - Class IA 0.84% N/A N/A 0.84%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.70% N/A 0.04% N/A Hartford Index HLS Fund - Class IB 0.30% 0.25% 0.02% N/A Hartford International Opportunities HLS Fund - Class IA 0.67% N/A 0.04% N/A Hartford Money Market HLS Fund - Class IA 0.40% N/A 0.04% N/A Hartford Small Company HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Total Return Bond HLS Fund - Class IA 0.46% N/A 0.03% N/A Hartford Value HLS Fund - Class IA 0.81% N/A 0.03% N/A MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 0.75% 0.25% 0.08% N/A MFS(R) Investors Trust Series - Service Class 0.75% 0.25% 0.09% N/A MFS(R) Research Bond Series - Service Class 0.50% 0.25% 0.14% N/A MFS(R) Total Return Series - Service Class 0.74% 0.25% 0.07% N/A MFS(R) Value Series - Service Class 0.75% 0.25% 0.09% N/A PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 0.65% 0.25% 0.13% 0.02% Putnam VT Investors Fund - Class IB 0.65% 0.25% 0.12% N/A Putnam VT Voyager Fund - Class IB 0.64% 0.25% 0.08% 0.01% CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.74% N/A N/A 0.74% Hartford Index HLS Fund - Class IB 0.57% N/A N/A 0.57% Hartford International Opportunities HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Money Market HLS Fund - Class IA 0.44% N/A N/A 0.44% Hartford Small Company HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Total Return Bond HLS Fund - Class IA 0.49% N/A N/A 0.49% Hartford Value HLS Fund - Class IA 0.84% N/A N/A 0.84% MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 1.08% N/A N/A 1.08% (16) MFS(R) Investors Trust Series - Service Class 1.09% N/A N/A 1.09% (16) MFS(R) Research Bond Series - Service Class 0.89% N/A N/A 0.89% (16) MFS(R) Total Return Series - Service Class 1.06% N/A N/A 1.06% (16) MFS(R) Value Series - Service Class 1.09% N/A N/A 1.09% (16) PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 1.05% N/A N/A 1.05% (17) Putnam VT Investors Fund - Class IB 1.02% N/A N/A 1.02% (18) Putnam VT Voyager Fund - Class IB 0.98% N/A N/A 0.98% (17)
* The 12b-1 fees deducted from these classes cover certain distribution, shareholder support and administrative services provided by intermediaries (the insurance company, broker dealer or other service provider). NOTES (1) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expense are included in the total returns of the Fund. (2) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees Invesco Aim receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. Fee Waiver reflects this agreement. (3) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.45% of average daily net assets. (4) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2008 and are expressed as a percentage of the Fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. (5) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 0.43% of average daily net assets. (6) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.40% of average daily net assets. (7) Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Portfolio's operating expenses. This waiver extends through April 30, 2010 and may be extended by the Adviser for additional one-year terms. (8) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of un-invested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been: Fidelity VIP Contrafund Portfolio Initial Class - 0.65%; Fidelity VIP Contrafund Portfolio Service Class 2 - 0.90%; 8 ------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio Initial Class - 0.67%; Fidelity VIP Growth Portfolio Service Class 2 - 0.92%; Fidelity VIP Mid Cap Portfolio Service Class 2 - 0.92%; Fidelity Overseas Portfolio Initial Class - 0.84%. These offsets may be discontinued at any time. (9) The investment manager and administrator have contractually agreed to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the Fund so that common annual Fund operating expenses (i.e., a combination of investment management fees, fund administration fees, and other expenses, but excluding Rule 12b-1 fees and acquired fund fees and expenses) do not exceed 0.72% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2010. This waiver is separate from the waiver related to the Sweep Money Fund. (10) The Fund administration fee is paid indirectly through the management fee. (11) The Fund's name changed from Mutual Discovery Securities Fund effective as of May 1, 2009. (12) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the Sweep Money Fund which is "the acquired fund" in this case) to the extent of the Fund's fees and expenses of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. (13) The Fund's name changed from Templeton Global Income Securities Fund effective as of May 1, 2009. (14) Because the Feeder Fund invests all of its assets in the Master Fund, the Feeder Fund will bear its own fees and expenses and its proportionate share of the fees and expenses of the Master Fund. The amounts shown under "Master Fund Expenses" include the advisory fee (before non-contractual fee waiver). The Annual Fund Operating Expense table and the Examples reflect the estimated expenses of both the Feeder Fund and the Master Fund. The Class I shares of the Master Funds do not have a sales charge (load) or a distribution and service (12b-1) fee. HL Advisors has entered into a contractual agreement with Hartford Series Fund, Inc (the Company") under which it will waive a portion of its advisory fee for such time as the fund is operated as a feeder fund, because during the that time it will not be providing the portfolio management portion of the advisory and management services to be provided under its investment management with the Company. The fee waiver will continue as long as the fund is part of a master-feeder structure unless the Board of Directors approves a change in or elimination of the waiver. Currently, the fund waivers are as follows: American Funds Asset Allocation HLS Fund - 0.40%; American Funds Blue Chip and Growth HLS Fund - 0.50%; American Fund Bond HLS Fund - 0.25%; American Funds Global Bond HLS Fund - 0.50%; American Funds Global Growth and Income HLS Fund - 0.55%; American Funds Global Growth HLS Fund - 0.75%; American Fund Global Small Capitalization HLS Fund - 0.55%; American Funds Growth HLS Fund - 0.50%; American Funds Growth-Income HLS Fund - 0.45%; American Funds International HLS Fund - 0.60%; American Funds New World HLS Fund - 0.85%. (15) Effective August 25, 2008 HL Advisors contractually agreed to waive a portion of its management fees until May 1, 2010. While such waiver is in effect, using the most recent fiscal year average net assets, the management fee is 0.85% and the total annual operating expenses are 0.92%. (16) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees." (17) "Total Annual Fund Operating Expenses" includes the amount from "Acquired Fund Fees and Expenses" column, which is an estimate of expenses attributable to the fund's investments in other investment companies, based on the total annual fund operating expenses of such companies as reported in their most recent shareholder reports (net of any applicable expense limitations). These indirect expenses will vary from time to time depending on the fund's investments in other investment companies and their operating expenses (18) Includes estimated expenses attributable to the fund's investments in other investment companies that the fund bears indirectly. 9 ------------------------------------------------------------------------------- EXAMPLE THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THIS VARIABLE ANNUITY WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITIES. LET'S SAY, HYPOTHETICALLY, THAT YOUR ANNUAL INVESTMENT RETURN IS FIVE (5%) PERCENT AND THAT YOUR FEES AND EXPENSES TODAY WERE AS HIGH AS POSSIBLE INCLUDING THE ELECTION OF THE HIGHEST POSSIBLE OPTIONAL CHARGES (I.E., THE HARTFORD'S RETURN OF PREMIUM DEATH BENEFIT). THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR EVERY $10,000 INVESTED (EXCLUDING PERSONAL PENSION ACCOUNT CONTRIBUTIONS AND AMOUNTS ALLOCATED TO THE FIXED ACCUMULATION FEATURE), HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS POSED: (1) If you Surrender your variable annuity at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $1137 $2092 $2858 $4630 C Share $676 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
(2) If you annuitize at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $294 $1245 $2199 $4525 C Share $381 $1355 $2332 $4782 I Share $274 $1041 $1822 $3841
(3) If you do not Surrender your variable annuity:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $474 $1425 $2379 $4630 C Share $486 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- When Premium Payments are credited to your Funds, they are converted into Accumulation Units by dividing the amount of your Premium Payments minus any Premium taxes, by the Accumulation Unit Value for that Valuation Day. All classes of Accumulation Unit Values may be obtained, free of charge, by contacting us. See Appendix B - Accumulation Unit Values for additional information. You can find financial statements for us and the Separate Account in the Statement of Additional Information. 10 ------------------------------------------------------------------------------- 3. MANAGEMENT OF THE CONTRACT THE COMPANY We are a stock life insurance company engaged in the business of writing life insurance and individual and group annuities. Hartford Life Insurance Company is authorized to do business in all states of the United States and the District of Columbia. Hartford Life and Annuity Insurance Company is authorized to do business in Puerto Rico, the District of Columbia, and all states of the United States except New York. Hartford Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company is a subsidiary of Hartford Life Insurance Company. Our corporate offices are located in Simsbury, Connecticut. Neither company cross guarantees the obligations of the other. We are ultimately controlled by The Hartford Financial Services Group, Inc. All guarantees under the Contract are subject to each issuing company's financial strength and claims-paying capabilities. We provide information about our financial strength in reports filed with the SEC (Hartford Life Insurance Company only) and/or state insurance departments. For example, Hartford Life Insurance Company files annual reports (Form 10-K), quarterly reports (Form 10-Q) and periodic reports (Form 8-K) with the SEC. Forms 10-K and 10-Q include information such as our financial statements, management discussion and analysis of the previous year of operations, risk factors, and other information. Form 8-K reports are used to communicate important developments that are not otherwise disclosed in the other forms described above. You may read or copy these reports at the SEC's Public Reference Room at 100 F. Street N.E., Room 1580, Washington, D.C. 20549-2001. You may also obtain reports and other information about us by contacting us using the information stated on the cover page of this prospectus, visiting our website at www.hartfordinvestor.com or visiting the SEC's website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department. THE GENERAL ACCOUNT The Fixed Accumulation Feature and the Personal Pension Account are part of our General Account. Any amounts that we are obligated to pay under the Fixed Accumulation Feature and the Personal Pension Account and any other payment obligation we undertake under the Contract are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. We invest the assets of the General Account according to the laws governing the investments of insurance company general accounts. The General Account is not a bank account and is not insured by the FDIC or any other government agency. We receive a benefit from all amounts held in our General Account. Amounts in our General Account are available to our general creditors. We issue other types of insurance policies and financial products and pay our obligations under these products from our assets in the General Account. THE SEPARATE ACCOUNT We set aside and invest the assets of some of our annuity contracts, including these Contracts, in a Separate Account. These Separate Accounts are registered as unit investment trusts under the 1940 Act. This registration does not involve supervision by the SEC of the management or the investment practices of a Separate Account or us. Separate Accounts meet the definition of "Separate Account" under federal securities law. The Separate Accounts referenced in this prospectus hold only assets for variable annuity contracts. These Separate Accounts: - hold assets for your benefit and the benefit of other Contract Owners, and the persons entitled to the payouts described in the Contract; - are not subject to the liabilities arising out of any other business we may conduct; - are not affected by the rate of return of our General Account or by the investment performance of any of our other Separate Accounts; - may be subject to liabilities of other variable annuity contracts offered by this Separate Account which are not described in this prospectus; and - are credited with income and gains, and takes losses, whether or not realized, from the assets they hold without regard to our other income, gains or loss. We do not guarantee the investment results of the Separate Account. THE FUNDS The Funds available for investment are not the same mutual funds that you can buy through your Registered Representative even though they may have similar investment strategies and the same portfolio managers. Each Fund has varying degrees of investment risk. Funds are also subject to separate fees and expenses such as management fees, distribution and operating expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the prospectuses for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all Contract classes. 11 ------------------------------------------------------------------------------- MIXED AND SHARED FUNDING - Fund shares may be sold to our other separate accounts, our insurance company affiliates or other unaffiliated insurance companies to serve as an underlying investment for variable annuity contracts and variable life insurance policies, pursuant to a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of Owners, and other contract owners investing these Funds. If a material conflict arose, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another underlying fund. VOTING RIGHTS - We are the legal owners of all Fund shares held in the Separate Account and we have the right to vote at the Funds' shareholder meetings. To the extent required by federal securities laws or regulations, we will: - notify you of any Fund shareholders' meeting if the shares held for your Contract may be voted; - send proxy materials and a form of instructions that you can use to tell us how to vote the Fund shares held for your Contract; - arrange for the handling and tallying of proxies received from Owners; - vote all Fund shares attributable to your Contract according to instructions received from you, and - vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. If any federal securities laws or regulations, or their present interpretation, change to permit us to vote Fund shares on our own, we may decide to do so. You may attend any shareholder meeting at which shares held for your Contract may be voted. After we begin to make Annuity Payouts to you, the number of votes you have will decrease. As a result of proportional voting, a small number of Owners could determine the outcome of a proposition subject to shareholder vote. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS - Subject to any applicable law, we may make certain changes to the Funds offered under your Contract. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Owners as we deem appropriate. We may also close one or more Funds to additional Premium Payments or transfers from existing Funds. We may liquidate one or more Sub-Accounts if the board of directors of any Fund determines that such actions are prudent. Unless otherwise directed, investment instructions will be automatically updated to reflect the Fund surviving after any merger, substitution or liquidation. We may eliminate the shares of any of the Funds from the Contract for any reason and we may substitute shares of another registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account. To the extent required by the 1940 Act, substitutions of shares attributable to your interest in a Fund will not be made until we have the approval of the SEC and we have notified you of the change. In the event of any substitution or change, we may, by appropriate endorsement, make any changes in the Contract necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Owners, the Separate Account may be operated as a management company under the 1940 Act or any other form permitted by law, may be de-registered under the 1940 Act in the event such registration is no longer required, or may be combined with one or more other Separate Accounts. FEES WE RECEIVE FROM FUNDS AND RELATED PARTIES - We receive substantial and varying administrative service payments (referred to as "revenue sharing payments") and Rule 12b-1 fees from certain Funds or related parties. We consider revenue sharing payments and Rule 12b-1 fees among a number of factors when deciding to add or keep a Fund that we offer through the Contract. We collect these payments and fees under agreements between us and a Fund's principal underwriter, transfer agent, investment adviser and/or other entities related to the Fund. We expect to make a profit on these fees. The availability of these types of arrangements creates an incentive for us to seek and offer Funds (and classes of shares of such Funds) that pay us revenue sharing. Other funds (or available classes of shares) may have lower fees and better overall investment performance. As of December 31, 2008, we have entered into arrangements to receive administrative service payments and/or Rule 12b-1 fees from each of the following Fund complexes (or affiliated entities): AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, Branch Banking & Trust Company, Evergreen Investment Services Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Franklin Templeton Services, LLC, The Huntington Funds, Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Merrill Lynch Asset Management & Princeton Funds Distributor, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, MTB Investment Advisors, Inc., Banc of America Advisors, LLC, JPMorgan Investment Advisors, Inc., Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Pioneer Variable Contracts Trust & Pioneer Investment Management, Inc. & Pioneer Funds Distributor, Inc., Prudential Investment Management Services, LLC, Putnam Retail Management Limited Partnership, SunTrust Securities, Inc. & Trusco Capital Management, Inc., UBS Financial Services, Inc., Van Kampen Life Investment Trust & Van Kampen Asset Management, Van Kampen Funds, The Victory Variable Insurance Funds & 12 ------------------------------------------------------------------------------- Victory Capital Management, Inc. & Victory Capital Advisers, Inc. and Wells Fargo Variable Trust & Wells Fargo Fund Management, LLC. We are affiliated with Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. (collectively, the "HLS Funds") based on our affiliation with their investment advisers HL Investment Advisors, LLC and Hartford Investment Management Company. In addition to investment advisory fees, we, or our other insurance company affiliates, receive fees to provide, among other things, administrative, processing, accounting and shareholder services for the HLS Funds. Not all Fund complexes pay the same amounts of revenue sharing payments and/or Rule 12b-1 fees. Therefore, the amount of fees we collect may be greater or smaller based on the Funds you select. Revenue sharing payments and Rule 12b-1 fees did not exceed 0.50% and 0.35%, respectively, in 2008, and are not expected to exceed 0.50% and 0.35%, respectively, in 2009, of the annual percentage of the average daily net assets (for instance, in 2008, assuming that you invested in a Fund that paid us the maximum fees and you maintained a hypothetical average balance of $10,000, we would collect a total of $85 from that Fund). For the fiscal year ended December 31, 2008, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $145.6 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. FIXED ACCUMULATION FEATURE INTERESTS IN THE FIXED ACCUMULATION FEATURE ARE NOT REGISTERED UNDER THE 1933 ACT AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE FIXED ACCUMULATION FEATURE NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE FIXED ACCUMULATION FEATURE IS NOT OFFERED IN ALL CONTRACT CLASSES AND IS NOT AVAILABLE IN ALL STATES. We guarantee that we will credit interest to amounts you allocate to the Fixed Accumulation Feature at a minimum rate that meets your State's minimum non-forfeiture requirements. Non-forfeiture rates vary from state-to-state. We may credit a rate higher than the minimum rate. We reserve the right to declare different rates of interest depending on when amounts are allocated or transferred to the Fixed Accumulation Feature. This means that amounts at any designated time may be credited with a different rate of interest than the rate previously credited to such amounts and to amounts allocated or transferred at any other designated time. We will periodically publish the Fixed Accumulation Feature interest rates currently in effect. There is no specific formula for determining interest rates and, except as specifically stated above, no assurances are offered as to future rates in excess of non-forfeiture rates. Some of the factors that we may consider in determining whether to credit interest are: general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. Fixed Accumulation Feature interest rates may vary by State. We will account for any deductions, Surrenders or transfers from the Fixed Accumulation Feature on a "first-in, first-out" basis (i.e., oldest investments will be liquidated first). ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCUMULATION FEATURE IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. From time to time, we may credit increased interest rates in our sole discretion. We may restrict your ability to allocate Contract Value, Benefit Balance or Premium Payments to the Fixed Accumulation Feature (and vice versa) at any time in our sole discretion. We may close the Fixed Accumulation Feature to new Premium Payments or transfers of existing Contract Value and/or Benefit Balance. Except as otherwise provided, during each Contract Year, you may make transfers out of the Fixed Accumulation Feature to Sub-Accounts or the Personal Pension Account, subject to the transfer restrictions discussed below. All transfer allocations must be in whole numbers (e.g., 1%). Each Contract Year you may transfer the greater of: - thirty (30%) percent of the Contract Value in the Fixed Accumulation Feature as of the last Contract Anniversary. When we calculate the 30%, we add Premium Payments allocated to the Fixed Accumulation Feature, transfers from Sub-Accounts and transfers from the Personal Pension Account made after that date but before the next Contract Anniversary. These restrictions also apply to systematic transfers. The 30% does not include Contract Value in any DCA Plus Program; or - an amount equal to your largest previous transfer from the Fixed Accumulation Feature in any one Contract Year. We apply these restrictions to all transfers from the Fixed Accumulation Feature, including all systematic transfers and Dollar Cost Averaging Programs, except for transfers under our DCA Plus Program. If your interest rate renews at a rate at least 1% lower than your prior interest rate, you may transfer any amount up to 100% of the amount to be invested at the renewal rate. You must make this transfer request within 60 days of being notified of the renewal rate. We may defer transfers and partial Surrenders from the Fixed Accumulation Feature for up to six months from the date of your request. 13 ------------------------------------------------------------------------------- You must wait six months after your most recent transfer from the Fixed Accumulation Feature before moving Sub-Account Values or Benefit Balance back to the Fixed Accumulation Feature. If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait six months after your last systematic transfer before moving Contract Value or Benefit Balance back to the Fixed Accumulation Feature. As a result of these limitations, it may take a significant amount of time (i.e., several years) to move Contract Value in the Fixed Accumulation Feature to Sub-Accounts and/or Personal Pension Account and therefore this may not provide an effective short term defensive strategy. PERSONAL PENSION ACCOUNT INTERESTS IN THE PERSONAL PENSION ACCOUNT ARE NOT REGISTERED UNDER THE 1933 ACT AND THE PERSONAL PENSION ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE PERSONAL PENSION ACCOUNT NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURES REGARDING THE PERSONAL PENSION ACCOUNT. THE FOLLOWING DISCLOSURE ABOUT THE PERSONAL PENSION ACCOUNT IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE PERSONAL PENSION ACCOUNT MAY NOT BE AVAILABLE TO ALL TYPES OF QUALIFIED PLANS, OWNERSHIP ARRANGEMENTS, OR IN ALL STATES. WHAT IS THE PERSONAL PENSION ACCOUNT? THE FOLLOWING IS A BRIEF SUMMARY OF THE PERSONAL PENSION ACCOUNT. YOU SHOULD READ THIS ENTIRE SECTION OF THE PROSPECTUS TO MAKE SURE THAT YOU UNDERSTAND THE IMPORTANT LIMITATIONS AND RESTRICTIONS APPLICABLE TO THE PERSONAL PENSION ACCOUNT. The Personal Pension Account is like the Fixed Accumulation Feature because you receive a fixed interest rate investment return. So, like the Fixed Accumulation Feature, you can invest in the Personal Pension Account if you want a steadier return than you would receive from the Sub-Accounts, where your return depends on the investment performance of the Funds you select. While the Personal Pension Account and Fixed Accumulation Feature both offer a fixed interest rate return, the Personal Pension Account is designed to serve a different purpose than the Fixed Accumulation Feature. The Fixed Accumulation Feature is designed to serve as a conventional accumulation-oriented investment -you put money in to build up your investment, and you can then withdraw money to meet financial needs as they arise. You can also transfer some or all of your investment to the Sub-Accounts or the Personal Pension Account, and your beneficiaries receive a death benefit if you die. The Personal Pension Account is designed to serve a different purpose - it has features and guarantees you can use to design your own personal pension plan to provide you with life-long income payments without having to use the Sub-Accounts or Fixed Accumulation Feature for that purpose. These guarantees let you know in advance how much your income payments will be in the future. While you can take income payments from the Fixed Accumulation Feature too, the amount of those income payments is not guaranteed in advance. Why would you invest in the Fixed Accumulation Feature if the Personal Pension Account gives you income guarantees and more flexibility structuring income payments? The reason is that to give you the guarantees and income payment flexibility, we had to place significant restrictions on how much you can transfer out of the Personal Pension Account in any year as well as on your ability to receive lump sum payments - instead of SURRENDERING part or all of the amounts you have built up in the Personal Pension Account, you can get a lump sum payment only by specifying some or all of the payments you are receiving, and then COMMUTING them into one lump sum. When you invest in the Personal Pension Account, you may end up getting less than you would have if you invested in the Fixed Accumulation Feature. This is the tradeoff you have to accept in return for getting the additional flexibility and guarantees that let you design your own personal pension plan. THERE ARE CERTAIN CONDITIONS THAT MUST BE SATISFIED FOR YOU TO RECEIVE GUARANTEED INCOME PAYMENTS FROM YOUR PERSONAL PENSION ACCOUNT INVESTMENT, INCLUDING STARTING TO TAKE PAYMENTS BEFORE THE END OF A SPECIFIED PERIOD. YOU SHOULD READ THE REST OF THIS PROSPECTUS AND YOUR CONTRACT CAREFULLY TO MAKE SURE YOU UNDERSTAND ALL OF THESE CONDITIONS. AS YOU READ THE REMAINDER OF THIS SECTION OF THE PROSPECTUS, WHICH PROVIDES YOU WITH MORE DETAILED INFORMATION ABOUT HOW THE PERSONAL PENSION ACCOUNT WORKS, YOU SHOULD KEEP IN MIND THESE IMPORTANT POINTS: - YOUR ABILITY TO MAKE TRANSFERS FROM THE PERSONAL PENSION ACCOUNT IS SIGNIFICANTLY LIMITED BECAUSE THE PERSONAL PENSION ACCOUNT RESTRICTS LIQUIDITY DUE TO TRANSFER LIMITATIONS AND THE POTENTIAL LOSS OF VALUE AS A RESULT OF COMMUTATION. ACCORDINGLY, YOU SHOULD ENSURE THAT YOUR INVESTMENTS IN THE FIXED ACCUMULATION FEATURE AND THE SUB-ACCOUNTS WILL BE ADEQUATE TO MEET YOUR LIQUIDITY NEEDS. - BECAUSE THE PERSONAL PENSION ACCOUNT IS DESIGNED AS A LONG-TERM RETIREMENT FUNDING VEHICLE, IT HAS GUARANTEED PAYOUT RATES APPLICABLE ONLY FOR PERSONAL PENSION ACCOUNT PAYMENTS COMMENCED BEFORE THE EXPIRATION OF YOUR SPECIFIED "GUARANTEE WINDOW" (AS DESCRIBED BELOW). 14 ------------------------------------------------------------------------------- - THE PERSONAL PENSION ACCOUNT PROVIDES CERTAIN ADDITIONAL FLEXIBILITY WITH RESPECT TO STRUCTURING INCOME PAYMENTS - YOU CAN CONVERT PART OF YOUR INVESTMENT IN THE PERSONAL PENSION ACCOUNT INTO INCOME PAYMENTS AT A PARTICULAR TIME RATHER THAN YOUR ENTIRE INVESTMENT, AND YOU MAY ESTABLISH DIFFERENT INCOME STREAMS. - AT ANY GIVEN TIME, CREDITED RATES AVAILABLE UNDER THE PERSONAL PENSION ACCOUNT MAY BE HIGHER OR LOWER THAN INTEREST RATES OFFERED UNDER THE FIXED ACCUMULATION FEATURE. - YOU MAY USE THE PERSONAL PENSION ACCOUNT TO ESTABLISH STREAMS OF INCOME PAYMENTS THAT WILL CONTINUE FOR AS LONG AS YOU, THE ANNUITANT OR A JOINT OWNER ARE ALIVE. - IF YOU REQUEST A LUMP SUM PAYMENT, WE COMMUTE THE AMOUNT OF THE PAYMENTS THAT WOULD HAVE BEEN MADE DURING THE "GUARANTEED PAYOUT DURATION" (AS DESCRIBED BELOW) PAYMENTS WILL COMMENCE AGAIN IF YOU THE ANNUITANT OR A JOINT OWNER LIVE PAST THE GUARANTEED PAYOUT DURATION. - IF YOU TERMINATE THIS CONTRACT, YOU GIVE UP YOUR RIGHT TO FUTURE "PERSONAL PENSION ACCOUNT PAYOUTS" (AS DESCRIBED BELOW). HOW DOES THE PERSONAL PENSION ACCOUNT WORK? CONTRIBUTIONS - You invest in the Personal Pension Account through Personal Pension Account Contributions. The first Personal Pension Account Contribution becomes your initial investment called your "Benefit Balance." The Benefit Balance will be increased by the amount of each subsequent Personal Pension Account Contribution, transfers into the Personal Pension Account from the Fixed Accumulation Feature and Sub-Accounts and accrued interest. Unlike the Fixed Accumulation Feature, the Benefit Balance is not indicative of what you would receive as a lump sum. Once you start taking Personal Pension Account Payouts, as described below, your Benefit Balance is divided into an "Accumulation Balance" and "Annuity Payout Value." Annuity Payout Value refers to the sums used to fund your Personal Pension Account Payouts and anything remaining is referred to as your Accumulation Balance. Because you may convert all or any portion of your Accumulation Balance into Personal Pension Account Payouts at different times, you may have more than one Annuity Payout Value. The minimum initial Personal Pension Account Contribution is $10,000. Our prior approval may be required for any single or cumulative Personal Pension Account Contribution of $1 million or more. Each subsequent Personal Pension Account Contribution must be at least $1,000. If made through an approved investment Program, subsequent Personal Pension Account Contributions minimums must be met over the course of the Contract Year or the duration of the investment Program, if less. FAILURE TO MAINTAIN A MINIMUM ACCUMULATION BALANCE OF $5,000 WILL RESULT IN PREMATURE COMMENCEMENT OF PENSION ACCOUNT PAYOUTS. You may not make any Personal Pension Account Contributions after the Annuity Commencement Date. INTEREST CREDITING - We guarantee that we will credit interest to amounts that you allocate to the Personal Pension Account at a minimum rate of 1.5% (called a "credited rate(s)"). We may credit a rate higher than the minimum credited rate. We expect to make a profit in setting credited rates. Different credited rates may apply during the course of your investment in the Personal Pension Account. Credited rates will continue to apply to your Accumulation Balance until the earliest of when you commence taking Personal Pension Account Payouts, the Annuity Commencement Date or when we pay the Death Benefit. Credited rates will not apply to your Annuity Payout Values. We reserve the right to periodically establish new credited rates that will be applied to new Personal Pension Account Contributions. This means that all or portions of your Accumulation Balance may earn interest at different credited rates. See Examples 1, 2 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of how different credited rates may apply during the term of your Contract. There is no specific formula for determining credited rates and no assurances are offered as to future credited rates and their applicability. Some of the factors that we may consider in determining credited rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match these or our general liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. PERSONAL PENSION ACCOUNT PAYOUTS - You may tell us to start paying you income payments called "Personal Pension Account Payouts" at any time or at different times until your Annuity Commencement Date. Subsequent Premium Payments can be made into Sub-Accounts and/or the Fixed Accumulation Feature after Personal Pension Account Payouts have begun (if received before your Annuity Commencement Date). As noted above, your ability to receive lump sum payments from the Personal Pension Account is limited. You do not withdraw any part of your Benefit Balance in the same way that you can surrender your Contract Value from Sub-Accounts or the Fixed Accumulation Feature. Rather, you must convert Accumulation Balance into an Annuity Payout Value that is then used to set your Personal Pension Account Payouts. You may surrender any or all of your Contract Value without affecting your Annuity Payout Value, or you may commute any or all of your Annuity Payout Value without affecting your Contract Value. However, you may terminate your Contract by (a) fully surrendering all of your Contract Value in the Sub-Accounts and Fixed Accumulation Feature; (b) commuting your Annuity Payout Value in your Personal Pension Account (as discussed in more detail below); and (c) giving up your right to Personal Pension Account Payouts. 15 ------------------------------------------------------------------------------- You will automatically start receiving Personal Pension Account Payouts on your Annuity Commencement Date. Personal Pension Account Payouts will be paid in the manner described in Annuity Payout Option Two or Eight under the heading "When do your Annuity Payouts begin?" under the Annuity Payouts section below. We reserve the right to require that you own your Contract for at least six months before you start receiving Personal Pension Account Payouts. For Qualified Contracts, we reserve the right to require that you start taking Personal Pension Account Payouts no later than when the Annuitant turns age 70 1/2. An annual benefit increase option may also be elected to adjust Personal Pension Account Payouts, subject to availability. We calculate the amount of your Personal Pension Account Payouts by applying the applicable payout rate to your Accumulation Balance. We will provide you with a guaranteed payout rate each time that you make a new Personal Pension Amount Contribution. Payout rates are set at our sole discretion. There is no specific formula for determining payout rates and, except as specifically provided below, there is no assurance as to future payout rates. Payout rates may vary based on Contract class and distribution channel. Some of the factors that we may consider in determining payout rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; competitive factors and mortality tables (including age and gender factors). When you first make a Personal Pension Account Contribution, you will be required to choose a Target Income Age at which you are likely to begin taking Personal Pension Account Payouts. The Target Income Age cannot exceed twenty (20) years from the oldest Annuitant's age at the time of investment or age 80. Except as provided below, the Target Income Age cannot be changed. We will use the guaranteed payout rate(s) to calculate Personal Pension Account Payouts if you commence taking Personal Pension Account Payouts during the timeframe that begins three (3) years prior to the Target Income Age and ends three (3) years after the Target Income Age (this seven year period is referred to as the "guarantee window"). If you commence taking Personal Pension Account Payouts at any time outside of the guarantee window, then we will calculate your Personal Pension Account Payouts using payout rate(s) that we then determine at our sole discretion. This payout rate will not exceed the guaranteed payout rate nor will the corresponding Personal Pension Account Payout be less than any guaranteed minimum provided in your Contract. The existence of guaranteed payout rates, among other things, distinguishes the Personal Pension Account from the way we treat annuitization of your Contract Value and investments in the Fixed Accumulation Feature at the end of the accumulation phase of your Contract. See Examples 1 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Payouts during the guarantee window. LUMP SUM PAYMENTS - You may commute any or all of your Annuity Payout Value to get a lump sum payment from the Personal Pension Account. The way we do this is to calculate the number of Personal Pension Account Payouts (corresponding to the Annuity Payout Value that you seek to commute) that when added together will equal the amount of your commutation request, and then the time period over which these Personal Pension Account Payouts would have otherwise been made is called the "Guaranteed Payout Duration." Personal Pension Account Payouts will resume after the Guaranteed Payout Duration for so long as you, the Annuitant or a joint Owner are alive. You should understand that if you commute you will receive less than your Annuity Payout Value. The amount you receive over time depends on a number of factors, including the difference between interest rates currently being credited and the discount rate used upon commutation, how long you have invested in the Personal Pension Account and whether you (or the Annuitant) live long enough so that Personal Pension Account Payouts start up again after the Guaranteed Payout Duration. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information about how commutation works. TRANSFERS - Each Contract Year, you may transfer a portion of your Accumulation Balance to the Fixed Accumulation Feature or Sub-Accounts without having to comply with the annuitization and commutation requirements discussed above. All transfer allocations must be in whole numbers (e.g., 1%). The maximum amount of Accumulation Balance that may be transferred is the highest of: - four (4%) percent of your Accumulation Balance as of your prior Contract Anniversary; - the amount of interest credited to your Accumulation Balance over the most recent full Contract Year; or - the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. We reserve the right to: (a) limit the number of transfers from the Personal Pension Account; (b) make you wait six months after your most recent transfer from the Personal Pension Account before moving Contract Value back into the Personal Pension Account; or (c) revoke this transfer privilege at any time. Amounts transferred out of the Personal Pension Account will reduce the Accumulation Balance by the amount transferred. Amounts transferred from the Personal Pension Account to the Fixed Accumulation Feature or the Sub-Accounts will be treated as a subsequent Premium Payment and become part of your Contract Value. You may also transfer Contract Value from your Sub-Accounts or Fixed Accumulation Feature, to the Accumulation Balance (such transfers will reduce the amount of your optional Death Benefit, Annual Withdrawal Amount (AWA) and Remaining Gross Premiums). If applicable, no CDSC will be applied to Accumulation Balance transferred to Sub-Accounts or the Fixed Accumulation Feature, or vice versa. No transfers 16 ------------------------------------------------------------------------------- may be made to or from the Personal Pension Account after the Annuity Commencement Date. See Example 3 under the Personal Pension Account Examples in Appendix A for an illustration of transfers into your Personal Pension Account. AS A RESULT OF THESE OUT-BOUND TRANSFER RESTRICTIONS, IT MAY TAKE A SIGNIFICANT AMOUNT OF TIME (I.E., SEVERAL YEARS) TO MOVE ACCUMULATION BALANCE TO SUB-ACCOUNTS OR THE FIXED ACCUMULATION FEATURE AND THEREFORE THIS MAY NOT PROVIDE AN EFFECTIVE SHORT TERM DEFENSIVE STRATEGY. PLEASE REFER TO EXAMPLE 3 UNDER THE PERSONAL PENSION ACCOUNT EXAMPLES IN APPENDIX A FOR AN ILLUSTRATION OF TRANSFER RESTRICTIONS. DEATH BENEFIT - The Personal Pension Account includes a Death Benefit equal to your Benefit Balance. This Death Benefit is considered to be part of the standard Death Benefit or any optional Death Benefit that you elect. Your Personal Pension Account Death Benefit increases as a result of additional Personal Pension Account Contributions and transfers into the Personal Pension Account. YOUR PERSONAL PENSION ACCOUNT DEATH BENEFIT DECREASES AS YOU TAKE PERSONAL PENSION ACCOUNT PAYOUTS AND MAY BE ELIMINATED OVER TIME. Benefit Balance transfers to Sub-Accounts and/or the Fixed Accumulation Feature also decrease your Personal Pension Account Death Benefit but because these amounts are converted into Contract Value, they become part of the standard Death Benefit and/or optional Death Benefit. YOUR BENEFIT BALANCE IS NOT GUARANTEED AS PART OF ANY OPTIONAL DEATH BENEFIT RIDER. Personal Pension Account Payouts will generally terminate upon notification to us of the death of the Owner, joint Owner or Annuitant, if prior to the Annuity Commencement Date; or upon notification to us of the Annuitant's death, if after the Annuity Commencement Date. The method of payment of the Death Benefit will be subject to the restrictions contained in the "Standard Death Benefit" section of this Prospectus. Your Benefit Balance will be converted into Contract Value and transferred to the Money Market Sub-Account without annuitization and commutation. Unless otherwise stated below, Contract Value may not be reallocated back into the Personal Pension Account. The Contingent Annuitant may reinvest Contract Value back into the Personal Pension Account and establish a new guarantee window, target income age and receive then applicable credited rates. If Spousal Contract continuation is elected, your Spouse can either continue to maintain the Personal Pension Account and resume Personal Pension Account Payouts, if applicable, or instruct us to transfer Benefit Balance to the Money Market Sub-Account. Your Spouse may then reinvest Contract Value back into the Personal Pension Account by establishing a new guarantee window and target income age. New crediting rates will apply. OTHER INFORMATION - We will account for any Personal Pension Account Contributions, Personal Pension Account Payouts, interest, and deductions separately and on a first-in, first-out basis for the purposes of determining which credited rates are associated with each Personal Pension Account Contribution. Personal Pension Account Payouts are not cumulative and may not be advanced, commuted or accelerated, except as explicitly stated in this prospectus. Subject to applicable state insurance law, the Personal Pension Account does not establish a cash surrender benefit. We may close the Personal Pension Account to new Personal Pension Account Contributions at any time without notice. We may also make the Personal Pension Account available only through enrollment in one or more investment Programs that we establish. Special consideration should be given by Personal Pension Account investors who are under age 40 to the twenty-year limitation on setting your Target Income Age and the absence of guaranteed payout rates applied if Personal Pension Account Payouts commence outside of your guarantee window. The Personal Pension Account should not be confused with a pension plan under The Employee Retirement Income Security Act of 1974, as amended (ERISA). Neither we nor any of our affiliates assume any fiduciary duties with regard to this Contract, as such terms are defined under ERISA laws and regulations. The Personal Pension Account is not a defined benefit plan guaranteed by the Pension Benefit Guaranty Corporation (PBGC) or any federal or state government agency. This feature is not a corporate pension plan issued by us or our affiliates. In summary, the Personal Pension Account is designed for the long-term investor who is willing to forego some degree of liquidity in exchange for, among other things, deferred lifetime income in the form of Personal Pension Account Payouts. This feature restricts liquidity through transfer and commutation restrictions. The amount ultimately received as a consequence of your investment in the Personal Pension Account is not predictable because of the uncertainty of factors such as how long you have invested in the Personal Pension Account, interest rates in effect at the time of investment and commutation, and how long you receive lifetime Personal Pension Account Payouts. If you partially commute your Personal Pension Account Payouts, you will retain the right to collect life contingent Personal Pension Account Payouts that resume after the applicable Guaranteed Payout Duration. HOWEVER, IF YOU ELECT TO TERMINATE YOUR CONTRACT, YOU WILL GIVE UP YOUR RIGHT TO THESE FUTURE LIFE CONTINGENT PERSONAL PENSION ACCOUNT PAYOUTS. YOU SHOULD THEREFORE CONSULT WITH YOUR REGISTERED REPRESENTATIVE OR A TRUSTED ADVISER BEFORE TERMINATING YOUR CONTRACT TO BE SURE THAT YOU UNDERSTAND THESE IMPORTANT IMPLICATIONS. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information. 17 ------------------------------------------------------------------------------- 4. INFORMATION ON YOUR ACCOUNT A. OPENING AN ACCOUNT WHO CAN BUY THIS CONTRACT? The Contract is an individual or group tax-deferred variable annuity Contract. It is designed for retirement planning purposes and may be purchased by any individual, group or trust, including: - any trustee or custodian for a retirement plan qualified under Section 401(a) of the Code; - individual Retirement Annuities adopted according to Section 408 of the Code; - employee pension plans established for employees by a state, a political subdivision of a state, or an agency of either a state or a political subdivision of a state; and - certain eligible deferred compensation plans as defined in Section 457 of the Code. The examples above represent Qualified Contracts, as defined by the Code. In addition, individuals and trusts can also purchase Contracts that are not part of a tax qualified retirement plan. These are known as Non-Qualified Contracts. If you are purchasing the Contract for use in an IRA or other qualified retirement plan, you should consider other features of the Contract besides tax deferral, since any investment vehicle used within an IRA or other Qualified Plan receives tax-deferred treatment under the Code. We no longer accept any incoming 403(b) exchanges, transfers or applications for 403(b) individual annuity contracts or additional investments into any individual annuity contract funded through a 403(b) plan. The Personal Pension Account may not be available to all types of Qualified Plans. HOW DO YOU PURCHASE A CONTRACT? You may only purchase a Contract through a Financial Intermediary. A Registered Representative will work with you to complete and submit an application or an order request form. Part of this process will include an assessment as to whether this variable annuity may be suitable for you. Prior to recommending the purchase or exchange of a deferred variable annuity, your Registered Representative shall make reasonable efforts to obtain certain information about you and your investment needs. This recommendation will be independently reviewed by a principal within your Financial Intermediary. Your initial Deposit will not be invested in any Account and/or the Personal Pension Account during this period. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, your Financial Intermediary will ask for your name, address, date of birth and other information that will allow us to identify you. They may also ask to see your driver's license or other identifying documents. Non-Resident Alien (NRA) application submissions require our prior approval. The minimum initial Deposit required to buy this Contract varies based on the type of investment, Contract class and whether you enroll in a systematic investment Program such as the InvestEase(R) Program. Financial Intermediaries may impose requirements regarding the form of payment they will accept. Deposits not actually received by us within the time period provided below will result in the rejection of your application or order request. Deposits sent to us must be made in U.S. dollars and checks must be drawn on U.S. banks. We do not accept cash, third party checks or double endorsed checks. We reserve the right to limit the number of checks processed at one time. If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees incurred. A check must clear our account through our Administrative Office to be considered to be in good order. We reserve the right to impose special conditions on anyone who seeks our prior approval to purchase a Contract with Deposits of $1 million or more. In order to request prior approval, you must submit a completed enhanced due diligence form prior to the submission of your application: - if you are seeking to purchase a Contract with an initial Deposit of $1 million or more; - if total Deposits, aggregated by social security number or taxpayer identification number, equal $1 million or more; and - for all applications where the Owner or joint Owner are non-resident aliens. You and your Annuitant must not be older than age 80 on the date that your Contract is issued. You must be of minimum legal age in the state where the Contract is being purchased or a guardian must act on your behalf. Optional riders are subject to additional maximum issue age restrictions. We urge you to discuss with your Registered Representative which share class is suitable for your needs. Share class availability and/or mortality and expense risk charge arrangements may vary based on the Financial Intermediary selling this variable annuity to you. 18 ------------------------------------------------------------------------------- Charges affect your overall rate of return on your Contract Value. In determining whether to invest in a share class that imposes a contingent deferred sales charge, you might consider whether higher mortality and expense risk and distribution charges out weigh the benefits of contingent deferred sales charges that reduce, or are eliminated, over time. For instance, those investing over $100,000 may find a front-end sales charge class share to be more economically advantageous than a contingent deferred sales charge share class. Finally, in determining whether to invest in a share class offered through a financial advisor, you might consider how the fee charged by your advisor bears in relation to the costs associated with investing in other share classes that impose higher fees. CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT? Yes. If for any reason you are not satisfied with your Contract, simply return it within ten days after you receive it with a written request for cancellation that indicates your tax-withholding instructions. In some states, you may be allowed more time to cancel your Contract. We may require additional information, including a signature guarantee, before we can cancel your Contract. Unless otherwise required by state law, we will pay you your Account Balance (minus applicable expenses) as of the Valuation Day we receive your properly completed request to cancel and will refund any sales or Contract charges incurred during the period you owned the Contract. The Account Balance may be more or less than your Deposits depending upon the investment performance of your Contract. This means that you bear the risk of any decline in your Account Balance until we receive your notice of cancellation. In certain states, however, we are required to return your Deposit without deduction for any fees or charges. HOW ARE DEPOSITS APPLIED TO YOUR CONTRACT? Your initial Deposit will usually be invested within two Valuation Days of our actual receipt in-hand at our Administrative Office of both a properly completed application or order request and the Deposit; both being in good order. If we receive a subsequent Deposit before the end of a Valuation Day, it will be invested on the same Valuation Day. If we receive your subsequent Deposit after the end of a Valuation Day, it will be invested on the next Valuation Day. If we receive a subsequent Deposit on a non-Valuation Day, the amount will be invested on the next Valuation Day. Unless we receive new instructions, we will invest all Deposits based on your last instructions on record. We will send you a confirmation when we invest your Deposit. If the request or other information accompanying the initial Deposit is incomplete or not in good order when received, we will hold the money in a non-interest bearing account for up to five Valuation Days (from the Valuation Day that we actually receive your initial Deposit at our Administrative Office) while we try to obtain complete information. If we cannot obtain the information within five Valuation Days, we will either return the Deposit and explain why it could not be processed or keep the Deposit if you authorize us to keep it until you provide the necessary information. Generally, we will receive your application or order request (whether for an initial purchase or a subsequent investment) after your Financial Intermediary has completed a suitability review. We will then consider if your investment is in good order. While the suitability and good order process is underway, Deposits will not be applied to your Contract. You will not earn any interest on Deposits even if they have been sent to us or deposited into our bank account. We are not responsible for gains or lost investment opportunities incurred during this review period or if your Financial Intermediary asks us to unwind a transaction based on their review of your Registered Representative's recommendations. Your Financial Institution, and we, may directly or indirectly earn income on your Deposits. For more information, contact your Registered Representative. HOW IS CONTRACT VALUE CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE? The Contract Value is the sum of the value of the Fixed Accumulation Feature, if applicable, and all Funds, and does not include Benefit Balance. There are two things that affect the value of your Sub-Accounts: (1) the number of Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is determined by multiplying the number of Accumulation Units by the Accumulation Unit Value. On any Valuation Day the investment performance of the Sub-Accounts will fluctuate with the performance of the Funds. When Premium Payments are credited to Sub-Accounts within your Account, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium taxes, by the Accumulation Unit Value for that day. The more Premium Payments you make to your Account, the more Accumulation Units you will own. You decrease the number of Accumulation Units you have by requesting partial or full Surrenders, settling a Death Benefit claim or by annuitizing your Contract or as a result of the application of certain Contract charges. To determine the current Accumulation Unit Value, we take the prior Valuation Day's Accumulation Unit Value and multiply it by the Net Investment Factor for the current Valuation Day. The Net Investment Factor is used to measure the investment performance of a Sub-Account from one Valuation Day to the next. The Net Investment Factor for each Sub-Account equals: - the net asset value per share plus applicable distributions per share of each Fund at the end of the current Valuation Day; reduced by - the net asset value per share of each Fund at the end of the prior Valuation Day; reduced by - contract charges including the deductions for the mortality and expense risk charge and any other periodic expenses and administrative charges, divided by the number of days in the year multiplied by the number of days in the valuation period. 19 ------------------------------------------------------------------------------- We will send you a statement at least annually. WHAT OTHER WAYS CAN YOU INVEST? You may enroll in the following features (sometimes called a "Program") for no additional fee. Not all Programs are available with all Contract variations. - INVESTEASE This electronic funds transfer feature allows you to have money automatically transferred from your checking or savings account and deposited into your Contract on a monthly or quarterly basis. It can be changed or discontinued at any time. The minimum amount for each transfer is $50. You can elect to have transfers made into any available Fund, the Fixed Accumulation Feature, or the Personal Pension Account. You cannot use this Program to invest in the DCA Plus Programs. - STATIC ASSET ALLOCATION MODELS This feature allows you to select an asset allocation model based on several potential factors including your risk tolerance, time horizon, investment objectives, or your preference to invest in certain Funds or Fund families. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Contract. Some asset allocation models are based on generally accepted investment theories that take into account the historic returns of different asset classes (e.g., equities, bonds or cash) over different time periods. Other asset allocation models focus on certain potential investment strategies that could possibly be achieved by investing in particular Funds or Fund families and are not based on such investment theories. Static asset allocation models offered from time to time are reflected in your application and marketing materials. You may obtain a copy of the current models by contacting your Financial Intermediary. You may invest in an asset allocation model through the Dollar Cost Averaging Program where the Fixed Accumulation Feature, Personal Pension Account, or a DCA Plus Program is the source of the assets to be invested in the asset allocation model you have chosen. You can also participate in these asset allocation models while enrolled in the InvestEase or Automatic Income Program. You can switch asset allocation models up to twelve times per year. Your ability to elect or switch into and between asset allocation models may be restricted based on Fund abusive trading restrictions. Your investments in an asset allocation model will be rebalanced quarterly to reflect the model's original percentages and you may cancel your model at any time subject to investment restrictions for maintaining certain optional riders. We have no discretionary authority or control over your investment decisions. These asset allocation models are based on then available Funds and do not include the Fixed Accumulation Feature or the Personal Pension Account. We make available educational information and materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case studies) that can help you select an asset allocation model, but we do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you. While we will not alter allocation percentages used in any asset allocation model, allocation weightings could be affected by mergers, liquidations, fund substitutions or closures. Availability of these models is subject to Fund company restrictions. Please refer to "What Restrictions Are There on your Ability to Make a Sub-Account Transfer?" for more information. You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the asset allocation models, and we will not reallocate your Contract Value based on those updates. Information on updated asset allocation models may be obtained by contacting your Registered Representative. If you wish to update your asset allocation model, you may do so by terminating your existing model and re-enrolling into a new one. Investment alternatives other than these asset allocation models are available that may enable you to invest your Contract Value with similar risk and return characteristics. When considering an asset allocation model for your individual situation, you should consider your other assets, income and investments in addition to this annuity. Asset allocation does not guarantee that your Contract Value will increase nor will it protect against a decline if market prices fall. If you choose to participate in an asset allocation program, you are responsible for determining which asset allocation model is best for you. Tools used to assess your risk tolerance may not be accurate and could be useless if your circumstances change over time. Although each asset allocation model is intended to maximize returns given various levels of risk tolerance, an asset allocation model may not perform as intended. Market, asset class or allocation option class performance may differ in the future from historical performance and from the assumptions upon which the asset allocation model is based, which could cause an asset allocation model to be ineffective or less effective in reducing volatility. An asset allocation model may perform better or worse than any single Fund, allocation option or any other combination of Funds or allocation options. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of asset allocation models can cause their component Funds to incur transactional expenses to raise cash for money flowing out of Funds or to buy securities with money flowing into the Funds. Moreover, large outflows of money from the Funds may increase the expenses attributable to the assets remaining in the Funds. These expenses can adversely affect the performance of the relevant Funds and of the asset allocation models. In addition, these inflows and outflows may cause a Fund to hold a large portion of its assets in cash, which could detract 20 ------------------------------------------------------------------------------- from the achievement of the Fund's investment objective, particularly in periods of rising market prices. For additional information regarding the risks of investing in a particular Fund, see that Fund's prospectus. Additional considerations apply for qualified Contracts with respect to Static Asset Allocation Model Programs. Neither we, nor any third party service provider, nor any of their respective affiliates, is acting as a fiduciary under The Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Code, in providing any information or other communication contemplated by any Program, including, without limitation, any asset allocation models. That information and communications are not intended, and may not serve as a primary basis for your investment decisions with respect to your participation in a Program. Before choosing to participate in a Program, you must determine that you are capable of exercising control and management of the assets of the plan and of making an independent and informed decision concerning your participation in the Program. Also, you are solely responsible for determining whether and to what extent the Program is appropriate for you and the assets contained in the qualified Contract. Qualified Contracts are subject to additional rules regarding participation in these Programs. It is your responsibility to ensure compliance of any recommendation in connection with any asset allocation model with governing plan documents. - ASSET REBALANCING In asset rebalancing, you select a portfolio of Funds, and we will rebalance your assets at the specified frequency to reflect the original allocation percentages you selected (choice of frequency may be limited when certain optional riders are elected). You can also combine this Program with others such as the Automatic Income Program, InvestEase and DCA Programs (subject to restrictions). You may designate only one set of asset allocation instructions at a time. - DOLLAR COST AVERAGING PROGRAMS We offer three Dollar Cost Averaging Programs: - DCA Plus - Fixed Amount DCA - Earnings/Interest DCA DCA Plus - These programs allow you to earn a fixed rate of interest on investments. These Programs are different from the Fixed Accumulation Feature or the Personal Pension Account. We determine, in our sole discretion, the interest rates to be credited. These interest rates may vary depending on the Contract class you purchased and the date the request for the Program is received. Please consult your Registered Representative to determine the interest rate for your Program. You may elect either the "12-Month Transfer Program" or the "6-Month Transfer Program". - Under the 12-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 12 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 12 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 7 but no more than 12 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Under the 6-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 6 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 6 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 3 but no more than 6 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Each time you make a subsequent Premium Payment, you can invest in a different rate lock program. Any subsequent investments made considered a separate rate lock Program investment. You can invest in up to 5 different rate lock Programs at one time. - You must invest at least $5,000 in each rate lock program ($2,000 for qualified plan transfers or rollovers, including IRAs). We will pre-authorize transfers from our Fixed Accumulation Feature subject to restrictions. - Pre-authorized transfers will begin within 15 days of receipt of the Program payment provided we receive complete enrollment instructions in good order. - If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is active on the Contract, we will set up the new Program to mirror the existing one. If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is not active on the Contract, but is the future investment allocation and a static asset allocation model is active on the Contract, we will set up the new Program to move Funds to the Static Asset Allocation Model. Otherwise, we will contact your investment professional to obtain complete instructions. If we do not receive in good order enrollment instructions within the 15 day timeframe noted above, we will refund the Program payment for further instruction. 21 ------------------------------------------------------------------------------- - If your Program payment is less than the required minimum amount, we will invest into the destination Funds or the Personal Pension Account indicated on the Program instructions accompanying the payment. If Program instructions were not provided and a DCA Plus Program is active on the Contract, we will apply the payment to the destination Funds or the Personal Pension Account of the current DCA Plus Program. Otherwise, we will contact your investment professional to obtain further investment instructions. - The credited interest rate used under the DCA Plus Programs is not earned on the full amount of your Premium Payment for the entire length of the Program because Program transfers to Sub-Accounts or the Personal Pension Account decrease the amount of your Premium Payment remaining in the Program. - You may elect to terminate your involvement in this Program at any time. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the Funds or the Personal Pension Account you designated. Fixed Amount DCA - This feature allows you to regularly transfer (monthly or quarterly) a fixed amount from the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into different Fund(s) or the Personal Pension Account. This program begins in 15 days unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. Earnings/Interest DCA - This feature allows you to regularly transfer (monthly or quarterly) the earnings (i.e., any gains over the previous month's or quarter's value) from your investment in the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into other Fund(s) or the Personal Pension Account. This program begins two business days plus the frequency selected unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. - AUTOMATIC INCOME PROGRAM This systematic withdrawal feature allows you to make partial Surrenders up to 5% of your total Premium Payments each Contract Year. You can designate the Funds to be surrendered from and also choose the frequency of partial Surrenders (monthly, quarterly, semiannual, or annually). The Personal Pension Account is not an eligible source Fund for partial Surrenders facilitated through the Automatic Income Program. The minimum amount of each Surrender is $100. Amounts taken under this program will count towards the AWA and may be subject to a CDSC. If received prior to age 59 1/2, may have adverse tax consequences, including a 10% federal income tax penalty on the taxable portion of the Surrender payment. You may satisfy Code Section 72(t)/(q) requirements by enrolling in this program. Please see the "Federal Tax Considerations" section and consult your tax adviser for information about the tax consequences associated with your Contract. Your level of participation in this program may result in your exceeding permissible withdrawal limits under certain optional riders. - OTHER PROGRAM CONSIDERATIONS - You may terminate your enrollment in any Program at any time. - We may discontinue, modify or amend any of these Programs at any time. We will automatically and unilaterally amend your enrollment instructions if: - any Fund is merged or substituted into another Fund - then your allocations will be directed to the surviving Fund; or - any Fund is liquidated - then your allocations to that Fund will be directed to any available money market Fund following prior notifications prior to reallocation. You may always provide us with updated instructions following any of these events. - Continuous or periodic investment neither insures a profit nor protects against a loss in declining markets. Because these Programs involve continuous investing regardless of fluctuating price levels, you should carefully consider your ability to continue investing through periods of fluctuating prices. - These Programs may be modified, terminated or adversely impacted by the imposition of Fund trading policies. CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER? Yes. During those phases of your Contract when transfers are permissible, you may make transfers between Funds and/or Benefit Balance according to the following policies and procedures, as they may be amended from time to time. - WHAT IS A SUB-ACCOUNT TRANSFER? A Sub-Account transfer is a transaction requested by you that involves reallocating part or all of your Contract Value among the Funds available in your Contract. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order. Otherwise, your request will be processed on the following Valuation Day. We will send you a confirmation when we process your 22 ------------------------------------------------------------------------------- transfer. You are responsible for verifying transfer confirmations and promptly advising us of any errors within 30 days of receiving the confirmation. - WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER? Many Owners request Sub-Account transfers. Some request transfers into (purchases) a particular Sub-Account, and others request transfers out of (redemptions) a particular Sub-Account. In addition, some Owners allocate new Premium Payments to Sub-Accounts, and others request Surrenders. We combine all the daily requests to transfer out of a Sub-Account along with all Surrenders from that Sub-Account and determine how many shares of that Fund we would need to sell to satisfy all Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or new Premium Payments allocated to that Sub-Account and determine how many shares of that Fund we would need to buy to satisfy all contract owners' "transfer-in" requests. In addition, many of the Funds that are available as investment options in our variable annuity products are also available as investment options in variable life insurance policies, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and participants in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Fund for many of the variable annuities, variable life insurance policies, retirement plans, funding agreements or other products offered by us or our affiliates. We also combine transfer-out requests and transfer-in requests. We then "net" these trades by offsetting purchases against redemptions. Netting trades has no impact on the net asset value of the Fund shares that you purchase or sell. This means that we sometimes reallocate shares of a Fund rather than buy new shares or sell shares of the Fund. For example, if we combine all transfer-out requests of a stock Fund with all other transfer-out requests of that Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Owners and the owners of other products offered by us, want to transfer-in an amount equal to $300,000 of that same Fund, then we would send a sell order to the Fund for $700,000 (a $1 million sell order minus the purchase order of $300,000) rather than making two or more transactions. - WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We count all Sub-Account transfer activity that occurs on any one Valuation Day as one "Sub-Account transfer", however, you cannot transfer the same Contract Value more than once a Valuation Day. EXAMPLES
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE? ------------------------------------------------------------------------------------------------------------ Transfer $10,000 from a money market Sub-Account to a growth Sub-Account Yes Transfer $10,000 from a money market Sub-Account to any number of other Sub-Accounts Yes (dividing the $10,000 among the other Sub-Accounts however you chose) Transfer $10,000 from any number of different Sub-Accounts to any number of other Yes Sub-Accounts Transfer $10,000 from a money market Sub-Account to a growth Sub-Account and then, before No the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH CONTRACT YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet or telephone. Once you have reached the maximum number of Sub-Account transfers, you may only submit any additional Sub-Account transfer requests and any trade cancellation requests in writing through U.S. Mail or overnight delivery service. In other words, Voice Response Unit, Internet or telephone transfer requests will not be honored. We may, but are not obligated to, notify you when you are in jeopardy of approaching these limits. For example, we will send you a letter after your 10th Sub-Account transfer to remind you about the Transfer Rule. After your 20th transfer request, our computer system will not allow you to do another Sub-Account transfer by telephone, Voice Response Unit or via the Internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service. We reserve the right to aggregate your Contracts (whether currently existing or those recently surrendered) for the purposes of enforcing these restrictions. The Transfer Rule does not apply to Sub-Account transfers that occur automatically as part of a Company sponsored asset allocation or Dollar Cost Averaging Program. Reallocations made based on a Fund merger or liquidation also do not count toward this transfer limit. Restrictions may vary based on state law. We make no assurances that the Transfer Rule is or will be effective in detecting or preventing market timing. 23 ------------------------------------------------------------------------------- THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS. You should not purchase this Contract if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Contract if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of a Fund. Even if you do not engage in market timing, certain restrictions may be imposed. Generally, you are subject to Fund trading policies, if any. We are obligated to provide, at the Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading policy. In certain instances, we have agreed to serve as a Fund's agent to help monitor compliance with that Fund's trading policy. We are obligated to follow each Fund's instructions regarding enforcement of their trading policy. Penalties for violating these policies may include, among other things, temporarily or permanently limiting or banning you from making Sub-Account transfers into a Fund or other funds within that fund complex. We are not authorized to grant an exception to a Fund's trading policy. Please refer to each Fund's prospectus for more information. Transactions that cannot be processed because of Fund trading policies will be considered not in good order. In certain circumstances, Fund trading policies do not apply or may be limited. For instance: - Certain types of Financial Intermediaries may not be required to provide us with shareholder information. - "Excepted funds" such money market funds and any Fund that affirmatively permits short-term trading of its securities may opt not to adopt this type of policy. This type of policy may not apply to any Financial Intermediary that a Fund treats as a single investor. - A Fund can decide to exempt categories of Contract holders whose Contracts are subject to inconsistent trading restrictions or none at all. - Non-shareholder initiated purchases or redemptions may not always be monitored. These include Sub-Account transfers that are executed: (i) automatically pursuant to a company-sponsored contractual or systematic program such as transfers of assets as a result of "dollar cost averaging" programs, asset allocation programs, automatic rebalancing programs, annuity payouts, or systematic withdrawal programs; (ii) as a result of the payment of a Death Benefit; (iii) as a result of any deduction of charges or fees under a Contract; or (iv) as a result of payments such as scheduled contributions, scheduled withdrawals or Surrenders, retirement plan salary reduction contributions, or planned Premium Payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading or market timing activities. For instance: - Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked. - Certain forms of variable annuities and types of Funds may be attractive to market timers. We cannot provide assurances that we will be capable of addressing possible abuses in a timely manner. - These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all. - In some cases, we are unable to count the number of Sub-Account transfers requested by group annuity participants co-investing in the same Funds ("Participants") or enforce the Transfer Rule because we do not keep Participants' account records for a Contract. In those cases, the Participant account records and Participant Sub-Account transfer information are kept by such owners or its third party service provider. These owners and third party service providers may provide us with limited information or no information at all regarding Participant Sub-Account transfers. HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS? We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract Value. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce the value of other optional benefits available under your Contract. Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund's trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product 24 ------------------------------------------------------------------------------- investors if the Fund and we cannot reach a mutually acceptable agreement on how to treat an investor who, in a Fund's opinion, has violated the Fund's trading policy. In some cases, we do not have the tax identification number or other identifying information requested by a Fund in our records. In those cases, we rely on the Contract Owner to provide the information. If the Contract Owner does not provide the information, we may be directed by the Fund to restrict the Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Contract will also be precluded from further purchases of Fund shares. MAIL, TELEPHONE AND INTERNET TRANSFERS You may make transfers through the mail or your Financial Intermediary. You may also make transfers by calling us or through our website. Transfer instructions received by telephone before the end of any Valuation Day will be carried out at the end of that day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the end of any Valuation Day, the instructions will be carried out at the end of that Valuation Day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. If you do not receive an electronic acknowledgement, you should contact us as soon as possible. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly reporting any inaccuracy or discrepancy to us and your Registered Representative. Any verbal communication should be re-confirmed in writing. Telephone or Internet transfer requests may currently only be cancelled by calling us before the end of the Valuation Day you made the transfer request. We, our agents or our affiliates are NOT responsible for losses resulting from telephone or electronic requests that we believe are genuine. We will use reasonable procedures to confirm that instructions received by telephone or through our website are genuine, including a requirement that Contract Owners provide certain identification information, including a personal identification number. We record all telephone transfer instructions. We may suspend, modify, or terminate telephone or electronic transfer privileges at any time. POWER OF ATTORNEY You may authorize another person to conduct financial and other transactions on your behalf by submitting a completed power of attorney form that meets the power of attorney requirements of your resident state law. Once we have the completed form on file, we will accept transaction requests, including transfer instructions, subject to our transfer restrictions, from your designated third party until we receive new instructions in writing from you. B. CHARGES AND FEES MORTALITY AND EXPENSE RISK CHARGE We deduct a daily charge for assuming mortality and expense risks under the Contract. This charge is deducted from your Sub-Account Value. The mortality and expense risk charge is broken into charges for mortality risks and for an expense risk: - Mortality Risk - There are two types of mortality risks that we assume, those made while your Premium Payments are accumulating and those made once Annuity Payouts have begun. During the accumulation phase of your Contract, we are required to cover any difference between the Death Benefit paid and the Surrender Value. These differences may occur in periods of declining value or in periods where any CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates. Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates. - Expense Risk - We also bear an expense risk that the sales charges (if applicable), Distribution Charge (if applicable) and the Annual Maintenance Fee collected before the Annuity Commencement Date may not be enough to cover the actual cost of selling, distributing and administering the Contract. 25 ------------------------------------------------------------------------------- Although variable Annuity Payouts will fluctuate with the performance of the Fund selected, your Annuity Payouts will NOT be affected by (a) the actual mortality experience of our annuitants, or (b) our actual expenses if they are greater than the deductions stated in the Contract. Because we cannot be certain how long our Annuitants will live, we charge this percentage fee based on the mortality tables currently in use. The mortality and expense risk charge enables us to keep our commitments and to pay you as planned. If the mortality and expense risk charge under a Contract is insufficient to cover our actual costs, we will bear the loss. If the mortality and expense risk charge exceeds these costs, we keep the excess as profit. We may use these profits, as well as revenue sharing and Rule 12b-1 fees received from certain Funds, for any proper corporate purpose including, among other things, payment of sales expenses, including the fees paid to distributors. We expect to make a profit from the mortality and expense risk charge. ANNUAL MAINTENANCE FEE The Annual Maintenance Fee is a flat fee that is deducted from your Contract Value to reimburse us for expenses relating to the administrative maintenance of the Contract and your Account. The annual charge is deducted on a Contract Anniversary or when the Contract is fully Surrendered if the Account Balance at either of those times is less than $50,000. The charge is deducted proportionately from each Sub-Account in which you are invested. We will waive the Annual Maintenance Fee if your Account Balance is $50,000 or more on your Contract Anniversary or when you fully Surrender your Contract. In addition, we will waive one Annual Maintenance Fee for Owners who own more than one Contract with a combined Account Balance between $50,000 and $100,000. If you have multiple Contracts with a combined Account Balance of $100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts. However, we may limit the number of waivers to a total of six Contracts. We also may waive the Annual Maintenance Fee under certain other conditions. We do not include Contracts from our Putnam Hartford line of variable annuity Contracts with the Contracts when we combine Account Balance for purposes of this waiver. ADMINISTRATIVE CHARGE We apply a daily administration charge against all Contract Values held in the Separate Account during both the accumulation and annuity phases of the Contract. This charge compensates us for administrative expenses that exceed revenues from the Annual Maintenance Fee described above. There is not necessarily a relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributable to that Contract; expenses may be more or less than the charge. DISTRIBUTION CHARGE We apply an annual distribution charge against all Remaining Gross Premiums invested in B share class Contracts (the "Distribution Charge"). The Distribution Charge will apply to each Premium Payment that has been invested for eight years or less and will be deducted on each Contract Anniversary. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge will also apply to any partial Surrender in excess of the AWA. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses, including promotion and distribution of the Contract. A proportional Distribution Charge will be deducted upon: - partial Surrenders in excess of the AWA (partial Surrenders are taken on a first-in, first-out basis); - full Surrender; - full or partial Annuitization, and/or - the date we receive due proof of death of the Owner, joint Owner, or the Annuitant and upon a corresponding full Surrender and/or annuitization. Upon such death, a proportional Distribution Charge will be applied on receipt of due proof of death and upon a Death Benefit distribution if elected at a later date. If a Beneficiary elects to continue under any of the available options described under the "Standard Death Benefits" section below, we will continue to deduct the Distribution Charge based on the portion of Remaining Gross Premium applicable for that Beneficiary. The Distribution Charge is taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state (in which event we will deduct the Distribution Charge from other Sub-Accounts). PREMIUM TAXES We deduct Premium taxes, if required, by a state or other government agency. Some states collect these taxes when Deposits are made; others collect at annuitization. Since we pay Premium taxes when they are required by applicable law, we may deduct them from your Contract when we pay the taxes, upon Surrender, or on the Annuity Commencement Date. The premium tax rate varies by state or municipality and currently ranges from 0 - 3.5%. SALES CHARGES CONTINGENT DEFERRED SALES CHARGES (CDSC) - B AND C SHARE CONTRACTS ONLY We may deduct a CDSC when you make Surrenders from your Contract. We may also deduct a CDSC in connection with certain Annuity Payout Options. This charge is designed to recover the expense of distributing the Contracts that are surrendered before 26 ------------------------------------------------------------------------------- distribution expenses have been recouped from revenue generated by these Contracts. Each Deposit has its own CDSC schedule. Only amounts invested for less than the requisite holding period are subject to a CDSC. In computing the CDSC, Surrenders will be taken: 1st - from the AWA; 2nd - from Contract Value subject to a CDSC on a first-in, first-out basis; and 3rd - from remaining Contract Value. CDSC is charged based on the type of transaction: - Partial Surrenders: To calculate the CDSC when you make a partial Surrender, we apply the applicable CDSC percentage to the amount of the Surrender in excess of the AWA that is eligible for CDSC. - Full Surrenders: If you fully Surrender your Contract, we apply the applicable CDSC percentage to the greater of Contract Value or Remaining Gross Premiums minus the AWA. - Annuity Payouts: To calculate the CDSC when you take an Annuity Payout pursuant to certain Annuity Payout Options, we apply the applicable CDSC to Commuted Value. Please refer to Examples 1 through 5 under the Remaining Gross Premium Examples in Appendix A for an illustration of these computations. The following are NOT subject to a CDSC: - Annual Withdrawal Amount (AWA) - During each Contract Year when a CDSC applies, you may take partial Surrenders up to the greater of: 1. 5% of the total Premium Payments that are otherwise subject to CDSC, or 2. Contract Value minus Remaining Gross Premiums. We compute the AWA as of the end of the Valuation Day when a partial Surrender request is received by us in good order. The AWA is calculated by comparing two values. First, total Premium Payments subject to a CDSC is multiplied by 5%. Next, the total Remaining Gross Premiums is subtracted from the Contract Value. The greater of the two calculations is the applicable AWA at the end of that particular Valuation Day. This method for calculating CDSCs is used for the current and all future partial Surrenders. All reductions from your Premium Payments will be made on a first-in, first-out basis. The financial impact of the CDSC will be greater during declining market conditions. These amounts are different for Contracts issued to a Charitable Remainder Trust. The AWA may vary on a daily basis because of fluctuations in Contract Value. If you do not take maximum AWA one Contract Year, you may not take more than the maximum AWA in a subsequent Contract Year. The AWA does not apply to Personal Pension Account Payouts. - Transfers from Sub-Accounts or the Fixed Accumulation Feature to the Personal Pension Account. - If you are a patient in a certified long-term care facility or other eligible facility - CDSC will be waived for a partial or full Surrender if you, the joint Owner or the Annuitant, are confined for at least 180 calendar days to a: - facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals; - facility certified as a hospital or long-term care facility; or - nursing home licensed by the state in which it is located and offers the services of a registered nurse 24 hours a day. For this waiver to apply, you must: - have owned the Contract continuously since it was issued, - provide written proof of your eligibility satisfactory to us, and - request the Surrender within 91 calendar days after the last day that you are an eligible patient in a recognized facility or nursing home. This waiver is not available if the Owner, the joint Owner or the Annuitant is in a facility or nursing home when you purchase the Contract. We will not waive any CDSC applicable to any Premium Payments made while you are in an eligible facility or nursing home. This waiver can be used any time after the first 180 days in a certified long-term care facility or other eligible facility up until ninety days after exiting such a facility. This waiver may not be available in all states. - Upon death of the Annuitant or any Contract Owner(s) - CDSC will be waived if the Annuitant or any Contract Owner(s) dies. 27 ------------------------------------------------------------------------------- - Upon Annuitization - CDSC will be waived when you annuitize the Contract. However, we will charge a CDSC if the Contract is Surrendered during the CDSC period under an Annuity Payout Option which allows commutation. - For Required Minimum Distributions - CDSC will be waived for any Annuitant age 70 1/2 or older with a Contract held under an IRA who Surrenders an amount equal to the Required Minimum Distribution for one year's required minimum distribution for that Contract Year. All requests for Required Minimum Distributions must be in writing. - For substantially equal periodic payments - CDSC will be waived if you take partial Surrenders under the Automatic Income Program where you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59 1/2. - Upon cancellation during the Right to Cancel Period - CDSC will be waived if you cancel your Contract during the Right to Cancel Period. - Exchanges - As an accommodation, we may, in our sole discretion, time-credit CDSC for the time that you held an annuity previously issued by us. - Settlements - We may, in our sole discretion, waive or time-credit CDSCs in connection with the settlement of disputes or if required by regulatory authorities. CHARGES AGAINST THE FUNDS Annual Fund Operating Expenses - The Separate Account purchases shares of the Funds at net asset value. The net asset value of the Fund reflects investment advisory fees, distribution fees, operating expenses and administrative expenses already deducted from the assets of the Funds. These charges are described in the Funds' prospectuses and the Fee Summary. REDUCED FEES AND CHARGES We may offer, in our discretion, reduced fees and charges for certain Contracts (including employer sponsored savings plans) which may result in decreased costs and expenses. C. SURRENDERS WHAT KINDS OF SURRENDERS ARE AVAILABLE? BEFORE THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - When you Surrender or terminate your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable, distribution charges and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract. For information on how termination of the Contract impacts the Personal Pension Account, see "Personal Pension Account" section above. Partial Surrenders - You may request a partial Surrender of Contract Value at any time before the Annuity Commencement Date. We will deduct any applicable CDSC and Distribution Charge. You can ask us to deduct the CDSC and Distribution Charge from the amount you are Surrendering or from your remaining Contract Value. If we deduct the CDSC from your remaining Contract Value, that amount will also be subject to CDSC. This is our default option. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. There are several restrictions on partial Surrenders of Contract Value before the Annuity Commencement Date: - the partial Surrender of Contract Value must be at least equal to $500, and - your Account Balance must be equal to or greater than our then current Minimum Amount Rule that we establish according to our then current policies and procedures. The "Minimum Amount Rule" refers to the minimum Contract Value that you must maintain within this Contract. If you fail to comply with the Minimum Amount Rule, we reserve the right to fully terminate your Contract. The Minimum Amount Rule varies by share class. Currently the Minimum Amount Rule for class I share Contracts is $500 and is $2,000 for Class B and C Shares. We may increase the Minimum Amount Rule from time to time but in no event shall the Minimum Amount Rule exceed $2,000 (Class I Shares) or $10,000 (Class B and C Shares). You may only commute all or a portion of Personal Pension Account Payouts by following the procedures described below in the "After the Annuity Commencement Date" section below. Withdrawals will reduce your standard Death Benefit on a dollar-for-dollar basis. Please consult with your Registered Representative to be sure that you fully understand the ways such a decision will affect your Contract. 28 ------------------------------------------------------------------------------- AFTER THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - You may Surrender and thus terminate your Contract on or after the Annuity Commencement Date only if you selected Annuity Payout Options Two, Three, Five, Six and Eight. IN THE EVENT YOU TAKE A FULL SURRENDER AND THEREBY TERMINATE YOUR CONTRACT AFTER ELECTING ANNUITY PAYOUT OPTIONS TWO, THREE, FIVE, OR EIGHT, YOU WILL FORFEIT THE LIFE CONTINGENT PAYMENTS PAYABLE UNDER THESE OPTIONS. Upon Contract termination, we pay you the Commuted Value, minus any applicable CDSCs and Premium tax. Partial Surrenders/Commutation - Partial Surrenders and/or commutation are permitted after the Annuity Commencement Date if you select the Annuity Payout Option Two, Three, Five, or Six, or Eight. You may withdraw amounts equal to the Commuted Value of the payments that we would have made during the Guaranteed Payout Duration. See Example 4 and footnote 3 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Commuted Value and the computation of Guaranteed Payout Duration. If you select the Annuity Payout Options Two or Eight, the Guaranteed Payout Duration will be equivilant to the Annuity Payout Value divided by the Annuity Payout amount, rounded down. To qualify under these Annuity Payout Options you must make the request before the Guaranteed Payout Duration expires. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. We will deduct any applicable CDSCs. If you elect to withdraw the entire Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will not make any Annuity Payouts during the remaining Guaranteed Payout Duration. If you elect to withdraw only some of the Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will reduce the remaining Annuity Payouts during the remaining Guaranteed Payout Duration on a first-in, first-out basis. ONCE THE GUARANTEED PAYOUT DURATION HAS EXPIRED, YOU MAY RESUME RECEIVING ANNUITY PAYOUTS PROVIDED THAT YOU, A JOINT OWNER OR THE ANNUITANT IS ALIVE AND YOU HAVE NOT TERMINATED YOUR CONTRACT. Annuity Payout Options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. WHAT IS THE COMMUTED VALUE? You may choose to accelerate Annuity Payouts under certain Annuity Payout Options to be received in one lump sum. This is referred to as "commuting" your Annuity Payout. The amount that you request to commute must be at least equal to $500. There will be a waiting period of at least thirty days for payment of any lump sum commutation. Upon commutation, the Annuity Payout Value or the remaining Guaranteed Payout Duration payments, as applicable, will be discounted based on an interest rate that we determine at our sole discretion (the "discount rate"). The discount rate may be different than the interest rate used to establish payout rates. We determine the discount rate based on a number of factors including then current interest rate(s), investment assumptions and the additional anti-selection and mortality risk we incur by permitting commutation. The higher the discount rate and CDSC, the lower the amount that you will receive. COMMUTED VALUE OF YOUR PERSONAL PENSION ACCOUNT WILL BE LESS THAN YOUR ANNUITY PAYOUT VALUE. Commutation does not affect resumption of life contingent Personal Pension Account Payouts at the conclusion of the applicable Guaranteed Payout Duration. Commuted Value is determined on the day we receive your written request. HOW DO YOU REQUEST A SURRENDER? Requests for full Surrenders terminating your Contract must be in writing. Requests for partial Surrenders can be made in writing, by telephone or on the Internet. We will send your money within seven days of receiving complete instructions. However, we may postpone payment whenever: (a) the New York Stock Exchange is closed, (b) trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and orders postponement or (d) the SEC determines that an emergency exists to restrict valuation. Written Requests - Complete a Surrender Form or send us a letter, signed by you, stating: - the dollar amount that you want to receive, either before or after we withhold taxes and deduct for any applicable charges, - your tax withholding amount or percentage, if any, and - your mailing address. You must complete a Commutation Form to commute any portion of your Personal Pension Account Annuity Payout Value or receive Commuted Value under applicable Annuity Payout Options. If there are joint Owners, both must authorize these transactions. For a partial Surrender, specify the Sub-Accounts that you want your Surrender to come from (this may be limited to pro-rata surrenders if optional benefits are elected); otherwise, the Surrender will be taken in proportion to the value in each Sub-Account. 29 ------------------------------------------------------------------------------- Telephone Requests - To request a partial Surrender by telephone, we must have received your completed Telephone Redemption Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept telephone instructions for partial Surrenders from either Owner. Telephone authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on telephone Surrenders. Internet Requests - To request a partial Surrender by internet; we must have received your completed Internet Partial Withdrawal Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept internet instructions for partial Surrenders from either Owner. Internet authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on Internet Surrenders. We may record telephone calls and use other procedures to verify information and confirm that instructions are genuine. We will not be liable for losses or expenses arising from telephone instructions reasonably believed to be genuine. WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME. Telephone and Internet Surrender instructions received before the end of a Valuation Day will be processed at the end of that Valuation Day. Otherwise, your request will be processed at the end of the next Valuation Day. Completing a Power of Attorney form for another person to act on your behalf may prevent you from making Surrenders via telephone and Internet. WHAT SHOULD BE CONSIDERED ABOUT TAXES? There are certain tax consequences associated with Surrenders and Personal Pension Account Payouts. If you make a Surrender or take a Personal Pension Account Payout prior to age 59 1/2, there may be adverse tax consequences including a 10% federal income tax penalty on the taxable portion of the Surrender payment or Personal Pension Account Payout. Taking these actions before age 59 1/2 may also affect the continuing tax-qualified status of some Contracts. WE DO NOT MONITOR SURRENDER REQUESTS. CONSULT YOUR PERSONAL TAX ADVISER TO DETERMINE WHETHER A SURRENDER IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY. More than one Contract owned in the same calendar year - If you own more than one Contract issued by us or our affiliates in the same calendar year, then these Contracts may be treated as one Contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. Please see "Federal Tax Considerations" and "Information Regarding Tax-Qualified Retirement Plans" for more information. D. ANNUITY PAYOUTS Generally speaking, when you annuitize your Contract, you begin the process of converting Accumulation Units in what is known as the "payout phase." The payout phase starts when you annuitize your Contract or with your Annuity Commencement Date and ends when we make the last payment required under your Contract. You may take Personal Pension Account Payouts without annuitizing Contract Value. Once you annuitize your Contract, you may no longer make Personal Pension Account Contributions. You must commence taking Annuity Payouts no later than when you reach your Annuity Commencement Date. Funds allocated to the Personal Pension Account will be paid to you under Annuity Payout Options Two and Eight. Contract Value can only be annuitized under Annuity Payout Options One, Three, Four, Five and Six. Please check with your Registered Representative to select the Annuity Payout Option that best meets your income needs. WHEN DO YOUR ANNUITY PAYOUTS BEGIN? Personal Pension Account Payouts may begin at any time but we reserve the right to require that you own your Contract for at least six months before you start taking these payments. Contract Value may only be annuitized on the Annuity Commencement Date. Your Annuity Commencement Date cannot be earlier than your second Contract Anniversary if choosing a fixed dollar Annuity Payout. The Annuity Commencement Date may be immediate if electing a variable dollar amount Annuity Payout. In no event; however, may the Annuity Commencement Date be later than: - Annuitant's 90th birthday (or if the Owner is a Charitable Remainder Trust, the Annuitant's 100th birthday); - 10th Contract Anniversary (subject to state variation); - The Annuity Commencement Date stated in an extension request (subject to your Financial Intermediary's rules for granting extension requests) received by us not less than 30 days prior to a scheduled Annuity Commencement Date; or - The date that you fully annuitize Accumulation Balance (assuming that no Contract Value exists as of such date). Unless otherwise requested, commencement of receipt of Personal Pension Account Payouts do not constitute an Annuity Commencement Date. 30 ------------------------------------------------------------------------------- We reserve the right, in our sole discretion, to refuse to extend your Annuity Commencement Date regardless of whether we may have granted extensions in the past to you or other similarly situated investors. Your Financial Intermediary may ask us to prohibit Annuity Commencement Date extensions beyond when the Annuitant turns age 95. Please ask your Registered Representative whether you are affected by any such prohibition and make sure that you fully understand the implications this might have in regard to your Death Benefits. Except as otherwise provided, the Annuity Calculation Date is when the amount of your Annuity Payout is determined. This occurs within five Valuation Days before your selected Annuity Commencement Date. All Annuity Payouts, regardless of frequency, will occur on the same day of the month as the Annuity Commencement Date. After the initial payout, if an Annuity Payout date falls on a non-Valuation Day, the Annuity Payout is computed on the prior Valuation Day. If the Annuity Payout date does not occur in a given month due to a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE? Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. We may change these Annuity Payout Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout Option with respect to that portion of your Contract cannot be changed. - OPTION ONE - LIFE ANNUITY We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth. - OPTION TWO - LIFE ANNUITY WITH A CASH REFUND In general, we will make Annuity Payouts as long as the Annuitant is living. However, when the Owner or joint Owner dies before the Annuity Commencement Date (and the Annuitant is living or deceased), the Death Benefit will be paid according to the standard Death Benefit rules. When the Annuitant dies after the Annuity Commencement Date (and the Owner is living or deceased), then the Beneficiary will receive the Death Benefit according to the standard Death Benefit rules and Annuity Payouts cease. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). - OPTION THREE - LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as the Annuitant is living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus the Annuitant's age. If the Annuitant dies before the guaranteed number of years has passed, then the Beneficiary may elect to continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. - OPTION FOUR - JOINT AND LAST SURVIVOR LIFE ANNUITY We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are living. When one Annuitant dies, we continue to make Annuity Payouts until that second Annuitant dies. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable Annuity Payouts, these percentages represent Annuity Units; for fixed Annuity Payouts, they represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION FIVE - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus your younger Annuitant's age. If the Annuitant and the Joint Annuitant both die before the guaranteed number of years have passed, then the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. 31 ------------------------------------------------------------------------------- When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable dollar amount Annuity Payouts, these percentages represent Annuity Units. For fixed dollar amount Annuity Payouts, these percentages represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION SIX - PAYMENTS FOR A PERIOD CERTAIN We agree to make payments for a specified time. The minimum period that you can select is 10 years during the first two Contract Years and 5 years after the second Contract Anniversary. The maximum period that you can select is 100 years minus your Annuitant's age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. - OPTION SEVEN - RESERVED - OPTION EIGHT - JOINT AND LAST SURVIVOR LIFE WITH CASH REFUND (NOT CURRENTLY AVAILABLE) In general, we will make Annuity Payouts as long as the Owner, and either Annuitant or Joint Annuitant are living. When the Owner dies before the Annuity Commencement Date (and the Annuitant or Joint Annuitant is living or deceased), then the Death Benefit is paid according to the standard Death Benefit rules. If death occurs after the Annuity Commencement Date, we will make Annuity Payouts as long as either the Annuitant or the Joint Annuitant is living. When one Annuitant dies, we continue to make Annuity Payouts at the elected percentage until the second Annuitant dies. When the last Annuitant dies, then the Death Benefit is paid according to the standard Death Benefit rules. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 75%, or - Decrease to 50%. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). YOU CANNOT TERMINATE YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE SELECTED ANNUITY PAYOUT OPTIONS TWO, THREE, FOUR, FIVE, SIX OR EIGHT. A CDSC, IF APPLICABLE, MAY BE DEDUCTED. Annuity Payout Option Two is only available for Personal Pension Account Payouts from the Personal Pension Account. Annuity Payout Options One, Three, Four, Five and Six are only available for Annuity Payouts from the Fixed Accumulation Feature or Sub-Accounts. Annuity Payout Option Eight is only available for Personal Pension Account Payouts from the Personal Pension Account and is not currently available. For certain qualified Contracts, if you elect an Annuity Payout Option with a Period Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables. AUTOMATIC ANNUITY PAYOUTS If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under Annuity Payout Option Three. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to five (5%) percent. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS? In addition to selecting an Annuity Commencement Date and an Annuity Payout Option, you must also decide how often you want the Payee to receive Annuity Payouts. You may choose to receive Annuity Payouts: - monthly, - quarterly, 32 ------------------------------------------------------------------------------- - semi-annually, or - annually. Once you select a frequency, it cannot be changed. If you do not make a selection, the Payee will receive monthly Annuity Payouts. You must select a frequency that results in an Annuity Payout of at least $50. If the amount falls below $50, we have the right to change the frequency to bring the Annuity Payout up to at least $50. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED DOLLAR AMOUNT OR VARIABLE DOLLAR AMOUNT? You may choose an Annuity Payout Option with fixed dollar amounts or variable dollar amounts, depending on your income needs. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. If you elect the Personal Pension Account, your Annuity Payout Option may only be a fixed dollar amount. - FIXED DOLLAR AMOUNT ANNUITY PAYOUTS Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium taxes, by an annuity rate set by us. Annuity purchase rates may vary based on the aspect of the Contract annuitized. - VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts. The dollar amount of the first variable Annuity Payout depends on: - the Annuity Payout Option chosen, - the Annuitant's attained age and gender (if applicable), - the applicable annuity purchase rates based on the 1983a Individual Annuity Mortality table adjusted for projections based on accepted actuarial principles; and - the Assumed Investment Return ("AIR"). The total amount of the first variable dollar amount Annuity Payout is determined by dividing the Contract Value minus any applicable Premium taxes, by $1,000 and multiplying the result by the payment factor defined in the Contract for the selected Annuity Payout Option. The dollar amount of each subsequent variable dollar amount Annuity Payout is equal to the total of Annuity Units for each Sub-Account multiplied by the Annuity Unit Value of each Sub-Account. The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to the Accumulation Unit Value Net Investment Factor for the current Valuation Period multiplied by the Annuity Unit Factor, multiplied by the Annuity Unit Value for the preceding Valuation Period. The Annuity Unit Factor offsets the AIR used to calculate your first variable dollar amount Annuity Payout. The first Annuity Payout will be based upon the AIR. The remaining Annuity Payouts will fluctuate based on the performance of the Funds in relation to the AIR. The degree of the fluctuation will depend on the AIR you select. You can select one of the following AIRs offered, subject to state variations:
ANNUITY ANNUITY ANNUITY AIR UNIT FACTOR AIR UNIT FACTOR AIR UNIT FACTOR ------------------------------------------------------------------- 3% 0.999919% 5% 0.999866% 6% 0.999840%
The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR. For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first. Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select. 33 ------------------------------------------------------------------------------- After the Annuity Calculation Date, you may transfer dollar amounts of Annuity Units from one Sub-Account to another. On the day you make a transfer, the dollar amounts are equal for both Sub-Accounts and the number of Annuity Units will be different. We will transfer the dollar amount of your Annuity Units the day we receive your written request if received before the close of the New York Stock Exchange. Otherwise, the transfer will be made on the next Valuation Day. All Sub-Account transfers must comply with applicable transfer restriction policies. - COMBINATION ANNUITY PAYOUT You may choose to receive a combination of fixed dollar amount and variable dollar amount Annuity Payouts as long as they total 100% of your Annuity Payout. For example, you may choose to use forty (40%) percent fixed dollar amount and sixty (60%) percent variable dollar amount to meet your income needs. Combination Annuity Payouts are not available during the first two Contract Years. E. STANDARD DEATH BENEFIT WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED? The Death Benefit is the amount we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The standard Death Benefit is equal to your Account Balance (less Distribution Charge) calculated as of the Valuation Day when we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature and Personal Pension Account for each Beneficiary's portion of the proceeds. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you have $5 million or more in total aggregate Account Balance. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of aggregate Deposits, as adjusted for partial Surrenders (for e.g., dollar-for-dollar or proportional and Personal Pension Account Payouts under all applicable contracts and associated riders; or - Account Balance plus $1 million. Please see the heading entitled "What kinds of Surrenders are available? - Before the Annuity Commencement Date" under the Surrenders section and "What effect does partial or full Surrenders have on your benefits under the rider?" in the Return of Premium Death Benefit section for a discussion regarding when partial Surrenders reduce your Death Benefit on either a dollar-for-dollar or proportionate basis. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. HOW IS THE DEATH BENEFIT PAID? The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Death Benefit payment is $5,000 or more, the Beneficiary may elect to have their Death Benefit paid through our "Safe Haven Program." Under this program, the proceeds remain in our General Account and the Beneficiary will receive a draft book. The Beneficiary can write one draft for total payment of the Death Benefit, or keep the money in the General Account and write drafts as needed. We will credit interest at a rate determined periodically in our sole discretion. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit amount to the General Account. The interest will be taxable to the Beneficiary in the tax year that it is credited. We may not offer the Safe Haven Program in all states and we reserve the right to discontinue offering it at any time. Although there are no direct charges for this program, we earn investment income from the proceeds. The investment income we earn is likely more than the amount of interest we credit; therefore, we make a profit from the difference. The Beneficiary may elect to leave proceeds from the Death Benefit invested with us for up to five years from the date of death of the Annuitant or Owner if death occurred before the Annuity Commencement Date. Once we receive a certified death certificate or other legal documents acceptable to us, the Beneficiary can: (a) make Sub-Account transfers (subject to applicable restrictions) and (b) take Surrenders without paying CDSCs, if any. The Beneficiary may not make Personal Pension Account Contributions. We shall endeavor to fully discharge the last instructions from the Owner wherever possible or practical. 34 ------------------------------------------------------------------------------- The Beneficiary of a non-qualified Contract or IRA (prior to the required distribution date) may also elect an annuity option that allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. If the Owner dies before the Annuity Commencement Date, the Death Benefit must be distributed within five years after death or be distributed under a distribution option or Annuity Payout Option that satisfies the Alternatives to the Required Distributions described below. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. WHO WILL RECEIVE THE DEATH BENEFIT? The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. If death occurs on or after the Annuity Commencement Date, there may be no payout at death unless the Owner has elected an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value. IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . . Owner There is a surviving joint The Annuitant is living or Joint Owner receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Beneficiary receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Owner's estate receives the Owner and the Beneficiary deceased Death Benefit. predeceases the Owner Annuitant The Owner is living There is no named Contingent The Owner becomes the Annuitant Contingent Annuitant and the Contract continues. The Owner may waive this presumption and receive the Death Benefit. Annuitant The Owner is living The Contingent Annuitant is Contingent Annuitant becomes living the Annuitant, and the Contract continues.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . THEN THE . . . Owner The Annuitant is living Beneficiary becomes the Owner. Annuitant The Owner is living Owner receives the payout at death. Annuitant The Annuitant is also the Owner Beneficiary receives the payout at death.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A PAYOUT AT DEATH. 5. RETURN OF PREMIUM DEATH BENEFIT OBJECTIVE To provide a Death Benefit that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The Death Benefit that we will pay under this rider is in addition to your Personal Pension Account Death Benefit. WHEN CAN YOU BUY THE RIDER? You can currently elect this benefit (called a "rider") only at the time that you buy this Contract. This rider may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw this rider at any time. The maximum age of any Owner or Annuitant when electing this rider is 80. 35 ------------------------------------------------------------------------------- DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? No. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on Premium Payments, as adjusted for Surrenders (as well as Benefit Balance transferred to Contract Value), as of each Contract Anniversary. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be based on the Contract Value on the date of any such change plus Premium Payments received after such date, as adjusted for Surrenders. This charge will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A prorated charge will be deducted in the event of a full Surrender of this Contract or this rider. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts or the rider is terminated. The rider charge may limit access to the Fixed Accumulation Feature in certain states. We reserve the right to change the rider charge up to the maximum fee described in the Fee Summary at any time without notice. The rider charge may increase for new investors. The rider charge may also prospectively increase upon certain ownership changes or upon Spousal Contract continuation. We reserve the right to charge a different rider charge based on your participation in approved investment options. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the higher of Contract Value (minus Distribution Charges) or Premium Payments, as adjusted for Surrenders. See Example 1 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit which is equal to your Benefit Balance. EVEN THOUGH YOUR BENEFIT BALANCE IS NOT SUBJECT TO PRINCIPAL PROTECTION UNDER THIS RIDER, ANY PORTIONS OF YOUR BENEFIT BALANCE TRANSFERRED TO SUB-ACCOUNTS AND/OR THE FIXED ACCUMULATION FEATURE ARE ALSO CONSIDERED TO BE PART OF THE CONTRACT VALUE USED TO COMPUTE THIS DEATH BENEFIT. See Example 2 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and result in your Beneficiary receiving the standard Death Benefit. The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? Yes. At anytime following the earliest of the fifth anniversary of the rider effective date or Spousal Contract continuation, the Contract Owner may elect to terminate this rider. If this rider is terminated, then a pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. The Death Benefit will be reset to the standard Death Benefit. No other optional benefit may be elected following the termination. A Company-sponsored exchange of this rider will not be considered to be a 36 ------------------------------------------------------------------------------- termination by you of the rider. This rider will also terminate upon election of a Death Benefit option (described in the "Standard Death Benefit" section) by the Beneficiary (excluding Spousal Contract continuation). WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? We calculate the adjustment to your aggregate Premium Payments for any Surrender by reducing your aggregate Premium Payments on a dollar-for-dollar basis for any Surrender within a Contract Year up to the Death Benefit withdrawal limit. The "Death Benefit withdrawal limit" is five (5%) percent of aggregate Premium Payments. If a change of ownership occurs or if Spousal Contract continuation is elected, the Death Benefit withdrawal limit will be five (5%) percent of Contract Value as of the date of such change plus Premium Payments made after such date. For purposes of this rider, a Surrender also includes a transfer of Contract Value to Benefit Balance. Any partial Surrender that causes cumulative Surrenders during the Contract Year to exceed the Death Benefit withdrawal limit, even if less than your permissible AWA (provided that such Surrender was not made in accordance with our Automatic Income program for the purposes of meeting Required Minimum Distribution requirements), will cause a proportionate reduction in your Death Benefit. Partial Surrenders up to, but not in excess of the Death Benefit withdrawal limit (assuming no ownership changes) will reduce your Death Benefit on a dollar-for-dollar basis. Any and all partial Surrenders in excess of your Death Benefit withdrawal limit, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the excessive partial Surrender (which is the amount of the Surrender in excess of the Death Benefit withdrawal limit) divided by the sum of (i) Contract Value prior to such partial Surrender minus (ii) any remaining Death Benefit withdrawal limit. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. See Example 1 under the Return of Premium Examples in Appendix A for an illustration of this calculation. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a reset of these benefits. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated to the lesser of the Contract Value or the Death Benefit on the effective date of the ownership change. If the oldest Owner after the change is greater than the age limitation of the rider as of the trade date of the change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, that Spouse may continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is not available for sale, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is still available for sale, the Death Benefit will be increased to the Contract Value if higher than the Death Benefit as of the date of due proof of death and will serve as the new basis for the benefit. The rider charge will be reset to the rider charge then being assessed for new sales of the rider. If the new Owner is age 81 or older at the time of the Spousal Contract continuation, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date and then will no longer be assessed. 37 ------------------------------------------------------------------------------- WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. You may allocate your Contract Value to any Sub-Accounts(s), asset allocation models, investment programs, fund of funds Sub-Accounts(s) or other investment option(s) or you may design your own portfolio, provided that your Fund selections comply with the investment restrictions in the following table:
CLASSIFICATION ALLOCATION -------------------------------------------------------------------------------- Fixed investments Funds Minimum of 30% - to a maximum of 100% Equity Investments - Maximum of 70% - No more than 20% may be invested in any one Fund in this category Limited Investments Maximum of 20% Multi-Asset Investments - Minimum of 0% - to a maximum of 100% - May not be combined with Funds in the above classifications
Please refer to Appendix C for the classification associated with each currently offered Fund. Investing in the Personal Pension Account and Fixed Accumulation Feature do not constitute a violation of these investment restrictions. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. The Personal Pension Account and Fixed Accumulation Feature are not included within any classification. We may, in our sole discretion, add, replace or delete Funds, programs, classifications, allocations and asset allocation models from time to time. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. You will be provided with advance notification of any investment restriction changes and you must invest any subsequent Premium Payments in accordance with such updated investment restrictions. You must participate in an asset rebalancing program. If on any Valuation Day, your Contract Value is no longer invested within the permissible allocations in the table above as a result of market fluctuations, we will not terminate the rider. Instead, your Contract Value will be rebalanced quarterly in accordance with your last compliant allocation instructions. All subsequent Premium Payments must also be invested according to the classifications described in this section. YOU MAY PROVIDE INVESTMENT INSTRUCTIONS TO INVEST CONTRACT VALUE IN A MANNER THAT VIOLATES THESE INVESTMENT RESTRICTIONS. ANY SUCH ACTION WILL, HOWEVER, RESULT IN THE TERMINATION OF THIS RIDER. WE WILL NOT ACCEPT INSTRUCTIONS TO VIOLATE THE INVESTMENT RESTRICTIONS FROM YOUR REGISTERED REPRESENTATIVE. VIOLATING THESE INVESTMENT RESTRICTIONS SHALL RESULT IN THE TERMINATION OF YOUR DEATH BENEFIT UNDER THIS RIDER. If this rider is terminated due to failure to comply with the investment restrictions, you will have a one time opportunity to reinstate the Death Benefit. You will be notified in your confirmation statement that you have violated these investment restrictions. The thirty calendar day reinstatement period will begin from the date this rider is terminated. Your opportunity to reinstate will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, or make an ownership change. UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENT WILL BE RESET AT THE LOWER OF THE DEATH BENEFIT PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE REINSTATEMENT. WE WILL DEDUCT A PRORATED RIDER CHARGE ON YOUR CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. 38 ------------------------------------------------------------------------------- CAN WE AGGREGATE CONTRACTS? Yes. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates where you have elected any optional death benefit rider as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you make $5 million or more in total aggregate Deposits. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of Deposits (as reduced by an adjustment for Surrenders), or - Account Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, assignment and/or violation of the investment restrictions. If we terminate the rider, it cannot be re-elected by you. - The selection of an Annuity Payout Option and the timing of the selection may have an impact on the tax treatment of the Death Benefit. To receive favorable tax treatment, the Annuity Payout Option selected: (a) cannot extend beyond the Beneficiary's life or life expectancy, and (b) must begin within one year of the date of death. If these conditions are not met, the Death Benefit will be treated as a lump sum payment for tax purposes. This sum will be taxable in the year in which it is considered received. - Upon Spousal Contract continuation or ownership change, the Death Benefit withdrawal limit upon which we reduce the Death Benefit will be adjusted to equal five (5%) percent of the Contract Value as of the date of such change plus Premium Payments received after such date. - If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the Contract may continue with the Spouse as Owner through a Spousal Contract continuation election, unless the Spouse elects to receive the Death Benefit as a lump sum payment or as an Annuity Payout Option. If the Contract continues with the Spouse as Owner, we will adjust the Contract Value to the amount that we would have paid as the Death Benefit payment, had the Spouse elected to receive the Death Benefit as a lump sum payment. Spousal Contract continuation will only apply one time for each Contract. If you do not name another Beneficiary at the time of continuation, the Beneficiary will default to your estate. - Participation in an automatic investment or income program may result in a transaction during the reinstatement period causing you to lose your right to reinstate the Death Benefit. 6. FURTHER INFORMATION A. GLOSSARY Except as provided elsewhere in this prospectus, the following capitalized terms shall have the meaning ascribed below: ACCOUNT: Any of the Sub-Accounts or the Fixed Accumulation Feature. ACCOUNT BALANCE: The sum of your Contract Value and Benefit Balance (this term is also referred to as the "Total Balance" in your Contract and marketing materials). ACCUMULATION BALANCE - The sum of all Personal Pension Account Contributions increased by credited interest; minus any transfers into any other Account(s) and any conversion into Annuity Payout Value. ACCUMULATION UNITS: If you allocate your Premium Payment to any of the Sub-Accounts, we will convert Premium Payments into Accumulation Units in the selected Sub-Accounts. Accumulation Units are valued at the end of each Valuation Day and are used to calculate Contract Value prior to Annuitization. ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation Day. ADMINISTRATIVE OFFICE: Our overnight mailing address is: 1 Griffin Road North, Windsor, CT 06095-1512. Our standard mailing address is: P.O. Box 5085, Hartford, Connecticut 06102-5085. ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or upon full Surrender. ANNUAL WITHDRAWAL AMOUNT (AWA): The amount you may Surrender each Contract Year without incurring a CDSC. 39 ------------------------------------------------------------------------------- ANNUITANT: The person on whose life the Contract is issued. Except as otherwise provided, the Annuitant may not be changed after your Contract is issued. ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout. ANNUITY COMMENCEMENT DATE: The first day of the first period for which a distribution is received as an Annuity Payout under the Contract. ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the duration and frequency you select. Annuity Payout also refers to Personal Pension Account Payouts. ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity Commencement Date, the death of the Contract Owner or Annuitant; or annuitization(s) of Benefit Balance. ANNUITY PAYOUT VALUE: The portion of your Benefit Balance converted into Personal Pension Account Payouts, as reduced by future Personal Pension Account Payouts. ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity Payouts under a variable dollar amount Annuity Payout Option. ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day. BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of the Contract upon the death of any Contract Owner or Annuitant, as the case may be. BENEFIT BALANCE: Personal Pension Account Contributions, as adjusted for transfers to or from Contract Value, credited interest and/or annuitization. Benefit Balance includes Annuity Payout Value, if any. CODE: The Internal Revenue Code of 1986, as amended. COMMUTED VALUE: The present value of any Annuity Payout due and payable during the Guaranteed Payout Duration. This amount is calculated using the Assumed Investment Return for variable dollar amount Annuity Payouts and the applicable discount rate determined by us for applicable fixed dollar amount Annuity Payouts. CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if the original Annuitant dies before the Annuity Commencement Date. You must name a Contingent Annuitant before the original Annuitant's death. CONTINGENT DEFERRED SALES CHARGE (CDSC): The deferred sales charge, if applicable, that may apply when you make a full or partial Surrender. CONTRACT: The individual Annuity Contract and any endorsements or riders. Group participants and some individuals may receive a certificate rather than a Contract. CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If the Contract Anniversary falls on a Non-Valuation Day, then the Contract Anniversary will be the next Valuation Day. CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in this prospectus including any joint Owner(s). We do not capitalize "you" in the prospectus. CONTRACT VALUE: The total value of the Account on any Valuation Day. CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued. DEATH BENEFIT: Except as otherwise provided, the amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date. DEPOSIT: The sum of allPremium Payments and Personal Pension Account Contributions. FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate all or a portion of your Contract Value. In your Contract, the Fixed Accumulation Feature may be called the Fixed Account. Not all classes of Contracts we offer contain a Fixed Accumulation Feature. FUND: A registered investment company or a series thereof in which assets of a Sub-Account may be invested. We sometimes call the Funds you select a "Sub-Account". GUARANTEED PAYOUT DURATION: The time period (sometimes referred to as a "Period Certain") specified in Annuity Payout Options Three, Five and Six; and with respect to Annuity Payout Options Two and Eight, the time period equal to the applicable Annuity Payout Value divided by the corresponding Personal Pension Account Payout, rounded down. 40 ------------------------------------------------------------------------------- JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the Annuitant dies after Annuitization. You may name a Joint Annuitant only if your Annuity Payout Option provides for a survivor. The Joint Annuitant may not be changed. NET INVESTMENT FACTOR: This is used to measure the investment performance of a Sub-Account from one Valuation Day to the next, and is also used to calculate your Annuity Payout amount. 1933 ACT: The Securities Act of 1933, as amended. 1934 ACT: The Securities Exchange Act of 1934, as amended. 1940 ACT: The Investment Company Act of 1940, as amended. NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading. PAYEE: The person or party you designate to receive Annuity Payouts. PERSONAL PENSION ACCOUNT CONTRIBUTIONS: Sums allocated to the Personal Pension Account (after deduction of front-end sales charges, if applicable). Personal Pension Account Contributions may take the form of Deposits or transfers of Contract Value from Sub-Accounts or the Fixed Accumulation Feature (if applicable). PERSONAL PENSION ACCOUNT PAYOUTS: Regularly scheduled periodic payments of Annuity Payout Value. PREMIUM OR PREMIUM PAYMENT: Money sent to us to be invested in your Contract (not taking into consideration any applicable sales charges). Unless otherwise specified, a Premium Payment does not include Personal Pension Account Contributions. Portions of your Benefit Balance transferred to Sub-Accounts and/or the Fixed Accumulation Feature are initially considered to be Premium Payments that become part of your Contract Value. REMAINING GROSS PREMIUM: Premium Payments minus prior partial Surrenders in excess of the AWA at the time of such partial Surrender. SPOUSE: A person related to a Contract Owner by marriage pursuant to the Code. SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund. There is a Sub-Account for each Fund. We sometimes call the Funds you select your "Sub-Account". SUB-ACCOUNT VALUE: The value of each Sub-Account on or before the Annuity Calculation Date, which is determined on any day by multiplying the number of Accumulation Units by the Accumulation Unit Value for each Sub-Account. SURRENDER: A complete or partial withdrawal from your Contract. For the purposes of optional riders only, a Surrender may also include a transfer of Contract Value to Benefit Balance. SURRENDER VALUE: The amount we pay you if you terminate your Contract before the Annuity Commencement Date. The Surrender Value is equal to the Contract Value minus any applicable charges (subject to rounding). Surrender Value does not include the Commuted Value of your Personal Pension Account. TARGET INCOME AGE - The year when Personal Pension Account Payouts are likely to commence. Target Income Age establishes a 7-year guarantee window (three years before and after) during which a guaranteed payout rate will be applied to your Accumulation Balance. VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values of the Separate Account are determined as of the close of the New York Stock Exchange. The Exchange generally closes at 4:00 p.m. Eastern Time but may close earlier on certain days and as conditions warrant. VALUATION PERIOD: The time span between the close of trading on the New York Stock Exchange from one Valuation Day to the next. WE, US OR OUR: Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company, as the case may be. YOU: The Owner including any joint Owner(s). We do not capitalize "you" or "your" in this prospectus. B. STATE VARIATIONS The following section describes modifications to this prospectus required by one or more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of Contracts we issue. References to certain state's variations do not imply that we actually offer Contracts in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders. ALABAMA - The Fixed Accumulation Feature is not available. The DCA Plus Fixed Accumulation Feature is available. 41 ------------------------------------------------------------------------------- CALIFORNIA - If you are 60 years old or older you must either elect the Senior Protection Program, or elect to immediately allocate the initial Premium Payments to the other investment options. Under the Senior Protection Program, we will allocate your initial Premium Payment to a money market Fund for the first 35 days your initial Premium Payment is invested. After the 35th day we will automatically allocate your Contract Value according to your most current investment instructions. If you elect the Senior Protection Program you will not be able to participate in any InvestEase (if otherwise available) or Dollar Cost Averaging Program until after the Program has terminated. The Dollar Cost Averaging Plus, the Static Asset Allocation Models and certain Automatic Income Programs are not available if you elect the Senior Protection Program. Under the Senior Protection Program any subsequent Premium Payment received during the 35 days after the initial Premium Payment is invested will also be invested in a money market Fund unless you direct otherwise. You may voluntarily terminate your participation in the Senior Protection Program by contacting us in writing or by telephone. You will automatically terminate your participation in the Senior Protection Program if you allocate a subsequent Premium Payment to any other investment option or transfer Contract Value from a money market Fund to another investment option. When you terminate your participation in the Senior Protection Program you may reallocate your Contract Value in the Program to other investment options; or we will automatically reallocate your Contract Value in the Program according to your original instructions 35 days after your initial Premium Payment was invested. CONNECTICUT, NEW HAMPSHIRE AND NEW JERSEY - A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). FLORIDA - The limit on Death Benefits imposed when aggregate Premium Payments total $5 million or more does not apply. MASSACHUSETTS - We will accept subsequent Premium Payments only until the Annuitant's 63rd birthday or the third Contract Anniversary, whichever is later (B Share Contracts). The Nursing Home Waiver is not available. NEW JERSEY - The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. NEW YORK - A Contract issued by Hartford Life and Annuity Insurance Company is not available in New York. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. OKLAHOMA - The only AIRs available are 3% and 5%. OREGON - We will accept subsequent Premium Payments during the first three Contract Years (B Share Contracts). Owners may only sign up for DCA Plus Programs that are 6 months or longer. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. The only AIRs available are 3% and 5%. PENNSYLVANIA - The Nursing Home Waiver minimum confinement period is changed from 180 days to 90 days. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. TEXAS - Letters of Intent are not available as a basis to reduce sales charges. VERMONT - Eligible Investments owned by you, your Spouse or any immediate family member may be included under the Rights of Accumulation Program. WASHINGTON - In any year when no Premium Payment is paid into the Fixed Accumulation Feature, any pro-rata portion of the fee taken from the Fixed Accumulation Feature will be limited to interest earned in excess of the 3% for that year. C. MISCELLANEOUS OWNERSHIP CHANGES - We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. ASSIGNMENT - A non-qualified Contract may be assigned subject to the ownership change restrictions above. We must be properly notified in writing of an assignment. Any Annuity Payouts or Surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract. 42 ------------------------------------------------------------------------------- SPECULATIVE INVESTING - Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. Your Contract may not be traded on any stock exchange or secondary market. By purchasing this contract you represent and warrant that you are not using this Contract, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. CONTRACT MODIFICATION - We may unilaterally modify the Contract to reflect, among other things, changes in applicable tax law or interpretations of tax law, but no modification will affect the amount or term of any Contract unless a modification is required to conform the Contract to applicable federal or state law. No modification will affect the method by which Contract Values are determined. Any modifications to the Contract will be filed with each state in which the Contract is for sale. Contract changes will be communicated to Owners through regular mail as an endorsement to their Contract. MEDICAID BENEFITS - Medicaid estate planning may be important to people who are concerned about long term care costs. Benefits associated with this variable annuity may have an impact on your Medicaid eligibility and the assets considered for Medicaid benefits. Ownership interests or beneficiary status under this variable annuity could render you or your loved ones ineligible for Medicaid. This may be particularly troubling if your Spouse or Beneficiary is already receiving Medicaid benefits at the time of transfer or receipt of Death Benefits. As certain ownership changes are either impermissible or are subject to benefit resetting rules, you may want to carefully consider how you structure the ownership and beneficiary status of your Contract. This discussion is intended to provide a very general overview and does not constitute legal advice or in any way suggest that you circumvent these rules. You should seek advice from a competent elder law attorney to make informed decisions about how this variable annuity may affect your plans. D. LEGAL PROCEEDINGS There continues to be significant federal and state regulatory activity relating to financial services companies. Like other insurance companies, we are involved in lawsuits, arbitrations, and regulatory/legal proceedings. Certain of the lawsuits and legal actions the Company is involved in assert claims for substantial amounts. While it is not possible to predict with certainty the ultimate outcome of any pending or future case, legal proceeding or regulatory action, we do not expect the ultimate result of any of these actions to result in a material adverse effect on the Company or its Separate Accounts. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods. E. HOW CONTRACTS ARE SOLD We have entered into a distribution agreement with our affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD serves as the principal underwriter for the Contracts, which are offered on a continuous basis. HSD is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of HSD is the same as ours. PLANCO Financial Services, LLC, a subsidiary of Hartford Life Insurance Company, provides marketing support for us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that sells this Contract. HSD has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to HSD for sales of the Contracts by Financial Intermediaries. HSD, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2008. Contracts will be sold by individuals who have been appointed by us as insurance agents and who are registered representatives of Financial Intermediaries ("Registered Representatives"). B and I share Contracts may be sold directly to the following individuals free of any commission: 1) our current or retired officers, directors, trustees and employees (and their families) and our corporate parent, affiliates and subsidiaries; and 2) employees and Registered Representatives of Financial Intermediaries. If applicable, we will credit the B share Contract with a credit of 5.0% of the initial Deposit and each subsequent Deposit, if any. This additional percentage of Deposit in no way affects current or future charges, rights, benefits or account values of other Owners. The financial advisory arrangement otherwise required in order to purchase I share Contracts shall not be applicable to Hartford Leaders Series V individual variable annuities bought by any of our current or retired officers, directors, trustees and employees or those of our corporate parent, affiliates and subsidiaries. This prospectus does not constitute personalized investment or financial planning advice or a recommendation to purchase this or any other variable annuity. We reserve the right to modify, suspend, or terminate these privileges at any time. We list below types of arrangements that help to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affect each variable annuity. These types of arrangements could be viewed as creating conflicts of interest. 43 ------------------------------------------------------------------------------- Financial Intermediaries receive commissions (described below under "Commissions"). Certain selected Financial Intermediaries also receive additional compensation (described below under "Additional Payments"). All or a portion of the payments we make to Financial Intermediaries may be passed on to Registered Representatives according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive commissions based on the type of Contract or optional benefits sold. Commissions are based on a specified amount of Deposits or Account Balance. - COMMISSIONS Up front commissions paid to Financial Intermediaries generally range from 0% to up to 5% of each Deposit. Trail commissions (fees paid for customers that maintain their Contracts generally for more than 1 year) range up to 1% of your Account Balance. We pay no additional commissions with respect to assets moved from the Personal Pension Account to Sub-Accounts or the Fixed Accumulation Feature. We pay different commissions based on the Contract variation that you buy. We may pay a lower commission for sales to Owners over age 80. Commission arrangements vary from one Financial Intermediary to another. We are not involved in determining your Registered Representative's compensation. Under certain circumstances, your Registered Representative may be required to return all or a portion of the commissions paid. Check with your Registered Representative to verify whether your account is a brokerage or an advisory account. Your interests may differ from ours and your Registered Representative (or the Financial Intermediary with which they are associated). Please ask questions to make sure you understand your rights and any potential conflicts of interest. If you are an advisory client, your Registered Representative (or the Financial Intermediary with which they are associated) can be paid both by you and by us based on what you buy. Therefore, profits, and your Registered Representative's (or their Financial Intermediary's) compensation, may vary by product and over time. Contact an appropriate person at your Financial Intermediary with whom you can discuss these differences. - ADDITIONAL PAYMENTS Subject to FINRA and Financial Intermediary rules, we (or our affiliates) also pay the following types of fees to among other things encourage the sale of this Contract. These additional payments could create an incentive for your Registered Representative, and the Financial Intermediary with which they are associated, to recommend products that pay them more than others, which may not necessarily be to your benefit.
ADDITIONAL PAYMENT TYPE WHAT IT'S USED FOR ------------------------------------------------------------------------------------------------------------------------------- Access Access to Registered Representatives and/or Financial Intermediaries such as one-on-one wholesaler visits or attendance at national sales meetings or similar events. Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and other gifts. Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/participation; sponsorship of Financial Intermediary sales contests and/or promotions in which participants (including Registered Representatives) receive prizes such as travel awards, merchandise and recognition; client generation expenses. Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities for certain Allowances Funds. Support Sales support through such things as providing hardware and software, operational and systems integration, links to our website from a Financial Intermediary's websites; shareholder services (including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and reimbursements). Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training, and/or client or prospect seminar sponsorships. Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or visibility at, national and regional conferences; and/or articles in Financial Intermediary publications highlighting our products and services. Volume Pay for the overall volume of their sales or the amount of money investing in our products.
44 ------------------------------------------------------------------------------- As of December 31, 2008, we have entered into ongoing contractual arrangements to make Additional Payments to the following Financial Intermediaries for our entire suite of variable annuities: AIG Advisors Group, Inc., (Advantage Capital, AIG Financial Advisors, American General, FSC Securities Corporation, Royal Alliance Assoc., Inc.), Allen & Company, AMTrust Investment Svcs Inc., Associated Securities, Banc of America Investment Services Inc., Bancwest Investment Services, Inc., Cadaret, Grant & Co., Inc., Cambridge Investment Research Inc., Capital Analyst Inc., Centaurus Financial, Inc., CCO Investment Services Corp., Citigroup, Inc. (various divisions and affiliates), Comerica Securities, Commonwealth Financial Network, Compass Brokerage, Inc., Crown Capital Securities, L.P., Cuna Brokerage Services, Inc., Cuso Financial Services, L.P., Edward D. Jones & Co., L.P., FFP Securities, Inc., First Allied Securities, Inc., First Citizens Investor Services, First Montauk Securities Corp., First Tennessee Brokerage Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc., H. Beck, Inc., H.D. Vest Investment Services (subsidiary of Wells Fargo & Company), Harbour Investments, Inc., Heim & Young Securities, Huntington Investment Company, Independent Financial Group LLC, Infinex Financial Group, ING Advisors Network, (Financial Network Services (or Investment) Corp., ING Financial Partners, Multi-Financial Securities, Primevest Financial Services, Inc.,), Inter-Securities Inc., Investacorp, Inc., Investment Professionals, Inc., Investors Capital Corp., J.J.B. Hilliard, James T. Borello & Co., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corporation, Key Investment Services, LaSalle Financial Services, Inc., Lincoln Financial Advisors Corp. (marketing name for Lincoln National Corp.), Lincoln Financial Securities Corp., Lincoln Investment Planning, LPL Financial Corporation, M&T Securities, Inc., Merrill Lynch Pierce Fenner & Smith, MML Investor Services Inc., Morgan Keegan & Company, Inc., Morgan Stanley & Co., Inc. (various divisions and affiliates), Mutual Service Corporation, NatCity Investments, National Planning Holdings (Invest Financial Corp., Investment Centers of America, Inc., National Planning Corp., SII Investments, Inc.), Newbridge Securities Corp., NEXT Financial Group, Inc., NFP Securities, Inc., Pension Planners Securities, Inc., Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James & Associates, Inc., Raymond James Financial Services, RBC Capital Markets., Robert W. Baird & Co. Inc., Rogan & Associates, Securities America, Inc., Sigma Financial Corporation, Sorrento Pacific, Stifel Nicolaus & Company, Incorporated, Summit Brokerage Services Inc., Sun Trust Bank, TFS Securities, Inc., The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc., Triad Advisors, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services, Inc. (Union Bank of California, N.A.), UBS Financial Services, Inc., Uvest Financial Services Group Inc., Vanderbilt Securities, LLC, Wachovia Securities, LLC (various divisions), Walnut Street Securities, Inc., Waterstone Financial Group, Wells Fargo Brokerage Services, L.L.C., WaMu Investments, Inc., Woodbury Financial Services, Inc. (an affiliate of ours). Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their Registered Representative is or should be included in any such listing. As of December 31, 2008, we have entered into arrangements to pay Marketing Expense Allowances to the following Fund Companies (or affiliated parties) for our entire suite of variable annuities: AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investment Research and Management, Inc., American Variable Insurance Series & Capital Research and Management Company, Franklin Templeton Services, LLC, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Putnam Retail Management Limited Partnership. Marketing Expense Allowances may vary based on the form of Contract sold and the age of the purchaser. We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify you whether any Financial Intermediary is or should be included in any such listing. You are encouraged to review the prospectus for each Fund for any other compensation arrangements pertaining to the distribution of Fund shares. For the fiscal year ended December 31, 2008, Additional Payments did not in the aggregate exceed approximately $55.8 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.06% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $7.9 million or approximately 0.25% of the Premium Payments invested in a particular Fund during this period. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. 7. FEDERAL TAX CONSIDERATIONS A. INTRODUCTION The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the Internal Revenue Code ("Code"), Treasury Regulations thereunder, and public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by published court decisions. This summary discusses only certain federal income tax consequences to United States Persons, and does not discuss state, local or foreign 45 ------------------------------------------------------------------------------- tax consequences. The term United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trust or estates that are subject to United States federal income tax, regardless of the source of their income. See "Annuity Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity purchases by non-U.S. Persons or residents. This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract. In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW. B. TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT The Separate Account is taxed as part of the Company which is taxed as a life insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the Separate Account will not be taxed as a "regulated investment company" under Subchapter M of Chapter 1 of the Code. Investment income and any realized capital gains on assets of the Separate Account are reinvested and taken into account in determining the value of the Accumulation and Annuity Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the Contract. Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. The Company is entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account. These tax benefits, which may include the foreign tax credit and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived. C. TAXATION OF ANNUITIES - GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN TAX-QUALIFIED RETIREMENT PLANS Section 72 of the Code governs the taxation of annuities in general. 1. NON-NATURAL PERSONS AS OWNERS Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Contract Owner generally could be required to include in gross income currently for each taxable year the excess of (a) the sum of the Contract Value as of the close of the taxable year and all previous distributions under the Contract over (b) the sum of net premiums paid for the taxable year and any prior taxable year and the amount includable in gross income for any prior taxable year with respect to the Contract under Section 72(u). However, Section 72(u) does not apply to: - A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person), - A contract acquired by the estate of a decedent by reason of such decedent's death, - Certain contracts acquired with respect to tax-qualified retirement arrangements, - Certain contracts held in structured settlement arrangements that may qualify under Code Section 130, or - A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract's purchase. A non-natural Contract Owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code 46 ------------------------------------------------------------------------------- Section 72(u). However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts. Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements. 2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected. The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts which were purchased prior to August 14, 1982. a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. i. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract" under Section 72 of the Code. ii. To the extent that the value of the Contract (ignoring any surrender charges except on a full surrender) exceeds the "investment in the contract," such excess constitutes the "income on the contract." It is unclear what value should be used in determining the "income on the contract." We believe that the current Contract Value (determined without regard to surrender charges) generally is an appropriate measure. However, in some instances the IRS could take the position that the value should be the current Contract Value (determined without regard to surrender charges) increased by some measure of the value of certain future cash-value type benefits. iii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a withdrawal or partial surrender) is deemed to come first from any such "income on the contract" and then from "investment in the contract," and for these purposes such "income on the contract" shall be computed by reference to any aggregation rule in subparagraph 2.c. below. As a result, any such amount received or deemed received (1) shall be includable in gross income to the extent that such amount does not exceed any such "income on the contract," and (2) shall not be includable in gross income to the extent that such amount does exceed any such "income on the contract." If at the time that any amount is received or deemed received there is no "income on the contract" (e.g., because the gross value of the Contract does not exceed the "investment in the contract" and no aggregation rule applies), then such amount received or deemed received will not be includable in gross income, and will simply reduce the "investment in the contract." iv. The receipt of any amount as a loan under the Contract or the assignment or pledge of any portion of the value of the Contract shall be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. v. In general, the transfer of the Contract, without full and adequate consideration, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. This transfer rule does not apply, however, to certain transfers of property between Spouses or incident to divorce. vi. In general, any amount actually received under the Contract as a Death Benefit, including an optional Death Benefit, if any, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made periodically after the Annuity Commencement Date are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the "investment in the contract" to the total amount of the payments to be made after the Annuity Commencement Date (the "exclusion ratio"). i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the investment in the contract as of the Annuity Commencement Date, any additional payments (including surrenders) will be entirely includable in gross income. ii. If the annuity payments cease by reason of the death of the Annuitant and, as of the date of death, the amount of annuity payments excluded from gross income by the exclusion ratio does not exceed the investment in the contract as of the Annuity Commencement Date, then the remaining portion of unrecovered investment shall be allowed as a deduction for the last taxable year of the Annuitant. 47 ------------------------------------------------------------------------------- iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date are not entitled to any exclusion ratio and shall be fully includable in gross income. However, upon a full surrender after such date, only the excess of the amount received (after any surrender charge) over the remaining "investment in the contract" shall be includable in gross income (except to the extent that the aggregation rule referred to in the next subparagraph c. may apply). iv. When annuitization of the Personal Pension Account has occurred, your Benefit Balance will be calculated by using an actuarial present value formula. c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after October 21, 1988 by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract may be treated as a new contract for this purpose. We believe that for any Contracts subject to such aggregation, the values under the Contracts and the investment in the contracts will be added together to determine the taxation under subparagraph 2.a., above, of amounts received or deemed received prior to the Annuity Commencement Date. Withdrawals will first be treated first as withdrawals of income until all of the income from all such Contracts is withdrawn. In addition, the Treasury Department has specific authority under the aggregation rules in Code Section 72(e)(12) to issue regulations to prevent the avoidance of the income-out-first rules for non-periodic distributions through the serial purchase of annuity contracts or otherwise. As of the date of this prospectus, there are no regulations interpreting these aggregation provisions. d. 10% PENALTY TAX - APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS. i. If any amount is received or deemed received on the Contract (before or after the Annuity Commencement Date), the Code applies a penalty tax equal to ten percent of the portion of the amount includable in gross income, unless an exception applies. ii. The 10% penalty tax will not apply to the following distributions: 1. Distributions made on or after the date the recipient has attained the age of 59 1/2. 2. Distributions made on or after the death of the holder or where the holder is not an individual, the death of the primary annuitant. 3. Distributions attributable to a recipient becoming disabled. 4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the recipient (or the joint lives or life expectancies of the recipient and the recipient's designated Beneficiary). 5. Distributions made under certain annuities issued in connection with structured settlement agreements. 6. Distributions of amounts which are allocable to the "investment in the contract" prior to August 14, 1982 (see next subparagraph e.). 7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service. If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14, 1982. If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first from the amount of the "investment in the contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then from the portion of the "income on the contract" (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining "income on the contract" and (4) last from the remaining "investment in the contract." As a result, to the extent that such amount received or deemed received does not exceed such pre-8/14/82 investment, such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the contract" attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e. 48 ------------------------------------------------------------------------------- f. REQUIRED DISTRIBUTIONS i. Death of Contract Owner or Primary Annuitant Subject to the alternative election or Spouse beneficiary provisions in ii or iii below: 1. If any Contract Owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death; 2. If any Contract Owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and 3. If the Contract Owner is not an individual, then for purposes of 1. or 2. above, the primary annuitant under the Contract shall be treated as the Contract Owner, and any change in the primary annuitant shall be treated as the death of the Contract Owner. The primary annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract. ii. Alternative Election to Satisfy Distribution Requirements If any portion of the interest of a Contract Owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the Contract Owner's death. iii. Spouse Beneficiary If any portion of the interest of a Contract Owner is payable to or for the benefit of his or her Spouse, and the Annuitant or Contingent Annuitant is living, such Spouse shall be treated as the Contract Owner of such portion for purposes of section i. above. This Spousal Contract continuation shall apply only once for this Contract. iv. Civil Union or Domestic Partner Upon the death of the Contract Owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving civil union or domestic partner of the Contract Owner pursuant to a civil union or domestic partnership recognized under state law, then such designated beneficiary's right to continue the Contract as the succeeding Contract Owner will be contingent, among other things, upon the treatment of such designated beneficiary as the spouse of the Contract Owner under Code Section 72(s) (or any successor provision). Currently, Federal tax law only recognizes spouses if they are married individuals of the opposite sex. Consequently, such designated beneficiary who is not recognized as a "spouse" under Federal tax law will not be able to continue the Contract and the entire interest in the Contract must be distributed within five years of the Contract Owner's death or under the Alternative Election. g. ADDITION OF RIDER OR MATERIAL CHANGE. The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information. h. PARTIAL EXCHANGES. The IRS in Rev. Rul. 2003-76 confirmed that the owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul. 2003-76 also refers to caveats and additional guidance in the companion Notice 2003-51, which discusses cases in which a partial exchange is followed by a surrender, withdrawal or other distribution from either the old contract or the new contract. Notice 2003-51 specifically indicates that the IRS is considering (1) under what circumstances it should treat a partial exchange followed by such a distribution within 24 months as presumptively for "tax avoidance" purposes (e.g., to avoid the income-out-first rules on amounts received under Code Section 72) and (2) what circumstances it should treat as rebutting such a presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of employment). Notice 2003-51 was superseded by Revenue Procedure 2008-24, effective for partial exchanges completed on or after June 30, 2008. Partial exchanges completed on or after this date will qualify for tax free treatment if: (1) no amounts are withdrawn from, or received in surrender of, either of the contracts involved in the exchange during the 12 months beginning on the date on which amounts are treated as received as premiums or other consideration paid for the contract received in the exchange (the date of transfer); or (2) the taxpayer demonstrates that certain conditions (e.g., death, disability, reaching age 59 1/2, divorce, loss of employment) occurred between the date of transfer and the date of the withdrawal or surrender. A transfer within the scope of the revenue procedure, but not treated as a tax-free exchange, will be treated as a taxable distribution, followed by a payment for a second contract. Two annuity contracts that are the subject of a tax-free exchange pursuant 49 ------------------------------------------------------------------------------- to the revenue procedure will not be aggregated, even if issued by the same insurance company. We advise you to consult with a qualified tax adviser as to potential tax consequences before attempting any partial exchange. The applicability of the IRS's partial exchange guidance to the splitting of an annuity contract is not clear. You should consult with a tax adviser if you plan to split an annuity contract as part of an exchange of annuity contracts. 3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting your Contract be adequately diversified. Code Section 817(h) provides that a variable annuity contract will not be treated as an annuity contract for any period during which the investments made by the separate account or Fund are not adequately diversified. If a contract is not treated as an annuity contract, the contract owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of the segregated asset account underlying a variable contract is represented by any one investment, - no more than 70% is represented by any two investments, - no more than 80% is represented by any three investments and - no more than 90% is represented by any four investments. In determining whether the diversification standards are met, all securities of the same issuer, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. In the case of government securities, each government agency or instrumentality is treated as a separate issuer. A separate account must be in compliance with the diversification standards on the last day of each calendar quarter or within 30 days after the quarter ends. If an insurance company inadvertently fails to meet the diversification requirements, the company may still comply within a reasonable period and avoid the taxation of contract income on an ongoing basis. However, either the insurer or the contract owner must agree to make adjustments or pay such amounts as may be required by the IRS for the period during which the diversification requirements were not met. Fund shares may also be sold to tax-qualified plans pursuant to an exemptive order and applicable tax laws. If Fund shares are sold to non-qualified plans, or to tax-qualified plans that later lose their tax-qualified status, the affected Funds may fail the diversification requirements of Code Section 817(h), which could have adverse tax consequences for Contract Owners with premiums allocated to affected Funds. In order to prevent a Fund diversification failure from such an occurrence, the Company obtained a private letter ruling ("PLR") from the IRS. As long as the Funds comply with certain terms and conditions contained in the PLR, Fund diversification will not be prevented if purported tax-qualified plans invest in the Funds. The Company and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. 4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the "owner" of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the "tax owner" of certain separate account assets, income and gain from such assets would be includable in the variable contract owner's gross income. The Treasury Department indicated in 1986 that it would provide guidance on the extent to which contract owners may direct their investments to particular Sub-Accounts without being treated as tax owners of the underlying shares. Although no such regulations have been issued to date, the IRS has issued a number of rulings that indicate that this issue remains subject to a facts and circumstances test for both variable annuity and life insurance contracts. Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where interests in a partnership offered in an insurer's separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such interests can be purchased directly by the general public or others without going through such a variable contract), such "public availability" means that such interests should be treated as owned directly by the contract owner (and not by the insurer) for tax purposes, as if such contract owner had chosen instead to purchase such interests directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer's variable contracts or by other permitted entities. Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund 50 ------------------------------------------------------------------------------- options, if any, that might prevent a variable contract owner from receiving favorable tax treatment. As a result, although the owner of a Contract has more than 20 fund choices, we believe that any owner of a Contract also should receive the same favorable tax treatment. However, there is necessarily some uncertainty here as long as the IRS continues to use a facts and circumstances test for investor control and other tax ownership issues. Therefore, we reserve the right to modify the Contract as necessary to prevent you from being treated as the tax owner of any underlying assets. 5. CERTAIN TAX CONSIDERATIONS FOR FULL OR PARTIAL SETTLEMENT PAYMENTS FROM THE PERSONAL PENSION ACCOUNT BEFORE AND AFTER THE ANNUITY COMMENCEMENT DATE. Because the IRS has published no guidance on the tax treatment of contracts with features resembling the Personal Pension Account arrangement, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated for tax purposes and we advise you to consult with a qualified tax adviser concerning such tax treatment before you deposit amounts into the Personal Pension Account. With respect to the Personal Pension Account, the Company plans to report any payments under a settlement of the Personal Pension Account before the Annuity Commencement Date as amounts not received as an annuity coming first from "income on the contract" (previously described in subparagraph 2.a) based on a computation of "income on the contract" for the entire Contract. After the Annuity Commencement Date, the Company plans to report any continuing periodic settlement payments as amounts received as an annuity to which a portion of the "investment in the contract" (discussed in subparagraph 2.b) has been allocated consistent with Treas. Reg. Section 1.72-6(b). D. FEDERAL INCOME TAX WITHHOLDING The portion of an amount received under a Contract that is taxable gross income to the Payee is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following: 1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless an individual elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" form is not submitted to us in a timely manner, generally we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS. 2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is generally subject to federal income tax withholding as if the Payee were a married individual claiming 3 exemptions, unless the individual elects otherwise. An individual generally may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming 3 exemptions, and remit this amount to the IRS. Generally no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the Payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A Payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the Payee's total tax liability. E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to the section entitled "Information Regarding Tax-Qualified Retirement Plans" for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans. F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and mandatory withholding on U.S. source taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In addition, purchasers may be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence. G. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS Any amount payable upon a Contract Owner's death, whether before or after the Annuity Commencement Date, is generally includable in the Contract Owner's estate for federal estate tax purposes. Similarly, prior to the Contract Owner's death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-Spouse beneficiary who either is (1) 37 1/2 or more years younger than a Contract Owner or (2) a grandchild (or more remote further 51 ------------------------------------------------------------------------------- descendent) of a Contract Owner may have federal generation-skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations under Code Section 2662 may require us to deduct any such GST tax from your Contract, or from any applicable payment, and pay it directly to the IRS. However, any federal estate, gift or GST tax payment with respect to a Contract could produce an offsetting income tax deduction for a beneficiary or transferee under Code Section 691(c) (partially offsetting such federal estate or GST tax) or a basis increase for a beneficiary or transferee under Code Section 691(c) or Section 1015(d). In addition, as indicated above in "Distributions Prior to the Annuity Commencement Date," the transfer of a Contract for less than adequate consideration during the Contract Owner's lifetime generally is treated as producing an amount received by such Contract Owner that is subject to both income tax and the 10% penalty tax. To the extent that such an amount deemed received causes an amount to be includable currently in such Contract Owner's gross income, this same income amount could produce a corresponding increase in such Contract Owner's tax basis for such Contract that is carried over to the transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and Section 1015. H. TAX DISCLOSURE OBLIGATIONS In some instances certain transactions must be disclosed to the IRS or penalties could apply. See, for example, IRS Notice 2004-67. The Code also requires certain "material advisers" to maintain a list of persons participating in such "reportable transactions," which list must be furnished to the IRS upon request. It is possible that such disclosures could be required by Hartford The Company, the Owner(s) or other persons involved in transactions involving annuity contracts. It is the responsibility of each party, in consultation with their tax and legal advisers, to determine whether the particular facts and circumstances warrant such disclosures. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences. The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts or accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan. THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN ADMINISTRATIVE DUTIES INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS, DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF QUALIFIED PLAN LOANS, COMPLIANCE WITH REGULATORY REQUIREMENTS AND FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A CONTRACT THROUGH A QUALIFIED PLAN, YOU SHOULD CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE. The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law and any applicable Qualified Plan terms. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences. We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future. 52 ------------------------------------------------------------------------------- 1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS"). In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) may elect to provide for a separate account or annuity contract that accepts after-tax employee contributions and is treated as a "Deemed IRA" under Code Section 408(q), which is generally subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available. a. TRADITIONAL IRAS Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the Owner reaches age 70 1/2 or dies, as described below, may result in imposition of a 50% penalty tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA. You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into a Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to the Traditional IRA. In addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant). IRAs generally may not invest in life insurance contracts. However, an annuity contract that is used as an IRA may provide a death benefit that equals the greater of the premiums paid or the contract's cash value. The Contract offers an enhanced death benefit that may exceed the greater of the Contract Value or total premium payments. The tax rules are unclear as to what extent an IRA can provide a death benefit that exceeds the greater of the IRA's cash value or the sum of the premiums paid and other contributions into the IRA. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. b. SEP IRAS Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, and in limited circumstances employee and salary reduction contributions, as well as higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. c. SIMPLE IRAS The Savings Incentive Match Plan for Employees of small employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax on premature distributions, as described below. In addition, the 10% penalty tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow 53 ------------------------------------------------------------------------------- each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection. If we do not serve as the Designated Financial Institution for your employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us. d. ROTH IRAS Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract Owner's lifetime. Generally, however, upon the Owner's death the amount remaining in a Roth IRA must be distributed by the end of the fifth year after such death or distributed over the life expectancy of a designated beneficiary. The Owner of a Traditional IRA may convert a Traditional IRA into a Roth IRA under certain circumstances. The conversion of a Traditional IRA to a Roth IRA will subject the fair market value of the converted Traditional IRA to federal income tax in the year of conversion. In addition to the amount held in the converted Traditional IRA, the fair market value may include the value of additional benefits provided by the annuity contract on the date of conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. 2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice. In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. 3. TAX SHELTERED ANNUITY UNDER SECTION 403(b) ("TSA") Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations described in Code Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and, subject to certain limitations, exclude employer contributions to a TSA from such an employee's gross income. Generally, total contributions may not exceed the lesser of an annual dollar limit (e.g., $49,000 in 2009) or 100% of the employee's "includable compensation" for the most recent full year of service, subject to other adjustments. There are also legal limits on annual elective deferrals that a participant may be permitted to make under a TSA. In certain cases, such as when the participant is age 50 or older, those limits may be increased. A TSA participant should contact his plan administrator to determine applicable elective contribution limits. Special provisions may allow certain employees different overall limitations. A TSA is subject to a prohibition against distributions from the TSA attributable to contributions made pursuant to a salary reduction agreement, unless such distribution is made: a. after the employee reaches age 59 1/2; b. upon the employee's separation from service; 54 ------------------------------------------------------------------------------- c. upon the employee's death or disability; d. in the case of hardship (as defined in applicable law and in the case of hardship, any income attributable to such contributions may not be distributed); or e. as a qualified reservist distribution upon certain calls to active duty. An employer sponsoring a TSA may impose additional restrictions on your TSA through its plan document. Please note that the TSA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a TSA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. In particular, please note that tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. In addition, a life insurance contract issued after September 23, 2007 is generally ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2). Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. Section 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant's or beneficiary's accumulated benefit immediately before such exchange (taking into account such participant's or beneficiary's accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant's employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. In addition, the same Regulation provides corresponding rules for a transfer from one TSA to another TSA under a different TSA Plan (e.g., for a different eligible employer). We are no longer accepting any incoming exchange request, or new contract application, for any individual TSA contract. 4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS") Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $15,000 for 2006 and thereafter ($16,500 for 2009). The $15,000 limit will be indexed for cost-of-living adjustments at $500 increments. The Plan may provide for additional "catch-up" contributions . In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70 1/2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations). Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. However, where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer's general creditors under Code Section 457(b)(6). 55 ------------------------------------------------------------------------------- 5. TAXATION OF AMOUNTS RECEIVED FROM QUALIFIED PLANS Except under certain circumstances in the case of Roth IRAs or Roth accounts in certain Qualified Plans, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above. For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Contract Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual. In addition, penalty taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan. 6. PENALTY TAXES FOR QUALIFIED PLANS Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal penalty taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Penalty taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The penalty taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below. a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59 1/2. However, this 10% penalty tax does not apply to a distribution that is either: (i) made to a beneficiary (or to the employee's estate) on or after the employee's death; (ii) attributable to the employee's becoming disabled under Code Section 72(m)(7); (iii) part of a series of substantially equal periodic payments (not less frequently than annually - "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service; (iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans); (v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse); (vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year; (vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty; (viii) made an account of an IRS levy on the Qualified Plan under Code Section 72(t)(2)(A)(vii); or (ix) made as a "direct rollover" or other timely rollover to an Eligible Retirement Plan, as described below. In addition, the 10% penalty tax does not apply to a distribution from an IRA that is either: (x) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions in Code Section 72(t)(2)(D) are met; (xi) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or (xii) for a qualified first-time home buyer and meets the requirements of Code Section 72(t)(8). If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death, disability or a method change allowed by Rev. Rul. 2002-62), the 10% penalty tax will be applied retroactively to all the 56 ------------------------------------------------------------------------------- prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. For any premature distribution from a SIMPLE IRA during the first 2 years that an individual participates in a salary reduction arrangement maintained by that individual's employer under a SIMPLE Plan, the 10% penalty tax rate is increased to 25%. b. RMDS AND 50% PENALTY TAX THE RMD RULES GENERALLY DO NOT APPLY FOR THE 2009 TAX YEAR. HOWEVER, INDIVIDUALS WHO DEFERRED 2008 RMDS UNTIL APRIL 1, 2009, MUST STILL TAKE AN RMD BY THAT DATE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISER OR YOUR QUALIFIED PLAN ADMINISTRATOR TO DETERMINE HOW THIS CHANGE MAY AFFECT YOU. If the amount distributed from a Qualified Contract or Plan is less than the amount of the required minimum distribution ("RMD") for the year, the participant is subject to a 50% penalty tax on the amount that has not been timely distributed. An individual's interest in a Qualified Plan generally must be distributed, or begin to be distributed, not later than the Required Beginning Date. Generally, the Required Beginning Date is April 1 of the calendar year following the later of - (i) the calendar year in which the individual attains age 70 1/2, or (ii) (except in the case of an IRA or a 5% owner, as defined in the Code) the calendar year in which a participant retires from service with the employer sponsoring a Qualified Plan that allows such a later Required Beginning Date. The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over - (a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or (b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary. If an individual dies before reaching the Required Beginning Date, the individual's entire interest generally must be distributed within 5 years after the individual's death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual's death to a qualifying designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual's surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 70 1/2. If an individual dies after RMDs have begun for such individual, any remainder of the individual's interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual's death. The RMD rules that apply while the Contract Owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the Owner apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own. The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of the Owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs. In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% penalty tax for RMDs if such additional RMD amount is not timely distributed. 7. TAX WITHHOLDING FOR QUALIFIED PLANS Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" from a Qualified Plan (described below in "ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution." 57 ------------------------------------------------------------------------------- Also, special withholding rules apply with respect to distributions from non-governmental Section 457(b) Plans, and to distributions made to individuals who are neither citizens nor resident aliens of the United States. Regardless of any "election out" (or any actual amount of tax actually withheld) on an amount received from a Qualified Contract or Plan, the payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the payee's total tax liability. 8. ROLLOVER DISTRIBUTIONS The current tax rules and limits for tax-free rollovers and transfers between Qualified Plans vary according to (1) the type of transferor Plan and transferee Plan, (2) whether the amount involved is transferred directly between Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed first to a participant or beneficiary who then transfers that amount back into another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the distribution is made to a participant, spouse or other beneficiary. Accordingly, we advise you to consult with a qualified tax adviser before receiving any amount from a Qualified Contract or Plan or attempting some form of rollover or transfer with a Qualified Contract or Plan. For instance, generally any amount can be transferred directly from one type of Qualified Plan (e.g., a TSA) to the same type of Plan for the benefit of the same individual, without limit (or federal income tax), if the transferee Plan is subject to the same kinds of restrictions as the transferor Plan (e.g., a TSA that is subject to the same kinds of salary reduction restrictions) and certain other conditions to maintain the applicable tax qualification are satisfied (e.g., as described above for TSA exchanges after September 24, 2007). Such a "direct transfer" between the same kinds of Plan is generally not treated as any form of "distribution" out of such a Plan for federal income tax purposes. By contrast, an amount distributed from one type of Plan (e.g., a TSA) into a different type of Plan (e.g., a Traditional IRA) generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to such tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover", the missing amount that is not rolled over remains subject to normal income tax plus any applicable penalty tax. Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either - a. an RMD amount; b. one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or c. any distribution made upon hardship of the employee. Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457 (e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution penalty tax applicable to distributions from such a "predecessor" Qualified Plan. Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and 408A(d)(3) also vary according to the type of transferor IRA and type of transferee IRA or other Plan. For instance, generally no tax-free "direct rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a 58 ------------------------------------------------------------------------------- "conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In addition, generally no tax-free "direct rollover" or "60-day rollover" can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA set up by that same individual as the original owner. Generally, any amount other than an RMD distributed from a Traditional or SEP IRA is eligible for a "direct rollover" or a "60-day rollover" to another Traditional IRA for the same individual. Similarly, any amount other than an RMD distributed from a Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to another Roth IRA for the same individual. However, in either case such a tax-free 60-day rollover is limited to 1 per year (365-day period); whereas no 1-year limit applies to any such "direct rollover." Similar rules apply to a "direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another SIMPLE IRA or a Traditional IRA, except that any distribution of employer contributions from a SIMPLE IRA during the initial 2-year period in which the individual participates in the employer's SIMPLE Plan is generally disqualified (and subject to the 25% penalty tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a "direct rollover" or a "60-day rollover" to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible). Special rollover rules also apply to (1) transfers or rollovers for the benefit of a spouse (or ex-spouse) or a nonspouse designated beneficiary, (2) Plan distributions of property, (3) distributions from a Roth account in certain Plans, (4) recontributions within 3 years of "qualified hurricane distributions" made before 2007 under Code Section 1400Q(a), (5) transfers from a Traditional or Roth IRA to certain health savings accounts under Code Section 408(d)(9), and (6) obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. 9. CERTAIN TAX CONSIDERATIONS WITH THE PERSONAL PENSION ACCOUNT IN QUALIFIED PLANS Because the IRS has published no guidance on the tax treatment of arrangements resembling the Personal Pension Account, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated in different types of Qualified Plans, and we advise you to consult with a qualified tax adviser concerning such treatment before you deposit any amount into a Personal Pension Account that is held in any Qualified Plan. Among such tax issues for you to consider with a qualified tax adviser in such a case are the following: a. Any amounts received by you (or your payee) prior to your attaining age 59 1/2 are generally subject to the penalty tax on premature distributions described above, unless such an amount received can qualify for an exception from such a penalty tax, e.g., scheduled payments that qualify for the SEPP Exception. In addition, any modification in payments qualifying for the SEPP Exception (e.g., by commutation) can have adverse penalty tax consequences, as described above. b. The tax rules for satisfying RMD requirements vary according to both the form of Qualified Plan (e.g., NonRoth or Roth IRA) and the form of payment (e.g., periodic annuity payout or non-periodic distribution from an account value). As a result, such variations should be considered when RMD amounts need to be taken (e.g., after age 70 1/2 or death). In addition, any modification in the form or amount of such payments (e.g., by commutation) could have adverse tax consequences, if such a modification does not satisfy an IRS-recognized RMD exception (e.g., for an acceleration or other change in periodic payments under Reg. Section 1.401(a) (9)-6, Q&A-1 and Q&A-14). c. Any attempt to transfer an amount from the Benefit Balance to Sub-Accounts or the Fixed Accumulation Feature (if available) that exceeds the threshold for such a transfer will be treated by us as a form of annuitization distribution from the Personal Pension Account, and thus may not qualify as a tax-free direct transfer. Instead, such an attempted excess transfer could be treated for tax purposes as a potentially taxable distribution out of the entire annuity contract, followed by a contribution back into the same contract. While such a distribution from an IRA may qualify for 60-day rollover treatment (if it is not needed to satisfy RMD requirements), only one such tax-free 60-day rollover is allowed for any 365-day period for any individual from all of such individual's IRAs. Failing such tax-free rollover treatment, such a distribution could be subject to both income and penalty tax, and any deemed contribution back into the contract may be subject to an excise tax on excess contributions, particularly after age 70 1/2. IN ADDITION, ANY SUCH DISTRIBUTION FROM A NON-IRA FORM OF QUALIFIED PLAN MAY BE SUBJECT TO THE 20% MANDATORY WITHHOLDING TAX, UNLESS SUCH DISTRIBUTION IS AN RMD OR OTHERWISE AVOIDS CLASSIFICATION AS AN "ELIGIBLE ROLLOVER DISTRIBUTION," AS DESCRIBED ABOVE. 59 ------------------------------------------------------------------------------- TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION GENERAL INFORMATION Safekeeping of Assets Experts Non-Participating Misstatement of Age or Sex Principal Underwriter Additional Payments PERFORMANCE RELATED INFORMATION Total Return for all Sub-Accounts Yield for Sub-Accounts Money Market Sub-Accounts Additional Materials Performance Comparisons ACCUMULATION UNIT VALUES FINANCIAL STATEMENTS
APP A-1 ------------------------------------------------------------------------------- APPENDIX A - EXAMPLES TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT APP A-2 RETURN OF PREMIUM DEATH BENEFIT APP A-8 REMAINING GROSS PREMIUM APP A-9
APP A-2 ------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT EXAMPLES EXAMPLE 1: STANDARD ILLUSTRATIONS WITH A PARTIAL INCOME STREAM Assume the initial Personal Pension Account Contribution is equal to $100,000 (no sums are invested in the Fixed Accumulation Feature or Sub-Accounts). Assume that in Contract Year 7, the Owner requested to commence an income stream based on $50,000 of Annuity Payout Value during the guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. Hypothetical credited and payout rates are illustrated below. A. To understand how your guaranteed payout rates are set during your guarantee window (shaded area), see Guaranteed Payout Rates in Contract Years 1 through 7. In this Example, the guaranteed payout rate is locked in at Contract Year 7 when Personal Pension Account Payouts commence. B. Credited interest rates vary during the duration of your Contract as illustrated in column 4. In this illustration, credited interest rates change at the 10th Contract Year and again at the 20th Contract Year. C. Please refer to the last column in Contract Year 23 for an example of how Personal Pension Account Payouts will continue for the life of the Annuitant, Owner or joint Owner even though Annuity Payout Value has been exhausted.
CREDITED CONTRACT BENEFIT INTEREST YEAR AGE BALANCE RATE ---------------------------------------------------------------------- 0 60 $ 100,000 5.00% 1 61 105,000 5.00% 2 62 110,250 5.00% 3 63 115,763 5.00% GUARANTEE 4 64 121,551 5.00% WINDOW 5 65 127,628 5.00% 6 66 134,010 5.00% 7 67 140,710 5.00% 8 68 142,009 5.00% 9 69 143,535 5.00% 10 70 145,299 3.00% 11 71 145,212 3.00% 12 72 145,220 3.00% 13 73 145,326 3.00% 14 74 145,532 3.00% 15 75 145,841 3.00% 16 76 146,256 3.00% 17 77 146,781 3.00% 18 78 147,419 3.00% 19 79 148,173 3.00% 20 80 149,047 1.50% 21 81 147,927 1.50% 22 82 146,839 1.50% 23 83 147,568 1.50% PERSONAL ANNUITY GUARANTEED PENSION ACCUMULATION PAYOUT PAYOUT RATES ACCOUNT BALANCE VALUE (PER 1000) PAYOUTS(2) ------------ -------------------------------------------------------------------------- $ 100,000 105,000 61.99 110,250 62.33 115,763 62.72 GUARANTEE 121,551 63.16 WINDOW 127,628 63.65 134,010 64.17 90,710 (1) 50,000 64.73 $ 3,237 95,246 46,763 $ 3,237 100,008 43,527 $ 3,237 105,008 40,290 $ 3,237 108,158 37,054 $ 3,237 111,403 33,817 $ 3,237 114,745 30,581 $ 3,237 118,188 27,344 $ 3,237 121,733 24,108 $ 3,237 125,385 20,871 $ 3,237 129,147 17,634 $ 3,237 133,021 14,398 $ 3,237 137,012 11,161 $ 3,237 141,122 7,925 $ 3,237 143,239 4,688 $ 3,237 145,388 1,452 $ 3,237 147,568 0 $ 3,237
(1) Accumulation Balance is reduced by $50,000 that is converted into the Annuity Payout Value. CDSC's and Premium tax have not been applied in this Example. If the $50,000 was instead commuted into a Commuted Value (assuming a hypothetical discount rate of 6%), the Commuted Value would be $32,294. The remaining Accumulation Balance can be converted into Annuity Payout Value at a later date for additional Personal Pension Account Payouts. (2) These Personal Pension Account Payouts shall continue for the life of the Annuitant, Owner or joint Owner pursuant to Annuity Payout Option Two. APP A-3 ------------------------------------------------------------------------------- EXAMPLE 2 Assume a $100,000 initial Personal Pension Account Contribution was made at a time when we declared a hypothetical credited rate of 4% and that a $15,000 subsequent Personal Pension Account Contribution was made when we declared a hypothetical credited rate of 3.75%. Your Benefit Balance would increase as follows:
PERSONAL PERSONAL TOTAL PENSION ACCOUNT CREDITED PENSION ACCOUNT CREDITED BENEFIT AGE CONTRIBUTION RATE CONTRIBUTION RATE BALANCE -------------------------------------------------------------------------------------------------------------------- 55 First $100,000 $100,000 56 Deposit 4.00% $104,000 57 4.00% $108,160 58 4.00% $112,486 59 4.00% Second $15,000 $131,986 60 4.00% Deposit 3.75% $137,228 61 4.00% 3.75% $142,678 62 4.00% 3.75% $148,345 63 4.00% 3.75% $154,237 64 4.00% 3.75% $160,362 65 4.00% 3.75% $166,732
EXAMPLE 3: BENEFIT BALANCE TRANSFER (IN-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Sub-Accounts to the Personal Pension Account occurs. Assume that the Owner makes a Premium Payment of $100,000 into the Sub-Accounts and then elects to transfer $5,000 from the Sub-Accounts to the Personal Pension Account, in which event:
TRANSFER FROM SUB-ACCOUNTS TO THE PERSONAL PENSION ACCOUNT BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $125,000 Remaining Gross Premium $100,000 $100,000 Annual Withdrawal Amount $5,000 $0 Return of Premium Death Benefit $100,000 $95,000 Benefit Balance $0 $5,000
- The Contract Value is reduced by the amount of the transfer ($5,000). - The Remaining Gross Premium associated to the Sub-Accounts is not reduced by the amount of the transfer as Remaining Gross Premium is only reduced for Surrenders or transfers in excess of the Annual Withdrawal Amount. - The Annual Withdrawal Amount is reduced by the amount of the transfer ($5,000) as transfers (and Surrenders) reduce the Annual Withdrawal Amount. - The Return of Premium Death Benefit is reduced dollar for dollar for the amount of the transfer ($5,000). - Assuming that there were no sums previously invested in the Personal Pension Account, the Benefit Balance is increased by this amount. APP A-4 ------------------------------------------------------------------------------- BENEFIT BALANCE TRANSFER (OUT-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Personal Pension Account to the Sub-Accounts occurs. Assume that the Owner makes a Personal Pension Account Contribution of $100,000 into the Personal Pension Account and then elects to transfer the maximum available transfer from the Personal Pension Account to the Sub-Accounts. The out-bound transfer restriction considers the following factors:
END OF YEAR MAXIMUM OF A, B, C A B C ------------------------------------------------------------------- 1 $4,120 $4,120 $3,000 $0 2 $4,120 $4,073 $2,966 $4,120
Where , - Column A equals four (4%) percent of the Accumulation Balance as of the prior Contract Anniversary. Assume that the $100,000 Personal Pension Account Contribution earns a credited interest rate of 3%. - Column B equals the amount of interest credited to the Accumulation Balance over the most recent full Contract Year. - Column C equals the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. Applying these factors, the following table shows how various Contract benefits change:
TRANSFER FROM PERSONAL PENSION ACCOUNT TO THE SUB-ACCOUNTS END OF YEAR 1 BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $134,120 Remaining Gross Premium $100,000 $104,120 Annual Withdrawal Amount $5,000 $5,206 Return of Premium Death Benefit $100,000 $104,120 Benefit Balance $103,000 $98,880
- The Accumulation Balance is reduced by the amount of the transfer ($4,120). - The Remaining Gross Premium associated to the Sub-Accounts is increased by the amount of the transfer as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Annual Withdrawal Amount is increased by 5% of the transfer amount ($206) as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Return of Premium Death Benefit is increased dollar for dollar for the amount of the transfer ($4,120). - The Contract Value is increased by the amount of the transfer ($4,120). APP A-5 ------------------------------------------------------------------------------- EXAMPLE 4A: FULL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking all Personal Pension Account Payouts and then fully commute the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). Also, assume that the initial Personal Pension Account Contribution is equal to $100,000 and no Premium Payments have been invested in the Fixed Accumulation Feature or Sub-Accounts.
CONTRACT BENEFIT ACCUMULATION CREDITED YEAR AGE BALANCE BALANCE RATE ------------------------------------------------------------------------------------------------- 0 60 $100,000 $ 100,000 5.00 % 1 61 105,000 105,000 5.00 % 2 62 110,250 110,250 5.00 % 3 63 115,763 115,763 5.00 % GUARANTEE 4 64 121,551 121,551 5.00 % WINDOW 5 65 127,628 127,628 5.00 % 6 66 134,010 134,010 5.00 % 7 67 140,710 140,710 5.00 % 8 68 147,746 147,746 5.00 % 9 69 155,133 155,133 5.00 % 10 70 162,889 162,889 3.00 % 11 71 167,776 167,776 3.00 % 12 72 172,809 172,809 3.00 % 13 73 177,994 177,994 3.00 % 14 74 183,334 183,334 3.00 % 15 75 188,834 188,834 3.00 % 16 76 194,499 194,499 3.00 % 17 77 200,333 200,333 3.00 % 18 78 206,343 206,343 3.00 % 19 79 212,534 212,534 3.00 % 20 80 218,910 $ 0 (2) 1.50 % 21 81 n/a N/A n/a (3) 22 82 n/a N/A n/a 23 83 n/a N/A n/a 24 84 n/a N/A n/a 25 85 n/a N/A n/a 26 86 n/a N/A n/a 27 87 n/a N/A n/a 28 88 n/a N/A n/a 29 89 n/a N/A n/a 30 90 n/a N/A n/a ANNUITY PAYOUT PAYOUT RATES COMMUTED VALUE (PER 1000)(1) VALUE PAYOUTS ------------ ------------------------------------------------------------- $ 0 61.68 $ 0 61.99 $ 0 $ 0 62.33 $ 0 $ 0 62.72 $ 0 GUARANTEE $ 0 63.16 $ 0 WINDOW $ 0 63.65 $ 0 $ 0 64.17 $ 0 $ 0 64.73 $ 0 $ 0 65.31 $ 0 $ 0 65.91 $ 0 $ 0 66.56 $ 0 $ 0 69.14 $ 0 $ 0 71.94 $ 0 $ 0 74.99 $ 0 $ 0 78.32 $ 0 $ 0 81.96 $ 0 $ 0 85.92 $ 0 $ 0 90.11 $ 0 $ 0 94.63 $ 0 $ 0 99.55 $ 0 $ 218,910 105.02 (6) $156,367 (5) $ 0 (4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 22,989 (7) N/A N/A N/A $ 22,989 (7)
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on being converted to Annuity Payout Value. CDSCs and Premium tax are not shown in this Example. APP A-6 ------------------------------------------------------------------------------- (3) Interest is no longer credited under the Personal Pension Account. (4) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the payout rate applicable to the year in which commutation is requested and dividing by 1,000. In this case, $218,910*$105.02/1,000 = $22,989. However, in this example, Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living and have not terminated the Contract as illustrated in years 29 and 30. (5) The Commuted Value depicted is based on commutation of the Annuity Payout Value (in this Example, is the same as the Benefit Balance because this is a full commutation) of $218,910 using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the Guaranteed Payout Duration (i.e., $218,910/$22,989, rounded down = 9 years) calculated using this discount rate. (6) Hypothetical Payout Rate used because Personal Pension Accounts and subsequent commutation occur outside of the guarantee window. (7) Lifetime Personal Pension Account Payouts resume because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. APP A-7 ------------------------------------------------------------------------------- EXAMPLE 4B: PARTIAL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking Personal Pension Account Payouts and commute half of the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. In this Example, the guarantee window is represented by the shaded area in years 1 though 7. Year 20 "Before" illustrates how the Annuity Payout Value is split in half to serve as the basis for Personal Pension Account Payouts and the Commuted Value. Year 20 "After" illustrates the amounts paid to the Owner in the form of Personal Pension Account Payouts and Commuted Value. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). The Guaranteed Payout Duration in this Example is illustrated as the shaded rows corresponding to Contract Years 20 through 28. Assume the initial Deposit is equal to $100,000 and no sums are invested in the Fixed Accumulation Feature or Sub-Accounts.
ANNUITY CONTRACT BENEFIT ACCUMULATION CREDITED PAYOUT YEAR AGE BALANCE BALANCE RATE VALUE 1 ------------------------------------------------------------------------------------------ 0 60 $100,000 $ 100,000 5.00% $ 0 1 61 105,000 105,000 5.00% $ 0 2 62 110,250 110,250 5.00% $ 0 3 63 115,763 115,763 5.00% $ 0 4 64 121,551 121,551 5.00% $ 0 5 65 127,628 127,628 5.00% $ 0 6 66 134,010 134,010 5.00% $ 0 7 67 140,710 140,710 5.00% $ 0 8 68 147,746 147,746 5.00% $ 0 9 69 155,133 155,133 5.00% $ 0 10 70 162,889 162,889 3.00% $ 0 11 71 167,776 167,776 3.00% $ 0 12 72 172,809 172,809 3.00% $ 0 13 73 177,994 177,994 3.00% $ 0 14 74 183,334 183,334 3.00% $ 0 15 75 188,834 188,834 3.00% $ 0 16 76 194,499 194,499 3.00% $ 0 17 77 200,333 200,333 3.00% $ 0 18 78 206,343 206,343 3.00% $ 0 19 79 212,534 212,534 3.00% $ 0 20 BEFORE 80 218,910 $ 0 (2) 1.50% $ 109,455 20 AFTER 80 $ 97,960 $ 0 (2) n/a $ 97,960 21 81 $ 86,465 N/A n/a (3) $ 86,465 22 82 $ 74,970 N/A n/a $ 74,970 23 83 $ 63,475 N/A n/a $ 63,475 24 84 $ 51,980 N/A n/a $ 51,980 25 85 $ 40,485 N/A n/a $ 40,485 26 86 $ 28,990 N/A n/a $ 28,990 27 87 $ 17,495 N/A n/a $ 17,495 28 88 $ 6,000 N/A n/a $ 6,000 29 89 $ 0 N/A n/a $ 0 30 90 $ 0 N/A n/a $ 0 31 91 $ 0 N/A n/a $ 0 ANNUITY CONTRACT PAYOUT COMMUTED PAYOUT RATES YEAR VALUE 2 VALUE (PER 1000)(1) PAYOUTS ------------ --------------------------------------------------------------------------- 0 $ 0 61.68 1 $ 0 61.99 $ 0 2 $ 0 62.33 $ 0 3 $ 0 62.72 $ 0 4 $ 0 63.16 $ 0 5 $ 0 63.65 $ 0 6 $ 0 64.17 $ 0 7 $ 0 64.73 $ 0 8 $ 0 65.31 $ 0 9 $ 0 65.91 $ 0 10 $ 0 66.56 $ 0 11 $ 0 69.14 $ 0 12 $ 0 71.94 $ 0 13 $ 0 74.99 $ 0 14 $ 0 78.32 $ 0 15 $ 0 81.96 $ 0 16 $ 0 85.92 $ 0 17 $ 0 90.11 $ 0 18 $ 0 94.63 $ 0 19 $ 0 99.55 $ 0 20 BEFORE (4) $ 109,455 (4) 20 AFTER (5) $ 0 $ 78,185 (7) 105.02 (8) $ 11,495 (6) 21 $ 0 N/A N/A $ 11,495 22 $ 0 N/A N/A $ 11,495 23 $ 0 N/A N/A $ 11,495 24 $ 0 N/A N/A $ 11,495 25 $ 0 N/A N/A $ 11,495 26 $ 0 N/A N/A $ 11,495 27 $ 0 N/A N/A $ 11,495 28 $ 0 N/A N/A $ 11,495 29 $ 0 N/A N/A $ 22,989 (9) 30 $ 0 N/A N/A $ 22,989 31 $ 0 N/A N/A $ 22,989
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Personal Pension Account Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on all amounts being converted to Annuity Payout Value. CDSCs and Premium tax not shown in the Example. (3) Interest is no longer credited under the Personal Pension Account. APP A-8 ------------------------------------------------------------------------------- (4) In year 20, the Owner elected to commute half of their Annuity Payout Value and receive the remaining half in the form of Personal Pension Account Payouts. Thus, the Accumulation Balance of $210,910 is split in half. $109,455 is converted into Annuity Payout Value and will serve as the basis for Personal Pension Account Payouts. The remaining $109,455 will serve as the basis for the Commuted Value calculation. (5) The Annuity Payout Value of $109,455 is reduced by the Personal Pension Account Payout of $11,495, leaving an Annuity Payout Value of $97,960 remaining. (6) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the appropriate payout rate and dividing by 1,000. In this case, $109,455*105.02/1,000 = $11,495. However, in this example, half of the Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living as illustrated in years 29, 30, and 31. (7) The Commuted Value depicted is based on commutation of half of the Annuity Payout Value, or $109,455, using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the remaining Guaranteed Payout Duration (i.e., $109,455/$11,495, rounded down = 9) calculated using the discount rate. (8) A hypothetical Payout Rate is used because Personal Pension Account Payouts and commutation occur outside of the guarantee window. (9) In this case, the lifetime Personal Pension Account Payouts for each Annuity Payout Value is $11,495 ($109,455*105.02/1000 = $11,495). When combined, these lifetime Personal Pension Account Payouts equal $22,989. Lifetime Personal Pension Account Payouts begin because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. RETURN OF PREMIUM DEATH BENEFIT EXAMPLES EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. IN CONTRACT YEAR 1 YOU APPLY A SUBSEQUENT PREMIUM PAYMENT OF $50,000. IN CONTRACT YEAR 3 YOU TAKE A PARTIAL SURRENDER FOR $1,000 AND IN THE SAME CONTRACT YEAR YOU TAKE ANOTHER PARTIAL SURRENDER FOR $10,000, YOUR CONTRACT VALUE IMMEDIATELY FOLLOWING IS $173,000. YOUR INITIAL VALUE: $100,000 VALUE AFTER THE SUBSEQUENT PREMIUM PAYMENT OF $50,000: $150,000, which is the prior value increased by the amount of the subsequent Premium Payments VALUE AFTER THE PARTIAL SURRENDER ($1,000): $149,000, which is the prior value reduced dollar-for-dollar by the amount of the Surrender because it is within the withdrawal limit VALUE AFTER THE ADDITIONAL PARTIAL SURRENDER ($10,000): $139,674.22, which is the prior value reduced first dollar-for-dollar by the amount of the Surrender not in excess of 5% of Premium Payments ($6,500) and then proportional for the amount in excess of 5% of Premium Payments ($3,500). The proportionate reduction is determined by first determining the factor: 1 - (excess Surrender/(Contract Value prior to the Surrender - Death Benefit withdrawal limit remaining) 1- ($3,500/($173,000 + $10,000 - $6,500) = .980169971 Once the factor is determined the value prior to the Surrender is first reduced dollar-for-dollar by the amount of the Surrender not in excess of the Death Benefit withdrawal limit: $149,000 - $6,500 =$142,500 This value is then multiplied by the factor: $142,500 * .980169971 = $139,674.22 The death benefit would be the Contract Value or $173,000. You will also receive the Personal Pension Account death benefit equal to any remaining Benefit Balance. EXAMPLE 2: SAME FACTS AS ABOVE EXCEPT THE BENEFIT BALANCE AT THE TIME OF DEATH WAS EQUAL TO $100,000. The Death Benefit would be $273,000 (Return of Premium Death Benefit = $173,000 + Personal Pension Account Death Benefit = $100,000). APP A-9 ------------------------------------------------------------------------------- REMAINING GROSS PREMIUM EXAMPLES EXAMPLE 1: ILLUSTRATES A PARTIAL SURRENDER THAT IS LESS THAN THE AWA IN A DOWN MARKET. ASSUME A PARTIAL SURRENDER TAKEN IN CONTRACT YEAR 2 EQUALS $5,000. VALUES PRIOR TO THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0, as the AWA was not exceeded EXAMPLE 2: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN A DOWN MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME TWO PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 2, FOR $5,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000. VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the second partial Surrender is $75,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 APP A-10 ------------------------------------------------------------------------------- VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $70,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $95,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($5,000) of the AWA - The CDSC applied to this $5,000 partial Surrender is $350, which is the amount of the partial Surrender in excess of the AWA ($5,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $78,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premium is $95,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $68,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA has been taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $85,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% EXAMPLE 3: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN AN UP MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME BOTH PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 1 FOR $10,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000 VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $110,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $10,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $10,000, which are your earnings - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $100,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender did not exceed the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded APP A-11 ------------------------------------------------------------------------------- VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the second partial Surrender is $100,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $90,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $90,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $10,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $99,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $9,000, which are your earnings - Your Remaining Gross Premiums are $90,000 VALUES AFTER THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the third partial surrender is $84,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $84,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($6,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $420, which is the amount of the partial Surrender in excess of the AWA ($6,000) multiplied by 7% EXAMPLE 4: ILLUSTRATES A FULL SURRENDER CALCULATION WITH ONE OF TWO PREMIUM PAYMENTS OUT OF THE APPLICABLE CDSC SCHEDULE. ASSUME TWO PREMIUM PAYMENTS WERE MADE FOR $100,000 EACH. ONE PAYMENT WAS APPLIED IN THE BEGINNING OF CONTRACT YEAR 1, THE SECOND IN THE BEGINNING OF CONTRACT YEAR 3. A FULL SURRENDER IS TAKEN IN CONTRACT YEAR 8. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $200,000 - Your Contract Value just prior to the full Surrender is $300,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $100,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $200,000, which is the premium out of CDSC schedule ($100,000) plus your earnings - Your Remaining Gross Premium for the second Premium Payment (still in CDSC) is $100,000 APP A-12 ------------------------------------------------------------------------------- VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $300,000 full Surrender is $4,000, which is the maximum of the full Surrender or Remaining Gross Premium, reduced by the AWA ($100,000) multiplied by 4% EXAMPLE 5: ILLUSTRATES A FULL SURRENDER CALCULATION IN A DOWN MARKET. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the full Surrender is $50,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $50,000 full Surrender is $6,650, which is the maximum of the full Surrender or Remaining Gross Premium reduced by the AWA ($95,000) multiplied by 7% (using the 7-year CDSC schedule applicable to the "Core" Hartford Leaders variable annuity Contract) APP B-1 ------------------------------------------------------------------------------- APPENDIX B - ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in the Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows only the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits. A table showing all classes of Accumulation Unit Values corresponding to all combinations of optional benefits is shown in the Statement of Additional Information, which you may obtain free of charge by contacting us. There is no information available because as of December 31, 2008, the Sub-Accounts had not yet commenced operations. APP C-1 ------------------------------------------------------------------------------- APPENDIX C - FUND DATA I. INVESTMENT OPTIONS (STANDARD)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. CORE EQUITY FUND - SERIES Growth of capital Invesco Aim Advisors, Inc. Equity II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. INTERNATIONAL GROWTH FUND Long-term growth of capital Invesco Aim Advisors, Inc. Equity - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. MID CAP CORE EQUITY FUND Long-term capital growth Invesco Aim Advisors, Inc. Limited - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. POWERSHARES ETF To provide total return consistent Invesco Aim Advisors, Inc. Multi-Asset ALLOCATION FUND - SERIES II with a moderate level of risk Sub-adviser: Advisory entities relative to the broad stock market. affiliated with Invesco Aim Advisors, Inc. AIM V.I. SMALL CAP EQUITY FUND - Long-term capital growth Invesco Aim Advisors, Inc. Limited SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS BALANCED Maximize total return consistent with AllianceBernstein L.P. Multi-Asset WEALTH STRATEGY PORTFOLIO - CLASS Advisor's determination of reasonable B risk ALLIANCEBERNSTEIN VPS Long-term capital growth AllianceBernstein L.P. Equity INTERNATIONAL VALUE PORTFOLIO - CLASS B ALLIANCEBERNSTEIN VPS SMALL/MID Long-term capital growth AllianceBernstein L.P. Equity CAP VALUE PORTFOLIO - CLASS B FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS FIDELITY VIP CONTRAFUND(R) Seeks long-term capital appreciation Fidelity Management & Research Equity PORTFOLIO - SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP MID CAP PORTFOLIO - Long-term capital growth Fidelity Management & Research Equity SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP STRATEGIC INCOME Limited PORTFOLIO - SERVICE CLASS 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN FLEX CAP GROWTH Seeks capital appreciation Franklin Advisers, Inc. Equity SECURITIES FUND - CLASS 4
APP C-2 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- FRANKLIN INCOME SECURITIES FUND - Seeks to maximize income while Franklin Advisers, Inc. Limited CLASS 4 maintaining prospects for capital appreciation FRANKLIN RISING DIVIDENDS Equity SECURITIES FUND - CLASS 4 FRANKLIN SMALL CAP VALUE Seeks long-term total return Franklin Advisory Services, LLC Limited SECURITIES FUND - CLASS 4 FRANKLIN SMALL-MID CAP GROWTH Seeks long-term capital growth Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 FRANKLIN STRATEGIC INCOME Seeks a high level of current income, Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 with capital appreciation over the long term as a secondary goal MUTUAL GLOBAL DISCOVERY SECURITIES Seeks capital appreciation Franklin Mutual Advisers, LLC Equity FUND - CLASS 4 (1) Sub-advised by Franklin Templeton Investment Management Limited MUTUAL SHARES SECURITIES FUND - Capital appreciation, with income as Franklin Mutual Advisers, LLC Equity CLASS 4 a secondary goal TEMPLETON FOREIGN SECURITIES FUND Seeks long-term capital growth Templeton Investment Counsel, LLC Equity - CLASS 4 TEMPLETON GLOBAL BOND SECURITIES Seeks high current income, consistent Franklin Advisers, Inc. Limited FUND - CLASS 4 (2) with preservation of capital, with capital appreciation as a secondary consideration TEMPLETON GROWTH SECURITIES FUND - Seeks long-term capital growth Templeton Global Advisors Limited Equity CLASS 4 Sub-advised by Templeton Asset Management Ltd. HARTFORD HLS SERIES FUND II, INC. HARTFORD GROWTH OPPORTUNITIES HLS Capital appreciation Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD U.S. GOVERNMENT Maximize total return with a high Hartford Investment Financial Fixed SECURITIES HLS FUND - CLASS IA level of current income consistent Services, LLC. with prudent investment risk Sub-advised by Hartford Investment Management Company HARTFORD SERIES FUND, INC. AMERICAN FUNDS ASSET ALLOCATION Seeks high total return consistent Hartford Investment Financial Equity HLS FUND - CLASS IB with preservation of capital over the Services, LLC. long term Sub-advised by Hartford Investment Management Company AMERICAN FUNDS BLUE CHIP INCOME Seeks to produce income exceeding the Hartford Investment Financial Equity AND GROWTH HLS FUND - CLASS IB average yield on U.S. stocks Services, LLC. generally (as represented by the Sub-advised by Hartford Investment average yield on the S&P 500 Index) Management Company and to provide an opportunity for growth of principal consistent with sound common stock investing. AMERICAN FUNDS BOND HLS FUND - Seeks to maximize current income and Hartford Investment Financial Fixed CLASS IB preservation of capital Services, LLC. Sub-advised by Hartford Investment Management Company
APP C-3 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL BOND HLS Seeks a high level of total return Hartford Investment Financial Limited FUND - CLASS IB over the long term Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH AND Seeks growth of capital and current Hartford Investment Financial Equity INCOME HLS FUND - CLASS IB income Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL SMALL Seeks growth of capital Hartford Investment Financial Limited CAPITALIZATION HLS FUND - CLASS Services, LLC. IB Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH HLS FUND - Seeks growth of capital Hartford Investment Financial Equity CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH-INCOME HLS Seeks growth of capital and income Hartford Investment Financial Equity FUND - CLASS IB over time Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS INTERNATIONAL HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS NEW WORLD HLS FUND Seeks growth of capital Hartford Investment Financial Limited - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD CAPITAL APPRECIATION HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DISCIPLINED EQUITY HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DIVIDEND AND GROWTH HLS High level of current income Hartford Investment Financial Equity FUND - CLASS IA consistent with growth of capital Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL EQUITY HLS FUND - Seeks long term capital appreciation Hartford Investment Financial Equity CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL GROWTH HLS FUND - Growth of capital Hartford Investment Financial Equity CLASS IA (3) Services, LLC. Sub-advised by Wellington Management Company, LLP
APP C-4 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- HARTFORD GROWTH HLS FUND - CLASS Seeks long-term capital appreciation Hartford Investment Financial Equity IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD HIGH YIELD HLS FUND - High current income with growth of Hartford Investment Financial Limited CLASS IA capital as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD INDEX HLS FUND - CLASS IB Seeks to provide investment results Hartford Investment Financial Equity which approximate the price and yield Services, LLC. performance of publicly traded common Sub-advised by Hartford Investment stocks in the aggregate Management Company HARTFORD INTERNATIONAL Long-term capital growth Hartford Investment Financial Equity OPPORTUNITIES HLS FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD MONEY MARKET HLS FUND - Maximum current income consistent Hartford Investment Financial Fixed CLASS IA* with liquidity and preservation of Services, LLC. capital Sub-advised by Hartford Investment Management Company HARTFORD SMALL COMPANY HLS FUND - Growth of capital Hartford Investment Financial Limited CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP and Hartford Investment Management Company HARTFORD TOTAL RETURN BOND HLS Competitive total return, with income Hartford Investment Financial Fixed FUND - CLASS IA as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD VALUE HLS FUND - CLASS IA Long-term total return Hartford Investment Financial Equity Services, LLC. Sub-advised by Wellington Management Company, LLP MFS(R) VARIABLE INSURANCE TRUST MFS(R) GROWTH SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS MFS(R) INVESTORS TRUST SERIES - Seeks capital appreciation MFS Investment Management Equity SERVICE CLASS MFS(R) RESEARCH BOND SERIES - Total return with an emphasis on high MFS Investment Management Fixed SERVICE CLASS current income, but also considering capital appreciation. MFS(R) TOTAL RETURN SERIES - Seeks total return MFS Investment Management Multi-Asset SERVICE CLASS MFS(R) VALUE SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS PUTNAM VARIABLE TRUST PUTNAM VT EQUITY INCOME FUND - Capital growth and current income Putnam Investment Management, LLC Equity CLASS IB PUTNAM VT INVESTORS FUND - CLASS Long-term growth of capital and any Putnam Investment Management, LLC Equity IB increased income that results from this growth
APP C-5 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VOYAGER FUND - CLASS IB Seeks capital appreciation Putnam Investment Management, LLC Equity FIXED ACCUMULATION FEATURE** Preservation of capital General Account N/A
NOTES (1) Formerly Mutual Discovery Securities Fund - Class 4 (2) Formerly Templeton Global Income Securities Fund - Class 4 (3) Formerly Hartford Global Leaders HLS Fund - Class IA * In a low interest rate environment, yields for money market funds, after deduction of Contract charges may be negative even though the fund's yield, before deducting for such charges, is positive. If you allocate a portion of your Contract Value to a money market Sub-Account or participate in an Asset Allocation Program where Contract Value is allocated to a money market Sub-Account, that portion of your Contract Value may decrease in value. ** The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this feature. The Fixed Accumulation Feature is currently not available to A Share and I Share products. II. UNDERLYING FUNDS (PROPRIETARY)
FUND ADVISER OBJECTIVE B SHARE C SHARE I SHARE CLASSIFICATION ------------------------------------------------------------------------------------------------------------------------
To obtain a Statement of Additional Information, please complete the form below and mail to: The Hartford Attn: Individual Markets Group P.O. Box 5085 Hartford, Connecticut 06102-5085 Please send a Statement of Additional Information to me at the following address: ---------------------------------------------------------------- Name ---------------------------------------------------------------- Address ---------------------------------------------------------------- City/State Zip Code Contract Name Issue Date PART B HARTFORD LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION HARTFORD LEADERS SERIES V This Statement of Additional Information is not a prospectus. The information contained in this document should be read in conjunction with the prospectus. To obtain a prospectus, send a written request to The Hartford, Attn: Individual Markets Group, P.O. Box 5085, Hartford, CT 06102-5085. Date of Prospectus: August 14, 2009 Date of Statement of Additional Information: August 14, 2009 TABLE OF CONTENTS GENERAL INFORMATION 2 Safekeeping of Assets 2 Experts 2 Non-Participating 2 Misstatement of Age or Sex 2 Principal Underwriter 2 Additional Payments 2 PERFORMANCE RELATED INFORMATION 6 Total Return for all Sub-Accounts 6 Yield for Sub-Accounts 6 Money Market Sub-Accounts 7 Additional Materials 7 Performance Comparisons 7 ACCUMULATION UNIT VALUES 8 FINANCIAL STATEMENTS SA-2
2 ------------------------------------------------------------------------------- GENERAL INFORMATION SAFEKEEPING OF ASSETS We hold title to the assets of the Separate Account. The assets are kept physically segregated and are held separate and apart from our general corporate assets. Records are maintained of all purchases and redemptions of the underlying fund shares held in each of the Sub-Accounts. EXPERTS The consolidated balance sheets of Hartford Life Insurance Company (the "Company") as of December 31, 2008 and 2007, 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, 2008 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 11, 2009 (April 29, 2009 as to the effects of the change in reporting entity structure and the retrospective adoption of FASB Statement No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS described in Note 1 and Note 17) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company's change in its method of accounting for the fair value measurement of financial instruments in 2008) and the statements of assets and liabilities of Hartford Life Insurance Company Separate Account Seven (the "Account") as of December 31, 2008, and the related statements of operations and changes in net assets for the respective stated periods then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 18, 2009, which reports are both included in this Statement of Additional Information. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is City Place, 32nd Floor, 185 Asylum Street, Hartford, Connecticut 06103-3402. With respect to the unaudited interim financial information for the periods ended June 30, 2009 and 2008 which is incorporated by reference herein, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their report included in the Company's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2009 and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited interim financial information because that report is not a "report" or a "part" of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. NON-PARTICIPATING The Contract is non-participating and we pay no dividends. MISSTATEMENT OF AGE OR SEX If an Annuitant's age or sex was misstated on the Contract, any Contract payments or benefits will be determined using the correct age and sex. If we have overpaid Annuity Payouts, an adjustment, including interest on the amount of the overpayment, will be made to the next Annuity Payout or Payouts. If we have underpaid due to a misstatement of age or sex, we will credit the next Annuity Payout with the amount we underpaid and credit interest. PRINCIPAL UNDERWRITER The Contracts, which are offered continuously, are distributed by Hartford Securities Distribution Company, Inc. ("HSD"). HSD serves as Principal Underwriter for the securities issued with respect to the Separate Account. HSD is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the National Association of Securities Dealers, Inc. HSD is an affiliate of ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial Services Group, Inc. The principal business address of HSD is the same as ours. We currently pay HSD underwriting commissions for its role as Principal Underwriter of all variable annuities associated with this Separate Account. For the past three years, the aggregate dollar amount of underwriting commissions paid to HSD in its role as Principal Underwriter has been: 2008: $53,980,236; 2007: $125,061,889; and 2006: $122,003,581. ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES As stated in the prospectus, we (or our affiliates) pay Additional Payments to Financial Intermediaries. In addition to the Financial Intermediaries listed in the prospectus with whom we have an ongoing contractual arrangement to make Additional Payments, listed 3 ------------------------------------------------------------------------------- below are all Financial Intermediaries that received Additional Payments in 2008 of items such as sponsorship of meetings, education seminars, and travel and entertainment, whether or not an ongoing contractual relationship exists. A.G. Edwards & Sons, Inc., Abacus Investments, Inc., ABD Financial Services, Inc., Access Financial Group, Inc., Access Investments, Inc., Acument Securities, Inc., Addison Avenue Federal Credit Union, ADP Broker-Dealer, Inc., Advanced Advisor Group, Advanced Equities, Inc., Advantage Capital Corp., Advisory Group Equity Services Ltd., AFA Financial Group, LLC., Affinity Bank, AFS Brokerage, Inc., AIG Equity Sales Corp., AIG Financial Advisors, AIG Retirement Advisors, Inc., AIM Distributors, Inc., Aim Investments, Alamo Capital, All Nevada Insurance, Allegacy Federal Credit Union, Allegheny Investments Ltd., Allen & Co. of Florida, Inc., Alliance Bank, AllianceBernstein, AllianceBernstein Investment Research, AllState Financial Services, LLC., Altura Credit Union, AMCORE Bank, NA., Amcore Investment Services, Inc., American Bank, NA., American Classic Securities, American Funds & Trusts, Inc., American General Securities Inc., American Heritage Federal Credit Union, American Independent Securities Group, American Independent Securities, Inc., American Investors Company, American Investors Group, American Municipal Securities, Inc., American Portfolios Financial Services, American Securities Group, Inc., American Trust & Savings Bank, Ameriprise Financial Services, Inc., Ameritas Investment Corp., Ameritrade, Inc., Ames Community Bank, Amsouth Bank, Amsouth Investment Services, AmTrust Bank, Amtrust Investment Services, Inc., Anchor Bank, Anderson & Strudwick, Inc., Andrew Garrett, Inc., Arlington Securities, Inc., Arrowhead Central Credit Union, Arvest Asset Management, Arvest Bank, Ascend Financial Services, Inc., Askar Corp., Asset Management Securities Corp., Associated Bank, NA., Associated Financial Services, Inc., Associated Investment Services, Inc., Associated Securities Corp., Astoria Federal Savings & Loan Association, Atlantic Securities, Inc., Avisen Securities, Inc., AXA Advisors, LLC., Ayre Investments, B.B. Graham & Co., B.C. Ziegler and Company, Banc of America Investment Services, Inc., Bancnorth Investment Group, Inc., Bancorpsouth Investment Services, Inc., BancWest Investment Services, Inc., Bank of Albuquerque, NA., Bank of America, Bank of Clarendon, Bank of Clarke County, Bank of Stockton, Bank of Texas, Bank of the Commonwealth, Bank of the South, Bank of the West, Bankers & Investors Co., Bankers Life and Casualty, Banknorth, BankUnited, FSB, BankWest, Inc., Bannon, Ohanesian & Lecours, Inc., Banorte Securities, Banorte Securities International, Bates Securities, Inc., BB&T Investment Services, Inc., BCG Securities, Inc., Beaconsfield Financial Services., Inc., Benchmark Investments, Inc., Beneficial Investment Services, Bernard Herold & Co., Inc., Berthel, Fisher & Co. Financial Services, Inc., Bethpage Federal Credit Union, BI Investments, LLC., Bodell Overcash Anderson & Co., Boeing Employees Credit Union, BOSC, Inc., Brecek & Young Advisors, Inc., Brighton Securities Corp., Britton & Koontz Bank, N.A., Broad Street Securities, Inc., Broker Dealer Financial Services Corp., Brokersxpress LLC., Brookstone Securities, Inc., Brookstreet Securities Corp., Brown Advisory Securities Inc., Brown, Lisle/Cummings, Inc., Bruce A Lefavi Securities, Inc., Busey Bank, Butler, Wick & Co., Inc., C.R.I. Securities, Inc., Cadaret, Grant & Co., Inc., California Bank & Trust, California Credit Union, California National Bank, Calton & Associates, Inc., Cambridge Investment Research, Inc., Cambridge Legacy Sec., LLC., Cambridge State Bank, Cantella & Co., Inc., Capital Analysts, Inc., Capital Bank, Capital Brokerage Corporation, Capital Choice, Capital City Bank, Capital Financial Services, Inc., Capital Growth Resources, Capital Investment Group, Inc., Capital Investment Services, Inc., Capital One Investments Services, LLC., Capital Securities Investment Corp., Capital Securities Management, Capital Select Investments Corp., Capital Wealth Advisors, Inc., Capital West Securities, Inc., CapitalBank, Capitol Federal Savings Bank, Capitol Securities Management, Inc., Carolina First Bank, Carolinas Investment Consulting LLC., Cary Street Partners, LLC., Cascade Investment Group, Inc., CCF Investments, Inc., CCO Investment Services Corp., Centaurus Financial, Inc., Centennial Securities Co., Inc., Central State Bank, Central Virginia Bank, Century National Bank, Century Securities Associates, Inc., CFD Investments, Inc., Chapin, Davis, Charles Schwab, Chase Investments Services Corp., Chemical Bank West, Chevy Chase Financial Services, CIBC World Markets Corp., Citadel Federal Credit Union, Citi Bank, Citicorp Investment Services, Citigroup Global Markets, Inc., Citizens & Farmers Bank, Citizens Bank, Citizens Business Bank, City Bank, City Securities Corporation, Coastal Federal Credit Union, Coburn & Meredith, Inc., Colonial Bank, N.A., Colonial Brokerage, Inc., Comerica Bank, Comerica Securities, Commerce Bank, N.A., Commerce Brokerage Services, Inc., Commerce Capital Markets, Inc., Commercial & Savings Bank/Mllrsbrg, Commercial Federal Bank, Commonwealth Bank & Trust Co., Commonwealth Financial Network, Commonwealth Investment Services, Inc., Community Bank, Community Bank & Trust, Community Credit Union, Community Investment Services, Inc., Compass Bank, Compass Brokerage, Inc., Comprehensive Financial Services, Conservative Financial Services., Inc., Coordinated Capital Securities, Inc., Country Club Financial Services., Inc., Countrywide Bank, Countrywide Investment Services, Inc., Credit Union West, Crews & Associates, Inc., Crowell, Weedon & Co., Crown Capital Securities, LLP, CUE, Cullum & Burks Securities, Inc., Cumberland Brokerage Corp., Cuna Brokerage Services, Inc., Cuso Financial Services, LLP., CW Securities, LLC., D.A. Davidson & Company, Davenport & Company LLC., David A. Noyes & Company, David Lerner Associates, Inc., DaVinci Capital Management, Inc., Dawson James Securities, Inc., Delta Equity Services Corp., Delta Trust Investment, Inc., Deutsche Bank Securities, Inc., DeWaay Financial Network, DFCU Financial Federal Credit Union, Dilworth, Diversified Securities, Inc., Dominion Investor Services., Inc., Dorsey & Company, Inc., Dougherty & Company LLC., Dubuque Bank & Trust Co., Dumon Financial, Duncan-Williams, Inc., Dupaco Community Credit Union, Eagle Bank, Eagle One Financial, Eagle One Investments, LLC., Eastern Bank, Eastern Financial Florida Credit Union, ECM Securities Corporation, EDI Financial, Inc., Edward Jones, Effex National Security, Eisner Securities, Inc., Emclaire Financial Corp., Emerson Equity, LLC., Empire Bank, Empire Financial Group, Inc., Empire Securities Corporation, Emporia State Bank & Trust Co., Ensemble Financial Services, Inc., EPlanning Securities, Inc., Equitable Bank, Equitas America, LLC, Equity Services, Inc., ESL Federal Credit Union, Essex Financial Services, Inc., Essex National Securities, Inc., Essex Securities, LLC., Evans National Bank, EVB, Evolve Securities, Inc., Excel Securities & 4 ------------------------------------------------------------------------------- Assoc., Inc., Fairport Capital, Inc., Fairwinds Credit Union, Farmers National Bank, Farmers National Bank/Canfield, Feltl & Company, Ferris/Baker Watts, FFP Securities, Inc., Fidelity Bank, Fidelity Brokerage Services., LLC., Fidelity Federal Bank & Trust, Fidelity Investments, Fifth Third Bank, Fifth Third Securities, FIMCO Securities Group,Inc., Financial Center Credit Union, Financial Network Investment Corp., Financial Partners Credit Union, Financial Planning Consultants, Financial Security Management, Inc., Financial West Group, Fintegra LLC., First Allied Securities, First America Bank, First American Bank, First Bank, First Brokerage America, First Citizens Bank, First Citizens Financial Plus, Inc., First Citizens Investor Services, First Command Financial Planning, First Commonwealth Bank, First Commonwealth Federal Credit Union, First Community Bank, First Community Bank, N.A., First Federal Bank, First Federal Savings & Loan of Charlston, First Financial Bank, First Financial Equity Corp., First Global Securities, Inc., First Harrison Bank, First Heartland Capital Inc., First Hope Bank, First Investment Services, First MidAmerica Investment Corp., First Midwest Bank, First Midwest Securities, First Montauk Securities, First National Bank, First National Investments Inc, First Niagara Bank, First Northern Bank of Dixon, First Place Bank, First Southeast Investment Services, First St. Louis Securities, Inc., First Tennessee Bank, First Tennessee Brokerage, Inc., First Wall Street Corporation, First Western Securities Inc., FirstMerit Securities, Inc., FiServ Investor Services, Inc., Flagstar Bank, FSB, Florida Investment Advisers, Flushing Savings Bank, FSB, FMN Capital Corporation, FNB Brokerage Services, Inc., FNIC F.I.D. Div., Folger Nolan Fleming Douglas, Foothill Securities, Inc., Foresters Equity Services, Inc., Fortune Financial Services, Founders Financial Securities, LLC., Fox and Company, Franklin Bank, Franklin/Templeton Dist., Inc., Freedom Financial, Inc., Fremont Bank, Frontier Bank, Frost Brokerage Services Inc., Frost National Bank, FSC Securities Corporation, FSIC, Fulcrum Securities, Inc., Gateway Bank and Trust Company, Geneos Wealth Management, Inc., Genworth Financial Securities Corp., GIA Financial Group, L.L.C., Girard Securities Inc., Global Brokerage Services, Gold Coast Securities, Inc., Golden One Credit Union, Great American Advisors, Inc., Great American Investors, Inc., Great Lakes Capital, Inc., Greenberg Financial Group, Gregory J Schwartz & Co., Inc., Gunnallen Financial, Inc., GWN Securities, Inc., H&R Block Financial Advisers, Inc., H. Beck, Inc., H.D.Vest Investment Services, Haas Financial Products, Inc., Hancock Bank, Hancock Investments Services, Harbor Financial Services, LLC., Harbour Investments, Inc., Harger and Company, Inc., Harold Dance Investments, Harris Investor Services, Inc., Harvest Capital LLC, Hawthorne Securities Corp., Hazard & Siegel, Inc., Hazlett, Burt & Watson, Inc., HBW Securities, LLC, HCSB, Heartland Investment Associates, Inc., Heim & Young Securities, Inc., Heim Young & Associates, Inc., Hibernia Investments, LLC, Hibernia National Bank, High Country Bank, High Ridge Insurance Services, Hilliard Lyons, HNB National Bank, Home Savings & Loan Company of Youngstown, Home Savings Bank, Horizon Bank, Hornor, Townsend & Kent, Inc., Horwitz & Associates, Inc., Howe Barnes Investments, Inc., HRC Investment Services, Inc., HSBC Bank USA, National Associates, HSBC International, HSBC Securities (USA) Inc., Huntingdon Securities Corp., Huntington Investment Co., Huntington National Bank, Huntington Valley Bank, Huntleigh Securities Corp., IBC Investments, IBN Financial Services, Inc., ICBA Financial Services Corp., IFG Network Securities, Inc., IFMG Securities, Inc., IMS Securities, Inc., Independent Financial Securities Inc., Independent Financial Group, LLC., Indiana Merchant Banking & Brokerage, Infinex Investment, Inc., Infinity Securities, Co., Inc., ING Financial Advisors, LLC, ING Financial Partners, Innovative Solutions, Integrated Financial Inc., Intercarolina Financial Services, Inc., Interpacific Investor Services, InterSecurities, Inc., INTRUST Bank, NA., Intrust Brokerage Inc., Invesmart Securities, LLC., INVEST Financial Corporation, Investacorp, Inc., Investment Center, Inc., Investment Centers of America, Investment Management Corp., Investment Network, Inc., Investment Planners, Inc., Investment Professionals, Inc., Investment Security Corp., Investors Capital Corp., Investors Resources Group, Inc., Iowa State Bank, ISG Equity Sales Corporation, J.B. Hanauer & Co., J.J.B Hilliard, W.L.Lyons LLC., J.P. Turner & Co., J.W. Cole Financial, Inc., Jack V Butterfield Investment Co., Jackson Securities, LLC., Jacksonville Savings Bank, James C. Butterfield, Inc., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corp., Jesup & Lamont Securities Corp., JHW Financial Services, Inc., JHW Securities, JJB Hilliard/WL Lyons, Inc., Jones Bains Sides Investments Group, Joseph James Financial Services, Kalos Capital, Inc., Kaplan & Co., Securities Inc., KCD Financial, Inc., Keesler Federal Credit Union, Kern National Federal Credit Union, Kern Schools Federal Credit Union, Key Bank, Key Investment Services, LLC., Key Investor Services, KeyBank, NA., KeyPoint Credit Union, Kinecta Credit Union, Kirkwood Bank & Trust Co., KleinBank, KMS Financial Services, Inc., Kovack Securities, Inc., L.F. Financial, LLC., L.M. Kohn & Company, LaBrunerie Financial Services, Inc., Lake Area Bank, Lake Community Bank, Landmark Credit Union, Lara, Shull & May, LTD., LaSalle Financial Services, Inc., LaSalle Street Securities, Inc., Lawrence Jorgenson, Legacy Asset Securities, Inc., Legacy Financial Services, Inc., Legend Equities Corporation, Legends Bank, Legg Mason/Citigroup Global Market, Leigh Baldwin & Co., LLC., Leonard & Company, Lesko Securities Inc., Leumi Investment Services, Inc., Lexington Investment Co., Inc., LFA, Liberty Group, LLC., Liberty Securities Corporation, Lifemark Securities Corp., Lincoln Financial Advisors Corp., Lincoln Investment Planning, Inc., Linsco/Private Ledger, LOC Federal Credit Union, Lockheed Federal Credit Union, Lombard Securities, Inc., Long Island Financial Group, Lord, Abbett & Co., Lowell & Company, Inc., LPL Financial, M Holdings Securities, Inc., M&I Bank, M&I Brokerage Services, Inc., M&I Financial Advisors, Inc., M&T Bank, M&T Securities, Inc., M. Griffith, Inc., M.L. Stern & Co. Inc., Madison Avenue Securities, Inc., Madison Bank & Trust, Main Street Securities, LLC., Manarin Securities Corp., Manna Financial Services Corp., Mascoma Savings Bank, Mass Institute of Technology Credit Union, Mass Mutual, Maxim Group LLC., McGinn, Smith & Co., Inc., McNally Financial Services Corp.; Means Investment Co., Inc., Medallion Equities, Inc., Medallion Investment Services Inc., Mercantile Bank, Mercantile Brokerage Services Inc., Mercantile Trust & Savings Bank, Merrill Lynch Inc., Merrimac Corporate Securities, Inc., Mesirow Financial, Inc., MetLife Securities, Inc., MFS Fund Distributors, Inc., MICG Investment Management, Michigan Catholic Credit Union, Michigan Securities, Inc., Mid Atlantic Capital Corp., MidAmerica Financial Services Inc., Mid-Atlantic Securities, Inc., Midwestern Sec Trading CO, LLC., Milkie/Ferguson 5 ------------------------------------------------------------------------------- Investments, Mission Federal Credit Union, MMC Securities Corp., MML Investor Services, Inc., Moloney Securities Co., Inc., Money Concepts Capital Corp, Money Management Advisory Inc., Moors & Cabot, Inc., Morgan Keegan & Co., Inc., Morgan Peabody, Inc., Morgan Stanley & Co., Inc., MSCS Financial Services, LLC., MTL Equity Products, Inc., Multi-Financial Securities Corp., Multiple Financial Services., Inc., Mutual Funds Assoc., Inc., Mutual Securities, Inc., Mutual Service Corp., NatCity Investments, National Bank & Trust, National City Bank of Midwest, National Financial Services Corp., National Investors Services, National Pension & Group Consultant, National Planning Corporation, National Securities Corp., Nations Financial Group, Inc., Nationwide Investment Service Corp., Navy Federal Brokerage Services, Navy Federal Credit Union, NBC Financial Services, NBC Securities, Inc., NBT Bank, Neidiger, Tucker, Bruner, Inc., Nelson Securities, Inc., Networth Strategic, New England Securities Corp., New Horizon Asset Management Group, LLC., NewAlliance Bank, NewAlliance Investments, Inc., Newbridge Securities Corp., Nexity Financial Services, Inc., Next Financial Group, NFB Investment Services Corp., NFP Securities, Inc., NIA Securities, LLC., Nodaway Valley Bank, Nollenberger Capital Partners, North Ridge Securities Corp., Northeast Securities, Inc., Northern Trust Company, Northern Trust Securities, Inc., Northridge Capital Corp., Northwestern Mutual Investment Services, Inc., Nutmeg Securities, Ltd., NYLIFE Securities Inc., O.N. Equity Sales Co., Oak Tree Securities, Inc., Oakbrook Financial Group, Inc., Oberlin Financial Corporation, OFG Financial Services, Inc., Ogilvie Security Advisors Corp., Ohio National Equities, Inc., O'Keefe Shaw & Company, Old National Bank, ON Equity Sales Co., OneAmerica Securities Inc., Oppenheimer and Co., Inc., Orange County Teachers Federal Credit Union, P & A Financial Sec's Inc., Pacific Cascade Federal Credit Union, Pacific Financial Assoc., Pacific West Securities, Inc., Packerland Brokerage Services, Inc., Paragon Bank & Trust, Park Avenue Securities, Parsonex Securities, Inc., Partnervest Securities, Inc., Patapsco Bank, Patelco Credit Union, Paulson Investment Company Inc., Peachtree Capital Corporation, Penn Plaza Brokerage, Pension Planners Securities Inc., Pentagon Federal Credit Union, Peoples Bank, Peoples Community Bank, Peoples Securities, Inc., Peoples United Bank, PFIC Securities Corp, Pillar Financial Services, Pimco Funds, PlanMember Securities Corp., PMK Securities & Research Inc., PNC Bank Corp., PNC Investments LLC., Premier America Credit Union, Prime Capital Services, Inc., PrimeSolutions Securities, Inc, PrimeVest Financial Services, Princor Financial Service Corp., ProEquities, Inc., Professional Asset Management, Inc., Prospera Financial Services, Protected Investors of America, Provident Bank, Provident Savings Bank, F.S.B., Pruco Securities Corp., Purshe, Kaplin & Sterling, Putnam Investments, Putnam Savings Bank, QA3 Financial Corp., Quest Capital Strategies, Inc., Quest Securities, Inc., Quest Tar, Questar Capital Corp., R.M. Stark & Co., Raymond James & Associates, Inc., Raymond James Financial Services, Inc., RBC Capital Markets Corp., RBC Centura Bank, RBC Centura Securities, Inc., RBC Dain Rauscher Inc., Regal Discount Securities, Inc., Regal Securities, Inc., Regency Securities Inc., Regions Bank, Reliance Securities, LLC., Resource Horizons Group, LLC., R-G Crown Bank, Rhodes Securities, Inc., Rice Pontes Capital, Inc., Ridgeway & Conger, Inc., River City Bank, RiverStone Wealth Management, Inc., RNR Securities LLC., Robert B. Ausdal & Co., Inc., Robert W. Baird & Co. Inc., Robinson & Robinson, Inc., Rogan & Associates, Inc., Rogan, Rosenberg & Assoc., Inc., Rothschild Investment Corp., Royal Alliance Associates, Inc., Royal Securities Company, Rushmore Securities Corp., Rydex Distributors, Inc., S F Police Credit Union, S.C. Parker & Co., Inc., Sage, Rutty & Co., Inc., Sammons Securities Company LLC., San Mateo County Employees Credit Union, Sanders Morris Harris Inc., Sandy Spring Bank, Sawtooth Securities, LLC., Saxony Securities, Inc., SCF Securities, Inc., School Employees Credit Union, Scott & Stringfellow, Inc., Seacoast Investor Services Inc., Seacoast National Bank, Securian Financial Services, Securities America, Inc., Securities Equity Group, Securities Service Network, Inc., Security Service Federal Credit Union, Shields & Company, Sicor Securities Inc., Sigma Financial Corporation, Signator Investors Inc., Signature Bank, Signature Financial Group, Inc., Signature Securities Group, SII Investments, Silicone Valley Securities, SMH Capital, Smith Barney, Smith Barney Bank Advisor, Smith Hayes Financial Services Corp., Sorrento Pacific Financial LLC., Source Capital Group, Inc., South Carolina Bank & Trust, South Valley Bank & Trust, South Valley Wealth Management, Southeast Investments NA Inc., Southern MO Bank of Marshfield, SouthTrust Securities, Inc., Southwest Securities, Inc., Sovereign Bank, Space Coast Credit Union, Spectrum Capital, Inc., Spelman & Co., Inc., Spire Securities, LLC., Stanford Group Company, Stephen A. Kohn & Associates, Stephens, Inc., Sterling Savings Bank, Sterne Agee & Leach, Inc., Stifel, Nicolaus & Co., Inc., Stock Depot Inc, Stockcross, Inc., Stofan, Agazzi & Company, Inc., Strand Atkinson Williams York, Strategic Alliance Corp., Strategic Financial Alliance, Summit Bank, Summit Brokerage Services Inc., Summit Equities, Inc., Summitalliance Securities, LLC., SunAmerica, Sunset Financial Services, Inc., SunTrust Investment Services, Inc., Superior Bank, Surrey Bank & Trust, Susquehanna Bank, SWBC Investment Company, SWS Financial Services, Symetra Investment Services Inc., Synergy Investment Group, Synovus Securities, T.J. Raney & Sons, Inc., Taylor Securities, Inc., TD Bancnorth, National Assoc., TD Waterhouse Investor Services, Inc., Technology Credit Union, Telesis Community Credit Union, Telhio Credit Union, TFS Securities, Inc., The Advisors Group, Inc., The Capital Group Sec. Inc., The Concord Equity Group, LLC., The Golden 1 Credit Union, The Huntington Investment Co., The Huntington Investment Company, The Legend Gray, Thomasville National Bank, Thoroughbred Financial Services, LLC., Thrasher & Company, Thrivent Investment Management, Inc., Thurston, Springer, Miller, Her, TierOne Bank, TimeCapital Securities Corp., Tower Square Securities, Inc., TradeStar Investments, Inc., Transamerica Financial Advisor, TransWest Credit Union, Tri Counties Bank, Triad Advisors, Inc., Tri-County Financial Group, Inc., Triequa Capital Corporation, Triune Capital Advisors, Troy Bank & Trust, Trustmark National Bank, Trustmont Financial Group Inc., U.S Bank, UBS Financial Services, Inc., UBS International; UBS Private Banking, UMB Bank, UMB Financial Services, Inc., UMB Scout Brokerage Services, Union Bank, Union Bank & Trust, Union Bank Company, Union Bank of California, N.A., Union Bank of Chandler, Union Capital Company, Union Savings Bank, UnionBanc Investment Services, United Bank, Inc., United Brokerage Services, Inc., United Community Bank, United Financial Group, United Planners Financial Services of America, United Securities Alliance Inc., Univest Investments, Inc., US Alliance Credit 6 ------------------------------------------------------------------------------- Union, US Bancorp Investments, US Bank, N.A., USA Financial Securities Corp., USAllianz Securities, Inc., USI Securities, UVest Financial Services, V.B.C. Securities, VALIC Financial Advisors, Inc., ValMark Securities, Van Kampen Investments, Inc., VanDerbilt Securities, LLC., Veritrust Financial, LLC., VFinance Investments, Inc., Vinson Assoc., Vision Bank, Vision Invstmnt Services, Inc., Vision Securities, Inc., Vorpahl Wing Securities, VSR Financial Services, Inc., VYstar Credit Union, Waccamaw Bank, Wachovia Bank, Wachovia Securities Inc. Financial Network, Wachovia Securities ISG, Wachovia Securities LLC., Waddell & Reed, Inc., Wakulla Bank, Wald Group, Wall Street Electronica, Inc., Wall Street Financial Group, Walnut Street Securities, Inc., WAMU, WaMu Investments, Inc., Washington Mutual, Wasserman & Associates, Waterstone Financial Group, Wayne Hummer Investments LLC., Wayne Savings Community Bank, Wealth Management Services, Webster Bank, Webster Investments, Wedbush Morgan Securities Inc., Weitzel Financial Services Inc., Wells Fargo Investments, Wells Fargo Securities Independent, Wells Federal Bank, Wellstone Securities, LLC., WesBanco Bank, Inc., WesBanco Securities, Inc., Wescom Credit Union, Wescom Financial Services, West Alabama Bank & Trust, West Coast Bank, Westamerica Bank, Western Federal Credit Union, Western International Securities, Westfield Bakerink Brozak LLC., Westminster Financial Investment, Westminster Financial Securities, Inc., Westport Securities, L.L.C., WFG Securities Corp., Whitney National Bank, Whitney Securities, LLC., Wilbank Securities, Wiley Bros.- Aintree Capital, William C. Burnside & Company, Wilmington Brokerage Services, Wilmington Trust Co., Windsor Securities, Inc., WM Financial Services, Inc., Woodbury Financial Services, Inc., Woodforest National Bank, Woodlands Securities Corp., Woodmen Financial Services Inc., Woodstock Financial Group, Inc., Workman Securities Corp., World Equity Group Inc., World Group Securities, Inc., Worth Financial Group, Inc., WRP Investments, Inc., Wunderlich Securities Inc., XCU Capital Corp., Inc., Xerox Credit Union, Zeigler Investment Services. PERFORMANCE RELATED INFORMATION The Separate Account may advertise certain performance-related information concerning the Sub-Accounts. Performance information about a Sub-Account is based on the Sub-Account's past performance only and is no indication of future performance. TOTAL RETURN FOR ALL SUB-ACCOUNTS When a Sub-Account advertises its standardized total return, it will be calculated on a quarterly basis from the date the underlying fund is made available in the Separate Account for one, five and ten year periods or some other relevant periods if the underlying fund has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. To calculate standardized total return, the Total Annual Fund Operating Expenses, applicable Sales Charges, Distribution Charge, Separate Account Annual Expenses, and the Annual Maintenance Fee are deducted from a hypothetical initial Premium Payment of $1,000.00. Standardized total returns do not include charges for optional benefit riders. The formula we use to calculate standardized total return is P(1+T) TO THE POWER OF n = ERV. In this calculation, "P" represents a hypothetical initial premium payment of $1,000.00, "T" represents the average annual total return, "n" represents the number of years and "ERV" represents the redeemable value at the end of the period. The Sub-Account may advertise a non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Non-standardized total return is measured in the same manner as the standardized total return described above, except that non-standardized total return does not include the Annual Maintenance Fee, Distribution Charge, or Sales Charges. Therefore, non-standardized total return for a Sub-Account is higher than standardized total return for a Sub-Account. The Sub-Account may also advertise adjusted non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Adjusted non-standardized total return is measured in the same manner as the standardized total return described above. A Sub-Account may advertise non-standardized total returns for periods predating its inception as an investment option in this variable annuity. Such non-standardized total returns reflect the adjusted historical returns of the underlying Fund in which the Sub-Account invests, as adjusted for certain Separate Account annual expenses (Mortality and Expense Risk Charges and Administrative Fees), but excludes adjustments for optional riders or deductions for Annual Maintenance Fees, sales charges, premium taxes and federal/state taxes (including possible penalties). To the extent that a Sub-Account invests in a Feeder Fund (a Feeder Fund is a fund that invests all of its assets into a corresponding Master Fund), the Feeder Fund's performance for periods pre-dating the inception of the Feeder Fund and/or its inclusion within a Separate Account may include the performance of the Master Fund since the inception of the Master Fund, as adjusted for the Feeder Fund's operating expenses. In such case, the performance of a Feeder Fund will be lower than the corresponding Master Fund because of Feeder Fund operating expenses. Performance may include the effect of waivers and reimbursements, in the absence of which performance may have been lower. 7 ------------------------------------------------------------------------------- YIELD FOR SUB-ACCOUNTS If applicable, the Sub-Accounts may advertise yield in addition to total return. At any time in the future, yields may be higher or lower than past yields and past performance is no indication of future performance. The standardized yield will be computed for periods beginning with the inception of the Sub-Account in the following manner. The net investment income per Accumulation Unit earned during a one-month period is divided by the Accumulation Unit Value on the last day of the period. The formula we use to calculate yield is: YIELD = 2[(a - b/cd +1) TO THE POWER OF 6 - 1]. In this calculation, "a" represents the net investment income earned during the period by the underlying fund, "b" represents the expenses accrued for the period, "c" represents the average daily number of Accumulation Units outstanding during the period and "d" represents the maximum offering price per Accumulation Unit on the last day of the period. MONEY MARKET SUB-ACCOUNTS At any time in the future, current and effective yields may be higher or lower than past yields and past performance is no indication of future performance. Current yield of a money market fund Sub-Account is calculated for a seven-day period or the "base period" without taking into consideration any realized or unrealized gains or losses on shares of the underlying fund. The first step in determining yield is to compute the base period return. We take a hypothetical account with a balance of one Accumulation Unit of the Sub-Account and calculates the net change in its value from the beginning of the base period to the end of the base period. We then subtract an amount equal to the total deductions for the Contract and then divides that number by the value of the account at the beginning of the base period. The result is the base period return or "BPR." Once the base period return is calculated, we then multiply it by 365/7 to compute the current yield. Current yield is calculated to the nearest hundredth of one percent. The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A - B)/C. "A" is equal to the net change in value of a hypothetical account with a balance of one Accumulation Unit of the Sub-Account from the beginning of the base period to the end of the base period. "B" is equal to the amount that Hartford deducts for mortality and expense risk charge, any applicable administrative charge and the Annual Maintenance Fee. "C" represents the value of the Sub-Account at the beginning of the base period. Effective yield is also calculated using the base period return. The effective yield is calculated by adding 1 to the base period return and raising that result to a power equal to 365 divided by 7 and subtracting 1 from the result. The calculation we use is: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1. ADDITIONAL MATERIALS We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, dollar cost averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contracts and the characteristics of and market for any alternatives. PERFORMANCE COMPARISONS Each Sub-Account may from time to time include in advertisements the ranking of its performance figures compared with performance figures of other annuity contract's sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services. 8 ------------------------------------------------------------------------------- ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in this Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows all possible Accumulation Unit Values corresponding to all combinations of optional benefits. A table showing only the highest and lowest possible Accumulation Unit Values is shown in the prospectus, which assumes you select either no optional benefits or all optional benefits. There are no accumulated unit values because as of December 31, 2008, the Sub-Accounts had not commenced operations. PART A HUNTINGTON HARTFORD LEADERS HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 4/1/99) HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 12/8/86) P.O. BOX 5085 HARTFORD, CONNECTICUT 06102 - 5085 [TELEPHONE ICON] 1-800-862-6668 (CONTRACT OWNERS) 1-800-862-7155 (REGISTERED REPRESENTATIVES) [COMPUTER ICON] WWW.HARTFORDINVESTOR.COM [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This prospectus describes information you should know before you purchase Series III of the Huntington Hartford Leaders variable annuity. The prospectus describes a contract between each Owner and joint Owner ("you") and Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company ("us," "we" or "our"). This is an individual, deferred, flexible-premium variable annuity. This variable annuity allows you to allocate your Deposit among the following portfolio companies: X AIM Variable Insurance Funds X AllianceBernstein Variable Products Series Fund, Inc. X Fidelity Variable Insurance Products Funds X Franklin Templeton Variable Insurance Products Trust X Hartford HLS Series Fund II X Hartford Series Fund, Inc. X Huntington Funds X MFS(R) Variable Insurance Trust X Putnam Variable Trust You may also allocate your Deposit to the Personal Pension Account and/or the Fixed Accumulation Feature. The Fixed Accumulation Feature is not available for every Contract class. This prospectus refers to the following Contract classes: X B Share (Core) X C Share (Access) X I Share (Advisory) The Contract class will be selected on your application and identified in your Contract. Not every Contract class or optional rider may be available from your Financial Intermediary. The I share class is offered through registered investment/financial advisors. Other available Contract classes offered through select Financial Intermediaries are not described in this Prospectus and may be subject to different charges. Please read this prospectus carefully before investing and keep it for your records and for future reference. You can also contact us to get a Statement of Additional Information free of charge. The Statement of Additional Information contains more information about this Contract and, like this prospectus, is filed with the Securities and Exchange Commission ("SEC" or "Commission"). Although we file this prospectus and the Statement of Additional Information with the SEC, the SEC doesn't approve or disapprove these securities or determine if the information in this prospectus is truthful or complete. Anyone who represents that the SEC does these things may be guilty of a criminal offense. This prospectus and the Statement of Additional Information can also be obtained from us or the SEC's website (www.sec.gov). This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing. You will get NO ADDITIONAL TAX ADVANTAGE from this variable annuity if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account ("IRA")). This prospectus is not intended to provide tax, accounting or legal advice. We are not an investment adviser nor are we registered as such with the SEC or any state securities regulatory authority. We are not acting in any fiduciary capacity with respect to your investment. This information does not constitute personalized investment advice or financial planning advice. NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT] FDIC FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE [NOT] BANK
-------------------------------------------------------------------------------- PROSPECTUS DATED: AUGUST 14, 2009 STATEMENT OF ADDITIONAL INFORMATION DATED: AUGUST 14, 2009 2 ------------------------------------------------------------------------------- CONTENTS
PAGE -------------------------------------------------------------------------------- 1. INTRODUCTION 3 2. FEE SUMMARY 4 3. MANAGEMENT OF THE CONTRACT 10 The Company 10 The General Account 10 The Separate Account 10 The Funds 10 Fixed Accumulation Feature 12 Personal Pension Account 13 4. INFORMATION ON YOUR ACCOUNT 17 a. Opening an Account 17 b. Charges and Fees 24 c. Surrenders 27 d. Annuity Payouts 29 e. Standard Death Benefit 33 5. RETURN OF PREMIUM DEATH BENEFIT 35 6. FURTHER INFORMATION 38 a. Glossary 38 b. State Variations 41 c. Miscellaneous 41 d. Legal Proceedings 42 e. How Contracts Are Sold 42 7. FEDERAL TAX CONSIDERATIONS/ TAX-QUALIFIED RETIREMENT PLANS 44 TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 59 APPENDIX A - EXAMPLES APP A-1 APPENDIX B - ACCUMULATION UNIT VALUES APP B-1 APPENDIX C - FUND DATA APP C-1
3 ------------------------------------------------------------------------------- 1. INTRODUCTION HOW TO BUY THIS VARIABLE ANNUITY [Thumbs up] CHOOSE A CONTRACT CLASS
MORTALITY & MINIMUM INITIAL EXPENSE RISK DEPOSIT NON- AND MAXIMUM QUALIFIED QUALIFIED ADMINISTRATIVE UP-FRONT CONTRACT CONTRACT SALES & OTHER CHARGES CHARGES COMMISSION ----------------------------------------------------------------------------------------------------------------------------------- B SHARE $2,000 $5,000 8 year Contingent Deferred Sales Charge and 0.50% 5% Distribution Charge C SHARE $2,000 $10,000 1 year Contingent Deferred Sales Charge 1.35% 1% I SHARE $5,000 $10,000 None 0.30% 0%
This table does not show Fund expenses, Premium taxes, Distribution Charges, and optional rider fees. [Thumbs up] CHOOSE INVESTMENT OPTIONS X Sub-Accounts - Funds with different investment strategies, objectives and risk/reward profiles. X Fixed Accumulation Feature (B share class only) - A fixed interest account. X Personal Pension Account - A fixed interest account designed to provide lifetime payouts. Subject to limitations, you may move your investment among each of these options. [Thumbs up] CHOOSE AN OPTIONAL FEATURE (IF DESIRED) OPTIONAL FEATURE GENERAL PURPOSE ------------------------------------------------------------------------ Return of Premium Death Benefit* Guaranteed Minimum Death Benefit * Investment restrictions apply. Optional features may not be available through your Financial Intermediary. [In writing] COMPLETE OUR APPLICATION OR ORDER REQUEST AND SUBMIT IT TO YOUR FINANCIAL INTERMEDIARY FOR APPROVAL. $ PAY THE APPLICABLE MINIMUM INITIAL DEPOSIT. 4 ------------------------------------------------------------------------------- 2. FEE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ CONTINGENT DEFERRED SALES CHARGE (CDSC) (1) None 1 7% 2% 2 7% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0% SURRENDER FEE None None None TRANSFER FEE None None None
(1) Each Deposit has its own CDSC schedule. CONTRACT OWNER PERIODIC EXPENSES THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY AND ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ ANNUAL MAINTENANCE FEE (2) $30 $30 $30 DISTRIBUTION CHARGE (3) 0.75% None None SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily Contract Value excluding Fixed Accumulation Feature investments) Mortality and Expense Risk Charge 0.30% 1.15% 0.10% Administrative Charge 0.20% 0.20% 0.20% TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 0.50% 1.35% 0.30% MAXIMUM OPTIONAL CHARGES Return of Premium Death Benefit (4) 0.75% 0.75% 0.75%
(2) Fee waived if Account Balance is $50,000 or more on your Contract Anniversary. (3) The Distribution Charge is based on a percentage of Remaining Gross Premium. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge is reduced to 0% after the completion of eight years after each respective Premium Payment. (4) Charge based on a percentage of Premium Payments adjusted for Surrenders on each Contract Anniversary. Current rider charge is 0.30%. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM MAXIMUM --------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 0.44% 2.37% (expenses that are deducted from Underlying Fund assets, including management fees, distribution and/or service fees (12b-1) fees, and other expenses.
5 ------------------------------------------------------------------------------- THE LAST TABLE SHOWS THE TOTAL ANNUAL FUND OPERATING EXPENSES FOR EACH UNDERLYING FUND. ACTUAL FEES AND EXPENSES FOR THE UNDERLYING FUNDS VARY DAILY. AS A RESULT, THE FEES AND EXPENSES FOR ANY GIVEN DAY MAY BE GREATER OR LESS THAN THE TOTAL ANNUAL FUND OPERATING EXPENSES LISTED BELOW. MORE DETAIL CONCERNING EACH UNDERLYING FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. THESE EXPENSES MAY VARY FROM YEAR TO YEAR. ANNUAL FUND OPERATING EXPENSES AS OF THE FUND'S YEAR END (As a percentage of net assets)
DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 0.61% 0.25% 0.29% 0.01% AIM V.I. International Growth Fund - Series II 0.71% 0.25% 0.35% 0.02% AIM V.I. Mid Cap Core Equity Fund - Series II 0.72% 0.25% 0.32% 0.03% AIM V.I. PowerShares ETF Allocation Fund - Series II 0.67% 0.25% 0.89% 0.56% AIM V.I. Small Cap Equity Fund - Series II 0.75% 0.25% 0.34% 0.01% ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 0.55% 0.25% 0.22% N/A AllianceBernstein VPS International Value Portfolio - Class B 0.74% 0.25% 0.07% N/A AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 0.75% 0.25% 0.11% N/A FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.56% 0.25% 0.10% N/A Fidelity VIP Mid Cap Portfolio - Service Class 2 0.56% 0.25% 0.12% N/A Fidelity VIP Strategic Income Portfolio - Service Class 2 0.57% 0.25% 0.16% N/A FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 0.68% 0.35% 0.31% 0.04% Franklin Income Securities Fund - Class 4 0.45% 0.35% 0.02% N/A Franklin Rising Dividends Securities Fund - Class 4 0.60% 0.35% 0.02% 0.01% Franklin Small Cap Value Securities Fund - Class 4 0.52% 0.35% 0.16% 0.01% Franklin Small-Mid Cap Growth Securities Fund - Class 4 0.50% 0.35% 0.28% 0.02% Franklin Strategic Income Securities Fund - Class 4 0.37% 0.35% 0.25% 0.01% Mutual Global Discovery Securities Fund - Class 4 0.80% 0.35% 0.18% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 1.16% 0.01% N/A 1.15% (1)(2)(3)(4) AIM V.I. International Growth Fund - Series II 1.33% 0.01% N/A 1.32% (1)(2)(3)(4) AIM V.I. Mid Cap Core Equity Fund - Series II 1.32% 0.03% N/A 1.29% (1)(2)(3)(4) AIM V.I. PowerShares ETF Allocation Fund - Series II 2.37% 1.38% N/A 0.99% (1)(2)(4)(5) AIM V.I. Small Cap Equity Fund - Series II 1.35% N/A N/A 1.35% (1)(4)(6) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 1.02% 0.02% N/A 1.00% (7) AllianceBernstein VPS International Value Portfolio - Class B 1.06% N/A N/A 1.06% AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 1.11% N/A N/A 1.11% FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.91% N/A N/A 0.91% (8) Fidelity VIP Mid Cap Portfolio - Service Class 2 0.93% N/A N/A 0.93% (8) Fidelity VIP Strategic Income Portfolio - Service Class 2 0.98% N/A N/A 0.98% FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 1.38% 0.31% N/A 1.07% (9)(12) Franklin Income Securities Fund - Class 4 0.82% N/A N/A 0.82% (10) Franklin Rising Dividends Securities Fund - Class 4 0.98% N/A N/A 0.98% Franklin Small Cap Value Securities Fund - Class 4 1.04% N/A N/A 1.04% (12) Franklin Small-Mid Cap Growth Securities Fund - Class 4 1.15% N/A N/A 1.15% (12) Franklin Strategic Income Securities Fund - Class 4 0.98% N/A N/A 0.98% (12) Mutual Global Discovery Securities Fund - Class 4 1.33% N/A N/A 1.33% (11)
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 0.60% 0.35% 0.13% N/A Templeton Foreign Securities Fund - Class 4 0.64% 0.35% 0.15% 0.02% Templeton Global Bond Securities Fund - Class 4 0.47% 0.35% 0.11% N/A Templeton Growth Securities Fund - Class 4 0.74% 0.35% 0.04% N/A HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.61% N/A 0.03% N/A Hartford U.S. Government Securities HLS Fund - Class IA 0.45% N/A 0.01% N/A HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.65% 0.25% 0.09% N/A American Funds Blue Chip Income and Growth HLS Fund - Class IB 0.75% 0.25% 0.17% N/A American Funds Bond HLS Fund - Class IB 0.50% 0.25% 0.05% N/A American Funds Global Bond HLS Fund - Class IB 0.75% 0.25% 0.10% N/A American Funds Global Growth and Income HLS Fund - Class IB 0.80% 0.25% 0.06% N/A American Funds Global Growth HLS Fund - Class IB 1.00% 0.25% 0.12% N/A American Funds Global Small Capitalization HLS Fund - Class IB 0.80% 0.25% 0.11% N/A American Funds Growth HLS Fund - Class IB 0.75% 0.25% 0.03% N/A American Funds Growth- Income HLS Fund - Class IB 0.70% 0.25% 0.04% N/A American Funds International HLS Fund - Class IB 0.85% 0.25% 0.04% N/A American Funds New World HLS Fund - Class IB 1.10% 0.25% 0.09% N/A Hartford Capital Appreciation HLS Fund - Class IA 0.63% N/A 0.04% N/A Hartford Disciplined Equity HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Dividend and Growth HLS Fund - Class IA 0.64% N/A 0.03% N/A Hartford Global Equity HLS Fund - Class IA 0.95% N/A 0.07% N/A Hartford Global Growth HLS Fund - Class IA 0.71% N/A 0.04% N/A Hartford Growth HLS Fund - Class IA 0.80% N/A 0.04% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 1.08% N/A N/A 1.08% Templeton Foreign Securities Fund - Class 4 1.16% N/A N/A 1.16% (12) Templeton Global Bond Securities Fund - Class 4 0.93% N/A N/A 0.93% (13) Templeton Growth Securities Fund - Class 4 1.13% N/A N/A 1.13% (10) HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.64% N/A N/A 0.64% Hartford U.S. Government Securities HLS Fund - Class IA 0.46% N/A N/A 0.46% HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.99% 0.40% 0.32% 0.91% (14) American Funds Blue Chip Income and Growth HLS Fund - Class IB 1.17% 0.50% 0.43% 1.10% (14) American Funds Bond HLS Fund - Class IB 0.80% 0.25% 0.40% 0.95% (14) American Funds Global Bond HLS Fund - Class IB 1.10% 0.50% 0.59% 1.19% (14) American Funds Global Growth and Income HLS Fund - Class IB 1.11% 0.55% 0.62% 1.18% (14) American Funds Global Growth HLS Fund - Class IB 1.37% 0.75% 0.55% 1.17% (14) American Funds Global Small Capitalization HLS Fund - Class IB 1.16% 0.55% 0.74% 1.35% (14) American Funds Growth HLS Fund - Class IB 1.03% 0.50% 0.33% 0.86% (14) American Funds Growth- Income HLS Fund - Class IB 0.99% 0.45% 0.28% 0.82% (14) American Funds International HLS Fund - Class IB 1.14% 0.60% 0.52% 1.06% (14) American Funds New World HLS Fund - Class IB 1.44% 0.85% 0.81% 1.40% (14) Hartford Capital Appreciation HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Disciplined Equity HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Dividend and Growth HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Global Equity HLS Fund - Class IA 1.02% 0.10% N/A 0.92% (15) Hartford Global Growth HLS Fund - Class IA 0.75% N/A N/A 0.75% Hartford Growth HLS Fund - Class IA 0.84% N/A N/A 0.84%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.70% N/A 0.04% N/A Hartford Index HLS Fund - Class IB 0.30% 0.25% 0.02% N/A Hartford International Opportunities HLS Fund - Class IA 0.67% N/A 0.04% N/A Hartford Money Market HLS Fund - Class IA 0.40% N/A 0.04% N/A Hartford Small Company HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Total Return Bond HLS Fund - Class IA 0.46% N/A 0.03% N/A Hartford Value HLS Fund - Class IA 0.81% N/A 0.03% N/A MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 0.75% 0.25% 0.08% N/A MFS(R) Investors Trust Series - Service Class 0.75% 0.25% 0.09% N/A MFS(R) Research Bond Series - Service Class 0.50% 0.25% 0.14% N/A MFS(R) Total Return Series - Service Class 0.74% 0.25% 0.07% N/A MFS(R) Value Series - Service Class 0.75% 0.25% 0.09% N/A PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 0.65% 0.25% 0.13% 0.02% Putnam VT Investors Fund - Class IB 0.65% 0.25% 0.12% N/A Putnam VT Voyager Fund - Class IB 0.64% 0.25% 0.08% 0.01% HUNTINGTON FUNDS Huntington VA Dividend Capture Fund 0.60% N/A 0.31% 0.01% Huntington VA Growth Fund 0.60% N/A 0.27% 0.02% Huntington VA Income Equity Fund 0.60% N/A 0.32% N/A Huntington VA International Equity Fund 0.60% N/A 0.43% 0.04% Huntington VA Macro 100 Fund 0.60% N/A 0.38% 0.01% Huntington VA Mid Corp America Fund 0.60% N/A 0.33% 0.04% Huntington VA Mortgage Securities Fund 0.60% N/A 0.44% 0.03% Huntington VA New Economy Fund 0.60% N/A 0.33% 0.08% Huntington VA Rotating Markets Fund 0.60% N/A 0.33% 0.68% Huntington VA Situs Fund 0.60% N/A 0.35% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.74% N/A N/A 0.74% Hartford Index HLS Fund - Class IB 0.57% N/A N/A 0.57% Hartford International Opportunities HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Money Market HLS Fund - Class IA 0.44% N/A N/A 0.44% Hartford Small Company HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Total Return Bond HLS Fund - Class IA 0.49% N/A N/A 0.49% Hartford Value HLS Fund - Class IA 0.84% N/A N/A 0.84% MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 1.08% N/A N/A 1.08% (16) MFS(R) Investors Trust Series - Service Class 1.09% N/A N/A 1.09% (16) MFS(R) Research Bond Series - Service Class 0.89% N/A N/A 0.89% (16) MFS(R) Total Return Series - Service Class 1.06% N/A N/A 1.06% (16) MFS(R) Value Series - Service Class 1.09% N/A N/A 1.09% (16) PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 1.05% N/A N/A 1.05% (17) Putnam VT Investors Fund - Class IB 1.02% N/A N/A 1.02% (18) Putnam VT Voyager Fund - Class IB 0.98% N/A N/A 0.98% (17) HUNTINGTON FUNDS Huntington VA Dividend Capture Fund 0.92% N/A N/A 0.92% (19) Huntington VA Growth Fund 0.89% N/A N/A 0.89% (19) Huntington VA Income Equity Fund 0.92% N/A N/A 0.92% Huntington VA International Equity Fund 1.07% N/A N/A 1.07% (19) Huntington VA Macro 100 Fund 0.99% N/A N/A 0.99% (19) Huntington VA Mid Corp America Fund 0.97% N/A N/A 0.97% (19) Huntington VA Mortgage Securities Fund 1.07% N/A N/A 1.07% (19) Huntington VA New Economy Fund 1.01% N/A N/A 1.01% (19) Huntington VA Rotating Markets Fund 1.61% N/A N/A 1.61% (19) Huntington VA Situs Fund 0.95% N/A N/A 0.95%
* The 12b-1 fees deducted from these classes cover certain distribution, shareholder support and administrative services provided by intermediaries (the insurance company, broker dealer or other service provider). NOTES (1) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expense are included in the total returns of the Fund. 8 ------------------------------------------------------------------------------- (2) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees Invesco Aim receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. Fee Waiver reflects this agreement. (3) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.45% of average daily net assets. (4) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2008 and are expressed as a percentage of the Fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. (5) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 0.43% of average daily net assets. (6) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.40% of average daily net assets. (7) Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Portfolio's operating expenses. This waiver extends through April 30, 2010 and may be extended by the Adviser for additional one-year terms. (8) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of un-invested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been: Fidelity VIP Contrafund Portfolio Initial Class - 0.65%; Fidelity VIP Contrafund Portfolio Service Class 2 - 0.90%; Fidelity VIP Growth Portfolio Initial Class - 0.67%; Fidelity VIP Growth Portfolio Service Class 2 - 0.92%; Fidelity VIP Mid Cap Portfolio Service Class 2 - 0.92%; Fidelity Overseas Portfolio Initial Class - 0.84%. These offsets may be discontinued at any time. (9) The investment manager and administrator have contractually agreed to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the Fund so that common annual Fund operating expenses (i.e., a combination of investment management fees, fund administration fees, and other expenses, but excluding Rule 12b-1 fees and acquired fund fees and expenses) do not exceed 0.72% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2010. This waiver is separate from the waiver related to the Sweep Money Fund. (10) The Fund administration fee is paid indirectly through the management fee. (11) The Fund's name changed from Mutual Discovery Securities Fund effective as of May 1, 2009. (12) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the Sweep Money Fund which is "the acquired fund" in this case) to the extent of the Fund's fees and expenses of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. (13) The Fund's name changed from Templeton Global Income Securities Fund effective as of May 1, 2009. (14) Because the Feeder Fund invests all of its assets in the Master Fund, the Feeder Fund will bear its own fees and expenses and its proportionate share of the fees and expenses of the Master Fund. The amounts shown under "Master Fund Expenses" include the advisory fee (before non-contractual fee waiver). The Annual Fund Operating Expense table and the Examples reflect the estimated expenses of both the Feeder Fund and the Master Fund. The Class I shares of the Master Funds do not have a sales charge (load) or a distribution and service (12b-1) fee. HL Advisors has entered into a contractual agreement with Hartford Series Fund, Inc (the Company") under which it will waive a portion of its advisory fee for such time as the fund is operated as a feeder fund, because during the that time it will not be providing the portfolio management portion of the advisory and management services to be provided under its investment management with the Company. The fee waiver will continue as long as the fund is part of a master-feeder structure unless the Board of Directors approves a change in or elimination of the waiver. Currently, the fund waivers are as follows: American Funds Asset Allocation HLS Fund - 0.40%; American Funds Blue Chip and Growth HLS Fund - 0.50%; American Fund Bond HLS Fund - 0.25%; American Funds Global Bond HLS Fund - 0.50%; American Funds Global Growth and Income HLS Fund - 0.55%; American Funds Global Growth HLS Fund - 0.75%; American Fund Global Small Capitalization HLS Fund - 0.55%; American Funds Growth HLS Fund - 0.50%; American Funds Growth-Income HLS Fund - 0.45%; American Funds International HLS Fund - 0.60%; American Funds New World HLS Fund - 0.85%. (15) Effective August 25, 2008 HL Advisors contractually agreed to waive a portion of its management fees until May 1, 2010. While such waiver is in effect, using the most recent fiscal year average net assets, the management fee is 0.85% and the total annual operating expenses are 0.92%. (16) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees." (17) "Total Annual Fund Operating Expenses" includes the amount from "Acquired Fund Fees and Expenses" column, which is an estimate of expenses attributable to the fund's investments in other investment companies, based on the total annual fund operating expenses of such companies as reported in their most recent shareholder reports (net of any applicable expense limitations). These indirect expenses will vary from time to time depending on the fund's investments in other investment companies and their operating expenses (18) Includes estimated expenses attributable to the fund's investments in other investment companies that the fund bears indirectly. (19) Because the Funds invest in other Funds, they are a shareholder of those Underlying Funds and indirectly bear their proportionate share of the operating expenses, including management fees, of the Underlying Funds. These expenses are deducted from the Underlying Funds before their share prices are calculated and are in addition to the direct fees and expenses borne by the Funds and their shareholders that are also described in the fee tables above. All of the above expenses of the Funds and Acquired (Underlying) Funds use their expense ratios for their most recent fiscal year. These estimates may vary considerably based on future asset levels of the Funds, the availability of Acquired (Underlying) Funds, the amount of Funds' assets invested in Acquired (Underlying) Funds at any point in time, and the fluctuation of the expense ratios of the Acquired (Underlying) Funds. 9 ------------------------------------------------------------------------------- EXAMPLE THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THIS VARIABLE ANNUITY WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITIES. LET'S SAY, HYPOTHETICALLY, THAT YOUR ANNUAL INVESTMENT RETURN IS FIVE (5%) PERCENT AND THAT YOUR FEES AND EXPENSES TODAY WERE AS HIGH AS POSSIBLE INCLUDING THE ELECTION OF THE HIGHEST POSSIBLE OPTIONAL CHARGES (I.E., THE HARTFORD'S RETURN OF PREMIUM DEATH BENEFIT). THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR EVERY $10,000 INVESTED (EXCLUDING PERSONAL PENSION ACCOUNT CONTRIBUTIONS AND AMOUNTS ALLOCATED TO THE FIXED ACCUMULATION FEATURE), HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS POSED: (1) If you Surrender your variable annuity at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $1137 $2092 $2858 $4630 C Share $676 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
(2) If you annuitize at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $294 $1245 $2199 $4525 C Share $381 $1355 $2332 $4782 I Share $274 $1041 $1822 $3841
(3) If you do not Surrender your variable annuity:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $474 $1425 $2379 $4630 C Share $486 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- When Premium Payments are credited to your Funds, they are converted into Accumulation Units by dividing the amount of your Premium Payments minus any Premium taxes, by the Accumulation Unit Value for that Valuation Day. All classes of Accumulation Unit Values may be obtained, free of charge, by contacting us. See Appendix B - Accumulation Unit Values for additional information. You can find financial statements for us and the Separate Account in the Statement of Additional Information. 10 ------------------------------------------------------------------------------- 3. MANAGEMENT OF THE CONTRACT THE COMPANY We are a stock life insurance company engaged in the business of writing life insurance and individual and group annuities. Hartford Life Insurance Company is authorized to do business in all states of the United States and the District of Columbia. Hartford Life and Annuity Insurance Company is authorized to do business in Puerto Rico, the District of Columbia, and all states of the United States except New York. Hartford Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company is a subsidiary of Hartford Life Insurance Company. Our corporate offices are located in Simsbury, Connecticut. Neither company cross guarantees the obligations of the other. We are ultimately controlled by The Hartford Financial Services Group, Inc. All guarantees under the Contract are subject to each issuing company's financial strength and claims-paying capabilities. We provide information about our financial strength in reports filed with the SEC (Hartford Life Insurance Company only) and/or state insurance departments. For example, Hartford Life Insurance Company files annual reports (Form 10-K), quarterly reports (Form 10-Q) and periodic reports (Form 8-K) with the SEC. Forms 10-K and 10-Q include information such as our financial statements, management discussion and analysis of the previous year of operations, risk factors, and other information. Form 8-K reports are used to communicate important developments that are not otherwise disclosed in the other forms described above. You may read or copy these reports at the SEC's Public Reference Room at 100 F. Street N.E., Room 1580, Washington, D.C. 20549-2001. You may also obtain reports and other information about us by contacting us using the information stated on the cover page of this prospectus, visiting our website at www.hartfordinvestor.com or visiting the SEC's website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department. THE GENERAL ACCOUNT The Fixed Accumulation Feature and the Personal Pension Account are part of our General Account. Any amounts that we are obligated to pay under the Fixed Accumulation Feature and the Personal Pension Account and any other payment obligation we undertake under the Contract are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. We invest the assets of the General Account according to the laws governing the investments of insurance company general accounts. The General Account is not a bank account and is not insured by the FDIC or any other government agency. We receive a benefit from all amounts held in our General Account. Amounts in our General Account are available to our general creditors. We issue other types of insurance policies and financial products and pay our obligations under these products from our assets in the General Account. THE SEPARATE ACCOUNT We set aside and invest the assets of some of our annuity contracts, including these Contracts, in a Separate Account. These Separate Accounts are registered as unit investment trusts under the 1940 Act. This registration does not involve supervision by the SEC of the management or the investment practices of a Separate Account or us. Separate Accounts meet the definition of "Separate Account" under federal securities law. The Separate Accounts referenced in this prospectus hold only assets for variable annuity contracts. These Separate Accounts: - hold assets for your benefit and the benefit of other Contract Owners, and the persons entitled to the payouts described in the Contract; - are not subject to the liabilities arising out of any other business we may conduct; - are not affected by the rate of return of our General Account or by the investment performance of any of our other Separate Accounts; - may be subject to liabilities of other variable annuity contracts offered by this Separate Account which are not described in this prospectus; and - are credited with income and gains, and takes losses, whether or not realized, from the assets they hold without regard to our other income, gains or loss. We do not guarantee the investment results of the Separate Account. THE FUNDS The Funds available for investment are not the same mutual funds that you can buy through your Registered Representative even though they may have similar investment strategies and the same portfolio managers. Each Fund has varying degrees of investment risk. Funds are also subject to separate fees and expenses such as management fees, distribution and operating expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the 11 ------------------------------------------------------------------------------- prospectuses for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all Contract classes. MIXED AND SHARED FUNDING - Fund shares may be sold to our other separate accounts, our insurance company affiliates or other unaffiliated insurance companies to serve as an underlying investment for variable annuity contracts and variable life insurance policies, pursuant to a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of Owners, and other contract owners investing these Funds. If a material conflict arose, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another underlying fund. VOTING RIGHTS - We are the legal owners of all Fund shares held in the Separate Account and we have the right to vote at the Funds' shareholder meetings. To the extent required by federal securities laws or regulations, we will: - notify you of any Fund shareholders' meeting if the shares held for your Contract may be voted; - send proxy materials and a form of instructions that you can use to tell us how to vote the Fund shares held for your Contract; - arrange for the handling and tallying of proxies received from Owners; - vote all Fund shares attributable to your Contract according to instructions received from you, and - vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. If any federal securities laws or regulations, or their present interpretation, change to permit us to vote Fund shares on our own, we may decide to do so. You may attend any shareholder meeting at which shares held for your Contract may be voted. After we begin to make Annuity Payouts to you, the number of votes you have will decrease. As a result of proportional voting, a small number of Owners could determine the outcome of a proposition subject to shareholder vote. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS - Subject to any applicable law, we may make certain changes to the Funds offered under your Contract. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Owners as we deem appropriate. We may also close one or more Funds to additional Premium Payments or transfers from existing Funds. We may liquidate one or more Sub-Accounts if the board of directors of any Fund determines that such actions are prudent. Unless otherwise directed, investment instructions will be automatically updated to reflect the Fund surviving after any merger, substitution or liquidation. We may eliminate the shares of any of the Funds from the Contract for any reason and we may substitute shares of another registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account. To the extent required by the 1940 Act, substitutions of shares attributable to your interest in a Fund will not be made until we have the approval of the SEC and we have notified you of the change. In the event of any substitution or change, we may, by appropriate endorsement, make any changes in the Contract necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Owners, the Separate Account may be operated as a management company under the 1940 Act or any other form permitted by law, may be de-registered under the 1940 Act in the event such registration is no longer required, or may be combined with one or more other Separate Accounts. FEES WE RECEIVE FROM FUNDS AND RELATED PARTIES - We receive substantial and varying administrative service payments (referred to as "revenue sharing payments") and Rule 12b-1 fees from certain Funds or related parties. We consider revenue sharing payments and Rule 12b-1 fees among a number of factors when deciding to add or keep a Fund that we offer through the Contract. We collect these payments and fees under agreements between us and a Fund's principal underwriter, transfer agent, investment adviser and/or other entities related to the Fund. We expect to make a profit on these fees. The availability of these types of arrangements creates an incentive for us to seek and offer Funds (and classes of shares of such Funds) that pay us revenue sharing. Other funds (or available classes of shares) may have lower fees and better overall investment performance. As of December 31, 2008, we have entered into arrangements to receive administrative service payments and/or Rule 12b-1 fees from each of the following Fund complexes (or affiliated entities): AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, Branch Banking & Trust Company, Evergreen Investment Services Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Franklin Templeton Services, LLC, The Huntington Funds, Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Merrill Lynch Asset Management & Princeton Funds Distributor, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, MTB Investment Advisors, Inc., Banc of America Advisors, LLC, JPMorgan Investment Advisors, Inc., Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Pioneer Variable Contracts Trust & Pioneer Investment Management, Inc. & Pioneer Funds Distributor, Inc., Prudential Investment Management Services, LLC, Putnam Retail Management Limited Partnership, SunTrust Securities, Inc. & Trusco Capital Management, Inc., UBS Financial Services, Inc., 12 ------------------------------------------------------------------------------- Van Kampen Life Investment Trust & Van Kampen Asset Management, Van Kampen Funds, The Victory Variable Insurance Funds & Victory Capital Management, Inc. & Victory Capital Advisers, Inc. and Wells Fargo Variable Trust & Wells Fargo Fund Management, LLC. We are affiliated with Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. (collectively, the "HLS Funds") based on our affiliation with their investment advisers HL Investment Advisors, LLC and Hartford Investment Management Company. In addition to investment advisory fees, we, or our other insurance company affiliates, receive fees to provide, among other things, administrative, processing, accounting and shareholder services for the HLS Funds. Not all Fund complexes pay the same amounts of revenue sharing payments and/or Rule 12b-1 fees. Therefore, the amount of fees we collect may be greater or smaller based on the Funds you select. Revenue sharing payments and Rule 12b-1 fees did not exceed 0.50% and 0.35%, respectively, in 2008, and are not expected to exceed 0.50% and 0.35%, respectively, in 2009, of the annual percentage of the average daily net assets (for instance, in 2008, assuming that you invested in a Fund that paid us the maximum fees and you maintained a hypothetical average balance of $10,000, we would collect a total of $85 from that Fund). For the fiscal year ended December 31, 2008, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $145.6 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. FIXED ACCUMULATION FEATURE INTERESTS IN THE FIXED ACCUMULATION FEATURE ARE NOT REGISTERED UNDER THE 1933 ACT AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE FIXED ACCUMULATION FEATURE NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE FIXED ACCUMULATION FEATURE IS NOT OFFERED IN ALL CONTRACT CLASSES AND IS NOT AVAILABLE IN ALL STATES. We guarantee that we will credit interest to amounts you allocate to the Fixed Accumulation Feature at a minimum rate that meets your State's minimum non-forfeiture requirements. Non-forfeiture rates vary from state-to-state. We may credit a rate higher than the minimum rate. We reserve the right to declare different rates of interest depending on when amounts are allocated or transferred to the Fixed Accumulation Feature. This means that amounts at any designated time may be credited with a different rate of interest than the rate previously credited to such amounts and to amounts allocated or transferred at any other designated time. We will periodically publish the Fixed Accumulation Feature interest rates currently in effect. There is no specific formula for determining interest rates and, except as specifically stated above, no assurances are offered as to future rates in excess of non-forfeiture rates. Some of the factors that we may consider in determining whether to credit interest are: general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. Fixed Accumulation Feature interest rates may vary by State. We will account for any deductions, Surrenders or transfers from the Fixed Accumulation Feature on a "first-in, first-out" basis (i.e., oldest investments will be liquidated first). ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCUMULATION FEATURE IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. From time to time, we may credit increased interest rates in our sole discretion. We may restrict your ability to allocate Contract Value, Benefit Balance or Premium Payments to the Fixed Accumulation Feature (and vice versa) at any time in our sole discretion. We may close the Fixed Accumulation Feature to new Premium Payments or transfers of existing Contract Value and/or Benefit Balance. Except as otherwise provided, during each Contract Year, you may make transfers out of the Fixed Accumulation Feature to Sub-Accounts or the Personal Pension Account, subject to the transfer restrictions discussed below. All transfer allocations must be in whole numbers (e.g., 1%). Each Contract Year you may transfer the greater of: - thirty (30%) percent of the Contract Value in the Fixed Accumulation Feature as of the last Contract Anniversary. When we calculate the 30%, we add Premium Payments allocated to the Fixed Accumulation Feature, transfers from Sub-Accounts and transfers from the Personal Pension Account made after that date but before the next Contract Anniversary. These restrictions also apply to systematic transfers. The 30% does not include Contract Value in any DCA Plus Program; or - an amount equal to your largest previous transfer from the Fixed Accumulation Feature in any one Contract Year. We apply these restrictions to all transfers from the Fixed Accumulation Feature, including all systematic transfers and Dollar Cost Averaging Programs, except for transfers under our DCA Plus Program. If your interest rate renews at a rate at least 1% lower than your prior interest rate, you may transfer any amount up to 100% of the amount to be invested at the renewal rate. You must make this transfer request within 60 days of being notified of the renewal rate. We may defer transfers and partial Surrenders from the Fixed Accumulation Feature for up to six months from the date of your request. 13 ------------------------------------------------------------------------------- You must wait six months after your most recent transfer from the Fixed Accumulation Feature before moving Sub-Account Values or Benefit Balance back to the Fixed Accumulation Feature. If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait six months after your last systematic transfer before moving Contract Value or Benefit Balance back to the Fixed Accumulation Feature. As a result of these limitations, it may take a significant amount of time (i.e., several years) to move Contract Value in the Fixed Accumulation Feature to Sub-Accounts and/or Personal Pension Account and therefore this may not provide an effective short term defensive strategy. PERSONAL PENSION ACCOUNT INTERESTS IN THE PERSONAL PENSION ACCOUNT ARE NOT REGISTERED UNDER THE 1933 ACT AND THE PERSONAL PENSION ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE PERSONAL PENSION ACCOUNT NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURES REGARDING THE PERSONAL PENSION ACCOUNT. THE FOLLOWING DISCLOSURE ABOUT THE PERSONAL PENSION ACCOUNT IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE PERSONAL PENSION ACCOUNT MAY NOT BE AVAILABLE TO ALL TYPES OF QUALIFIED PLANS, OWNERSHIP ARRANGEMENTS, OR IN ALL STATES. WHAT IS THE PERSONAL PENSION ACCOUNT? THE FOLLOWING IS A BRIEF SUMMARY OF THE PERSONAL PENSION ACCOUNT. YOU SHOULD READ THIS ENTIRE SECTION OF THE PROSPECTUS TO MAKE SURE THAT YOU UNDERSTAND THE IMPORTANT LIMITATIONS AND RESTRICTIONS APPLICABLE TO THE PERSONAL PENSION ACCOUNT. The Personal Pension Account is like the Fixed Accumulation Feature because you receive a fixed interest rate investment return. So, like the Fixed Accumulation Feature, you can invest in the Personal Pension Account if you want a steadier return than you would receive from the Sub-Accounts, where your return depends on the investment performance of the Funds you select. While the Personal Pension Account and Fixed Accumulation Feature both offer a fixed interest rate return, the Personal Pension Account is designed to serve a different purpose than the Fixed Accumulation Feature. The Fixed Accumulation Feature is designed to serve as a conventional accumulation-oriented investment -you put money in to build up your investment, and you can then withdraw money to meet financial needs as they arise. You can also transfer some or all of your investment to the Sub-Accounts or the Personal Pension Account, and your beneficiaries receive a death benefit if you die. The Personal Pension Account is designed to serve a different purpose - it has features and guarantees you can use to design your own personal pension plan to provide you with life-long income payments without having to use the Sub-Accounts or Fixed Accumulation Feature for that purpose. These guarantees let you know in advance how much your income payments will be in the future. While you can take income payments from the Fixed Accumulation Feature too, the amount of those income payments is not guaranteed in advance. Why would you invest in the Fixed Accumulation Feature if the Personal Pension Account gives you income guarantees and more flexibility structuring income payments? The reason is that to give you the guarantees and income payment flexibility, we had to place significant restrictions on how much you can transfer out of the Personal Pension Account in any year as well as on your ability to receive lump sum payments - instead of SURRENDERINGpart or all of the amounts you have built up in the Personal Pension Account, you can get a lump sum payment only by specifying some or all of the payments you are receiving, and then COMMUTING them into one lump sum. When you invest in the Personal Pension Account, you may end up getting less than you would have if you invested in the Fixed Accumulation Feature. This is the tradeoff you have to accept in return for getting the additional flexibility and guarantees that let you design your own personal pension plan. THERE ARE CERTAIN CONDITIONS THAT MUST BE SATISFIED FOR YOU TO RECEIVE GUARANTEED INCOME PAYMENTS FROM YOUR PERSONAL PENSION ACCOUNT INVESTMENT, INCLUDING STARTING TO TAKE PAYMENTS BEFORE THE END OF A SPECIFIED PERIOD. YOU SHOULD READ THE REST OF THIS PROSPECTUS AND YOUR CONTRACT CAREFULLY TO MAKE SURE YOU UNDERSTAND ALL OF THESE CONDITIONS. AS YOU READ THE REMAINDER OF THIS SECTION OF THE PROSPECTUS, WHICH PROVIDES YOU WITH MORE DETAILED INFORMATION ABOUT HOW THE PERSONAL PENSION ACCOUNT WORKS, YOU SHOULD KEEP IN MIND THESE IMPORTANT POINTS: - YOUR ABILITY TO MAKE TRANSFERS FROM THE PERSONAL PENSION ACCOUNT IS SIGNIFICANTLY LIMITED BECAUSE THE PERSONAL PENSION ACCOUNT RESTRICTS LIQUIDITY DUE TO TRANSFER LIMITATIONS AND THE POTENTIAL LOSS OF VALUE AS A RESULT OF COMMUTATION. ACCORDINGLY, YOU SHOULD ENSURE THAT YOUR INVESTMENTS IN THE FIXED ACCUMULATION FEATURE AND THE SUB-ACCOUNTS WILL BE ADEQUATE TO MEET YOUR LIQUIDITY NEEDS. - BECAUSE THE PERSONAL PENSION ACCOUNT IS DESIGNED AS A LONG-TERM RETIREMENT FUNDING VEHICLE, IT HAS GUARANTEED PAYOUT RATES APPLICABLE ONLY FOR PERSONAL PENSION ACCOUNT PAYMENTS COMMENCED BEFORE THE EXPIRATION OF YOUR SPECIFIED "GUARANTEE WINDOW" (AS DESCRIBED BELOW). 14 ------------------------------------------------------------------------------- - THE PERSONAL PENSION ACCOUNT PROVIDES CERTAIN ADDITIONAL FLEXIBILITY WITH RESPECT TO STRUCTURING INCOME PAYMENTS - YOU CAN CONVERT PART OF YOUR INVESTMENT IN THE PERSONAL PENSION ACCOUNT INTO INCOME PAYMENTS AT A PARTICULAR TIME RATHER THAN YOUR ENTIRE INVESTMENT, AND YOU MAY ESTABLISH DIFFERENT INCOME STREAMS. - AT ANY GIVEN TIME, CREDITED RATES AVAILABLE UNDER THE PERSONAL PENSION ACCOUNT MAY BE HIGHER OR LOWER THAN INTEREST RATES OFFERED UNDER THE FIXED ACCUMULATION FEATURE. - YOU MAY USE THE PERSONAL PENSION ACCOUNT TO ESTABLISH STREAMS OF INCOME PAYMENTS THAT WILL CONTINUE FOR AS LONG AS YOU, THE ANNUITANT OR A JOINT OWNER ARE ALIVE. - IF YOU REQUEST A LUMP SUM PAYMENT, WE COMMUTE THE AMOUNT OF THE PAYMENTS THAT WOULD HAVE BEEN MADE DURING THE "GUARANTEED PAYOUT DURATION" (AS DESCRIBED BELOW). PAYMENTS WILL COMMENCE AGAIN IF YOU THE ANNUITANT OR A JOINT OWNER LIVE PAST THE GUARANTEED PAYOUT DURATION. - IF YOU TERMINATE THIS CONTRACT, YOU GIVE UP YOUR RIGHT TO FUTURE "PERSONAL PENSION ACCOUNT PAYOUTS" (AS DESCRIBED BELOW). HOW DOES THE PERSONAL PENSION ACCOUNT WORK? CONTRIBUTIONS. You invest in the Personal Pension Account through Personal Pension Account Contributions. The first Personal Pension Account Contribution becomes your initial investment called your "Benefit Balance." The Benefit Balance will be increased by the amount of each subsequent Personal Pension Account Contribution, transfers into the Personal Pension Account from the Fixed Accumulation Feature and Sub-Accounts and accrued interest. Unlike the Fixed Accumulation Feature, the Benefit Balance is not indicative of what you would receive as a lump sum. Once you start taking Personal Pension Account Payouts, as described below, your Benefit Balance is divided into an "Accumulation Balance" and "Annuity Payout Value." Annuity Payout Value refers to the sums used to fund your Personal Pension Account Payouts and anything remaining is referred to as your Accumulation Balance. Because you may convert all or any portion of your Accumulation Balance into Personal Pension Account Payouts at different times, you may have more than one Annuity Payout Value. The minimum initial Personal Pension Account Contribution is $10,000. Our prior approval may be required for any single or cumulative Personal Pension Account Contribution of $1 million or more. Each subsequent Personal Pension Account Contribution must be at least $1,000. If made through an approved investment Program, subsequent Personal Pension Account Contributions minimums must be met over the course of the Contract Year or the duration of the investment Program, if less. FAILURE TO MAINTAIN A MINIMUM ACCUMULATION BALANCE OF $5,000 WILL RESULT IN PREMATURE COMMENCEMENT OF PENSION ACCOUNT PAYOUTS. You may not make any Personal Pension Account Contributions after the Annuity Commencement Date. INTEREST CREDITING - We guarantee that we will credit interest to amounts that you allocate to the Personal Pension Account at a minimum rate of 1.5% (called a "credited rate(s)"). We may credit a rate higher than the minimum credited rate. We expect to make a profit in setting credited rates. Different credited rates may apply during the course of your investment in the Personal Pension Account. Credited rates will continue to apply to your Accumulation Balance until the earliest of when you commence taking Personal Pension Account Payouts, the Annuity Commencement Date or when we pay the Death Benefit. Credited rates will not apply to your Annuity Payout Value(s). We reserve the right to periodically establish new credited rates that will be applied to new Personal Pension Account Contributions. This means that all or portions of your Accumulation Balance may earn interest at different credited rates. See Examples 1, 2 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of how different credited rates may apply during the term of your Contract. There is no specific formula for determining credited rates and no assurances are offered as to future credited rates and their applicability. Some of the factors that we may consider in determining credited rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match these or our general liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. PERSONAL PENSION ACCOUNT PAYOUTS - You may tell us to start paying you income payments called "Personal Pension Account Payouts" at any time or at different times until your Annuity Commencement Date. Subsequent Premium Payments can be made into Sub-Accounts and/or the Fixed Accumulation Feature after Personal Pension Account Payouts have begun (if received before your Annuity Commencement Date). As noted above, your ability to receive lump sum payments from the Personal Pension Account is limited. You do not withdraw any part of your Benefit Balance in the same way that you can surrender your Contract Value from Sub-Accounts or the Fixed Accumulation Feature. Rather, you must convert Accumulation Balance into an Annuity Payout Value that is then used to set your Personal Pension Account Payouts. You may surrender any or all of your Contract Value without affecting your Annuity Payout Value, or you may commute any or all of your Annuity Payout Value without affecting your Contract Value. However, you may terminate your Contract by (a) fully surrendering all of your Contract Value in the Sub-Accounts and Fixed Accumulation Feature; (b) commuting your Annuity Payout Value in your Personal Pension Account (as discussed in more detail below); and (c) giving up your right to Personal Pension Account Payouts. 15 ------------------------------------------------------------------------------- You will automatically start receiving Personal Pension Account Payouts on your Annuity Commencement Date. Personal Pension Account Payouts will be paid in the manner described in Annuity Payout Option Two or Eight under the heading "When do your Annuity Payouts begin?" under the Annuity Payouts section below. We reserve the right to require that you own your Contract for at least six months before you start receiving Personal Pension Account Payouts. For Qualified Contracts, we reserve the right to require that you start taking Personal Pension Account Payouts no later than when the Annuitant turns age 70 1/2. An annual benefit increase option may also be elected to adjust Personal Pension Account Payouts, subject to availability. We calculate the amount of your Personal Pension Account Payouts by applying the applicable payout rate to your Accumulation Balance. We will provide you with a guaranteed payout rate each time that you make a new Personal Pension Amount Contribution. Payout rates are set at our sole discretion. There is no specific formula for determining payout rates and, except as specifically provided below, there is no assurance as to future payout rates. Payout rates may vary based on Contract class and distribution channel. Some of the factors that we may consider in determining payout rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; competitive factors and mortality tables (including age and gender factors). When you first make a Personal Pension Account Contribution, you will be required to choose a Target Income Age at which you are likely to begin taking Personal Pension Account Payouts. The Target Income Age cannot exceed twenty (20) years from the oldest Annuitant's age at the time of investment or age 80. Except as provided below, the Target Income Age cannot be changed. We will use the guaranteed payout rate(s) to calculate Personal Pension Account Payouts if you commence taking Personal Pension Account Payouts during the timeframe that begins three (3) years prior to the Target Income Age and ends three (3) years after the Target Income Age (this seven year period is referred to as the "guarantee window"). If you commence taking Personal Pension Account Payouts at any time outside of the guarantee window, then we will calculate your Personal Pension Account Payouts using payout rate(s) that we then determine at our sole discretion. This payout rate will not exceed the guaranteed payout rate nor will the corresponding Personal Pension Account Payout be less than any guaranteed minimum provided in your Contract. The existence of guaranteed payout rates, among other things, distinguishes the Personal Pension Account from the way we treat annuitization of your Contract Value and investments in the Fixed Accumulation Feature at the end of the accumulation phase of your Contract. See Examples 1 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Payouts during the guarantee window. LUMP SUM PAYMENTS - You may commute any or all of your Annuity Payout Value to get a lump sum payment from the Personal Pension Account. The way we do this is to calculate the number of Personal Pension Account Payouts (corresponding to the Annuity Payout Value that you seek to commute) that when added together will equal the amount of your commutation request, and then the time period over which these Personal Pension Account Payouts would have otherwise been made is called the "Guaranteed Payout Duration." Personal Pension Account Payouts will resume after the Guaranteed Payout Duration for so long as you, the Annuitant or a joint Owner are alive. You should understand that if you commute you will receive less than your Annuity Payout Value. The amount you receive over time depends on a number of factors, including the difference between interest rates currently being credited and the discount rate used upon commutation, how long you have invested in the Personal Pension Account and whether you (or the Annuitant) live long enough so that Personal Pension Account Payouts start up again after the Guaranteed Payout Duration. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information about how commutation works. TRANSFERS - Each Contract Year, you may transfer a portion of your Accumulation Balance to the Fixed Accumulation Feature or Sub-Accounts without having to comply with the annuitization and commutation requirements discussed above. All transfer allocations must be in whole numbers (e.g., 1%). The maximum amount of Accumulation Balance that may be transferred is the highest of: - four (4%) percent of your Accumulation Balance as of your prior Contract Anniversary; - the amount of interest credited to your Accumulation Balance over the most recent full Contract Year; or - the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. We reserve the right to: (a) limit the number of transfers from the Personal Pension Account; (b) make you wait six months after your most recent transfer from the Personal Pension Account before moving Contract Value back into the Personal Pension Account; or (c) revoke this privilege at any time. Amounts transferred out of the Personal Pension Account will reduce the Accumulation Balance by the amount transferred. Amounts transferred from the Personal Pension Account to the Fixed Accumulation Feature or the Sub-Accounts will be treated as a subsequent Premium Payment and become part of your Contract Value. You may also transfer Contract Value from your Sub-Accounts or Fixed Accumulation Feature, to the Accumulation Balance (such transfers will reduce the amount of your optional Death Benefit, Annual Withdrawal Amount (AWA) and Remaining Gross Premiums). If applicable, no CDSC will be applied to Accumulation Balance transferred to Sub-Accounts or the Fixed Accumulation Feature, or vice versa. No transfers may be 16 ------------------------------------------------------------------------------- made to or from the Personal Pension Account after the Annuity Commencement Date. See Example 3 under the Personal Pension Account Examples in Appendix A for an illustration of transfers into your Personal Pension Account. AS A RESULT OF THESE OUT-BOUND TRANSFER RESTRICTIONS, IT MAY TAKE A SIGNIFICANT AMOUNT OF TIME (I.E., SEVERAL YEARS) TO MOVE ACCUMULATION BALANCE TO SUB-ACCOUNTS OR THE FIXED ACCUMULATION FEATURE AND THEREFORE THIS MAY NOT PROVIDE AN EFFECTIVE SHORT TERM DEFENSIVE STRATEGY. PLEASE REFER TO EXAMPLE 3 UNDER THE PERSONAL PENSION ACCOUNT EXAMPLES IN APPENDIX A FOR AN ILLUSTRATION OF TRANSFER RESTRICTIONS. DEATH BENEFIT - The Personal Pension Account includes a Death Benefit equal to your Benefit Balance. This Death Benefit is considered to be part of the standard Death Benefit or any optional Death Benefit that you elect. Your Personal Pension Account Death Benefit increases as a result of additional Personal Pension Account Contributions and transfers into the Personal Pension Account. YOUR PERSONAL PENSION ACCOUNT DEATH BENEFIT DECREASES AS YOU TAKE PERSONAL PENSION ACCOUNT PAYOUTS AND MAY BE ELIMINATED OVER TIME. Benefit Balance transfers to Sub-Accounts and/or the Fixed Accumulation Feature also decrease your Personal Pension Account Death Benefit but because these amounts are converted into Contract Value, they become part of the standard Death Benefit and/or optional Death Benefit. YOUR BENEFIT BALANCE IS NOT GUARANTEED AS PART OF ANY OPTIONAL DEATH BENEFIT RIDER. Personal Pension Account Payouts will generally terminate upon notification to us of the death of the Owner, joint Owner or Annuitant, if prior to the Annuity Commencement Date; or upon notification to us of the Annuitant's death, if after the Annuity Commencement Date. The method of payment of the Death Benefit will be subject to the restrictions contained in the "Standard Death Benefit" section of this Prospectus. Your Benefit Balance will be converted into Contract Value and transferred to the Money Market Sub-Account without annuitization and commutation. Unless otherwise stated below, Contract Value may not be reallocated back into the Personal Pension Account. The Contingent Annuitant may reinvest Contract Value back into the Personal Pension Account and establish a new guarantee window, target income age and receive then applicable credited rates. If Spousal Contract continuation is elected, your Spouse can either continue to maintain the Personal Pension Account and resume Personal Pension Account Payouts, if applicable, or instruct us to transfer Benefit Balance to the Money Market Sub-Account. Your Spouse may then reinvest Contract Value back into the Personal Pension Account by establishing a new guarantee window and target income age. New crediting rates will apply. OTHER INFORMATION - We will account for any Personal Pension Account Contributions, Personal Pension Account Payouts, interest, and deductions separately and on a first-in, first-out basis for the purposes of determining which credited rates are associated with each Personal Pension Account Contribution. Personal Pension Account Payouts are not cumulative and may not be advanced, commuted or accelerated, except as explicitly stated in this prospectus. Subject to applicable state insurance law, the Personal Pension Account does not establish a cash surrender benefit. We may close the Personal Pension Account to new Personal Pension Account Contributions at any time without notice. We may also make the Personal Pension Account available only through enrollment in one or more investment Programs that we establish. Special consideration should be given by Personal Pension Account investors who are under age 40 to the twenty-year limitation on setting your Target Income Age and the absence of guaranteed payout rates applied if Personal Pension Account Payouts commence outside of your guarantee window. The Personal Pension Account should not be confused with a pension plan under The Employee Retirement Income Security Act of 1974, as amended (ERISA). Neither we nor any of our affiliates assume any fiduciary duties with regard to this Contract, as such terms are defined under ERISA laws and regulations. The Personal Pension Account is not a defined benefit plan guaranteed by the Pension Benefit Guaranty Corporation (PBGC) or any federal or state government agency. This feature is not a corporate pension plan issued by us or our affiliates. In summary, the Personal Pension Account is designed for the long-term investor who is willing to forego some degree of liquidity in exchange for, among other things, deferred lifetime income in the form of Personal Pension Account Payouts. This feature restricts liquidity through transfer and commutation restrictions. The amount ultimately received as a consequence of your investment in the Personal Pension Account is not predictable because of the uncertainty of factors such as how long you have invested in the Personal Pension Account, interest rates in effect at the time of investment and commutation, and how long you receive lifetime Personal Pension Account Payouts. If you partially commute your Personal Pension Account Payouts, you will retain the right to collect life contingent Personal Pension Account Payouts that resume after the applicable Guaranteed Payout Duration. HOWEVER, IF YOU ELECT TO TERMINATE YOUR CONTRACT, YOU WILL GIVE UP YOUR RIGHT TO THESE FUTURE LIFE CONTINGENT PERSONAL PENSION ACCOUNT PAYOUTS. YOU SHOULD THEREFORE CONSULT WITH YOUR REGISTERED REPRESENTATIVE OR A TRUSTED ADVISER BEFORE TERMINATING YOUR CONTRACT TO BE SURE THAT YOU UNDERSTAND THESE IMPORTANT IMPLICATIONS. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information. 17 ------------------------------------------------------------------------------- 4. INFORMATION ON YOUR ACCOUNT A. OPENING AN ACCOUNT WHO CAN BUY THIS CONTRACT? The Contract is an individual or group tax-deferred variable annuity Contract. It is designed for retirement planning purposes and may be purchased by any individual, group or trust, including: - any trustee or custodian for a retirement plan qualified under Section 401(a) of the Code; - individual Retirement Annuities adopted according to Section 408 of the Code; - employee pension plans established for employees by a state, a political subdivision of a state, or an agency of either a state or a political subdivision of a state; and - certain eligible deferred compensation plans as defined in Section 457 of the Code. The examples above represent Qualified Contracts, as defined by the Code. In addition, individuals and trusts can also purchase Contracts that are not part of a tax qualified retirement plan. These are known as Non-Qualified Contracts. If you are purchasing the Contract for use in an IRA or other qualified retirement plan, you should consider other features of the Contract besides tax deferral, since any investment vehicle used within an IRA or other Qualified Plan receives tax-deferred treatment under the Code. We no longer accept any incoming 403(b) exchanges, transfers or applications for 403(b) individual annuity contracts or additional investments into any individual annuity contract funded through a 403(b) plan. The Personal Pension Account may not be available to all types of Qualified Plans. HOW DO YOU PURCHASE A CONTRACT? You may only purchase a Contract through a Financial Intermediary. A Registered Representative will work with you to complete and submit an application or an order request form. Part of this process will include an assessment as to whether this variable annuity may be suitable for you. Prior to recommending the purchase or exchange of a deferred variable annuity, your Registered Representative shall make reasonable efforts to obtain certain information about you and your investment needs. This recommendation will be independently reviewed by a principal within your Financial Intermediary. Your initial Deposit will not be invested in any Account and/or the Personal Pension Account during this period. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, your Financial Intermediary will ask for your name, address, date of birth and other information that will allow us to identify you. They may also ask to see your driver's license or other identifying documents. Non-Resident Alien (NRA) application submissions require our prior approval. The minimum initial Deposit required to buy this Contract varies based on the type of investment, Contract class and whether you enroll in a systematic investment Program such as the InvestEase(R) Program. Financial Intermediaries may impose requirements regarding the form of payment they will accept. Deposits not actually received by us within the time period provided below will result in the rejection of your application or order request. Deposits sent to us must be made in U.S. dollars and checks must be drawn on U.S. banks. We do not accept cash, third party checks or double endorsed checks. We reserve the right to limit the number of checks processed at one time. If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees incurred. A check must clear our account through our Administrative Office to be considered to be in good order. We reserve the right to impose special conditions on anyone who seeks our prior approval to purchase a Contract with Deposits of $1 million or more. In order to request prior approval, you must submit a completed enhanced due diligence form prior to the submission of your application: - if you are seeking to purchase a Contract with an initial Deposit of $1 million or more; - if total Deposits, aggregated by social security number or taxpayer identification number, equal $1 million or more; and - for all applications where the Owner or joint Owner are non-resident aliens. You and your Annuitant must not be older than age 80 on the date that your Contract is issued. You must be of minimum legal age in the state where the Contract is being purchased or a guardian must act on your behalf. Optional riders are subject to additional maximum issue age restrictions. We urge you to discuss with your Registered Representative which share class is suitable for your needs. Share class availability and/or mortality and expense risk charge arrangements may vary based on the Financial Intermediary selling this variable annuity to you. 18 ------------------------------------------------------------------------------- Charges affect your overall rate of return on your Contract Value. In determining whether to invest in a share class that imposes a contingent deferred sales charge, you might consider whether higher mortality and expense risk and distribution charges out weigh the benefits of contingent deferred sales charges that reduce, or are eliminated, over time. For instance, those investing over $100,000 may find a front-end sales charge class share to be more economically advantageous than a contingent deferred sales charge share class. Finally, in determining whether to invest in a share class offered through a financial advisor, you might consider how the fee charged by your advisor bears in relation to the costs associated with investing in other share classes that impose higher fees. CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT? Yes. If for any reason you are not satisfied with your Contract, simply return it within ten days after you receive it with a written request for cancellation that indicates your tax-withholding instructions. In some states, you may be allowed more time to cancel your Contract. We may require additional information, including a signature guarantee, before we can cancel your Contract. Unless otherwise required by state law, we will pay you your Account Balance (minus applicable expenses) as of the Valuation Day we receive your properly completed request to cancel and will refund any sales or Contract charges incurred during the period you owned the Contract. The Account Balance may be more or less than your Deposits depending upon the investment performance of your Contract. This means that you bear the risk of any decline in your Account Balance until we receive your notice of cancellation. In certain states, however, we are required to return your Deposit without deduction for any fees or charges. HOW ARE DEPOSITS APPLIED TO YOUR CONTRACT? Your initial Deposit will usually be invested within two Valuation Days of our actual receipt in-hand at our Administrative Office of both a properly completed application or order request and the Deposit; both being in good order. If we receive a subsequent Deposit before the end of a Valuation Day, it will be invested on the same Valuation Day. If we receive your subsequent Deposit after the end of a Valuation Day, it will be invested on the next Valuation Day. If we receive a subsequent Deposit on a non-Valuation Day, the amount will be invested on the next Valuation Day. Unless we receive new instructions, we will invest all Deposits based on your last instructions on record. We will send you a confirmation when we invest your Deposit. If the request or other information accompanying the initial Deposit is incomplete or not in good order when received, we will hold the money in a non-interest bearing account for up to five Valuation Days (from the Valuation Day that we actually receive your initial Deposit at our Administrative Office) while we try to obtain complete information. If we cannot obtain the information within five Valuation Days, we will either return the Deposit and explain why it could not be processed or keep the Deposit if you authorize us to keep it until you provide the necessary information. Generally, we will receive your application or order request (whether for an initial purchase or a subsequent investment) after your Financial Intermediary has completed a suitability review. We will then consider if your investment is in good order. While the suitability and good order process is underway, Deposits will not be applied to your Contract. You will not earn any interest on Deposits even if they have been sent to us or deposited into our bank account. We are not responsible for gains or lost investment opportunities incurred during this review period or if your Financial Intermediary asks us to unwind a transaction based on their review of your Registered Representative's recommendations. Your Financial Institution, and we, may directly or indirectly earn income on your Deposits. For more information, contact your Registered Representative. HOW IS CONTRACT VALUE CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE? The Contract Value is the sum of the value of the Fixed Accumulation Feature, if applicable, and all Funds, and does not include Benefit Balance. There are two things that affect the value of your Sub-Accounts: (1) the number of Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is determined by multiplying the number of Accumulation Units by the Accumulation Unit Value. On any Valuation Day the investment performance of the Sub-Accounts will fluctuate with the performance of the Funds. When Premium Payments are credited to Sub-Accounts within your Account, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium taxes, by the Accumulation Unit Value for that day. The more Premium Payments you make to your Account, the more Accumulation Units you will own. You decrease the number of Accumulation Units you have by requesting partial or full Surrenders, settling a Death Benefit claim or by annuitizing your Contract or as a result of the application of certain Contract charges. To determine the current Accumulation Unit Value, we take the prior Valuation Day's Accumulation Unit Value and multiply it by the Net Investment Factor for the current Valuation Day. The Net Investment Factor is used to measure the investment performance of a Sub-Account from one Valuation Day to the next. The Net Investment Factor for each Sub-Account equals: - the net asset value per share plus applicable distributions per share of each Fund at the end of the current Valuation Day; reduced by - the net asset value per share of each Fund at the end of the prior Valuation Day; reduced by 19 ------------------------------------------------------------------------------- - contract charges including the deductions for the mortality and expense risk charge and any other periodic expenses and administrative charges, divided by the number of days in the year multiplied by the number of days in the valuation period. We will send you a statement at least annually. WHAT OTHER WAYS CAN YOU INVEST? You may enroll in the following features (sometimes called a "Program") for no additional fee. Not all Programs are available with all Contract variations. - INVESTEASE This electronic funds transfer feature allows you to have money automatically transferred from your checking or savings account and deposited into your Contract on a monthly or quarterly basis. It can be changed or discontinued at any time. The minimum amount for each transfer is $50. You can elect to have transfers made into any available Fund, the Fixed Accumulation Feature, or the Personal Pension Account. You cannot use this Program to invest in the DCA Plus Programs. - STATIC ASSET ALLOCATION MODELS This feature allows you to select an asset allocation model based on several potential factors including your risk tolerance, time horizon, investment objectives, or your preference to invest in certain Funds or Fund families. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Contract. Some asset allocation models are based on generally accepted investment theories that take into account the historic returns of different asset classes (e.g., equities, bonds or cash) over different time periods. Other asset allocation models focus on certain potential investment strategies that could possibly be achieved by investing in particular Funds or Fund families and are not based on such investment theories. Static asset allocation models offered from time to time are reflected in your application and marketing materials. You may obtain a copy of the current models by contacting your Financial Intermediary. You may invest in an asset allocation model through the Dollar Cost Averaging Program where the Fixed Accumulation Feature, Personal Pension Account, or a DCA Plus Program is the source of the assets to be invested in the asset allocation model you have chosen. You can also participate in these asset allocation models while enrolled in the InvestEase or Automatic Income Program. You can switch asset allocation models up to twelve times per year. Your ability to elect or switch into and between asset allocation models may be restricted based on Fund abusive trading restrictions. Your investments in an asset allocation model will be rebalanced quarterly to reflect the model's original percentages and you may cancel your model at any time subject to investment restrictions for maintaining certain optional riders. We have no discretionary authority or control over your investment decisions. These asset allocation models are based on then available Funds and do not include the Fixed Accumulation Feature or the Personal Pension Account. We make available educational information and materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case studies) that can help you select an asset allocation model, but we do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you. While we will not alter allocation percentages used in any asset allocation model, allocation weightings could be affected by mergers, liquidations, fund substitutions or closures. Availability of these models is subject to Fund company restrictions. Please refer to "What Restrictions Are There on your Ability to Make a Sub-Account Transfer?" for more information. You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the asset allocation models, and we will not reallocate your Contract Value based on those updates. Information on updated asset allocation models may be obtained by contacting your Registered Representative. If you wish to update your asset allocation model, you may do so by terminating your existing model and re-enrolling into a new one. Investment alternatives other than these asset allocation models are available that may enable you to invest your Contract Value with similar risk and return characteristics. When considering an asset allocation model for your individual situation, you should consider your other assets, income and investments in addition to this annuity. Asset allocation does not guarantee that your Contract Value will increase nor will it protect against a decline if market prices fall. If you choose to participate in an asset allocation program, you are responsible for determining which asset allocation model is best for you. Tools used to assess your risk tolerance may not be accurate and could be useless if your circumstances change over time. Although each asset allocation model is intended to maximize returns given various levels of risk tolerance, an asset allocation model may not perform as intended. Market, asset class or allocation option class performance may differ in the future from historical performance and from the assumptions upon which the asset allocation model is based, which could cause an asset allocation model to be ineffective or less effective in reducing volatility. An asset allocation model may perform better or worse than any single Fund, allocation option or any other combination of Funds or allocation options. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of asset allocation models can cause their 20 ------------------------------------------------------------------------------- component Funds to incur transactional expenses to raise cash for money flowing out of Funds or to buy securities with money flowing into the Funds. Moreover, large outflows of money from the Funds may increase the expenses attributable to the assets remaining in the Funds. These expenses can adversely affect the performance of the relevant Funds and of the asset allocation models. In addition, these inflows and outflows may cause a Fund to hold a large portion of its assets in cash, which could detract from the achievement of the Fund's investment objective, particularly in periods of rising market prices. For additional information regarding the risks of investing in a particular Fund, see that Fund's prospectus. Additional considerations apply for qualified Contracts with respect to Static Asset Allocation Model Programs. Neither we, nor any third party service provider, nor any of their respective affiliates, is acting as a fiduciary under The Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Code, in providing any information or other communication contemplated by any Program, including, without limitation, any asset allocation models. That information and communications are not intended, and may not serve as a primary basis for your investment decisions with respect to your participation in a Program. Before choosing to participate in a Program, you must determine that you are capable of exercising control and management of the assets of the plan and of making an independent and informed decision concerning your participation in the Program. Also, you are solely responsible for determining whether and to what extent the Program is appropriate for you and the assets contained in the qualified Contract. Qualified Contracts are subject to additional rules regarding participation in these Programs. It is your responsibility to ensure compliance of any recommendation in connection with any asset allocation model with governing plan documents. - ASSET REBALANCING In asset rebalancing, you select a portfolio of Funds, and we will rebalance your assets at the specified frequency to reflect the original allocation percentages you selected (choice of frequency may be limited when certain optional riders are elected). You can also combine this Program with others such as the Automatic Income Program, InvestEase and DCA Programs (subject to restrictions). You may designate only one set of asset allocation instructions at a time. - DOLLAR COST AVERAGING PROGRAMS We offer three Dollar Cost Averaging Programs: - DCA Plus - Fixed Amount DCA - Earnings/Interest DCA DCA Plus - These programs allow you to earn a fixed rate of interest on investments. These Programs are different from the Fixed Accumulation Feature or the Personal Pension Account. We determine, in our sole discretion, the interest rates to be credited. These interest rates may vary depending on the Contract class you purchased and the date the request for the Program is received. Please consult your Registered Representative to determine the interest rate for your Program. You may elect either the "12-Month Transfer Program" or the "6-Month Transfer Program". - Under the 12-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 12 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 12 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 7 but no more than 12 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Under the 6-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 6 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 6 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 3 but no more than 6 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Each time you make a subsequent Premium Payment, you can invest in a different rate lock program. Any subsequent investments made considered a separate rate lock Program investment. You can invest in up to 5 different rate lock Programs at one time. - You must invest at least $5,000 in each rate lock program ($2,000 for qualified plan transfers or rollovers, including IRAs). We will pre-authorize transfers from our Fixed Accumulation Feature subject to restrictions. - Pre-authorized transfers will begin within 15 days of receipt of the Program payment provided we receive complete enrollment instructions in good order. 21 ------------------------------------------------------------------------------- - If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is active on the Contract, we will set up the new Program to mirror the existing one. If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is not active on the Contract, but is the future investment allocation and a static asset allocation model is active on the Contract, we will set up the new Program to move Funds to the Static Asset Allocation Model. Otherwise, we will contact your investment professional to obtain complete instructions. If we do not receive in good order enrollment instructions within the 15 day timeframe noted above, we will refund the Program payment for further instruction. - If your Program payment is less than the required minimum amount, we will invest into the destination Funds or the Personal Pension Account indicated on the Program instructions accompanying the payment. If Program instructions were not provided and a DCA Plus Program is active on the Contract, we will apply the payment to the destination Funds or the Personal Pension Account of the current DCA Plus Program. Otherwise, we will contact your investment professional to obtain further investment instructions. - The credited interest rate used under the DCA Plus Programs is not earned on the full amount of your Premium Payment for the entire length of the Program because Program transfers to Sub-Accounts or the Personal Pension Account decrease the amount of your Premium Payment remaining in the Program. - You may elect to terminate your involvement in this Program at any time. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the Funds or the Personal Pension Account you designated. Fixed Amount DCA - This feature allows you to regularly transfer (monthly or quarterly) a fixed amount from the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into different Fund(s) or the Personal Pension Account. This program begins in 15 days unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. Earnings/Interest DCA - This feature allows you to regularly transfer (monthly or quarterly) the earnings (i.e., any gains over the previous month's or quarter's value) from your investment in the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into other Fund(s) or the Personal Pension Account. This program begins two business days plus the frequency selected unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. - AUTOMATIC INCOME PROGRAM This systematic withdrawal feature allows you to make partial Surrenders up to 5% of your total Premium Payments each Contract Year. You can designate the Funds to be surrendered from and also choose the frequency of partial Surrenders (monthly, quarterly, semiannual, or annually). The Personal Pension Account is not an eligible source Fund for partial Surrenders facilitated through the Automatic Income Program. The minimum amount of each Surrender is $100. Amounts taken under this program will count towards the AWA and may be subject to a CDSC. If received prior to age 59 1/2, may have adverse tax consequences, including a 10% federal income tax penalty on the taxable portion of the Surrender payment. You may satisfy Code Section 72(t)/(q) requirements by enrolling in this program. Please see the "Federal Tax Considerations" section and consult your tax adviser for information about the tax consequences associated with your Contract. Your level of participation in this program may result in your exceeding permissible withdrawal limits under certain optional riders. - OTHER PROGRAM CONSIDERATIONS - You may terminate your enrollment in any Program at any time. - We may discontinue, modify or amend any of these Programs at any time. We will automatically and unilaterally amend your enrollment instructions if: - any Fund is merged or substituted into another Fund - then your allocations will be directed to the surviving Fund; or - any Fund is liquidated - then your allocations to that Fund will be directed to any available money market Fund following prior notifications prior to reallocation. You may always provide us with updated instructions following any of these events. - Continuous or periodic investment neither insures a profit nor protects against a loss in declining markets. Because these Programs involve continuous investing regardless of fluctuating price levels, you should carefully consider your ability to continue investing through periods of fluctuating prices. - These Programs may be modified, terminated or adversely impacted by the imposition of Fund trading policies. 22 ------------------------------------------------------------------------------- CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER? Yes. During those phases of your Contract when transfers are permissible, you may make transfers between Funds and/or Benefit Balance according to the following policies and procedures, as they may be amended from time to time. - WHAT IS A SUB-ACCOUNT TRANSFER? A Sub-Account transfer is a transaction requested by you that involves reallocating part or all of your Contract Value among the Funds available in your Contract. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order. Otherwise, your request will be processed on the following Valuation Day. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly advising us of any errors within 30 days of receiving the confirmation. - WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER? Many Owners request Sub-Account transfers. Some request transfers into (purchases) a particular Sub-Account, and others request transfers out of (redemptions) a particular Sub-Account. In addition, some Owners allocate new Premium Payments to Sub-Accounts, and others request Surrenders. We combine all the daily requests to transfer out of a Sub-Account along with all Surrenders from that Sub-Account and determine how many shares of that Fund we would need to sell to satisfy all Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or new Premium Payments allocated to that Sub-Account and determine how many shares of that Fund we would need to buy to satisfy all contract owners' "transfer-in" requests. In addition, many of the Funds that are available as investment options in our variable annuity products are also available as investment options in variable life insurance policies, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and participants in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Fund for many of the variable annuities, variable life insurance policies, retirement plans, funding agreements or other products offered by us or our affiliates. We also combine transfer-out requests and transfer-in requests. We then "net" these trades by offsetting purchases against redemptions. Netting trades has no impact on the net asset value of the Fund shares that you purchase or sell. This means that we sometimes reallocate shares of a Fund rather than buy new shares or sell shares of the Fund. For example, if we combine all transfer-out requests of a stock Fund with all other transfer-out requests of that Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Owners and the owners of other products offered by us, want to transfer-in an amount equal to $300,000 of that same Fund, then we would send a sell order to the Fund for $700,000 (a $1 million sell order minus the purchase order of $300,000) rather than making two or more transactions. - WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We count all Sub-Account transfer activity that occurs on any one Valuation Day as one "Sub-Account transfer", however, you cannot transfer the same Contract Value more than once a Valuation Day. EXAMPLES
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE? ------------------------------------------------------------------------------------------------------------ Transfer $10,000 from a money market Sub-Account to a growth Sub-Account Yes Transfer $10,000 from a money market Sub-Account to any number of other Sub-Accounts Yes (dividing the $10,000 among the other Sub-Accounts however you chose) Transfer $10,000 from any number of different Sub-Accounts to any number of other Yes Sub-Accounts Transfer $10,000 from a money market Sub-Account to a growth Sub-Account and then, before No the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH CONTRACT YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet or telephone. Once you have reached the maximum number of Sub-Account transfers, you may only submit any additional Sub-Account transfer requests and any trade cancellation requests in writing through U.S. Mail or overnight delivery service. In other words, Voice Response Unit, Internet or telephone transfer requests will not be honored. We may, but are not obligated to, notify you when you are in jeopardy of approaching these limits. For example, we will send you a letter after your 10th Sub-Account transfer to remind you about the Transfer Rule. After your 20th transfer request, our computer system will not allow you to do another Sub-Account transfer by telephone, Voice Response Unit or via the Internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service. 23 ------------------------------------------------------------------------------- We reserve the right to aggregate your Contracts (whether currently existing or those recently surrendered) for the purposes of enforcing these restrictions. The Transfer Rule does not apply to Sub-Account transfers that occur automatically as part of a Company sponsored asset allocation or Dollar Cost Averaging Program. Reallocations made based on a Fund merger or liquidation also do not count toward this transfer limit. Restrictions may vary based on state law. We make no assurances that the Transfer Rule is or will be effective in detecting or preventing market timing. THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS. You should not purchase this Contract if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Contract if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of a Fund. Even if you do not engage in market timing, certain restrictions may be imposed. Generally, you are subject to Fund trading policies, if any. We are obligated to provide, at the Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading policy. In certain instances, we have agreed to serve as a Fund's agent to help monitor compliance with that Fund's trading policy. We are obligated to follow each Fund's instructions regarding enforcement of their trading policy. Penalties for violating these policies may include, among other things, temporarily or permanently limiting or banning you from making Sub-Account transfers into a Fund or other funds within that fund complex. We are not authorized to grant an exception to a Fund's trading policy. Please refer to each Fund's prospectus for more information. Transactions that cannot be processed because of Fund trading policies will be considered not in good order. In certain circumstances, Fund trading policies do not apply or may be limited. For instance: - Certain types of Financial Intermediaries may not be required to provide us with shareholder information. - "Excepted funds" such money market funds and any Fund that affirmatively permits short-term trading of its securities may opt not to adopt this type of policy. This type of policy may not apply to any Financial Intermediary that a Fund treats as a single investor. - A Fund can decide to exempt categories of Contract holders whose Contracts are subject to inconsistent trading restrictions or none at all. - Non-shareholder initiated purchases or redemptions may not always be monitored. These include Sub-Account transfers that are executed: (i) automatically pursuant to a company-sponsored contractual or systematic program such as transfers of assets as a result of "dollar cost averaging" programs, asset allocation programs, automatic rebalancing programs, annuity payouts, or systematic withdrawal programs; (ii) as a result of the payment of a Death Benefit; (iii) as a result of any deduction of charges or fees under a Contract; or (iv) as a result of payments such as scheduled contributions, scheduled withdrawals or Surrenders, retirement plan salary reduction contributions, or planned Premium Payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading or market timing activities. For instance: - Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked. - Certain forms of variable annuities and types of Funds may be attractive to market timers. We cannot provide assurances that we will be capable of addressing possible abuses in a timely manner. - These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all. - In some cases, we are unable to count the number of Sub-Account transfers requested by group annuity participants co-investing in the same Funds ("Participants") or enforce the Transfer Rule because we do not keep Participants' account records for a Contract. In those cases, the Participant account records and Participant Sub-Account transfer information are kept by such owners or its third party service provider. These owners and third party service providers may provide us with limited information or no information at all regarding Participant Sub-Account transfers. 24 ------------------------------------------------------------------------------- HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS? We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract Value. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce the value of other optional benefits available under your Contract. Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund's trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product investors if the Fund and we cannot reach a mutually acceptable agreement on how to treat an investor who, in a Fund's opinion, has violated the Fund's trading policy. In some cases, we do not have the tax identification number or other identifying information requested by a Fund in our records. In those cases, we rely on the Contract Owner to provide the information. If the Contract Owner does not provide the information, we may be directed by the Fund to restrict the Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Contract will also be precluded from further purchases of Fund shares. MAIL, TELEPHONE AND INTERNET TRANSFERS You may make transfers through the mail or your Financial Intermediary. You may also make transfers by calling us or through our website. Transfer instructions received by telephone before the end of any Valuation Day will be carried out at the end of that day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the end of any Valuation Day, the instructions will be carried out at the end of that Valuation Day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. If you do not receive an electronic acknowledgement, you should contact us as soon as possible. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly reporting any inaccuracy or discrepancy to us and your Registered Representative. Any verbal communication should be re-confirmed in writing. Telephone or Internet transfer requests may currently only be cancelled by calling us before the end of the Valuation Day you made the transfer request. We, our agents or our affiliates are NOT responsible for losses resulting from telephone or electronic requests that we believe are genuine. We will use reasonable procedures to confirm that instructions received by telephone or through our website are genuine, including a requirement that Contract Owners provide certain identification information, including a personal identification number. We record all telephone transfer instructions. We may suspend, modify, or terminate telephone or electronic transfer privileges at any time. POWER OF ATTORNEY You may authorize another person to conduct financial and other transactions on your behalf by submitting a completed power of attorney form that meets the power of attorney requirements of your resident state law. Once we have the completed form on file, we will accept transaction requests, including transfer instructions, subject to our transfer restrictions, from your designated third party until we receive new instructions in writing from you. B. CHARGES AND FEES MORTALITY AND EXPENSE RISK CHARGE We deduct a daily charge for assuming mortality and expense risks under the Contract. This charge is deducted from your Sub-Account Value. The mortality and expense risk charge is broken into charges for mortality risks and for an expense risk: - Mortality Risk - There are two types of mortality risks that we assume, those made while your Premium Payments are accumulating and those made once Annuity Payouts have begun. During the accumulation phase of your Contract, we are required to cover any difference between the Death Benefit paid and the Surrender Value. These differences may occur in periods of declining value or in periods where any CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates. 25 ------------------------------------------------------------------------------- Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates. - Expense Risk - We also bear an expense risk that the sales charges (if applicable), Distribution Charge (if applicable) and the Annual Maintenance Fee collected before the Annuity Commencement Date may not be enough to cover the actual cost of selling, distributing and administering the Contract. Although variable Annuity Payouts will fluctuate with the performance of the Fund selected, your Annuity Payouts will NOT be affected by (a) the actual mortality experience of our annuitants, or (b) our actual expenses if they are greater than the deductions stated in the Contract. Because we cannot be certain how long our Annuitants will live, we charge this percentage fee based on the mortality tables currently in use. The mortality and expense risk charge enables us to keep our commitments and to pay you as planned. If the mortality and expense risk charge under a Contract is insufficient to cover our actual costs, we will bear the loss. If the mortality and expense risk charge exceeds these costs, we keep the excess as profit. We may use these profits, as well as revenue sharing and Rule 12b-1 fees received from certain Funds, for any proper corporate purpose including, among other things, payment of sales expenses, including the fees paid to distributors. We expect to make a profit from the mortality and expense risk charge. ANNUAL MAINTENANCE FEE The Annual Maintenance Fee is a flat fee that is deducted from your Contract Value to reimburse us for expenses relating to the administrative maintenance of the Contract and your Account. The annual charge is deducted on a Contract Anniversary or when the Contract is fully Surrendered if the Account Balance at either of those times is less than $50,000. The charge is deducted proportionately from each Sub-Account in which you are invested. We will waive the Annual Maintenance Fee if your Account Balance is $50,000 or more on your Contract Anniversary or when you fully Surrender your Contract. In addition, we will waive one Annual Maintenance Fee for Owners who own more than one Contract with a combined Account Balance between $50,000 and $100,000. If you have multiple Contracts with a combined Account Balance of $100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts. However, we may limit the number of waivers to a total of six Contracts. We also may waive the Annual Maintenance Fee under certain other conditions. We do not include Contracts from our Putnam Hartford line of variable annuity Contracts with the Contracts when we combine Account Balance for purposes of this waiver. ADMINISTRATIVE CHARGE We apply a daily administration charge against all Contract Values held in the Separate Account during both the accumulation and annuity phases of the Contract. This charge compensates us for administrative expenses that exceed revenues from the Annual Maintenance Fee described above. There is not necessarily a relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributable to that Contract; expenses may be more or less than the charge. DISTRIBUTION CHARGE We apply an annual distribution charge against all Remaining Gross Premiums invested in B share class Contracts (the "Distribution Charge"). The Distribution Charge will apply to each Premium Payment that has been invested for eight years or less and will be deducted on each Contract Anniversary. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge will also apply to any partial Surrender in excess of the AWA. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses, including promotion and distribution of the Contract. A proportional Distribution Charge will be deducted upon: - partial Surrenders in excess of the AWA (partial Surrenders are taken on a first-in, first-out basis); - full Surrender; - full or partial Annuitization, and/or - the date we receive due proof of death of the Owner, joint Owner, or the Annuitant and upon a corresponding full Surrender and/or annuitization. Upon such death, a proportional Distribution Charge will be applied on receipt of due proof of death and upon a Death Benefit distribution if elected at a later date. If a Beneficiary elects to continue under any of the available options described under the "Standard Death Benefits" section below, we will continue to deduct the Distribution Charge based on the portion of Remaining Gross Premium applicable for that Beneficiary. The Distribution Charge is taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state (in which event we will deduct the Distribution Charge from other Sub-Accounts). PREMIUM TAXES We deduct Premium taxes, if required, by a state or other government agency. Some states collect these taxes when Deposits are made; others collect at annuitization. Since we pay Premium taxes when they are required by applicable law, we may deduct them 26 ------------------------------------------------------------------------------- from your Contract when we pay the taxes, upon Surrender, or on the Annuity Commencement Date. The premium tax rate varies by state or municipality and currently ranges from 0 - 3.5%. SALES CHARGES CONTINGENT DEFERRED SALES CHARGES (CDSC) - B AND C SHARE CONTRACTS ONLY We may deduct a CDSC when you make Surrenders from your Contract. We may also deduct a CDSC in connection with certain Annuity Payout Options. This charge is designed to recover the expense of distributing the Contracts that are surrendered before distribution expenses have been recouped from revenue generated by these Contracts. Each Deposit has its own CDSC schedule. Only amounts invested for less than the requisite holding period are subject to a CDSC. In computing the CDSC, Surrenders will be taken: 1st - from the AWA; 2nd - from Contract Value subject to a CDSC on a first-in, first-out basis; and 3rd - from remaining Contract Value. CDSC is charged based on the type of transaction: - Partial Surrenders: To calculate the CDSC when you make a partial Surrender, we apply the applicable CDSC percentage to the amount of the Surrender in excess of the AWA that is eligible for CDSC. - Full Surrenders: If you fully Surrender your Contract, we apply the applicable CDSC percentage to the greater of Contract Value or Remaining Gross Premiums minus the AWA. - Annuity Payouts: To calculate the CDSC when you take an Annuity Payout pursuant to certain Annuity Payout Options, we apply the applicable CDSC to Commuted Value. Please refer to Examples 1 through 5 under the Remaining Gross Premium Examples in Appendix A for an illustration of these computations. The following are NOT subject to a CDSC: - Annual Withdrawal Amount (AWA) - During each Contract Year when a CDSC applies, you may take partial Surrenders up to the greater of: 1. 5% of the total Premium Payments that are otherwise subject to CDSC, or 2. Contract Value minus Remaining Gross Premiums. We compute the AWA as of the end of the Valuation Day when a partial Surrender request is received by us in good order. The AWA is calculated by comparing two values. First, total Premium Payments subject to a CDSC is multiplied by 5%. Next, the total Remaining Gross Premiums is subtracted from the Contract Value. The greater of the two calculations is the applicable AWA at the end of that particular Valuation Day. This method for calculating CDSCs is used for the current and all future partial Surrenders. All reductions from your Premium Payments will be made on a first-in, first-out basis. The financial impact of the CDSC will be greater during declining market conditions. These amounts are different for Contracts issued to a Charitable Remainder Trust. The AWA may vary on a daily basis because of fluctuations in Contract Value. If you do not take maximum AWA one Contract Year, you may not take more than the maximum AWA in a subsequent Contract Year. The AWA does not apply to Personal Pension Account Payouts. - Transfers from Sub-Accounts or the Fixed Accumulation Feature to the Personal Pension Account. - If you are a patient in a certified long-term care facility or other eligible facility - CDSC will be waived for a partial or full Surrender if you, the joint Owner or the Annuitant, are confined for at least 180 calendar days to a: - facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals; - facility certified as a hospital or long-term care facility; or - nursing home licensed by the state in which it is located and offers the services of a registered nurse 24 hours a day. For this waiver to apply, you must: - have owned the Contract continuously since it was issued, - provide written proof of your eligibility satisfactory to us, and 27 ------------------------------------------------------------------------------- - request the Surrender within 91 calendar days after the last day that you are an eligible patient in a recognized facility or nursing home. This waiver is not available if the Owner, the joint Owner or the Annuitant is in a facility or nursing home when you purchase the Contract. We will not waive any CDSC applicable to any Premium Payments made while you are in an eligible facility or nursing home. This waiver can be used any time after the first 180 days in a certified long-term care facility or other eligible facility up until ninety days after exiting such a facility. This waiver may not be available in all states. - Upon death of the Annuitant or any Contract Owner(s) - CDSC will be waived if the Annuitant or any Contract Owner(s) dies. - Upon Annuitization - CDSC will be waived when you annuitize the Contract. However, we will charge a CDSC if the Contract is Surrendered during the CDSC period under an Annuity Payout Option which allows commutation. - For Required Minimum Distributions - CDSC will be waived for any Annuitant age 70 1/2 or older with a Contract held under an IRA who Surrenders an amount equal to the Required Minimum Distribution for one year's required minimum distribution for that Contract Year. All requests for Required Minimum Distributions must be in writing. - For substantially equal periodic payments - CDSC will be waived if you take partial Surrenders under the Automatic Income Program where you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59 1/2. - Upon cancellation during the Right to Cancel Period - CDSC will be waived if you cancel your Contract during the Right to Cancel Period. - Exchanges - As an accommodation, we may, in our sole discretion, time-credit CDSC for the time that you held an annuity previously issued by us. - Settlements - We may, in our sole discretion, waive or time-credit CDSCs in connection with the settlement of disputes or if required by regulatory authorities. CHARGES AGAINST THE FUNDS Annual Fund Operating Expenses - The Separate Account purchases shares of the Funds at net asset value. The net asset value of the Fund reflects investment advisory fees, distribution fees, operating expenses and administrative expenses already deducted from the assets of the Funds. These charges are described in the Funds' prospectuses and the Fee Summary. REDUCED FEES AND CHARGES We may offer, in our discretion, reduced fees and charges for certain Contracts (including employer sponsored savings plans) which may result in decreased costs and expenses. C. SURRENDERS WHAT KINDS OF SURRENDERS ARE AVAILABLE? BEFORE THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - When you Surrender or terminate your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable, distribution charges and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract. For information on how termination of the Contract impacts the Personal Pension Account, see "Personal Pension Account" section above. Partial Surrenders - You may request a partial Surrender of Contract Value at any time before the Annuity Commencement Date. We will deduct any applicable CDSC and Distribution Charge. You can ask us to deduct the CDSC and Distribution Charge from the amount you are Surrendering or from your remaining Contract Value. If we deduct the CDSC from your remaining Contract Value, that amount will also be subject to CDSC. This is our default option. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. There are several restrictions on partial Surrenders of Contract Value before the Annuity Commencement Date: - the partial Surrender of Contract Value must be at least equal to $500, and - your Account Balance must be equal to or greater than our then current Minimum Amount Rule that we establish according to our then current policies and procedures. The "Minimum Amount Rule" refers to the minimum Contract Value that you must maintain within this Contract. If you fail to comply with the Minimum Amount Rule, we reserve the right to fully terminate your Contract. The Minimum Amount Rule varies by share class. Currently the Minimum Amount Rule for class I share 28 ------------------------------------------------------------------------------- Contracts is $500 and is $2,000 for Class B and C Shares. We may increase the Minimum Amount Rule from time to time but in no event shall the Minimum Amount Rule exceed $2,000 (Class I Shares) or $10,000 (Class B and C Shares). You may only commute all or a portion of Personal Pension Account Payouts by following the procedures described below in the "After the Annuity Commencement Date" section below. Withdrawals will reduce your standard Death Benefit on a dollar-for-dollar basis. Please consult with your Registered Representative to be sure that you fully understand the ways such a decision will affect your Contract. AFTER THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - You may Surrender and thus terminate your Contract on or after the Annuity Commencement Date only if you selected Annuity Payout Options Two, Three, Five, Six and Eight. IN THE EVENT YOU TAKE A FULL SURRENDER AND THUS TERMINATE ANNUITY PAYOUT OPTIONS TWO, THREE, FIVE, OR EIGHT, YOU WILL FORFEIT THE LIFE CONTINGENT PAYMENTS PAYABLE UNDER THESE OPTIONS. Upon Contract termination, we pay you the Commuted Value, minus any applicable CDSCs and Premium tax. Partial Surrenders/Commutation - Partial Surrenders and/or commutation are permitted after the Annuity Commencement Date if you select the Annuity Payout Option Two, Three, Five, or Six, or Eight. You may withdraw amounts equal to the Commuted Value of the payments that we would have made during the Guaranteed Payout Duration. See Example 4 and footnote 3 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Commuted Value and the computation of Guaranteed Payout Duration. If you select the Annuity Payout Options Two or Eight, the Guaranteed Payout Duration will be equivilant to the Annuity Payout Value divided by the Annuity Payout amount, rounded down. To qualify under these Annuity Payout Options you must make the request before the Guaranteed Payout Duration expires. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. We will deduct any applicable CDSCs. If you elect to withdraw the entire Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will not make any Annuity Payouts during the remaining Guaranteed Payout Duration. If you elect to withdraw only some of the Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will reduce the remaining Annuity Payouts during the remaining Guaranteed Payout Duration on a first-in, first-out basis. ONCE THE GUARANTEED PAYOUT DURATION HAS EXPIRED, YOU MAY RESUME RECEIVING ANNUITY PAYOUTS PROVIDED THAT YOU, A JOINT OWNER OR THE ANNUITANT IS ALIVE AND YOU HAVE NOT TERMINATED YOUR CONTRACT. Annuity Payout Options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. WHAT IS THE COMMUTED VALUE? You may choose to accelerate Annuity Payouts under certain Annuity Payout Options to be received in one lump sum. This is referred to as "commuting" your Annuity Payout. The amount that you request to commute must be at least equal to $500. There will be a waiting period of at least thirty days for payment of any lump sum commutation. Upon commutation, the Annuity Payout Value or the remaining Guaranteed Payout Duration payments, as applicable, will be discounted based on an interest rate that we determine at our sole discretion (the "discount rate"). The discount rate may be different than the interest rate used to establish payout rates. We determine the discount rate based on a number of factors including then current interest rate(s), investment assumptions and the additional anti-selection and mortality risk we incur by permitting commutation. The higher the discount rate and CDSC, the lower the amount that you will receive. COMMUTED VALUE OF YOUR PERSONAL PENSION ACCOUNT WILL BE LESS THAN YOUR ANNUITY PAYOUT VALUE. Commutation does not affect resumption of life contingent Personal Pension Account Payouts at the conclusion of the applicable Guaranteed Payout Duration. Commuted Value is determined on the day we receive your written request. HOW DO YOU REQUEST A SURRENDER? Requests for full Surrenders terminating your Contract must be in writing. Requests for partial Surrenders can be made in writing, by telephone or on the Internet. We will send your money within seven days of receiving complete instructions. However, we may postpone payment whenever: (a) the New York Stock Exchange is closed, (b) trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and orders postponement or (d) the SEC determines that an emergency exists to restrict valuation. Written Requests - Complete a Surrender Form or send us a letter, signed by you, stating: - the dollar amount that you want to receive, either before or after we withhold taxes and deduct for any applicable charges, - your tax withholding amount or percentage, if any, and - your mailing address. 29 ------------------------------------------------------------------------------- You must complete a Commutation Form to commute any portion of your Personal Pension Account Annuity Payout Value or receive Commuted Value under applicable Annuity Payout Options. If there are joint Owners, both must authorize these transactions. For a partial Surrender, specify the Sub-Accounts that you want your Surrender to come from (this may be limited to pro-rata surrenders if optional benefits are elected); otherwise, the Surrender will be taken in proportion to the value in each Sub-Account. Telephone Requests - To request a partial Surrender by telephone, we must have received your completed Telephone Redemption Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept telephone instructions for partial Surrenders from either Owner. Telephone authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on telephone Surrenders. Internet Requests - To request a partial Surrender by internet; we must have received your completed Internet Partial Withdrawal Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept internet instructions for partial Surrenders from either Owner. Internet authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on Internet Surrenders. We may record telephone calls and use other procedures to verify information and confirm that instructions are genuine. We will not be liable for losses or expenses arising from telephone instructions reasonably believed to be genuine. WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME. Telephone and Internet Surrender instructions received before the end of a Valuation Day will be processed at the end of that Valuation Day. Otherwise, your request will be processed at the end of the next Valuation Day. Completing a Power of Attorney form for another person to act on your behalf may prevent you from making Surrenders via telephone and Internet. WHAT SHOULD BE CONSIDERED ABOUT TAXES? There are certain tax consequences associated with Surrenders and Personal Pension Account Payouts. If you make a Surrender or take a Personal Pension Account Payout prior to age 59 1/2, there may be adverse tax consequences including a 10% federal income tax penalty on the taxable portion of the Surrender payment or a Personal Pension Account Payout. Taking these actions before age 59 1/2 may also affect the continuing tax-qualified status of some Contracts. WE DO NOT MONITOR SURRENDER REQUESTS. CONSULT YOUR PERSONAL TAX ADVISER TO DETERMINE WHETHER A SURRENDER IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY. More than one Contract owned in the same calendar year - If you own more than one Contract issued by us or our affiliates in the same calendar year, then these Contracts may be treated as one Contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. Please see "Federal Tax Considerations" and "Information Regarding Tax-Qualified Retirement Plans" for more information. D. ANNUITY PAYOUTS Generally speaking, when you annuitize your Contract, you begin the process of converting Accumulation Units in what is known as the "payout phase." The payout phase starts when you annuitize your Contract or with your Annuity Commencement Date and ends when we make the last payment required under your Contract. You may take Personal Pension Account Payouts without annuitizing Contract Value. Once you annuitize your Contract, you may no longer make Personal Pension Account Contributions. You must commence taking Annuity Payouts no later than when you reach your Annuity Commencement Date. Funds allocated to the Personal Pension Account will be paid to you under Annuity Payout Options Two and Eight. Contract Value can only be annuitized under Annuity Payout Options One, Three, Four, Five and Six. Please check with your Registered Representative to select the Annuity Payout Option that best meets your income needs. WHEN DO YOUR ANNUITY PAYOUTS BEGIN? Personal Pension Account Payouts may begin at any time but we reserve the right to require that you own your Contract for at least six months before you start taking these payments. Contract Value may only be annuitized on the Annuity Commencement Date. Your Annuity Commencement Date cannot be earlier than your second Contract Anniversary if choosing a fixed dollar Annuity Payout. The Annuity Commencement Date may be immediate if electing a variable dollar amount Annuity Payout. In no event; however, may the Annuity Commencement Date be later than: - Annuitant's 90th birthday (or if the Owner is a Charitable Remainder Trust, the Annuitant's 100th birthday); 30 ------------------------------------------------------------------------------- - 10th Contract Anniversary (subject to state variation); - The Annuity Commencement Date stated in an extension request (subject to your Financial Intermediary's rules for granting extension requests) received by us not less than 30 days prior to a scheduled Annuity Commencement Date; or - The date that you fully annuitize Accumulation Balance (assuming that no Contract Value exists as of such date). Unless otherwise requested, commencement of receipt of Personal Pension Account Payouts do not constitute an Annuity Commencement Date. We reserve the right, in our sole discretion, to refuse to extend your Annuity Commencement Date regardless of whether we may have granted extensions in the past to you or other similarly situated investors. Your Financial Intermediary may ask us to prohibit Annuity Commencement Date extensions beyond when the Annuitant turns age 95. Please ask your Registered Representative whether you are affected by any such prohibition and make sure that you fully understand the implications this might have in regard to your Death Benefits. Except as otherwise provided, the Annuity Calculation Date is when the amount of your Annuity Payout is determined. This occurs within five Valuation Days before your selected Annuity Commencement Date. All Annuity Payouts, regardless of frequency, will occur on the same day of the month as the Annuity Commencement Date. After the initial payout, if an Annuity Payout date falls on a non-Valuation Day, the Annuity Payout is computed on the prior Valuation Day. If the Annuity Payout date does not occur in a given month due to a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE? Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. We may change these Annuity Payout Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout Option with respect to that portion of your Contract cannot be changed. - OPTION ONE - LIFE ANNUITY We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth. - OPTION TWO - LIFE ANNUITY WITH A CASH REFUND In general, we will make Annuity Payouts as long as the Annuitant is living. However, when the Owner or joint Owner dies before the Annuity Commencement Date (and the Annuitant is living or deceased), the Death Benefit will be paid according to the standard Death Benefit rules. When the Annuitant dies after the Annuity Commencement Date (and the Owner is living or deceased), then the Beneficiary will receive the Death Benefit according to the standard Death Benefit rules and Annuity Payouts cease. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). - OPTION THREE - LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as the Annuitant is living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus the Annuitant's age. If the Annuitant dies before the guaranteed number of years has passed, then the Beneficiary may elect to continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. - OPTION FOUR - JOINT AND LAST SURVIVOR LIFE ANNUITY We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are living. When one Annuitant dies, we continue to make Annuity Payouts until that second Annuitant dies. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable Annuity Payouts, these percentages represent Annuity Units; for fixed Annuity Payouts, they represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. 31 ------------------------------------------------------------------------------- - OPTION FIVE - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus your younger Annuitant's age. If the Annuitant and the Joint Annuitant both die before the guaranteed number of years have passed, then the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable dollar amount Annuity Payouts, these percentages represent Annuity Units. For fixed dollar amount Annuity Payouts, these percentages represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION SIX - PAYMENTS FOR A PERIOD CERTAIN We agree to make payments for a specified time. The minimum period that you can select is 10 years during the first two Contract Years and 5 years after the second Contract Anniversary. The maximum period that you can select is 100 years minus your Annuitant's age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. - OPTION SEVEN - RESERVED - OPTION EIGHT - JOINT AND LAST SURVIVOR LIFE WITH CASH REFUND (NOT CURRENTLY AVAILABLE) In general, we will make Annuity Payouts as long as the Owner, and either Annuitant or Joint Annuitant are living. When the Owner dies before the Annuity Commencement Date (and the Annuitant or Joint Annuitant is living or deceased), then the Death Benefit is paid according to the standard Death Benefit rules. If death occurs after the Annuity Commencement Date, we will make Annuity Payouts as long as either the Annuitant or the Joint Annuitant is living. When one Annuitant dies, we continue to make Annuity Payouts at the elected percentage until the second Annuitant dies. When the last Annuitant dies, then the Death Benefit is paid according to the standard Death Benefit rules. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 75%, or - Decrease to 50%. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). YOU CANNOT TERMINATE YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE SELECTED ANNUITY PAYOUT OPTIONS TWO, THREE, FOUR, FIVE, SIX OR EIGHT. A CDSC, IF APPLICABLE, MAY BE DEDUCTED. Annuity Payout Option Two is only available for Personal Pension Account Payouts from the Personal Pension Account. Annuity Payout Options One, Three, Four, Five and Six are only available for Annuity Payouts from the Fixed Accumulation Feature or Sub-Accounts. Annuity Payout Option Eight is only available for Personal Pension Account Payouts from the Personal Pension Account and is not currently available. For certain qualified Contracts, if you elect an Annuity Payout Option with a Period Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables. AUTOMATIC ANNUITY PAYOUTS If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under Annuity Payout Option Three. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to five (5%) percent. 32 ------------------------------------------------------------------------------- HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS? In addition to selecting an Annuity Commencement Date and an Annuity Payout Option, you must also decide how often you want the Payee to receive Annuity Payouts. You may choose to receive Annuity Payouts: - monthly, - quarterly, - semi-annually, or - annually. Once you select a frequency, it cannot be changed. If you do not make a selection, the Payee will receive monthly Annuity Payouts. You must select a frequency that results in an Annuity Payout of at least $50. If the amount falls below $50, we have the right to change the frequency to bring the Annuity Payout up to at least $50. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED DOLLAR AMOUNT OR VARIABLE DOLLAR AMOUNT? You may choose an Annuity Payout Option with fixed dollar amounts or variable dollar amounts, depending on your income needs. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. If you elect the Personal Pension Account, your Annuity Payout Option may only be a fixed dollar amount. - FIXED DOLLAR AMOUNT ANNUITY PAYOUTS Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium taxes, by an annuity rate set by us. Annuity purchase rates may vary based on the aspect of the Contract annuitized. - VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts. The dollar amount of the first variable Annuity Payout depends on: - the Annuity Payout Option chosen, - the Annuitant's attained age and gender (if applicable), - the applicable annuity purchase rates based on the 1983a Individual Annuity Mortality table adjusted for projections based on accepted actuarial principles; and - the Assumed Investment Return ("AIR"). The total amount of the first variable dollar amount Annuity Payout is determined by dividing the Contract Value minus any applicable Premium taxes, by $1,000 and multiplying the result by the payment factor defined in the Contract for the selected Annuity Payout Option. The dollar amount of each subsequent variable dollar amount Annuity Payout is equal to the total of Annuity Units for each Sub-Account multiplied by the Annuity Unit Value of each Sub-Account. The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to the Accumulation Unit Value Net Investment Factor for the current Valuation Period multiplied by the Annuity Unit Factor, multiplied by the Annuity Unit Value for the preceding Valuation Period. The Annuity Unit Factor offsets the AIR used to calculate your first variable dollar amount Annuity Payout. The first Annuity Payout will be based upon the AIR. The remaining Annuity Payouts will fluctuate based on the performance of the Funds in relation to the AIR. The degree of the fluctuation will depend on the AIR you select. You can select one of the following AIRs offered, subject to state variations:
ANNUITY ANNUITY ANNUITY AIR UNIT FACTOR AIR UNIT FACTOR AIR UNIT FACTOR ------------------------------------------------------------------- 3% 0.999919% 5% 0.999866% 6% 0.999840%
33 ------------------------------------------------------------------------------- The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR. For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first. Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select. After the Annuity Calculation Date, you may transfer dollar amounts of Annuity Units from one Sub-Account to another. On the day you make a transfer, the dollar amounts are equal for both Sub-Accounts and the number of Annuity Units will be different. We will transfer the dollar amount of your Annuity Units the day we receive your written request if received before the close of the New York Stock Exchange. Otherwise, the transfer will be made on the next Valuation Day. All Sub-Account transfers must comply with applicable transfer restriction policies. - COMBINATION ANNUITY PAYOUT You may choose to receive a combination of fixed dollar amount and variable dollar amount Annuity Payouts as long as they total 100% of your Annuity Payout. For example, you may choose to use forty (40%) percent fixed dollar amount and sixty (60%) percent variable dollar amount to meet your income needs. Combination Annuity Payouts are not available during the first two Contract Years. E. STANDARD DEATH BENEFIT WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED? The Death Benefit is the amount we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The standard Death Benefit is equal to your Account Balance (less Distribution Charge) calculated as of the Valuation Day when we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature and Personal Pension Account for each Beneficiary's portion of the proceeds. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you have $5 million or more in total aggregate Account Balance. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of aggregate Deposits, as adjusted for partial Surrenders (for e.g., dollar-for-dollar or proportional) and Personal Pension Account Payouts under all applicable contracts and associated riders; or - Account Balance plus $1 million. Please see the heading entitled "What kinds of Surrenders are available? - Before the Annuity Commencement Date" under the Surrenders section and "What effect does partial or full Surrenders have on your benefits under the rider?" in the Return of Premium Death Benefit section for a discussion regarding when partial Surrenders reduce your Death Benefit on either a dollar-for-dollar or proportionate basis. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. HOW IS THE DEATH BENEFIT PAID? The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Death Benefit payment is $5,000 or more, the Beneficiary may elect to have their Death Benefit paid through our "Safe Haven Program." Under this program, the proceeds remain in our General Account and the Beneficiary will receive a draft book. The Beneficiary can write one draft for total payment of the Death Benefit, or keep the money in the General Account and write drafts as needed. We will credit interest at a rate determined periodically in our sole discretion. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit amount to the General Account. 34 ------------------------------------------------------------------------------- The interest will be taxable to the Beneficiary in the tax year that it is credited. We may not offer the Safe Haven Program in all states and we reserve the right to discontinue offering it at any time. Although there are no direct charges for this program, we earn investment income from the proceeds. The investment income we earn is likely more than the amount of interest we credit; therefore, we make a profit from the difference. The Beneficiary may elect to leave proceeds from the Death Benefit invested with us for up to five years from the date of death of the Annuitant or Owner if death occurred before the Annuity Commencement Date. Once we receive a certified death certificate or other legal documents acceptable to us, the Beneficiary can: (a) make Sub-Account transfers (subject to applicable restrictions) and (b) take Surrenders without paying CDSCs, if any. The Beneficiary may not make Personal Pension Account Contributions. We shall endeavor to fully discharge the last instructions from the Owner wherever possible or practical. The Beneficiary of a non-qualified Contract or IRA (prior to the required distribution date) may also elect an annuity option that allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. If the Owner dies before the Annuity Commencement Date, the Death Benefit must be distributed within five years after death or be distributed under a distribution option or Annuity Payout Option that satisfies the Alternatives to the Required Distributions described below. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. WHO WILL RECEIVE THE DEATH BENEFIT? The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. If death occurs on or after the Annuity Commencement Date, there may be no payout at death unless the Owner has elected an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value. IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . . Owner There is a surviving joint The Annuitant is living or Joint Owner receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Beneficiary receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Owner's estate receives the Owner and the Beneficiary deceased Death Benefit. predeceases the Owner Annuitant The Owner is living There is no named Contingent The Owner becomes the Annuitant Contingent Annuitant and the Contract continues. The Owner may waive this presumption and receive the Death Benefit. Annuitant The Owner is living The Contingent Annuitant is Contingent Annuitant becomes living the Annuitant, and the Contract continues.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . THEN THE . . . Owner The Annuitant is living Beneficiary becomes the Owner. Annuitant The Owner is living Owner receives the payout at death. Annuitant The Annuitant is also the Owner Beneficiary receives the payout at death.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A PAYOUT AT DEATH. 35 ------------------------------------------------------------------------------- 5. RETURN OF PREMIUM DEATH BENEFIT OBJECTIVE To provide a Death Benefit that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The Death Benefit that we will pay under this rider is in addition to your Personal Pension Account Death Benefit. WHEN CAN YOU BUY THE RIDER? You can currently elect this benefit (called a "rider") only at the time that you buy this Contract. This rider may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw this rider at any time. The maximum age of any Owner or Annuitant when electing this rider is 80. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? No. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on Premium Payments, as adjusted for Surrenders (as well as Benefit Balance transferred to Contract Value), as of each Contract Anniversary. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be based on the Contract Value on the date of any such change plus Premium Payments received after such date, as adjusted for Surrenders. This charge will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A prorated charge will be deducted in the event of a full Surrender of this Contract or this rider. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts or the rider is terminated. The rider charge may limit access to the Fixed Accumulation Feature in certain states. We reserve the right to change the rider charge up to the maximum fee described in the Fee Summary at any time without notice. The rider charge may increase for new investors. The rider charge may also prospectively increase upon certain ownership changes or upon Spousal Contract continuation. We reserve the right to charge a different rider charge based on your participation in approved investment options. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the higher of Contract Value (minus Distribution Charges) or Premium Payments, as adjusted for Surrenders. See Example 1 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit which is equal to your Benefit Balance. EVEN THOUGH YOUR BENEFIT BALANCE IS NOT SUBJECT TO PRINCIPAL PROTECTION UNDER THIS RIDER, ANY PORTIONS OF YOUR BENEFIT BALANCE TRANSFERRED TO SUB-ACCOUNTS AND/OR THE FIXED ACCUMULATION FEATURE ARE ALSO CONSIDERED TO BE PART OF THE CONTRACT VALUE USED TO COMPUTE THIS DEATH BENEFIT. See Example 2 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and result in your Beneficiary receiving the standard Death Benefit. The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. 36 ------------------------------------------------------------------------------- DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? Yes. At anytime following the earliest of the fifth anniversary of the rider effective date or Spousal Contract continuation, the Contract Owner may elect to terminate this rider. If this rider is terminated, then a pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. The Death Benefit will be reset to the standard Death Benefit. No other optional benefit may be elected following the termination. A Company-sponsored exchange of this rider will not be considered to be a termination by you of the rider. This rider will also terminate upon election of a Death Benefit option (described in the "Standard Death Benefit" section) by the Beneficiary (excluding Spousal Contract continuation). WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? We calculate the adjustment to your aggregate Premium Payments for any Surrender by reducing your aggregate Premium Payments on a dollar-for-dollar basis for any Surrender within a Contract Year up to the Death Benefit withdrawal limit. The "Death Benefit withdrawal limit" is five (5%) percent of aggregate Premium Payments. If a change of ownership occurs or if Spousal Contract continuation is elected, the Death Benefit withdrawal limit will be five (5%) percent of Contract Value as of the date of such change plus Premium Payments made after such date. For purposes of this rider, a Surrender also includes a transfer of Contract Value to Benefit Balance. Any partial Surrender that causes cumulative Surrenders during the Contract Year to exceed the Death Benefit withdrawal limit, even if less than your permissible AWA (provided that such Surrender was not made in accordance with our Automatic Income program for the purposes of meeting Required Minimum Distribution requirements), will cause a proportionate reduction in your Death Benefit. Partial Surrenders up to, but not in excess of the Death Benefit withdrawal limit (assuming no ownership changes) will reduce your Death Benefit on a dollar-for-dollar basis. Any and all partial Surrenders in excess of your Death Benefit withdrawal limit, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the excessive partial Surrender (which is the amount of the Surrender in excess of the Death Benefit withdrawal limit) divided by the sum of (i) Contract Value prior to such partial Surrender minus (ii) any remaining Death Benefit withdrawal limit. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. See Example 1 under the Return of Premium Examples in Appendix A for an illustration of this calculation. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a reset of these benefits. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated to the lesser of the Contract Value or the Death Benefit on the effective date of the ownership change. If the oldest Owner after the change is greater than the age limitation of the rider as of the trade date of the change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, that Spouse may continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is not available for sale, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. 37 ------------------------------------------------------------------------------- If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is still available for sale, the Death Benefit will be increased to the Contract Value if higher than the Death Benefit as of the date of due proof of death and will serve as the new basis for the benefit. The rider charge will be reset to the rider charge then being assessed for new sales of the rider. If the new Owner is age 81 or older at the time of the Spousal Contract continuation, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date and then will no longer be assessed. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. You may allocate your Contract Value to any Sub-Accounts(s), asset allocation models, investment programs, fund of funds Sub-Accounts(s) or other investment option(s) or you may design your own portfolio, provided that your Fund selections comply with the investment restrictions in the following table:
CLASSIFICATION ALLOCATION -------------------------------------------------------------------------------- Fixed investments Funds Minimum of 30% - to a maximum of 100% Equity Investments - Maximum of 70% - No more than 20% may be invested in any one Fund in this category Limited Investments Maximum of 20% Multi-Asset Investments - Minimum of 0% - to a maximum of 100% - May not be combined with Funds in the above classifications
Please refer to Appendix C for the classification associated with each currently offered Fund. Investing in the Personal Pension Account and Fixed Accumulation Feature do not constitute a violation of these investment restrictions. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. The Personal Pension Account and Fixed Accumulation Feature are not included within any classification. We may, in our sole discretion, add, replace or delete Funds, programs, classifications, allocations and asset allocation models from time to time. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. You will be provided with advance notification of any investment restriction changes and you must invest any subsequent Premium Payments in accordance with such updated investment restrictions. You must participate in an asset rebalancing program. If on any Valuation Day, your Contract Value is no longer invested within the permissible allocations in the table above as a result of market fluctuations, we will not terminate the rider. Instead, your Contract Value will be rebalanced quarterly in accordance with your last compliant allocation instructions. All subsequent Premium Payments must also be invested according to the classifications described in this section. YOU MAY PROVIDE INVESTMENT INSTRUCTIONS TO INVEST CONTRACT VALUE IN A MANNER THAT VIOLATES THESE INVESTMENT RESTRICTIONS. ANY SUCH ACTION WILL, HOWEVER, RESULT IN THE TERMINATION OF THIS RIDER. WE WILL NOT ACCEPT INSTRUCTIONS TO VIOLATE THE INVESTMENT RESTRICTIONS FROM YOUR REGISTERED REPRESENTATIVE. VIOLATING THESE INVESTMENT RESTRICTIONS SHALL RESULT IN THE TERMINATION OF YOUR DEATH BENEFIT UNDER THIS RIDER. If this rider is terminated due to failure to comply with the investment restrictions, you will have a one time opportunity to reinstate the Death Benefit. You will be notified in your confirmation statement that you have violated these investment restrictions. The thirty calendar day reinstatement period will begin from the date this rider is terminated. Your opportunity to reinstate will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, or make an ownership change. UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENT WILL BE RESET AT THE LOWER OF THE DEATH BENEFIT PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE REINSTATEMENT. WE WILL DEDUCT A PRORATED RIDER CHARGE ON YOUR CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. 38 ------------------------------------------------------------------------------- ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. CAN WE AGGREGATE CONTRACTS? Yes. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates where you have elected any optional death benefit rider as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you make $5 million or more in total aggregate Deposits. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of Deposits (as reduced by an adjustment for Surrenders), or - Account Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, assignment and/or violation of the investment restrictions. If we terminate the rider, it cannot be re-elected by you. - The selection of an Annuity Payout Option and the timing of the selection may have an impact on the tax treatment of the Death Benefit. To receive favorable tax treatment, the Annuity Payout Option selected: (a) cannot extend beyond the Beneficiary's life or life expectancy, and (b) must begin within one year of the date of death. If these conditions are not met, the Death Benefit will be treated as a lump sum payment for tax purposes. This sum will be taxable in the year in which it is considered received. - Upon Spousal Contract continuation or ownership change, the Death Benefit withdrawal limit upon which we reduce the Death Benefit will be adjusted to equal five (5%) percent of the Contract Value as of the date of such change plus Premium Payments received after such date. - If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the Contract may continue with the Spouse as Owner through a Spousal Contract continuation election, unless the Spouse elects to receive the Death Benefit as a lump sum payment or as an Annuity Payout Option. If the Contract continues with the Spouse as Owner, we will adjust the Contract Value to the amount that we would have paid as the Death Benefit payment, had the Spouse elected to receive the Death Benefit as a lump sum payment. Spousal Contract continuation will only apply one time for each Contract. If you do not name another Beneficiary at the time of continuation, the Beneficiary will default to your estate. - Participation in an automatic investment or income program may result in a transaction during the reinstatement period causing you to lose your right to reinstate the Death Benefit. 6. FURTHER INFORMATION A. GLOSSARY Except as provided elsewhere in this prospectus, the following capitalized terms shall have the meaning ascribed below: ACCOUNT: Any of the Sub-Accounts or the Fixed Accumulation Feature. ACCOUNT BALANCE: The sum of your Contract Value and Benefit Balance (this term is also referred to as the "Total Balance" in your Contract and marketing materials). ACCUMULATION BALANCE - The sum of all Personal Pension Account Contributions increased by credited interest; minus any transfers into any other Account(s) and any conversion into Annuity Payout Value. ACCUMULATION UNITS: If you allocate your Premium Payment to any of the Sub-Accounts, we will convert Premium Payments into Accumulation Units in the selected Sub-Accounts. Accumulation Units are valued at the end of each Valuation Day and are used to calculate Contract Value prior to Annuitization. ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation Day. 39 ------------------------------------------------------------------------------- ADMINISTRATIVE OFFICE: Our overnight mailing address is: 1 Griffin Road North, Windsor, CT 06095-1512. Our standard mailing address is: P.O. Box 5085, Hartford, Connecticut 06102-5085. ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or upon full Surrender. ANNUAL WITHDRAWAL AMOUNT (AWA): The amount you may Surrender each Contract Year without incurring a CDSC. ANNUITANT: The person on whose life the Contract is issued. Except as otherwise provided, the Annuitant may not be changed after your Contract is issued. ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout. ANNUITY COMMENCEMENT DATE: The first day of the first period for which a distribution is received as an Annuity Payout under the Contract. ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the duration and frequency you select. Annuity Payout also refers to Personal Pension Account Payouts. ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity Commencement Date, the death of the Contract Owner or Annuitant; or annuitization(s) of Benefit Balance. ANNUITY PAYOUT VALUE: The portion of your Benefit Balance converted into Personal Pension Account Payouts, as reduced by future Personal Pension Account Payouts. ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity Payouts under a variable dollar amount Annuity Payout Option. ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day. BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of the Contract upon the death of any Contract Owner or Annuitant, as the case may be. BENEFIT BALANCE: Personal Pension Account Contributions, as adjusted for transfers to or from Contract Value, credited interest and/or annuitization. Benefit Balance includes Annuity Payout Value, if any. CODE: The Internal Revenue Code of 1986, as amended. COMMUTED VALUE: The present value of any Annuity Payout due and payable during the Guaranteed Payout Duration. This amount is calculated using the Assumed Investment Return for variable dollar amount Annuity Payouts and the applicable discount rate determined by us for applicable fixed dollar amount Annuity Payouts. CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if the original Annuitant dies before the Annuity Commencement Date. You must name a Contingent Annuitant before the original Annuitant's death. CONTINGENT DEFERRED SALES CHARGE (CDSC): The deferred sales charge, if applicable, that may apply when you make a full or partial Surrender. CONTRACT: The individual Annuity Contract and any endorsements or riders. Group participants and some individuals may receive a certificate rather than a Contract. CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If the Contract Anniversary falls on a Non-Valuation Day, then the Contract Anniversary will be the next Valuation Day. CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in this prospectus including any joint Owner(s). We do not capitalize "you" in the prospectus. CONTRACT VALUE: The total value of the Account on any Valuation Day. CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued. DEATH BENEFIT: Except as otherwise provided, the amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date. DEPOSIT: The sum of allPremium Payments and Personal Pension Account Contributions. FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate all or a portion of your Contract Value. In your Contract, the Fixed Accumulation Feature may be called the Fixed Account. Not all classes of Contracts we offer contain a Fixed Accumulation Feature. 40 ------------------------------------------------------------------------------- FUND: A registered investment company or a series thereof in which assets of a Sub-Account may be invested. We sometimes call the Funds you select a "Sub-Account". GUARANTEED PAYOUT DURATION: The time period (sometimes referred to as a "Period Certain") specified in Annuity Payout Options Three, Five and Six; and with respect to Annuity Payout Options Two and Eight, the time period equal to the applicable Annuity Payout Value divided by the corresponding Personal Pension Account Payout, rounded down. JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the Annuitant dies after Annuitization. You may name a Joint Annuitant only if your Annuity Payout Option provides for a survivor. The Joint Annuitant may not be changed. NET INVESTMENT FACTOR: This is used to measure the investment performance of a Sub-Account from one Valuation Day to the next, and is also used to calculate your Annuity Payout amount. 1933 ACT: The Securities Act of 1933, as amended. 1934 ACT: The Securities Exchange Act of 1934, as amended. 1940 ACT: The Investment Company Act of 1940, as amended. NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading. PAYEE: The person or party you designate to receive Annuity Payouts. PERSONAL PENSION ACCOUNT CONTRIBUTIONS: Sums allocated to the Personal Pension Account (after deduction of front-end sales charges, if applicable). Personal Pension Account Contributions may take the form of Deposits or transfers of Contract Value from Sub-Accounts or the Fixed Accumulation Feature (if applicable). PERSONAL PENSION ACCOUNT PAYOUTS: Regularly scheduled periodic payments of Annuity Payout Value. PREMIUM OR PREMIUM PAYMENT: Money sent to us to be invested in your Contract (not taking into consideration any applicable sales charges). Unless otherwise specified, a Premium Payment does not include Personal Pension Account Contributions. Portions of your Benefit Balance transferred to Sub-Accounts and/or the Fixed Accumulation Feature are initially considered to be Premium Payments that become part of your Contract Value. REMAINING GROSS PREMIUM: Premium Payments minus prior partial Surrenders in excess of the AWA at the time of such partial Surrender. SPOUSE: A person related to a Contract Owner by marriage pursuant to the Code. SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund. There is a Sub-Account for each Fund. We sometimes call the Funds you select your "Sub-Account". SUB-ACCOUNT VALUE: The value of each Sub-Account on or before the Annuity Calculation Date, which is determined on any day by multiplying the number of Accumulation Units by the Accumulation Unit Value for each Sub-Account. SURRENDER: A complete or partial withdrawal from your Contract. For the purposes of optional riders only, a Surrender may also include a transfer of Contract Value to Benefit Balance. SURRENDER VALUE: The amount we pay you if you terminate your Contract before the Annuity Commencement Date. The Surrender Value is equal to the Contract Value minus any applicable charges (subject to rounding). Surrender Value does not include the Commuted Value of your Personal Pension Account. TARGET INCOME AGE - The year when Personal Pension Account Payouts are likely to commence. Target Income Age establishes a 7-year guarantee window (three years before and after) during which a guaranteed payout rate will be applied to your Accumulation Balance. VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values of the Separate Account are determined as of the close of the New York Stock Exchange. The Exchange generally closes at 4:00 p.m. Eastern Time but may close earlier on certain days and as conditions warrant. VALUATION PERIOD: The time span between the close of trading on the New York Stock Exchange from one Valuation Day to the next. WE, US OR OUR: Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company, as the case may be. YOU: The Owner including any joint Owner(s). We do not capitalize "you" or "your" in this prospectus. 41 ------------------------------------------------------------------------------- B. STATE VARIATIONS The following section describes modifications to this prospectus required by one or more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of Contracts we issue. References to certain state's variations do not imply that we actually offer Contracts in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders. ALABAMA - The Fixed Accumulation Feature is not available. The DCA Plus Fixed Accumulation Feature is available. CALIFORNIA - If you are 60 years old or older you must either elect the Senior Protection Program, or elect to immediately allocate the initial Premium Payments to the other investment options. Under the Senior Protection Program, we will allocate your initial Premium Payment to a money market Fund for the first 35 days your initial Premium Payment is invested. After the 35th day we will automatically allocate your Contract Value according to your most current investment instructions. If you elect the Senior Protection Program you will not be able to participate in any InvestEase (if otherwise available) or Dollar Cost Averaging Program until after the Program has terminated. The Dollar Cost Averaging Plus, the Static Asset Allocation Models and certain Automatic Income Programs are not available if you elect the Senior Protection Program. Under the Senior Protection Program any subsequent Premium Payment received during the 35 days after the initial Premium Payment is invested will also be invested in a money market Fund unless you direct otherwise. You may voluntarily terminate your participation in the Senior Protection Program by contacting us in writing or by telephone. You will automatically terminate your participation in the Senior Protection Program if you allocate a subsequent Premium Payment to any other investment option or transfer Contract Value from a money market Fund to another investment option. When you terminate your participation in the Senior Protection Program you may reallocate your Contract Value in the Program to other investment options; or we will automatically reallocate your Contract Value in the Program according to your original instructions 35 days after your initial Premium Payment was invested. CONNECTICUT, NEW HAMPSHIRE AND NEW JERSEY - A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). FLORIDA - The limit on Death Benefits imposed when aggregate Premium Payments total $5 million or more does not apply. MASSACHUSETTS - We will accept subsequent Premium Payments only until the Annuitant's 63rd birthday or the third Contract Anniversary, whichever is later (B Share Contracts). The Nursing Home Waiver is not available. NEW JERSEY - The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. NEW YORK - A Contract issued by Hartford Life and Annuity Insurance Company is not available in New York. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. OKLAHOMA - The only AIRs available are 3% and 5%. OREGON - We will accept subsequent Premium Payments during the first three Contract Years (B Share Contracts). Owners may only sign up for DCA Plus Programs that are 6 months or longer. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. The only AIRs available are 3% and 5%. PENNSYLVANIA - The Nursing Home Waiver minimum confinement period is changed from 180 days to 90 days. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. TEXAS - Letters of Intent are not available as a basis to reduce sales charges. VERMONT - Eligible Investments owned by you, your Spouse or any immediate family member may be included under the Rights of Accumulation Program. WASHINGTON - In any year when no Premium Payment is paid into the Fixed Accumulation Feature, any pro-rata portion of the fee taken from the Fixed Accumulation Feature will be limited to interest earned in excess of the 3% for that year. C. MISCELLANEOUS OWNERSHIP CHANGES - We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. ASSIGNMENT - A non-qualified Contract may be assigned subject to the ownership change restrictions above. We must be properly notified in writing of an assignment. Any Annuity Payouts or Surrenders requested or scheduled before we record an assignment will be 42 ------------------------------------------------------------------------------- made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract. SPECULATIVE INVESTING - Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. Your Contract may not be traded on any stock exchange or secondary market. By purchasing this contract you represent and warrant that you are not using this Contract, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. CONTRACT MODIFICATION - We may unilaterally modify the Contract to reflect, among other things, changes in applicable tax law or interpretations of tax law, but no modification will affect the amount or term of any Contract unless a modification is required to conform the Contract to applicable federal or state law. No modification will affect the method by which Contract Values are determined. Any modifications to the Contract will be filed with each state in which the Contract is for sale. Contract changes will be communicated to Owners through regular mail as an endorsement to their Contract. MEDICAID BENEFITS - Medicaid estate planning may be important to people who are concerned about long term care costs. Benefits associated with this variable annuity may have an impact on your Medicaid eligibility and the assets considered for Medicaid benefits. Ownership interests or beneficiary status under this variable annuity could render you or your loved ones ineligible for Medicaid. This may be particularly troubling if your Spouse or Beneficiary is already receiving Medicaid benefits at the time of transfer or receipt of Death Benefits. As certain ownership changes are either impermissible or are subject to benefit resetting rules, you may want to carefully consider how you structure the ownership and beneficiary status of your Contract. This discussion is intended to provide a very general overview and does not constitute legal advice or in any way suggest that you circumvent these rules. You should seek advice from a competent elder law attorney to make informed decisions about how this variable annuity may affect your plans. D. LEGAL PROCEEDINGS There continues to be significant federal and state regulatory activity relating to financial services companies. Like other insurance companies, we are involved in lawsuits, arbitrations, and regulatory/legal proceedings. Certain of the lawsuits and legal actions the Company is involved in assert claims for substantial amounts. While it is not possible to predict with certainty the ultimate outcome of any pending or future case, legal proceeding or regulatory action, we do not expect the ultimate result of any of these actions to result in a material adverse effect on the Company or its Separate Accounts. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods. E. HOW CONTRACTS ARE SOLD We have entered into a distribution agreement with our affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD serves as the principal underwriter for the Contracts, which are offered on a continuous basis. HSD is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of HSD is the same as ours. PLANCO Financial Services, LLC, a subsidiary of Hartford Life Insurance Company, provides marketing support for us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that sells this Contract. HSD has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to HSD for sales of the Contracts by Financial Intermediaries. HSD, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2008. Contracts will be sold by individuals who have been appointed by us as insurance agents and who are registered representatives of Financial Intermediaries ("Registered Representatives"). B and I share Contracts may be sold directly to the following individuals free of any commission: 1) our current or retired officers, directors, trustees and employees (and their families) and our corporate parent, affiliates and subsidiaries; and 2) employees and Registered Representatives of Financial Intermediaries. If applicable, we will credit the B share Contract with a credit of 5.0% of the initial Deposit and each subsequent Deposit, if any. This additional percentage of Deposit in no way affects current or future charges, rights, benefits or account values of other Owners. The financial advisory arrangement otherwise required in order to purchase I share Contracts shall not be applicable to Hartford Leaders Series V individual variable annuities bought by any of our current or retired officers, directors, trustees and employees or those of our corporate parent, affiliates and subsidiaries. This prospectus does not constitute personalized investment or financial planning advice or a recommendation to purchase this or any other variable annuity. We reserve the right to modify, suspend, or terminate these privileges at any time. 43 ------------------------------------------------------------------------------- We list below types of arrangements that help to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affect each variable annuity. These types of arrangements could be viewed as creating conflicts of interest. Financial Intermediaries receive commissions (described below under "Commissions"). Certain selected Financial Intermediaries also receive additional compensation (described below under "Additional Payments"). All or a portion of the payments we make to Financial Intermediaries may be passed on to Registered Representatives according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive commissions based on the type of Contract or optional benefits sold. Commissions are based on a specified amount of Deposits or Account Balance. - COMMISSIONS Up front commissions paid to Financial Intermediaries generally range from 0% to up to 5% of each Deposit. Trail commissions (fees paid for customers that maintain their Contracts generally for more than 1 year) range up to 1% of your Account Balance. We pay no additional commissions with respect to assets moved from the Personal Pension Account to Sub-Accounts or the Fixed Accumulation Feature. We pay different commissions based on the Contract variation that you buy. We may pay a lower commission for sales to Owners over age 80. Commission arrangements vary from one Financial Intermediary to another. We are not involved in determining your Registered Representative's compensation. Under certain circumstances, your Registered Representative may be required to return all or a portion of the commissions paid. Check with your Registered Representative to verify whether your account is a brokerage or an advisory account. Your interests may differ from ours and your Registered Representative (or the Financial Intermediary with which they are associated). Please ask questions to make sure you understand your rights and any potential conflicts of interest. If you are an advisory client, your Registered Representative (or the Financial Intermediary with which they are associated) can be paid both by you and by us based on what you buy. Therefore, profits, and your Registered Representative's (or their Financial Intermediary's) compensation, may vary by product and over time. Contact an appropriate person at your Financial Intermediary with whom you can discuss these differences. - ADDITIONAL PAYMENTS Subject to FINRA and Financial Intermediary rules, we (or our affiliates) also pay the following types of fees to among other things encourage the sale of this Contract. These additional payments could create an incentive for your Registered Representative, and the Financial Intermediary with which they are associated, to recommend products that pay them more than others, which may not necessarily be to your benefit.
ADDITIONAL PAYMENT TYPE WHAT IT'S USED FOR ------------------------------------------------------------------------------------------------------------------------------- Access Access to Registered Representatives and/or Financial Intermediaries such as one-on-one wholesaler visits or attendance at national sales meetings or similar events. Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and other gifts. Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/participation; sponsorship of Financial Intermediary sales contests and/or promotions in which participants (including Registered Representatives) receive prizes such as travel awards, merchandise and recognition; client generation expenses. Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities for certain Allowances Funds. Support Sales support through such things as providing hardware and software, operational and systems integration, links to our website from a Financial Intermediary's websites; shareholder services (including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and reimbursements). Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training, and/or client or prospect seminar sponsorships. Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or visibility at, national and regional conferences; and/or articles in Financial Intermediary publications highlighting our products and services. Volume Pay for the overall volume of their sales or the amount of money investing in our products.
44 ------------------------------------------------------------------------------- As of December 31, 2008, we have entered into ongoing contractual arrangements to make Additional Payments to the following Financial Intermediaries for our entire suite of variable annuities: AIG Advisors Group, Inc., (Advantage Capital, AIG Financial Advisors, American General, FSC Securities Corporation, Royal Alliance Assoc., Inc.), Allen & Company, AMTrust Investment Svcs Inc., Associated Securities, Banc of America Investment Services Inc., Bancwest Investment Services, Inc., Cadaret, Grant & Co., Inc., Cambridge Investment Research Inc., Capital Analyst Inc., Centaurus Financial, Inc., CCO Investment Services Corp., Citigroup, Inc. (various divisions and affiliates), Comerica Securities, Commonwealth Financial Network, Compass Brokerage, Inc., Crown Capital Securities, L.P., Cuna Brokerage Services, Inc., Cuso Financial Services, L.P., Edward D. Jones & Co., L.P., FFP Securities, Inc., First Allied Securities, Inc., First Citizens Investor Services, First Montauk Securities Corp., First Tennessee Brokerage Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc., H. Beck, Inc., H.D. Vest Investment Services (subsidiary of Wells Fargo & Company), Harbour Investments, Inc., Heim & Young Securities, Huntington Investment Company, Independent Financial Group LLC, Infinex Financial Group, ING Advisors Network, (Financial Network Services (or Investment) Corp., ING Financial Partners, Multi-Financial Securities, Primevest Financial Services, Inc.,), Inter-Securities Inc., Investacorp, Inc., Investment Professionals, Inc., Investors Capital Corp., J.J.B. Hilliard, James T. Borello & Co., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corporation, Key Investment Services, LaSalle Financial Services, Inc., Lincoln Financial Advisors Corp. (marketing name for Lincoln National Corp.), Lincoln Financial Securities Corp., Lincoln Investment Planning, LPL Financial Corporation, M&T Securities, Inc., Merrill Lynch Pierce Fenner & Smith, MML Investor Services Inc., Morgan Keegan & Company, Inc., Morgan Stanley & Co., Inc. (various divisions and affiliates), Mutual Service Corporation, NatCity Investments, National Planning Holdings (Invest Financial Corp., Investment Centers of America, Inc., National Planning Corp., SII Investments, Inc.), Newbridge Securities Corp., NEXT Financial Group, Inc., NFP Securities, Inc., Pension Planners Securities, Inc., Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James & Associates, Inc., Raymond James Financial Services, RBC Capital Markets., Robert W. Baird & Co. Inc., Rogan & Associates, Securities America, Inc., Sigma Financial Corporation, Sorrento Pacific, Stifel Nicolaus & Company, Incorporated, Summit Brokerage Services Inc., Sun Trust Bank, TFS Securities, Inc., The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc., Triad Advisors, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services, Inc. (Union Bank of California, N.A.), UBS Financial Services, Inc., Uvest Financial Services Group Inc., Vanderbilt Securities, LLC, Wachovia Securities, LLC (various divisions), Walnut Street Securities, Inc., Waterstone Financial Group, Wells Fargo Brokerage Services, L.L.C., WaMu Investments, Inc., Woodbury Financial Services, Inc. (an affiliate of ours). Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their Registered Representative is or should be included in any such listing. As of December 31, 2008, we have entered into arrangements to pay Marketing Expense Allowances to the following Fund Companies (or affiliated parties) for our entire suite of variable annuities: AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investment Research and Management, Inc., American Variable Insurance Series & Capital Research and Management Company, Franklin Templeton Services, LLC, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Putnam Retail Management Limited Partnership. Marketing Expense Allowances may vary based on the form of Contract sold and the age of the purchaser. We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify you whether any Financial Intermediary is or should be included in any such listing. You are encouraged to review the prospectus for each Fund for any other compensation arrangements pertaining to the distribution of Fund shares. For the fiscal year ended December 31, 2008, Additional Payments did not in the aggregate exceed approximately $55.8 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.06% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $7.9 million or approximately 0.25% of the Premium Payments invested in a particular Fund during this period. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. 7. FEDERAL TAX CONSIDERATIONS A. INTRODUCTION The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the Internal Revenue Code ("Code"), Treasury Regulations thereunder, and public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by published court decisions. This summary discusses only certain federal income tax consequences to United States Persons, and does not discuss state, local or foreign 45 ------------------------------------------------------------------------------- tax consequences. The term United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trust or estates that are subject to United States federal income tax, regardless of the source of their income. See "Annuity Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity purchases by non-U.S. Persons or residents. This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract. In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW. B. TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT The Separate Account is taxed as part of the Company which is taxed as a life insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the Separate Account will not be taxed as a "regulated investment company" under Subchapter M of Chapter 1 of the Code. Investment income and any realized capital gains on assets of the Separate Account are reinvested and taken into account in determining the value of the Accumulation and Annuity Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the Contract. Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. The Company is entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account. These tax benefits, which may include the foreign tax credit and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived. C. TAXATION OF ANNUITIES - GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN TAX-QUALIFIED RETIREMENT PLANS Section 72 of the Code governs the taxation of annuities in general. 1. NON-NATURAL PERSONS AS OWNERS Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Contract Owner generally could be required to include in gross income currently for each taxable year the excess of (a) the sum of the Contract Value as of the close of the taxable year and all previous distributions under the Contract over (b) the sum of net premiums paid for the taxable year and any prior taxable year and the amount includable in gross income for any prior taxable year with respect to the Contract under Section 72(u). However, Section 72(u) does not apply to: - A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person), - A contract acquired by the estate of a decedent by reason of such decedent's death, - Certain contracts acquired with respect to tax-qualified retirement arrangements, - Certain contracts held in structured settlement arrangements that may qualify under Code Section 130, or - A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract's purchase. A non-natural Contract Owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code 46 ------------------------------------------------------------------------------- Section 72(u). However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts. Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements. 2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected. The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts which were purchased prior to August 14, 1982. a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. i. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract" under Section 72 of the Code. ii. To the extent that the value of the Contract (ignoring any surrender charges except on a full surrender) exceeds the "investment in the contract," such excess constitutes the "income on the contract." It is unclear what value should be used in determining the "income on the contract." We believe that the current Contract Value (determined without regard to surrender charges) generally is an appropriate measure. However, in some instances the IRS could take the position that the value should be the current Contract Value (determined without regard to surrender charges) increased by some measure of the value of certain future cash-value type benefits. iii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a withdrawal or partial surrender) is deemed to come first from any such "income on the contract" and then from "investment in the contract," and for these purposes such "income on the contract" shall be computed by reference to any aggregation rule in subparagraph 2.c. below. As a result, any such amount received or deemed received (1) shall be includable in gross income to the extent that such amount does not exceed any such "income on the contract," and (2) shall not be includable in gross income to the extent that such amount does exceed any such "income on the contract." If at the time that any amount is received or deemed received there is no "income on the contract" (e.g., because the gross value of the Contract does not exceed the "investment in the contract" and no aggregation rule applies), then such amount received or deemed received will not be includable in gross income, and will simply reduce the "investment in the contract." iv. The receipt of any amount as a loan under the Contract or the assignment or pledge of any portion of the value of the Contract shall be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. v. In general, the transfer of the Contract, without full and adequate consideration, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. This transfer rule does not apply, however, to certain transfers of property between Spouses or incident to divorce. vi. In general, any amount actually received under the Contract as a Death Benefit, including an optional Death Benefit, if any, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made periodically after the Annuity Commencement Date are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the "investment in the contract" to the total amount of the payments to be made after the Annuity Commencement Date (the "exclusion ratio"). i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the investment in the contract as of the Annuity Commencement Date, any additional payments (including surrenders) will be entirely includable in gross income. ii. If the annuity payments cease by reason of the death of the Annuitant and, as of the date of death, the amount of annuity payments excluded from gross income by the exclusion ratio does not exceed the investment in the contract as of the Annuity Commencement Date, then the remaining portion of unrecovered investment shall be allowed as a deduction for the last taxable year of the Annuitant. 47 ------------------------------------------------------------------------------- iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date are not entitled to any exclusion ratio and shall be fully includable in gross income. However, upon a full surrender after such date, only the excess of the amount received (after any surrender charge) over the remaining "investment in the contract" shall be includable in gross income (except to the extent that the aggregation rule referred to in the next subparagraph c. may apply). iv. When annuitization of the Personal Pension Account has occurred, your Benefit Balance will be calculated by using an actuarial present value formula. c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after October 21, 1988 by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract may be treated as a new contract for this purpose. We believe that for any Contracts subject to such aggregation, the values under the Contracts and the investment in the contracts will be added together to determine the taxation under subparagraph 2.a., above, of amounts received or deemed received prior to the Annuity Commencement Date. Withdrawals will first be treated first as withdrawals of income until all of the income from all such Contracts is withdrawn. In addition, the Treasury Department has specific authority under the aggregation rules in Code Section 72(e)(12) to issue regulations to prevent the avoidance of the income-out-first rules for non-periodic distributions through the serial purchase of annuity contracts or otherwise. As of the date of this prospectus, there are no regulations interpreting these aggregation provisions. d. 10% PENALTY TAX - APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS. i. If any amount is received or deemed received on the Contract (before or after the Annuity Commencement Date), the Code applies a penalty tax equal to ten percent of the portion of the amount includable in gross income, unless an exception applies. ii. The 10% penalty tax will not apply to the following distributions: 1. Distributions made on or after the date the recipient has attained the age of 59 1/2. 2. Distributions made on or after the death of the holder or where the holder is not an individual, the death of the primary annuitant. 3. Distributions attributable to a recipient becoming disabled. 4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the recipient (or the joint lives or life expectancies of the recipient and the recipient's designated Beneficiary). 5. Distributions made under certain annuities issued in connection with structured settlement agreements. 6. Distributions of amounts which are allocable to the "investment in the contract" prior to August 14, 1982 (see next subparagraph e.). 7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service. If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14, 1982. If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first from the amount of the "investment in the contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then from the portion of the "income on the contract" (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining "income on the contract" and (4) last from the remaining "investment in the contract." As a result, to the extent that such amount received or deemed received does not exceed such pre-8/14/82 investment, such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the contract" attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e. 48 ------------------------------------------------------------------------------- f. REQUIRED DISTRIBUTIONS i. Death of Contract Owner or Primary Annuitant Subject to the alternative election or Spouse beneficiary provisions in ii or iii below: 1. If any Contract Owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death; 2. If any Contract Owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and 3. If the Contract Owner is not an individual, then for purposes of 1. or 2. above, the primary annuitant under the Contract shall be treated as the Contract Owner, and any change in the primary annuitant shall be treated as the death of the Contract Owner. The primary annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract. ii. Alternative Election to Satisfy Distribution Requirements If any portion of the interest of a Contract Owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the Contract Owner's death. iii. Spouse Beneficiary If any portion of the interest of a Contract Owner is payable to or for the benefit of his or her Spouse, and the Annuitant or Contingent Annuitant is living, such Spouse shall be treated as the Contract Owner of such portion for purposes of section i. above. This Spousal Contract continuation shall apply only once for this Contract. iv. Civil Union or Domestic Partner Upon the death of the Contract Owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving civil union or domestic partner of the Contract Owner pursuant to a civil union or domestic partnership recognized under state law, then such designated beneficiary's right to continue the Contract as the succeeding Contract Owner will be contingent, among other things, upon the treatment of such designated beneficiary as the spouse of the Contract Owner under Code Section 72(s) (or any successor provision). Currently, Federal tax law only recognizes spouses if they are married individuals of the opposite sex. Consequently, such designated beneficiary who is not recognized as a "spouse" under Federal tax law will not be able to continue the Contract and the entire interest in the Contract must be distributed within five years of the Contract Owner's death or under the Alternative Election. g. ADDITION OF RIDER OR MATERIAL CHANGE. The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information. h. PARTIAL EXCHANGES. The IRS in Rev. Rul. 2003-76 confirmed that the owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul. 2003-76 also refers to caveats and additional guidance in the companion Notice 2003-51, which discusses cases in which a partial exchange is followed by a surrender, withdrawal or other distribution from either the old contract or the new contract. Notice 2003-51 specifically indicates that the IRS is considering (1) under what circumstances it should treat a partial exchange followed by such a distribution within 24 months as presumptively for "tax avoidance" purposes (e.g., to avoid the income-out-first rules on amounts received under Code Section 72) and (2) what circumstances it should treat as rebutting such a presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of employment). Notice 2003-51 was superseded by Revenue Procedure 2008-24, effective for partial exchanges completed on or after June 30, 2008. Partial exchanges completed on or after this date will qualify for tax free treatment if: (1) no amounts are withdrawn from, or received in surrender of, either of the contracts involved in the exchange during the 12 months beginning on the date on which amounts are treated as received as premiums or other consideration paid for the contract received in the exchange (the date of transfer); or (2) the taxpayer demonstrates that certain conditions (e.g., death, disability, reaching age 59 1/2, divorce, loss of employment) occurred between the date of transfer and the date of the withdrawal or surrender. A transfer within the scope of the revenue procedure, but not treated as a tax-free exchange, will be treated as a taxable distribution, followed by a payment for a second contract. Two annuity contracts that are the subject of a tax-free exchange pursuant 49 ------------------------------------------------------------------------------- to the revenue procedure will not be aggregated, even if issued by the same insurance company. We advise you to consult with a qualified tax adviser as to potential tax consequences before attempting any partial exchange. The applicability of the IRS's partial exchange guidance to the splitting of an annuity contract is not clear. You should consult with a tax adviser if you plan to split an annuity contract as part of an exchange of annuity contracts. 3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting your Contract be adequately diversified. Code Section 817(h) provides that a variable annuity contract will not be treated as an annuity contract for any period during which the investments made by the separate account or Fund are not adequately diversified. If a contract is not treated as an annuity contract, the contract owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of the segregated asset account underlying a variable contract is represented by any one investment, - no more than 70% is represented by any two investments, - no more than 80% is represented by any three investments and - no more than 90% is represented by any four investments. In determining whether the diversification standards are met, all securities of the same issuer, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. In the case of government securities, each government agency or instrumentality is treated as a separate issuer. A separate account must be in compliance with the diversification standards on the last day of each calendar quarter or within 30 days after the quarter ends. If an insurance company inadvertently fails to meet the diversification requirements, the company may still comply within a reasonable period and avoid the taxation of contract income on an ongoing basis. However, either the insurer or the contract owner must agree to make adjustments or pay such amounts as may be required by the IRS for the period during which the diversification requirements were not met. Fund shares may also be sold to tax-qualified plans pursuant to an exemptive order and applicable tax laws. If Fund shares are sold to non-qualified plans, or to tax-qualified plans that later lose their tax-qualified status, the affected Funds may fail the diversification requirements of Code Section 817(h), which could have adverse tax consequences for Contract Owners with premiums allocated to affected Funds. In order to prevent a Fund diversification failure from such an occurrence, the Company obtained a private letter ruling ("PLR") from the IRS. As long as the Funds comply with certain terms and conditions contained in the PLR, Fund diversification will not be prevented if purported tax-qualified plans invest in the Funds. The Company and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. 4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the "owner" of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the "tax owner" of certain separate account assets, income and gain from such assets would be includable in the variable contract owner's gross income. The Treasury Department indicated in 1986 that it would provide guidance on the extent to which contract owners may direct their investments to particular Sub-Accounts without being treated as tax owners of the underlying shares. Although no such regulations have been issued to date, the IRS has issued a number of rulings that indicate that this issue remains subject to a facts and circumstances test for both variable annuity and life insurance contracts. Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where interests in a partnership offered in an insurer's separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such interests can be purchased directly by the general public or others without going through such a variable contract), such "public availability" means that such interests should be treated as owned directly by the contract owner (and not by the insurer) for tax purposes, as if such contract owner had chosen instead to purchase such interests directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer's variable contracts or by other permitted entities. Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund 50 ------------------------------------------------------------------------------- options, if any, that might prevent a variable contract owner from receiving favorable tax treatment. As a result, although the owner of a Contract has more than 20 fund choices, we believe that any owner of a Contract also should receive the same favorable tax treatment. However, there is necessarily some uncertainty here as long as the IRS continues to use a facts and circumstances test for investor control and other tax ownership issues. Therefore, we reserve the right to modify the Contract as necessary to prevent you from being treated as the tax owner of any underlying assets. 5. CERTAIN TAX CONSIDERATIONS FOR FULL OR PARTIAL SETTLEMENT PAYMENTS FROM THE PERSONAL PENSION ACCOUNT BEFORE AND AFTER THE ANNUITY COMMENCEMENT DATE. Because the IRS has published no guidance on the tax treatment of contracts with features resembling the Personal Pension Account arrangement, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated for tax purposes and we advise you to consult with a qualified tax adviser concerning such tax treatment before you deposit amounts into the Personal Pension Account. With respect to the Personal Pension Account, the Company plans to report any payments under a settlement of the Personal Pension Account before the Annuity Commencement Date as amounts not received as an annuity coming first from "income on the contract" (previously described in subparagraph 2.a) based on a computation of "income on the contract" for the entire Contract. After the Annuity Commencement Date, the Company plans to report any continuing periodic settlement payments as amounts received as an annuity to which a portion of the "investment in the contract" (discussed in subparagraph 2.b) has been allocated consistent with Treas. Reg. Section 1.72-6(b). D. FEDERAL INCOME TAX WITHHOLDING The portion of an amount received under a Contract that is taxable gross income to the Payee is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following: 1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless an individual elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" form is not submitted to us in a timely manner, generally we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS. 2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is generally subject to federal income tax withholding as if the Payee were a married individual claiming 3 exemptions, unless the individual elects otherwise. An individual generally may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming 3 exemptions, and remit this amount to the IRS. Generally no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the Payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A Payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the Payee's total tax liability. E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to the section entitled "Information Regarding Tax-Qualified Retirement Plans" for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans. F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and mandatory withholding on U.S. source taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In addition, purchasers may be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence. G. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS Any amount payable upon a Contract Owner's death, whether before or after the Annuity Commencement Date, is generally includable in the Contract Owner's estate for federal estate tax purposes. Similarly, prior to the Contract Owner's death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-Spouse beneficiary who either is (1) 37 1/2 or more years younger than a Contract Owner or (2) a grandchild (or more remote further 51 ------------------------------------------------------------------------------- descendent) of a Contract Owner may have federal generation-skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations under Code Section 2662 may require us to deduct any such GST tax from your Contract, or from any applicable payment, and pay it directly to the IRS. However, any federal estate, gift or GST tax payment with respect to a Contract could produce an offsetting income tax deduction for a beneficiary or transferee under Code Section 691(c) (partially offsetting such federal estate or GST tax) or a basis increase for a beneficiary or transferee under Code Section 691(c) or Section 1015(d). In addition, as indicated above in "Distributions Prior to the Annuity Commencement Date," the transfer of a Contract for less than adequate consideration during the Contract Owner's lifetime generally is treated as producing an amount received by such Contract Owner that is subject to both income tax and the 10% penalty tax. To the extent that such an amount deemed received causes an amount to be includable currently in such Contract Owner's gross income, this same income amount could produce a corresponding increase in such Contract Owner's tax basis for such Contract that is carried over to the transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and Section 1015. H. TAX DISCLOSURE OBLIGATIONS In some instances certain transactions must be disclosed to the IRS or penalties could apply. See, for example, IRS Notice 2004-67. The Code also requires certain "material advisers" to maintain a list of persons participating in such "reportable transactions," which list must be furnished to the IRS upon request. It is possible that such disclosures could be required by Hartford The Company, the Owner(s) or other persons involved in transactions involving annuity contracts. It is the responsibility of each party, in consultation with their tax and legal advisers, to determine whether the particular facts and circumstances warrant such disclosures. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences. The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts or accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan. THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN ADMINISTRATIVE DUTIES INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS, DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF QUALIFIED PLAN LOANS, COMPLIANCE WITH REGULATORY REQUIREMENTS AND FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A CONTRACT THROUGH A QUALIFIED PLAN, YOU SHOULD CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE. The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law and any applicable Qualified Plan terms. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences. We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future. 52 ------------------------------------------------------------------------------- 1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS"). In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) may elect to provide for a separate account or annuity contract that accepts after-tax employee contributions and is treated as a "Deemed IRA" under Code Section 408(q), which is generally subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available. a. TRADITIONAL IRAS Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the Owner reaches age 70 1/2 or dies, as described below, may result in imposition of a 50% penalty tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA. You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into a Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to the Traditional IRA. In addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant). IRAs generally may not invest in life insurance contracts. However, an annuity contract that is used as an IRA may provide a death benefit that equals the greater of the premiums paid or the contract's cash value. The Contract offers an enhanced death benefit that may exceed the greater of the Contract Value or total premium payments. The tax rules are unclear as to what extent an IRA can provide a death benefit that exceeds the greater of the IRA's cash value or the sum of the premiums paid and other contributions into the IRA. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. b. SEP IRAS Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, and in limited circumstances employee and salary reduction contributions, as well as higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. c. SIMPLE IRAS The Savings Incentive Match Plan for Employees of small employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax on premature distributions, as described below. In addition, the 10% penalty tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow 53 ------------------------------------------------------------------------------- each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection. If we do not serve as the Designated Financial Institution for your employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us. d. ROTH IRAS Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract Owner's lifetime. Generally, however, upon the Owner's death the amount remaining in a Roth IRA must be distributed by the end of the fifth year after such death or distributed over the life expectancy of a designated beneficiary. The Owner of a Traditional IRA may convert a Traditional IRA into a Roth IRA under certain circumstances. The conversion of a Traditional IRA to a Roth IRA will subject the fair market value of the converted Traditional IRA to federal income tax in the year of conversion. In addition to the amount held in the converted Traditional IRA, the fair market value may include the value of additional benefits provided by the annuity contract on the date of conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. 2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice. In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. 3. TAX SHELTERED ANNUITY UNDER SECTION 403(b) ("TSA") Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations described in Code Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and, subject to certain limitations, exclude employer contributions to a TSA from such an employee's gross income. Generally, total contributions may not exceed the lesser of an annual dollar limit (e.g., $49,000 in 2009) or 100% of the employee's "includable compensation" for the most recent full year of service, subject to other adjustments. There are also legal limits on annual elective deferrals that a participant may be permitted to make under a TSA. In certain cases, such as when the participant is age 50 or older, those limits may be increased. A TSA participant should contact his plan administrator to determine applicable elective contribution limits. Special provisions may allow certain employees different overall limitations. A TSA is subject to a prohibition against distributions from the TSA attributable to contributions made pursuant to a salary reduction agreement, unless such distribution is made: a. after the employee reaches age 59 1/2; b. upon the employee's separation from service; 54 ------------------------------------------------------------------------------- c. upon the employee's death or disability; d. in the case of hardship (as defined in applicable law and in the case of hardship, any income attributable to such contributions may not be distributed); or e. as a qualified reservist distribution upon certain calls to active duty. An employer sponsoring a TSA may impose additional restrictions on your TSA through its plan document. Please note that the TSA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a TSA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. In particular, please note that tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. In addition, a life insurance contract issued after September 23, 2007 is generally ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2). Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. Section 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant's or beneficiary's accumulated benefit immediately before such exchange (taking into account such participant's or beneficiary's accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant's employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. In addition, the same Regulation provides corresponding rules for a transfer from one TSA to another TSA under a different TSA Plan (e.g., for a different eligible employer). We are no longer accepting any incoming exchange request, or new contract application, for any individual TSA contract. 4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS") Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $15,000 for 2006 and thereafter ($16,500 for 2009). The $15,000 limit will be indexed for cost-of-living adjustments at $500 increments. The Plan may provide for additional "catch-up" contributions . In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70 1/2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations). Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. However, where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer's general creditors under Code Section 457(b)(6). 55 ------------------------------------------------------------------------------- 5. TAXATION OF AMOUNTS RECEIVED FROM QUALIFIED PLANS Except under certain circumstances in the case of Roth IRAs or Roth accounts in certain Qualified Plans, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above. For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Contract Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual. In addition, penalty taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan. 6. PENALTY TAXES FOR QUALIFIED PLANS Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal penalty taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Penalty taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The penalty taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below. a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59 1/2. However, this 10% penalty tax does not apply to a distribution that is either: (i) made to a beneficiary (or to the employee's estate) on or after the employee's death; (ii) attributable to the employee's becoming disabled under Code Section 72(m)(7); (iii) part of a series of substantially equal periodic payments (not less frequently than annually - "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service; (iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans); (v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse); (vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year; (vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty; (viii) made an account of an IRS levy on the Qualified Plan under Code Section 72(t)(2)(A)(vii); or (ix) made as a "direct rollover" or other timely rollover to an Eligible Retirement Plan, as described below. In addition, the 10% penalty tax does not apply to a distribution from an IRA that is either: (x) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions in Code Section 72(t)(2)(D) are met; (xi) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or (xii) for a qualified first-time home buyer and meets the requirements of Code Section 72(t)(8). If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death, disability or a method change allowed by Rev. Rul. 2002-62), the 10% penalty tax will be applied retroactively to all the 56 ------------------------------------------------------------------------------- prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. For any premature distribution from a SIMPLE IRA during the first 2 years that an individual participates in a salary reduction arrangement maintained by that individual's employer under a SIMPLE Plan, the 10% penalty tax rate is increased to 25%. b. RMDS AND 50% PENALTY TAX THE RMD RULES GENERALLY DO NOT APPLY FOR THE 2009 TAX YEAR. HOWEVER, INDIVIDUALS WHO DEFERRED 2008 RMDS UNTIL APRIL 1, 2009, MUST STILL TAKE AN RMD BY THAT DATE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISER OR YOUR QUALIFIED PLAN ADMINISTRATOR TO DETERMINE HOW THIS CHANGE MAY AFFECT YOU. If the amount distributed from a Qualified Contract or Plan is less than the amount of the required minimum distribution ("RMD") for the year, the participant is subject to a 50% penalty tax on the amount that has not been timely distributed. An individual's interest in a Qualified Plan generally must be distributed, or begin to be distributed, not later than the Required Beginning Date. Generally, the Required Beginning Date is April 1 of the calendar year following the later of - (i) the calendar year in which the individual attains age 70 1/2, or (ii) (except in the case of an IRA or a 5% owner, as defined in the Code) the calendar year in which a participant retires from service with the employer sponsoring a Qualified Plan that allows such a later Required Beginning Date. The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over - (a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or (b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary. If an individual dies before reaching the Required Beginning Date, the individual's entire interest generally must be distributed within 5 years after the individual's death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual's death to a qualifying designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual's surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 70 1/2. If an individual dies after RMDs have begun for such individual, any remainder of the individual's interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual's death. The RMD rules that apply while the Contract Owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the Owner apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own. The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of the Owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs. In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% penalty tax for RMDs if such additional RMD amount is not timely distributed. 7. TAX WITHHOLDING FOR QUALIFIED PLANS Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" from a Qualified Plan (described below in "ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution." 57 ------------------------------------------------------------------------------- Also, special withholding rules apply with respect to distributions from non-governmental Section 457(b) Plans, and to distributions made to individuals who are neither citizens nor resident aliens of the United States. Regardless of any "election out" (or any actual amount of tax actually withheld) on an amount received from a Qualified Contract or Plan, the payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the payee's total tax liability. 8. ROLLOVER DISTRIBUTIONS The current tax rules and limits for tax-free rollovers and transfers between Qualified Plans vary according to (1) the type of transferor Plan and transferee Plan, (2) whether the amount involved is transferred directly between Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed first to a participant or beneficiary who then transfers that amount back into another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the distribution is made to a participant, spouse or other beneficiary. Accordingly, we advise you to consult with a qualified tax adviser before receiving any amount from a Qualified Contract or Plan or attempting some form of rollover or transfer with a Qualified Contract or Plan. For instance, generally any amount can be transferred directly from one type of Qualified Plan (e.g., a TSA) to the same type of Plan for the benefit of the same individual, without limit (or federal income tax), if the transferee Plan is subject to the same kinds of restrictions as the transferor Plan (e.g., a TSA that is subject to the same kinds of salary reduction restrictions) and certain other conditions to maintain the applicable tax qualification are satisfied (e.g., as described above for TSA exchanges after September 24, 2007). Such a "direct transfer" between the same kinds of Plan is generally not treated as any form of "distribution" out of such a Plan for federal income tax purposes. By contrast, an amount distributed from one type of Plan (e.g., a TSA) into a different type of Plan (e.g., a Traditional IRA) generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to such tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover", the missing amount that is not rolled over remains subject to normal income tax plus any applicable penalty tax. Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either - a. an RMD amount; b. one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or c. any distribution made upon hardship of the employee. Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457 (e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution penalty tax applicable to distributions from such a "predecessor" Qualified Plan. Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and 408A(d)(3) also vary according to the type of transferor IRA and type of transferee IRA or other Plan. For instance, generally no tax-free "direct rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a 58 ------------------------------------------------------------------------------- "conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In addition, generally no tax-free "direct rollover" or "60-day rollover" can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA set up by that same individual as the original owner. Generally, any amount other than an RMD distributed from a Traditional or SEP IRA is eligible for a "direct rollover" or a "60-day rollover" to another Traditional IRA for the same individual. Similarly, any amount other than an RMD distributed from a Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to another Roth IRA for the same individual. However, in either case such a tax-free 60-day rollover is limited to 1 per year (365-day period); whereas no 1-year limit applies to any such "direct rollover." Similar rules apply to a "direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another SIMPLE IRA or a Traditional IRA, except that any distribution of employer contributions from a SIMPLE IRA during the initial 2-year period in which the individual participates in the employer's SIMPLE Plan is generally disqualified (and subject to the 25% penalty tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a "direct rollover" or a "60-day rollover" to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible). Special rollover rules also apply to (1) transfers or rollovers for the benefit of a spouse (or ex-spouse) or a nonspouse designated beneficiary, (2) Plan distributions of property, (3) distributions from a Roth account in certain Plans, (4) recontributions within 3 years of "qualified hurricane distributions" made before 2007 under Code Section 1400Q(a), (5) transfers from a Traditional or Roth IRA to certain health savings accounts under Code Section 408(d)(9), and (6) obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. 9. CERTAIN TAX CONSIDERATIONS WITH THE PERSONAL PENSION ACCOUNT IN QUALIFIED PLANS Because the IRS has published no guidance on the tax treatment of arrangements resembling the Personal Pension Account, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated in different types of Qualified Plans, and we advise you to consult with a qualified tax adviser concerning such treatment before you deposit any amount into a Personal Pension Account that is held in any Qualified Plan. Among such tax issues for you to consider with a qualified tax adviser in such a case are the following: a. Any amounts received by you (or your payee) prior to your attaining age 59 1/2 are generally subject to the penalty tax on premature distributions described above, unless such an amount received can qualify for an exception from such a penalty tax, e.g., scheduled payments that qualify for the SEPP Exception. In addition, any modification in payments qualifying for the SEPP Exception (e.g., by commutation) can have adverse penalty tax consequences, as described above. b. The tax rules for satisfying RMD requirements vary according to both the form of Qualified Plan (e.g., NonRoth or Roth IRA) and the form of payment (e.g., periodic annuity payout or non-periodic distribution from an account value). As a result, such variations should be considered when RMD amounts need to be taken (e.g., after age 70 1/2 or death). In addition, any modification in the form or amount of such payments (e.g., by commutation) could have adverse tax consequences, if such a modification does not satisfy an IRS-recognized RMD exception (e.g., for an acceleration or other change in periodic payments under Reg. Section 1.401(a) (9)-6, Q&A-1 and Q&A-14). c. Any attempt to transfer an amount from the Benefit Balance to Sub-Accounts or the Fixed Accumulation Feature (if available) that exceeds the threshold for such a transfer will be treated by us as a form of annuitization distribution from the Personal Pension Account, and thus may not qualify as a tax-free direct transfer. Instead, such an attempted excess transfer could be treated for tax purposes as a potentially taxable distribution out of the entire annuity contract, followed by a contribution back into the same contract. While such a distribution from an IRA may qualify for 60-day rollover treatment (if it is not needed to satisfy RMD requirements), only one such tax-free 60-day rollover is allowed for any 365-day period for any individual from all of such individual's IRAs. Failing such tax-free rollover treatment, such a distribution could be subject to both income and penalty tax, and any deemed contribution back into the contract may be subject to an excise tax on excess contributions, particularly after age 70 1/2. IN ADDITION, ANY SUCH DISTRIBUTION FROM A NON-IRA FORM OF QUALIFIED PLAN MAY BE SUBJECT TO THE 20% MANDATORY WITHHOLDING TAX, UNLESS SUCH DISTRIBUTION IS AN RMD OR OTHERWISE AVOIDS CLASSIFICATION AS AN "ELIGIBLE ROLLOVER DISTRIBUTION," AS DESCRIBED ABOVE. 59 ------------------------------------------------------------------------------- TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION GENERAL INFORMATION Safekeeping of Assets Experts Non-Participating Misstatement of Age or Sex Principal Underwriter Additional Payments PERFORMANCE RELATED INFORMATION Total Return for all Sub-Accounts Yield for Sub-Accounts Money Market Sub-Accounts Additional Materials Performance Comparisons ACCUMULATION UNIT VALUES FINANCIAL STATEMENTS
APP A-1 ------------------------------------------------------------------------------- APPENDIX A - EXAMPLES TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT APP A-2 RETURN OF PREMIUM DEATH BENEFIT APP A-8 REMAINING GROSS PREMIUM APP A-9
APP A-2 ------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT EXAMPLES EXAMPLE 1: STANDARD ILLUSTRATIONS WITH A PARTIAL INCOME STREAM Assume the initial Personal Pension Account Contribution is equal to $100,000 (no sums are invested in the Fixed Accumulation Feature or Sub-Accounts). Assume that in Contract Year 7, the Owner requested to commence an income stream based on $50,000 of Annuity Payout Value during the guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. Hypothetical credited and payout rates are illustrated below. A. To understand how your guaranteed payout rates are set during your guarantee window (shaded area), see Guaranteed Payout Rates in Contract Years 1 through 7. In this Example, the guaranteed payout rate is locked in at Contract Year 7 when Personal Pension Account Payouts commence. B. Credited interest rates vary during the duration of your Contract as illustrated in column 4. In this illustration, credited interest rates change at the 10th Contract Year and again at the 20th Contract Year. C. Please refer to the last column in Contract Year 23 for an example of how Personal Pension Account Payouts will continue for the life of the Annuitant, Owner or joint Owner even though Annuity Payout Value has been exhausted.
CREDITED CONTRACT BENEFIT INTEREST YEAR AGE BALANCE RATE ---------------------------------------------------------------------- 0 60 $ 100,000 5.00% 1 61 105,000 5.00% 2 62 110,250 5.00% 3 63 115,763 5.00% GUARANTEE 4 64 121,551 5.00% WINDOW 5 65 127,628 5.00% 6 66 134,010 5.00% 7 67 140,710 5.00% 8 68 142,009 5.00% 9 69 143,535 5.00% 10 70 145,299 3.00% 11 71 145,212 3.00% 12 72 145,220 3.00% 13 73 145,326 3.00% 14 74 145,532 3.00% 15 75 145,841 3.00% 16 76 146,256 3.00% 17 77 146,781 3.00% 18 78 147,419 3.00% 19 79 148,173 3.00% 20 80 149,047 1.50% 21 81 147,927 1.50% 22 82 146,839 1.50% 23 83 147,568 1.50% PERSONAL ANNUITY GUARANTEED PENSION ACCUMULATION PAYOUT PAYOUT RATES ACCOUNT BALANCE VALUE (PER 1000) PAYOUTS(2) ------------ -------------------------------------------------------------------------- $ 100,000 105,000 61.99 110,250 62.33 115,763 62.72 GUARANTEE 121,551 63.16 WINDOW 127,628 63.65 134,010 64.17 90,710 (1) 50,000 64.73 $ 3,237 95,246 46,763 $ 3,237 100,008 43,527 $ 3,237 105,008 40,290 $ 3,237 108,158 37,054 $ 3,237 111,403 33,817 $ 3,237 114,745 30,581 $ 3,237 118,188 27,344 $ 3,237 121,733 24,108 $ 3,237 125,385 20,871 $ 3,237 129,147 17,634 $ 3,237 133,021 14,398 $ 3,237 137,012 11,161 $ 3,237 141,122 7,925 $ 3,237 143,239 4,688 $ 3,237 145,388 1,452 $ 3,237 147,568 0 $ 3,237
(1) Accumulation Balance is reduced by $50,000 that is converted into the Annuity Payout Value. CDSC's and Premium tax have not been applied in this Example. If the $50,000 was instead commuted into a Commuted Value (assuming a hypothetical discount rate of 6%), the Commuted Value would be $32,294. The remaining Accumulation Balance can be converted into Annuity Payout Value at a later date for additional Personal Pension Account Payouts. (2) These Personal Pension Account Payouts shall continue for the life of the Annuitant, Owner or joint Owner pursuant to Annuity Payout Option Two. APP A-3 ------------------------------------------------------------------------------- EXAMPLE 2 Assume a $100,000 initial Personal Pension Account Contribution was made at a time when we declared a hypothetical credited rate of 4% and that a $15,000 subsequent Personal Pension Account Contribution was made when we declared a hypothetical credited rate of 3.75%. Your Benefit Balance would increase as follows:
PERSONAL PERSONAL TOTAL PENSION ACCOUNT CREDITED PENSION ACCOUNT CREDITED BENEFIT AGE CONTRIBUTION RATE CONTRIBUTION RATE BALANCE -------------------------------------------------------------------------------------------------------------------- 55 First $100,000 $100,000 56 Deposit 4.00% $104,000 57 4.00% $108,160 58 4.00% $112,486 59 4.00% Second $15,000 $131,986 60 4.00% Deposit 3.75% $137,228 61 4.00% 3.75% $142,678 62 4.00% 3.75% $148,345 63 4.00% 3.75% $154,237 64 4.00% 3.75% $160,362 65 4.00% 3.75% $166,732
EXAMPLE 3: BENEFIT BALANCE TRANSFER (IN-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Sub-Accounts to the Personal Pension Account occurs. Assume that the Owner makes a Premium Payment of $100,000 into the Sub-Accounts and then elects to transfer $5,000 from the Sub-Accounts to the Personal Pension Account, in which event:
TRANSFER FROM SUB-ACCOUNTS TO THE PERSONAL PENSION ACCOUNT BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $125,000 Remaining Gross Premium $100,000 $100,000 Annual Withdrawal Amount $5,000 $0 Return of Premium Death Benefit $100,000 $95,000 Benefit Balance $0 $5,000
- The Contract Value is reduced by the amount of the transfer ($5,000). - The Remaining Gross Premium associated to the Sub-Accounts is not reduced by the amount of the transfer as Remaining Gross Premium is only reduced for Surrenders or transfers in excess of the Annual Withdrawal Amount. - The Annual Withdrawal Amount is reduced by the amount of the transfer ($5,000) as transfers (and Surrenders) reduce the Annual Withdrawal Amount. - The Return of Premium Death Benefit is reduced dollar for dollar for the amount of the transfer ($5,000). - Assuming that there were no sums previously invested in the Personal Pension Account, the Benefit Balance is increased by this amount. APP A-4 ------------------------------------------------------------------------------- BENEFIT BALANCE TRANSFER (OUT-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Personal Pension Account to the Sub-Accounts occurs. Assume that the Owner makes a Personal Pension Account Contribution of $100,000 into the Personal Pension Account and then elects to transfer the maximum available transfer from the Personal Pension Account to the Sub-Accounts. The out-bound transfer restriction considers the following factors:
END OF YEAR MAXIMUM OF A, B, C A B C ------------------------------------------------------------------- 1 $4,120 $4,120 $3,000 $0 2 $4,120 $4,073 $2,966 $4,120
Where , - Column A equals four (4%) percent of the Accumulation Balance as of the prior Contract Anniversary. Assume that the $100,000 Personal Pension Account Contribution earns a credited interest rate of 3%. - Column B equals the amount of interest credited to the Accumulation Balance over the most recent full Contract Year. - Column C equals the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. Applying these factors, the following table shows how various Contract benefits change:
TRANSFER FROM PERSONAL PENSION ACCOUNT TO THE SUB-ACCOUNTS END OF YEAR 1 BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $134,120 Remaining Gross Premium $100,000 $104,120 Annual Withdrawal Amount $5,000 $5,206 Return of Premium Death Benefit $100,000 $104,120 Benefit Balance $103,000 $98,880
- The Accumulation Balance is reduced by the amount of the transfer ($4,120). - The Remaining Gross Premium associated to the Sub-Accounts is increased by the amount of the transfer as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Annual Withdrawal Amount is increased by 5% of the transfer amount ($206) as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Return of Premium Death Benefit is increased dollar for dollar for the amount of the transfer ($4,120). - The Contract Value is increased by the amount of the transfer ($4,120). APP A-5 ------------------------------------------------------------------------------- EXAMPLE 4A: FULL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking all Personal Pension Account Payouts and then fully commute the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). Also, assume that the initial Personal Pension Account Contribution is equal to $100,000 and no Premium Payments have been invested in the Fixed Accumulation Feature or Sub-Accounts.
CONTRACT BENEFIT ACCUMULATION CREDITED YEAR AGE BALANCE BALANCE RATE ------------------------------------------------------------------------------------------------- 0 60 $100,000 $ 100,000 5.00 % 1 61 105,000 105,000 5.00 % 2 62 110,250 110,250 5.00 % 3 63 115,763 115,763 5.00 % GUARANTEE 4 64 121,551 121,551 5.00 % WINDOW 5 65 127,628 127,628 5.00 % 6 66 134,010 134,010 5.00 % 7 67 140,710 140,710 5.00 % 8 68 147,746 147,746 5.00 % 9 69 155,133 155,133 5.00 % 10 70 162,889 162,889 3.00 % 11 71 167,776 167,776 3.00 % 12 72 172,809 172,809 3.00 % 13 73 177,994 177,994 3.00 % 14 74 183,334 183,334 3.00 % 15 75 188,834 188,834 3.00 % 16 76 194,499 194,499 3.00 % 17 77 200,333 200,333 3.00 % 18 78 206,343 206,343 3.00 % 19 79 212,534 212,534 3.00 % 20 80 218,910 $ 0 (2) 1.50 % 21 81 n/a N/A n/a (3) 22 82 n/a N/A n/a 23 83 n/a N/A n/a 24 84 n/a N/A n/a 25 85 n/a N/A n/a 26 86 n/a N/A n/a 27 87 n/a N/A n/a 28 88 n/a N/A n/a 29 89 n/a N/A n/a 30 90 n/a N/A n/a ANNUITY PAYOUT PAYOUT RATES COMMUTED VALUE (PER 1000)(1) VALUE PAYOUTS ------------ ------------------------------------------------------------- $ 0 61.68 $ 0 61.99 $ 0 $ 0 62.33 $ 0 $ 0 62.72 $ 0 GUARANTEE $ 0 63.16 $ 0 WINDOW $ 0 63.65 $ 0 $ 0 64.17 $ 0 $ 0 64.73 $ 0 $ 0 65.31 $ 0 $ 0 65.91 $ 0 $ 0 66.56 $ 0 $ 0 69.14 $ 0 $ 0 71.94 $ 0 $ 0 74.99 $ 0 $ 0 78.32 $ 0 $ 0 81.96 $ 0 $ 0 85.92 $ 0 $ 0 90.11 $ 0 $ 0 94.63 $ 0 $ 0 99.55 $ 0 $ 218,910 105.02 (6) $156,367 (5) $ 0 (4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 22,989 (7) N/A N/A N/A $ 22,989 (7)
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on being converted to Annuity Payout Value. CDSCs and Premium tax are not shown in this Example. APP A-6 ------------------------------------------------------------------------------- (3) Interest is no longer credited under the Personal Pension Account. (4) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the payout rate applicable to the year in which commutation is requested and dividing by 1,000. In this case, $218,910*$105.02/1,000 = $22,989. However, in this example, Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living and have not terminated the Contract as illustrated in years 29 and 30. (5) The Commuted Value depicted is based on commutation of the Annuity Payout Value (in this Example, is the same as the Benefit Balance because this is a full commutation) of $218,910 using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the Guaranteed Payout Duration (i.e., $218,910/$22,989, rounded down = 9 years) calculated using this discount rate. (6) Hypothetical Payout Rate used because Personal Pension Accounts and subsequent commutation occur outside of the guarantee window. (7) Lifetime Personal Pension Account Payouts resume because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. APP A-7 ------------------------------------------------------------------------------- EXAMPLE 4B: PARTIAL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking Personal Pension Account Payouts and commute half of the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. In this Example, the guarantee window is represented by the shaded area in years 1 though 7. Year 20 "Before" illustrates how the Annuity Payout Value is split in half to serve as the basis for Personal Pension Account Payouts and the Commuted Value. Year 20 "After" illustrates the amounts paid to the Owner in the form of Personal Pension Account Payouts and Commuted Value. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). The Guaranteed Payout Duration in this Example is illustrated as the shaded rows corresponding to Contract Years 20 through 28. Assume the initial Deposit is equal to $100,000 and no sums are invested in the Fixed Accumulation Feature or Sub-Accounts.
ANNUITY CONTRACT BENEFIT ACCUMULATION CREDITED PAYOUT YEAR AGE BALANCE BALANCE RATE VALUE 1 ------------------------------------------------------------------------------------------ 0 60 $100,000 $ 100,000 5.00% $ 0 1 61 105,000 105,000 5.00% $ 0 2 62 110,250 110,250 5.00% $ 0 3 63 115,763 115,763 5.00% $ 0 4 64 121,551 121,551 5.00% $ 0 5 65 127,628 127,628 5.00% $ 0 6 66 134,010 134,010 5.00% $ 0 7 67 140,710 140,710 5.00% $ 0 8 68 147,746 147,746 5.00% $ 0 9 69 155,133 155,133 5.00% $ 0 10 70 162,889 162,889 3.00% $ 0 11 71 167,776 167,776 3.00% $ 0 12 72 172,809 172,809 3.00% $ 0 13 73 177,994 177,994 3.00% $ 0 14 74 183,334 183,334 3.00% $ 0 15 75 188,834 188,834 3.00% $ 0 16 76 194,499 194,499 3.00% $ 0 17 77 200,333 200,333 3.00% $ 0 18 78 206,343 206,343 3.00% $ 0 19 79 212,534 212,534 3.00% $ 0 20 BEFORE 80 218,910 $ 0 (2) 1.50% $ 109,455 20 AFTER 80 $ 97,960 $ 0 (2) n/a $ 97,960 21 81 $ 86,465 N/A n/a (3) $ 86,465 22 82 $ 74,970 N/A n/a $ 74,970 23 83 $ 63,475 N/A n/a $ 63,475 24 84 $ 51,980 N/A n/a $ 51,980 25 85 $ 40,485 N/A n/a $ 40,485 26 86 $ 28,990 N/A n/a $ 28,990 27 87 $ 17,495 N/A n/a $ 17,495 28 88 $ 6,000 N/A n/a $ 6,000 29 89 $ 0 N/A n/a $ 0 30 90 $ 0 N/A n/a $ 0 31 91 $ 0 N/A n/a $ 0 ANNUITY CONTRACT PAYOUT COMMUTED PAYOUT RATES YEAR VALUE 2 VALUE (PER 1000)(1) PAYOUTS ------------ --------------------------------------------------------------------------- 0 $ 0 61.68 1 $ 0 61.99 $ 0 2 $ 0 62.33 $ 0 3 $ 0 62.72 $ 0 4 $ 0 63.16 $ 0 5 $ 0 63.65 $ 0 6 $ 0 64.17 $ 0 7 $ 0 64.73 $ 0 8 $ 0 65.31 $ 0 9 $ 0 65.91 $ 0 10 $ 0 66.56 $ 0 11 $ 0 69.14 $ 0 12 $ 0 71.94 $ 0 13 $ 0 74.99 $ 0 14 $ 0 78.32 $ 0 15 $ 0 81.96 $ 0 16 $ 0 85.92 $ 0 17 $ 0 90.11 $ 0 18 $ 0 94.63 $ 0 19 $ 0 99.55 $ 0 20 BEFORE (4) $ 109,455 (4) 20 AFTER (5) $ 0 $ 78,185 (7) 105.02 (8) $ 11,495 (6) 21 $ 0 N/A N/A $ 11,495 22 $ 0 N/A N/A $ 11,495 23 $ 0 N/A N/A $ 11,495 24 $ 0 N/A N/A $ 11,495 25 $ 0 N/A N/A $ 11,495 26 $ 0 N/A N/A $ 11,495 27 $ 0 N/A N/A $ 11,495 28 $ 0 N/A N/A $ 11,495 29 $ 0 N/A N/A $ 22,989 (9) 30 $ 0 N/A N/A $ 22,989 31 $ 0 N/A N/A $ 22,989
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Personal Pension Account Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on all amounts being converted to Annuity Payout Value. CDSCs and Premium tax not shown in the Example. (3) Interest is no longer credited under the Personal Pension Account. APP A-8 ------------------------------------------------------------------------------- (4) In year 20, the Owner elected to commute half of their Annuity Payout Value and receive the remaining half in the form of Personal Pension Account Payouts. Thus, the Accumulation Balance of $210,910 is split in half. $109,455 is converted into Annuity Payout Value and will serve as the basis for Personal Pension Account Payouts. The remaining $109,455 will serve as the basis for the Commuted Value calculation. (5) The Annuity Payout Value of $109,455 is reduced by the Personal Pension Account Payout of $11,495, leaving an Annuity Payout Value of $97,960 remaining. (6) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the appropriate payout rate and dividing by 1,000. In this case, $109,455*105.02/1,000 = $11,495. However, in this example, half of the Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living as illustrated in years 29, 30, and 31. (7) The Commuted Value depicted is based on commutation of half of the Annuity Payout Value, or $109,455, using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the remaining Guaranteed Payout Duration (i.e., $109,455/$11,495, rounded down = 9) calculated using the discount rate. (8) A hypothetical Payout Rate is used because Personal Pension Account Payouts and commutation occur outside of the guarantee window. (9) In this case, the lifetime Personal Pension Account Payouts for each Annuity Payout Value is $11,495 ($109,455*105.02/1000 = $11,495). When combined, these lifetime Personal Pension Account Payouts equal $22,989. Lifetime Personal Pension Account Payouts begin because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. RETURN OF PREMIUM DEATH BENEFIT EXAMPLES EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. IN CONTRACT YEAR 1 YOU APPLY A SUBSEQUENT PREMIUM PAYMENT OF $50,000. IN CONTRACT YEAR 3 YOU TAKE A PARTIAL SURRENDER FOR $1,000 AND IN THE SAME CONTRACT YEAR YOU TAKE ANOTHER PARTIAL SURRENDER FOR $10,000, YOUR CONTRACT VALUE IMMEDIATELY FOLLOWING IS $173,000. YOUR INITIAL VALUE: $100,000 VALUE AFTER THE SUBSEQUENT PREMIUM PAYMENT OF $50,000: $150,000, which is the prior value increased by the amount of the subsequent Premium Payments VALUE AFTER THE PARTIAL SURRENDER ($1,000): $149,000, which is the prior value reduced dollar-for-dollar by the amount of the Surrender because it is within the withdrawal limit VALUE AFTER THE ADDITIONAL PARTIAL SURRENDER ($10,000): $139,674.22, which is the prior value reduced first dollar-for-dollar by the amount of the Surrender not in excess of 5% of Premium Payments ($6,500) and then proportional for the amount in excess of 5% of Premium Payments ($3,500). The proportionate reduction is determined by first determining the factor: 1 - (excess Surrender/(Contract Value prior to the Surrender - Death Benefit withdrawal limit remaining) 1- ($3,500/($173,000 + $10,000 - $6,500) = .980169971 Once the factor is determined the value prior to the Surrender is first reduced dollar-for-dollar by the amount of the Surrender not in excess of the Death Benefit withdrawal limit: $149,000 - $6,500 =$142,500 This value is then multiplied by the factor: $142,500 * .980169971 = $139,674.22 The death benefit would be the Contract Value or $173,000. You will also receive the Personal Pension Account death benefit equal to any remaining Benefit Balance. EXAMPLE 2: SAME FACTS AS ABOVE EXCEPT THE BENEFIT BALANCE AT THE TIME OF DEATH WAS EQUAL TO $100,000. The Death Benefit would be $273,000 (Return of Premium Death Benefit = $173,000 + Personal Pension Account Death Benefit = $100,000). APP A-9 ------------------------------------------------------------------------------- REMAINING GROSS PREMIUM EXAMPLES EXAMPLE 1: ILLUSTRATES A PARTIAL SURRENDER THAT IS LESS THAN THE AWA IN A DOWN MARKET. ASSUME A PARTIAL SURRENDER TAKEN IN CONTRACT YEAR 2 EQUALS $5,000. VALUES PRIOR TO THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0, as the AWA was not exceeded EXAMPLE 2: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN A DOWN MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME TWO PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 2, FOR $5,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000. VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the second partial Surrender is $75,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 APP A-10 ------------------------------------------------------------------------------- VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $70,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $95,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($5,000) of the AWA - The CDSC applied to this $5,000 partial Surrender is $350, which is the amount of the partial Surrender in excess of the AWA ($5,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $78,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premium is $95,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $68,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA has been taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $85,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% EXAMPLE 3: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN AN UP MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME BOTH PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 1 FOR $10,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000 VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $110,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $10,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $10,000, which are your earnings - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $100,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender did not exceed the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded APP A-11 ------------------------------------------------------------------------------- VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the second partial Surrender is $100,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $90,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $90,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $10,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $99,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $9,000, which are your earnings - Your Remaining Gross Premiums are $90,000 VALUES AFTER THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the third partial surrender is $84,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $84,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($6,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $420, which is the amount of the partial Surrender in excess of the AWA ($6,000) multiplied by 7% EXAMPLE 4: ILLUSTRATES A FULL SURRENDER CALCULATION WITH ONE OF TWO PREMIUM PAYMENTS OUT OF THE APPLICABLE CDSC SCHEDULE. ASSUME TWO PREMIUM PAYMENTS WERE MADE FOR $100,000 EACH. ONE PAYMENT WAS APPLIED IN THE BEGINNING OF CONTRACT YEAR 1, THE SECOND IN THE BEGINNING OF CONTRACT YEAR 3. A FULL SURRENDER IS TAKEN IN CONTRACT YEAR 8. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $200,000 - Your Contract Value just prior to the full Surrender is $300,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $100,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $200,000, which is the premium out of CDSC schedule ($100,000) plus your earnings - Your Remaining Gross Premium for the second Premium Payment (still in CDSC) is $100,000 APP A-12 ------------------------------------------------------------------------------- VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $300,000 full Surrender is $4,000, which is the maximum of the full Surrender or Remaining Gross Premium, reduced by the AWA ($100,000) multiplied by 4% EXAMPLE 5: ILLUSTRATES A FULL SURRENDER CALCULATION IN A DOWN MARKET. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the full Surrender is $50,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $50,000 full Surrender is $6,650, which is the maximum of the full Surrender or Remaining Gross Premium reduced by the AWA ($95,000) multiplied by 7% (using the 7-year CDSC schedule applicable to the "Core" Hartford Leaders variable annuity Contract) APP B-1 ------------------------------------------------------------------------------- APPENDIX B - ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in the Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows only the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits. A table showing all classes of Accumulation Unit Values corresponding to all combinations of optional benefits is shown in the Statement of Additional Information, which you may obtain free of charge by contacting us. There is no information available because as of December 31, 2008, the Sub-Accounts had not yet commenced operations. APP C-1 ------------------------------------------------------------------------------- APPENDIX C - FUND DATA I. INVESTMENT OPTIONS (STANDARD)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. CORE EQUITY FUND - SERIES Growth of capital Invesco Aim Advisors, Inc. Equity II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. INTERNATIONAL GROWTH FUND Long-term growth of capital Invesco Aim Advisors, Inc. Equity - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. MID CAP CORE EQUITY FUND Long-term capital growth Invesco Aim Advisors, Inc. Limited - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. POWERSHARES ETF To provide total return consistent Invesco Aim Advisors, Inc. Multi-Asset ALLOCATION FUND - SERIES II with a moderate level of risk Sub-adviser: Advisory entities relative to the broad stock market. affiliated with Invesco Aim Advisors, Inc. AIM V.I. SMALL CAP EQUITY FUND - Long-term capital growth Invesco Aim Advisors, Inc. Limited SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS BALANCED Maximize total return consistent with AllianceBernstein L.P. Multi-Asset WEALTH STRATEGY PORTFOLIO - CLASS Advisor's determination of reasonable B risk ALLIANCEBERNSTEIN VPS Long-term capital growth AllianceBernstein L.P. Equity INTERNATIONAL VALUE PORTFOLIO - CLASS B ALLIANCEBERNSTEIN VPS SMALL/MID Long-term capital growth AllianceBernstein L.P. Equity CAP VALUE PORTFOLIO - CLASS B FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS FIDELITY VIP CONTRAFUND(R) Seeks long-term capital appreciation Fidelity Management & Research Equity PORTFOLIO - SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP MID CAP PORTFOLIO - Long-term capital growth Fidelity Management & Research Equity SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP STRATEGIC INCOME Limited PORTFOLIO - SERVICE CLASS 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN FLEX CAP GROWTH Seeks capital appreciation Franklin Advisers, Inc. Equity SECURITIES FUND - CLASS 4
APP C-2 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- FRANKLIN INCOME SECURITIES FUND - Seeks to maximize income while Franklin Advisers, Inc. Limited CLASS 4 maintaining prospects for capital appreciation FRANKLIN RISING DIVIDENDS Equity SECURITIES FUND - CLASS 4 FRANKLIN SMALL CAP VALUE Seeks long-term total return Franklin Advisory Services, LLC Limited SECURITIES FUND - CLASS 4 FRANKLIN SMALL-MID CAP GROWTH Seeks long-term capital growth Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 FRANKLIN STRATEGIC INCOME Seeks a high level of current income, Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 with capital appreciation over the long term as a secondary goal MUTUAL GLOBAL DISCOVERY SECURITIES Seeks capital appreciation Franklin Mutual Advisers, LLC Equity FUND - CLASS 4 (1) Sub-advised by Franklin Templeton Investment Management Limited MUTUAL SHARES SECURITIES FUND - Capital appreciation, with income as Franklin Mutual Advisers, LLC Equity CLASS 4 a secondary goal TEMPLETON FOREIGN SECURITIES FUND Seeks long-term capital growth Templeton Investment Counsel, LLC Equity - CLASS 4 TEMPLETON GLOBAL BOND SECURITIES Seeks high current income, consistent Franklin Advisers, Inc. Limited FUND - CLASS 4 (2) with preservation of capital, with capital appreciation as a secondary consideration TEMPLETON GROWTH SECURITIES FUND - Seeks long-term capital growth Templeton Global Advisors Limited Equity CLASS 4 Sub-advised by Templeton Asset Management Ltd. HARTFORD HLS SERIES FUND II, INC. HARTFORD GROWTH OPPORTUNITIES HLS Capital appreciation Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD U.S. GOVERNMENT Maximize total return with a high Hartford Investment Financial Fixed SECURITIES HLS FUND - CLASS IA level of current income consistent Services, LLC. with prudent investment risk Sub-advised by Hartford Investment Management Company HARTFORD SERIES FUND, INC. AMERICAN FUNDS ASSET ALLOCATION Seeks high total return consistent Hartford Investment Financial Equity HLS FUND - CLASS IB with preservation of capital over the Services, LLC. long term Sub-advised by Hartford Investment Management Company AMERICAN FUNDS BLUE CHIP INCOME Seeks to produce income exceeding the Hartford Investment Financial Equity AND GROWTH HLS FUND - CLASS IB average yield on U.S. stocks Services, LLC. generally (as represented by the Sub-advised by Hartford Investment average yield on the S&P 500 Index) Management Company and to provide an opportunity for growth of principal consistent with sound common stock investing. AMERICAN FUNDS BOND HLS FUND - Seeks to maximize current income and Hartford Investment Financial Fixed CLASS IB preservation of capital Services, LLC. Sub-advised by Hartford Investment Management Company
APP C-3 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL BOND HLS Seeks a high level of total return Hartford Investment Financial Limited FUND - CLASS IB over the long term Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH AND Seeks growth of capital and current Hartford Investment Financial Equity INCOME HLS FUND - CLASS IB income Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL SMALL Seeks growth of capital Hartford Investment Financial Limited CAPITALIZATION HLS FUND - CLASS Services, LLC. IB Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH HLS FUND - Seeks growth of capital Hartford Investment Financial Equity CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH-INCOME HLS Seeks growth of capital and income Hartford Investment Financial Equity FUND - CLASS IB over time Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS INTERNATIONAL HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS NEW WORLD HLS FUND Seeks growth of capital Hartford Investment Financial Limited - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD CAPITAL APPRECIATION HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DISCIPLINED EQUITY HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DIVIDEND AND GROWTH HLS High level of current income Hartford Investment Financial Equity FUND - CLASS IA consistent with growth of capital Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL EQUITY HLS FUND - Seeks long term capital appreciation Hartford Investment Financial Equity CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL GROWTH HLS FUND - Growth of capital Hartford Investment Financial Equity CLASS IA (3) Services, LLC. Sub-advised by Wellington Management Company, LLP
APP C-4 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- HARTFORD GROWTH HLS FUND - CLASS Seeks long-term capital appreciation Hartford Investment Financial Equity IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD HIGH YIELD HLS FUND - High current income with growth of Hartford Investment Financial Limited CLASS IA capital as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD INDEX HLS FUND - CLASS IB Seeks to provide investment results Hartford Investment Financial Equity which approximate the price and yield Services, LLC. performance of publicly traded common Sub-advised by Hartford Investment stocks in the aggregate Management Company HARTFORD INTERNATIONAL Long-term capital growth Hartford Investment Financial Equity OPPORTUNITIES HLS FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD MONEY MARKET HLS FUND - Maximum current income consistent Hartford Investment Financial Fixed CLASS IA* with liquidity and preservation of Services, LLC. capital Sub-advised by Hartford Investment Management Company HARTFORD SMALL COMPANY HLS FUND - Growth of capital Hartford Investment Financial Limited CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP and Hartford Investment Management Company HARTFORD TOTAL RETURN BOND HLS Competitive total return, with income Hartford Investment Financial Fixed FUND - CLASS IA as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD VALUE HLS FUND - CLASS IA Long-term total return Hartford Investment Financial Equity Services, LLC. Sub-advised by Wellington Management Company, LLP MFS(R) VARIABLE INSURANCE TRUST MFS(R) GROWTH SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS MFS(R) INVESTORS TRUST SERIES - Seeks capital appreciation MFS Investment Management Equity SERVICE CLASS MFS(R) RESEARCH BOND SERIES - Total return with an emphasis on high MFS Investment Management Fixed SERVICE CLASS current income, but also considering capital appreciation. MFS(R) TOTAL RETURN SERIES - Seeks total return MFS Investment Management Multi-Asset SERVICE CLASS MFS(R) VALUE SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS PUTNAM VARIABLE TRUST PUTNAM VT EQUITY INCOME FUND - Capital growth and current income Putnam Investment Management, LLC Equity CLASS IB PUTNAM VT INVESTORS FUND - CLASS Long-term growth of capital and any Putnam Investment Management, LLC Equity IB increased income that results from this growth
APP C-5 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VOYAGER FUND - CLASS IB Seeks capital appreciation Putnam Investment Management, LLC Equity FIXED ACCUMULATION FEATURE** Preservation of capital General Account N/A
NOTES (1) Formerly Mutual Discovery Securities Fund - Class 4 (2) Formerly Templeton Global Income Securities Fund - Class 4 (3) Formerly Hartford Global Leaders HLS Fund - Class IA * In a low interest rate environment, yields for money market funds, after deduction of Contract charges may be negative even though the fund's yield, before deducting for such charges, is positive. If you allocate a portion of your Contract Value to a money market Sub-Account or participate in an Asset Allocation Program where Contract Value is allocated to a money market Sub-Account, that portion of your Contract Value may decrease in value. ** The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this feature. The Fixed Accumulation Feature is currently not available to A Share and I Share products. II. UNDERLYING FUNDS (PROPRIETARY)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- HUNTINGTON FUNDS HUNTINGTON VA DIVIDEND CAPTURE Total return with dividend income as Huntington Asset Advisors, Inc. Equity FUND an important component of that return HUNTINGTON VA GROWTH FUND Seeks long-term capital appreciation Huntington Asset Advisors, Inc. Equity HUNTINGTON VA INCOME EQUITY FUND Current income and moderate Huntington Asset Advisors, Inc. Equity appreciation of capital HUNTINGTON VA INTERNATIONAL EQUITY Seeks total return Huntington Asset Advisors, Inc. Equity FUND HUNTINGTON VA MACRO 100 FUND Total return consisting of capital Huntington Asset Advisors, Inc. Equity appreciation and income HUNTINGTON VA MID CORP AMERICA Seeks long-term capital appreciation Huntington Asset Advisors, Inc. Equity FUND HUNTINGTON VA MORTGAGE SECURITIES Current income Huntington Asset Advisors, Inc. Limited FUND HUNTINGTON VA NEW ECONOMY FUND Seeks capital appreciation Huntington Asset Advisors, Inc. Limited HUNTINGTON VA ROTATING MARKETS Seeks capital appreciation Huntington Asset Advisors, Inc. Equity FUND HUNTINGTON VA SITUS FUND Seeks long-term capital appreciation Huntington Asset Advisors, Inc. Limited
To obtain a Statement of Additional Information, please complete the form below and mail to: The Hartford Attn: Individual Markets Group P.O. Box 5085 Hartford, Connecticut 06102-5085 Please send a Statement of Additional Information to me at the following address: ---------------------------------------------------------------- Name ---------------------------------------------------------------- Address ---------------------------------------------------------------- City/State Zip Code Contract Name Issue Date PART B HARTFORD LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION HUNTINGTON HARTFORD LEADERS SERIES III This Statement of Additional Information is not a prospectus. The information contained in this document should be read in conjunction with the prospectus. To obtain a prospectus, send a written request to The Hartford, Attn: Individual Markets Group, P.O. Box 5085, Hartford, CT 06102-5085. Date of Prospectus: August 14, 2009 Date of Statement of Additional Information: August 14, 2009 TABLE OF CONTENTS GENERAL INFORMATION 2 Safekeeping of Assets 2 Experts 2 Non-Participating 2 Misstatement of Age or Sex 2 Principal Underwriter 2 Additional Payments 2 PERFORMANCE RELATED INFORMATION 6 Total Return for all Sub-Accounts 6 Yield for Sub-Accounts 6 Money Market Sub-Accounts 7 Additional Materials 7 Performance Comparisons 7 ACCUMULATION UNIT VALUES 8 FINANCIAL STATEMENTS SA-2
2 ------------------------------------------------------------------------------- GENERAL INFORMATION SAFEKEEPING OF ASSETS We hold title to the assets of the Separate Account. The assets are kept physically segregated and are held separate and apart from our general corporate assets. Records are maintained of all purchases and redemptions of the underlying fund shares held in each of the Sub-Accounts. EXPERTS The consolidated balance sheets of Hartford Life Insurance Company (the "Company") as of December 31, 2008 and 2007, 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, 2008 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 11, 2009 (April 29, 2009 as to the effects of the change in reporting entity structure and the retrospective adoption of FASB Statement No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS described in Note 1 and Note 17) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company's change in its method of accounting for the fair value measurement of financial instruments in 2008) and the statements of assets and liabilities of Hartford Life Insurance Company Separate Account Seven (the "Account") as of December 31, 2008, and the related statements of operations and changes in net assets for the respective stated periods then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 18, 2009, which reports are both included in this Statement of Additional Information. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is City Place, 32nd Floor, 185 Asylum Street, Hartford, Connecticut 06103-3402. With respect to the unaudited interim financial information for the periods ended June 30, 2009 and 2008 which is incorporated by reference herein, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their report included in the Company's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2009 and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited interim financial information because that report is not a "report" or a "part" of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. NON-PARTICIPATING The Contract is non-participating and we pay no dividends. MISSTATEMENT OF AGE OR SEX If an Annuitant's age or sex was misstated on the Contract, any Contract payments or benefits will be determined using the correct age and sex. If we have overpaid Annuity Payouts, an adjustment, including interest on the amount of the overpayment, will be made to the next Annuity Payout or Payouts. If we have underpaid due to a misstatement of age or sex, we will credit the next Annuity Payout with the amount we underpaid and credit interest. PRINCIPAL UNDERWRITER The Contracts, which are offered continuously, are distributed by Hartford Securities Distribution Company, Inc. ("HSD"). HSD serves as Principal Underwriter for the securities issued with respect to the Separate Account. HSD is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the National Association of Securities Dealers, Inc. HSD is an affiliate of ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial Services Group, Inc. The principal business address of HSD is the same as ours. We currently pay HSD underwriting commissions for its role as Principal Underwriter of all variable annuities associated with this Separate Account. For the past three years, the aggregate dollar amount of underwriting commissions paid to HSD in its role as Principal Underwriter has been: 2008: $53,980,236; 2007: $125,061,889; and 2006: $122,003,581. ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES As stated in the prospectus, we (or our affiliates) pay Additional Payments to Financial Intermediaries. In addition to the Financial Intermediaries listed in the prospectus with whom we have an ongoing contractual arrangement to make Additional Payments, listed 3 ------------------------------------------------------------------------------- below are all Financial Intermediaries that received Additional Payments in 2008 of items such as sponsorship of meetings, education seminars, and travel and entertainment, whether or not an ongoing contractual relationship exists. A.G. Edwards & Sons, Inc., Abacus Investments, Inc., ABD Financial Services, Inc., Access Financial Group, Inc., Access Investments, Inc., Acument Securities, Inc., Addison Avenue Federal Credit Union, ADP Broker-Dealer, Inc., Advanced Advisor Group, Advanced Equities, Inc., Advantage Capital Corp., Advisory Group Equity Services Ltd., AFA Financial Group, LLC., Affinity Bank, AFS Brokerage, Inc., AIG Equity Sales Corp., AIG Financial Advisors, AIG Retirement Advisors, Inc., AIM Distributors, Inc., Aim Investments, Alamo Capital, All Nevada Insurance, Allegacy Federal Credit Union, Allegheny Investments Ltd., Allen & Co. of Florida, Inc., Alliance Bank, AllianceBernstein, AllianceBernstein Investment Research, AllState Financial Services, LLC., Altura Credit Union, AMCORE Bank, NA., Amcore Investment Services, Inc., American Bank, NA., American Classic Securities, American Funds & Trusts, Inc., American General Securities Inc., American Heritage Federal Credit Union, American Independent Securities Group, American Independent Securities, Inc., American Investors Company, American Investors Group, American Municipal Securities, Inc., American Portfolios Financial Services, American Securities Group, Inc., American Trust & Savings Bank, Ameriprise Financial Services, Inc., Ameritas Investment Corp., Ameritrade, Inc., Ames Community Bank, Amsouth Bank, Amsouth Investment Services, AmTrust Bank, Amtrust Investment Services, Inc., Anchor Bank, Anderson & Strudwick, Inc., Andrew Garrett, Inc., Arlington Securities, Inc., Arrowhead Central Credit Union, Arvest Asset Management, Arvest Bank, Ascend Financial Services, Inc., Askar Corp., Asset Management Securities Corp., Associated Bank, NA., Associated Financial Services, Inc., Associated Investment Services, Inc., Associated Securities Corp., Astoria Federal Savings & Loan Association, Atlantic Securities, Inc., Avisen Securities, Inc., AXA Advisors, LLC., Ayre Investments, B.B. Graham & Co., B.C. Ziegler and Company, Banc of America Investment Services, Inc., Bancnorth Investment Group, Inc., Bancorpsouth Investment Services, Inc., BancWest Investment Services, Inc., Bank of Albuquerque, NA., Bank of America, Bank of Clarendon, Bank of Clarke County, Bank of Stockton, Bank of Texas, Bank of the Commonwealth, Bank of the South, Bank of the West, Bankers & Investors Co., Bankers Life and Casualty, Banknorth, BankUnited, FSB, BankWest, Inc., Bannon, Ohanesian & Lecours, Inc., Banorte Securities, Banorte Securities International, Bates Securities, Inc., BB&T Investment Services, Inc., BCG Securities, Inc., Beaconsfield Financial Services., Inc., Benchmark Investments, Inc., Beneficial Investment Services, Bernard Herold & Co., Inc., Berthel, Fisher & Co. Financial Services, Inc., Bethpage Federal Credit Union, BI Investments, LLC., Bodell Overcash Anderson & Co., Boeing Employees Credit Union, BOSC, Inc., Brecek & Young Advisors, Inc., Brighton Securities Corp., Britton & Koontz Bank, N.A., Broad Street Securities, Inc., Broker Dealer Financial Services Corp., Brokersxpress LLC., Brookstone Securities, Inc., Brookstreet Securities Corp., Brown Advisory Securities Inc., Brown, Lisle/Cummings, Inc., Bruce A Lefavi Securities, Inc., Busey Bank, Butler, Wick & Co., Inc., C.R.I. Securities, Inc., Cadaret, Grant & Co., Inc., California Bank & Trust, California Credit Union, California National Bank, Calton & Associates, Inc., Cambridge Investment Research, Inc., Cambridge Legacy Sec., LLC., Cambridge State Bank, Cantella & Co., Inc., Capital Analysts, Inc., Capital Bank, Capital Brokerage Corporation, Capital Choice, Capital City Bank, Capital Financial Services, Inc., Capital Growth Resources, Capital Investment Group, Inc., Capital Investment Services, Inc., Capital One Investments Services, LLC., Capital Securities Investment Corp., Capital Securities Management, Capital Select Investments Corp., Capital Wealth Advisors, Inc., Capital West Securities, Inc., CapitalBank, Capitol Federal Savings Bank, Capitol Securities Management, Inc., Carolina First Bank, Carolinas Investment Consulting LLC., Cary Street Partners, LLC., Cascade Investment Group, Inc., CCF Investments, Inc., CCO Investment Services Corp., Centaurus Financial, Inc., Centennial Securities Co., Inc., Central State Bank, Central Virginia Bank, Century National Bank, Century Securities Associates, Inc., CFD Investments, Inc., Chapin, Davis, Charles Schwab, Chase Investments Services Corp., Chemical Bank West, Chevy Chase Financial Services, CIBC World Markets Corp., Citadel Federal Credit Union, Citi Bank, Citicorp Investment Services, Citigroup Global Markets, Inc., Citizens & Farmers Bank, Citizens Bank, Citizens Business Bank, City Bank, City Securities Corporation, Coastal Federal Credit Union, Coburn & Meredith, Inc., Colonial Bank, N.A., Colonial Brokerage, Inc., Comerica Bank, Comerica Securities, Commerce Bank, N.A., Commerce Brokerage Services, Inc., Commerce Capital Markets, Inc., Commercial & Savings Bank/Mllrsbrg, Commercial Federal Bank, Commonwealth Bank & Trust Co., Commonwealth Financial Network, Commonwealth Investment Services, Inc., Community Bank, Community Bank & Trust, Community Credit Union, Community Investment Services, Inc., Compass Bank, Compass Brokerage, Inc., Comprehensive Financial Services, Conservative Financial Services., Inc., Coordinated Capital Securities, Inc., Country Club Financial Services., Inc., Countrywide Bank, Countrywide Investment Services, Inc., Credit Union West, Crews & Associates, Inc., Crowell, Weedon & Co., Crown Capital Securities, LLP, CUE, Cullum & Burks Securities, Inc., Cumberland Brokerage Corp., Cuna Brokerage Services, Inc., Cuso Financial Services, LLP., CW Securities, LLC., D.A. Davidson & Company, Davenport & Company LLC., David A. Noyes & Company, David Lerner Associates, Inc., DaVinci Capital Management, Inc., Dawson James Securities, Inc., Delta Equity Services Corp., Delta Trust Investment, Inc., Deutsche Bank Securities, Inc., DeWaay Financial Network, DFCU Financial Federal Credit Union, Dilworth, Diversified Securities, Inc., Dominion Investor Services., Inc., Dorsey & Company, Inc., Dougherty & Company LLC., Dubuque Bank & Trust Co., Dumon Financial, Duncan-Williams, Inc., Dupaco Community Credit Union, Eagle Bank, Eagle One Financial, Eagle One Investments, LLC., Eastern Bank, Eastern Financial Florida Credit Union, ECM Securities Corporation, EDI Financial, Inc., Edward Jones, Effex National Security, Eisner Securities, Inc., Emclaire Financial Corp., Emerson Equity, LLC., Empire Bank, Empire Financial Group, Inc., Empire Securities Corporation, Emporia State Bank & Trust Co., Ensemble Financial Services, Inc., EPlanning Securities, Inc., Equitable Bank, Equitas America, LLC, Equity Services, Inc., ESL Federal Credit Union, Essex Financial Services, Inc., Essex National Securities, Inc., Essex Securities, LLC., Evans National Bank, EVB, Evolve Securities, Inc., Excel Securities & 4 ------------------------------------------------------------------------------- Assoc., Inc., Fairport Capital, Inc., Fairwinds Credit Union, Farmers National Bank, Farmers National Bank/Canfield, Feltl & Company, Ferris/Baker Watts, FFP Securities, Inc., Fidelity Bank, Fidelity Brokerage Services., LLC., Fidelity Federal Bank & Trust, Fidelity Investments, Fifth Third Bank, Fifth Third Securities, FIMCO Securities Group,Inc., Financial Center Credit Union, Financial Network Investment Corp., Financial Partners Credit Union, Financial Planning Consultants, Financial Security Management, Inc., Financial West Group, Fintegra LLC., First Allied Securities, First America Bank, First American Bank, First Bank, First Brokerage America, First Citizens Bank, First Citizens Financial Plus, Inc., First Citizens Investor Services, First Command Financial Planning, First Commonwealth Bank, First Commonwealth Federal Credit Union, First Community Bank, First Community Bank, N.A., First Federal Bank, First Federal Savings & Loan of Charlston, First Financial Bank, First Financial Equity Corp., First Global Securities, Inc., First Harrison Bank, First Heartland Capital Inc., First Hope Bank, First Investment Services, First MidAmerica Investment Corp., First Midwest Bank, First Midwest Securities, First Montauk Securities, First National Bank, First National Investments Inc, First Niagara Bank, First Northern Bank of Dixon, First Place Bank, First Southeast Investment Services, First St. Louis Securities, Inc., First Tennessee Bank, First Tennessee Brokerage, Inc., First Wall Street Corporation, First Western Securities Inc., FirstMerit Securities, Inc., FiServ Investor Services, Inc., Flagstar Bank, FSB, Florida Investment Advisers, Flushing Savings Bank, FSB, FMN Capital Corporation, FNB Brokerage Services, Inc., FNIC F.I.D. Div., Folger Nolan Fleming Douglas, Foothill Securities, Inc., Foresters Equity Services, Inc., Fortune Financial Services, Founders Financial Securities, LLC., Fox and Company, Franklin Bank, Franklin/Templeton Dist., Inc., Freedom Financial, Inc., Fremont Bank, Frontier Bank, Frost Brokerage Services Inc., Frost National Bank, FSC Securities Corporation, FSIC, Fulcrum Securities, Inc., Gateway Bank and Trust Company, Geneos Wealth Management, Inc., Genworth Financial Securities Corp., GIA Financial Group, L.L.C., Girard Securities Inc., Global Brokerage Services, Gold Coast Securities, Inc., Golden One Credit Union, Great American Advisors, Inc., Great American Investors, Inc., Great Lakes Capital, Inc., Greenberg Financial Group, Gregory J Schwartz & Co., Inc., Gunnallen Financial, Inc., GWN Securities, Inc., H&R Block Financial Advisers, Inc., H. Beck, Inc., H.D.Vest Investment Services, Haas Financial Products, Inc., Hancock Bank, Hancock Investments Services, Harbor Financial Services, LLC., Harbour Investments, Inc., Harger and Company, Inc., Harold Dance Investments, Harris Investor Services, Inc., Harvest Capital LLC, Hawthorne Securities Corp., Hazard & Siegel, Inc., Hazlett, Burt & Watson, Inc., HBW Securities, LLC, HCSB, Heartland Investment Associates, Inc., Heim & Young Securities, Inc., Heim Young & Associates, Inc., Hibernia Investments, LLC, Hibernia National Bank, High Country Bank, High Ridge Insurance Services, Hilliard Lyons, HNB National Bank, Home Savings & Loan Company of Youngstown, Home Savings Bank, Horizon Bank, Hornor, Townsend & Kent, Inc., Horwitz & Associates, Inc., Howe Barnes Investments, Inc., HRC Investment Services, Inc., HSBC Bank USA, National Associates, HSBC International, HSBC Securities (USA) Inc., Huntingdon Securities Corp., Huntington Investment Co., Huntington National Bank, Huntington Valley Bank, Huntleigh Securities Corp., IBC Investments, IBN Financial Services, Inc., ICBA Financial Services Corp., IFG Network Securities, Inc., IFMG Securities, Inc., IMS Securities, Inc., Independent Financial Securities Inc., Independent Financial Group, LLC., Indiana Merchant Banking & Brokerage, Infinex Investment, Inc., Infinity Securities, Co., Inc., ING Financial Advisors, LLC, ING Financial Partners, Innovative Solutions, Integrated Financial Inc., Intercarolina Financial Services, Inc., Interpacific Investor Services, InterSecurities, Inc., INTRUST Bank, NA., Intrust Brokerage Inc., Invesmart Securities, LLC., INVEST Financial Corporation, Investacorp, Inc., Investment Center, Inc., Investment Centers of America, Investment Management Corp., Investment Network, Inc., Investment Planners, Inc., Investment Professionals, Inc., Investment Security Corp., Investors Capital Corp., Investors Resources Group, Inc., Iowa State Bank, ISG Equity Sales Corporation, J.B. Hanauer & Co., J.J.B Hilliard, W.L.Lyons LLC., J.P. Turner & Co., J.W. Cole Financial, Inc., Jack V Butterfield Investment Co., Jackson Securities, LLC., Jacksonville Savings Bank, James C. Butterfield, Inc., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corp., Jesup & Lamont Securities Corp., JHW Financial Services, Inc., JHW Securities, JJB Hilliard/WL Lyons, Inc., Jones Bains Sides Investments Group, Joseph James Financial Services, Kalos Capital, Inc., Kaplan & Co., Securities Inc., KCD Financial, Inc., Keesler Federal Credit Union, Kern National Federal Credit Union, Kern Schools Federal Credit Union, Key Bank, Key Investment Services, LLC., Key Investor Services, KeyBank, NA., KeyPoint Credit Union, Kinecta Credit Union, Kirkwood Bank & Trust Co., KleinBank, KMS Financial Services, Inc., Kovack Securities, Inc., L.F. Financial, LLC., L.M. Kohn & Company, LaBrunerie Financial Services, Inc., Lake Area Bank, Lake Community Bank, Landmark Credit Union, Lara, Shull & May, LTD., LaSalle Financial Services, Inc., LaSalle Street Securities, Inc., Lawrence Jorgenson, Legacy Asset Securities, Inc., Legacy Financial Services, Inc., Legend Equities Corporation, Legends Bank, Legg Mason/Citigroup Global Market, Leigh Baldwin & Co., LLC., Leonard & Company, Lesko Securities Inc., Leumi Investment Services, Inc., Lexington Investment Co., Inc., LFA, Liberty Group, LLC., Liberty Securities Corporation, Lifemark Securities Corp., Lincoln Financial Advisors Corp., Lincoln Investment Planning, Inc., Linsco/Private Ledger, LOC Federal Credit Union, Lockheed Federal Credit Union, Lombard Securities, Inc., Long Island Financial Group, Lord, Abbett & Co., Lowell & Company, Inc., LPL Financial, M Holdings Securities, Inc., M&I Bank, M&I Brokerage Services, Inc., M&I Financial Advisors, Inc., M&T Bank, M&T Securities, Inc., M. Griffith, Inc., M.L. Stern & Co. Inc., Madison Avenue Securities, Inc., Madison Bank & Trust, Main Street Securities, LLC., Manarin Securities Corp., Manna Financial Services Corp., Mascoma Savings Bank, Mass Institute of Technology Credit Union, Mass Mutual, Maxim Group LLC., McGinn, Smith & Co., Inc., McNally Financial Services Corp.; Means Investment Co., Inc., Medallion Equities, Inc., Medallion Investment Services Inc., Mercantile Bank, Mercantile Brokerage Services Inc., Mercantile Trust & Savings Bank, Merrill Lynch Inc., Merrimac Corporate Securities, Inc., Mesirow Financial, Inc., MetLife Securities, Inc., MFS Fund Distributors, Inc., MICG Investment Management, Michigan Catholic Credit Union, Michigan Securities, Inc., Mid Atlantic Capital Corp., MidAmerica Financial Services Inc., Mid-Atlantic Securities, Inc., Midwestern Sec Trading CO, LLC., Milkie/Ferguson 5 ------------------------------------------------------------------------------- Investments, Mission Federal Credit Union, MMC Securities Corp., MML Investor Services, Inc., Moloney Securities Co., Inc., Money Concepts Capital Corp, Money Management Advisory Inc., Moors & Cabot, Inc., Morgan Keegan & Co., Inc., Morgan Peabody, Inc., Morgan Stanley & Co., Inc., MSCS Financial Services, LLC., MTL Equity Products, Inc., Multi-Financial Securities Corp., Multiple Financial Services., Inc., Mutual Funds Assoc., Inc., Mutual Securities, Inc., Mutual Service Corp., NatCity Investments, National Bank & Trust, National City Bank of Midwest, National Financial Services Corp., National Investors Services, National Pension & Group Consultant, National Planning Corporation, National Securities Corp., Nations Financial Group, Inc., Nationwide Investment Service Corp., Navy Federal Brokerage Services, Navy Federal Credit Union, NBC Financial Services, NBC Securities, Inc., NBT Bank, Neidiger, Tucker, Bruner, Inc., Nelson Securities, Inc., Networth Strategic, New England Securities Corp., New Horizon Asset Management Group, LLC., NewAlliance Bank, NewAlliance Investments, Inc., Newbridge Securities Corp., Nexity Financial Services, Inc., Next Financial Group, NFB Investment Services Corp., NFP Securities, Inc., NIA Securities, LLC., Nodaway Valley Bank, Nollenberger Capital Partners, North Ridge Securities Corp., Northeast Securities, Inc., Northern Trust Company, Northern Trust Securities, Inc., Northridge Capital Corp., Northwestern Mutual Investment Services, Inc., Nutmeg Securities, Ltd., NYLIFE Securities Inc., O.N. Equity Sales Co., Oak Tree Securities, Inc., Oakbrook Financial Group, Inc., Oberlin Financial Corporation, OFG Financial Services, Inc., Ogilvie Security Advisors Corp., Ohio National Equities, Inc., O'Keefe Shaw & Company, Old National Bank, ON Equity Sales Co., OneAmerica Securities Inc., Oppenheimer and Co., Inc., Orange County Teachers Federal Credit Union, P & A Financial Sec's Inc., Pacific Cascade Federal Credit Union, Pacific Financial Assoc., Pacific West Securities, Inc., Packerland Brokerage Services, Inc., Paragon Bank & Trust, Park Avenue Securities, Parsonex Securities, Inc., Partnervest Securities, Inc., Patapsco Bank, Patelco Credit Union, Paulson Investment Company Inc., Peachtree Capital Corporation, Penn Plaza Brokerage, Pension Planners Securities Inc., Pentagon Federal Credit Union, Peoples Bank, Peoples Community Bank, Peoples Securities, Inc., Peoples United Bank, PFIC Securities Corp, Pillar Financial Services, Pimco Funds, PlanMember Securities Corp., PMK Securities & Research Inc., PNC Bank Corp., PNC Investments LLC., Premier America Credit Union, Prime Capital Services, Inc., PrimeSolutions Securities, Inc, PrimeVest Financial Services, Princor Financial Service Corp., ProEquities, Inc., Professional Asset Management, Inc., Prospera Financial Services, Protected Investors of America, Provident Bank, Provident Savings Bank, F.S.B., Pruco Securities Corp., Purshe, Kaplin & Sterling, Putnam Investments, Putnam Savings Bank, QA3 Financial Corp., Quest Capital Strategies, Inc., Quest Securities, Inc., Quest Tar, Questar Capital Corp., R.M. Stark & Co., Raymond James & Associates, Inc., Raymond James Financial Services, Inc., RBC Capital Markets Corp., RBC Centura Bank, RBC Centura Securities, Inc., RBC Dain Rauscher Inc., Regal Discount Securities, Inc., Regal Securities, Inc., Regency Securities Inc., Regions Bank, Reliance Securities, LLC., Resource Horizons Group, LLC., R-G Crown Bank, Rhodes Securities, Inc., Rice Pontes Capital, Inc., Ridgeway & Conger, Inc., River City Bank, RiverStone Wealth Management, Inc., RNR Securities LLC., Robert B. Ausdal & Co., Inc., Robert W. Baird & Co. Inc., Robinson & Robinson, Inc., Rogan & Associates, Inc., Rogan, Rosenberg & Assoc., Inc., Rothschild Investment Corp., Royal Alliance Associates, Inc., Royal Securities Company, Rushmore Securities Corp., Rydex Distributors, Inc., S F Police Credit Union, S.C. Parker & Co., Inc., Sage, Rutty & Co., Inc., Sammons Securities Company LLC., San Mateo County Employees Credit Union, Sanders Morris Harris Inc., Sandy Spring Bank, Sawtooth Securities, LLC., Saxony Securities, Inc., SCF Securities, Inc., School Employees Credit Union, Scott & Stringfellow, Inc., Seacoast Investor Services Inc., Seacoast National Bank, Securian Financial Services, Securities America, Inc., Securities Equity Group, Securities Service Network, Inc., Security Service Federal Credit Union, Shields & Company, Sicor Securities Inc., Sigma Financial Corporation, Signator Investors Inc., Signature Bank, Signature Financial Group, Inc., Signature Securities Group, SII Investments, Silicone Valley Securities, SMH Capital, Smith Barney, Smith Barney Bank Advisor, Smith Hayes Financial Services Corp., Sorrento Pacific Financial LLC., Source Capital Group, Inc., South Carolina Bank & Trust, South Valley Bank & Trust, South Valley Wealth Management, Southeast Investments NA Inc., Southern MO Bank of Marshfield, SouthTrust Securities, Inc., Southwest Securities, Inc., Sovereign Bank, Space Coast Credit Union, Spectrum Capital, Inc., Spelman & Co., Inc., Spire Securities, LLC., Stanford Group Company, Stephen A. Kohn & Associates, Stephens, Inc., Sterling Savings Bank, Sterne Agee & Leach, Inc., Stifel, Nicolaus & Co., Inc., Stock Depot Inc, Stockcross, Inc., Stofan, Agazzi & Company, Inc., Strand Atkinson Williams York, Strategic Alliance Corp., Strategic Financial Alliance, Summit Bank, Summit Brokerage Services Inc., Summit Equities, Inc., Summitalliance Securities, LLC., SunAmerica, Sunset Financial Services, Inc., SunTrust Investment Services, Inc., Superior Bank, Surrey Bank & Trust, Susquehanna Bank, SWBC Investment Company, SWS Financial Services, Symetra Investment Services Inc., Synergy Investment Group, Synovus Securities, T.J. Raney & Sons, Inc., Taylor Securities, Inc., TD Bancnorth, National Assoc., TD Waterhouse Investor Services, Inc., Technology Credit Union, Telesis Community Credit Union, Telhio Credit Union, TFS Securities, Inc., The Advisors Group, Inc., The Capital Group Sec. Inc., The Concord Equity Group, LLC., The Golden 1 Credit Union, The Huntington Investment Co., The Huntington Investment Company, The Legend Gray, Thomasville National Bank, Thoroughbred Financial Services, LLC., Thrasher & Company, Thrivent Investment Management, Inc., Thurston, Springer, Miller, Her, TierOne Bank, TimeCapital Securities Corp., Tower Square Securities, Inc., TradeStar Investments, Inc., Transamerica Financial Advisor, TransWest Credit Union, Tri Counties Bank, Triad Advisors, Inc., Tri-County Financial Group, Inc., Triequa Capital Corporation, Triune Capital Advisors, Troy Bank & Trust, Trustmark National Bank, Trustmont Financial Group Inc., U.S Bank, UBS Financial Services, Inc., UBS International; UBS Private Banking, UMB Bank, UMB Financial Services, Inc., UMB Scout Brokerage Services, Union Bank, Union Bank & Trust, Union Bank Company, Union Bank of California, N.A., Union Bank of Chandler, Union Capital Company, Union Savings Bank, UnionBanc Investment Services, United Bank, Inc., United Brokerage Services, Inc., United Community Bank, United Financial Group, United Planners Financial Services of America, United Securities Alliance Inc., Univest Investments, Inc., US Alliance Credit 6 ------------------------------------------------------------------------------- Union, US Bancorp Investments, US Bank, N.A., USA Financial Securities Corp., USAllianz Securities, Inc., USI Securities, UVest Financial Services, V.B.C. Securities, VALIC Financial Advisors, Inc., ValMark Securities, Van Kampen Investments, Inc., VanDerbilt Securities, LLC., Veritrust Financial, LLC., VFinance Investments, Inc., Vinson Assoc., Vision Bank, Vision Invstmnt Services, Inc., Vision Securities, Inc., Vorpahl Wing Securities, VSR Financial Services, Inc., VYstar Credit Union, Waccamaw Bank, Wachovia Bank, Wachovia Securities Inc. Financial Network, Wachovia Securities ISG, Wachovia Securities LLC., Waddell & Reed, Inc., Wakulla Bank, Wald Group, Wall Street Electronica, Inc., Wall Street Financial Group, Walnut Street Securities, Inc., WAMU, WaMu Investments, Inc., Washington Mutual, Wasserman & Associates, Waterstone Financial Group, Wayne Hummer Investments LLC., Wayne Savings Community Bank, Wealth Management Services, Webster Bank, Webster Investments, Wedbush Morgan Securities Inc., Weitzel Financial Services Inc., Wells Fargo Investments, Wells Fargo Securities Independent, Wells Federal Bank, Wellstone Securities, LLC., WesBanco Bank, Inc., WesBanco Securities, Inc., Wescom Credit Union, Wescom Financial Services, West Alabama Bank & Trust, West Coast Bank, Westamerica Bank, Western Federal Credit Union, Western International Securities, Westfield Bakerink Brozak LLC., Westminster Financial Investment, Westminster Financial Securities, Inc., Westport Securities, L.L.C., WFG Securities Corp., Whitney National Bank, Whitney Securities, LLC., Wilbank Securities, Wiley Bros.- Aintree Capital, William C. Burnside & Company, Wilmington Brokerage Services, Wilmington Trust Co., Windsor Securities, Inc., WM Financial Services, Inc., Woodbury Financial Services, Inc., Woodforest National Bank, Woodlands Securities Corp., Woodmen Financial Services Inc., Woodstock Financial Group, Inc., Workman Securities Corp., World Equity Group Inc., World Group Securities, Inc., Worth Financial Group, Inc., WRP Investments, Inc., Wunderlich Securities Inc., XCU Capital Corp., Inc., Xerox Credit Union, Zeigler Investment Services. PERFORMANCE RELATED INFORMATION The Separate Account may advertise certain performance-related information concerning the Sub-Accounts. Performance information about a Sub-Account is based on the Sub-Account's past performance only and is no indication of future performance. TOTAL RETURN FOR ALL SUB-ACCOUNTS When a Sub-Account advertises its standardized total return, it will be calculated on a quarterly basis from the date the underlying fund is made available in the Separate Account for one, five and ten year periods or some other relevant periods if the underlying fund has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. To calculate standardized total return, the Total Annual Fund Operating Expenses, applicable Sales Charges, Distribution Charge, Separate Account Annual Expenses, and the Annual Maintenance Fee are deducted from a hypothetical initial Premium Payment of $1,000.00. Standardized total returns do not include charges for optional benefit riders. The formula we use to calculate standardized total return is P(1+T) TO THE POWER OF n = ERV. In this calculation, "P" represents a hypothetical initial premium payment of $1,000.00, "T" represents the average annual total return, "n" represents the number of years and "ERV" represents the redeemable value at the end of the period. The Sub-Account may advertise a non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Non-standardized total return is measured in the same manner as the standardized total return described above, except that non-standardized total return does not include the Annual Maintenance Fee, Distribution Charge, or Sales Charges. Therefore, non-standardized total return for a Sub-Account is higher than standardized total return for a Sub-Account. The Sub-Account may also advertise adjusted non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Adjusted non-standardized total return is measured in the same manner as the standardized total return described above. A Sub-Account may advertise non-standardized total returns for periods predating its inception as an investment option in this variable annuity. Such non-standardized total returns reflect the adjusted historical returns of the underlying Fund in which the Sub-Account invests, as adjusted for certain Separate Account annual expenses (Mortality and Expense Risk Charges and Administrative Fees), but excludes adjustments for optional riders or deductions for Annual Maintenance Fees, sales charges, premium taxes and federal/state taxes (including possible penalties). To the extent that a Sub-Account invests in a Feeder Fund (a Feeder Fund is a fund that invests all of its assets into a corresponding Master Fund), the Feeder Fund's performance for periods pre-dating the inception of the Feeder Fund and/or its inclusion within a Separate Account may include the performance of the Master Fund since the inception of the Master Fund, as adjusted for the Feeder Fund's operating expenses. In such case, the performance of a Feeder Fund will be lower than the corresponding Master Fund because of Feeder Fund operating expenses. Performance may include the effect of waivers and reimbursements, in the absence of which performance may have been lower. 7 ------------------------------------------------------------------------------- YIELD FOR SUB-ACCOUNTS If applicable, the Sub-Accounts may advertise yield in addition to total return. At any time in the future, yields may be higher or lower than past yields and past performance is no indication of future performance. The standardized yield will be computed for periods beginning with the inception of the Sub-Account in the following manner. The net investment income per Accumulation Unit earned during a one-month period is divided by the Accumulation Unit Value on the last day of the period. The formula we use to calculate yield is: YIELD = 2[(a - b/cd +1) TO THE POWER OF 6 - 1]. In this calculation, "a" represents the net investment income earned during the period by the underlying fund, "b" represents the expenses accrued for the period, "c" represents the average daily number of Accumulation Units outstanding during the period and "d" represents the maximum offering price per Accumulation Unit on the last day of the period. MONEY MARKET SUB-ACCOUNTS At any time in the future, current and effective yields may be higher or lower than past yields and past performance is no indication of future performance. Current yield of a money market fund Sub-Account is calculated for a seven-day period or the "base period" without taking into consideration any realized or unrealized gains or losses on shares of the underlying fund. The first step in determining yield is to compute the base period return. We take a hypothetical account with a balance of one Accumulation Unit of the Sub-Account and calculates the net change in its value from the beginning of the base period to the end of the base period. We then subtract an amount equal to the total deductions for the Contract and then divides that number by the value of the account at the beginning of the base period. The result is the base period return or "BPR." Once the base period return is calculated, we then multiply it by 365/7 to compute the current yield. Current yield is calculated to the nearest hundredth of one percent. The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A - B)/C. "A" is equal to the net change in value of a hypothetical account with a balance of one Accumulation Unit of the Sub-Account from the beginning of the base period to the end of the base period. "B" is equal to the amount that Hartford deducts for mortality and expense risk charge, any applicable administrative charge and the Annual Maintenance Fee. "C" represents the value of the Sub-Account at the beginning of the base period. Effective yield is also calculated using the base period return. The effective yield is calculated by adding 1 to the base period return and raising that result to a power equal to 365 divided by 7 and subtracting 1 from the result. The calculation we use is: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1. ADDITIONAL MATERIALS We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, dollar cost averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contracts and the characteristics of and market for any alternatives. PERFORMANCE COMPARISONS Each Sub-Account may from time to time include in advertisements the ranking of its performance figures compared with performance figures of other annuity contract's sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services. 8 ------------------------------------------------------------------------------- ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in this Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows all possible Accumulation Unit Values corresponding to all combinations of optional benefits. A table showing only the highest and lowest possible Accumulation Unit Values is shown in the prospectus, which assumes you select either no optional benefits or all optional benefits. There are no accumulated unit values because as of December 31, 2008, the Sub-Accounts had not commenced operations. PART A HARTFORD LEADERS SELECT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 4/1/99) HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 12/8/86) P.O. BOX 5085 HARTFORD, CONNECTICUT 06102 - 5085 [TELEPHONE ICON] 1-800-862-6668 (CONTRACT OWNERS) 1-800-862-7155 (REGISTERED REPRESENTATIVES) [COMPUTER ICON] WWW.HARTFORDINVESTOR.COM [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This prospectus describes information you should know before you purchase Series III of the Hartford Leaders Select variable annuity. The prospectus describes a contract between each Owner and joint Owner ("you") and Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company ("us," "we" or "our"). This is an individual, deferred, flexible-premium variable annuity. This variable annuity allows you to allocate your Deposit among the following portfolio companies: X AIM Variable Insurance Funds X AllianceBernstein Variable Products Series Fund, Inc. X Evergreen Variable Annuity Trust X Fidelity Variable Insurance Products Funds X Franklin Templeton Variable Insurance Products Trust X Hartford HLS Series Fund II X Hartford Series Fund, Inc. X MFS(R) Variable Insurance Trust X Putnam Variable Trust You may also allocate your Deposit to the Personal Pension Account and/or the Fixed Accumulation Feature. The Fixed Accumulation Feature is not available for every Contract class. This prospectus refers to the following Contract classes: X B Share (Core) X C Share (Access) X I Share (Advisory) The Contract class will be selected on your application and identified in your Contract. Not every Contract class or optional rider may be available from your Financial Intermediary. The I share class is offered through registered investment/financial advisors. Other available Contract classes offered through select Financial Intermediaries are not described in this Prospectus and may be subject to different charges. Please read this prospectus carefully before investing and keep it for your records and for future reference. You can also contact us to get a Statement of Additional Information free of charge. The Statement of Additional Information contains more information about this Contract and, like this prospectus, is filed with the Securities and Exchange Commission ("SEC" or "Commission"). Although we file this prospectus and the Statement of Additional Information with the SEC, the SEC doesn't approve or disapprove these securities or determine if the information in this prospectus is truthful or complete. Anyone who represents that the SEC does these things may be guilty of a criminal offense. This prospectus and the Statement of Additional Information can also be obtained from us or the SEC's website (www.sec.gov). This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing. You will get NO ADDITIONAL TAX ADVANTAGE from this variable annuity if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account ("IRA")). This prospectus is not intended to provide tax, accounting or legal advice. We are not an investment adviser nor are we registered as such with the SEC or any state securities regulatory authority. We are not acting in any fiduciary capacity with respect to your investment. This information does not constitute personalized investment advice or financial planning advice. NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT] FDIC FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE [NOT] BANK
-------------------------------------------------------------------------------- PROSPECTUS DATED: AUGUST 14, 2009 STATEMENT OF ADDITIONAL INFORMATION DATED: AUGUST 14, 2009 2 ------------------------------------------------------------------------------- CONTENTS
PAGE -------------------------------------------------------------------------------- 1. INTRODUCTION 3 2. FEE SUMMARY 4 3. MANAGEMENT OF THE CONTRACT 10 The Company 10 The General Account 10 The Separate Account 10 The Funds 10 Fixed Accumulation Feature 12 Personal Pension Account 13 4. INFORMATION ON YOUR ACCOUNT 17 a. Opening an Account 17 b. Charges and Fees 24 c. Surrenders 27 d. Annuity Payouts 29 e. Standard Death Benefit 33 5. RETURN OF PREMIUM DEATH BENEFIT 34 6. FURTHER INFORMATION 38 a. Glossary 38 b. State Variations 40 c. Miscellaneous 41 d. Legal Proceedings 42 e. How Contracts Are Sold 42 7. FEDERAL TAX CONSIDERATIONS/ TAX-QUALIFIED RETIREMENT PLANS 44 TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 59 APPENDIX A - EXAMPLES APP A-1 APPENDIX B - ACCUMULATION UNIT VALUES APP B-1 APPENDIX C - FUND DATA APP C-1
3 ------------------------------------------------------------------------------- 1. INTRODUCTION HOW TO BUY THIS VARIABLE ANNUITY [Thumbs up] CHOOSE A CONTRACT CLASS
MORTALITY & MINIMUM INITIAL EXPENSE RISK DEPOSIT NON- AND MAXIMUM QUALIFIED QUALIFIED ADMINISTRATIVE UP-FRONT CONTRACT CONTRACT SALES & OTHER CHARGES CHARGES COMMISSION ----------------------------------------------------------------------------------------------------------------------------------- B SHARE $2,000 $5,000 8 year Contingent Deferred Sales Charge and 0.50% 5% Distribution Charge C SHARE $2,000 $10,000 1 year Contingent Deferred Sales Charge 1.35% 1% I SHARE $5,000 $10,000 None 0.30% 0%
This table does not show Fund expenses, Premium taxes, Distribution Charges, and optional rider fees. [Thumbs up] CHOOSE INVESTMENT OPTIONS X Sub-Accounts - Funds with different investment strategies, objectives and risk/reward profiles. X Fixed Accumulation Feature (B share class only) - A fixed interest account. X Personal Pension Account - A fixed interest account designed to provide lifetime payouts. Subject to limitations, you may move your investment among each of these options. [Thumbs up] CHOOSE AN OPTIONAL FEATURE (IF DESIRED) OPTIONAL FEATURE GENERAL PURPOSE ------------------------------------------------------------------------ Return of Premium Death Benefit* Guaranteed Minimum Death Benefit * Investment restrictions apply. Optional features may not be available through your Financial Intermediary. [In writing] COMPLETE OUR APPLICATION OR ORDER REQUEST AND SUBMIT IT TO YOUR FINANCIAL INTERMEDIARY FOR APPROVAL. $ PAY THE APPLICABLE MINIMUM INITIAL DEPOSIT. 4 ------------------------------------------------------------------------------- 2. FEE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ CONTINGENT DEFERRED SALES CHARGE (CDSC) (1) None 1 7% 2% 2 7% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0% SURRENDER FEE None None None TRANSFER FEE None None None
(1) Each Deposit has its own CDSC schedule. CONTRACT OWNER PERIODIC EXPENSES THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY AND ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
B SHARE C SHARE I SHARE ------------------------------------------------------------------------------------------ ANNUAL MAINTENANCE FEE (2) $30 $30 $30 DISTRIBUTION CHARGE (3) 0.75% None None SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily Contract Value excluding Fixed Accumulation Feature investments) Mortality and Expense Risk Charge 0.30% 1.15% 0.10% Administrative Charge 0.20% 0.20% 0.20% TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 0.50% 1.35% 0.30% MAXIMUM OPTIONAL CHARGES Return of Premium Death Benefit (4) 0.75% 0.75% 0.75%
(2) Fee waived if Account Balance is $50,000 or more on your Contract Anniversary. (3) The Distribution Charge is based on a percentage of Remaining Gross Premium. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge is reduced to 0% after the completion of eight years after each respective Premium Payment. (4) Charge based on a percentage of Premium Payments adjusted for Surrenders on each Contract Anniversary. Current rider charge is 0.30%. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM MAXIMUM --------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 0.44% 2.37% (expenses that are deducted from Underlying Fund assets, including management fees, distribution and/or service fees (12b-1) fees, and other expenses.
5 ------------------------------------------------------------------------------- THE LAST TABLE SHOWS THE TOTAL ANNUAL FUND OPERATING EXPENSES FOR EACH UNDERLYING FUND. ACTUAL FEES AND EXPENSES FOR THE UNDERLYING FUNDS VARY DAILY. AS A RESULT, THE FEES AND EXPENSES FOR ANY GIVEN DAY MAY BE GREATER OR LESS THAN THE TOTAL ANNUAL FUND OPERATING EXPENSES LISTED BELOW. MORE DETAIL CONCERNING EACH UNDERLYING FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. THESE EXPENSES MAY VARY FROM YEAR TO YEAR. ANNUAL FUND OPERATING EXPENSES AS OF THE FUND'S YEAR END (As a percentage of net assets)
DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 0.61% 0.25% 0.29% 0.01% AIM V.I. International Growth Fund - Series II 0.71% 0.25% 0.35% 0.02% AIM V.I. Mid Cap Core Equity Fund - Series II 0.72% 0.25% 0.32% 0.03% AIM V.I. PowerShares ETF Allocation Fund - Series II 0.67% 0.25% 0.89% 0.56% AIM V.I. Small Cap Equity Fund - Series II 0.75% 0.25% 0.34% 0.01% ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 0.55% 0.25% 0.22% N/A AllianceBernstein VPS International Value Portfolio - Class B 0.74% 0.25% 0.07% N/A AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 0.75% 0.25% 0.11% N/A FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.56% 0.25% 0.10% N/A Fidelity VIP Mid Cap Portfolio - Service Class 2 0.56% 0.25% 0.12% N/A Fidelity VIP Strategic Income Portfolio - Service Class 2 0.57% 0.25% 0.16% N/A FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 0.68% 0.35% 0.31% 0.04% Franklin Income Securities Fund - Class 4 0.45% 0.35% 0.02% N/A Franklin Rising Dividends Securities Fund - Class 4 0.60% 0.35% 0.02% 0.01% Franklin Small Cap Value Securities Fund - Class 4 0.52% 0.35% 0.16% 0.01% Franklin Small-Mid Cap Growth Securities Fund - Class 4 0.50% 0.35% 0.28% 0.02% Franklin Strategic Income Securities Fund - Class 4 0.37% 0.35% 0.25% 0.01% Mutual Global Discovery Securities Fund - Class 4 0.80% 0.35% 0.18% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Core Equity Fund - Series II 1.16% 0.01% N/A 1.15% (1)(2)(3)(4) AIM V.I. International Growth Fund - Series II 1.33% 0.01% N/A 1.32% (1)(2)(3)(4) AIM V.I. Mid Cap Core Equity Fund - Series II 1.32% 0.03% N/A 1.29% (1)(2)(3)(4) AIM V.I. PowerShares ETF Allocation Fund - Series II 2.37% 1.38% N/A 0.99% (1)(2)(4)(5) AIM V.I. Small Cap Equity Fund - Series II 1.35% N/A N/A 1.35% (1)(4)(6) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 1.02% 0.02% N/A 1.00% (7) AllianceBernstein VPS International Value Portfolio - Class B 1.06% N/A N/A 1.06% AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 1.11% N/A N/A 1.11% FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio - Service Class 2 0.91% N/A N/A 0.91% (8) Fidelity VIP Mid Cap Portfolio - Service Class 2 0.93% N/A N/A 0.93% (8) Fidelity VIP Strategic Income Portfolio - Service Class 2 0.98% N/A N/A 0.98% FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 4 1.38% 0.31% N/A 1.07% (9)(12) Franklin Income Securities Fund - Class 4 0.82% N/A N/A 0.82% (10) Franklin Rising Dividends Securities Fund - Class 4 0.98% N/A N/A 0.98% Franklin Small Cap Value Securities Fund - Class 4 1.04% N/A N/A 1.04% (12) Franklin Small-Mid Cap Growth Securities Fund - Class 4 1.15% N/A N/A 1.15% (12) Franklin Strategic Income Securities Fund - Class 4 0.98% N/A N/A 0.98% (12) Mutual Global Discovery Securities Fund - Class 4 1.33% N/A N/A 1.33% (11)
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 0.60% 0.35% 0.13% N/A Templeton Foreign Securities Fund - Class 4 0.64% 0.35% 0.15% 0.02% Templeton Global Bond Securities Fund - Class 4 0.47% 0.35% 0.11% N/A Templeton Growth Securities Fund - Class 4 0.74% 0.35% 0.04% N/A HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.61% N/A 0.03% N/A Hartford U.S. Government Securities HLS Fund - Class IA 0.45% N/A 0.01% N/A HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.65% 0.25% 0.09% N/A American Funds Blue Chip Income and Growth HLS Fund - Class IB 0.75% 0.25% 0.17% N/A American Funds Bond HLS Fund - Class IB 0.50% 0.25% 0.05% N/A American Funds Global Bond HLS Fund - Class IB 0.75% 0.25% 0.10% N/A American Funds Global Growth and Income HLS Fund - Class IB 0.80% 0.25% 0.06% N/A American Funds Global Growth HLS Fund - Class IB 1.00% 0.25% 0.12% N/A American Funds Global Small Capitalization HLS Fund - Class IB 0.80% 0.25% 0.11% N/A American Funds Growth HLS Fund - Class IB 0.75% 0.25% 0.03% N/A American Funds Growth- Income HLS Fund - Class IB 0.70% 0.25% 0.04% N/A American Funds International HLS Fund - Class IB 0.85% 0.25% 0.04% N/A American Funds New World HLS Fund - Class IB 1.10% 0.25% 0.09% N/A Hartford Capital Appreciation HLS Fund - Class IA 0.63% N/A 0.04% N/A Hartford Disciplined Equity HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Dividend and Growth HLS Fund - Class IA 0.64% N/A 0.03% N/A Hartford Global Equity HLS Fund - Class IA 0.95% N/A 0.07% N/A Hartford Global Growth HLS Fund - Class IA 0.71% N/A 0.04% N/A Hartford Growth HLS Fund - Class IA 0.80% N/A 0.04% N/A CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Mutual Shares Securities Fund - Class 4 1.08% N/A N/A 1.08% Templeton Foreign Securities Fund - Class 4 1.16% N/A N/A 1.16% (12) Templeton Global Bond Securities Fund - Class 4 0.93% N/A N/A 0.93% (13) Templeton Growth Securities Fund - Class 4 1.13% N/A N/A 1.13% (10) HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.64% N/A N/A 0.64% Hartford U.S. Government Securities HLS Fund - Class IA 0.46% N/A N/A 0.46% HARTFORD SERIES FUND, INC. American Funds Asset Allocation HLS Fund - Class IB 0.99% 0.40% 0.32% 0.91% (14) American Funds Blue Chip Income and Growth HLS Fund - Class IB 1.17% 0.50% 0.43% 1.10% (14) American Funds Bond HLS Fund - Class IB 0.80% 0.25% 0.40% 0.95% (14) American Funds Global Bond HLS Fund - Class IB 1.10% 0.50% 0.59% 1.19% (14) American Funds Global Growth and Income HLS Fund - Class IB 1.11% 0.55% 0.62% 1.18% (14) American Funds Global Growth HLS Fund - Class IB 1.37% 0.75% 0.55% 1.17% (14) American Funds Global Small Capitalization HLS Fund - Class IB 1.16% 0.55% 0.74% 1.35% (14) American Funds Growth HLS Fund - Class IB 1.03% 0.50% 0.33% 0.86% (14) American Funds Growth- Income HLS Fund - Class IB 0.99% 0.45% 0.28% 0.82% (14) American Funds International HLS Fund - Class IB 1.14% 0.60% 0.52% 1.06% (14) American Funds New World HLS Fund - Class IB 1.44% 0.85% 0.81% 1.40% (14) Hartford Capital Appreciation HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Disciplined Equity HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Dividend and Growth HLS Fund - Class IA 0.67% N/A N/A 0.67% Hartford Global Equity HLS Fund - Class IA 1.02% 0.10% N/A 0.92% (15) Hartford Global Growth HLS Fund - Class IA 0.75% N/A N/A 0.75% Hartford Growth HLS Fund - Class IA 0.84% N/A N/A 0.84%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ------------------------------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.70% N/A 0.04% N/A Hartford Index HLS Fund - Class IB 0.30% 0.25% 0.02% N/A Hartford International Opportunities HLS Fund - Class IA 0.67% N/A 0.04% N/A Hartford Money Market HLS Fund - Class IA 0.40% N/A 0.04% N/A Hartford Small Company HLS Fund - Class IA 0.68% N/A 0.03% N/A Hartford Total Return Bond HLS Fund - Class IA 0.46% N/A 0.03% N/A Hartford Value HLS Fund - Class IA 0.81% N/A 0.03% N/A MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 0.75% 0.25% 0.08% N/A MFS(R) Investors Trust Series - Service Class 0.75% 0.25% 0.09% N/A MFS(R) Research Bond Series - Service Class 0.50% 0.25% 0.14% N/A MFS(R) Total Return Series - Service Class 0.74% 0.25% 0.07% N/A MFS(R) Value Series - Service Class 0.75% 0.25% 0.09% N/A PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 0.65% 0.25% 0.13% 0.02% Putnam VT Investors Fund - Class IB 0.65% 0.25% 0.12% N/A Putnam VT Voyager Fund - Class IB 0.64% 0.25% 0.08% 0.01% EVERGREEN VARIABLE ANNUITY TRUST Evergreen VA Diversified Capital Builder Fund - Class 1 0.33% N/A 0.28% N/A Evergreen VA Fundamental Large Cap Fund - Class 1 0.61% N/A 0.19% 0.01% Evergreen VA Growth Fund - Class 1 0.70% N/A 0.24% 0.01% Evergreen VA International Equity Fund - Class 1 0.42% N/A 0.25% N/A Evergreen VA Omega Fund - Class 1 0.52% N/A 0.20% N/A Evergreen VA Special Values Fund - Class 1 0.79% N/A 0.21% 0.02% CONTRACTUAL MASTER FUND NET TOTAL TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ----------------------------- ------------------------------------------------------------------------- Hartford High Yield HLS Fund - Class IA 0.74% N/A N/A 0.74% Hartford Index HLS Fund - Class IB 0.57% N/A N/A 0.57% Hartford International Opportunities HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Money Market HLS Fund - Class IA 0.44% N/A N/A 0.44% Hartford Small Company HLS Fund - Class IA 0.71% N/A N/A 0.71% Hartford Total Return Bond HLS Fund - Class IA 0.49% N/A N/A 0.49% Hartford Value HLS Fund - Class IA 0.84% N/A N/A 0.84% MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 1.08% N/A N/A 1.08% (16) MFS(R) Investors Trust Series - Service Class 1.09% N/A N/A 1.09% (16) MFS(R) Research Bond Series - Service Class 0.89% N/A N/A 0.89% (16) MFS(R) Total Return Series - Service Class 1.06% N/A N/A 1.06% (16) MFS(R) Value Series - Service Class 1.09% N/A N/A 1.09% (16) PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 1.05% N/A N/A 1.05% (17) Putnam VT Investors Fund - Class IB 1.02% N/A N/A 1.02% (18) Putnam VT Voyager Fund - Class IB 0.98% N/A N/A 0.98% (17) EVERGREEN VARIABLE ANNUITY TRUST Evergreen VA Diversified Capital Builder Fund - Class 1 0.61% N/A N/A 0.61% (21) Evergreen VA Fundamental Large Cap Fund - Class 1 0.81% N/A N/A 0.81% (19)(21) Evergreen VA Growth Fund - Class 1 0.95% N/A N/A 0.95% (19)(21) Evergreen VA International Equity Fund - Class 1 0.67% N/A N/A 0.67% (20)(21) Evergreen VA Omega Fund - Class 1 0.72% N/A N/A 0.72% (21) Evergreen VA Special Values Fund - Class 1 1.02% N/A N/A 1.02% (19)(21)
* The 12b-1 fees deducted from these classes cover certain distribution, shareholder support and administrative services provided by intermediaries (the insurance company, broker dealer or other service provider). NOTES (1) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expense are included in the total returns of the Fund. (2) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees Invesco Aim receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. Fee Waiver reflects this agreement. 8 ------------------------------------------------------------------------------- (3) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.45% of average daily net assets. (4) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2008 and are expressed as a percentage of the Fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. (5) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 0.43% of average daily net assets. (6) The Fund's advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses of Series II shares to 1.40% of average daily net assets. (7) Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Portfolio's operating expenses. This waiver extends through April 30, 2010 and may be extended by the Adviser for additional one-year terms. (8) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of un-invested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been: Fidelity VIP Contrafund Portfolio Initial Class - 0.65%; Fidelity VIP Contrafund Portfolio Service Class 2 - 0.90%; Fidelity VIP Growth Portfolio Initial Class - 0.67%; Fidelity VIP Growth Portfolio Service Class 2 - 0.92%; Fidelity VIP Mid Cap Portfolio Service Class 2 - 0.92%; Fidelity Overseas Portfolio Initial Class - 0.84%. These offsets may be discontinued at any time. (9) The investment manager and administrator have contractually agreed to waive or limit their respective fees and to assume as their own expense certain expenses otherwise payable by the Fund so that common annual Fund operating expenses (i.e., a combination of investment management fees, fund administration fees, and other expenses, but excluding Rule 12b-1 fees and acquired fund fees and expenses) do not exceed 0.72% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2010. This waiver is separate from the waiver related to the Sweep Money Fund. (10) The Fund administration fee is paid indirectly through the management fee. (11) The Fund's name changed from Mutual Discovery Securities Fund effective as of May 1, 2009. (12) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the Sweep Money Fund which is "the acquired fund" in this case) to the extent of the Fund's fees and expenses of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. (13) The Fund's name changed from Templeton Global Income Securities Fund effective as of May 1, 2009. (14) Because the Feeder Fund invests all of its assets in the Master Fund, the Feeder Fund will bear its own fees and expenses and its proportionate share of the fees and expenses of the Master Fund. The amounts shown under "Master Fund Expenses" include the advisory fee (before non-contractual fee waiver). The Annual Fund Operating Expense table and the Examples reflect the estimated expenses of both the Feeder Fund and the Master Fund. The Class I shares of the Master Funds do not have a sales charge (load) or a distribution and service (12b-1) fee. HL Advisors has entered into a contractual agreement with Hartford Series Fund, Inc (the Company") under which it will waive a portion of its advisory fee for such time as the fund is operated as a feeder fund, because during the that time it will not be providing the portfolio management portion of the advisory and management services to be provided under its investment management with the Company. The fee waiver will continue as long as the fund is part of a master-feeder structure unless the Board of Directors approves a change in or elimination of the waiver. Currently, the fund waivers are as follows: American Funds Asset Allocation HLS Fund - 0.40%; American Funds Blue Chip and Growth HLS Fund - 0.50%; American Fund Bond HLS Fund - 0.25%; American Funds Global Bond HLS Fund - 0.50%; American Funds Global Growth and Income HLS Fund - 0.55%; American Funds Global Growth HLS Fund - 0.75%; American Fund Global Small Capitalization HLS Fund - 0.55%; American Funds Growth HLS Fund - 0.50%; American Funds Growth-Income HLS Fund - 0.45%; American Funds International HLS Fund - 0.60%; American Funds New World HLS Fund - 0.85%. (15) Effective August 25, 2008 HL Advisors contractually agreed to waive a portion of its management fees until May 1, 2010. While such waiver is in effect, using the most recent fiscal year average net assets, the management fee is 0.85% and the total annual operating expenses are 0.92%. (16) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees." (17) "Total Annual Fund Operating Expenses" includes the amount from "Acquired Fund Fees and Expenses" column, which is an estimate of expenses attributable to the fund's investments in other investment companies, based on the total annual fund operating expenses of such companies as reported in their most recent shareholder reports (net of any applicable expense limitations). These indirect expenses will vary from time to time depending on the fund's investments in other investment companies and their operating expenses (18) Includes estimated expenses attributable to the fund's investments in other investment companies that the fund bears indirectly. (19) The Total fees in the table include fees and expenses incurred indirectly by the fund as a result of its investments in other investment companies (each an Acquired Fund). (20) Effective January 1, 2009, the Fund's investment advisor has agreed to limit Total Annual Fund Operating Expenses to 0.75% through February 28, 2011. (21) The Total ratio of expenses to net assets excludes expense reductions. 9 ------------------------------------------------------------------------------- EXAMPLE THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THIS VARIABLE ANNUITY WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITIES. LET'S SAY, HYPOTHETICALLY, THAT YOUR ANNUAL INVESTMENT RETURN IS FIVE (5%) PERCENT AND THAT YOUR FEES AND EXPENSES TODAY WERE AS HIGH AS POSSIBLE INCLUDING THE ELECTION OF THE HIGHEST POSSIBLE OPTIONAL CHARGES (I.E., THE HARTFORD'S RETURN OF PREMIUM DEATH BENEFIT). THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR EVERY $10,000 INVESTED (EXCLUDING PERSONAL PENSION ACCOUNT CONTRIBUTIONS AND AMOUNTS ALLOCATED TO THE FIXED ACCUMULATION FEATURE), HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS POSED: (1) If you Surrender your variable annuity at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $1137 $2092 $2858 $4630 C Share $676 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
(2) If you annuitize at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $294 $1245 $2199 $4525 C Share $381 $1355 $2332 $4782 I Share $274 $1041 $1822 $3841
(3) If you do not Surrender your variable annuity:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------------------------------------------------------------------- B Share $474 $1425 $2379 $4630 C Share $486 $1460 $2437 $4887 I Share $379 $1146 $1927 $3946
CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- When Premium Payments are credited to your Funds, they are converted into Accumulation Units by dividing the amount of your Premium Payments minus any Premium taxes, by the Accumulation Unit Value for that Valuation Day. All classes of Accumulation Unit Values may be obtained, free of charge, by contacting us. See Appendix B - Accumulation Unit Values for additional information. You can find financial statements for us and the Separate Account in the Statement of Additional Information. 10 ------------------------------------------------------------------------------- 3. MANAGEMENT OF THE CONTRACT THE COMPANY We are a stock life insurance company engaged in the business of writing life insurance and individual and group annuities. Hartford Life Insurance Company is authorized to do business in all states of the United States and the District of Columbia. Hartford Life and Annuity Insurance Company is authorized to do business in Puerto Rico, the District of Columbia, and all states of the United States except New York. Hartford Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company is a subsidiary of Hartford Life Insurance Company. Our corporate offices are located in Simsbury, Connecticut. Neither company cross guarantees the obligations of the other. We are ultimately controlled by The Hartford Financial Services Group, Inc. All guarantees under the Contract are subject to each issuing company's financial strength and claims-paying capabilities. We provide information about our financial strength in reports filed with the SEC (Hartford Life Insurance Company only) and/or state insurance departments. For example, Hartford Life Insurance Company files annual reports (Form 10-K), quarterly reports (Form 10-Q) and periodic reports (Form 8-K) with the SEC. Forms 10-K and 10-Q include information such as our financial statements, management discussion and analysis of the previous year of operations, risk factors, and other information. Form 8-K reports are used to communicate important developments that are not otherwise disclosed in the other forms described above. You may read or copy these reports at the SEC's Public Reference Room at 100 F. Street N.E., Room 1580, Washington, D.C. 20549-2001. You may also obtain reports and other information about us by contacting us using the information stated on the cover page of this prospectus, visiting our website at www.hartfordinvestor.com or visiting the SEC's website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department. THE GENERAL ACCOUNT The Fixed Accumulation Feature and the Personal Pension Account are part of our General Account. Any amounts that we are obligated to pay under the Fixed Accumulation Feature and the Personal Pension Account and any other payment obligation we undertake under the Contract are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. We invest the assets of the General Account according to the laws governing the investments of insurance company general accounts. The General Account is not a bank account and is not insured by the FDIC or any other government agency. We receive a benefit from all amounts held in our General Account. Amounts in our General Account are available to our general creditors. We issue other types of insurance policies and financial products and pay our obligations under these products from our assets in the General Account. THE SEPARATE ACCOUNT We set aside and invest the assets of some of our annuity contracts, including these Contracts, in a Separate Account. These Separate Accounts are registered as unit investment trusts under the 1940 Act. This registration does not involve supervision by the SEC of the management or the investment practices of a Separate Account or us. Separate Accounts meet the definition of "Separate Account" under federal securities law. The Separate Accounts referenced in this prospectus hold only assets for variable annuity contracts. These Separate Accounts: - hold assets for your benefit and the benefit of other Contract Owners, and the persons entitled to the payouts described in the Contract; - are not subject to the liabilities arising out of any other business we may conduct; - are not affected by the rate of return of our General Account or by the investment performance of any of our other Separate Accounts; - may be subject to liabilities of other variable annuity contracts offered by this Separate Account which are not described in this prospectus; and - are credited with income and gains, and takes losses, whether or not realized, from the assets they hold without regard to our other income, gains or loss. We do not guarantee the investment results of the Separate Account. THE FUNDS The Funds available for investment are not the same mutual funds that you can buy through your Registered Representative even though they may have similar investment strategies and the same portfolio managers. Each Fund has varying degrees of investment risk. Funds are also subject to separate fees and expenses such as management fees, distribution and operating expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the 11 ------------------------------------------------------------------------------- prospectuses for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all Contract classes. MIXED AND SHARED FUNDING - Fund shares may be sold to our other separate accounts, our insurance company affiliates or other unaffiliated insurance companies to serve as an underlying investment for variable annuity contracts and variable life insurance policies, pursuant to a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of Owners, and other contract owners investing these Funds. If a material conflict arose, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another underlying fund. VOTING RIGHTS - We are the legal owners of all Fund shares held in the Separate Account and we have the right to vote at the Funds' shareholder meetings. To the extent required by federal securities laws or regulations, we will: - notify you of any Fund shareholders' meeting if the shares held for your Contract may be voted; - send proxy materials and a form of instructions that you can use to tell us how to vote the Fund shares held for your Contract; - arrange for the handling and tallying of proxies received from Owners; - vote all Fund shares attributable to your Contract according to instructions received from you, and - vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. If any federal securities laws or regulations, or their present interpretation, change to permit us to vote Fund shares on our own, we may decide to do so. You may attend any shareholder meeting at which shares held for your Contract may be voted. After we begin to make Annuity Payouts to you, the number of votes you have will decrease. As a result of proportional voting, a small number of Owners could determine the outcome of a proposition subject to shareholder vote. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS - Subject to any applicable law, we may make certain changes to the Funds offered under your Contract. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Owners as we deem appropriate. We may also close one or more Funds to additional Premium Payments or transfers from existing Funds. We may liquidate one or more Sub-Accounts if the board of directors of any Fund determines that such actions are prudent. Unless otherwise directed, investment instructions will be automatically updated to reflect the Fund surviving after any merger, substitution or liquidation. We may eliminate the shares of any of the Funds from the Contract for any reason and we may substitute shares of another registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account. To the extent required by the 1940 Act, substitutions of shares attributable to your interest in a Fund will not be made until we have the approval of the SEC and we have notified you of the change. In the event of any substitution or change, we may, by appropriate endorsement, make any changes in the Contract necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Owners, the Separate Account may be operated as a management company under the 1940 Act or any other form permitted by law, may be de-registered under the 1940 Act in the event such registration is no longer required, or may be combined with one or more other Separate Accounts. FEES WE RECEIVE FROM FUNDS AND RELATED PARTIES - We receive substantial and varying administrative service payments (referred to as "revenue sharing payments") and Rule 12b-1 fees from certain Funds or related parties. We consider revenue sharing payments and Rule 12b-1 fees among a number of factors when deciding to add or keep a Fund that we offer through the Contract. We collect these payments and fees under agreements between us and a Fund's principal underwriter, transfer agent, investment adviser and/or other entities related to the Fund. We expect to make a profit on these fees. The availability of these types of arrangements creates an incentive for us to seek and offer Funds (and classes of shares of such Funds) that pay us revenue sharing. Other funds (or available classes of shares) may have lower fees and better overall investment performance. As of December 31, 2008, we have entered into arrangements to receive administrative service payments and/or Rule 12b-1 fees from each of the following Fund complexes (or affiliated entities): AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, Branch Banking & Trust Company, Evergreen Investment Services Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Franklin Templeton Services, LLC, The Huntington Funds, Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Merrill Lynch Asset Management & Princeton Funds Distributor, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, MTB Investment Advisors, Inc., Banc of America Advisors, LLC, JPMorgan Investment Advisors, Inc., Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Pioneer Variable Contracts Trust & Pioneer Investment Management, Inc. & Pioneer Funds Distributor, Inc., Prudential Investment Management Services, LLC, Putnam Retail 12 ------------------------------------------------------------------------------- Management Limited Partnership, SunTrust Securities, Inc. & Trusco Capital Management, Inc., UBS Financial Services, Inc., Van Kampen Life Investment Trust & Van Kampen Asset Management, Van Kampen Funds, The Victory Variable Insurance Funds & Victory Capital Management, Inc. & Victory Capital Advisers, Inc. and Wells Fargo Variable Trust & Wells Fargo Fund Management, LLC. We are affiliated with Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. (collectively, the "HLS Funds") based on our affiliation with their investment advisers HL Investment Advisors, LLC and Hartford Investment Management Company. In addition to investment advisory fees, we, or our other insurance company affiliates, receive fees to provide, among other things, administrative, processing, accounting and shareholder services for the HLS Funds. Not all Fund complexes pay the same amounts of revenue sharing payments and/or Rule 12b-1 fees. Therefore, the amount of fees we collect may be greater or smaller based on the Funds you select. Revenue sharing payments and Rule 12b-1 fees did not exceed 0.50% and 0.35%, respectively, in 2008, and are not expected to exceed 0.50% and 0.35%, respectively, in 2009, of the annual percentage of the average daily net assets (for instance, in 2008, assuming that you invested in a Fund that paid us the maximum fees and you maintained a hypothetical average balance of $10,000, we would collect a total of $85 from that Fund). For the fiscal year ended December 31, 2008, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $145.6 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. FIXED ACCUMULATION FEATURE INTERESTS IN THE FIXED ACCUMULATION FEATURE ARE NOT REGISTERED UNDER THE 1933 ACT AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE FIXED ACCUMULATION FEATURE NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE FIXED ACCUMULATION FEATURE IS NOT OFFERED IN ALL CONTRACT CLASSES AND IS NOT AVAILABLE IN ALL STATES. We guarantee that we will credit interest to amounts you allocate to the Fixed Accumulation Feature at a minimum rate that meets your State's minimum non-forfeiture requirements. Non-forfeiture rates vary from state-to-state. We may credit a rate higher than the minimum rate. We reserve the right to declare different rates of interest depending on when amounts are allocated or transferred to the Fixed Accumulation Feature. This means that amounts at any designated time may be credited with a different rate of interest than the rate previously credited to such amounts and to amounts allocated or transferred at any other designated time. We will periodically publish the Fixed Accumulation Feature interest rates currently in effect. There is no specific formula for determining interest rates and, except as specifically stated above, no assurances are offered as to future rates in excess of non-forfeiture rates. Some of the factors that we may consider in determining whether to credit interest are: general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. Fixed Accumulation Feature interest rates may vary by State. We will account for any deductions, Surrenders or transfers from the Fixed Accumulation Feature on a "first-in, first-out" basis (i.e., oldest investments will be liquidated first). ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCUMULATION FEATURE IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. From time to time, we may credit increased interest rates in our sole discretion. We may restrict your ability to allocate Contract Value, Benefit Balance or Premium Payments to the Fixed Accumulation Feature (and vice versa) at any time in our sole discretion. We may close the Fixed Accumulation Feature to new Premium Payments or transfers of existing Contract Value and/or Benefit Balance. Except as otherwise provided, during each Contract Year, you may make transfers out of the Fixed Accumulation Feature to Sub-Accounts or the Personal Pension Account, subject to the transfer restrictions discussed below. All transfer allocations must be in whole numbers (e.g., 1%). Each Contract Year you may transfer the greater of: - thirty (30%) percent of the Contract Value in the Fixed Accumulation Feature as of the last Contract Anniversary. When we calculate the 30%, we add Premium Payments allocated to the Fixed Accumulation Feature, transfers from Sub-Accounts and transfers from the Personal Pension Account made after that date but before the next Contract Anniversary. These restrictions also apply to systematic transfers. The 30% does not include Contract Value in any DCA Plus Program; or - an amount equal to your largest previous transfer from the Fixed Accumulation Feature in any one Contract Year. We apply these restrictions to all transfers from the Fixed Accumulation Feature, including all systematic transfers and Dollar Cost Averaging Programs, except for transfers under our DCA Plus Program. If your interest rate renews at a rate at least 1% lower than your prior interest rate, you may transfer any amount up to 100% of the amount to be invested at the renewal rate. You must make this transfer request within 60 days of being notified of the renewal rate. 13 ------------------------------------------------------------------------------- We may defer transfers and partial Surrenders from the Fixed Accumulation Feature for up to six months from the date of your request. You must wait six months after your most recent transfer from the Fixed Accumulation Feature before moving Sub-Account Values or Benefit Balance back to the Fixed Accumulation Feature. If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait six months after your last systematic transfer before moving Contract Value or Benefit Balance back to the Fixed Accumulation Feature. As a result of these limitations, it may take a significant amount of time (i.e., several years) to move Contract Value in the Fixed Accumulation Feature to Sub-Accounts and/or Personal Pension Account and therefore this may not provide an effective short term defensive strategy. PERSONAL PENSION ACCOUNT INTERESTS IN THE PERSONAL PENSION ACCOUNT ARE NOT REGISTERED UNDER THE 1933 ACT AND THE PERSONAL PENSION ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE PERSONAL PENSION ACCOUNT NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURES REGARDING THE PERSONAL PENSION ACCOUNT. THE FOLLOWING DISCLOSURE ABOUT THE PERSONAL PENSION ACCOUNT IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE PERSONAL PENSION ACCOUNT MAY NOT BE AVAILABLE TO ALL TYPES OF QUALIFIED PLANS, OWNERSHIP ARRANGEMENTS, OR IN ALL STATES. WHAT IS THE PERSONAL PENSION ACCOUNT? THE FOLLOWING IS A BRIEF SUMMARY OF THE PERSONAL PENSION ACCOUNT. You should read this entire section of the prospectus to make sure that you understand the important limitations and restrictions applicable to the Personal Pension Account. The Personal Pension Account is like the Fixed Accumulation Feature because you receive a fixed interest rate investment return. So, like the Fixed Accumulation Feature, you can invest in the Personal Pension Account if you want a steadier return than you would receive from the Sub-Accounts, where your return depends on the investment performance of the Funds you select. While the Personal Pension Account and Fixed Accumulation Feature both offer a fixed interest rate return, the Personal Pension Account is designed to serve a different purpose than the Fixed Accumulation Feature. The Fixed Accumulation Feature is designed to serve as a conventional accumulation-oriented investment -you put money in to build up your investment, and you can then withdraw money to meet financial needs as they arise. You can also transfer some or all of your investment to the Sub-Accounts or the Personal Pension Account, and your beneficiaries receive a death benefit if you die. The Personal Pension Account is designed to serve a different purpose - it has features and guarantees you can use to design your own personal pension plan to provide you with life-long income payments without having to use the Sub-Accounts or Fixed Accumulation Feature for that purpose. These guarantees let you know in advance how much your income payments will be in the future. While you can take income payments from the Fixed Accumulation Feature too, the amount of those income payments is not guaranteed in advance. Why would you invest in the Fixed Accumulation Feature if the Personal Pension Account gives you income guarantees and more flexibility structuring income payments? The reason is that to give you the guarantees and income payment flexibility, we had to place significant restrictions on how much you can transfer out of the Personal Pension Account in any year as well as on your ability to receive lump sum payments - instead of SURRENDERING part or all of the amounts you have built up in the Personal Pension Account, you can get a lump sum payment only by specifying some or all of the payments you are receiving, and then COMMUTING them into one lump sum. When you invest in the Personal Pension Account, you may end up getting less than you would have if you invested in the Fixed Accumulation Feature. This is the tradeoff you have to accept in return for getting the additional flexibility and guarantees that let you design your own personal pension plan. THERE ARE CERTAIN CONDITIONS THAT MUST BE SATISFIED FOR YOU TO RECEIVE GUARANTEED INCOME PAYMENTS FROM YOUR PERSONAL PENSION ACCOUNT INVESTMENT, INCLUDING STARTING TO TAKE PAYMENTS BEFORE THE END OF A SPECIFIED PERIOD. YOU SHOULD READ THE REST OF THIS PROSPECTUS AND YOUR CONTRACT CAREFULLY TO MAKE SURE YOU UNDERSTAND ALL OF THESE CONDITIONS. AS YOU READ THE REMAINDER OF THIS SECTION OF THE PROSPECTUS, WHICH PROVIDES YOU WITH MORE DETAILED INFORMATION ABOUT HOW THE PERSONAL PENSION ACCOUNT WORKS, YOU SHOULD KEEP IN MIND THESE IMPORTANT POINTS: - YOUR ABILITY TO MAKE TRANSFERS FROM THE PERSONAL PENSION ACCOUNT IS SIGNIFICANTLY LIMITED BECAUSE THE PERSONAL PENSION ACCOUNT RESTRICTS LIQUIDITY DUE TO TRANSFER LIMITATIONS AND THE POTENTIAL LOSS OF VALUE AS A RESULT OF COMMUTATION. ACCORDINGLY, YOU SHOULD ENSURE THAT YOUR INVESTMENTS IN THE FIXED ACCUMULATION FEATURE AND THE SUB-ACCOUNTS WILL BE ADEQUATE TO MEET YOUR LIQUIDITY NEEDS. 14 ------------------------------------------------------------------------------- - BECAUSE THE PERSONAL PENSION ACCOUNT IS DESIGNED AS A LONG-TERM RETIREMENT FUNDING VEHICLE, IT HAS GUARANTEED PAYOUT RATES APPLICABLE ONLY FOR PERSONAL PENSION ACCOUNT PAYMENTS COMMENCED BEFORE THE EXPIRATION OF YOUR SPECIFIED "GUARANTEE WINDOW" (AS DESCRIBED BELOW). - THE PERSONAL PENSION ACCOUNT PROVIDES CERTAIN ADDITIONAL FLEXIBILITY WITH RESPECT TO STRUCTURING INCOME PAYMENTS - YOU CAN CONVERT PART OF YOUR INVESTMENT IN THE PERSONAL PENSION ACCOUNT INTO INCOME PAYMENTS AT A PARTICULAR TIME RATHER THAN YOUR ENTIRE INVESTMENT, AND YOU MAY ESTABLISH DIFFERENT INCOME STREAMS. - AT ANY GIVEN TIME, CREDITED RATES AVAILABLE UNDER THE PERSONAL PENSION ACCOUNT MAY BE HIGHER OR LOWER THAN INTEREST RATES OFFERED UNDER THE FIXED ACCUMULATION FEATURE. - YOU MAY USE THE PERSONAL PENSION ACCOUNT TO ESTABLISH STREAMS OF INCOME PAYMENTS THAT WILL CONTINUE FOR AS LONG AS YOU, THE ANNUITANT OR A JOINT OWNER ARE ALIVE. - IF YOU REQUEST A LUMP SUM PAYMENT, WE COMMUTE THE AMOUNT OF THE PAYMENTS THAT WOULD HAVE BEEN MADE DURING THE "GUARANTEED PAYOUT DURATION" (AS DESCRIBED BELOW). PAYMENTS WILL COMMENCE AGAIN IF YOU THE ANNUITANT OR A JOINT OWNER LIVE PAST THE GUARANTEED PAYOUT DURATION. - IF YOU TERMINATE THIS CONTRACT, YOU GIVE UP YOUR RIGHT TO FUTURE "PERSONAL PENSION ACCOUNT PAYOUTS" (AS DESCRIBED BELOW). HOW DOES THE PERSONAL PENSION ACCOUNT WORK? CONTRIBUTIONS. You invest in the Personal Pension Account through Personal Pension Account Contributions. The first Personal Pension Account Contribution becomes your initial investment called your "Benefit Balance." The Benefit Balance will be increased by the amount of each subsequent Personal Pension Account Contribution, transfers into the Personal Pension Account from the Fixed Accumulation Feature and Sub-Accounts and accrued interest. Unlike the Fixed Accumulation Feature, the Benefit Balance is not indicative of what you would receive as a lump sum. Once you start taking Personal Pension Account Payouts, as described below, your Benefit Balance is divided into an "Accumulation Balance" and "Annuity Payout Value." Annuity Payout Value refers to the sums used to fund your Personal Pension Account Payouts and anything remaining is referred to as your Accumulation Balance. Because you may convert all or any portion of your Accumulation Balance into Personal Pension Account Payouts at different times, you may have more than one Annuity Payout Value. The minimum initial Personal Pension Account Contribution is $10,000. Our prior approval may be required for any single or cumulative Personal Pension Account Contribution of $1 million or more. Each subsequent Personal Pension Account Contribution must be at least $1,000. If made through an approved investment Program, subsequent Personal Pension Account Contributions minimums must be met over the course of the Contract Year or the duration of the investment Program, if less. FAILURE TO MAINTAIN A MINIMUM ACCUMULATION BALANCE OF $5,000 WILL RESULT IN PREMATURE COMMENCEMENT OF PENSION ACCOUNT PAYOUTS. You may not make any Personal Pension Account Contributions after the Annuity Commencement Date. INTEREST CREDITING - We guarantee that we will credit interest to amounts that you allocate to the Personal Pension Account at a minimum rate of 1.5% (called a "credited rate(s)"). We may credit a rate higher than the minimum credited rate. We expect to make a profit in setting credited rates. Different credited rates may apply during the course of your investment in the Personal Pension Account. Credited rates will continue to apply to your Accumulation Balance until the earliest of when you commence taking Personal Pension Account Payouts, the Annuity Commencement Date or when we pay the Death Benefit. Credited rates will not apply to your Annuity Payout Value(s). We reserve the right to periodically establish new credited rates that will be applied to new Personal Pension Account Contributions. This means that all or portions of your Accumulation Balance may earn interest at different credited rates. See Examples 1, 2 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of how different credited rates may apply during the term of your Contract. There is no specific formula for determining credited rates and no assurances are offered as to future credited rates and their applicability. Some of the factors that we may consider in determining credited rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match these or our general liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. PERSONAL PENSION ACCOUNT PAYOUTS - You may tell us to start paying you income payments called "Personal Pension Account Payouts" at any time or at different times until your Annuity Commencement Date. Subsequent Premium Payments can be made into Sub-Accounts and/or the Fixed Accumulation Feature after Personal Pension Account Payouts have begun (if received before your Annuity Commencement Date). 15 ------------------------------------------------------------------------------- As noted above, your ability to receive lump sum payments from the Personal Pension Account is limited. You do not withdraw any part of your Benefit Balance in the same way that you can surrender your Contract Value from Sub-Accounts or the Fixed Accumulation Feature. Rather, you must convert Accumulation Balance into an Annuity Payout Value that is then used to set your Personal Pension Account Payouts. You may surrender any or all of your Contract Value without affecting your Annuity Payout Value, or you may commute any or all of your Annuity Payout Value without affecting your Contract Value. However, you may terminate your Contract by (a) fully surrendering all of your Contract Value in the Sub-Accounts and Fixed Accumulation Feature; (b) commuting your Annuity Payout Value in your Personal Pension Account (as discussed in more detail below); and (c) giving up your right to Personal Pension Account Payouts. You will automatically start receiving Personal Pension Account Payouts on your Annuity Commencement Date. Personal Pension Account Payouts will be paid in the manner described in Annuity Payout Option Two or Eight under the heading "When do your Annuity Payouts begin?" under the Annuity Payouts section below. We reserve the right to require that you own your Contract for at least six months before you start receiving Personal Pension Account Payouts. For Qualified Contracts, we reserve the right to require that you start taking Personal Pension Account Payouts no later than when the Annuitant turns age 70 1/2. An annual benefit increase option may also be elected to adjust Personal Pension Account Payouts, subject to availability. We calculate the amount of your Personal Pension Account Payouts by applying the applicable payout rate to your Accumulation Balance. We will provide you with a guaranteed payout rate each time that you make a new Personal Pension Amount Contribution. Payout rates are set at our sole discretion. There is no specific formula for determining payout rates and, except as specifically provided below, there is no assurance as to future payout rates. Payout rates may vary based on Contract class and distribution channel. Some of the factors that we may consider in determining payout rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; competitive factors and mortality tables (including age and gender factors). When you first make a Personal Pension Account Contribution, you will be required to choose a Target Income Age at which you are likely to begin taking Personal Pension Account Payouts. The Target Income Age cannot exceed twenty (20) years from the oldest Annuitant's age at the time of investment or age 80. Except as provided below, the Target Income Age cannot be changed. We will use the guaranteed payout rate(s) to calculate Personal Pension Account Payouts if you commence taking Personal Pension Account Payouts during the timeframe that begins three (3) years prior to the Target Income Age and ends three (3) years after the Target Income Age (this seven year period is referred to as the "guarantee window"). If you commence taking Personal Pension Account Payouts at any time outside of the guarantee window, then we will calculate your Personal Pension Account Payouts using payout rate(s) that we then determine at our sole discretion. This payout rate will not exceed the guaranteed payout rate nor will the corresponding Personal Pension Account Payout be less than any guaranteed minimum provided in your Contract. The existence of guaranteed payout rates, among other things, distinguishes the Personal Pension Account from the way we treat annuitization of your Contract Value and investments in the Fixed Accumulation Feature at the end of the accumulation phase of your Contract. See Examples 1 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Payouts during the guarantee window. LUMP SUM PAYMENTS. You may commute any or all of your Annuity Payout Value to get a lump sum payment from the Personal Pension Account. The way we do this is to calculate the number of Personal Pension Account Payouts (corresponding to the Annuity Payout Value that you seek to commute) that when added together will equal the amount of your commutation request, and then the time period over which these Personal Pension Account Payouts would have otherwise been made is called the "Guaranteed Payout Duration." Personal Pension Account Payouts will resume after the Guaranteed Payout Duration for so long as you, the Annuitant or a joint Owner are alive. You should understand that if you commute you will receive less than your Annuity Payout Value. The amount you receive over time depends on a number of factors, including the difference between interest rates currently being credited and the discount rate used upon commutation, how long you have invested in the Personal Pension Account and whether you (or the Annuitant) live long enough so that Personal Pension Account Payouts start up again after the Guaranteed Payout Duration. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information about how commutation works. TRANSFERS - Each Contract Year, you may transfer a portion of your Accumulation Balance to the Fixed Accumulation Feature or Sub-Accounts without having to comply with the annuitization and commutation requirements discussed above. All transfer allocations must be in whole numbers (e.g., 1%). The maximum amount of Accumulation Balance that may be transferred is the highest of: - four (4%) percent of your Accumulation Balance as of your prior Contract Anniversary; - the amount of interest credited to your Accumulation Balance over the most recent full Contract Year; or - the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. We reserve the right to: (a) limit the number of transfers from the Personal Pension Account; (b) make you wait six months after your most recent transfer from the Personal Pension Account before moving Contract Value back into the Personal Pension Account; or 16 ------------------------------------------------------------------------------- (c) revoke this transfer privilege at any time. Amounts transferred out of the Personal Pension Account will reduce the Accumulation Balance by the amount transferred. Amounts transferred from the Personal Pension Account to the Fixed Accumulation Feature or the Sub-Accounts will be treated as a subsequent Premium Payment and become part of your Contract Value. You may also transfer Contract Value from your Sub-Accounts or Fixed Accumulation Feature, to the Accumulation Balance (such transfers will reduce the amount of your optional Death Benefit, Annual Withdrawal Amount (AWA) and Remaining Gross Premiums). If applicable, no CDSC will be applied to Accumulation Balance transferred to Sub-Accounts or the Fixed Accumulation Feature, or vice versa. No transfers may be made to or from the Personal Pension Account after the Annuity Commencement Date. See Example 3 under the Personal Pension Account Examples in Appendix A for an illustration of transfers into your Personal Pension Account. AS A RESULT OF THESE OUT-BOUND TRANSFER RESTRICTIONS, IT MAY TAKE A SIGNIFICANT AMOUNT OF TIME (I.E., SEVERAL YEARS) TO MOVE ACCUMULATION BALANCE TO SUB-ACCOUNTS OR THE FIXED ACCUMULATION FEATURE AND THEREFORE THIS MAY NOT PROVIDE AN EFFECTIVE SHORT TERM DEFENSIVE STRATEGY. PLEASE REFER TO EXAMPLE 3 UNDER THE PERSONAL PENSION ACCOUNT EXAMPLES IN APPENDIX A FOR AN ILLUSTRATION OF TRANSFER RESTRICTIONS. DEATH BENEFIT - The Personal Pension Account includes a Death Benefit equal to your Benefit Balance. This Death Benefit is considered to be part of the standard Death Benefit or any optional Death Benefit that you elect. Your Personal Pension Account Death Benefit increases as a result of additional Personal Pension Account Contributions and transfers into the Personal Pension Account. YOUR PERSONAL PENSION ACCOUNT DEATH BENEFIT DECREASES AS YOU TAKE PERSONAL PENSION ACCOUNT PAYOUTS AND MAY BE ELIMINATED OVER TIME. Benefit Balance transfers to Sub-Accounts and/or the Fixed Accumulation Feature also decrease your Personal Pension Account Death Benefit but because these amounts are converted into Contract Value, they become part of the standard Death Benefit and/or optional Death Benefit. YOUR BENEFIT BALANCE IS NOT GUARANTEED AS PART OF ANY OPTIONAL DEATH BENEFIT RIDER. Personal Pension Account Payouts will generally terminate upon notification to us of the death of the Owner, joint Owner or Annuitant, if prior to the Annuity Commencement Date; or upon notification to us of the Annuitant's death, if after the Annuity Commencement Date. The method of payment of the Death Benefit will be subject to the restrictions contained in the "Standard Death Benefit" section of this Prospectus. Your Benefit Balance will be converted into Contract Value and transferred to the Money Market Sub-Account without annuitization and commutation. Unless otherwise stated below, Contract Value may not be reallocated back into the Personal Pension Account. The Contingent Annuitant may reinvest Contract Value back into the Personal Pension Account and establish a new guarantee window, target income age and receive then applicable credited rates. If Spousal Contract continuation is elected, your Spouse can either continue to maintain the Personal Pension Account and resume Personal Pension Account Payouts, if applicable, or instruct us to transfer Benefit Balance to the Money Market Sub-Account. Your Spouse may then reinvest Contract Value back into the Personal Pension Account by establishing a new guarantee window and target income age. New crediting rates will apply. OTHER INFORMATION - We will account for any Personal Pension Account Contributions, Personal Pension Account Payouts, interest, and deductions separately and on a first-in, first-out basis for the purposes of determining which credited rates are associated with each Personal Pension Account Contribution. Personal Pension Account Payouts are not cumulative and may not be advanced, commuted or accelerated, except as explicitly stated in this prospectus. Subject to applicable state insurance law, the Personal Pension Account does not establish a cash surrender benefit. We may close the Personal Pension Account to new Personal Pension Account Contributions at any time without notice. We may also make the Personal Pension Account available only through enrollment in one or more investment Programs that we establish. Special consideration should be given by Personal Pension Account investors who are under age 40 to the twenty-year limitation on setting your Target Income Age and the absence of guaranteed payout rates applied if Personal Pension Account Payouts commence outside of your guarantee window. The Personal Pension Account should not be confused with a pension plan under The Employee Retirement Income Security Act of 1974, as amended (ERISA). Neither we nor any of our affiliates assume any fiduciary duties with regard to this Contract, as such terms are defined under ERISA laws and regulations. The Personal Pension Account is not a defined benefit plan guaranteed by the Pension Benefit Guaranty Corporation (PBGC) or any federal or state government agency. This feature is not a corporate pension plan issued by us or our affiliates. In summary, the Personal Pension Account is designed for the long-term investor who is willing to forego some degree of liquidity in exchange for, among other things, deferred lifetime income in the form of Personal Pension Account Payouts. This feature restricts liquidity through transfer and commutation restrictions. The amount ultimately received as a consequence of your investment in the Personal Pension Account is not predictable because of the uncertainty of factors such as how long you have invested in the Personal Pension Account, interest rates in effect at the time of investment and commutation, and how long you receive lifetime Personal Pension Account Payouts. If you partially commute your Personal Pension Account Payouts, you will retain the right to collect life contingent Personal Pension Account Payouts that resume after the applicable Guaranteed Payout Duration. HOWEVER, IF YOU ELECT TO TERMINATE YOUR CONTRACT, YOU WILL GIVE UP YOUR RIGHT TO THESE FUTURE LIFE CONTINGENT PERSONAL PENSION ACCOUNT 17 ------------------------------------------------------------------------------- PAYOUTS. YOU SHOULD THEREFORE CONSULT WITH YOUR REGISTERED REPRESENTATIVE OR A TRUSTED ADVISER BEFORE TERMINATING YOUR CONTRACT TO BE SURE THAT YOU UNDERSTAND THESE IMPORTANT IMPLICATIONS. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information. 4. INFORMATION ON YOUR ACCOUNT A. OPENING AN ACCOUNT WHO CAN BUY THIS CONTRACT? The Contract is an individual or group tax-deferred variable annuity Contract. It is designed for retirement planning purposes and may be purchased by any individual, group or trust, including: - any trustee or custodian for a retirement plan qualified under Section 401(a) of the Code; - individual Retirement Annuities adopted according to Section 408 of the Code; - employee pension plans established for employees by a state, a political subdivision of a state, or an agency of either a state or a political subdivision of a state; and - certain eligible deferred compensation plans as defined in Section 457 of the Code. The examples above represent Qualified Contracts, as defined by the Code. In addition, individuals and trusts can also purchase Contracts that are not part of a tax qualified retirement plan. These are known as Non-Qualified Contracts. If you are purchasing the Contract for use in an IRA or other qualified retirement plan, you should consider other features of the Contract besides tax deferral, since any investment vehicle used within an IRA or other Qualified Plan receives tax-deferred treatment under the Code. We no longer accept any incoming 403(b) exchanges, transfers or applications for 403(b) individual annuity contracts or additional investments into any individual annuity contract funded through a 403(b) plan. The Personal Pension Account may not be available to all types of Qualified Plans. HOW DO YOU PURCHASE A CONTRACT? You may only purchase a Contract through a Financial Intermediary. A Registered Representative will work with you to complete and submit an application or an order request form. Part of this process will include an assessment as to whether this variable annuity may be suitable for you. Prior to recommending the purchase or exchange of a deferred variable annuity, your Registered Representative shall make reasonable efforts to obtain certain information about you and your investment needs. This recommendation will be independently reviewed by a principal within your Financial Intermediary. Your initial Deposit will not be invested in any Account and/or the Personal Pension Account during this period. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, your Financial Intermediary will ask for your name, address, date of birth and other information that will allow us to identify you. They may also ask to see your driver's license or other identifying documents. Non-Resident Alien (NRA) application submissions require our prior approval. The minimum initial Deposit required to buy this Contract varies based on the type of investment, Contract class and whether you enroll in a systematic investment Program such as the InvestEase(R) Program. Financial Intermediaries may impose requirements regarding the form of payment they will accept. Deposits not actually received by us within the time period provided below will result in the rejection of your application or order request. Deposits sent to us must be made in U.S. dollars and checks must be drawn on U.S. banks. We do not accept cash, third party checks or double endorsed checks. We reserve the right to limit the number of checks processed at one time. If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees incurred. A check must clear our account through our Administrative Office to be considered to be in good order. We reserve the right to impose special conditions on anyone who seeks our prior approval to purchase a Contract with Deposits of $1 million or more. In order to request prior approval, you must submit a completed enhanced due diligence form prior to the submission of your application: - if you are seeking to purchase a Contract with an initial Deposit of $1 million or more; - if total Deposits, aggregated by social security number or taxpayer identification number, equal $1 million or more; and 18 ------------------------------------------------------------------------------- - for all applications where the Owner or joint Owner are non-resident aliens. You and your Annuitant must not be older than age 80 on the date that your Contract is issued. You must be of minimum legal age in the state where the Contract is being purchased or a guardian must act on your behalf. Optional riders are subject to additional maximum issue age restrictions. We urge you to discuss with your Registered Representative which share class is suitable for your needs. Share class availability and/or mortality and expense risk charge arrangements may vary based on the Financial Intermediary selling this variable annuity to you. Charges affect your overall rate of return on your Contract Value. In determining whether to invest in a share class that imposes a contingent deferred sales charge, you might consider whether higher mortality and expense risk and distribution charges out weigh the benefits of contingent deferred sales charges that reduce, or are eliminated, over time. For instance, those investing over $100,000 may find a front-end sales charge class share to be more economically advantageous than a contingent deferred sales charge share class. Finally, in determining whether to invest in a share class offered through a financial advisor, you might consider how the fee charged by your advisor bears in relation to the costs associated with investing in other share classes that impose higher fees. CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT? Yes. If for any reason you are not satisfied with your Contract, simply return it within ten days after you receive it with a written request for cancellation that indicates your tax-withholding instructions. In some states, you may be allowed more time to cancel your Contract. We may require additional information, including a signature guarantee, before we can cancel your Contract. Unless otherwise required by state law, we will pay you your Account Balance (minus applicable expenses) as of the Valuation Day we receive your properly completed request to cancel and will refund any sales or Contract charges incurred during the period you owned the Contract. The Account Balance may be more or less than your Deposits depending upon the investment performance of your Contract. This means that you bear the risk of any decline in your Account Balance until we receive your notice of cancellation. In certain states, however, we are required to return your Deposit without deduction for any fees or charges. HOW ARE DEPOSITS APPLIED TO YOUR CONTRACT? Your initial Deposit will usually be invested within two Valuation Days of our actual receipt in-hand at our Administrative Office of both a properly completed application or order request and the Deposit; both being in good order. If we receive a subsequent Deposit before the end of a Valuation Day, it will be invested on the same Valuation Day. If we receive your subsequent Deposit after the end of a Valuation Day, it will be invested on the next Valuation Day. If we receive a subsequent Deposit on a non-Valuation Day, the amount will be invested on the next Valuation Day. Unless we receive new instructions, we will invest all Deposits based on your last instructions on record. We will send you a confirmation when we invest your Deposit. If the request or other information accompanying the initial Deposit is incomplete or not in good order when received, we will hold the money in a non-interest bearing account for up to five Valuation Days (from the Valuation Day that we actually receive your initial Deposit at our Administrative Office) while we try to obtain complete information. If we cannot obtain the information within five Valuation Days, we will either return the Deposit and explain why it could not be processed or keep the Deposit if you authorize us to keep it until you provide the necessary information. Generally, we will receive your application or order request (whether for an initial purchase or a subsequent investment) after your Financial Intermediary has completed a suitability review. We will then consider if your investment is in good order. While the suitability and good order process is underway, Deposits will not be applied to your Contract. You will not earn any interest on Deposits even if they have been sent to us or deposited into our bank account. We are not responsible for gains or lost investment opportunities incurred during this review period or if your Financial Intermediary asks us to unwind a transaction based on their review of your Registered Representative's recommendations. Your Financial Institution, and we, may directly or indirectly earn income on your Deposits. For more information, contact your Registered Representative. HOW IS CONTRACT VALUE CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE? The Contract Value is the sum of the value of the Fixed Accumulation Feature, if applicable, and all Funds, and does not include Benefit Balance. There are two things that affect the value of your Sub-Accounts: (1) the number of Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is determined by multiplying the number of Accumulation Units by the Accumulation Unit Value. On any Valuation Day the investment performance of the Sub-Accounts will fluctuate with the performance of the Funds. When Premium Payments are credited to Sub-Accounts within your Account, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium taxes, by the Accumulation Unit Value for that day. The more Premium Payments you make to your Account, the more Accumulation Units you will own. You decrease the number of Accumulation Units you have by requesting partial or full Surrenders, settling a Death Benefit claim or by annuitizing your Contract or as a result of the application of certain Contract charges. To determine the current Accumulation Unit Value, we take the prior Valuation Day's Accumulation Unit Value and multiply it by the Net Investment Factor for the current Valuation Day. 19 ------------------------------------------------------------------------------- The Net Investment Factor is used to measure the investment performance of a Sub-Account from one Valuation Day to the next. The Net Investment Factor for each Sub-Account equals: - the net asset value per share plus applicable distributions per share of each Fund at the end of the current Valuation Day; reduced by - the net asset value per share of each Fund at the end of the prior Valuation Day; reduced by - contract charges including the deductions for the mortality and expense risk charge and any other periodic expenses and administrative charges, divided by the number of days in the year multiplied by the number of days in the valuation period. We will send you a statement at least annually. WHAT OTHER WAYS CAN YOU INVEST? You may enroll in the following features (sometimes called a "Program") for no additional fee. Not all Programs are available with all Contract variations. - INVESTEASE This electronic funds transfer feature allows you to have money automatically transferred from your checking or savings account and deposited into your Contract on a monthly or quarterly basis. It can be changed or discontinued at any time. The minimum amount for each transfer is $50. You can elect to have transfers made into any available Fund, the Fixed Accumulation Feature, or the Personal Pension Account. You cannot use this Program to invest in the DCA Plus Programs. - STATIC ASSET ALLOCATION MODELS This feature allows you to select an asset allocation model based on several potential factors including your risk tolerance, time horizon, investment objectives, or your preference to invest in certain Funds or Fund families. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Contract. Some asset allocation models are based on generally accepted investment theories that take into account the historic returns of different asset classes (e.g., equities, bonds or cash) over different time periods. Other asset allocation models focus on certain potential investment strategies that could possibly be achieved by investing in particular Funds or Fund families and are not based on such investment theories. Static asset allocation models offered from time to time are reflected in your application and marketing materials. You may obtain a copy of the current models by contacting your Financial Intermediary. You may invest in an asset allocation model through the Dollar Cost Averaging Program where the Fixed Accumulation Feature, Personal Pension Account, or a DCA Plus Program is the source of the assets to be invested in the asset allocation model you have chosen. You can also participate in these asset allocation models while enrolled in the InvestEase or Automatic Income Program. You can switch asset allocation models up to twelve times per year. Your ability to elect or switch into and between asset allocation models may be restricted based on Fund abusive trading restrictions. Your investments in an asset allocation model will be rebalanced quarterly to reflect the model's original percentages and you may cancel your model at any time subject to investment restrictions for maintaining certain optional riders. We have no discretionary authority or control over your investment decisions. These asset allocation models are based on then available Funds and do not include the Fixed Accumulation Feature or the Personal Pension Account. We make available educational information and materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case studies) that can help you select an asset allocation model, but we do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you. While we will not alter allocation percentages used in any asset allocation model, allocation weightings could be affected by mergers, liquidations, fund substitutions or closures. Availability of these models is subject to Fund company restrictions. Please refer to "What Restrictions Are There on your Ability to Make a Sub-Account Transfer?" for more information. You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the asset allocation models, and we will not reallocate your Contract Value based on those updates. Information on updated asset allocation models may be obtained by contacting your Registered Representative. If you wish to update your asset allocation model, you may do so by terminating your existing model and re-enrolling into a new one. Investment alternatives other than these asset allocation models are available that may enable you to invest your Contract Value with similar risk and return characteristics. When considering an asset allocation model for your individual situation, you should consider your other assets, income and investments in addition to this annuity. Asset allocation does not guarantee that your Contract Value will increase nor will it protect against a decline if market prices fall. If you choose to participate in an asset allocation program, you are responsible for determining which asset allocation model is best for 20 ------------------------------------------------------------------------------- you. Tools used to assess your risk tolerance may not be accurate and could be useless if your circumstances change over time. Although each asset allocation model is intended to maximize returns given various levels of risk tolerance, an asset allocation model may not perform as intended. Market, asset class or allocation option class performance may differ in the future from historical performance and from the assumptions upon which the asset allocation model is based, which could cause an asset allocation model to be ineffective or less effective in reducing volatility. An asset allocation model may perform better or worse than any single Fund, allocation option or any other combination of Funds or allocation options. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of asset allocation models can cause their component Funds to incur transactional expenses to raise cash for money flowing out of Funds or to buy securities with money flowing into the Funds. Moreover, large outflows of money from the Funds may increase the expenses attributable to the assets remaining in the Funds. These expenses can adversely affect the performance of the relevant Funds and of the asset allocation models. In addition, these inflows and outflows may cause a Fund to hold a large portion of its assets in cash, which could detract from the achievement of the Fund's investment objective, particularly in periods of rising market prices. For additional information regarding the risks of investing in a particular Fund, see that Fund's prospectus. Additional considerations apply for qualified Contracts with respect to Static Asset Allocation Model Programs. Neither we, nor any third party service provider, nor any of their respective affiliates, is acting as a fiduciary under The Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Code, in providing any information or other communication contemplated by any Program, including, without limitation, any asset allocation models. That information and communications are not intended, and may not serve as a primary basis for your investment decisions with respect to your participation in a Program. Before choosing to participate in a Program, you must determine that you are capable of exercising control and management of the assets of the plan and of making an independent and informed decision concerning your participation in the Program. Also, you are solely responsible for determining whether and to what extent the Program is appropriate for you and the assets contained in the qualified Contract. Qualified Contracts are subject to additional rules regarding participation in these Programs. It is your responsibility to ensure compliance of any recommendation in connection with any asset allocation model with governing plan documents. - ASSET REBALANCING In asset rebalancing, you select a portfolio of Funds, and we will rebalance your assets at the specified frequency to reflect the original allocation percentages you selected (choice of frequency may be limited when certain optional riders are elected). You can also combine this Program with others such as the Automatic Income Program, InvestEase and DCA Programs (subject to restrictions). You may designate only one set of asset allocation instructions at a time. - DOLLAR COST AVERAGING PROGRAMS We offer three Dollar Cost Averaging Programs: - DCA Plus - Fixed Amount DCA - Earnings/Interest DCA DCA Plus - These programs allow you to earn a fixed rate of interest on investments. These Programs are different from the Fixed Accumulation Feature or the Personal Pension Account. We determine, in our sole discretion, the interest rates to be credited. These interest rates may vary depending on the Contract class you purchased and the date the request for the Program is received. Please consult your Registered Representative to determine the interest rate for your Program. You may elect either the "12-Month Transfer Program" or the "6-Month Transfer Program". - Under the 12-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 12 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 12 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 7 but no more than 12 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Under the 6-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 6 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 6 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 3 but no more than 6 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Each time you make a subsequent Premium Payment, you can invest in a different rate lock program. Any subsequent investments made considered a separate rate lock Program investment. You can invest in up to 5 different rate lock Programs at one time. 21 ------------------------------------------------------------------------------- - You must invest at least $5,000 in each rate lock program ($2,000 for qualified plan transfers or rollovers, including IRAs). We will pre-authorize transfers from our Fixed Accumulation Feature subject to restrictions. - Pre-authorized transfers will begin within 15 days of receipt of the Program payment provided we receive complete enrollment instructions in good order. - If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is active on the Contract, we will set up the new Program to mirror the existing one. If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is not active on the Contract, but is the future investment allocation and a static asset allocation model is active on the Contract, we will set up the new Program to move Funds to the Static Asset Allocation Model. Otherwise, we will contact your investment professional to obtain complete instructions. If we do not receive in good order enrollment instructions within the 15 day timeframe noted above, we will refund the Program payment for further instruction. - If your Program payment is less than the required minimum amount, we will invest into the destination Funds or the Personal Pension Account indicated on the Program instructions accompanying the payment. If Program instructions were not provided and a DCA Plus Program is active on the Contract, we will apply the payment to the destination Funds or the Personal Pension Account of the current DCA Plus Program. Otherwise, we will contact your investment professional to obtain further investment instructions. - The credited interest rate used under the DCA Plus Programs is not earned on the full amount of your Premium Payment for the entire length of the Program because Program transfers to Sub-Accounts or the Personal Pension Account decrease the amount of your Premium Payment remaining in the Program. - You may elect to terminate your involvement in this Program at any time. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the Funds or the Personal Pension Account you designated. Fixed Amount DCA - This feature allows you to regularly transfer (monthly or quarterly) a fixed amount from the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into different Fund(s) or the Personal Pension Account. This program begins in 15 days unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. Earnings/Interest DCA - This feature allows you to regularly transfer (monthly or quarterly) the earnings (i.e., any gains over the previous month's or quarter's value) from your investment in the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into other Fund(s) or the Personal Pension Account. This program begins two business days plus the frequency selected unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. - AUTOMATIC INCOME PROGRAM This systematic withdrawal feature allows you to make partial Surrenders up to 5% of your total Premium Payments each Contract Year. You can designate the Funds to be surrendered from and also choose the frequency of partial Surrenders (monthly, quarterly, semiannual, or annually). The Personal Pension Account is not an eligible source Fund for partial Surrenders facilitated through the Automatic Income Program. The minimum amount of each Surrender is $100. Amounts taken under this program will count towards the AWA and may be subject to a CDSC. If received prior to age 59 1/2, may have adverse tax consequences, including a 10% federal income tax penalty on the taxable portion of the Surrender payment. You may satisfy Code Section 72(t)/(q) requirements by enrolling in this program. Please see the "Federal Tax Considerations" section and consult your tax adviser for information about the tax consequences associated with your Contract. Your level of participation in this program may result in your exceeding permissible withdrawal limits under certain optional riders. - OTHER PROGRAM CONSIDERATIONS - You may terminate your enrollment in any Program at any time. - We may discontinue, modify or amend any of these Programs at any time. We will automatically and unilaterally amend your enrollment instructions if: - any Fund is merged or substituted into another Fund - then your allocations will be directed to the surviving Fund; or - any Fund is liquidated - then your allocations to that Fund will be directed to any available money market Fund following prior notifications prior to reallocation. You may always provide us with updated instructions following any of these events. - Continuous or periodic investment neither insures a profit nor protects against a loss in declining markets. Because these Programs involve continuous investing regardless of fluctuating price levels, you should carefully consider your ability to continue investing through periods of fluctuating prices. 22 ------------------------------------------------------------------------------- - These Programs may be modified, terminated or adversely impacted by the imposition of Fund trading policies. CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER? Yes. During those phases of your Contract when transfers are permissible, you may make transfers between Funds and/or Benefit Balance according to the following policies and procedures, as they may be amended from time to time. - WHAT IS A SUB-ACCOUNT TRANSFER? A Sub-Account transfer is a transaction requested by you that involves reallocating part or all of your Contract Value among the Funds available in your Contract. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order. Otherwise, your request will be processed on the following Valuation Day. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly advising us of any errors within 30 days of receiving the confirmation. - WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER? Many Owners request Sub-Account transfers. Some request transfers into (purchases) a particular Sub-Account, and others request transfers out of (redemptions) a particular Sub-Account. In addition, some Owners allocate new Premium Payments to Sub-Accounts, and others request Surrenders. We combine all the daily requests to transfer out of a Sub-Account along with all Surrenders from that Sub-Account and determine how many shares of that Fund we would need to sell to satisfy all Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or new Premium Payments allocated to that Sub-Account and determine how many shares of that Fund we would need to buy to satisfy all contract owners' "transfer-in" requests. In addition, many of the Funds that are available as investment options in our variable annuity products are also available as investment options in variable life insurance policies, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and participants in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Fund for many of the variable annuities, variable life insurance policies, retirement plans, funding agreements or other products offered by us or our affiliates. We also combine transfer-out requests and transfer-in requests. We then "net" these trades by offsetting purchases against redemptions. Netting trades has no impact on the net asset value of the Fund shares that you purchase or sell. This means that we sometimes reallocate shares of a Fund rather than buy new shares or sell shares of the Fund. For example, if we combine all transfer-out requests of a stock Fund with all other transfer-out requests of that Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Owners and the owners of other products offered by us, want to transfer-in an amount equal to $300,000 of that same Fund, then we would send a sell order to the Fund for $700,000 (a $1 million sell order minus the purchase order of $300,000) rather than making two or more transactions. - WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We count all Sub-Account transfer activity that occurs on any one Valuation Day as one "Sub-Account transfer", however, you cannot transfer the same Contract Value more than once a Valuation Day. EXAMPLES
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE? ------------------------------------------------------------------------------------------------------------ Transfer $10,000 from a money market Sub-Account to a growth Sub-Account Yes Transfer $10,000 from a money market Sub-Account to any number of other Sub-Accounts Yes (dividing the $10,000 among the other Sub-Accounts however you chose) Transfer $10,000 from any number of different Sub-Accounts to any number of other Yes Sub-Accounts Transfer $10,000 from a money market Sub-Account to a growth Sub-Account and then, before No the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH CONTRACT YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet or telephone. Once you have reached the maximum number of Sub-Account transfers, you may only submit any additional Sub-Account transfer requests and any trade cancellation requests in writing through U.S. Mail or overnight delivery service. In other words, Voice Response Unit, Internet or telephone transfer requests will not be honored. We may, but are not obligated to, notify you when you are in jeopardy of approaching these limits. For example, we will send you a letter after your 10th Sub-Account transfer to remind you about the Transfer Rule. After your 20th transfer request, our computer system will not allow you to 23 ------------------------------------------------------------------------------- do another Sub-Account transfer by telephone, Voice Response Unit or via the Internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service. We reserve the right to aggregate your Contracts (whether currently existing or those recently surrendered) for the purposes of enforcing these restrictions. The Transfer Rule does not apply to Sub-Account transfers that occur automatically as part of a Company sponsored asset allocation or Dollar Cost Averaging Program. Reallocations made based on a Fund merger or liquidation also do not count toward this transfer limit. Restrictions may vary based on state law. We make no assurances that the Transfer Rule is or will be effective in detecting or preventing market timing. THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS. You should not purchase this Contract if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Contract if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of a Fund. Even if you do not engage in market timing, certain restrictions may be imposed. Generally, you are subject to Fund trading policies, if any. We are obligated to provide, at the Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading policy. In certain instances, we have agreed to serve as a Fund's agent to help monitor compliance with that Fund's trading policy. We are obligated to follow each Fund's instructions regarding enforcement of their trading policy. Penalties for violating these policies may include, among other things, temporarily or permanently limiting or banning you from making Sub-Account transfers into a Fund or other funds within that fund complex. We are not authorized to grant an exception to a Fund's trading policy. Please refer to each Fund's prospectus for more information. Transactions that cannot be processed because of Fund trading policies will be considered not in good order. In certain circumstances, Fund trading policies do not apply or may be limited. For instance: - Certain types of Financial Intermediaries may not be required to provide us with shareholder information. - "Excepted funds" such money market funds and any Fund that affirmatively permits short-term trading of its securities may opt not to adopt this type of policy. This type of policy may not apply to any Financial Intermediary that a Fund treats as a single investor. - A Fund can decide to exempt categories of Contract holders whose Contracts are subject to inconsistent trading restrictions or none at all. - Non-shareholder initiated purchases or redemptions may not always be monitored. These include Sub-Account transfers that are executed: (i) automatically pursuant to a company-sponsored contractual or systematic program such as transfers of assets as a result of "dollar cost averaging" programs, asset allocation programs, automatic rebalancing programs, annuity payouts, or systematic withdrawal programs; (ii) as a result of the payment of a Death Benefit; (iii) as a result of any deduction of charges or fees under a Contract; or (iv) as a result of payments such as scheduled contributions, scheduled withdrawals or Surrenders, retirement plan salary reduction contributions, or planned Premium Payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading or market timing activities. For instance: - Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked. - Certain forms of variable annuities and types of Funds may be attractive to market timers. We cannot provide assurances that we will be capable of addressing possible abuses in a timely manner. - These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all. - In some cases, we are unable to count the number of Sub-Account transfers requested by group annuity participants co-investing in the same Funds ("Participants") or enforce the Transfer Rule because we do not keep Participants' account records for a Contract. In those cases, the Participant account records and Participant Sub-Account transfer information are kept by such owners or its third party service provider. These owners and third party service providers may provide us with limited information or no information at all regarding Participant Sub-Account transfers. 24 ------------------------------------------------------------------------------- HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS? We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract Value. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce the value of other optional benefits available under your Contract. Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund's trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product investors if the Fund and we cannot reach a mutually acceptable agreement on how to treat an investor who, in a Fund's opinion, has violated the Fund's trading policy. In some cases, we do not have the tax identification number or other identifying information requested by a Fund in our records. In those cases, we rely on the Contract Owner to provide the information. If the Contract Owner does not provide the information, we may be directed by the Fund to restrict the Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Contract will also be precluded from further purchases of Fund shares. MAIL, TELEPHONE AND INTERNET TRANSFERS You may make transfers through the mail or your Financial Intermediary. You may also make transfers by calling us or through our website. Transfer instructions received by telephone before the end of any Valuation Day will be carried out at the end of that day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the end of any Valuation Day, the instructions will be carried out at the end of that Valuation Day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. If you do not receive an electronic acknowledgement, you should contact us as soon as possible. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly reporting any inaccuracy or discrepancy to us and your Registered Representative. Any verbal communication should be re-confirmed in writing. Telephone or Internet transfer requests may currently only be cancelled by calling us before the end of the Valuation Day you made the transfer request. We, our agents or our affiliates are NOT responsible for losses resulting from telephone or electronic requests that we believe are genuine. We will use reasonable procedures to confirm that instructions received by telephone or through our website are genuine, including a requirement that Contract Owners provide certain identification information, including a personal identification number. We record all telephone transfer instructions. We may suspend, modify, or terminate telephone or electronic transfer privileges at any time. POWER OF ATTORNEY You may authorize another person to conduct financial and other transactions on your behalf by submitting a completed power of attorney form that meets the power of attorney requirements of your resident state law. Once we have the completed form on file, we will accept transaction requests, including transfer instructions, subject to our transfer restrictions, from your designated third party until we receive new instructions in writing from you. B. CHARGES AND FEES MORTALITY AND EXPENSE RISK CHARGE We deduct a daily charge for assuming mortality and expense risks under the Contract. This charge is deducted from your Sub-Account Value. The mortality and expense risk charge is broken into charges for mortality risks and for an expense risk: - Mortality Risk - There are two types of mortality risks that we assume, those made while your Premium Payments are accumulating and those made once Annuity Payouts have begun. During the accumulation phase of your Contract, we are required to cover any difference between the Death Benefit paid and the Surrender Value. These differences may occur in periods of declining value or in periods where any CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates. 25 ------------------------------------------------------------------------------- Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates. - Expense Risk - We also bear an expense risk that the sales charges (if applicable), Distribution Charge (if applicable) and the Annual Maintenance Fee collected before the Annuity Commencement Date may not be enough to cover the actual cost of selling, distributing and administering the Contract. Although variable Annuity Payouts will fluctuate with the performance of the Fund selected, your Annuity Payouts will NOT be affected by (a) the actual mortality experience of our annuitants, or (b) our actual expenses if they are greater than the deductions stated in the Contract. Because we cannot be certain how long our Annuitants will live, we charge this percentage fee based on the mortality tables currently in use. The mortality and expense risk charge enables us to keep our commitments and to pay you as planned. If the mortality and expense risk charge under a Contract is insufficient to cover our actual costs, we will bear the loss. If the mortality and expense risk charge exceeds these costs, we keep the excess as profit. We may use these profits, as well as revenue sharing and Rule 12b-1 fees received from certain Funds, for any proper corporate purpose including, among other things, payment of sales expenses, including the fees paid to distributors. We expect to make a profit from the mortality and expense risk charge. ANNUAL MAINTENANCE FEE The Annual Maintenance Fee is a flat fee that is deducted from your Contract Value to reimburse us for expenses relating to the administrative maintenance of the Contract and your Account. The annual charge is deducted on a Contract Anniversary or when the Contract is fully Surrendered if the Account Balance at either of those times is less than $50,000. The charge is deducted proportionately from each Sub-Account in which you are invested. We will waive the Annual Maintenance Fee if your Account Balance is $50,000 or more on your Contract Anniversary or when you fully Surrender your Contract. In addition, we will waive one Annual Maintenance Fee for Owners who own more than one Contract with a combined Account Balance between $50,000 and $100,000. If you have multiple Contracts with a combined Account Balance of $100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts. However, we may limit the number of waivers to a total of six Contracts. We also may waive the Annual Maintenance Fee under certain other conditions. We do not include Contracts from our Putnam Hartford line of variable annuity Contracts with the Contracts when we combine Account Balance for purposes of this waiver. ADMINISTRATIVE CHARGE We apply a daily administration charge against all Contract Values held in the Separate Account during both the accumulation and annuity phases of the Contract. This charge compensates us for administrative expenses that exceed revenues from the Annual Maintenance Fee described above. There is not necessarily a relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributable to that Contract; expenses may be more or less than the charge. DISTRIBUTION CHARGE We apply an annual distribution charge against all Remaining Gross Premiums invested in B share class Contracts (the "Distribution Charge"). The Distribution Charge will apply to each Premium Payment that has been invested for eight years or less and will be deducted on each Contract Anniversary. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge will also apply to any partial Surrender in excess of the AWA. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses, including promotion and distribution of the Contract. A proportional Distribution Charge will be deducted upon: - partial Surrenders in excess of the AWA (partial Surrenders are taken on a first-in, first-out basis); - full Surrender; - full or partial Annuitization, and/or - the date we receive due proof of death of the Owner, joint Owner, or the Annuitant and upon a corresponding full Surrender and/or annuitization. Upon such death, a proportional Distribution Charge will be applied on receipt of due proof of death and upon a Death Benefit distribution if elected at a later date. If a Beneficiary elects to continue under any of the available options described under the "Standard Death Benefits" section below, we will continue to deduct the Distribution Charge based on the portion of Remaining Gross Premium applicable for that Beneficiary. The Distribution Charge is taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state (in which event we will deduct the Distribution Charge from other Sub-Accounts). PREMIUM TAXES We deduct Premium taxes, if required, by a state or other government agency. Some states collect these taxes when Deposits are made; others collect at annuitization. Since we pay Premium taxes when they are required by applicable law, we may deduct them 26 ------------------------------------------------------------------------------- from your Contract when we pay the taxes, upon Surrender, or on the Annuity Commencement Date. The premium tax rate varies by state or municipality and currently ranges from 0 - 3.5%. SALES CHARGES CONTINGENT DEFERRED SALES CHARGES (CDSC) - B AND C SHARE CONTRACTS ONLY We may deduct a CDSC when you make Surrenders from your Contract. We may also deduct a CDSC in connection with certain Annuity Payout Options. This charge is designed to recover the expense of distributing the Contracts that are surrendered before distribution expenses have been recouped from revenue generated by these Contracts. Each Deposit has its own CDSC schedule. Only amounts invested for less than the requisite holding period are subject to a CDSC. In computing the CDSC, Surrenders will be taken: 1st - from the AWA; 2nd - from Contract Value subject to a CDSC on a first-in, first-out basis; and 3rd - from remaining Contract Value. CDSC is charged based on the type of transaction: - Partial Surrenders: To calculate the CDSC when you make a partial Surrender, we apply the applicable CDSC percentage to the amount of the Surrender in excess of the AWA that is eligible for CDSC. - Full Surrenders: If you fully Surrender your Contract, we apply the applicable CDSC percentage to the greater of Contract Value or Remaining Gross Premiums minus the AWA. - Annuity Payouts: To calculate the CDSC when you take an Annuity Payout pursuant to certain Annuity Payout Options, we apply the applicable CDSC to Commuted Value. Please refer to Examples 1 through 5 under the Remaining Gross Premium Examples in Appendix A for an illustration of these computations. The following are NOT subject to a CDSC: - Annual Withdrawal Amount (AWA) - During each Contract Year when a CDSC applies, you may take partial Surrenders up to the greater of: 1. 5% of the total Premium Payments that are otherwise subject to CDSC, or 2. Contract Value minus Remaining Gross Premiums. We compute the AWA as of the end of the Valuation Day when a partial Surrender request is received by us in good order. The AWA is calculated by comparing two values. First, total Premium Payments subject to a CDSC is multiplied by 5%. Next, the total Remaining Gross Premiums is subtracted from the Contract Value. The greater of the two calculations is the applicable AWA at the end of that particular Valuation Day. This method for calculating CDSCs is used for the current and all future partial Surrenders. All reductions from your Premium Payments will be made on a first-in, first-out basis. The financial impact of the CDSC will be greater during declining market conditions. These amounts are different for Contracts issued to a Charitable Remainder Trust. The AWA may vary on a daily basis because of fluctuations in Contract Value. If you do not take maximum AWA one Contract Year, you may not take more than the maximum AWA in a subsequent Contract Year. The AWA does not apply to Personal Pension Account Payouts. - Transfers from Sub-Accounts or the Fixed Accumulation Feature to the Personal Pension Account. - If you are a patient in a certified long-term care facility or other eligible facility - CDSC will be waived for a partial or full Surrender if you, the joint Owner or the Annuitant, are confined for at least 180 calendar days to a: - facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals; - facility certified as a hospital or long-term care facility; or - nursing home licensed by the state in which it is located and offers the services of a registered nurse 24 hours a day. For this waiver to apply, you must: - have owned the Contract continuously since it was issued, - provide written proof of your eligibility satisfactory to us, and 27 ------------------------------------------------------------------------------- - request the Surrender within 91 calendar days after the last day that you are an eligible patient in a recognized facility or nursing home. This waiver is not available if the Owner, the joint Owner or the Annuitant is in a facility or nursing home when you purchase the Contract. We will not waive any CDSC applicable to any Premium Payments made while you are in an eligible facility or nursing home. This waiver can be used any time after the first 180 days in a certified long-term care facility or other eligible facility up until ninety days after exiting such a facility. This waiver may not be available in all states. - Upon death of the Annuitant or any Contract Owner(s) - CDSC will be waived if the Annuitant or any Contract Owner(s) dies. - Upon Annuitization - CDSC will be waived when you annuitize the Contract. However, we will charge a CDSC if the Contract is Surrendered during the CDSC period under an Annuity Payout Option which allows commutation. - For Required Minimum Distributions - CDSC will be waived for any Annuitant age 70 1/2 or older with a Contract held under an IRA who Surrenders an amount equal to the Required Minimum Distribution for one year's required minimum distribution for that Contract Year. All requests for Required Minimum Distributions must be in writing. - For substantially equal periodic payments - CDSC will be waived if you take partial Surrenders under the Automatic Income Program where you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59 1/2. - Upon cancellation during the Right to Cancel Period - CDSC will be waived if you cancel your Contract during the Right to Cancel Period. - Exchanges - As an accommodation, we may, in our sole discretion, time-credit CDSC for the time that you held an annuity previously issued by us. - Settlements - We may, in our sole discretion, waive or time-credit CDSCs in connection with the settlement of disputes or if required by regulatory authorities. CHARGES AGAINST THE FUNDS Annual Fund Operating Expenses - The Separate Account purchases shares of the Funds at net asset value. The net asset value of the Fund reflects investment advisory fees, distribution fees, operating expenses and administrative expenses already deducted from the assets of the Funds. These charges are described in the Funds' prospectuses and the Fee Summary. REDUCED FEES AND CHARGES We may offer, in our discretion, reduced fees and charges for certain Contracts (including employer sponsored savings plans) which may result in decreased costs and expenses. C. SURRENDERS WHAT KINDS OF SURRENDERS ARE AVAILABLE? BEFORE THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - When you Surrender or terminate your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable, distribution charges and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract. For information on how termination of the Contract impacts the Personal Pension Account, see "Personal Pension Account" section above. Partial Surrenders - You may request a partial Surrender of Contract Value at any time before the Annuity Commencement Date. We will deduct any applicable CDSC and Distribution Charge. You can ask us to deduct the CDSC and Distribution Charge from the amount you are Surrendering or from your remaining Contract Value. If we deduct the CDSC from your remaining Contract Value, that amount will also be subject to CDSC. This is our default option. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. There are several restrictions on partial Surrenders of Contract Value before the Annuity Commencement Date: - the partial Surrender of Contract Value must be at least equal to $500, and - your Account Balance must be equal to or greater than our then current Minimum Amount Rule that we establish according to our then current policies and procedures. The "Minimum Amount Rule" refers to the minimum Contract Value that you must maintain within this Contract. If you fail to comply with the Minimum Amount Rule, we reserve the right to fully terminate your Contract. The Minimum Amount Rule varies by share class. Currently the Minimum Amount Rule for class I share 28 ------------------------------------------------------------------------------- Contracts is $500 and is $2,000 for Class B and C Shares. We may increase the Minimum Amount Rule from time to time but in no event shall the Minimum Amount Rule exceed $2,000 (Class I Shares) or $10,000 (Class B and C Shares). You may only commute all or a portion of Personal Pension Account Payouts by following the procedures described below in the "After the Annuity Commencement Date" section below. Withdrawals will reduce your standard Death Benefit on a dollar-for-dollar basis. Please consult with your Registered Representative to be sure that you fully understand the ways such a decision will affect your Contract. AFTER THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - You may Surrender and thus terminate your Contract on or after the Annuity Commencement Date only if you selected Annuity Payout Options Two, Three, Five, Six and Eight. IN THE EVENT YOU TAKE A FULL SURRENDER AND THEREBY TERMINATE YOUR CONTRACT AFTER ELECTING ANNUITY PAYOUT OPTIONS TWO, THREE, FIVE, OR EIGHT, YOU WILL FORFEIT THE LIFE CONTINGENT PAYMENTS OF THESE OPTIONS. Upon Contract termination, we pay you the Commuted Value, minus any applicable CDSCs and Premium tax. Partial Surrenders/Commutation - Partial Surrenders and/or Commutation are permitted after the Annuity Commencement Date if you select the Annuity Payout Option Two, Three, Five, or Six, or Eight. You may withdraw amounts equal to the Commuted Value of the payments that we would have made during the Guaranteed Payout Duration. See Example 4 and footnote 3 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Commuted Value and the computation of Guaranteed Payout Duration. If you select the Annuity Payout Options Two or Eight, the Guaranteed Payout Duration will be equivilant to the Annuity Payout Value divided by the Annuity Payout amount, rounded down. To qualify under these Annuity Payout Options you must make the request before the Guaranteed Payout Duration expires. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. We will deduct any applicable CDSCs. If you elect to withdraw the entire Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will not make any Annuity Payouts during the remaining Guaranteed Payout Duration. If you elect to withdraw only some of the Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will reduce the remaining Annuity Payouts during the remaining Guaranteed Payout Duration on a first-in, first-out basis. ONCE THE GUARANTEED PAYOUT DURATION HAS EXPIRED, YOU MAY RESUME RECEIVING ANNUITY PAYOUTS PROVIDED THAT YOU, A JOINT OWNER OR THE ANNUITANT IS ALIVE AND YOU HAVE NOT TERMINATED YOUR CONTRACT. Annuity Payout Options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. WHAT IS THE COMMUTED VALUE? You may choose to accelerate Annuity Payouts under certain Annuity Payout Options to be received in one lump sum. This is referred to as "commuting" your Annuity Payout. The amount that you request to commute must be at least equal to $500. There will be a waiting period of at least thirty days for payment of any lump sum commutation. Upon commutation, the Annuity Payout Value or the remaining Guaranteed Payout Duration payments, as applicable, will be discounted based on an interest rate that we determine at our sole discretion (the "discount rate"). The discount rate may be different than the interest rate used to establish payout rates. We determine the discount rate based on a number of factors including then current interest rate(s), investment assumptions and the additional anti-selection and mortality risk we incur by permitting commutation. The higher the discount rate and CDSC, the lower the amount that you will receive. COMMUTED VALUE OF YOUR PERSONAL PENSION ACCOUNT WILL BE LESS THAN YOUR ANNUITY PAYOUT VALUE. Commutation does not affect resumption of life contingent Personal Pension Account Payouts at the conclusion of the applicable Guaranteed Payout Duration. Commuted Value is determined on the day we receive your written request. HOW DO YOU REQUEST A SURRENDER? Requests for full Surrenders terminating your Contract must be in writing. Requests for partial Surrenders can be made in writing, by telephone or on the Internet. We will send your money within seven days of receiving complete instructions. However, we may postpone payment whenever: (a) the New York Stock Exchange is closed, (b) trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and orders postponement or (d) the SEC determines that an emergency exists to restrict valuation. Written Requests - Complete a Surrender Form or send us a letter, signed by you, stating: - the dollar amount that you want to receive, either before or after we withhold taxes and deduct for any applicable charges, - your tax withholding amount or percentage, if any, and - your mailing address. 29 ------------------------------------------------------------------------------- You must complete a Commutation Form to commute any portion of your Personal Pension Account Annuity Payout Value or receive Commuted Value under applicable Annuity Payout Options. If there are joint Owners, both must authorize these transactions. For a partial Surrender, specify the Sub-Accounts that you want your Surrender to come from (this may be limited to pro-rata surrenders if optional benefits are elected); otherwise, the Surrender will be taken in proportion to the value in each Sub-Account. Telephone Requests - To request a partial Surrender by telephone, we must have received your completed Telephone Redemption Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept telephone instructions for partial Surrenders from either Owner. Telephone authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on telephone Surrenders. Internet Requests - To request a partial Surrender by internet; we must have received your completed Internet Partial Withdrawal Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept internet instructions for partial Surrenders from either Owner. Internet authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on Internet Surrenders. We may record telephone calls and use other procedures to verify information and confirm that instructions are genuine. We will not be liable for losses or expenses arising from telephone instructions reasonably believed to be genuine. WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME. Telephone and Internet Surrender instructions received before the end of a Valuation Day will be processed at the end of that Valuation Day. Otherwise, your request will be processed at the end of the next Valuation Day. Completing a Power of Attorney form for another person to act on your behalf may prevent you from making Surrenders via telephone and Internet. WHAT SHOULD BE CONSIDERED ABOUT TAXES? There are certain tax consequences associated with Surrenders and Personal Pension Account Payouts. If you make a Surrender or take a Personal Pension Account Payout prior to age 59 1/2, there may be adverse tax consequences including a 10% federal income tax penalty on the taxable portion of the Surrender payment or a Personal Pension Account Payout. Taking these actions before age 59 1/2 may also affect the continuing tax-qualified status of some Contracts. WE DO NOT MONITOR SURRENDER REQUESTS. CONSULT YOUR PERSONAL TAX ADVISER TO DETERMINE WHETHER A SURRENDER OR A PERSONAL PENSION ACCOUNT PAYOUT IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY. More than one Contract owned in the same calendar year - If you own more than one Contract issued by us or our affiliates in the same calendar year, then these Contracts may be treated as one Contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. Please see "Federal Tax Considerations" and "Information Regarding Tax-Qualified Retirement Plans" for more information. D. ANNUITY PAYOUTS Generally speaking, when you annuitize your Contract, you begin the process of converting Accumulation Units in what is known as the "payout phase." The payout phase starts when you annuitize your Contract or with your Annuity Commencement Date and ends when we make the last payment required under your Contract. You may take Personal Pension Account Payouts without annuitizing Contract Value. Once you annuitize your Contract, you may no longer make Personal Pension Account Contributions. You must commence taking Annuity Payouts no later than when you reach your Annuity Commencement Date. Funds allocated to the Personal Pension Account will be paid to you under Annuity Payout Options Two and Eight. Contract Value can only be annuitized under Annuity Payout Options One, Three, Four, Five and Six. Please check with your Registered Representative to select the Annuity Payout Option that best meets your income needs. WHEN DO YOUR ANNUITY PAYOUTS BEGIN? Personal Pension Account Payouts may begin at any time but we reserve the right to require that you own your Contract for at least six months before you start taking these payments. Contract Value may only be annuitized on the Annuity Commencement Date. Your Annuity Commencement Date cannot be earlier than your second Contract Anniversary if choosing a fixed dollar Annuity Payout. The Annuity Commencement Date may be immediate if electing a variable dollar amount Annuity Payout. In no event; however, may the Annuity Commencement Date be later than: - Annuitant's 90th birthday (or if the Owner is a Charitable Remainder Trust, the Annuitant's 100th birthday); - 10th Contract Anniversary (subject to state variation); 30 ------------------------------------------------------------------------------- - The Annuity Commencement Date stated in an extension request (subject to your Financial Intermediary's rules for granting extension requests) received by us not less than 30 days prior to a scheduled Annuity Commencement Date; or - The date that you fully annuitize Accumulation Balance (assuming that no Contract Value exists as of such date). Unless otherwise requested, commencement of receipt of Personal Pension Account Payouts do not constitute an Annuity Commencement Date. We reserve the right, in our sole discretion, to refuse to extend your Annuity Commencement Date regardless of whether we may have granted extensions in the past to you or other similarly situated investors. Your Financial Intermediary may ask us to prohibit Annuity Commencement Date extensions beyond when the Annuitant turns age 95. Please ask your Registered Representative whether you are affected by any such prohibition and make sure that you fully understand the implications this might have in regard to your Death Benefits. Except as otherwise provided, the Annuity Calculation Date is when the amount of your Annuity Payout is determined. This occurs within five Valuation Days before your selected Annuity Commencement Date. All Annuity Payouts, regardless of frequency, will occur on the same day of the month as the Annuity Commencement Date. After the initial payout, if an Annuity Payout date falls on a non-Valuation Day, the Annuity Payout is computed on the prior Valuation Day. If the Annuity Payout date does not occur in a given month due to a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE? Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. We may change these Annuity Payout Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout Option with respect to that portion of your Contract cannot be changed. - OPTION ONE - LIFE ANNUITY We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth. - OPTION TWO - LIFE ANNUITY WITH A CASH REFUND In general, we will make Annuity Payouts as long as the Annuitant is living. However, when the Owner or joint Owner dies before the Annuity Commencement Date (and the Annuitant is living or deceased), the Death Benefit will be paid according to the standard Death Benefit rules. When the Annuitant dies after the Annuity Commencement Date (and the Owner is living or deceased), then the Beneficiary will receive the Death Benefit according to the standard Death Benefit rules and Annuity Payouts cease. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). - OPTION THREE - LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as the Annuitant is living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus the Annuitant's age. If the Annuitant dies before the guaranteed number of years has passed, then the Beneficiary may elect to continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. - OPTION FOUR - JOINT AND LAST SURVIVOR LIFE ANNUITY We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are living. When one Annuitant dies, we continue to make Annuity Payouts until that second Annuitant dies. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable Annuity Payouts, these percentages represent Annuity Units; for fixed Annuity Payouts, they represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION FIVE - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus your younger Annuitant's age. If the Annuitant and the Joint Annuitant both die before the guaranteed number of years have passed, then the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. 31 ------------------------------------------------------------------------------- When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable dollar amount Annuity Payouts, these percentages represent Annuity Units. For fixed dollar amount Annuity Payouts, these percentages represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION SIX - PAYMENTS FOR A PERIOD CERTAIN We agree to make payments for a specified time. The minimum period that you can select is 10 years during the first two Contract Years and 5 years after the second Contract Anniversary. The maximum period that you can select is 100 years minus your Annuitant's age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. - OPTION SEVEN - RESERVED - OPTION EIGHT - JOINT AND LAST SURVIVOR LIFE WITH CASH REFUND (NOT CURRENTLY AVAILABLE) In general, we will make Annuity Payouts as long as the Owner, and either Annuitant or Joint Annuitant are living. When the Owner dies before the Annuity Commencement Date (and the Annuitant or Joint Annuitant is living or deceased), then the Death Benefit is paid according to the standard Death Benefit rules. If death occurs after the Annuity Commencement Date, we will make Annuity Payouts as long as either the Annuitant or the Joint Annuitant is living. When one Annuitant dies, we continue to make Annuity Payouts at the elected percentage until the second Annuitant dies. When the last Annuitant dies, then the Death Benefit is paid according to the standard Death Benefit rules. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 75%, or - Decrease to 50%. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). YOU CANNOT TERMINATE YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE SELECTED ANNUITY PAYOUT OPTIONS TWO, THREE, FOUR, FIVE, SIX OR EIGHT. A CDSC, IF APPLICABLE, MAY BE DEDUCTED. Annuity Payout Option Two is only available for Personal Pension Account Payouts from the Personal Pension Account. Annuity Payout Options One, Three, Four, Five and Six are only available for Annuity Payouts from the Fixed Accumulation Feature or Sub-Accounts. Annuity Payout Option Eight is only available for Personal Pension Account Payouts from the Personal Pension Account and is not currently available. For certain qualified Contracts, if you elect an Annuity Payout Option with a Period Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables. AUTOMATIC ANNUITY PAYOUTS If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under Annuity Payout Option Three. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to five (5%) percent. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS? In addition to selecting an Annuity Commencement Date and an Annuity Payout Option, you must also decide how often you want the Payee to receive Annuity Payouts. You may choose to receive Annuity Payouts: - monthly, - quarterly, - semi-annually, or - annually. 32 ------------------------------------------------------------------------------- Once you select a frequency, it cannot be changed. If you do not make a selection, the Payee will receive monthly Annuity Payouts. You must select a frequency that results in an Annuity Payout of at least $50. If the amount falls below $50, we have the right to change the frequency to bring the Annuity Payout up to at least $50. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED DOLLAR AMOUNT OR VARIABLE DOLLAR AMOUNT? You may choose an Annuity Payout Option with fixed dollar amounts or variable dollar amounts, depending on your income needs. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. If you elect the Personal Pension Account, your Annuity Payout Option may only be a fixed dollar amount. - FIXED DOLLAR AMOUNT ANNUITY PAYOUTS Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium taxes, by an annuity rate set by us. Annuity purchase rates may vary based on the aspect of the Contract annuitized. - VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts. The dollar amount of the first variable Annuity Payout depends on: - the Annuity Payout Option chosen, - the Annuitant's attained age and gender (if applicable), - the applicable annuity purchase rates based on the 1983a Individual Annuity Mortality table adjusted for projections based on accepted actuarial principles; and - the Assumed Investment Return ("AIR"). The total amount of the first variable dollar amount Annuity Payout is determined by dividing the Contract Value minus any applicable Premium taxes, by $1,000 and multiplying the result by the payment factor defined in the Contract for the selected Annuity Payout Option. The dollar amount of each subsequent variable dollar amount Annuity Payout is equal to the total of Annuity Units for each Sub-Account multiplied by the Annuity Unit Value of each Sub-Account. The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to the Accumulation Unit Value Net Investment Factor for the current Valuation Period multiplied by the Annuity Unit Factor, multiplied by the Annuity Unit Value for the preceding Valuation Period. The Annuity Unit Factor offsets the AIR used to calculate your first variable dollar amount Annuity Payout. The first Annuity Payout will be based upon the AIR. The remaining Annuity Payouts will fluctuate based on the performance of the Funds in relation to the AIR. The degree of the fluctuation will depend on the AIR you select. You can select one of the following AIRs offered, subject to state variations:
ANNUITY ANNUITY ANNUITY AIR UNIT FACTOR AIR UNIT FACTOR AIR UNIT FACTOR ------------------------------------------------------------------- 3% 0.999919% 5% 0.999866% 6% 0.999840%
The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR. For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first. Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select. 33 ------------------------------------------------------------------------------- After the Annuity Calculation Date, you may transfer dollar amounts of Annuity Units from one Sub-Account to another. On the day you make a transfer, the dollar amounts are equal for both Sub-Accounts and the number of Annuity Units will be different. We will transfer the dollar amount of your Annuity Units the day we receive your written request if received before the close of the New York Stock Exchange. Otherwise, the transfer will be made on the next Valuation Day. All Sub-Account transfers must comply with applicable transfer restriction policies. - COMBINATION ANNUITY PAYOUT You may choose to receive a combination of fixed dollar amount and variable dollar amount Annuity Payouts as long as they total 100% of your Annuity Payout. For example, you may choose to use forty (40%) percent fixed dollar amount and sixty (60%) percent variable dollar amount to meet your income needs. Combination Annuity Payouts are not available during the first two Contract Years. E. STANDARD DEATH BENEFIT WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED? The Death Benefit is the amount we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The standard Death Benefit is equal to your Account Balance (less Distribution Charge) calculated as of the Valuation Day when we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature and Personal Pension Account for each Beneficiary's portion of the proceeds. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you have $5 million or more in total aggregate Account Balance. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of aggregate Deposits, as adjusted for partial Surrenders (for e.g., dollar-for-dollar or proportional) and Personal Pension Account Payouts under all applicable contracts and associated riders; or - Account Balance plus $1 million. Please see the heading entitled "What kinds of Surrenders are available? - Before the Annuity Commencement Date" under the Surrenders section and "What effect does partial or full Surrenders have on your benefits under the rider?" in the Return of Premium Death Benefit section for a discussion regarding when partial Surrenders reduce your Death Benefit on either a dollar-for-dollar or proportionate basis. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. HOW IS THE DEATH BENEFIT PAID? The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Death Benefit payment is $5,000 or more, the Beneficiary may elect to have their Death Benefit paid through our "Safe Haven Program." Under this program, the proceeds remain in our General Account and the Beneficiary will receive a draft book. The Beneficiary can write one draft for total payment of the Death Benefit, or keep the money in the General Account and write drafts as needed. We will credit interest at a rate determined periodically in our sole discretion. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit amount to the General Account. The interest will be taxable to the Beneficiary in the tax year that it is credited. We may not offer the Safe Haven Program in all states and we reserve the right to discontinue offering it at any time. Although there are no direct charges for this program, we earn investment income from the proceeds. The investment income we earn is likely more than the amount of interest we credit; therefore, we make a profit from the difference. The Beneficiary may elect to leave proceeds from the Death Benefit invested with us for up to five years from the date of death of the Annuitant or Owner if death occurred before the Annuity Commencement Date. Once we receive a certified death certificate or other legal documents acceptable to us, the Beneficiary can: (a) make Sub-Account transfers (subject to applicable restrictions) and (b) take Surrenders without paying CDSCs, if any. The Beneficiary may not make Personal Pension Account Contributions. We shall endeavor to fully discharge the last instructions from the Owner wherever possible or practical. 34 ------------------------------------------------------------------------------- The Beneficiary of a non-qualified Contract or IRA (prior to the required distribution date) may also elect an annuity option that allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. If the Owner dies before the Annuity Commencement Date, the Death Benefit must be distributed within five years after death or be distributed under a distribution option or Annuity Payout Option that satisfies the Alternatives to the Required Distributions described below. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. WHO WILL RECEIVE THE DEATH BENEFIT? The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. If death occurs on or after the Annuity Commencement Date, there may be no payout at death unless the Owner has elected an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value. IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . . Owner There is a surviving joint The Annuitant is living or Joint Owner receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Beneficiary receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Owner's estate receives the Owner and the Beneficiary deceased Death Benefit. predeceases the Owner Annuitant The Owner is living There is no named Contingent The Owner becomes the Annuitant Contingent Annuitant and the Contract continues. The Owner may waive this presumption and receive the Death Benefit. Annuitant The Owner is living The Contingent Annuitant is Contingent Annuitant becomes living the Annuitant, and the Contract continues.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . THEN THE . . . Owner The Annuitant is living Beneficiary becomes the Owner. Annuitant The Owner is living Owner receives the payout at death. Annuitant The Annuitant is also the Owner Beneficiary receives the payout at death.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A PAYOUT AT DEATH. 5. RETURN OF PREMIUM DEATH BENEFIT OBJECTIVE To provide a Death Benefit that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The Death Benefit that we will pay under this rider is in addition to your Personal Pension Account Death Benefit. WHEN CAN YOU BUY THE RIDER? You can currently elect this benefit (called a "rider") only at the time that you buy this Contract. This rider may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw this rider at any time. The maximum age of any Owner or Annuitant when electing this rider is 80. 35 ------------------------------------------------------------------------------- DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? No. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on Premium Payments, as adjusted for Surrenders (as well as Benefit Balance transferred to Contract Value), as of each Contract Anniversary. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be based on the Contract Value on the date of any such change plus Premium Payments received after such date, as adjusted for Surrenders. This charge will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A prorated charge will be deducted in the event of a full Surrender of this Contract or this rider. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts or the rider is terminated. The rider charge may limit access to the Fixed Accumulation Feature in certain states. We reserve the right to change the rider charge up to the maximum fee described in the Fee Summary at any time without notice. The rider charge may increase for new investors. The rider charge may also prospectively increase upon certain ownership changes or upon Spousal Contract continuation. We reserve the right to charge a different rider charge based on your participation in approved investment options. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the higher of Contract Value (minus Distribution Charges) or Premium Payments, as adjusted for Surrenders. See Example 1 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit which is equal to your Benefit Balance. EVEN THOUGH YOUR BENEFIT BALANCE IS NOT SUBJECT TO PRINCIPAL PROTECTION UNDER THIS RIDER, ANY PORTIONS OF YOUR BENEFIT BALANCE TRANSFERRED TO SUB-ACCOUNTS AND/OR THE FIXED ACCUMULATION FEATURE ARE ALSO CONSIDERED TO BE PART OF THE CONTRACT VALUE USED TO COMPUTE THIS DEATH BENEFIT. See Example 2 under The Hartford's Return of Premium Death Benefit Examples in Appendix A. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and result in your Beneficiary receiving the standard Death Benefit. The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? Yes. At anytime following the earliest of the fifth anniversary of the rider effective date or Spousal Contract continuation, the Contract Owner may elect to terminate this rider. If this rider is terminated, then a pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. The Death Benefit will be reset to the standard Death Benefit. No other optional benefit may be elected following the termination. A Company-sponsored exchange of this rider will not be considered to be a 36 ------------------------------------------------------------------------------- termination by you of the rider. This rider will also terminate upon election of a Death Benefit option (described in the "Standard Death Benefit" section) by the Beneficiary (excluding Spousal Contract continuation). WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? We calculate the adjustment to your aggregate Premium Payments for any Surrender by reducing your aggregate Premium Payments on a dollar-for-dollar basis for any Surrender within a Contract Year up to the Death Benefit withdrawal limit. The "Death Benefit withdrawal limit" is five (5%) percent of aggregate Premium Payments. If a change of ownership occurs or if Spousal Contract continuation is elected, the Death Benefit withdrawal limit will be five (5%) percent of Contract Value as of the date of such change plus Premium Payments made after such date. For purposes of this rider, a Surrender also includes a transfer of Contract Value to Benefit Balance. Any partial Surrender that causes cumulative Surrenders during the Contract Year to exceed the Death Benefit withdrawal limit, even if less than your permissible AWA (provided that such Surrender was not made in accordance with our Automatic Income program for the purposes of meeting Required Minimum Distribution requirements), will cause a proportionate reduction in your Death Benefit. Partial Surrenders up to, but not in excess of the Death Benefit withdrawal limit (assuming no ownership changes) will reduce your Death Benefit on a dollar-for-dollar basis. Any and all partial Surrenders in excess of your Death Benefit withdrawal limit, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the excessive partial Surrender (which is the amount of the Surrender in excess of the Death Benefit withdrawal limit) divided by the sum of (i) Contract Value prior to such partial Surrender minus (ii) any remaining Death Benefit withdrawal limit. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Registered Representative before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. See Example 1 under the Return of Premium Examples in Appendix A for an illustration of this calculation. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a reset of these benefits. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated to the lesser of the Contract Value or the Death Benefit on the effective date of the ownership change. If the oldest Owner after the change is greater than the age limitation of the rider as of the trade date of the change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, that Spouse may continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is not available for sale, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the Owner is less than or equal to age 80 at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is still available for sale, the Death Benefit will be increased to the Contract Value if higher than the Death Benefit as of the date of due proof of death and will serve as the new basis for the benefit. The rider charge will be reset to the rider charge then being assessed for new sales of the rider. If the new Owner is age 81 or older at the time of the Spousal Contract continuation, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date and then will no longer be assessed. 37 ------------------------------------------------------------------------------- WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. You may allocate your Contract Value to any Sub-Accounts(s), asset allocation models, investment programs, fund of funds Sub-Accounts(s) or other investment option(s) or you may design your own portfolio, provided that your Fund selections comply with the investment restrictions in the following table:
CLASSIFICATION ALLOCATION -------------------------------------------------------------------------------- Fixed investments Funds Minimum of 30% - to a maximum of 100% Equity Investments - Maximum of 70% - No more than 20% may be invested in any one Fund in this category Limited Investments Maximum of 20% Multi-Asset Investments - Minimum of 0% - to a maximum of 100% - May not be combined with Funds in the above classifications
Please refer to Appendix C for the classification associated with each currently offered Fund. Investing in the Personal Pension Account and Fixed Accumulation Feature do not constitute a violation of these investment restrictions. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. The Personal Pension Account and Fixed Accumulation Feature are not included within any classification. We may, in our sole discretion, add, replace or delete Funds, programs, classifications, allocations and asset allocation models from time to time. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. You will be provided with advance notification of any investment restriction changes and you must invest any subsequent Premium Payments in accordance with such updated investment restrictions. You must participate in an asset rebalancing program. If on any Valuation Day, your Contract Value is no longer invested within the permissible allocations in the table above as a result of market fluctuations, we will not terminate the rider. Instead, your Contract Value will be rebalanced quarterly in accordance with your last compliant allocation instructions. All subsequent Premium Payments must also be invested according to the classifications described in this section. YOU MAY PROVIDE INVESTMENT INSTRUCTIONS TO INVEST CONTRACT VALUE IN A MANNER THAT VIOLATES THESE INVESTMENT RESTRICTIONS. ANY SUCH ACTION WILL, HOWEVER, RESULT IN THE TERMINATION OF THIS RIDER. WE WILL NOT ACCEPT INSTRUCTIONS TO VIOLATE THE INVESTMENT RESTRICTIONS FROM YOUR REGISTERED REPRESENTATIVE. VIOLATING THESE INVESTMENT RESTRICTIONS SHALL RESULT IN THE TERMINATION OF YOUR DEATH BENEFIT UNDER THIS RIDER. If this rider is terminated due to failure to comply with the investment restrictions, you will have a one time opportunity to reinstate the Death Benefit. You will be notified in your confirmation statement that you have violated these investment restrictions. The thirty calendar day reinstatement period will begin from the date this rider is terminated. Your opportunity to reinstate will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, or make an ownership change. UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENT WILL BE RESET AT THE LOWER OF THE DEATH BENEFIT PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE REINSTATEMENT. WE WILL DEDUCT A PRORATED RIDER CHARGE ON YOUR CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. 38 ------------------------------------------------------------------------------- CAN WE AGGREGATE CONTRACTS? Yes. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates where you have elected any optional death benefit rider as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you make $5 million or more in total aggregate Deposits. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of Deposits (as reduced by an adjustment for Surrenders), or - Account Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, assignment and/or violation of the investment restrictions. If we terminate the rider, it cannot be re-elected by you. - The selection of an Annuity Payout Option and the timing of the selection may have an impact on the tax treatment of the Death Benefit. To receive favorable tax treatment, the Annuity Payout Option selected: (a) cannot extend beyond the Beneficiary's life or life expectancy, and (b) must begin within one year of the date of death. If these conditions are not met, the Death Benefit will be treated as a lump sum payment for tax purposes. This sum will be taxable in the year in which it is considered received. - Upon Spousal Contract continuation or ownership change, the Death Benefit withdrawal limit upon which we reduce the Death Benefit will be adjusted to equal five (5%) percent of the Contract Value as of the date of such change plus Premium Payments received after such date. - If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the Contract may continue with the Spouse as Owner through a Spousal Contract continuation election, unless the Spouse elects to receive the Death Benefit as a lump sum payment or as an Annuity Payout Option. If the Contract continues with the Spouse as Owner, we will adjust the Contract Value to the amount that we would have paid as the Death Benefit payment, had the Spouse elected to receive the Death Benefit as a lump sum payment. Spousal Contract continuation will only apply one time for each Contract. If you do not name another Beneficiary at the time of continuation, the Beneficiary will default to your estate. - Participation in an automatic investment or income program may result in a transaction during the reinstatement period causing you to lose your right to reinstate the Death Benefit. 6. FURTHER INFORMATION A. GLOSSARY Except as provided elsewhere in this prospectus, the following capitalized terms shall have the meaning ascribed below: ACCOUNT: Any of the Sub-Accounts or the Fixed Accumulation Feature. ACCOUNT BALANCE: The sum of your Contract Value and Benefit Balance (this term is also referred to as the "Total Balance" in your Contract and marketing materials). ACCUMULATION BALANCE - The sum of all Personal Pension Account Contributions increased by credited interest; minus any transfers into any other Account(s) and any conversion into Annuity Payout Value. ACCUMULATION UNITS: If you allocate your Premium Payment to any of the Sub-Accounts, we will convert Premium Payments into Accumulation Units in the selected Sub-Accounts. Accumulation Units are valued at the end of each Valuation Day and are used to calculate Contract Value prior to Annuitization. ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation Day. ADMINISTRATIVE OFFICE: Our overnight mailing address is: 1 Griffin Road North, Windsor, CT 06095-1512. Our standard mailing address is: P.O. Box 5085, Hartford, Connecticut 06102-5085. ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or upon full Surrender. ANNUAL WITHDRAWAL AMOUNT (AWA): The amount you may Surrender each Contract Year without incurring a CDSC. 39 ------------------------------------------------------------------------------- ANNUITANT: The person on whose life the Contract is issued. Except as otherwise provided, the Annuitant may not be changed after your Contract is issued. ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout. ANNUITY COMMENCEMENT DATE: The first day of the first period for which a distribution is received as an Annuity Payout under the Contract. ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the duration and frequency you select. Annuity Payout also refers to Personal Pension Account Payouts. ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity Commencement Date, the death of the Contract Owner or Annuitant; or annuitization(s) of Benefit Balance. ANNUITY PAYOUT VALUE: The portion of your Benefit Balance annuitized converted into Personal Pension Account Payouts, as reduced by future Personal Pension Account Payouts. ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity Payouts under a variable dollar amount Annuity Payout Option. ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day. BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of the Contract upon the death of any Contract Owner or Annuitant, as the case may be. BENEFIT BALANCE: Personal Pension Account Contributions, as adjusted for transfers to or from Contract Value, credited interest and/or annuitization. Benefit Balance includes Annuity Payout Value, if any. CODE: The Internal Revenue Code of 1986, as amended. COMMUTED VALUE: The present value of any Annuity Payout due and payable during the Guaranteed Payout Duration. This amount is calculated using the Assumed Investment Return for variable dollar amount Annuity Payouts and the applicable discount rate determined by us for applicable fixed dollar amount Annuity Payouts. CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if the original Annuitant dies before the Annuity Commencement Date. You must name a Contingent Annuitant before the original Annuitant's death. CONTINGENT DEFERRED SALES CHARGE (CDSC): The deferred sales charge, if applicable, that may apply when you make a full or partial Surrender. CONTRACT: The individual Annuity Contract and any endorsements or riders. Group participants and some individuals may receive a certificate rather than a Contract. CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If the Contract Anniversary falls on a Non-Valuation Day, then the Contract Anniversary will be the next Valuation Day. CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in this prospectus including any joint Owner(s). We do not capitalize "you" in the prospectus. CONTRACT VALUE: The total value of the Account on any Valuation Day. CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued. DEATH BENEFIT: Except as otherwise provided, the amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date. DEPOSIT: The sum of allPremium Payments and Personal Pension Account Contributions. FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate all or a portion of your Contract Value. In your Contract, the Fixed Accumulation Feature may be called the Fixed Account. Not all classes of Contracts we offer contain a Fixed Accumulation Feature. FUND: A registered investment company or a series thereof in which assets of a Sub-Account may be invested. We sometimes call the Funds you select a "Sub-Account". GUARANTEED PAYOUT DURATION: The time period (sometimes referred to as a "Period Certain") specified in Annuity Payout Options Three, Five and Six; and with respect to Annuity Payout Options Two and Eight, the time period equal to the applicable Annuity Payout Value divided by the corresponding Personal Pension Account Payout, rounded down. 40 ------------------------------------------------------------------------------- JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the Annuitant dies after Annuitization. You may name a Joint Annuitant only if your Annuity Payout Option provides for a survivor. The Joint Annuitant may not be changed. NET INVESTMENT FACTOR: This is used to measure the investment performance of a Sub-Account from one Valuation Day to the next, and is also used to calculate your Annuity Payout amount. 1933 ACT: The Securities Act of 1933, as amended. 1934 ACT: The Securities Exchange Act of 1934, as amended. 1940 ACT: The Investment Company Act of 1940, as amended. NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading. PAYEE: The person or party you designate to receive Annuity Payouts. PERSONAL PENSION ACCOUNT CONTRIBUTIONS: Sums allocated to the Personal Pension Account (after deduction of front-end sales charges, if applicable). Personal Pension Account Contributions may take the form of Deposits or transfers of Contract Value from Sub-Accounts or the Fixed Accumulation Feature (if applicable). PERSONAL PENSION ACCOUNT PAYOUTS: Regularly scheduled periodic payments of Annuity Payout Value. PREMIUM OR PREMIUM PAYMENT: Money sent to us to be invested in your Contract (not taking into consideration any applicable sales charges). Unless otherwise specified, a Premium Payment does not include Personal Pension Account Contributions. Portions of your Benefit Balance transferred to Sub-Accounts and/or the Fixed Accumulation Feature are initially considered to be Premium Payments that become part of your Contract Value. REMAINING GROSS PREMIUM: Premium Payments minus prior partial Surrenders in excess of the AWA at the time of such partial Surrender. SPOUSE: A person related to a Contract Owner by marriage pursuant to the Code. SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund. There is a Sub-Account for each Fund. We sometimes call the Funds you select your "Sub-Account". SUB-ACCOUNT VALUE: The value of each Sub-Account on or before the Annuity Calculation Date, which is determined on any day by multiplying the number of Accumulation Units by the Accumulation Unit Value for each Sub-Account. SURRENDER: A complete or partial withdrawal from your Contract. For the purposes of optional riders only, a Surrender may also include a transfer of Contract Value to Benefit Balance. SURRENDER VALUE: The amount we pay you if you terminate your Contract before the Annuity Commencement Date. The Surrender Value is equal to the Contract Value minus any applicable charges (subject to rounding). Surrender Value does not include the Commuted Value of your Personal Pension Account. TARGET INCOME AGE - The year when Personal Pension Account Payouts are likely to commence. Target Income Age establishes a 7-year guarantee window (three years before and after) during which a guaranteed payout rate will be applied to your Accumulation Balance. VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values of the Separate Account are determined as of the close of the New York Stock Exchange. The Exchange generally closes at 4:00 p.m. Eastern Time but may close earlier on certain days and as conditions warrant. VALUATION PERIOD: The time span between the close of trading on the New York Stock Exchange from one Valuation Day to the next. WE, US OR OUR: Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company, as the case may be. YOU: The Owner including any joint Owner(s). We do not capitalize "you" or "your" in this prospectus. B. STATE VARIATIONS The following section describes modifications to this prospectus required by one or more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of Contracts we issue. References to certain state's variations do not imply that we actually offer Contracts in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders. ALABAMA - The Fixed Accumulation Feature is not available. The DCA Plus Fixed Accumulation Feature is available. 41 ------------------------------------------------------------------------------- CALIFORNIA - If you are 60 years old or older you must either elect the Senior Protection Program, or elect to immediately allocate the initial Premium Payments to the other investment options. Under the Senior Protection Program, we will allocate your initial Premium Payment to a money market Fund for the first 35 days your initial Premium Payment is invested. After the 35th day we will automatically allocate your Contract Value according to your most current investment instructions. If you elect the Senior Protection Program you will not be able to participate in any InvestEase (if otherwise available) or Dollar Cost Averaging Program until after the Program has terminated. The Dollar Cost Averaging Plus, the Static Asset Allocation Models and certain Automatic Income Programs are not available if you elect the Senior Protection Program. Under the Senior Protection Program any subsequent Premium Payment received during the 35 days after the initial Premium Payment is invested will also be invested in a money market Fund unless you direct otherwise. You may voluntarily terminate your participation in the Senior Protection Program by contacting us in writing or by telephone. You will automatically terminate your participation in the Senior Protection Program if you allocate a subsequent Premium Payment to any other investment option or transfer Contract Value from a money market Fund to another investment option. When you terminate your participation in the Senior Protection Program you may reallocate your Contract Value in the Program to other investment options; or we will automatically reallocate your Contract Value in the Program according to your original instructions 35 days after your initial Premium Payment was invested. CONNECTICUT, NEW HAMPSHIRE AND NEW JERSEY - A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). FLORIDA - The limit on Death Benefits imposed when aggregate Premium Payments total $5 million or more does not apply. MASSACHUSETTS - We will accept subsequent Premium Payments only until the Annuitant's 63rd birthday or the third Contract Anniversary, whichever is later (B Share Contracts). The Nursing Home Waiver is not available. NEW JERSEY - The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. NEW YORK - A Contract issued by Hartford Life and Annuity Insurance Company is not available in New York. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. OKLAHOMA - The only AIRs available are 3% and 5%. OREGON - We will accept subsequent Premium Payments during the first three Contract Years (B Share Contracts). Owners may only sign up for DCA Plus Programs that are 6 months or longer. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. The only AIRs available are 3% and 5%. PENNSYLVANIA - The Nursing Home Waiver minimum confinement period is changed from 180 days to 90 days. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. TEXAS - Letters of Intent are not available as a basis to reduce sales charges. VERMONT - Eligible Investments owned by you, your Spouse or any immediate family member may be included under the Rights of Accumulation Program. WASHINGTON - In any year when no Premium Payment is paid into the Fixed Accumulation Feature, any pro-rata portion of the fee taken from the Fixed Accumulation Feature will be limited to interest earned in excess of the 3% for that year. C. MISCELLANEOUS OWNERSHIP CHANGES - We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. ASSIGNMENT - A non-qualified Contract may be assigned subject to the ownership change restrictions above. We must be properly notified in writing of an assignment. Any Annuity Payouts or Surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract. 42 ------------------------------------------------------------------------------- SPECULATIVE INVESTING - Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. Your Contract may not be traded on any stock exchange or secondary market. By purchasing this contract you represent and warrant that you are not using this Contract, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. CONTRACT MODIFICATION - We may unilaterally modify the Contract to reflect, among other things, changes in applicable tax law or interpretations of tax law, but no modification will affect the amount or term of any Contract unless a modification is required to conform the Contract to applicable federal or state law. No modification will affect the method by which Contract Values are determined. Any modifications to the Contract will be filed with each state in which the Contract is for sale. Contract changes will be communicated to Owners through regular mail as an endorsement to their Contract. MEDICAID BENEFITS - Medicaid estate planning may be important to people who are concerned about long term care costs. Benefits associated with this variable annuity may have an impact on your Medicaid eligibility and the assets considered for Medicaid benefits. Ownership interests or beneficiary status under this variable annuity could render you or your loved ones ineligible for Medicaid. This may be particularly troubling if your Spouse or Beneficiary is already receiving Medicaid benefits at the time of transfer or receipt of Death Benefits. As certain ownership changes are either impermissible or are subject to benefit resetting rules, you may want to carefully consider how you structure the ownership and beneficiary status of your Contract. This discussion is intended to provide a very general overview and does not constitute legal advice or in any way suggest that you circumvent these rules. You should seek advice from a competent elder law attorney to make informed decisions about how this variable annuity may affect your plans. D. LEGAL PROCEEDINGS There continues to be significant federal and state regulatory activity relating to financial services companies. Like other insurance companies, we are involved in lawsuits, arbitrations, and regulatory/legal proceedings. Certain of the lawsuits and legal actions the Company is involved in assert claims for substantial amounts. While it is not possible to predict with certainty the ultimate outcome of any pending or future case, legal proceeding or regulatory action, we do not expect the ultimate result of any of these actions to result in a material adverse effect on the Company or its Separate Accounts. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods. E. HOW CONTRACTS ARE SOLD We have entered into a distribution agreement with our affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD serves as the principal underwriter for the Contracts, which are offered on a continuous basis. HSD is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of HSD is the same as ours. PLANCO Financial Services, LLC, a subsidiary of Hartford Life Insurance Company, provides marketing support for us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that sells this Contract. HSD has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to HSD for sales of the Contracts by Financial Intermediaries. HSD, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2008. Contracts will be sold by individuals who have been appointed by us as insurance agents and who are registered representatives of Financial Intermediaries ("Registered Representatives"). B and I share Contracts may be sold directly to the following individuals free of any commission: 1) our current or retired officers, directors, trustees and employees (and their families) and our corporate parent, affiliates and subsidiaries; and 2) employees and Registered Representatives of Financial Intermediaries. If applicable, we will credit the B share Contract with a credit of 5.0% of the initial Deposit and each subsequent Deposit, if any. This additional percentage of Deposit in no way affects current or future charges, rights, benefits or account values of other Owners. The financial advisory arrangement otherwise required in order to purchase I share Contracts shall not be applicable to Hartford Leaders Series V individual variable annuities bought by any of our current or retired officers, directors, trustees and employees or those of our corporate parent, affiliates and subsidiaries. This prospectus does not constitute personalized investment or financial planning advice or a recommendation to purchase this or any other variable annuity. We reserve the right to modify, suspend, or terminate these privileges at any time. We list below types of arrangements that help to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affect each variable annuity. These types of arrangements could be viewed as creating conflicts of interest. 43 ------------------------------------------------------------------------------- Financial Intermediaries receive commissions (described below under "Commissions"). Certain selected Financial Intermediaries also receive additional compensation (described below under "Additional Payments"). All or a portion of the payments we make to Financial Intermediaries may be passed on to Registered Representatives according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive commissions based on the type of Contract or optional benefits sold. Commissions are based on a specified amount of Deposits or Account Balance. - COMMISSIONS Up front commissions paid to Financial Intermediaries generally range from 0% to up to 5% of each Deposit. Trail commissions (fees paid for customers that maintain their Contracts generally for more than 1 year) range up to 1% of your Account Balance. We pay no additional commissions with respect to assets moved from the Personal Pension Account to Sub-Accounts or the Fixed Accumulation Feature. We pay different commissions based on the Contract variation that you buy. We may pay a lower commission for sales to Owners over age 80. Commission arrangements vary from one Financial Intermediary to another. We are not involved in determining your Registered Representative's compensation. Under certain circumstances, your Registered Representative may be required to return all or a portion of the commissions paid. Check with your Registered Representative to verify whether your account is a brokerage or an advisory account. Your interests may differ from ours and your Registered Representative (or the Financial Intermediary with which they are associated). Please ask questions to make sure you understand your rights and any potential conflicts of interest. If you are an advisory client, your Registered Representative (or the Financial Intermediary with which they are associated) can be paid both by you and by us based on what you buy. Therefore, profits, and your Registered Representative's (or their Financial Intermediary's) compensation, may vary by product and over time. Contact an appropriate person at your Financial Intermediary with whom you can discuss these differences. - ADDITIONAL PAYMENTS Subject to FINRA and Financial Intermediary rules, we (or our affiliates) also pay the following types of fees to among other things encourage the sale of this Contract. These additional payments could create an incentive for your Registered Representative, and the Financial Intermediary with which they are associated, to recommend products that pay them more than others, which may not necessarily be to your benefit.
ADDITIONAL PAYMENT TYPE WHAT IT'S USED FOR ------------------------------------------------------------------------------------------------------------------------------- Access Access to Registered Representatives and/or Financial Intermediaries such as one-on-one wholesaler visits or attendance at national sales meetings or similar events. Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and other gifts. Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/participation; sponsorship of Financial Intermediary sales contests and/or promotions in which participants (including Registered Representatives) receive prizes such as travel awards, merchandise and recognition; client generation expenses. Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities for certain Allowances Funds. Support Sales support through such things as providing hardware and software, operational and systems integration, links to our website from a Financial Intermediary's websites; shareholder services (including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and reimbursements). Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training, and/or client or prospect seminar sponsorships. Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or visibility at, national and regional conferences; and/or articles in Financial Intermediary publications highlighting our products and services. Volume Pay for the overall volume of their sales or the amount of money investing in our products.
44 ------------------------------------------------------------------------------- As of December 31, 2008, we have entered into ongoing contractual arrangements to make Additional Payments to the following Financial Intermediaries for our entire suite of variable annuities: AIG Advisors Group, Inc., (Advantage Capital, AIG Financial Advisors, American General, FSC Securities Corporation, Royal Alliance Assoc., Inc.), Allen & Company, AMTrust Investment Svcs Inc., Associated Securities, Banc of America Investment Services Inc., Bancwest Investment Services, Inc., Cadaret, Grant & Co., Inc., Cambridge Investment Research Inc., Capital Analyst Inc., Centaurus Financial, Inc., CCO Investment Services Corp., Citigroup, Inc. (various divisions and affiliates), Comerica Securities, Commonwealth Financial Network, Compass Brokerage, Inc., Crown Capital Securities, L.P., Cuna Brokerage Services, Inc., Cuso Financial Services, L.P., Edward D. Jones & Co., L.P., FFP Securities, Inc., First Allied Securities, Inc., First Citizens Investor Services, First Montauk Securities Corp., First Tennessee Brokerage Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc., H. Beck, Inc., H.D. Vest Investment Services (subsidiary of Wells Fargo & Company), Harbour Investments, Inc., Heim & Young Securities, Huntington Investment Company, Independent Financial Group LLC, Infinex Financial Group, ING Advisors Network, (Financial Network Services (or Investment) Corp., ING Financial Partners, Multi-Financial Securities, Primevest Financial Services, Inc.,), Inter-Securities Inc., Investacorp, Inc., Investment Professionals, Inc., Investors Capital Corp., J.J.B. Hilliard, James T. Borello & Co., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corporation, Key Investment Services, LaSalle Financial Services, Inc., Lincoln Financial Advisors Corp. (marketing name for Lincoln National Corp.), Lincoln Financial Securities Corp., Lincoln Investment Planning, LPL Financial Corporation, M&T Securities, Inc., Merrill Lynch Pierce Fenner & Smith, MML Investor Services Inc., Morgan Keegan & Company, Inc., Morgan Stanley & Co., Inc. (various divisions and affiliates), Mutual Service Corporation, NatCity Investments, National Planning Holdings (Invest Financial Corp., Investment Centers of America, Inc., National Planning Corp., SII Investments, Inc.), Newbridge Securities Corp., NEXT Financial Group, Inc., NFP Securities, Inc., Pension Planners Securities, Inc., Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James & Associates, Inc., Raymond James Financial Services, RBC Capital Markets., Robert W. Baird & Co. Inc., Rogan & Associates, Securities America, Inc., Sigma Financial Corporation, Sorrento Pacific, Stifel Nicolaus & Company, Incorporated, Summit Brokerage Services Inc., Sun Trust Bank, TFS Securities, Inc., The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc., Triad Advisors, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services, Inc. (Union Bank of California, N.A.), UBS Financial Services, Inc., Uvest Financial Services Group Inc., Vanderbilt Securities, LLC, Wachovia Securities, LLC (various divisions), Walnut Street Securities, Inc., Waterstone Financial Group, Wells Fargo Brokerage Services, L.L.C., WaMu Investments, Inc., Woodbury Financial Services, Inc. (an affiliate of ours). Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their Registered Representative is or should be included in any such listing. As of December 31, 2008, we have entered into arrangements to pay Marketing Expense Allowances to the following Fund Companies (or affiliated parties) for our entire suite of variable annuities: AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investment Research and Management, Inc., American Variable Insurance Series & Capital Research and Management Company, Franklin Templeton Services, LLC, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Putnam Retail Management Limited Partnership. Marketing Expense Allowances may vary based on the form of Contract sold and the age of the purchaser. We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify you whether any Financial Intermediary is or should be included in any such listing. You are encouraged to review the prospectus for each Fund for any other compensation arrangements pertaining to the distribution of Fund shares. For the fiscal year ended December 31, 2008, Additional Payments did not in the aggregate exceed approximately $55.8 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.06% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $7.9 million or approximately 0.25% of the Premium Payments invested in a particular Fund during this period. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. Financial Intermediaries that received Additional Payments in 2008, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. 7. FEDERAL TAX CONSIDERATIONS A. INTRODUCTION The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the Internal Revenue Code ("Code"), Treasury Regulations thereunder, and public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by published court decisions. This summary discusses only certain federal income tax consequences to United States Persons, and does not discuss state, local or foreign 45 ------------------------------------------------------------------------------- tax consequences. The term United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trust or estates that are subject to United States federal income tax, regardless of the source of their income. See "Annuity Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity purchases by non-U.S. Persons or residents. This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract. In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW. B. TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT The Separate Account is taxed as part of the Company which is taxed as a life insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the Separate Account will not be taxed as a "regulated investment company" under Subchapter M of Chapter 1 of the Code. Investment income and any realized capital gains on assets of the Separate Account are reinvested and taken into account in determining the value of the Accumulation and Annuity Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the Contract. Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. The Company is entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account. These tax benefits, which may include the foreign tax credit and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived. C. TAXATION OF ANNUITIES - GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN TAX-QUALIFIED RETIREMENT PLANS Section 72 of the Code governs the taxation of annuities in general. 1. NON-NATURAL PERSONS AS OWNERS Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Contract Owner generally could be required to include in gross income currently for each taxable year the excess of (a) the sum of the Contract Value as of the close of the taxable year and all previous distributions under the Contract over (b) the sum of net premiums paid for the taxable year and any prior taxable year and the amount includable in gross income for any prior taxable year with respect to the Contract under Section 72(u). However, Section 72(u) does not apply to: - A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person), - A contract acquired by the estate of a decedent by reason of such decedent's death, - Certain contracts acquired with respect to tax-qualified retirement arrangements, - Certain contracts held in structured settlement arrangements that may qualify under Code Section 130, or - A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract's purchase. A non-natural Contract Owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code 46 ------------------------------------------------------------------------------- Section 72(u). However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts. Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements. 2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected. The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts which were purchased prior to August 14, 1982. a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. i. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract" under Section 72 of the Code. ii. To the extent that the value of the Contract (ignoring any surrender charges except on a full surrender) exceeds the "investment in the contract," such excess constitutes the "income on the contract." It is unclear what value should be used in determining the "income on the contract." We believe that the current Contract Value (determined without regard to surrender charges) generally is an appropriate measure. However, in some instances the IRS could take the position that the value should be the current Contract Value (determined without regard to surrender charges) increased by some measure of the value of certain future cash-value type benefits. iii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a withdrawal or partial surrender) is deemed to come first from any such "income on the contract" and then from "investment in the contract," and for these purposes such "income on the contract" shall be computed by reference to any aggregation rule in subparagraph 2.c. below. As a result, any such amount received or deemed received (1) shall be includable in gross income to the extent that such amount does not exceed any such "income on the contract," and (2) shall not be includable in gross income to the extent that such amount does exceed any such "income on the contract." If at the time that any amount is received or deemed received there is no "income on the contract" (e.g., because the gross value of the Contract does not exceed the "investment in the contract" and no aggregation rule applies), then such amount received or deemed received will not be includable in gross income, and will simply reduce the "investment in the contract." iv. The receipt of any amount as a loan under the Contract or the assignment or pledge of any portion of the value of the Contract shall be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. v. In general, the transfer of the Contract, without full and adequate consideration, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. This transfer rule does not apply, however, to certain transfers of property between Spouses or incident to divorce. vi. In general, any amount actually received under the Contract as a Death Benefit, including an optional Death Benefit, if any, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made periodically after the Annuity Commencement Date are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the "investment in the contract" to the total amount of the payments to be made after the Annuity Commencement Date (the "exclusion ratio"). i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the investment in the contract as of the Annuity Commencement Date, any additional payments (including surrenders) will be entirely includable in gross income. ii. If the annuity payments cease by reason of the death of the Annuitant and, as of the date of death, the amount of annuity payments excluded from gross income by the exclusion ratio does not exceed the investment in the contract as of the Annuity Commencement Date, then the remaining portion of unrecovered investment shall be allowed as a deduction for the last taxable year of the Annuitant. 47 ------------------------------------------------------------------------------- iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date are not entitled to any exclusion ratio and shall be fully includable in gross income. However, upon a full surrender after such date, only the excess of the amount received (after any surrender charge) over the remaining "investment in the contract" shall be includable in gross income (except to the extent that the aggregation rule referred to in the next subparagraph c. may apply). iv. When annuitization of the Personal Pension Account has occurred, your Benefit Balance will be calculated by using an actuarial present value formula. c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after October 21, 1988 by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract may be treated as a new contract for this purpose. We believe that for any Contracts subject to such aggregation, the values under the Contracts and the investment in the contracts will be added together to determine the taxation under subparagraph 2.a., above, of amounts received or deemed received prior to the Annuity Commencement Date. Withdrawals will first be treated first as withdrawals of income until all of the income from all such Contracts is withdrawn. In addition, the Treasury Department has specific authority under the aggregation rules in Code Section 72(e)(12) to issue regulations to prevent the avoidance of the income-out-first rules for non-periodic distributions through the serial purchase of annuity contracts or otherwise. As of the date of this prospectus, there are no regulations interpreting these aggregation provisions. d. 10% PENALTY TAX - APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS. i. If any amount is received or deemed received on the Contract (before or after the Annuity Commencement Date), the Code applies a penalty tax equal to ten percent of the portion of the amount includable in gross income, unless an exception applies. ii. The 10% penalty tax will not apply to the following distributions: 1. Distributions made on or after the date the recipient has attained the age of 59 1/2. 2. Distributions made on or after the death of the holder or where the holder is not an individual, the death of the primary annuitant. 3. Distributions attributable to a recipient becoming disabled. 4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the recipient (or the joint lives or life expectancies of the recipient and the recipient's designated Beneficiary). 5. Distributions made under certain annuities issued in connection with structured settlement agreements. 6. Distributions of amounts which are allocable to the "investment in the contract" prior to August 14, 1982 (see next subparagraph e.). 7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service. If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14, 1982. If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first from the amount of the "investment in the contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then from the portion of the "income on the contract" (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining "income on the contract" and (4) last from the remaining "investment in the contract." As a result, to the extent that such amount received or deemed received does not exceed such pre-8/14/82 investment, such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the contract" attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e. 48 ------------------------------------------------------------------------------- f. REQUIRED DISTRIBUTIONS i. Death of Contract Owner or Primary Annuitant Subject to the alternative election or Spouse beneficiary provisions in ii or iii below: 1. If any Contract Owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death; 2. If any Contract Owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and 3. If the Contract Owner is not an individual, then for purposes of 1. or 2. above, the primary annuitant under the Contract shall be treated as the Contract Owner, and any change in the primary annuitant shall be treated as the death of the Contract Owner. The primary annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract. ii. Alternative Election to Satisfy Distribution Requirements If any portion of the interest of a Contract Owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the Contract Owner's death. iii. Spouse Beneficiary If any portion of the interest of a Contract Owner is payable to or for the benefit of his or her Spouse, and the Annuitant or Contingent Annuitant is living, such Spouse shall be treated as the Contract Owner of such portion for purposes of section i. above. This Spousal Contract continuation shall apply only once for this Contract. iv. Civil Union or Domestic Partner Upon the death of the Contract Owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving civil union or domestic partner of the Contract Owner pursuant to a civil union or domestic partnership recognized under state law, then such designated beneficiary's right to continue the Contract as the succeeding Contract Owner will be contingent, among other things, upon the treatment of such designated beneficiary as the spouse of the Contract Owner under Code Section 72(s) (or any successor provision). Currently, Federal tax law only recognizes spouses if they are married individuals of the opposite sex. Consequently, such designated beneficiary who is not recognized as a "spouse" under Federal tax law will not be able to continue the Contract and the entire interest in the Contract must be distributed within five years of the Contract Owner's death or under the Alternative Election. g. ADDITION OF RIDER OR MATERIAL CHANGE. The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information. h. PARTIAL EXCHANGES. The IRS in Rev. Rul. 2003-76 confirmed that the owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul. 2003-76 also refers to caveats and additional guidance in the companion Notice 2003-51, which discusses cases in which a partial exchange is followed by a surrender, withdrawal or other distribution from either the old contract or the new contract. Notice 2003-51 specifically indicates that the IRS is considering (1) under what circumstances it should treat a partial exchange followed by such a distribution within 24 months as presumptively for "tax avoidance" purposes (e.g., to avoid the income-out-first rules on amounts received under Code Section 72) and (2) what circumstances it should treat as rebutting such a presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of employment). Notice 2003-51 was superseded by Revenue Procedure 2008-24, effective for partial exchanges completed on or after June 30, 2008. Partial exchanges completed on or after this date will qualify for tax free treatment if: (1) no amounts are withdrawn from, or received in surrender of, either of the contracts involved in the exchange during the 12 months beginning on the date on which amounts are treated as received as premiums or other consideration paid for the contract received in the exchange (the date of transfer); or (2) the taxpayer demonstrates that certain conditions (e.g., death, disability, reaching age 59 1/2, divorce, loss of employment) occurred between the date of transfer and the date of the withdrawal or surrender. A transfer within the scope of the revenue procedure, but not treated as a tax-free exchange, will be treated as a taxable distribution, followed by a payment for a second contract. Two annuity contracts that are the subject of a tax-free exchange pursuant 49 ------------------------------------------------------------------------------- to the revenue procedure will not be aggregated, even if issued by the same insurance company. We advise you to consult with a qualified tax adviser as to potential tax consequences before attempting any partial exchange. The applicability of the IRS's partial exchange guidance to the splitting of an annuity contract is not clear. You should consult with a tax adviser if you plan to split an annuity contract as part of an exchange of annuity contracts. 3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting your Contract be adequately diversified. Code Section 817(h) provides that a variable annuity contract will not be treated as an annuity contract for any period during which the investments made by the separate account or Fund are not adequately diversified. If a contract is not treated as an annuity contract, the contract owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of the segregated asset account underlying a variable contract is represented by any one investment, - no more than 70% is represented by any two investments, - no more than 80% is represented by any three investments and - no more than 90% is represented by any four investments. In determining whether the diversification standards are met, all securities of the same issuer, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. In the case of government securities, each government agency or instrumentality is treated as a separate issuer. A separate account must be in compliance with the diversification standards on the last day of each calendar quarter or within 30 days after the quarter ends. If an insurance company inadvertently fails to meet the diversification requirements, the company may still comply within a reasonable period and avoid the taxation of contract income on an ongoing basis. However, either the insurer or the contract owner must agree to make adjustments or pay such amounts as may be required by the IRS for the period during which the diversification requirements were not met. Fund shares may also be sold to tax-qualified plans pursuant to an exemptive order and applicable tax laws. If Fund shares are sold to non-qualified plans, or to tax-qualified plans that later lose their tax-qualified status, the affected Funds may fail the diversification requirements of Code Section 817(h), which could have adverse tax consequences for Contract Owners with premiums allocated to affected Funds. In order to prevent a Fund diversification failure from such an occurrence, the Company obtained a private letter ruling ("PLR") from the IRS. As long as the Funds comply with certain terms and conditions contained in the PLR, Fund diversification will not be prevented if purported tax-qualified plans invest in the Funds. The Company and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. 4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the "owner" of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the "tax owner" of certain separate account assets, income and gain from such assets would be includable in the variable contract owner's gross income. The Treasury Department indicated in 1986 that it would provide guidance on the extent to which contract owners may direct their investments to particular Sub-Accounts without being treated as tax owners of the underlying shares. Although no such regulations have been issued to date, the IRS has issued a number of rulings that indicate that this issue remains subject to a facts and circumstances test for both variable annuity and life insurance contracts. Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where interests in a partnership offered in an insurer's separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such interests can be purchased directly by the general public or others without going through such a variable contract), such "public availability" means that such interests should be treated as owned directly by the contract owner (and not by the insurer) for tax purposes, as if such contract owner had chosen instead to purchase such interests directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer's variable contracts or by other permitted entities. Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund 50 ------------------------------------------------------------------------------- options, if any, that might prevent a variable contract owner from receiving favorable tax treatment. As a result, although the owner of a Contract has more than 20 fund choices, we believe that any owner of a Contract also should receive the same favorable tax treatment. However, there is necessarily some uncertainty here as long as the IRS continues to use a facts and circumstances test for investor control and other tax ownership issues. Therefore, we reserve the right to modify the Contract as necessary to prevent you from being treated as the tax owner of any underlying assets. 5. CERTAIN TAX CONSIDERATIONS FOR FULL OR PARTIAL SETTLEMENT PAYMENTS FROM THE PERSONAL PENSION ACCOUNT BEFORE AND AFTER THE ANNUITY COMMENCEMENT DATE. Because the IRS has published no guidance on the tax treatment of contracts with features resembling the Personal Pension Account arrangement, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated for tax purposes and we advise you to consult with a qualified tax adviser concerning such tax treatment before you deposit amounts into the Personal Pension Account. With respect to the Personal Pension Account, the Company plans to report any payments under a settlement of the Personal Pension Account before the Annuity Commencement Date as amounts not received as an annuity coming first from "income on the contract" (previously described in subparagraph 2.a) based on a computation of "income on the contract" for the entire Contract. After the Annuity Commencement Date, the Company plans to report any continuing periodic settlement payments as amounts received as an annuity to which a portion of the "investment in the contract" (discussed in subparagraph 2.b) has been allocated consistent with Treas. Reg. Section 1.72-6(b). D. FEDERAL INCOME TAX WITHHOLDING The portion of an amount received under a Contract that is taxable gross income to the Payee is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following: 1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless an individual elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" form is not submitted to us in a timely manner, generally we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS. 2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is generally subject to federal income tax withholding as if the Payee were a married individual claiming 3 exemptions, unless the individual elects otherwise. An individual generally may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming 3 exemptions, and remit this amount to the IRS. Generally no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the Payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A Payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the Payee's total tax liability. E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to the section entitled "Information Regarding Tax-Qualified Retirement Plans" for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans. F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and mandatory withholding on U.S. source taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In addition, purchasers may be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence. G. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS Any amount payable upon a Contract Owner's death, whether before or after the Annuity Commencement Date, is generally includable in the Contract Owner's estate for federal estate tax purposes. Similarly, prior to the Contract Owner's death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-Spouse beneficiary who either is (1) 37 1/2 or more years younger than a Contract Owner or (2) a grandchild (or more remote further 51 ------------------------------------------------------------------------------- descendent) of a Contract Owner may have federal generation-skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations under Code Section 2662 may require us to deduct any such GST tax from your Contract, or from any applicable payment, and pay it directly to the IRS. However, any federal estate, gift or GST tax payment with respect to a Contract could produce an offsetting income tax deduction for a beneficiary or transferee under Code Section 691(c) (partially offsetting such federal estate or GST tax) or a basis increase for a beneficiary or transferee under Code Section 691(c) or Section 1015(d). In addition, as indicated above in "Distributions Prior to the Annuity Commencement Date," the transfer of a Contract for less than adequate consideration during the Contract Owner's lifetime generally is treated as producing an amount received by such Contract Owner that is subject to both income tax and the 10% penalty tax. To the extent that such an amount deemed received causes an amount to be includable currently in such Contract Owner's gross income, this same income amount could produce a corresponding increase in such Contract Owner's tax basis for such Contract that is carried over to the transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and Section 1015. H. TAX DISCLOSURE OBLIGATIONS In some instances certain transactions must be disclosed to the IRS or penalties could apply. See, for example, IRS Notice 2004-67. The Code also requires certain "material advisers" to maintain a list of persons participating in such "reportable transactions," which list must be furnished to the IRS upon request. It is possible that such disclosures could be required by Hartford The Company, the Owner(s) or other persons involved in transactions involving annuity contracts. It is the responsibility of each party, in consultation with their tax and legal advisers, to determine whether the particular facts and circumstances warrant such disclosures. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences. The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts or accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan. THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN ADMINISTRATIVE DUTIES INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS, DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF QUALIFIED PLAN LOANS, COMPLIANCE WITH REGULATORY REQUIREMENTS AND FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A CONTRACT THROUGH A QUALIFIED PLAN, YOU SHOULD CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE. The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law and any applicable Qualified Plan terms. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences. We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future. 52 ------------------------------------------------------------------------------- 1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS"). In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) may elect to provide for a separate account or annuity contract that accepts after-tax employee contributions and is treated as a "Deemed IRA" under Code Section 408(q), which is generally subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available. a. TRADITIONAL IRAS Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the Owner reaches age 70 1/2 or dies, as described below, may result in imposition of a 50% penalty tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA. You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into a Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to the Traditional IRA. In addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant). IRAs generally may not invest in life insurance contracts. However, an annuity contract that is used as an IRA may provide a death benefit that equals the greater of the premiums paid or the contract's cash value. The Contract offers an enhanced death benefit that may exceed the greater of the Contract Value or total premium payments. The tax rules are unclear as to what extent an IRA can provide a death benefit that exceeds the greater of the IRA's cash value or the sum of the premiums paid and other contributions into the IRA. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. b. SEP IRAS Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, and in limited circumstances employee and salary reduction contributions, as well as higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. c. SIMPLE IRAS The Savings Incentive Match Plan for Employees of small employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax on premature distributions, as described below. In addition, the 10% penalty tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow 53 ------------------------------------------------------------------------------- each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection. If we do not serve as the Designated Financial Institution for your employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us. d. ROTH IRAS Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract Owner's lifetime. Generally, however, upon the Owner's death the amount remaining in a Roth IRA must be distributed by the end of the fifth year after such death or distributed over the life expectancy of a designated beneficiary. The Owner of a Traditional IRA may convert a Traditional IRA into a Roth IRA under certain circumstances. The conversion of a Traditional IRA to a Roth IRA will subject the fair market value of the converted Traditional IRA to federal income tax in the year of conversion. In addition to the amount held in the converted Traditional IRA, the fair market value may include the value of additional benefits provided by the annuity contract on the date of conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. 2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice. In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. 3. TAX SHELTERED ANNUITY UNDER SECTION 403(b) ("TSA") Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations described in Code Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and, subject to certain limitations, exclude employer contributions to a TSA from such an employee's gross income. Generally, total contributions may not exceed the lesser of an annual dollar limit (e.g., $49,000 in 2009) or 100% of the employee's "includable compensation" for the most recent full year of service, subject to other adjustments. There are also legal limits on annual elective deferrals that a participant may be permitted to make under a TSA. In certain cases, such as when the participant is age 50 or older, those limits may be increased. A TSA participant should contact his plan administrator to determine applicable elective contribution limits. Special provisions may allow certain employees different overall limitations. A TSA is subject to a prohibition against distributions from the TSA attributable to contributions made pursuant to a salary reduction agreement, unless such distribution is made: a. after the employee reaches age 59 1/2; b. upon the employee's separation from service; 54 ------------------------------------------------------------------------------- c. upon the employee's death or disability; d. in the case of hardship (as defined in applicable law and in the case of hardship, any income attributable to such contributions may not be distributed); or e. as a qualified reservist distribution upon certain calls to active duty. An employer sponsoring a TSA may impose additional restrictions on your TSA through its plan document. Please note that the TSA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a TSA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. In particular, please note that tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. In addition, a life insurance contract issued after September 23, 2007 is generally ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2). Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. Section 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant's or beneficiary's accumulated benefit immediately before such exchange (taking into account such participant's or beneficiary's accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant's employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. In addition, the same Regulation provides corresponding rules for a transfer from one TSA to another TSA under a different TSA Plan (e.g., for a different eligible employer). We are no longer accepting any incoming exchange request, or new contract application, for any individual TSA contract. 4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS") Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $15,000 for 2006 and thereafter ($16,500 for 2009). The $15,000 limit will be indexed for cost-of-living adjustments at $500 increments. The Plan may provide for additional "catch-up" contributions . In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70 1/2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations). Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. However, where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer's general creditors under Code Section 457(b)(6). 55 ------------------------------------------------------------------------------- 5. TAXATION OF AMOUNTS RECEIVED FROM QUALIFIED PLANS Except under certain circumstances in the case of Roth IRAs or Roth accounts in certain Qualified Plans, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above. For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Contract Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual. In addition, penalty taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan. 6. PENALTY TAXES FOR QUALIFIED PLANS Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal penalty taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Penalty taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The penalty taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below. a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59 1/2. However, this 10% penalty tax does not apply to a distribution that is either: (i) made to a beneficiary (or to the employee's estate) on or after the employee's death; (ii) attributable to the employee's becoming disabled under Code Section 72(m)(7); (iii) part of a series of substantially equal periodic payments (not less frequently than annually - "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service; (iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans); (v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse); (vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year; (vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty; (viii) made an account of an IRS levy on the Qualified Plan under Code Section 72(t)(2)(A)(vii); or (ix) made as a "direct rollover" or other timely rollover to an Eligible Retirement Plan, as described below. In addition, the 10% penalty tax does not apply to a distribution from an IRA that is either: (x) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions in Code Section 72(t)(2)(D) are met; (xi) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or (xii) for a qualified first-time home buyer and meets the requirements of Code Section 72(t)(8). If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death, disability or a method change allowed by Rev. Rul. 2002-62), the 10% penalty tax will be applied retroactively to all the 56 ------------------------------------------------------------------------------- prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. For any premature distribution from a SIMPLE IRA during the first 2 years that an individual participates in a salary reduction arrangement maintained by that individual's employer under a SIMPLE Plan, the 10% penalty tax rate is increased to 25%. b. RMDS AND 50% PENALTY TAX THE RMD RULES GENERALLY DO NOT APPLY FOR THE 2009 TAX YEAR. HOWEVER, INDIVIDUALS WHO DEFERRED 2008 RMDS UNTIL APRIL 1, 2009, MUST STILL TAKE AN RMD BY THAT DATE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISER OR YOUR QUALIFIED PLAN ADMINISTRATOR TO DETERMINE HOW THIS CHANGE MAY AFFECT YOU. If the amount distributed from a Qualified Contract or Plan is less than the amount of the required minimum distribution ("RMD") for the year, the participant is subject to a 50% penalty tax on the amount that has not been timely distributed. An individual's interest in a Qualified Plan generally must be distributed, or begin to be distributed, not later than the Required Beginning Date. Generally, the Required Beginning Date is April 1 of the calendar year following the later of - (i) the calendar year in which the individual attains age 70 1/2, or (ii) (except in the case of an IRA or a 5% owner, as defined in the Code) the calendar year in which a participant retires from service with the employer sponsoring a Qualified Plan that allows such a later Required Beginning Date. The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over - (a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or (b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary. If an individual dies before reaching the Required Beginning Date, the individual's entire interest generally must be distributed within 5 years after the individual's death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual's death to a qualifying designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual's surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 70 1/2. If an individual dies after RMDs have begun for such individual, any remainder of the individual's interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual's death. The RMD rules that apply while the Contract Owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the Owner apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own. The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of the Owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs. In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% penalty tax for RMDs if such additional RMD amount is not timely distributed. 7. TAX WITHHOLDING FOR QUALIFIED PLANS Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" from a Qualified Plan (described below in "ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution." 57 ------------------------------------------------------------------------------- Also, special withholding rules apply with respect to distributions from non-governmental Section 457(b) Plans, and to distributions made to individuals who are neither citizens nor resident aliens of the United States. Regardless of any "election out" (or any actual amount of tax actually withheld) on an amount received from a Qualified Contract or Plan, the payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the payee's total tax liability. 8. ROLLOVER DISTRIBUTIONS The current tax rules and limits for tax-free rollovers and transfers between Qualified Plans vary according to (1) the type of transferor Plan and transferee Plan, (2) whether the amount involved is transferred directly between Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed first to a participant or beneficiary who then transfers that amount back into another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the distribution is made to a participant, spouse or other beneficiary. Accordingly, we advise you to consult with a qualified tax adviser before receiving any amount from a Qualified Contract or Plan or attempting some form of rollover or transfer with a Qualified Contract or Plan. For instance, generally any amount can be transferred directly from one type of Qualified Plan (e.g., a TSA) to the same type of Plan for the benefit of the same individual, without limit (or federal income tax), if the transferee Plan is subject to the same kinds of restrictions as the transferor Plan (e.g., a TSA that is subject to the same kinds of salary reduction restrictions) and certain other conditions to maintain the applicable tax qualification are satisfied (e.g., as described above for TSA exchanges after September 24, 2007). Such a "direct transfer" between the same kinds of Plan is generally not treated as any form of "distribution" out of such a Plan for federal income tax purposes. By contrast, an amount distributed from one type of Plan (e.g., a TSA) into a different type of Plan (e.g., a Traditional IRA) generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to such tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover", the missing amount that is not rolled over remains subject to normal income tax plus any applicable penalty tax. Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either - a. an RMD amount; b. one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or c. any distribution made upon hardship of the employee. Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457 (e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution penalty tax applicable to distributions from such a "predecessor" Qualified Plan. Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and 408A(d)(3) also vary according to the type of transferor IRA and type of transferee IRA or other Plan. For instance, generally no tax-free "direct rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a 58 ------------------------------------------------------------------------------- "conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In addition, generally no tax-free "direct rollover" or "60-day rollover" can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA set up by that same individual as the original owner. Generally, any amount other than an RMD distributed from a Traditional or SEP IRA is eligible for a "direct rollover" or a "60-day rollover" to another Traditional IRA for the same individual. Similarly, any amount other than an RMD distributed from a Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to another Roth IRA for the same individual. However, in either case such a tax-free 60-day rollover is limited to 1 per year (365-day period); whereas no 1-year limit applies to any such "direct rollover." Similar rules apply to a "direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another SIMPLE IRA or a Traditional IRA, except that any distribution of employer contributions from a SIMPLE IRA during the initial 2-year period in which the individual participates in the employer's SIMPLE Plan is generally disqualified (and subject to the 25% penalty tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a "direct rollover" or a "60-day rollover" to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible). Special rollover rules also apply to (1) transfers or rollovers for the benefit of a spouse (or ex-spouse) or a nonspouse designated beneficiary, (2) Plan distributions of property, (3) distributions from a Roth account in certain Plans, (4) recontributions within 3 years of "qualified hurricane distributions" made before 2007 under Code Section 1400Q(a), (5) transfers from a Traditional or Roth IRA to certain health savings accounts under Code Section 408(d)(9), and (6) obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. 9. CERTAIN TAX CONSIDERATIONS WITH THE PERSONAL PENSION ACCOUNT IN QUALIFIED PLANS Because the IRS has published no guidance on the tax treatment of arrangements resembling the Personal Pension Account, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated in different types of Qualified Plans, and we advise you to consult with a qualified tax adviser concerning such treatment before you deposit any amount into a Personal Pension Account that is held in any Qualified Plan. Among such tax issues for you to consider with a qualified tax adviser in such a case are the following: a. Any amounts received by you (or your payee) prior to your attaining age 59 1/2 are generally subject to the penalty tax on premature distributions described above, unless such an amount received can qualify for an exception from such a penalty tax, e.g., scheduled payments that qualify for the SEPP Exception. In addition, any modification in payments qualifying for the SEPP Exception (e.g., by commutation) can have adverse penalty tax consequences, as described above. b. The tax rules for satisfying RMD requirements vary according to both the form of Qualified Plan (e.g., NonRoth or Roth IRA) and the form of payment (e.g., periodic annuity payout or non-periodic distribution from an account value). As a result, such variations should be considered when RMD amounts need to be taken (e.g., after age 70 1/2 or death). In addition, any modification in the form or amount of such payments (e.g., by commutation) could have adverse tax consequences, if such a modification does not satisfy an IRS-recognized RMD exception (e.g., for an acceleration or other change in periodic payments under Reg. Section 1.401(a) (9)-6, Q&A-1 and Q&A-14). c. Any attempt to transfer an amount from the Benefit Balance to Sub-Accounts or the Fixed Accumulation Feature (if available) that exceeds the threshold for such a transfer will be treated by us as a form of annuitization distribution from the Personal Pension Account, and thus may not qualify as a tax-free direct transfer. Instead, such an attempted excess transfer could be treated for tax purposes as a potentially taxable distribution out of the entire annuity contract, followed by a contribution back into the same contract. While such a distribution from an IRA may qualify for 60-day rollover treatment (if it is not needed to satisfy RMD requirements), only one such tax-free 60-day rollover is allowed for any 365-day period for any individual from all of such individual's IRAs. Failing such tax-free rollover treatment, such a distribution could be subject to both income and penalty tax, and any deemed contribution back into the contract may be subject to an excise tax on excess contributions, particularly after age 70 1/2. IN ADDITION, ANY SUCH DISTRIBUTION FROM A NON-IRA FORM OF QUALIFIED PLAN MAY BE SUBJECT TO THE 20% MANDATORY WITHHOLDING TAX, UNLESS SUCH DISTRIBUTION IS AN RMD OR OTHERWISE AVOIDS CLASSIFICATION AS AN "ELIGIBLE ROLLOVER DISTRIBUTION," AS DESCRIBED ABOVE. 59 ------------------------------------------------------------------------------- TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION GENERAL INFORMATION Safekeeping of Assets Experts Non-Participating Misstatement of Age or Sex Principal Underwriter Additional Payments PERFORMANCE RELATED INFORMATION Total Return for all Sub-Accounts Yield for Sub-Accounts Money Market Sub-Accounts Additional Materials Performance Comparisons ACCUMULATION UNIT VALUES FINANCIAL STATEMENTS
APP A-1 ------------------------------------------------------------------------------- APPENDIX A - EXAMPLES TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT APP A-2 RETURN OF PREMIUM DEATH BENEFIT APP A-8 REMAINING GROSS PREMIUM APP A-9
APP A-2 ------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT EXAMPLES EXAMPLE 1: STANDARD ILLUSTRATIONS WITH A PARTIAL INCOME STREAM Assume the initial Personal Pension Account Contribution is equal to $100,000 (no sums are invested in the Fixed Accumulation Feature or Sub-Accounts). Assume that in Contract Year 7, the Owner requested to commence an income stream based on $50,000 of Annuity Payout Value during the guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. Hypothetical credited and payout rates are illustrated below. A. To understand how your guaranteed payout rates are set during your guarantee window (shaded area), see Guaranteed Payout Rates in Contract Years 1 through 7. In this Example, the guaranteed payout rate is locked in at Contract Year 7 when Personal Pension Account Payouts commence. B. Credited interest rates vary during the duration of your Contract as illustrated in column 4. In this illustration, credited interest rates change at the 10th Contract Year and again at the 20th Contract Year. C. Please refer to the last column in Contract Year 23 for an example of how Personal Pension Account Payouts will continue for the life of the Annuitant, Owner or joint Owner even though Annuity Payout Value has been exhausted.
CREDITED CONTRACT BENEFIT INTEREST YEAR AGE BALANCE RATE ---------------------------------------------------------------------- 0 60 $ 100,000 5.00% 1 61 105,000 5.00% 2 62 110,250 5.00% 3 63 115,763 5.00% GUARANTEE 4 64 121,551 5.00% WINDOW 5 65 127,628 5.00% 6 66 134,010 5.00% 7 67 140,710 5.00% 8 68 142,009 5.00% 9 69 143,535 5.00% 10 70 145,299 3.00% 11 71 145,212 3.00% 12 72 145,220 3.00% 13 73 145,326 3.00% 14 74 145,532 3.00% 15 75 145,841 3.00% 16 76 146,256 3.00% 17 77 146,781 3.00% 18 78 147,419 3.00% 19 79 148,173 3.00% 20 80 149,047 1.50% 21 81 147,927 1.50% 22 82 146,839 1.50% 23 83 147,568 1.50% PERSONAL ANNUITY GUARANTEED PENSION ACCUMULATION PAYOUT PAYOUT RATES ACCOUNT BALANCE VALUE (PER 1000) PAYOUTS(2) ------------ -------------------------------------------------------------------------- $ 100,000 105,000 61.99 110,250 62.33 115,763 62.72 GUARANTEE 121,551 63.16 WINDOW 127,628 63.65 134,010 64.17 90,710 (1) 50,000 64.73 $ 3,237 95,246 46,763 $ 3,237 100,008 43,527 $ 3,237 105,008 40,290 $ 3,237 108,158 37,054 $ 3,237 111,403 33,817 $ 3,237 114,745 30,581 $ 3,237 118,188 27,344 $ 3,237 121,733 24,108 $ 3,237 125,385 20,871 $ 3,237 129,147 17,634 $ 3,237 133,021 14,398 $ 3,237 137,012 11,161 $ 3,237 141,122 7,925 $ 3,237 143,239 4,688 $ 3,237 145,388 1,452 $ 3,237 147,568 0 $ 3,237
(1) Accumulation Balance is reduced by $50,000 that is converted into the Annuity Payout Value. CDSC's and Premium tax have not been applied in this Example. If the $50,000 was instead commuted into a Commuted Value (assuming a hypothetical discount rate of 6%), the Commuted Value would be $32,294. The remaining Accumulation Balance can be converted into Annuity Payout Value at a later date for additional Personal Pension Account Payouts. (2) These Personal Pension Account Payouts shall continue for the life of the Annuitant, Owner or joint Owner pursuant to Annuity Payout Option Two. APP A-3 ------------------------------------------------------------------------------- EXAMPLE 2 Assume a $100,000 initial Personal Pension Account Contribution was made at a time when we declared a hypothetical credited rate of 4% and that a $15,000 subsequent Personal Pension Account Contribution was made when we declared a hypothetical credited rate of 3.75%. Your Benefit Balance would increase as follows:
PERSONAL PERSONAL TOTAL PENSION ACCOUNT CREDITED PENSION ACCOUNT CREDITED BENEFIT AGE CONTRIBUTION RATE CONTRIBUTION RATE BALANCE -------------------------------------------------------------------------------------------------------------------- 55 First $100,000 $100,000 56 Deposit 4.00% $104,000 57 4.00% $108,160 58 4.00% $112,486 59 4.00% Second $15,000 $131,986 60 4.00% Deposit 3.75% $137,228 61 4.00% 3.75% $142,678 62 4.00% 3.75% $148,345 63 4.00% 3.75% $154,237 64 4.00% 3.75% $160,362 65 4.00% 3.75% $166,732
EXAMPLE 3: BENEFIT BALANCE TRANSFER (IN-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Sub-Accounts to the Personal Pension Account occurs. Assume that the Owner makes a Premium Payment of $100,000 into the Sub-Accounts and then elects to transfer $5,000 from the Sub-Accounts to the Personal Pension Account, in which event:
TRANSFER FROM SUB-ACCOUNTS TO THE PERSONAL PENSION ACCOUNT BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $125,000 Remaining Gross Premium $100,000 $100,000 Annual Withdrawal Amount $5,000 $0 Return of Premium Death Benefit $100,000 $95,000 Benefit Balance $0 $5,000
- The Contract Value is reduced by the amount of the transfer ($5,000). - The Remaining Gross Premium associated to the Sub-Accounts is not reduced by the amount of the transfer as Remaining Gross Premium is only reduced for Surrenders or transfers in excess of the Annual Withdrawal Amount. - The Annual Withdrawal Amount is reduced by the amount of the transfer ($5,000) as transfers (and Surrenders) reduce the Annual Withdrawal Amount. - The Return of Premium Death Benefit is reduced dollar for dollar for the amount of the transfer ($5,000). - Assuming that there were no sums previously invested in the Personal Pension Account, the Benefit Balance is increased by this amount. APP A-4 ------------------------------------------------------------------------------- BENEFIT BALANCE TRANSFER (OUT-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Personal Pension Account to the Sub-Accounts occurs. Assume that the Owner makes a Personal Pension Account Contribution of $100,000 into the Personal Pension Account and then elects to transfer the maximum available transfer from the Personal Pension Account to the Sub-Accounts. The out-bound transfer restriction considers the following factors:
END OF YEAR MAXIMUM OF A, B, C A B C ------------------------------------------------------------------- 1 $4,120 $4,120 $3,000 $0 2 $4,120 $4,073 $2,966 $4,120
Where , - Column A equals four (4%) percent of the Accumulation Balance as of the prior Contract Anniversary. Assume that the $100,000 Personal Pension Account Contribution earns a credited interest rate of 3%. - Column B equals the amount of interest credited to the Accumulation Balance over the most recent full Contract Year. - Column C equals the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. Applying these factors, the following table shows how various Contract benefits change:
TRANSFER FROM PERSONAL PENSION ACCOUNT TO THE SUB-ACCOUNTS END OF YEAR 1 BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------- Contract Value (assumed) $130,000 $134,120 Remaining Gross Premium $100,000 $104,120 Annual Withdrawal Amount $5,000 $5,206 Return of Premium Death Benefit $100,000 $104,120 Benefit Balance $103,000 $98,880
- The Accumulation Balance is reduced by the amount of the transfer ($4,120). - The Remaining Gross Premium associated to the Sub-Accounts is increased by the amount of the transfer as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Annual Withdrawal Amount is increased by 5% of the transfer amount ($206) as the transfer from the Personal Pension Account to the Sub-Accounts is considered a subsequent Premium Payment. - The Return of Premium Death Benefit is increased dollar for dollar for the amount of the transfer ($4,120). - The Contract Value is increased by the amount of the transfer ($4,120). APP A-5 ------------------------------------------------------------------------------- EXAMPLE 4A: FULL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking all Personal Pension Account Payouts and then fully commute the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). Also, assume that the initial Personal Pension Account Contribution is equal to $100,000 and no Premium Payments have been invested in the Fixed Accumulation Feature or Sub-Accounts.
CONTRACT BENEFIT ACCUMULATION CREDITED YEAR AGE BALANCE BALANCE RATE ------------------------------------------------------------------------------------------------- 0 60 $100,000 $ 100,000 5.00 % 1 61 105,000 105,000 5.00 % 2 62 110,250 110,250 5.00 % 3 63 115,763 115,763 5.00 % GUARANTEE 4 64 121,551 121,551 5.00 % WINDOW 5 65 127,628 127,628 5.00 % 6 66 134,010 134,010 5.00 % 7 67 140,710 140,710 5.00 % 8 68 147,746 147,746 5.00 % 9 69 155,133 155,133 5.00 % 10 70 162,889 162,889 3.00 % 11 71 167,776 167,776 3.00 % 12 72 172,809 172,809 3.00 % 13 73 177,994 177,994 3.00 % 14 74 183,334 183,334 3.00 % 15 75 188,834 188,834 3.00 % 16 76 194,499 194,499 3.00 % 17 77 200,333 200,333 3.00 % 18 78 206,343 206,343 3.00 % 19 79 212,534 212,534 3.00 % 20 80 218,910 $ 0 (2) 1.50 % 21 81 n/a N/A n/a (3) 22 82 n/a N/A n/a 23 83 n/a N/A n/a 24 84 n/a N/A n/a 25 85 n/a N/A n/a 26 86 n/a N/A n/a 27 87 n/a N/A n/a 28 88 n/a N/A n/a 29 89 n/a N/A n/a 30 90 n/a N/A n/a ANNUITY PAYOUT PAYOUT RATES COMMUTED VALUE (PER 1000)(1) VALUE PAYOUTS ------------ ------------------------------------------------------------- $ 0 61.68 $ 0 61.99 $ 0 $ 0 62.33 $ 0 $ 0 62.72 $ 0 GUARANTEE $ 0 63.16 $ 0 WINDOW $ 0 63.65 $ 0 $ 0 64.17 $ 0 $ 0 64.73 $ 0 $ 0 65.31 $ 0 $ 0 65.91 $ 0 $ 0 66.56 $ 0 $ 0 69.14 $ 0 $ 0 71.94 $ 0 $ 0 74.99 $ 0 $ 0 78.32 $ 0 $ 0 81.96 $ 0 $ 0 85.92 $ 0 $ 0 90.11 $ 0 $ 0 94.63 $ 0 $ 0 99.55 $ 0 $ 218,910 105.02 (6) $156,367 (5) $ 0 (4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 22,989 (7) N/A N/A N/A $ 22,989 (7)
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on being converted to Annuity Payout Value. CDSCs and Premium tax are not shown in this Example. APP A-6 ------------------------------------------------------------------------------- (3) Interest is no longer credited under the Personal Pension Account. (4) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the payout rate applicable to the year in which commutation is requested and dividing by 1,000. In this case, $218,910*$105.02/1,000 = $22,989. However, in this example, Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living and have not terminated the Contract as illustrated in years 29 and 30. (5) The Commuted Value depicted is based on commutation of the Annuity Payout Value (in this Example, is the same as the Benefit Balance because this is a full commutation) of $218,910 using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the Guaranteed Payout Duration (i.e., $218,910/$22,989, rounded down = 9 years) calculated using this discount rate. (6) Hypothetical Payout Rate used because Personal Pension Accounts and subsequent commutation occur outside of the guarantee window. (7) Lifetime Personal Pension Account Payouts resume because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. APP A-7 ------------------------------------------------------------------------------- EXAMPLE 4B: PARTIAL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking Personal Pension Account Payouts and commute half of the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. In this Example, the guarantee window is represented by the shaded area in years 1 though 7. Year 20 "Before" illustrates how the Annuity Payout Value is split in half to serve as the basis for Personal Pension Account Payouts and the Commuted Value. Year 20 "After" illustrates the amounts paid to the Owner in the form of Personal Pension Account Payouts and Commuted Value. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). The Guaranteed Payout Duration in this Example is illustrated as the shaded rows corresponding to Contract Years 20 through 28. Assume the initial Deposit is equal to $100,000 and no sums are invested in the Fixed Accumulation Feature or Sub-Accounts.
ANNUITY CONTRACT BENEFIT ACCUMULATION CREDITED PAYOUT YEAR AGE BALANCE BALANCE RATE VALUE 1 ------------------------------------------------------------------------------------------ 0 60 $100,000 $ 100,000 5.00% $ 0 1 61 105,000 105,000 5.00% $ 0 2 62 110,250 110,250 5.00% $ 0 3 63 115,763 115,763 5.00% $ 0 4 64 121,551 121,551 5.00% $ 0 5 65 127,628 127,628 5.00% $ 0 6 66 134,010 134,010 5.00% $ 0 7 67 140,710 140,710 5.00% $ 0 8 68 147,746 147,746 5.00% $ 0 9 69 155,133 155,133 5.00% $ 0 10 70 162,889 162,889 3.00% $ 0 11 71 167,776 167,776 3.00% $ 0 12 72 172,809 172,809 3.00% $ 0 13 73 177,994 177,994 3.00% $ 0 14 74 183,334 183,334 3.00% $ 0 15 75 188,834 188,834 3.00% $ 0 16 76 194,499 194,499 3.00% $ 0 17 77 200,333 200,333 3.00% $ 0 18 78 206,343 206,343 3.00% $ 0 19 79 212,534 212,534 3.00% $ 0 20 BEFORE 80 218,910 $ 0 (2) 1.50% $ 109,455 20 AFTER 80 $ 97,960 $ 0 (2) n/a $ 97,960 21 81 $ 86,465 N/A n/a (3) $ 86,465 22 82 $ 74,970 N/A n/a $ 74,970 23 83 $ 63,475 N/A n/a $ 63,475 24 84 $ 51,980 N/A n/a $ 51,980 25 85 $ 40,485 N/A n/a $ 40,485 26 86 $ 28,990 N/A n/a $ 28,990 27 87 $ 17,495 N/A n/a $ 17,495 28 88 $ 6,000 N/A n/a $ 6,000 29 89 $ 0 N/A n/a $ 0 30 90 $ 0 N/A n/a $ 0 31 91 $ 0 N/A n/a $ 0 ANNUITY CONTRACT PAYOUT COMMUTED PAYOUT RATES YEAR VALUE 2 VALUE (PER 1000)(1) PAYOUTS ------------ --------------------------------------------------------------------------- 0 $ 0 61.68 1 $ 0 61.99 $ 0 2 $ 0 62.33 $ 0 3 $ 0 62.72 $ 0 4 $ 0 63.16 $ 0 5 $ 0 63.65 $ 0 6 $ 0 64.17 $ 0 7 $ 0 64.73 $ 0 8 $ 0 65.31 $ 0 9 $ 0 65.91 $ 0 10 $ 0 66.56 $ 0 11 $ 0 69.14 $ 0 12 $ 0 71.94 $ 0 13 $ 0 74.99 $ 0 14 $ 0 78.32 $ 0 15 $ 0 81.96 $ 0 16 $ 0 85.92 $ 0 17 $ 0 90.11 $ 0 18 $ 0 94.63 $ 0 19 $ 0 99.55 $ 0 20 BEFORE (4) $ 109,455 (4) 20 AFTER (5) $ 0 $ 78,185 (7) 105.02 (8) $ 11,495 (6) 21 $ 0 N/A N/A $ 11,495 22 $ 0 N/A N/A $ 11,495 23 $ 0 N/A N/A $ 11,495 24 $ 0 N/A N/A $ 11,495 25 $ 0 N/A N/A $ 11,495 26 $ 0 N/A N/A $ 11,495 27 $ 0 N/A N/A $ 11,495 28 $ 0 N/A N/A $ 11,495 29 $ 0 N/A N/A $ 22,989 (9) 30 $ 0 N/A N/A $ 22,989 31 $ 0 N/A N/A $ 22,989
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Personal Pension Account Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on all amounts being converted to Annuity Payout Value. CDSCs and Premium tax not shown in the Example. (3) Interest is no longer credited under the Personal Pension Account. APP A-8 ------------------------------------------------------------------------------- (4) In year 20, the Owner elected to commute half of their Annuity Payout Value and receive the remaining half in the form of Personal Pension Account Payouts. Thus, the Accumulation Balance of $210,910 is split in half. $109,455 is converted into Annuity Payout Value and will serve as the basis for Personal Pension Account Payouts. The remaining $109,455 will serve as the basis for the Commuted Value calculation. (5) The Annuity Payout Value of $109,455 is reduced by the Personal Pension Account Payout of $11,495, leaving an Annuity Payout Value of $97,960 remaining. (6) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the appropriate payout rate and dividing by 1,000. In this case, $109,455*105.02/1,000 = $11,495. However, in this example, half of the Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living as illustrated in years 29, 30, and 31. (7) The Commuted Value depicted is based on commutation of half of the Annuity Payout Value, or $109,455, using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the remaining Guaranteed Payout Duration (i.e., $109,455/$11,495, rounded down = 9) calculated using the discount rate. (8) A hypothetical Payout Rate is used because Personal Pension Account Payouts and commutation occur outside of the guarantee window. (9) In this case, the lifetime Personal Pension Account Payouts for each Annuity Payout Value is $11,495 ($109,455*105.02/1000 = $11,495). When combined, these lifetime Personal Pension Account Payouts equal $22,989. Lifetime Personal Pension Account Payouts begin because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. RETURN OF PREMIUM DEATH BENEFIT EXAMPLES EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. IN CONTRACT YEAR 1 YOU APPLY A SUBSEQUENT PREMIUM PAYMENT OF $50,000. IN CONTRACT YEAR 3 YOU TAKE A PARTIAL SURRENDER FOR $1,000 AND IN THE SAME CONTRACT YEAR YOU TAKE ANOTHER PARTIAL SURRENDER FOR $10,000, YOUR CONTRACT VALUE IMMEDIATELY FOLLOWING IS $173,000. YOUR INITIAL VALUE: $100,000 VALUE AFTER THE SUBSEQUENT PREMIUM PAYMENT OF $50,000: $150,000, which is the prior value increased by the amount of the subsequent Premium Payments VALUE AFTER THE PARTIAL SURRENDER ($1,000): $149,000, which is the prior value reduced dollar-for-dollar by the amount of the Surrender because it is within the withdrawal limit VALUE AFTER THE ADDITIONAL PARTIAL SURRENDER ($10,000): $139,674.22, which is the prior value reduced first dollar-for-dollar by the amount of the Surrender not in excess of 5% of Premium Payments ($6,500) and then proportional for the amount in excess of 5% of Premium Payments ($3,500). The proportionate reduction is determined by first determining the factor: 1 - (excess Surrender/(Contract Value prior to the Surrender - Death Benefit withdrawal limit remaining) 1- ($3,500/($173,000 + $10,000 - $6,500) = .980169971 Once the factor is determined the value prior to the Surrender is first reduced dollar-for-dollar by the amount of the Surrender not in excess of the Death Benefit withdrawal limit: $149,000 - $6,500 =$142,500 This value is then multiplied by the factor: $142,500 * .980169971 = $139,674.22 The death benefit would be the Contract Value or $173,000. You will also receive the Personal Pension Account death benefit equal to any remaining Benefit Balance. EXAMPLE 2: SAME FACTS AS ABOVE EXCEPT THE BENEFIT BALANCE AT THE TIME OF DEATH WAS EQUAL TO $100,000. The Death Benefit would be $273,000 (Return of Premium Death Benefit = $173,000 + Personal Pension Account Death Benefit = $100,000). APP A-9 ------------------------------------------------------------------------------- REMAINING GROSS PREMIUM EXAMPLES EXAMPLE 1: ILLUSTRATES A PARTIAL SURRENDER THAT IS LESS THAN THE AWA IN A DOWN MARKET. ASSUME A PARTIAL SURRENDER TAKEN IN CONTRACT YEAR 2 EQUALS $5,000. VALUES PRIOR TO THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0, as the AWA was not exceeded EXAMPLE 2: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN A DOWN MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME TWO PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 2, FOR $5,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000. VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the second partial Surrender is $75,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 APP A-10 ------------------------------------------------------------------------------- VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $70,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $95,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($5,000) of the AWA - The CDSC applied to this $5,000 partial Surrender is $350, which is the amount of the partial Surrender in excess of the AWA ($5,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $78,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premium is $95,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $68,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA has been taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $85,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% EXAMPLE 3: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN AN UP MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME BOTH PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 1 FOR $10,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000 VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $110,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $10,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $10,000, which are your earnings - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $100,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender did not exceed the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded APP A-11 ------------------------------------------------------------------------------- VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the second partial Surrender is $100,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $90,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $90,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $10,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $99,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $9,000, which are your earnings - Your Remaining Gross Premiums are $90,000 VALUES AFTER THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the third partial surrender is $84,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $84,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($6,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $420, which is the amount of the partial Surrender in excess of the AWA ($6,000) multiplied by 7% EXAMPLE 4: ILLUSTRATES A FULL SURRENDER CALCULATION WITH ONE OF TWO PREMIUM PAYMENTS OUT OF THE APPLICABLE CDSC SCHEDULE. ASSUME TWO PREMIUM PAYMENTS WERE MADE FOR $100,000 EACH. ONE PAYMENT WAS APPLIED IN THE BEGINNING OF CONTRACT YEAR 1, THE SECOND IN THE BEGINNING OF CONTRACT YEAR 3. A FULL SURRENDER IS TAKEN IN CONTRACT YEAR 8. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $200,000 - Your Contract Value just prior to the full Surrender is $300,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $100,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $200,000, which is the premium out of CDSC schedule ($100,000) plus your earnings - Your Remaining Gross Premium for the second Premium Payment (still in CDSC) is $100,000 APP A-12 ------------------------------------------------------------------------------- VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $300,000 full Surrender is $4,000, which is the maximum of the full Surrender or Remaining Gross Premium, reduced by the AWA ($100,000) multiplied by 4% EXAMPLE 5: ILLUSTRATES A FULL SURRENDER CALCULATION IN A DOWN MARKET. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the full Surrender is $50,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $50,000 full Surrender is $6,650, which is the maximum of the full Surrender or Remaining Gross Premium reduced by the AWA ($95,000) multiplied by 7% (using the 7-year CDSC schedule applicable to the "Core" Hartford Leaders variable annuity Contract) APP B-1 ------------------------------------------------------------------------------- APPENDIX B - ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in the Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows only the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits. A table showing all classes of Accumulation Unit Values corresponding to all combinations of optional benefits is shown in the Statement of Additional Information, which you may obtain free of charge by contacting us. There is no information available because as of December 31, 2008, the Sub-Accounts had not yet commenced operations. APP C-1 ------------------------------------------------------------------------------- APPENDIX C - FUND DATA I. INVESTMENT OPTIONS (STANDARD)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. CORE EQUITY FUND - SERIES Growth of capital Invesco Aim Advisors, Inc. Equity II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. INTERNATIONAL GROWTH FUND Long-term growth of capital Invesco Aim Advisors, Inc. Equity - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. MID CAP CORE EQUITY FUND Long-term capital growth Invesco Aim Advisors, Inc. Limited - SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. POWERSHARES ETF To provide total return consistent Invesco Aim Advisors, Inc. Multi-Asset ALLOCATION FUND - SERIES II with a moderate level of risk Sub-adviser: Advisory entities relative to the broad stock market. affiliated with Invesco Aim Advisors, Inc. AIM V.I. SMALL CAP EQUITY FUND - Long-term capital growth Invesco Aim Advisors, Inc. Limited SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS BALANCED Maximize total return consistent with AllianceBernstein L.P. Multi-Asset WEALTH STRATEGY PORTFOLIO - CLASS Advisor's determination of reasonable B risk ALLIANCEBERNSTEIN VPS Long-term capital growth AllianceBernstein L.P. Equity INTERNATIONAL VALUE PORTFOLIO - CLASS B ALLIANCEBERNSTEIN VPS SMALL/MID Long-term capital growth AllianceBernstein L.P. Equity CAP VALUE PORTFOLIO - CLASS B FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS FIDELITY VIP CONTRAFUND(R) Seeks long-term capital appreciation Fidelity Management & Research Equity PORTFOLIO - SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP MID CAP PORTFOLIO - Long-term capital growth Fidelity Management & Research Equity SERVICE CLASS 2 Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY VIP STRATEGIC INCOME Limited PORTFOLIO - SERVICE CLASS 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN FLEX CAP GROWTH Seeks capital appreciation Franklin Advisers, Inc. Equity SECURITIES FUND - CLASS 4
APP C-2 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- FRANKLIN INCOME SECURITIES FUND - Seeks to maximize income while Franklin Advisers, Inc. Limited CLASS 4 maintaining prospects for capital appreciation FRANKLIN RISING DIVIDENDS Equity SECURITIES FUND - CLASS 4 FRANKLIN SMALL CAP VALUE Seeks long-term total return Franklin Advisory Services, LLC Limited SECURITIES FUND - CLASS 4 FRANKLIN SMALL-MID CAP GROWTH Seeks long-term capital growth Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 FRANKLIN STRATEGIC INCOME Seeks a high level of current income, Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 4 with capital appreciation over the long term as a secondary goal MUTUAL GLOBAL DISCOVERY SECURITIES Seeks capital appreciation Franklin Mutual Advisers, LLC Equity FUND - CLASS 4 (1) Sub-advised by Franklin Templeton Investment Management Limited MUTUAL SHARES SECURITIES FUND - Capital appreciation, with income as Franklin Mutual Advisers, LLC Equity CLASS 4 a secondary goal TEMPLETON FOREIGN SECURITIES FUND Seeks long-term capital growth Templeton Investment Counsel, LLC Equity - CLASS 4 TEMPLETON GLOBAL BOND SECURITIES Seeks high current income, consistent Franklin Advisers, Inc. Limited FUND - CLASS 4 (2) with preservation of capital, with capital appreciation as a secondary consideration TEMPLETON GROWTH SECURITIES FUND - Seeks long-term capital growth Templeton Global Advisors Limited Equity CLASS 4 Sub-advised by Templeton Asset Management Ltd. HARTFORD HLS SERIES FUND II, INC. HARTFORD GROWTH OPPORTUNITIES HLS Capital appreciation Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD U.S. GOVERNMENT Maximize total return with a high Hartford Investment Financial Fixed SECURITIES HLS FUND - CLASS IA level of current income consistent Services, LLC. with prudent investment risk Sub-advised by Hartford Investment Management Company HARTFORD SERIES FUND, INC. AMERICAN FUNDS ASSET ALLOCATION Seeks high total return consistent Hartford Investment Financial Equity HLS FUND - CLASS IB with preservation of capital over the Services, LLC. long term Sub-advised by Hartford Investment Management Company AMERICAN FUNDS BLUE CHIP INCOME Seeks to produce income exceeding the Hartford Investment Financial Equity AND GROWTH HLS FUND - CLASS IB average yield on U.S. stocks Services, LLC. generally (as represented by the Sub-advised by Hartford Investment average yield on the S&P 500 Index) Management Company and to provide an opportunity for growth of principal consistent with sound common stock investing. AMERICAN FUNDS BOND HLS FUND - Seeks to maximize current income and Hartford Investment Financial Fixed CLASS IB preservation of capital Services, LLC. Sub-advised by Hartford Investment Management Company
APP C-3 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL BOND HLS Seeks a high level of total return Hartford Investment Financial Limited FUND - CLASS IB over the long term Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH AND Seeks growth of capital and current Hartford Investment Financial Equity INCOME HLS FUND - CLASS IB income Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL GROWTH HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GLOBAL SMALL Seeks growth of capital Hartford Investment Financial Limited CAPITALIZATION HLS FUND - CLASS Services, LLC. IB Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH HLS FUND - Seeks growth of capital Hartford Investment Financial Equity CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS GROWTH-INCOME HLS Seeks growth of capital and income Hartford Investment Financial Equity FUND - CLASS IB over time Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS INTERNATIONAL HLS Seeks growth of capital Hartford Investment Financial Equity FUND - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company AMERICAN FUNDS NEW WORLD HLS FUND Seeks growth of capital Hartford Investment Financial Limited - CLASS IB Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD CAPITAL APPRECIATION HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DISCIPLINED EQUITY HLS Growth of capital Hartford Investment Financial Equity FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD DIVIDEND AND GROWTH HLS High level of current income Hartford Investment Financial Equity FUND - CLASS IA consistent with growth of capital Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL EQUITY HLS FUND - Seeks long term capital appreciation Hartford Investment Financial Equity CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL GROWTH HLS FUND - Growth of capital Hartford Investment Financial Equity CLASS IA (3) Services, LLC. Sub-advised by Wellington Management Company, LLP
APP C-4 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- HARTFORD GROWTH HLS FUND - CLASS Seeks long-term capital appreciation Hartford Investment Financial Equity IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD HIGH YIELD HLS FUND - High current income with growth of Hartford Investment Financial Limited CLASS IA capital as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD INDEX HLS FUND - CLASS IB Seeks to provide investment results Hartford Investment Financial Equity which approximate the price and yield Services, LLC. performance of publicly traded common Sub-advised by Hartford Investment stocks in the aggregate Management Company HARTFORD INTERNATIONAL Long-term capital growth Hartford Investment Financial Equity OPPORTUNITIES HLS FUND - CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP HARTFORD MONEY MARKET HLS FUND - Maximum current income consistent Hartford Investment Financial Fixed CLASS IA* with liquidity and preservation of Services, LLC. capital Sub-advised by Hartford Investment Management Company HARTFORD SMALL COMPANY HLS FUND - Growth of capital Hartford Investment Financial Limited CLASS IA Services, LLC. Sub-advised by Wellington Management Company, LLP and Hartford Investment Management Company HARTFORD TOTAL RETURN BOND HLS Competitive total return, with income Hartford Investment Financial Fixed FUND - CLASS IA as a secondary objective Services, LLC. Sub-advised by Hartford Investment Management Company HARTFORD VALUE HLS FUND - CLASS IA Long-term total return Hartford Investment Financial Equity Services, LLC. Sub-advised by Wellington Management Company, LLP MFS(R) VARIABLE INSURANCE TRUST MFS(R) GROWTH SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS MFS(R) INVESTORS TRUST SERIES - Seeks capital appreciation MFS Investment Management Equity SERVICE CLASS MFS(R) RESEARCH BOND SERIES - Total return with an emphasis on high MFS Investment Management Fixed SERVICE CLASS current income, but also considering capital appreciation. MFS(R) TOTAL RETURN SERIES - Seeks total return MFS Investment Management Multi-Asset SERVICE CLASS MFS(R) VALUE SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS PUTNAM VARIABLE TRUST PUTNAM VT EQUITY INCOME FUND - Capital growth and current income Putnam Investment Management, LLC Equity CLASS IB PUTNAM VT INVESTORS FUND - CLASS Long-term growth of capital and any Putnam Investment Management, LLC Equity IB increased income that results from this growth
APP C-5 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT VOYAGER FUND - CLASS IB Seeks capital appreciation Putnam Investment Management, LLC Equity FIXED ACCUMULATION FEATURE** Preservation of capital General Account N/A
NOTES (1) Formerly Mutual Discovery Securities Fund - Class 4 (2) Formerly Templeton Global Income Securities Fund - Class 4 (3) Formerly Hartford Global Leaders HLS Fund - Class IA * In a low interest rate environment, yields for money market funds, after deduction of Contract charges may be negative even though the fund's yield, before deducting for such charges, is positive. If you allocate a portion of your Contract Value to a money market Sub-Account or participate in an Asset Allocation Program where Contract Value is allocated to a money market Sub-Account, that portion of your Contract Value may decrease in value. ** The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this feature. The Fixed Accumulation Feature is currently not available to A Share and I Share products. II. UNDERLYING FUNDS (PROPRIETARY)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- EVERGREEN VARIABLE ANNUITY TRUST EVERGREEN VA DIVERSIFIED CAPITAL Capital growth and current income Evergreen Investment Management Equity BUILDER FUND - CLASS 1(1) Company, LLC EVERGREEN VA FUNDAMENTAL LARGE CAP Capital growth with the potential for Evergreen Investment Management Equity FUND - CLASS 1 current income Company, LLC EVERGREEN VA GROWTH FUND - CLASS 1 Seeks long-term capital growth Evergreen Investment Management Equity Company, LLC EVERGREEN VA INTERNATIONAL EQUITY Long-term capital growth and Evergreen Investment Management Equity FUND - CLASS 1 secondarily, modest income Company, LLC EVERGREEN VA OMEGA FUND - CLASS 1 Seeks long-term capital growth Evergreen Investment Management Equity Company, LLC EVERGREEN VA SPECIAL VALUES FUND - Seeks capital growth in the value of Evergreen Investment Management Limited CLASS 1 its shares Company, LLC
NOTES (1) Formerly Evergreen VA Balanced Fund - Class 1 To obtain a Statement of Additional Information, please complete the form below and mail to: The Hartford Attn: Individual Markets Group P.O. Box 5085 Hartford, Connecticut 06102-5085 Please send a Statement of Additional Information to me at the following address: ---------------------------------------------------------------- Name ---------------------------------------------------------------- Address ---------------------------------------------------------------- City/State Zip Code Contract Name Issue Date PART B HARTFORD LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION HARTFORD LEADERS SELECT SERIES III This Statement of Additional Information is not a prospectus. The information contained in this document should be read in conjunction with the prospectus. To obtain a prospectus, send a written request to The Hartford, Attn: Individual Markets Group, P.O. Box 5085, Hartford, CT 06102-5085. Date of Prospectus: August 14, 2009 Date of Statement of Additional Information: August 14, 2009 TABLE OF CONTENTS GENERAL INFORMATION 2 Safekeeping of Assets 2 Experts 2 Non-Participating 2 Misstatement of Age or Sex 2 Principal Underwriter 2 Additional Payments 2 PERFORMANCE RELATED INFORMATION 6 Total Return for all Sub-Accounts 6 Yield for Sub-Accounts 7 Money Market Sub-Accounts 7 Additional Materials 7 Performance Comparisons 7 ACCUMULATION UNIT VALUES 8 FINANCIAL STATEMENTS SA-2
2 ------------------------------------------------------------------------------- GENERAL INFORMATION SAFEKEEPING OF ASSETS We hold title to the assets of the Separate Account. The assets are kept physically segregated and are held separate and apart from our general corporate assets. Records are maintained of all purchases and redemptions of the underlying fund shares held in each of the Sub-Accounts. EXPERTS The consolidated balance sheets of Hartford Life Insurance Company (the "Company") as of December 31, 2008 and 2007, 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, 2008 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 11, 2009 (April 29, 2009 as to the effects of the change in reporting entity structure and the retrospective adoption of FASB Statement No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS described in Note 1 and Note 17) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company's change in its method of accounting for the fair value measurement of financial instruments in 2008) and the statements of assets and liabilities of Hartford Life Insurance Company Separate Account Seven (the "Account") as of December 31, 2008, and the related statements of operations and changes in net assets for the respective stated periods then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 18, 2009, which reports are both included in this Statement of Additional Information. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is City Place, 32nd Floor, 185 Asylum Street, Hartford, Connecticut 06103-3402. With respect to the unaudited interim financial information for the periods ended June 30, 2009 and 2008 which is incorporated by reference herein, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their report included in the Company's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2009 and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited interim financial information because that report is not a "report" or a "part" of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. NON-PARTICIPATING The Contract is non-participating and we pay no dividends. MISSTATEMENT OF AGE OR SEX If an Annuitant's age or sex was misstated on the Contract, any Contract payments or benefits will be determined using the correct age and sex. If we have overpaid Annuity Payouts, an adjustment, including interest on the amount of the overpayment, will be made to the next Annuity Payout or Payouts. If we have underpaid due to a misstatement of age or sex, we will credit the next Annuity Payout with the amount we underpaid and credit interest. PRINCIPAL UNDERWRITER The Contracts, which are offered continuously, are distributed by Hartford Securities Distribution Company, Inc. ("HSD"). HSD serves as Principal Underwriter for the securities issued with respect to the Separate Account. HSD is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the National Association of Securities Dealers, Inc. HSD is an affiliate of ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial Services Group, Inc. The principal business address of HSD is the same as ours. We currently pay HSD underwriting commissions for its role as Principal Underwriter of all variable annuities associated with this Separate Account. For the past three years, the aggregate dollar amount of underwriting commissions paid to HSD in its role as Principal Underwriter has been: 2008: $53,980,236; 2007: $125,061,889; and 2006: $122,003,581. ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES As stated in the prospectus, we (or our affiliates) pay Additional Payments to Financial Intermediaries. In addition to the Financial Intermediaries listed in the prospectus with whom we have an ongoing contractual arrangement to make Additional Payments, listed 3 ------------------------------------------------------------------------------- below are all Financial Intermediaries that received Additional Payments in 2008 of items such as sponsorship of meetings, education seminars, and travel and entertainment, whether or not an ongoing contractual relationship exists. A.G. Edwards & Sons, Inc., Abacus Investments, Inc., ABD Financial Services, Inc., Access Financial Group, Inc., Access Investments, Inc., Acument Securities, Inc., Addison Avenue Federal Credit Union, ADP Broker-Dealer, Inc., Advanced Advisor Group, Advanced Equities, Inc., Advantage Capital Corp., Advisory Group Equity Services Ltd., AFA Financial Group, LLC., Affinity Bank, AFS Brokerage, Inc., AIG Equity Sales Corp., AIG Financial Advisors, AIG Retirement Advisors, Inc., AIM Distributors, Inc., Aim Investments, Alamo Capital, All Nevada Insurance, Allegacy Federal Credit Union, Allegheny Investments Ltd., Allen & Co. of Florida, Inc., Alliance Bank, AllianceBernstein, AllianceBernstein Investment Research, AllState Financial Services, LLC., Altura Credit Union, AMCORE Bank, NA., Amcore Investment Services, Inc., American Bank, NA., American Classic Securities, American Funds & Trusts, Inc., American General Securities Inc., American Heritage Federal Credit Union, American Independent Securities Group, American Independent Securities, Inc., American Investors Company, American Investors Group, American Municipal Securities, Inc., American Portfolios Financial Services, American Securities Group, Inc., American Trust & Savings Bank, Ameriprise Financial Services, Inc., Ameritas Investment Corp., Ameritrade, Inc., Ames Community Bank, Amsouth Bank, Amsouth Investment Services, AmTrust Bank, Amtrust Investment Services, Inc., Anchor Bank, Anderson & Strudwick, Inc., Andrew Garrett, Inc., Arlington Securities, Inc., Arrowhead Central Credit Union, Arvest Asset Management, Arvest Bank, Ascend Financial Services, Inc., Askar Corp., Asset Management Securities Corp., Associated Bank, NA., Associated Financial Services, Inc., Associated Investment Services, Inc., Associated Securities Corp., Astoria Federal Savings & Loan Association, Atlantic Securities, Inc., Avisen Securities, Inc., AXA Advisors, LLC., Ayre Investments, B.B. Graham & Co., B.C. Ziegler and Company, Banc of America Investment Services, Inc., Bancnorth Investment Group, Inc., Bancorpsouth Investment Services, Inc., BancWest Investment Services, Inc., Bank of Albuquerque, NA., Bank of America, Bank of Clarendon, Bank of Clarke County, Bank of Stockton, Bank of Texas, Bank of the Commonwealth, Bank of the South, Bank of the West, Bankers & Investors Co., Bankers Life and Casualty, Banknorth, BankUnited, FSB, BankWest, Inc., Bannon, Ohanesian & Lecours, Inc., Banorte Securities, Banorte Securities International, Bates Securities, Inc., BB&T Investment Services, Inc., BCG Securities, Inc., Beaconsfield Financial Services., Inc., Benchmark Investments, Inc., Beneficial Investment Services, Bernard Herold & Co., Inc., Berthel, Fisher & Co. Financial Services, Inc., Bethpage Federal Credit Union, BI Investments, LLC., Bodell Overcash Anderson & Co., Boeing Employees Credit Union, BOSC, Inc., Brecek & Young Advisors, Inc., Brighton Securities Corp., Britton & Koontz Bank, N.A., Broad Street Securities, Inc., Broker Dealer Financial Services Corp., Brokersxpress LLC., Brookstone Securities, Inc., Brookstreet Securities Corp., Brown Advisory Securities Inc., Brown, Lisle/Cummings, Inc., Bruce A Lefavi Securities, Inc., Busey Bank, Butler, Wick & Co., Inc., C.R.I. Securities, Inc., Cadaret, Grant & Co., Inc., California Bank & Trust, California Credit Union, California National Bank, Calton & Associates, Inc., Cambridge Investment Research, Inc., Cambridge Legacy Sec., LLC., Cambridge State Bank, Cantella & Co., Inc., Capital Analysts, Inc., Capital Bank, Capital Brokerage Corporation, Capital Choice, Capital City Bank, Capital Financial Services, Inc., Capital Growth Resources, Capital Investment Group, Inc., Capital Investment Services, Inc., Capital One Investments Services, LLC., Capital Securities Investment Corp., Capital Securities Management, Capital Select Investments Corp., Capital Wealth Advisors, Inc., Capital West Securities, Inc., CapitalBank, Capitol Federal Savings Bank, Capitol Securities Management, Inc., Carolina First Bank, Carolinas Investment Consulting LLC., Cary Street Partners, LLC., Cascade Investment Group, Inc., CCF Investments, Inc., CCO Investment Services Corp., Centaurus Financial, Inc., Centennial Securities Co., Inc., Central State Bank, Central Virginia Bank, Century National Bank, Century Securities Associates, Inc., CFD Investments, Inc., Chapin, Davis, Charles Schwab, Chase Investments Services Corp., Chemical Bank West, Chevy Chase Financial Services, CIBC World Markets Corp., Citadel Federal Credit Union, Citi Bank, Citicorp Investment Services, Citigroup Global Markets, Inc., Citizens & Farmers Bank, Citizens Bank, Citizens Business Bank, City Bank, City Securities Corporation, Coastal Federal Credit Union, Coburn & Meredith, Inc., Colonial Bank, N.A., Colonial Brokerage, Inc., Comerica Bank, Comerica Securities, Commerce Bank, N.A., Commerce Brokerage Services, Inc., Commerce Capital Markets, Inc., Commercial & Savings Bank/Mllrsbrg, Commercial Federal Bank, Commonwealth Bank & Trust Co., Commonwealth Financial Network, Commonwealth Investment Services, Inc., Community Bank, Community Bank & Trust, Community Credit Union, Community Investment Services, Inc., Compass Bank, Compass Brokerage, Inc., Comprehensive Financial Services, Conservative Financial Services., Inc., Coordinated Capital Securities, Inc., Country Club Financial Services., Inc., Countrywide Bank, Countrywide Investment Services, Inc., Credit Union West, Crews & Associates, Inc., Crowell, Weedon & Co., Crown Capital Securities, LLP, CUE, Cullum & Burks Securities, Inc., Cumberland Brokerage Corp., Cuna Brokerage Services, Inc., Cuso Financial Services, LLP., CW Securities, LLC., D.A. Davidson & Company, Davenport & Company LLC., David A. Noyes & Company, David Lerner Associates, Inc., DaVinci Capital Management, Inc., Dawson James Securities, Inc., Delta Equity Services Corp., Delta Trust Investment, Inc., Deutsche Bank Securities, Inc., DeWaay Financial Network, DFCU Financial Federal Credit Union, Dilworth, Diversified Securities, Inc., Dominion Investor Services., Inc., Dorsey & Company, Inc., Dougherty & Company LLC., Dubuque Bank & Trust Co., Dumon Financial, Duncan-Williams, Inc., Dupaco Community Credit Union, Eagle Bank, Eagle One Financial, Eagle One Investments, LLC., Eastern Bank, Eastern Financial Florida Credit Union, ECM Securities Corporation, EDI Financial, Inc., Edward Jones, Effex National Security, Eisner Securities, Inc., Emclaire Financial Corp., Emerson Equity, LLC., Empire Bank, Empire Financial Group, Inc., Empire Securities Corporation, Emporia State Bank & Trust Co., Ensemble Financial Services, Inc., EPlanning Securities, Inc., Equitable Bank, Equitas America, LLC, Equity Services, Inc., ESL Federal Credit Union, Essex Financial Services, Inc., Essex National Securities, Inc., Essex Securities, LLC., Evans National Bank, EVB, Evolve Securities, Inc., Excel Securities & 4 ------------------------------------------------------------------------------- Assoc., Inc., Fairport Capital, Inc., Fairwinds Credit Union, Farmers National Bank, Farmers National Bank/Canfield, Feltl & Company, Ferris/Baker Watts, FFP Securities, Inc., Fidelity Bank, Fidelity Brokerage Services., LLC., Fidelity Federal Bank & Trust, Fidelity Investments, Fifth Third Bank, Fifth Third Securities, FIMCO Securities Group,Inc., Financial Center Credit Union, Financial Network Investment Corp., Financial Partners Credit Union, Financial Planning Consultants, Financial Security Management, Inc., Financial West Group, Fintegra LLC., First Allied Securities, First America Bank, First American Bank, First Bank, First Brokerage America, First Citizens Bank, First Citizens Financial Plus, Inc., First Citizens Investor Services, First Command Financial Planning, First Commonwealth Bank, First Commonwealth Federal Credit Union, First Community Bank, First Community Bank, N.A., First Federal Bank, First Federal Savings & Loan of Charlston, First Financial Bank, First Financial Equity Corp., First Global Securities, Inc., First Harrison Bank, First Heartland Capital Inc., First Hope Bank, First Investment Services, First MidAmerica Investment Corp., First Midwest Bank, First Midwest Securities, First Montauk Securities, First National Bank, First National Investments Inc, First Niagara Bank, First Northern Bank of Dixon, First Place Bank, First Southeast Investment Services, First St. Louis Securities, Inc., First Tennessee Bank, First Tennessee Brokerage, Inc., First Wall Street Corporation, First Western Securities Inc., FirstMerit Securities, Inc., FiServ Investor Services, Inc., Flagstar Bank, FSB, Florida Investment Advisers, Flushing Savings Bank, FSB, FMN Capital Corporation, FNB Brokerage Services, Inc., FNIC F.I.D. Div., Folger Nolan Fleming Douglas, Foothill Securities, Inc., Foresters Equity Services, Inc., Fortune Financial Services, Founders Financial Securities, LLC., Fox and Company, Franklin Bank, Franklin/Templeton Dist., Inc., Freedom Financial, Inc., Fremont Bank, Frontier Bank, Frost Brokerage Services Inc., Frost National Bank, FSC Securities Corporation, FSIC, Fulcrum Securities, Inc., Gateway Bank and Trust Company, Geneos Wealth Management, Inc., Genworth Financial Securities Corp., GIA Financial Group, L.L.C., Girard Securities Inc., Global Brokerage Services, Gold Coast Securities, Inc., Golden One Credit Union, Great American Advisors, Inc., Great American Investors, Inc., Great Lakes Capital, Inc., Greenberg Financial Group, Gregory J Schwartz & Co., Inc., Gunnallen Financial, Inc., GWN Securities, Inc., H&R Block Financial Advisers, Inc., H. Beck, Inc., H.D.Vest Investment Services, Haas Financial Products, Inc., Hancock Bank, Hancock Investments Services, Harbor Financial Services, LLC., Harbour Investments, Inc., Harger and Company, Inc., Harold Dance Investments, Harris Investor Services, Inc., Harvest Capital LLC, Hawthorne Securities Corp., Hazard & Siegel, Inc., Hazlett, Burt & Watson, Inc., HBW Securities, LLC, HCSB, Heartland Investment Associates, Inc., Heim & Young Securities, Inc., Heim Young & Associates, Inc., Hibernia Investments, LLC, Hibernia National Bank, High Country Bank, High Ridge Insurance Services, Hilliard Lyons, HNB National Bank, Home Savings & Loan Company of Youngstown, Home Savings Bank, Horizon Bank, Hornor, Townsend & Kent, Inc., Horwitz & Associates, Inc., Howe Barnes Investments, Inc., HRC Investment Services, Inc., HSBC Bank USA, National Associates, HSBC International, HSBC Securities (USA) Inc., Huntingdon Securities Corp., Huntington Investment Co., Huntington National Bank, Huntington Valley Bank, Huntleigh Securities Corp., IBC Investments, IBN Financial Services, Inc., ICBA Financial Services Corp., IFG Network Securities, Inc., IFMG Securities, Inc., IMS Securities, Inc., Independent Financial Securities Inc., Independent Financial Group, LLC., Indiana Merchant Banking & Brokerage, Infinex Investment, Inc., Infinity Securities, Co., Inc., ING Financial Advisors, LLC, ING Financial Partners, Innovative Solutions, Integrated Financial Inc., Intercarolina Financial Services, Inc., Interpacific Investor Services, InterSecurities, Inc., INTRUST Bank, NA., Intrust Brokerage Inc., Invesmart Securities, LLC., INVEST Financial Corporation, Investacorp, Inc., Investment Center, Inc., Investment Centers of America, Investment Management Corp., Investment Network, Inc., Investment Planners, Inc., Investment Professionals, Inc., Investment Security Corp., Investors Capital Corp., Investors Resources Group, Inc., Iowa State Bank, ISG Equity Sales Corporation, J.B. Hanauer & Co., J.J.B Hilliard, W.L.Lyons LLC., J.P. Turner & Co., J.W. Cole Financial, Inc., Jack V Butterfield Investment Co., Jackson Securities, LLC., Jacksonville Savings Bank, James C. Butterfield, Inc., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corp., Jesup & Lamont Securities Corp., JHW Financial Services, Inc., JHW Securities, JJB Hilliard/WL Lyons, Inc., Jones Bains Sides Investments Group, Joseph James Financial Services, Kalos Capital, Inc., Kaplan & Co., Securities Inc., KCD Financial, Inc., Keesler Federal Credit Union, Kern National Federal Credit Union, Kern Schools Federal Credit Union, Key Bank, Key Investment Services, LLC., Key Investor Services, KeyBank, NA., KeyPoint Credit Union, Kinecta Credit Union, Kirkwood Bank & Trust Co., KleinBank, KMS Financial Services, Inc., Kovack Securities, Inc., L.F. Financial, LLC., L.M. Kohn & Company, LaBrunerie Financial Services, Inc., Lake Area Bank, Lake Community Bank, Landmark Credit Union, Lara, Shull & May, LTD., LaSalle Financial Services, Inc., LaSalle Street Securities, Inc., Lawrence Jorgenson, Legacy Asset Securities, Inc., Legacy Financial Services, Inc., Legend Equities Corporation, Legends Bank, Legg Mason/Citigroup Global Market, Leigh Baldwin & Co., LLC., Leonard & Company, Lesko Securities Inc., Leumi Investment Services, Inc., Lexington Investment Co., Inc., LFA, Liberty Group, LLC., Liberty Securities Corporation, Lifemark Securities Corp., Lincoln Financial Advisors Corp., Lincoln Investment Planning, Inc., Linsco/Private Ledger, LOC Federal Credit Union, Lockheed Federal Credit Union, Lombard Securities, Inc., Long Island Financial Group, Lord, Abbett & Co., Lowell & Company, Inc., LPL Financial, M Holdings Securities, Inc., M&I Bank, M&I Brokerage Services, Inc., M&I Financial Advisors, Inc., M&T Bank, M&T Securities, Inc., M. Griffith, Inc., M.L. Stern & Co. Inc., Madison Avenue Securities, Inc., Madison Bank & Trust, Main Street Securities, LLC., Manarin Securities Corp., Manna Financial Services Corp., Mascoma Savings Bank, Mass Institute of Technology Credit Union, Mass Mutual, Maxim Group LLC., McGinn, Smith & Co., Inc., McNally Financial Services Corp.; Means Investment Co., Inc., Medallion Equities, Inc., Medallion Investment Services Inc., Mercantile Bank, Mercantile Brokerage Services Inc., Mercantile Trust & Savings Bank, Merrill Lynch Inc., Merrimac Corporate Securities, Inc., Mesirow Financial, Inc., MetLife Securities, Inc., MFS Fund Distributors, Inc., MICG Investment Management, Michigan Catholic Credit Union, Michigan Securities, Inc., Mid Atlantic Capital Corp., MidAmerica Financial Services Inc., Mid-Atlantic Securities, Inc., Midwestern Sec Trading CO, LLC., Milkie/Ferguson 5 ------------------------------------------------------------------------------- Investments, Mission Federal Credit Union, MMC Securities Corp., MML Investor Services, Inc., Moloney Securities Co., Inc., Money Concepts Capital Corp, Money Management Advisory Inc., Moors & Cabot, Inc., Morgan Keegan & Co., Inc., Morgan Peabody, Inc., Morgan Stanley & Co., Inc., MSCS Financial Services, LLC., MTL Equity Products, Inc., Multi-Financial Securities Corp., Multiple Financial Services., Inc., Mutual Funds Assoc., Inc., Mutual Securities, Inc., Mutual Service Corp., NatCity Investments, National Bank & Trust, National City Bank of Midwest, National Financial Services Corp., National Investors Services, National Pension & Group Consultant, National Planning Corporation, National Securities Corp., Nations Financial Group, Inc., Nationwide Investment Service Corp., Navy Federal Brokerage Services, Navy Federal Credit Union, NBC Financial Services, NBC Securities, Inc., NBT Bank, Neidiger, Tucker, Bruner, Inc., Nelson Securities, Inc., Networth Strategic, New England Securities Corp., New Horizon Asset Management Group, LLC., NewAlliance Bank, NewAlliance Investments, Inc., Newbridge Securities Corp., Nexity Financial Services, Inc., Next Financial Group, NFB Investment Services Corp., NFP Securities, Inc., NIA Securities, LLC., Nodaway Valley Bank, Nollenberger Capital Partners, North Ridge Securities Corp., Northeast Securities, Inc., Northern Trust Company, Northern Trust Securities, Inc., Northridge Capital Corp., Northwestern Mutual Investment Services, Inc., Nutmeg Securities, Ltd., NYLIFE Securities Inc., O.N. Equity Sales Co., Oak Tree Securities, Inc., Oakbrook Financial Group, Inc., Oberlin Financial Corporation, OFG Financial Services, Inc., Ogilvie Security Advisors Corp., Ohio National Equities, Inc., O'Keefe Shaw & Company, Old National Bank, ON Equity Sales Co., OneAmerica Securities Inc., Oppenheimer and Co., Inc., Orange County Teachers Federal Credit Union, P & A Financial Sec's Inc., Pacific Cascade Federal Credit Union, Pacific Financial Assoc., Pacific West Securities, Inc., Packerland Brokerage Services, Inc., Paragon Bank & Trust, Park Avenue Securities, Parsonex Securities, Inc., Partnervest Securities, Inc., Patapsco Bank, Patelco Credit Union, Paulson Investment Company Inc., Peachtree Capital Corporation, Penn Plaza Brokerage, Pension Planners Securities Inc., Pentagon Federal Credit Union, Peoples Bank, Peoples Community Bank, Peoples Securities, Inc., Peoples United Bank, PFIC Securities Corp, Pillar Financial Services, Pimco Funds, PlanMember Securities Corp., PMK Securities & Research Inc., PNC Bank Corp., PNC Investments LLC., Premier America Credit Union, Prime Capital Services, Inc., PrimeSolutions Securities, Inc, PrimeVest Financial Services, Princor Financial Service Corp., ProEquities, Inc., Professional Asset Management, Inc., Prospera Financial Services, Protected Investors of America, Provident Bank, Provident Savings Bank, F.S.B., Pruco Securities Corp., Purshe, Kaplin & Sterling, Putnam Investments, Putnam Savings Bank, QA3 Financial Corp., Quest Capital Strategies, Inc., Quest Securities, Inc., Quest Tar, Questar Capital Corp., R.M. Stark & Co., Raymond James & Associates, Inc., Raymond James Financial Services, Inc., RBC Capital Markets Corp., RBC Centura Bank, RBC Centura Securities, Inc., RBC Dain Rauscher Inc., Regal Discount Securities, Inc., Regal Securities, Inc., Regency Securities Inc., Regions Bank, Reliance Securities, LLC., Resource Horizons Group, LLC., R-G Crown Bank, Rhodes Securities, Inc., Rice Pontes Capital, Inc., Ridgeway & Conger, Inc., River City Bank, RiverStone Wealth Management, Inc., RNR Securities LLC., Robert B. Ausdal & Co., Inc., Robert W. Baird & Co. Inc., Robinson & Robinson, Inc., Rogan & Associates, Inc., Rogan, Rosenberg & Assoc., Inc., Rothschild Investment Corp., Royal Alliance Associates, Inc., Royal Securities Company, Rushmore Securities Corp., Rydex Distributors, Inc., S F Police Credit Union, S.C. Parker & Co., Inc., Sage, Rutty & Co., Inc., Sammons Securities Company LLC., San Mateo County Employees Credit Union, Sanders Morris Harris Inc., Sandy Spring Bank, Sawtooth Securities, LLC., Saxony Securities, Inc., SCF Securities, Inc., School Employees Credit Union, Scott & Stringfellow, Inc., Seacoast Investor Services Inc., Seacoast National Bank, Securian Financial Services, Securities America, Inc., Securities Equity Group, Securities Service Network, Inc., Security Service Federal Credit Union, Shields & Company, Sicor Securities Inc., Sigma Financial Corporation, Signator Investors Inc., Signature Bank, Signature Financial Group, Inc., Signature Securities Group, SII Investments, Silicone Valley Securities, SMH Capital, Smith Barney, Smith Barney Bank Advisor, Smith Hayes Financial Services Corp., Sorrento Pacific Financial LLC., Source Capital Group, Inc., South Carolina Bank & Trust, South Valley Bank & Trust, South Valley Wealth Management, Southeast Investments NA Inc., Southern MO Bank of Marshfield, SouthTrust Securities, Inc., Southwest Securities, Inc., Sovereign Bank, Space Coast Credit Union, Spectrum Capital, Inc., Spelman & Co., Inc., Spire Securities, LLC., Stanford Group Company, Stephen A. Kohn & Associates, Stephens, Inc., Sterling Savings Bank, Sterne Agee & Leach, Inc., Stifel, Nicolaus & Co., Inc., Stock Depot Inc, Stockcross, Inc., Stofan, Agazzi & Company, Inc., Strand Atkinson Williams York, Strategic Alliance Corp., Strategic Financial Alliance, Summit Bank, Summit Brokerage Services Inc., Summit Equities, Inc., Summitalliance Securities, LLC., SunAmerica, Sunset Financial Services, Inc., SunTrust Investment Services, Inc., Superior Bank, Surrey Bank & Trust, Susquehanna Bank, SWBC Investment Company, SWS Financial Services, Symetra Investment Services Inc., Synergy Investment Group, Synovus Securities, T.J. Raney & Sons, Inc., Taylor Securities, Inc., TD Bancnorth, National Assoc., TD Waterhouse Investor Services, Inc., Technology Credit Union, Telesis Community Credit Union, Telhio Credit Union, TFS Securities, Inc., The Advisors Group, Inc., The Capital Group Sec. Inc., The Concord Equity Group, LLC., The Golden 1 Credit Union, The Huntington Investment Co., The Huntington Investment Company, The Legend Gray, Thomasville National Bank, Thoroughbred Financial Services, LLC., Thrasher & Company, Thrivent Investment Management, Inc., Thurston, Springer, Miller, Her, TierOne Bank, TimeCapital Securities Corp., Tower Square Securities, Inc., TradeStar Investments, Inc., Transamerica Financial Advisor, TransWest Credit Union, Tri Counties Bank, Triad Advisors, Inc., Tri-County Financial Group, Inc., Triequa Capital Corporation, Triune Capital Advisors, Troy Bank & Trust, Trustmark National Bank, Trustmont Financial Group Inc., U.S Bank, UBS Financial Services, Inc., UBS International; UBS Private Banking, UMB Bank, UMB Financial Services, Inc., UMB Scout Brokerage Services, Union Bank, Union Bank & Trust, Union Bank Company, Union Bank of California, N.A., Union Bank of Chandler, Union Capital Company, Union Savings Bank, UnionBanc Investment Services, United Bank, Inc., United Brokerage Services, Inc., United Community Bank, United Financial Group, United Planners Financial Services of America, United Securities Alliance Inc., Univest Investments, Inc., US Alliance Credit 6 ------------------------------------------------------------------------------- Union, US Bancorp Investments, US Bank, N.A., USA Financial Securities Corp., USAllianz Securities, Inc., USI Securities, UVest Financial Services, V.B.C. Securities, VALIC Financial Advisors, Inc., ValMark Securities, Van Kampen Investments, Inc., VanDerbilt Securities, LLC., Veritrust Financial, LLC., VFinance Investments, Inc., Vinson Assoc., Vision Bank, Vision Invstmnt Services, Inc., Vision Securities, Inc., Vorpahl Wing Securities, VSR Financial Services, Inc., VYstar Credit Union, Waccamaw Bank, Wachovia Bank, Wachovia Securities Inc. Financial Network, Wachovia Securities ISG, Wachovia Securities LLC., Waddell & Reed, Inc., Wakulla Bank, Wald Group, Wall Street Electronica, Inc., Wall Street Financial Group, Walnut Street Securities, Inc., WAMU, WaMu Investments, Inc., Washington Mutual, Wasserman & Associates, Waterstone Financial Group, Wayne Hummer Investments LLC., Wayne Savings Community Bank, Wealth Management Services, Webster Bank, Webster Investments, Wedbush Morgan Securities Inc., Weitzel Financial Services Inc., Wells Fargo Investments, Wells Fargo Securities Independent, Wells Federal Bank, Wellstone Securities, LLC., WesBanco Bank, Inc., WesBanco Securities, Inc., Wescom Credit Union, Wescom Financial Services, West Alabama Bank & Trust, West Coast Bank, Westamerica Bank, Western Federal Credit Union, Western International Securities, Westfield Bakerink Brozak LLC., Westminster Financial Investment, Westminster Financial Securities, Inc., Westport Securities, L.L.C., WFG Securities Corp., Whitney National Bank, Whitney Securities, LLC., Wilbank Securities, Wiley Bros.- Aintree Capital, William C. Burnside & Company, Wilmington Brokerage Services, Wilmington Trust Co., Windsor Securities, Inc., WM Financial Services, Inc., Woodbury Financial Services, Inc., Woodforest National Bank, Woodlands Securities Corp., Woodmen Financial Services Inc., Woodstock Financial Group, Inc., Workman Securities Corp., World Equity Group Inc., World Group Securities, Inc., Worth Financial Group, Inc., WRP Investments, Inc., Wunderlich Securities Inc., XCU Capital Corp., Inc., Xerox Credit Union, Zeigler Investment Services. PERFORMANCE RELATED INFORMATION The Separate Account may advertise certain performance-related information concerning the Sub-Accounts. Performance information about a Sub-Account is based on the Sub-Account's past performance only and is no indication of future performance. TOTAL RETURN FOR ALL SUB-ACCOUNTS When a Sub-Account advertises its standardized total return, it will be calculated on a quarterly basis from the date the underlying fund is made available in the Separate Account for one, five and ten year periods or some other relevant periods if the underlying fund has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. To calculate standardized total return, the Total Annual Fund Operating Expenses, applicable Sales Charges, Distribution Charge, Separate Account Annual Expenses, and the Annual Maintenance Fee are deducted from a hypothetical initial Premium Payment of $1,000.00. Standardized total returns do not include charges for optional benefit riders. The formula we use to calculate standardized total return is P(1+T) TO THE POWER OF n = ERV. In this calculation, "P" represents a hypothetical initial premium payment of $1,000.00, "T" represents the average annual total return, "n" represents the number of years and "ERV" represents the redeemable value at the end of the period. The Sub-Account may advertise a non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Non-standardized total return is measured in the same manner as the standardized total return described above, except that non-standardized total return does not include the Annual Maintenance Fee, Distribution Charge, or Sales Charges. Therefore, non-standardized total return for a Sub-Account is higher than standardized total return for a Sub-Account. The Sub-Account may also advertise adjusted non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Adjusted non-standardized total return is measured in the same manner as the standardized total return described above. A Sub-Account may advertise non-standardized total returns for periods predating its inception as an investment option in this variable annuity. Such non-standardized total returns reflect the adjusted historical returns of the underlying Fund in which the Sub-Account invests, as adjusted for certain Separate Account annual expenses (Mortality and Expense Risk Charges and Administrative Fees), but excludes adjustments for optional riders or deductions for Annual Maintenance Fees, sales charges, premium taxes and federal/state taxes (including possible penalties). To the extent that a Sub-Account invests in a Feeder Fund (a Feeder Fund is a fund that invests all of its assets into a corresponding Master Fund), the Feeder Fund's performance for periods pre-dating the inception of the Feeder Fund and/or its inclusion within a Separate Account may include the performance of the Master Fund since the inception of the Master Fund, as adjusted for the Feeder Fund's operating expenses. In such case, the performance of a Feeder Fund will be lower than the corresponding Master Fund because of Feeder Fund operating expenses. Performance may include the effect of waivers and reimbursements, in the absence of which performance may have been lower. 7 ------------------------------------------------------------------------------- YIELD FOR SUB-ACCOUNTS If applicable, the Sub-Accounts may advertise yield in addition to total return. At any time in the future, yields may be higher or lower than past yields and past performance is no indication of future performance. The standardized yield will be computed for periods beginning with the inception of the Sub-Account in the following manner. The net investment income per Accumulation Unit earned during a one-month period is divided by the Accumulation Unit Value on the last day of the period. The formula we use to calculate yield is: YIELD = 2[(a - b/cd +1) TO THE POWER OF 6 - 1]. In this calculation, "a" represents the net investment income earned during the period by the underlying fund, "b" represents the expenses accrued for the period, "c" represents the average daily number of Accumulation Units outstanding during the period and "d" represents the maximum offering price per Accumulation Unit on the last day of the period. MONEY MARKET SUB-ACCOUNTS At any time in the future, current and effective yields may be higher or lower than past yields and past performance is no indication of future performance. Current yield of a money market fund Sub-Account is calculated for a seven-day period or the "base period" without taking into consideration any realized or unrealized gains or losses on shares of the underlying fund. The first step in determining yield is to compute the base period return. We take a hypothetical account with a balance of one Accumulation Unit of the Sub-Account and calculates the net change in its value from the beginning of the base period to the end of the base period. We then subtract an amount equal to the total deductions for the Contract and then divides that number by the value of the account at the beginning of the base period. The result is the base period return or "BPR." Once the base period return is calculated, we then multiply it by 365/7 to compute the current yield. Current yield is calculated to the nearest hundredth of one percent. The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A - B)/C. "A" is equal to the net change in value of a hypothetical account with a balance of one Accumulation Unit of the Sub-Account from the beginning of the base period to the end of the base period. "B" is equal to the amount that Hartford deducts for mortality and expense risk charge, any applicable administrative charge and the Annual Maintenance Fee. "C" represents the value of the Sub-Account at the beginning of the base period. Effective yield is also calculated using the base period return. The effective yield is calculated by adding 1 to the base period return and raising that result to a power equal to 365 divided by 7 and subtracting 1 from the result. The calculation we use is: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1. ADDITIONAL MATERIALS We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, dollar cost averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contracts and the characteristics of and market for any alternatives. PERFORMANCE COMPARISONS Each Sub-Account may from time to time include in advertisements the ranking of its performance figures compared with performance figures of other annuity contract's sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services. 8 ------------------------------------------------------------------------------- ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in this Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows all possible Accumulation Unit Values corresponding to all combinations of optional benefits. A table showing only the highest and lowest possible Accumulation Unit Values is shown in the prospectus, which assumes you select either no optional benefits or all optional benefits. There are no accumulated unit values because as of December 31, 2008, the Sub-Accounts had not commenced operations. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE CONTRACT OWNERS OF HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN AND THE BOARD OF DIRECTORS OF HARTFORD LIFE INSURANCE COMPANY ------------------------------------------------------------------------------- We have audited the accompanying statements of assets and liabilities of each of the individual Sub-Accounts disclosed in Note 1 which comprise the Hartford Life Insurance Company Separate Account Seven (the "Account"), as of December 31, 2008, and the related statements of operations and changes in net assets for the respective stated periods then ended. 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 the standards of the Public Company Accounting Oversight Board (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. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2008, by correspondence with the mutual fund companies. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of each of the individual Sub-Accounts constituting Hartford Life Insurance Company Separate Account Seven as of December 31, 2008, the results of their operations and the changes in their net assets for the respective stated periods then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Hartford, Connecticut February 18, 2009 SA-1 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2008 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) ---------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 138,776 315,084 ============ ============ Cost: Class IA -- -- Class IB -- -- Other class $1,372,493 $4,808,286 ============ ============ Market Value: Class IA -- -- Class IB -- -- Other class $1,197,638 $3,443,865 Due from Hartford Life Insurance Company 3,809 3,787 Receivable from fund shares sold -- -- Other assets -- -- ------------ ------------ Total Assets 1,201,447 3,447,652 ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased 3,809 3,787 Other liabilities 1 2 ------------ ------------ Total Liabilities 3,810 3,789 ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $1,197,637 $3,443,863 ============ ============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-2 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS AIM V.I. SMALL/MID-CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 57,584 11,715 61,985 8,223,378 ========== ========== ============ ============= Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $738,210 $117,012 $1,035,810 $63,826,998 ========== ========== ============ ============= Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $568,356 $88,914 $769,233 $33,715,851 Due from Hartford Life Insurance Company 17,016 -- 2,212 -- Receivable from fund shares sold -- 4 -- 384 Other assets -- -- -- -- ---------- ---------- ------------ ------------- Total Assets 585,372 88,918 771,445 33,716,235 ---------- ---------- ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company -- 4 -- 384 Payable for fund shares purchased 17,016 -- 2,212 -- Other liabilities -- -- -- 7 ---------- ---------- ------------ ------------- Total Liabilities 17,016 4 2,212 391 ---------- ---------- ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $568,356 $88,914 $769,233 $33,715,844 ========== ========== ============ ============= AIM V.I. AIM V.I. AIM V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 1,110,716 3,558,014 31,466,905 ============= ============= ============== Cost: Class IA -- -- -- Class IB -- -- -- Other class $24,418,641 $88,787,660 $384,522,829 ============= ============= ============== Market Value: Class IA -- -- -- Class IB -- -- -- Other class $18,757,412 $70,268,105 $410,643,108 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 4,681 812 59,433 Other assets -- -- -- ------------- ------------- -------------- Total Assets 18,762,093 70,268,917 410,702,541 ------------- ------------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 4,681 812 59,433 Payable for fund shares purchased -- -- -- Other liabilities 68 898 11 ------------- ------------- -------------- Total Liabilities 4,749 1,710 59,444 ------------- ------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $18,757,344 $70,267,207 $410,643,097 ============= ============= ==============
(a) From inception May 1, 2008 to December 31, 2008. SA-3 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. HIGH INTERNATIONAL YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 200,937 2,889,866 ============ ============= Cost: Class IA -- -- Class IB -- -- Other class $1,090,267 $76,551,185 ============ ============= Market Value: Class IA -- -- Class IB -- -- Other class $741,459 $56,274,291 Due from Hartford Life Insurance Company -- 9,185 Receivable from fund shares sold 42 -- Other assets -- -- ------------ ------------- Total Assets 741,501 56,283,476 ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company 42 -- Payable for fund shares purchased -- 9,185 Other liabilities -- 1 ------------ ------------- Total Liabilities 42 9,186 ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $741,459 $56,274,290 ============ =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-4 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I. MID CAP CORE SMALL CAP LARGE CAP CAPITAL EQUITY FUND EQUITY FUND GROWTH FUND DEVELOPMENT FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 8,393,592 2,961,292 1,302,951 66,619 ============= ============= ============= ========== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $94,459,642 $41,990,135 $16,260,904 $897,171 ============= ============= ============= ========== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $72,100,950 $31,445,028 $12,742,857 $525,270 Due from Hartford Life Insurance Company 10,544 41,997 -- -- Receivable from fund shares sold -- -- 1,136 25 Other assets 7 -- -- -- ------------- ------------- ------------- ---------- Total Assets 72,111,501 31,487,025 12,743,993 525,295 ------------- ------------- ------------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 1,247 25 Payable for fund shares purchased 10,544 41,997 -- -- Other liabilities -- 6 2 -- ------------- ------------- ------------- ---------- Total Liabilities 10,544 42,003 1,249 25 ------------- ------------- ------------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $72,100,957 $31,445,022 $12,742,744 $525,270 ============= ============= ============= ========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 7,656,290 13,143,668 24,872,232 ============= ============== ============== Cost: Class IA -- -- -- Class IB -- -- -- Other class $83,768,615 $144,519,509 $365,954,988 ============= ============== ============== Market Value: Class IA -- -- -- Class IB -- -- -- Other class $81,616,046 $87,668,261 $300,456,560 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 21,464 5,004 67,483 Other assets 2 -- -- ------------- -------------- -------------- Total Assets 81,637,512 87,673,265 300,524,043 ------------- -------------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 21,464 5,004 67,483 Payable for fund shares purchased -- -- -- Other liabilities -- -- 2 ------------- -------------- -------------- Total Liabilities 21,464 5,004 67,485 ------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $81,616,048 $87,668,261 $300,456,558 ============= ============== ==============
SA-5 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 19,529,998 32,586,512 ============== ============== Cost: Class IA -- -- Class IB -- -- Other class $176,404,112 $355,014,550 ============== ============== Market Value: Class IA -- -- Class IB -- -- Other class $129,288,584 $305,335,616 Due from Hartford Life Insurance Company -- 59,564 Receivable from fund shares sold 53,853 -- Other assets 2 -- -------------- -------------- Total Assets 129,342,439 305,395,180 -------------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 53,853 -- Payable for fund shares purchased -- 59,564 Other liabilities -- 3 -------------- -------------- Total Liabilities 53,853 59,567 -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $129,288,586 $305,335,613 ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-6 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 6,262,587 20,253,604 28,146,972 16,453,413 ============== ================ ============== ============== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $113,539,120 $1,069,142,995 $986,759,699 $285,167,864 ============== ================ ============== ============== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $86,924,708 $673,837,385 $678,623,508 $200,567,102 Due from Hartford Life Insurance Company -- -- 21,939 3,948 Receivable from fund shares sold 141,513 9,174 -- -- Other assets 2 -- -- -- -------------- ---------------- -------------- -------------- Total Assets 87,066,223 673,846,559 678,645,447 200,571,050 -------------- ---------------- -------------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 141,513 9,174 -- -- Payable for fund shares purchased -- -- 20,996 3,948 Other liabilities -- 2 17 9 -------------- ---------------- -------------- -------------- Total Liabilities 141,513 9,176 21,013 3,957 -------------- ---------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $86,924,710 $673,837,383 $678,624,434 $200,567,093 ============== ================ ============== ============== AMERICAN FUNDS BB&T AMERICAN FUNDS GLOBAL SMALL MID CAP NEW WORLD FUND CAPITALIZATION FUND GROWTH VIF SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) -------------------------- ---------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 5,326,737 5,351,090 21,019 ============= ============= ========== Cost: Class IA -- -- -- Class IB -- -- -- Other class $89,778,338 $95,606,419 $272,979 ============= ============= ========== Market Value: Class IA -- -- -- Class IB -- -- -- Other class $71,751,139 $59,022,523 $145,032 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 70,834 62,075 6 Other assets 1 -- -- ------------- ------------- ---------- Total Assets 71,821,974 59,084,598 145,038 ------------- ------------- ---------- LIABILITIES: Due to Hartford Life Insurance Company 70,834 62,075 6 Payable for fund shares purchased -- -- -- Other liabilities -- 2 -- ------------- ------------- ---------- Total Liabilities 70,834 62,077 6 ------------- ------------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $71,751,140 $59,022,521 $145,032 ============= ============= ==========
(a) From inception May 1, 2008 to December 31, 2008. SA-7 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
BB&T CAPITAL MANAGER BB&T EQUITY VIF LARGE CAP VIF SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 45 1,548 ===== ========= Cost: Class IA -- -- Class IB -- -- Other class $211 $17,138 ===== ========= Market Value: Class IA -- -- Class IB -- -- Other class $216 $10,049 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold -- -- Other assets -- -- ----- --------- Total Assets 216 10,049 ----- --------- LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased -- -- Other liabilities -- -- ----- --------- Total Liabilities -- -- ----- --------- NET ASSETS: For Variable Annuity Contract Liabilities $216 $10,049 ===== =========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-8 -------------------------------------------------------------------------------
BB&T COLUMBIA SPECIAL BB&T COLUMBIA SMALL COMPANY OPPORTUNITIES TOTAL RETURN ASSET ALLOCATION GROWTH EQUITY VIF BOND VIF VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 112,771 57,265 452,915 1,134,409 ============ ========== ============ ============= Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $1,577,579 $560,947 $7,198,970 $15,109,610 ============ ========== ============ ============= Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $1,158,160 $569,210 $4,221,213 $8,625,435 Due from Hartford Life Insurance Company -- -- -- 1,222 Receivable from fund shares sold 50 24 8,433 -- Other assets -- -- -- -- ------------ ---------- ------------ ------------- Total Assets 1,158,210 569,234 4,229,646 8,626,657 ------------ ---------- ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company 50 24 8,433 -- Payable for fund shares purchased -- -- -- 1,222 Other liabilities -- 1 52 3,932 ------------ ---------- ------------ ------------- Total Liabilities 50 25 8,485 5,154 ------------ ---------- ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,158,160 $569,209 $4,221,161 $8,621,503 ============ ========== ============ ============= COLUMBIA EVERGREEN VA LARGE CAP VALUE DIVERSIFIED CAPITAL EVERGREEN VA VS FUND BUILDER FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (B) SUB-ACCOUNT -------------------------- ----------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 1,559,029 54,883 164,457 ============= ========== ============ Cost: Class IA -- -- -- Class IB -- -- -- Other class $28,300,104 $751,017 $2,466,563 ============= ========== ============ Market Value: Class IA -- -- -- Class IB -- -- -- Other class $14,951,196 $463,210 $1,356,770 Due from Hartford Life Insurance Company 177 -- -- Receivable from fund shares sold -- 22 65 Other assets -- -- -- ------------- ---------- ------------ Total Assets 14,951,373 463,232 1,356,835 ------------- ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company -- 22 65 Payable for fund shares purchased 177 -- -- Other liabilities 116 -- -- ------------- ---------- ------------ Total Liabilities 293 22 65 ------------- ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $14,951,080 $463,210 $1,356,770 ============= ========== ============
(a) From inception May 1, 2008 to December 31, 2008. (b) Formerly Evergreen VA Balanced Fund. Change effective May 30, 2008. SA-9 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
EVERGREEN VA INTERNATIONAL EVERGREEN VA EQUITY FUND OMEGA FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 179,586 11,185 ============ ========== Cost: Class IA -- -- Class IB -- -- Other class $2,762,015 $188,815 ============ ========== Market Value: Class IA -- -- Class IB -- -- Other class $1,725,818 $161,397 Due from Hartford Life Insurance Company 546 -- Receivable from fund shares sold -- 7 Other assets -- -- ------------ ---------- Total Assets 1,726,364 161,404 ------------ ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 7 Payable for fund shares purchased 546 -- Other liabilities -- -- ------------ ---------- Total Liabilities 546 7 ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $1,725,818 $161,397 ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-10 -------------------------------------------------------------------------------
EVERGREEN VA EVERGREEN VA FIDELITY VIP FIDELITY VIP SPECIAL FUNDAMENTAL GROWTH CONTRAFUND(R) VALUES FUND LARGE CAP FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 1,378,056 254,128 10,301 522,581 ============= ============ ========== ============= Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $22,669,752 $4,078,788 $345,224 $10,225,323 ============= ============ ========== ============= Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $12,650,552 $3,232,507 $240,121 $7,911,878 Due from Hartford Life Insurance Company -- 1,791 -- 45,168 Receivable from fund shares sold 1,474 -- 11 -- Other assets 1 -- -- -- ------------- ------------ ---------- ------------- Total Assets 12,652,027 3,234,298 240,132 7,957,046 ------------- ------------ ---------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 1,474 -- 11 -- Payable for fund shares purchased -- 1,791 -- 45,168 Other liabilities -- 2 -- 14 ------------- ------------ ---------- ------------- Total Liabilities 1,474 1,793 11 45,182 ------------- ------------ ---------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $12,650,553 $3,232,505 $240,121 $7,911,864 ============= ============ ========== ============= FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- ------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 312,005 59,128 18,908 ============ ========== ========== Cost: Class IA -- -- -- Class IB -- -- -- Other class $7,033,815 $401,990 $137,823 ============ ========== ========== Market Value: Class IA -- -- -- Class IB -- -- -- Other class $5,653,531 $293,273 $98,320 Due from Hartford Life Insurance Company 19,384 3,804 -- Receivable from fund shares sold -- -- 5 Other assets -- -- -- ------------ ---------- ---------- Total Assets 5,672,915 297,077 98,325 ------------ ---------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 5 Payable for fund shares purchased 19,384 3,804 -- Other liabilities 3 -- -- ------------ ---------- ---------- Total Liabilities 19,387 3,804 5 ------------ ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $5,653,528 $293,273 $98,320 ============ ========== ==========
(a) From inception May 1, 2008 to December 31, 2008. SA-11 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN DIVIDENDS INCOME SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 19,512,032 73,737,277 ============== ================ Cost: Class IA -- -- Class IB -- -- Other class $352,195,867 $1,136,684,448 ============== ================ Market Value: Class IA -- -- Class IB -- -- Other class $267,705,080 $836,509,235 Due from Hartford Life Insurance Company 19,188 -- Receivable from fund shares sold -- 183,938 Other assets -- -- -------------- ---------------- Total Assets 267,724,268 836,693,173 -------------- ---------------- LIABILITIES: Due to Hartford Life Insurance Company -- 183,938 Payable for fund shares purchased 19,188 -- Other liabilities 10 10 -------------- ---------------- Total Liabilities 19,198 183,948 -------------- ---------------- NET ASSETS: For Variable Annuity Contract Liabilities $267,705,070 $836,509,225 ============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-12 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN FRANKLIN LARGE CAP GLOBAL SMALL-MID CAP SMALL CAP GROWTH REAL ESTATE GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 4,637,529 158,670 5,879,344 595,368 ============ =========== ============= =========== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $66,899,373 $2,665,160 $108,565,875 $8,194,552 ============ =========== ============= =========== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $48,694,056 $1,683,488 $69,098,085 $6,302,538 Due from Hartford Life Insurance Company -- -- -- 19,599 Receivable from fund shares sold 4,158 1,832 17,869 -- Other assets -- 2 -- -- ------------ ----------- ------------- ----------- Total Assets 48,698,214 1,685,322 69,115,954 6,322,137 ------------ ----------- ------------- ----------- LIABILITIES: Due to Hartford Life Insurance Company 4,158 1,832 17,869 -- Payable for fund shares purchased -- -- -- 19,599 Other liabilities 4 -- 3 1 ------------ ----------- ------------- ----------- Total Liabilities 4,162 1,832 17,872 19,600 ------------ ----------- ------------- ----------- NET ASSETS: For Variable Annuity Contract Liabilities $48,694,052 $1,683,490 $69,098,082 $6,302,537 ============ =========== ============= =========== FRANKLIN TEMPLETON STRATEGIC DEVELOPING INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 19,677,289 38,566,920 6,232,452 ============= ============= ============ Cost: Class IA -- -- -- Class IB -- -- -- Other class $237,957,059 $639,685,506 $63,653,251 ============= ============= ============ Market Value: Class IA -- -- -- Class IB -- -- -- Other class $208,155,119 $454,398,249 $38,076,418 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 91,548 74,742 12,237 Other assets -- -- -- ------------- ------------- ------------ Total Assets 208,246,667 454,472,991 38,088,655 ------------- ------------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 91,548 74,742 12,237 Payable for fund shares purchased -- -- -- Other liabilities -- 13 1 ------------- ------------- ------------ Total Liabilities 91,548 74,755 12,238 ------------- ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $208,155,119 $454,398,236 $38,076,417 ============= ============= ============
SA-13 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON FOREIGN GLOBAL ASSET SECURITIES FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 14,904,245 201,535 ============== ============ Cost: Class IA -- -- Class IB -- -- Other class $213,108,104 $3,596,152 ============== ============ Market Value: Class IA -- -- Class IB -- -- Other class $160,378,423 $1,707,001 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold 13,617 71 Other assets -- -- -------------- ------------ Total Assets 160,392,040 1,707,072 -------------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 13,617 71 Payable for fund shares purchased -- -- Other liabilities 1 -- -------------- ------------ Total Liabilities 13,618 71 -------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $160,378,422 $1,707,001 ============== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-14 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON FLEX CAP LARGE CAP GROWTH MUTUAL DISCOVERY GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 37,020,932 7,924,970 1,990,040 831,190 ============== ============== ============= ============ Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $478,753,835 $149,072,759 $21,913,044 $8,878,042 ============== ============== ============= ============ Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $303,628,800 $125,652,234 $16,357,733 $6,267,170 Due from Hartford Life Insurance Company -- -- 488 -- Receivable from fund shares sold 71,904 261,924 -- 3,672 Other assets 10 -- -- -- -------------- -------------- ------------- ------------ Total Assets 303,700,714 125,914,158 16,358,221 6,270,842 -------------- -------------- ------------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 71,904 261,924 -- 3,672 Payable for fund shares purchased -- -- 488 -- Other liabilities -- 1 1 -- -------------- -------------- ------------- ------------ Total Liabilities 71,904 261,925 489 3,672 -------------- -------------- ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $303,628,810 $125,652,233 $16,357,732 $6,267,170 ============== ============== ============= ============ HARTFORD TEMPLETON HARTFORD LARGECAP GLOBAL INCOME ADVISERS GROWTH SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (A) ----------------------------- ---------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- 68,929 3,215 Class IB -- 1,116,062 -- Other class 316,000 -- -- ============ ============= ========= Cost: Class IA -- $1,097,913 $41,924 Class IB -- 25,511,890 -- Other class $5,292,043 -- -- ============ ============= ========= Market Value: Class IA -- $943,619 $31,774 Class IB -- 15,456,455 -- Other class $5,488,788 -- -- Due from Hartford Life Insurance Company 10,597 3,023 -- Receivable from fund shares sold -- -- 2 Other assets -- 3 -- ------------ ------------- --------- Total Assets 5,499,385 16,403,100 31,776 ------------ ------------- --------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 2 Payable for fund shares purchased 10,597 3,023 -- Other liabilities -- -- -- ------------ ------------- --------- Total Liabilities 10,597 3,023 2 ------------ ------------- --------- NET ASSETS: For Variable Annuity Contract Liabilities $5,488,788 $16,400,077 $31,774 ============ ============= =========
(a) From inception May 1, 2008 to December 31, 2008. SA-15 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD TOTAL CAPITAL RETURN BOND APPRECIATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA 3,959,732 1,579,236 Class IB 5,698,001 1,170,798 Other class -- -- ============= ============= Cost: Class IA $41,495,234 $52,595,821 Class IB 66,436,260 52,157,515 Other class -- -- ============= ============= Market Value: Class IA $37,788,358 $40,017,845 Class IB 54,137,233 29,437,479 Other class -- -- Due from Hartford Life Insurance Company 73,193 142,327 Receivable from fund shares sold -- -- Other assets 1 -- ------------- ------------- Total Assets 91,998,785 69,597,651 ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased 73,193 142,327 Other liabilities -- 18 ------------- ------------- Total Liabilities 73,193 142,345 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $91,925,592 $69,455,306 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-16 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD DIVIDEND FUNDAMENTAL GLOBAL HARTFORD AND GROWTH GROWTH ADVISERS GLOBAL EQUITY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)(C)(D)(E) -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA 1,918,080 15,354 -- 6,573 Class IB 1,831,515 350 14,943 35,016 Other class -- -- -- -- ============= ========== ========== ========== Cost: Class IA $32,568,950 $105,848 -- $54,727 Class IB 32,450,734 3,178 $201,189 327,175 Other class -- -- -- -- ============= ========== ========== ========== Market Value: Class IA $27,558,564 $90,895 -- $40,463 Class IB 26,261,370 2,059.00 $126,714 215,285 Other class -- -- -- -- Due from Hartford Life Insurance Company 116,679 -- -- -- Receivable from fund shares sold -- 4 5 11 Other assets -- -- -- -- ------------- ---------- ---------- ---------- Total Assets 53,936,613 92,958 126,719 255,759 ------------- ---------- ---------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 4 5 11 Payable for fund shares purchased 116,679 -- -- -- Other liabilities 26 -- -- -- ------------- ---------- ---------- ---------- Total Liabilities 116,705 4 5 11 ------------- ---------- ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $53,819,908 $92,954 $126,714 $255,748 ============= ========== ========== ========== HARTFORD HARTFORD HARTFORD DISCIPLINED GLOBAL HEALTH GLOBAL GROWTH EQUITY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- 7,482 413,749 Class IB 30,958 69,856 46,579 Other class -- -- -- ========== ============ ============ Cost: Class IA -- $99,452 $4,362,135 Class IB $407,441 1,405,795 657,103 Other class -- -- -- ========== ============ ============ Market Value: Class IA -- $76,124 $3,498,471 Class IB $323,713 707,079 391,963 Other class -- -- -- Due from Hartford Life Insurance Company -- -- 7,713 Receivable from fund shares sold 12 31 -- Other assets -- -- -- ---------- ------------ ------------ Total Assets 323,725 783,234 3,898,147 ---------- ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company 12 31 -- Payable for fund shares purchased -- -- 7,713 Other liabilities -- -- 1 ---------- ------------ ------------ Total Liabilities 12 31 7,714 ---------- ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $323,713 $783,203 $3,890,433 ========== ============ ============
(a) From inception May 1, 2008 to December 31, 2008. (c) Effective August 22, 2008, Hartford Global Communications HLS Fund merged with Hartford Global Equity HLS Fund. (d) Effective August 22, 2008, Hartford Global Financial Services HLS Fund merged with Hartford Global Equity HLS Fund. (e) Effective August 22, 2008, Hartford Global Technology HLS Fund merged with Hartford Global Equity HLS Fund. SA-17 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH GROWTH OPPORTUNITIES HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA 39,154 506,799 Class IB 3,663 4,029 Other class -- -- ========== ============= Cost: Class IA $340,184 $11,226,994 Class IB 42,456 113,467 Other class -- -- ========== ============= Market Value: Class IA $294,951 $8,642,934 Class IB 27,178 68,053 Other class -- -- Due from Hartford Life Insurance Company -- 18,190 Receivable from fund shares sold 12 -- Other assets -- -- ---------- ------------- Total Assets 322,141 8,729,177 ---------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 12 -- Payable for fund shares purchased -- 18,190 Other liabilities -- 4 ---------- ------------- Total Liabilities 12 18,194 ---------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $322,129 $8,710,983 ========== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-18 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL HIGH YIELD INDEX GROWTH SMALL COMPANY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA 114,204 -- 24,649 -- Class IB 39,035 19,154 16,582 7,932 Other class -- -- -- -- ========== ========== ========== ========== Cost: Class IA $843,531 -- $221,818 -- Class IB 337,717 $771,803 198,613 $111,064 Other class -- -- -- -- ========== ========== ========== ========== Market Value: Class IA $654,531 -- $144,311 -- Class IB 221,756 $357,948 96,590 $65,334 Other class -- -- -- -- Due from Hartford Life Insurance Company 6,211 -- 301 -- Receivable from fund shares sold -- 14 -- 2 Other assets -- -- -- -- ---------- ---------- ---------- ---------- Total Assets 882,498 357,962 241,202 65,336 ---------- ---------- ---------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 14 -- 2 Payable for fund shares purchased 6,211 -- 301 -- Other liabilities -- -- -- -- ---------- ---------- ---------- ---------- Total Liabilities 6,211 14 301 2 ---------- ---------- ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $876,287 $357,948 $240,901 $65,334 ========== ========== ========== ========== HARTFORD HARTFORD INTERNATIONAL MIDCAP HARTFORD OPPORTUNITIES GROWTH MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA 230,559 120,128 -- Class IB 524,625 16,926 103,831 Other class -- -- -- ============ ========== ============ Cost: Class IA $2,556,016 $875,625 -- Class IB 5,961,898 113,284 $2,401,678 Other class -- -- -- ============ ========== ============ Market Value: Class IA $1,937,034 $641,623 -- Class IB 4,462,299 90,325 $1,667,174 Other class -- -- -- Due from Hartford Life Insurance Company -- 3,753 -- Receivable from fund shares sold 5,667 -- 63 Other assets -- -- -- ------------ ---------- ------------ Total Assets 6,405,000 735,701 1,667,237 ------------ ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 5,667 -- 63 Payable for fund shares purchased -- 3,753 -- Other liabilities 1 -- -- ------------ ---------- ------------ Total Liabilities 5,668 3,753 63 ------------ ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $6,399,332 $731,948 $1,667,174 ============ ========== ============
(a) From inception May 1, 2008 to December 31, 2008. SA-19 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- 531,816,724 Class IB 28,103 28,128,658 Other class -- -- ========== ============== Cost: Class IA -- $531,816,724 Class IB $261,064 28,128,658 Other class -- (68) ========== ============== Market Value: Class IA -- $531,816,724 Class IB $162,966 28,128,658 Other class -- 1 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold 6 1,130,681 Other assets -- -- ---------- -------------- Total Assets 162,972 561,076,064 ---------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 6 1,130,681 Payable for fund shares purchased -- -- Other liabilities -- 8 ---------- -------------- Total Liabilities 6 1,130,689 ---------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $162,966 $559,945,375 ========== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-20 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD SMALLCAP VALUE SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- 85,904 23,753 11,855 Class IB 22,493 319,680 3,630 439,366 Other class -- -- -- -- ========== ============ ========== ============= Cost: Class IA -- $1,229,434 $340,573 $409,386 Class IB $178,324 4,587,717 60,345 20,803,714 Other class -- -- -- -- ========== ============ ========== ============= Market Value: Class IA -- $945,546 $274,760 $306,630 Class IB $164,848 3,438,448 41,874 11,354,168 Other class -- -- -- -- Due from Hartford Life Insurance Company -- -- 2,782 1,547 Receivable from fund shares sold 9 1,956 -- -- Other assets -- -- -- -- ---------- ------------ ---------- ------------- Total Assets 164,857 4,385,950 319,416 11,662,345 ---------- ------------ ---------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 9 1,956 -- -- Payable for fund shares purchased -- -- 2,782 1,547 Other liabilities -- -- 3 1 ---------- ------------ ---------- ------------- Total Liabilities 9 1,956 2,785 1,548 ---------- ------------ ---------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $164,848 $4,383,994 $316,631 $11,660,797 ========== ============ ========== ============= HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD VALUE SECURITIES VALUE OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (F) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA 272,909 24,784 8,753 Class IB 100,966 3,935 3,298 Other class -- -- -- ============ ========== ========== Cost: Class IA $2,867,197 $233,959 $104,127 Class IB 1,077,465 37,883 56,147 Other class -- -- -- ============ ========== ========== Market Value: Class IA $2,781,369 $192,670 $76,799 Class IB 1,026,136 30,568 28,846 Other class -- -- -- Due from Hartford Life Insurance Company 3,819 1,185 -- Receivable from fund shares sold -- -- 515 Other assets 1 -- -- ------------ ---------- ---------- Total Assets 3,811,325 224,423 106,160 ------------ ---------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 515 Payable for fund shares purchased 3,819 1,185 -- Other liabilities -- -- -- ------------ ---------- ---------- Total Liabilities 3,819 1,185 515 ------------ ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $3,807,506 $223,238 $105,645 ============ ========== ==========
(a) From inception May 1, 2008 to December 31, 2008. (f) Effective September 26, 2008, Hartford Mortgage Securities HLS Fund merged with Hartford U.S. Government Securities HLS Fund. SA-21 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD EQUITY AMERICAN FUNDS INCOME ASSET ALLOCATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) ---------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA 21,528 -- Class IB 2,850 650,543 Other class -- -- ========== ============ Cost: Class IA $228,628 -- Class IB 38,031 $5,548,672 Other class -- -- ========== ============ Market Value: Class IA $197,959 -- Class IB 26,224 $4,756,804 Other class -- -- Due from Hartford Life Insurance Company -- 11,173 Receivable from fund shares sold 721 -- Other assets -- -- ---------- ------------ Total Assets 224,904 4,767,977 ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 721 -- Payable for fund shares purchased -- 11,173 Other liabilities -- -- ---------- ------------ Total Liabilities 721 11,173 ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $224,183 $4,756,804 ========== ============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-22 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP AMERICAN FUNDS INCOME AND AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH GROWTH BOND GLOBAL BOND AND INCOME HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB 362,289 1,436,997 276,333 1,137,685 Other class -- -- -- -- ============ ============= ============ ============ Cost: Class IA -- -- -- -- Class IB $2,947,038 $13,391,344 $2,665,908 $8,772,188 Other class -- -- -- -- ============ ============= ============ ============ Market Value: Class IA -- -- -- -- Class IB $2,440,398 $12,902,737 $2,721,688 $6,891,233 Other class -- -- -- -- Due from Hartford Life Insurance Company 2,274 34,048 1,648 40,075 Receivable from fund shares sold -- -- -- -- Other assets -- -- -- -- ------------ ------------- ------------ ------------ Total Assets 2,442,672 12,936,785 2,723,336 6,931,308 ------------ ------------- ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company -- -- -- -- Payable for fund shares purchased 2,274 34,048 1,648 40,075 Other liabilities 2 -- -- 1 ------------ ------------- ------------ ------------ Total Liabilities 2,276 34,048 1,648 40,076 ------------ ------------- ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $2,440,396 $12,902,737 $2,721,688 $6,891,232 ============ ============= ============ ============ AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS GLOBAL GROWTH CAPITALIZATION GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- ----------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB 261,256 514,646 3,309,815 Other class -- -- -- ============ ============ ============= Cost: Class IA -- -- -- Class IB $2,116,812 $3,599,358 $25,000,266 Other class -- -- -- ============ ============ ============= Market Value: Class IA -- -- -- Class IB $1,673,223 $2,622,804 $19,213,480 Other class -- -- -- Due from Hartford Life Insurance Company 19,887 11,455 85,632 Receivable from fund shares sold -- -- -- Other assets -- -- -- ------------ ------------ ------------- Total Assets 1,693,110 2,634,259 19,299,112 ------------ ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company -- -- -- Payable for fund shares purchased 19,887 11,455 85,632 Other liabilities -- 1 6 ------------ ------------ ------------- Total Liabilities 19,887 11,456 85,638 ------------ ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,673,223 $2,622,803 $19,213,474 ============ ============ =============
(a) From inception May 1, 2008 to December 31, 2008. SA-23 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GROWTH-INCOME INTERNATIONAL HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB 2,031,480 1,929,793 Other class -- -- ============= ============= Cost: Class IA -- -- Class IB $16,318,285 $14,573,177 Other class -- -- ============= ============= Market Value: Class IA -- -- Class IB $12,978,186 $11,752,323 Other class -- -- Due from Hartford Life Insurance Company 55,591 39,329 Receivable from fund shares sold -- -- Other assets -- -- ------------- ------------- Total Assets 13,033,777 11,791,652 ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased 55,591 39,329 Other liabilities 3 3 ------------- ------------- Total Liabilities 55,594 39,332 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $12,978,183 $11,752,320 ============= =============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-24 -------------------------------------------------------------------------------
AMERICAN FUNDS HUNTINGTON VA HUNTINGTON VA NEW WORLD INCOME DIVIDEND HUNTINGTON VA HLS FUND EQUITY FUND CAPTURE FUND GROWTH FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB 567,958 -- -- -- Other class -- 296,551 849,044 312,476 ============ ============ ============= ============ Cost: Class IA -- -- -- -- Class IB $4,396,044 -- -- -- Other class -- $3,132,456 $10,130,980 $2,809,862 ============ ============ ============= ============ Market Value: Class IA -- -- -- -- Class IB $3,409,654 -- -- -- Other class -- $1,948,339 $6,019,723 $1,918,601 Due from Hartford Life Insurance Company 21,470 -- -- 2,814 Receivable from fund shares sold -- 1,143 554 -- Other assets -- 1 -- 1 ------------ ------------ ------------- ------------ Total Assets 3,431,124 1,949,483 6,020,277 1,921,416 ------------ ------------ ------------- ------------ LIABILITIES: Due to Hartford Life Insurance Company -- 1,143 554 -- Payable for fund shares purchased 21,470 -- -- 2,814 Other liabilities -- -- 1 -- ------------ ------------ ------------- ------------ Total Liabilities 21,470 1,143 555 2,814 ------------ ------------ ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $3,409,654 $1,948,340 $6,019,722 $1,918,602 ============ ============ ============= ============ HUNTINGTON VA HUNTINGTON VA HUNTINGTON VA MID CORP NEW ROTATING AMERICA FUND ECONOMY FUND MARKETS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 305,293 347,111 146,478 ============ ============ ============ Cost: Class IA -- -- -- Class IB -- -- -- Other class $4,894,338 $5,501,667 $1,833,181 ============ ============ ============ Market Value: Class IA -- -- -- Class IB -- -- -- Other class $3,291,053 $2,815,072 $1,149,856 Due from Hartford Life Insurance Company -- 503 -- Receivable from fund shares sold 175 -- 127 Other assets -- -- -- ------------ ------------ ------------ Total Assets 3,291,228 2,815,575 1,149,983 ------------ ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company 175 -- 127 Payable for fund shares purchased -- 503 -- Other liabilities -- -- -- ------------ ------------ ------------ Total Liabilities 175 503 127 ------------ ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $3,291,053 $2,815,072 $1,149,856 ============ ============ ============
(a) From inception May 1, 2008 to December 31, 2008. SA-25 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
HUNTINGTON VA INTERNATIONAL HUNTINGTON VA EQUITY FUND MACRO 100 FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 358,425 144,303 ============ ============ Cost: Class IA -- -- Class IB -- -- Other class $5,527,841 $1,605,991 ============ ============ Market Value: Class IA -- -- Class IB -- -- Other class $3,605,752 $943,741 Due from Hartford Life Insurance Company 145 -- Receivable from fund shares sold -- 647 Other assets -- -- ------------ ------------ Total Assets 3,605,897 944,388 ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company -- 647 Payable for fund shares purchased 145 -- Other liabilities -- -- ------------ ------------ Total Liabilities 145 647 ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $3,605,752 $943,741 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-26 -------------------------------------------------------------------------------
HUNTINGTON VA LORD ABBETT LORD ABBETT MORTGAGE HUNTINGTON VA AMERICA'S VALUE BOND-DEBENTURE SECURITIES FUND SITUS FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (G) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 234,842 449,436 67,490 653,011 ============ ============ ========== ============ Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $2,596,873 $6,330,368 $800,659 $6,839,706 ============ ============ ========== ============ Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $2,494,020 $3,928,068 $676,928 $5,824,862 Due from Hartford Life Insurance Company -- 27 1,903 7,272 Receivable from fund shares sold 982 -- -- -- Other assets -- 1 -- -- ------------ ------------ ---------- ------------ Total Assets 2,495,002 3,928,096 678,831 5,832,134 ------------ ------------ ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 982 -- -- -- Payable for fund shares purchased -- 27 1,903 7,272 Other liabilities -- -- -- -- ------------ ------------ ---------- ------------ Total Liabilities 982 27 1,903 7,272 ------------ ------------ ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $2,494,020 $3,928,069 $676,928 $5,824,862 ============ ============ ========== ============ LORD ABBETT GROWTH AND INCOME MFS(R) CORE MFS(R) GROWTH PORTFOLIO EQUITY SERIES SERIES SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (H) -------------------------- ----------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 101,998 606,712 779,381 ============ ============ ============= Cost: Class IA -- -- -- Class IB -- -- -- Other class $2,096,348 $9,867,756 $16,582,092 ============ ============ ============= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $1,761,498 $6,297,673 $12,172,237 Due from Hartford Life Insurance Company -- -- 280,210 Receivable from fund shares sold 117 9,065 -- Other assets -- -- -- ------------ ------------ ------------- Total Assets 1,761,615 6,306,738 12,452,447 ------------ ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company 117 9,065 -- Payable for fund shares purchased -- -- 280,210 Other liabilities 16 1 1 ------------ ------------ ------------- Total Liabilities 133 9,066 280,211 ------------ ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,761,482 $6,297,672 $12,172,236 ============ ============ =============
(a) From inception May 1, 2008 to December 31, 2008. (g) Formerly Huntington VA Situs Small Cap Fund. Change effective January 24, 2008. (h) Formerly MFS Emerging Growth Series. Change effective May 1, 2008. SA-27 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) GLOBAL MFS(R) HIGH EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 823,905 8,162,633 ============ ============= Cost: Class IA -- -- Class IB -- -- Other class $9,880,725 $76,861,333 ============ ============= Market Value: Class IA -- -- Class IB -- -- Other class $7,711,754 $50,853,201 Due from Hartford Life Insurance Company -- 155,352 Receivable from fund shares sold 2,772 -- Other assets -- -- ------------ ------------- Total Assets 7,714,526 51,008,553 ------------ ------------- LIABILITIES: Due to Hartford Life Insurance Company 2,772 -- Payable for fund shares purchased -- 155,352 Other liabilities 1 1 ------------ ------------- Total Liabilities 2,773 155,353 ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $7,711,753 $50,853,200 ============ =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-28 -------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH MFS(R) INVESTORS MFS(R) MID CAP MFS(R) NEW STOCK SERIES TRUST SERIES GROWTH SERIES DISCOVERY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 1,783,815 7,954,539 5,407,239 7,134,903 ============= ============== ============= ============== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $17,915,699 $148,070,301 $33,956,037 $104,986,459 ============= ============== ============= ============== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $12,665,089 $116,454,108 $17,681,670 $58,720,255 Due from Hartford Life Insurance Company -- -- -- -- Receivable from fund shares sold 7,494 15,108 12,284 10,721 Other assets -- -- 1 3 ------------- -------------- ------------- -------------- Total Assets 12,672,583 116,469,216 17,693,955 58,730,979 ------------- -------------- ------------- -------------- LIABILITIES: Due to Hartford Life Insurance Company 7,494 15,108 12,284 10,721 Payable for fund shares purchased -- -- -- -- Other liabilities -- 1 -- -- ------------- -------------- ------------- -------------- Total Liabilities 7,494 15,109 12,284 10,721 ------------- -------------- ------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $12,665,089 $116,454,107 $17,681,671 $58,720,258 ============= ============== ============= ============== MFS(R) TOTAL MFS(R) VALUE MFS(R) RESEARCH RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 24,706,779 6,817,119 3,841,382 ============== ============= ============= Cost: Class IA -- -- -- Class IB -- -- -- Other class $492,882,962 $88,854,231 $43,781,123 ============== ============= ============= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $380,930,644 $66,474,413 $42,252,422 Due from Hartford Life Insurance Company -- -- 19,994 Receivable from fund shares sold 33,934 202,046 -- Other assets -- -- -- -------------- ------------- ------------- Total Assets 380,964,578 66,676,459 42,272,416 -------------- ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 33,934 202,046 -- Payable for fund shares purchased -- -- 19,994 Other liabilities 11 6 -- -------------- ------------- ------------- Total Liabilities 33,945 202,052 19,994 -------------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $380,930,633 $66,474,407 $42,252,422 ============== ============= =============
SA-29 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) RESEARCH MFS(R) RESEARCH INTERNATIONAL SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 2,369,144 172,436 ============= ============ Cost: Class IA -- -- Class IB -- -- Other class $33,391,808 $3,013,373 ============= ============ Market Value: Class IA -- -- Class IB -- -- Other class $21,061,689 $2,224,424 Due from Hartford Life Insurance Company 260 -- Receivable from fund shares sold -- 356 Other assets -- -- ------------- ------------ Total Assets 21,061,949 2,224,780 ------------- ------------ LIABILITIES: Due to Hartford Life Insurance Company -- 356 Payable for fund shares purchased 260 -- Other liabilities 1 -- ------------- ------------ Total Liabilities 261 356 ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $21,061,688 $2,224,424 ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-30 -------------------------------------------------------------------------------
VAN KAMPEN -- VAN KAMPEN -- BLACKROCK BLACKROCK UIF INTERNATIONAL UIF MID CAP GLOBAL LARGE CAP GROWTH EQUITY GROWTH GROWTH V.I. FUND GROWTH V.I. FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (P) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 3,298 63,518 3,670 137,652 ========= ========== ========= ============ Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $24,645 $531,195 $45,863 $1,122,569 ========= ========== ========= ============ Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $31,960 $475,749 $22,828 $794,251 Due from Hartford Life Insurance Company -- -- -- 460 Receivable from fund shares sold 2 26 1 -- Other assets -- -- -- -- --------- ---------- --------- ------------ Total Assets 31,962 475,775 22,829 794,711 --------- ---------- --------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 2 26 1 -- Payable for fund shares purchased -- -- -- 460 Other liabilities -- -- -- -- --------- ---------- --------- ------------ Total Liabilities 2 26 1 460 --------- ---------- --------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $31,960 $475,749 $22,828 $794,251 ========= ========== ========= ============ VAN KAMPEN -- MORGAN STANLEY -- UIF U.S. MORGAN STANLEY -- CAPITAL MID CAP VALUE FOCUS GROWTH OPPORTUNITIES PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (Q) SUB-ACCOUNT (I) SUB-ACCOUNT (R) ----------------------------- ------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 49,454 310 17,438 ========== ======= ========== Cost: Class IA -- -- -- Class IB -- -- -- Other class $540,301 $5,872 $231,460 ========== ======= ========== Market Value: Class IA -- -- -- Class IB -- -- -- Other class $377,827 $3,149 $131,135 Due from Hartford Life Insurance Company 1,131 -- -- Receivable from fund shares sold -- -- 27 Other assets -- -- -- ---------- ------- ---------- Total Assets 378,958 3,149 131,162 ---------- ------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 27 Payable for fund shares purchased 1,131 -- -- Other liabilities -- -- -- ---------- ------- ---------- Total Liabilities 1,131 -- 27 ---------- ------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $377,827 $3,149 $131,135 ========== ======= ==========
(a) From inception May 1, 2008 to December 31, 2008. (i) Funded as of February 13, 2008. (p) Formerly reported as International Growth Equity Fund. (q) Formerly reported as U.S. Mid Cap Value. (r) Formerly reported as Capital Opportunities. SA-31 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
MORGAN STANLEY -- MID CAP MORGAN STANLEY -- GROWTH FLEXIBLE INCOME PORTFOLIO PORTFOLIO SUB-ACCOUNT (J) SUB-ACCOUNT (S) ---------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 594 6,478 ========= ========= Cost: Class IA -- -- Class IB -- -- Other class $15,900 $46,893 ========= ========= Market Value: Class IA -- -- Class IB -- -- Other class $9,698 $35,243 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold -- 2 Other assets -- -- --------- --------- Total Assets 9,698 35,245 --------- --------- LIABILITIES: Due to Hartford Life Insurance Company -- 2 Payable for fund shares purchased -- -- Other liabilities -- -- --------- --------- Total Liabilities -- 2 --------- --------- NET ASSETS: For Variable Annuity Contract Liabilities $9,698 $35,243 ========= =========
(j) Formerly Developing Growth. Change effective May 1, 2008. (s) Formerly reported as Flexible Income. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-32 -------------------------------------------------------------------------------
MORGAN STANLEY -- DIVIDEND MORGAN STANLEY -- GROWTH GLOBAL EQUITY MTB LARGE CAP MTB LARGE CAP PORTFOLIO PORTFOLIO GROWTH FUND II VALUE FUND II SUB-ACCOUNT (T) SUB-ACCOUNT (U) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 411 987 24,928 28,402 ======= ========= ========== ========== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $7,567 $17,029 $216,299 $245,288 ======= ========= ========== ========== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $4,818 $9,264 $167,267 $196,544 Due from Hartford Life Insurance Company -- -- 408 407 Receivable from fund shares sold -- 1 -- -- Other assets -- -- -- -- ------- --------- ---------- ---------- Total Assets 4,818 9,265 167,675 196,951 ------- --------- ---------- ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 1 -- -- Payable for fund shares purchased -- -- 408 407 Other liabilities -- -- -- -- ------- --------- ---------- ---------- Total Liabilities -- 1 408 407 ------- --------- ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $4,818 $9,264 $167,267 $196,544 ======= ========= ========== ========== COLUMBIA MARSICO INTERNATIONAL COLUMBIA MTB MODERATE OPPORTUNITIES HIGH YIELD GROWTH FUND II VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 1,621 1,392,259 1,633,617 ========= ============= ============= Cost: Class IA -- -- -- Class IB -- -- -- Other class $14,265 $17,457,553 $15,520,394 ========= ============= ============= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $11,250 $14,549,101 $12,317,473 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold -- 9,699 5,172 Other assets -- -- 3 --------- ------------- ------------- Total Assets 11,250 14,558,800 12,322,648 --------- ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company -- 9,699 5,172 Payable for fund shares purchased -- -- -- Other liabilities -- 2 -- --------- ------------- ------------- Total Liabilities -- 9,701 5,172 --------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $11,250 $14,549,099 $12,317,476 ========= ============= =============
(a) From inception May 1, 2008 to December 31, 2008. (t) Formerly reported as Dividend Growth. (u) Formerly reported as Global Equity. SA-33 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
COLUMBIA MARSICO COLUMBIA MARSICO FOCUSED EQUITIES GROWTH VS FUND VS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 1,012,224 805,183 ============= ============= Cost: Class IA -- -- Class IB -- -- Other class $13,283,769 $10,778,889 ============= ============= Market Value: Class IA -- -- Class IB -- -- Other class $11,387,522 $10,829,713 Due from Hartford Life Insurance Company -- 1,808 Receivable from fund shares sold 559 -- Other assets -- 1 ------------- ------------- Total Assets 11,388,081 10,831,522 ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 559 -- Payable for fund shares purchased -- 1,808 Other liabilities 9 -- ------------- ------------- Total Liabilities 568 1,808 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $11,387,513 $10,829,714 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-34 -------------------------------------------------------------------------------
OPPENHEIMER COLUMBIA MARSICO COLUMBIA MARSICO CAPITAL OPPENHEIMER 21ST CENTURY MIDCAP GROWTH APPRECIATION GLOBAL SECURITIES VS FUND VS FUND FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) ---------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 468,327 3,222,546 4,766 181,070 ============ ============= ========== ============ Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $3,687,236 $21,072,878 $185,318 $4,366,661 ============ ============= ========== ============ Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $3,793,448 $13,599,144 $121,151 $3,625,014 Due from Hartford Life Insurance Company -- -- -- 12,666 Receivable from fund shares sold 15,863 2,034 6 -- Other assets 1 3 -- -- ------------ ------------- ---------- ------------ Total Assets 3,809,312 13,601,181 121,157 3,637,680 ------------ ------------- ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 15,863 2,034 6 -- Payable for fund shares purchased -- -- -- 12,666 Other liabilities -- -- -- 14 ------------ ------------- ---------- ------------ Total Liabilities 15,863 2,034 6 12,680 ------------ ------------- ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $3,793,449 $13,599,147 $121,151 $3,625,000 ============ ============= ========== ============ OPPENHEIMER OPPENHEIMER MAIN STREET OPPENHEIMER MAIN STREET SMALL CAP VALUE FUND(R)/VA FUND(R)/VA FUND/VA SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- ----------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 27,985 229,826 8,775 ========== ============ ========= Cost: Class IA -- -- -- Class IB -- -- -- Other class $495,837 $3,011,128 $78,521 ========== ============ ========= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $403,550 $2,422,366 $59,582 Due from Hartford Life Insurance Company -- 5,216 -- Receivable from fund shares sold 392 -- 3 Other assets -- -- -- ---------- ------------ --------- Total Assets 403,942 2,427,582 59,585 ---------- ------------ --------- LIABILITIES: Due to Hartford Life Insurance Company 392 -- 3 Payable for fund shares purchased -- 5,216 -- Other liabilities -- 7 -- ---------- ------------ --------- Total Liabilities 392 5,223 3 ---------- ------------ --------- NET ASSETS: For Variable Annuity Contract Liabilities $403,550 $2,422,359 $59,582 ========== ============ =========
(a) From inception May 1, 2008 to December 31, 2008. SA-35 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET INCOME FUND ALLOCATION FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) ---------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB 1,156,722 9,412 Other class -- -- ============ ========== Cost: Class IA -- -- Class IB $8,063,595 $135,836 Other class -- -- ============ ========== Market Value: Class IA -- -- Class IB $6,570,180 $102,589 Other class -- -- Due from Hartford Life Insurance Company 8,635 -- Receivable from fund shares sold -- 5 Other assets -- -- ------------ ---------- Total Assets 6,578,815 102,594 ------------ ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 5 Payable for fund shares purchased 8,635 -- Other liabilities -- -- ------------ ---------- Total Liabilities 8,635 5 ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $6,570,180 $102,589 ============ ==========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-36 -------------------------------------------------------------------------------
PUTNAM VT JPMORGAN INTERNATIONAL PUTNAM VT PUTNAM VT INSURANCE TRUST GROWTH AND INTERNATIONAL SMALL CAP BALANCED INCOME FUND EQUITY FUND VALUE FUND PORTFOLIO - 1 SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB 5,704 8,160 8,865 -- Other class -- -- -- 126,261 ========= ========= ========== ============ Cost: Class IA -- -- -- -- Class IB $57,074 $91,000 $102,499 -- Other class -- -- -- $1,758,114 ========= ========= ========== ============ Market Value: Class IA -- -- -- -- Class IB $40,729 $72,546 $75,622 -- Other class -- -- -- $1,299,224 Due from Hartford Life Insurance Company -- -- -- -- Receivable from fund shares sold 2 3 3 57 Other assets -- -- -- -- --------- --------- ---------- ------------ Total Assets 40,731 72,549 75,625 1,299,281 --------- --------- ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 2 3 3 57 Payable for fund shares purchased -- -- -- -- Other liabilities -- -- -- -- --------- --------- ---------- ------------ Total Liabilities 2 3 3 57 --------- --------- ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $40,729 $72,546 $75,622 $1,299,224 ========= ========= ========== ============ JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST CORE BOND DIVERSIFIED EQUITY INTREPID MID CAP PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 5,158,963 696,861 759,512 ============= ============= ============= Cost: Class IA -- -- -- Class IB -- -- -- Other class $57,534,074 $10,743,794 $13,313,388 ============= ============= ============= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $56,439,051 $7,484,287 $7,534,356 Due from Hartford Life Insurance Company -- 744 -- Receivable from fund shares sold 1,104 -- 387 Other assets 3 -- -- ------------- ------------- ------------- Total Assets 56,440,158 7,485,031 7,534,743 ------------- ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company 1,104 -- 387 Payable for fund shares purchased -- 744 -- Other liabilities -- -- -- ------------- ------------- ------------- Total Liabilities 1,104 744 387 ------------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $56,439,054 $7,484,287 $7,534,356 ============= ============= =============
(a) From inception May 1, 2008 to December 31, 2008. SA-37 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST EQUITY INDEX GOVERNMENT BOND PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 4,015,581 2,433,331 ============= ============= Cost: Class IA -- -- Class IB -- -- Other class $44,740,857 $27,374,370 ============= ============= Market Value: Class IA -- -- Class IB -- -- Other class $31,843,556 $28,980,976 Due from Hartford Life Insurance Company 622 1,496 Receivable from fund shares sold -- -- Other assets -- -- ------------- ------------- Total Assets 31,844,178 28,982,472 ------------- ------------- LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased 622 1,496 Other liabilities 2 1 ------------- ------------- Total Liabilities 624 1,497 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $31,843,554 $28,980,975 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-38 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST DIVERSIFIED DIVERSIFIED JENNISON 20/20 INTREPID GROWTH MID CAP GROWTH MID CAP VALUE FOCUS PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 295,199 842,325 1,456,103 23,459 ============ ============= ============= ========== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $4,331,955 $15,002,517 $16,689,435 $309,731 ============ ============= ============= ========== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $2,910,662 $7,926,275 $6,508,780 $212,539 Due from Hartford Life Insurance Company -- 553 -- -- Receivable from fund shares sold 2,300 -- 2,210 10 Other assets -- -- -- -- ------------ ------------- ------------- ---------- Total Assets 2,912,962 7,926,828 6,510,990 212,549 ------------ ------------- ------------- ---------- LIABILITIES: Due to Hartford Life Insurance Company 2,300 -- 2,210 10 Payable for fund shares purchased -- 553 -- -- Other liabilities -- -- -- -- ------------ ------------- ------------- ---------- Total Liabilities 2,300 553 2,210 10 ------------ ------------- ------------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $2,910,662 $7,926,275 $6,508,780 $212,539 ============ ============= ============= ========== PRUDENTIAL PRUDENTIAL SERIES JENNISON VALUE INTERNATIONAL PORTFOLIO PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 20,252 10,517 1,286 ========== ========== ======= Cost: Class IA -- -- -- Class IB -- -- -- Other class $492,387 $203,545 $9,076 ========== ========== ======= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $292,844 $114,639 $4,335 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 20 5 -- Other assets -- -- -- ---------- ---------- ------- Total Assets 292,864 114,644 4,335 ---------- ---------- ------- LIABILITIES: Due to Hartford Life Insurance Company 20 5 -- Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ---------- ---------- ------- Total Liabilities 20 5 -- ---------- ---------- ------- NET ASSETS: For Variable Annuity Contract Liabilities $292,844 $114,639 $4,335 ========== ========== =======
SA-39 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
LEGG MASON LEGG MASON PARTNERS VARIABLE PARTNERS VARIABLE CAPITAL AND INCOME FUNDAMENTAL VALUE PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 10,147 71,229 ========== ============ Cost: Class IA -- -- Class IB -- -- Other class $147,856 $1,695,377 ========== ============ Market Value: Class IA -- -- Class IB -- -- Other class $79,049 $955,896 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold 593 625 Other assets -- 1 ---------- ------------ Total Assets 79,642 956,522 ---------- ------------ LIABILITIES: Due to Hartford Life Insurance Company 593 625 Payable for fund shares purchased -- -- Other liabilities 1 -- ---------- ------------ Total Liabilities 594 625 ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $79,048 $955,897 ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-40 -------------------------------------------------------------------------------
LEGG MASON PARTNERS VARIABLE LEGG MASON VAN KAMPEN LIT GLOBAL HIGH PARTNERS VARIABLE GROWTH AND VAN KAMPEN LIT YIELD BOND INVESTORS INCOME COMSTOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (V) SUB-ACCOUNT (W) ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 12,017 33,136 60,855 36,281 ========== ========== ============ ========== Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $100,589 $433,845 $1,056,462 $519,120 ========== ========== ============ ========== Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $63,689 $336,664 $834,319 $298,231 Due from Hartford Life Insurance Company -- -- 5,724 -- Receivable from fund shares sold -- 14 -- 16 Other assets -- -- -- -- ---------- ---------- ------------ ---------- Total Assets 63,689 336,678 840,043 298,247 ---------- ---------- ------------ ---------- LIABILITIES: Due to Hartford Life Insurance Company -- 14 -- 16 Payable for fund shares purchased -- -- 5,724 -- Other liabilities -- -- -- -- ---------- ---------- ------------ ---------- Total Liabilities -- 14 5,724 16 ---------- ---------- ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $63,689 $336,664 $834,319 $298,231 ========== ========== ============ ========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ASSET TOTAL RETURN EQUITY ALLOCATION FUND BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 1,030 893 1,746 ========= ======= ========= Cost: Class IA -- -- -- Class IB -- -- -- Other class $12,433 $8,882 $27,753 ========= ======= ========= Market Value: Class IA -- -- -- Class IB -- -- -- Other class $9,592 $8,659 $17,249 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold -- -- 1 Other assets -- -- -- --------- ------- --------- Total Assets 9,592 8,659 17,250 --------- ------- --------- LIABILITIES: Due to Hartford Life Insurance Company -- -- 1 Payable for fund shares purchased -- -- -- Other liabilities -- -- -- --------- ------- --------- Total Liabilities -- -- 1 --------- ------- --------- NET ASSETS: For Variable Annuity Contract Liabilities $9,592 $8,659 $17,249 ========= ======= =========
(v) Formerly reported as Growth and Income. (w) Formerly reported as Comstock. SA-41 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT C&B LARGE CAP INTERNATIONAL VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ ASSETS: Investments: Number of Shares: Class IA -- -- Class IB -- -- Other class 714 1,554 ======= ========= Cost: Class IA -- -- Class IB -- -- Other class $7,689 $12,118 ======= ========= Market Value: Class IA -- -- Class IB -- -- Other class $5,019 $7,162 Due from Hartford Life Insurance Company -- -- Receivable from fund shares sold -- -- Other assets -- -- ------- --------- Total Assets 5,019 7,162 ------- --------- LIABILITIES: Due to Hartford Life Insurance Company -- -- Payable for fund shares purchased -- -- Other liabilities -- -- ------- --------- Total Liabilities -- -- ------- --------- NET ASSETS: For Variable Annuity Contract Liabilities $5,019 $7,162 ======= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-42 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO RIDGEWORTH ADVANTAGE VT ADVANTAGE VT WELLS FARGO VARIABLE TRUST LARGE COMPANY SMALL CAP ADVANTAGE VT LARGE CAP GROWTH GROWTH FUND GROWTH FUND DISCOVERY FUND STOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (K) SUB-ACCOUNT (L) -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- -- Class IB -- -- -- -- Other class 863 1,564 170 389,325 ======= ========= ======= ============ Cost: Class IA -- -- -- -- Class IB -- -- -- -- Other class $7,519 $12,416 $2,800 $5,903,985 ======= ========= ======= ============ Market Value: Class IA -- -- -- -- Class IB -- -- -- -- Other class $5,418 $6,505 $1,898 $3,527,282 Due from Hartford Life Insurance Company -- -- -- -- Receivable from fund shares sold -- -- -- 201 Other assets -- -- -- -- ------- --------- ------- ------------ Total Assets 5,418 6,505 1,898 3,527,483 ------- --------- ------- ------------ LIABILITIES: Due to Hartford Life Insurance Company -- -- -- 201 Payable for fund shares purchased -- -- -- -- Other liabilities -- -- -- -- ------- --------- ------- ------------ Total Liabilities -- -- -- 201 ------- --------- ------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $5,418 $6,505 $1,898 $3,527,282 ======= ========= ======= ============ RIDGEWORTH RIDGEWORTH RIDGEWORTH VARIABLE TRUST VARIABLE TRUST VARIABLE TRUST LARGE CAP CORE MID-CAP CORE LARGE CAP VALUE EQUITY FUND EQUITY FUND EQUITY FUND SUB-ACCOUNT (M) SUB-ACCOUNT (N) SUB-ACCOUNT (O) ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares: Class IA -- -- -- Class IB -- -- -- Other class 106,238 150,773 342,190 ========== ============ ============ Cost: Class IA -- -- -- Class IB -- -- -- Other class $976,242 $1,551,448 $5,124,803 ========== ============ ============ Market Value: Class IA -- -- -- Class IB -- -- -- Other class $714,981 $952,887 $3,661,430 Due from Hartford Life Insurance Company -- -- -- Receivable from fund shares sold 39 52 191 Other assets -- -- 2 ---------- ------------ ------------ Total Assets 715,020 952,939 3,661,623 ---------- ------------ ------------ LIABILITIES: Due to Hartford Life Insurance Company 39 52 191 Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ---------- ------------ ------------ Total Liabilities 39 52 191 ---------- ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $714,981 $952,887 $3,661,432 ========== ============ ============
(k) Funded as of February 12, 2008. (l) Formerly STI Classic VT Large Cap Growth Stock Fund. Change effective May 1, 2008. (m) Formerly STI Classic VT Large Cap Core Equity Fund. Change effective May 1, 2008. (n) Formerly STI Classic VT Mid-Cap Core Equity Fund. Change effective May 1, 2008. (o) Formerly STI Classic VT Large Cap Value Equity Fund. Change effective May 1, 2008. SA-43 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION PERIOD (BY SUB-ACCOUNT): AllianceBernstein VPS Balanced Wealth Strategy Portfolio -- Class B 162,206 $7.327822 to $7.429046 $1,197,637 AllianceBernstein VPS International Value Portfolio -- Class B 671,581 5.088962 to 5.159378 3,443,863 AllianceBernstein VPS Small/Mid-Cap Value Portfolio -- Class B 85,144 6.627915 to 6.719459 568,356 AllianceBernstein VPS Value Portfolio -- Class B 13,909 6.350732 to 6.414435 88,914 AllianceBernstein VPS International Growth Portfolio -- Class B 141,573 5.397825 to 5.454337 769,233 AIM V.I. Basic Value Fund -- Class S1 48,428,104 0.665662 to 0.743126 33,715,390 AIM V.I. Capital Appreciation Fund -- Class S1 22,091,371 0.569159 to 0.915334 18,600,029 AIM V.I. Capital Appreciation Fund -- Class S2 24,147 6.476319 to 6.563072 157,315 AIM V.I. Core Equity Fund -- Class S1 9,231,523 0.633309 to 8.890218 69,710,463 AIM V.I. Core Equity Fund -- Class S2 74,491 7.222139 to 7.276370 539,361 AIM V.I. Government Securities Fund -- Class S1 326,226,990 1.198564 to 1.337969 410,581,550 AIM V.I. High Yield Fund -- Class S1 793,824 0.909386 to 0.960119 741,459 AIM V.I. International Growth Fund -- Class S1 38,678,931 1.289787 to 1.426724 52,635,411 AIM V.I. International Growth Fund -- Class S2 568,864 6.348755 to 6.433855 3,638,053 AIM V.I. Mid Cap Core Equity Fund -- Class S1 58,948,855 1.167979 to 1.303837 72,040,523 AIM V.I. Small Cap Equity Fund -- Class S1 3,140,803 9.512314 to 10.335807 31,061,572 AIM V.I. Small Cap Equity Fund -- Class S2 49,361 7.474579 to 7.549483 371,437 AIM V.I. Large Cap Growth Fund -- Class S1 1,631,068 7.611709 to 7.970578 12,742,744 AIM V.I. Capital Development Fund -- Class S1 79,084 5.060475 to 5.115978 402,339 AIM V.I. Capital Development Fund -- Class S2 20,899 5.867133 to 5.911614 122,931 American Funds Global Bond Fund -- Class 2 7,334,791 10.931491 to 11.355894 81,616,048 American Funds Global Growth and Income Fund -- Class 2 12,566,952 6.817920 to 7.143265 87,648,558 American Funds Asset Allocation Fund -- Class 2 30,909,506 9.105509 to 11.032179 300,184,763 American Funds Blue Chip Income and Growth Fund -- Class 2 173,546,310 0.708958 to 0.793293 129,200,290 American Funds Bond Fund -- Class 2 24,887,910 11.336185 to 13.450287 305,235,650 American Funds Global Growth Fund -- Class 2 9,075,313 7.177236 to 11.181017 86,888,793 American Funds Growth Fund -- Class 2 91,390,725 5.694785 to 9.465758 673,602,575 American Funds Growth-Income Fund -- Class 2 76,782,130 8.243204 to 10.300888 678,235,589 American Funds International Fund -- Class 2 21,048,152 7.140203 to 11.160748 200,453,828 American Funds New World Fund -- Class 2 4,592,275 14.217246 to 17.860675 71,747,350 American Funds Global Small Capitalization Fund -- Class 2 5,977,485 7.836227 to 11.712875 58,996,776 BB&T Mid Cap Growth VIF 25,459 5.680961 to 5.704645 145,032 BB&T Capital Manager Equity VIF 33 6.658485 to 6.658485 216 BB&T Large Cap VIF 1,486 6.764032 to 6.764032 10,049 BB&T Special Opportunities Equity VIF 172,869 6.652817 to 6.719519 1,158,160 BB&T Total Return Bond VIF 56,833 9.941791 to 10.041380 569,209 Columbia Asset Allocation VS Fund -- Class A 5,184,306 0.787961 to 0.831921 4,221,161 Columbia Small Company Growth VS Fund -- Class A 11,231,117 0.744658 to 0.788228 8,621,503 Columbia Large Cap Value VS Fund -- Class A 18,902,033 0.768066 to 0.812983 14,951,080 Evergreen VA Diversified Capital Builder Fund -- Class I 754,270 0.545565 to 5.849215 463,210 Evergreen VA Growth Fund -- Class I 1,898,376 0.613641 to 0.913474 1,354,863
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-44 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Evergreen VA International Equity Fund -- Class I 1,924,883 $0.756032 to $6.310104 $1,725,818 Evergreen VA Omega Fund -- Class I 278,910 0.494777 to 8.077427 161,397 Evergreen VA Special Values Fund -- Class I 11,495,971 0.958172 to 7.101381 12,648,678 Evergreen VA Fundamental Large Cap Fund -- Class I 2,582,100 0.874909 to 7.417026 3,232,505 Fidelity VIP Growth Portfolio -- Class SRV2 41,141 5.802725 to 5.861477 240,121 Fidelity VIP Contrafund(R) Portfolio -- Class SRV2 1,248,240 6.291088 to 6.378773 7,911,864 Fidelity VIP Mid Cap Portfolio -- Class SRV2 880,757 6.374875 to 6.461003 5,653,528 Fidelity VIP Value Strategies Portfolio -- Class SRV2 55,063 5.294088 to 5.349991 293,273 Fidelity VIP Dynamic Capital Appreciation Portfolio -- Class SRV2 15,435 6.356132 to 6.404294 98,320 Franklin Rising Dividends Securities Fund -- Class 2 25,327,427 10.091165 to 11.038764 267,577,826 Franklin Income Securities Fund -- Class 2 74,762,461 10.385353 to 11.516028 817,282,689 Franklin Income Securities Fund -- Class 4 2,617,706 7.187168 to 7.262802 18,955,727 Franklin Large Cap Growth Securities Fund -- Class 2 6,151,268 7.561687 to 8.326926 48,686,905 Franklin Global Real Estate Securities Fund -- Class 2 136,942 10.630848 to 12.606898 1,680,905 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 10,710,424 4.482015 to 8.432728 68,351,095 Franklin Small-Mid Cap Growth Securities Fund -- Class 4 109,452 6.393267 to 6.457952 703,218 Franklin Small Cap Value Securities Fund -- Class 2 786,113 6.021529 to 6.154292 4,775,481 Franklin Small Cap Value Securities Fund -- Class 4 218,585 6.941854 to 7.012100 1,527,056 Franklin Strategic Income Securities Fund -- Class 1 14,458,930 12.729023 to 15.164639 197,707,854 Franklin Strategic Income Securities Fund -- Class 2 9,809 8.742017 to 8.778651 85,975 Franklin Strategic Income Securities Fund -- Class 4 1,177,708 8.652237 to 8.739521 10,266,057 Mutual Shares Securities Fund -- Class 2 41,044,175 9.863136 to 12.750001 444,794,796 Mutual Shares Securities Fund -- Class 4 1,417,786 6.647506 to 6.717539 9,496,138 Templeton Developing Markets Securities Fund -- Class 1 2,840,499 11.346798 to 14.597511 36,904,359 Templeton Developing Markets Securities Fund -- Class 2 546 5.104258 to 5.104258 2,787 Templeton Developing Markets Securities Fund -- Class 4 230,796 5.029468 to 5.080359 1,167,422 Templeton Foreign Securities Fund -- Class 2 17,921,873 8.211268 to 10.037945 159,698,372 Templeton Foreign Securities Fund -- Class 4 99,583 6.353110 to 6.417326 636,591 Templeton Global Asset Allocation Fund -- Class 2 132,903 11.809477 to 13.972496 1,703,301 Templeton Growth Securities Fund -- Class 2 33,253,036 8.149626 to 10.130564 299,099,678 Templeton Growth Securities Fund -- Class 4 682,129 6.288191 to 6.354434 4,318,202 Mutual Discovery Securities Fund -- Class 2 7,994,383 14.666576 to 16.043394 122,578,445 Mutual Discovery Securities Fund -- Class 4 401,417 7.493064 to 7.571909 3,028,282 Franklin Flex Cap Growth Securities Fund -- Class 2 2,079,011 7.491831 to 7.981607 16,025,465 Franklin Flex Cap Growth Securities Fund -- Class 4 45,008 7.183258 to 7.255906 325,087 Franklin Large Cap Value Securities Fund -- Class 2 854,493 7.106541 to 7.585679 6,267,170 Templeton Global Income Securities Fund -- Class 2 843 9.955924 to 9.955924 8,389 Templeton Global Income Securities Fund -- Class 4 553,845 9.822923 to 9.921998 5,480,399 Hartford Advisers HLS Fund -- Class IA 131,083 7.150381 to 7.222661 943,619 Hartford Advisers HLS Fund -- Class IB 20,340,254 0.719130 to 0.905287 15,454,287 Hartford LargeCap Growth HLS Fund -- Class IA 5,046 6.272651 to 6.314875 31,774 Hartford Total Return Bond HLS Fund -- Class IA 4,194,121 8.939674 to 9.060101 37,788,357 Hartford Total Return Bond HLS Fund -- Class IB 47,395,904 1.105264 to 1.371676 54,137,235 Hartford Capital Appreciation HLS Fund -- Class IA 6,866,286 5.781273 to 5.861911 40,017,822 Hartford Capital Appreciation HLS Fund -- Class IB 31,603,380 0.848255 to 1.449484 29,436,538 Hartford Dividend and Growth HLS Fund -- Class IA 3,857,194 7.088552 to 7.184273 27,558,538 Hartford Dividend and Growth HLS Fund -- Class IB 28,457,341 0.889157 to 1.116938 26,261,370
SA-45 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Hartford Fundamental Growth HLS Fund -- Class IA 14,614 $6.193128 to $6.234829 $90,895 Hartford Fundamental Growth HLS Fund -- Class IB 2,759 0.746149 to 0.746149 2,059 Hartford Global Advisers HLS Fund -- Class IB 84,314 1.487931 to 1.508217 126,714 Hartford Global Equity HLS Fund -- Class IA 6,609 6.121982 to 6.121982 40,463 Hartford Global Equity HLS Fund -- Class IB 35,039 6.098927 to 6.147729 215,285 Hartford Global Health HLS Fund -- Class IB 201,819 1.560245 to 1.605923 323,713 Hartford Global Growth HLS Fund -- Class IA 14,180 5.357859 to 5.371371 76,124 Hartford Global Growth HLS Fund -- Class IB 598,459 1.137918 to 1.183214 707,079 Hartford Disciplined Equity HLS Fund -- Class IA 512,698 6.769289 to 6.860722 3,498,470 Hartford Disciplined Equity HLS Fund -- Class IB 429,863 0.877925 to 0.912871 391,963 Hartford Growth HLS Fund -- Class IA 44,833 6.519796 to 6.607896 294,950 Hartford Growth HLS Fund -- Class IB 31,513 0.862478 to 0.862478 27,179 Hartford Growth Opportunities HLS Fund -- Class IA 1,430,962 5.991598 to 6.075105 8,642,930 Hartford Growth Opportunities HLS Fund -- Class IB 63,787 1.039044 to 1.073888 68,053 Hartford High Yield HLS Fund -- Class IA 85,798 7.575364 to 7.677483 654,531 Hartford High Yield HLS Fund -- Class IB 216,357 0.990614 to 1.030041 221,756 Hartford Index HLS Fund -- Class IB 106,592 3.235025 to 3.363785 357,948 Hartford International Growth HLS Fund -- Class IA 29,628 4.837910 to 4.903365 144,311 Hartford International Growth HLS Fund -- Class IB 116,245 0.805814 to 0.835741 96,590 Hartford International Small Company HLS Fund -- Class IB 47,992 1.361330 to 1.361330 65,334 Hartford International Opportunities HLS Fund -- Class IA 310,707 6.188370 to 6.271971 1,937,034 Hartford International Opportunities HLS Fund -- Class IB 4,451,079 0.962384 to 1.062596 4,461,473 Hartford MidCap Growth HLS Fund -- Class IA 111,889 5.693823 to 5.770819 641,623 Hartford MidCap Growth HLS Fund -- Class IB 15,368 5.871243 to 5.906797 90,325 Hartford MidCap HLS Fund -- Class IB 581,250 2.831583 to 2.870203 1,667,174 Hartford MidCap Value HLS Fund -- Class IB 161,982 0.975511 to 1.011759 162,966 Hartford Money Market HLS Fund -- Class IA 464,578,214 1.030094 to 10.045334 531,742,631 Hartford Money Market HLS Fund -- Class IB 27,432,772 0.989484 to 1.203662 28,050,986 Hartford SmallCap Value HLS Fund -- Class IB 21,810 7.535915 to 7.573923 164,848 Hartford Small Company HLS Fund -- Class IA 142,550 6.597309 to 6.664054 945,543 Hartford Small Company HLS Fund -- Class IB 3,616,897 0.889390 to 1.168364 3,438,451 Hartford SmallCap Growth HLS Fund -- Class IA 39,846 6.846178 to 6.938674 274,756 Hartford SmallCap Growth HLS Fund -- Class IB 50,100 0.808833 to 0.835944 41,875 Hartford Stock HLS Fund -- Class IA 49,023 6.216238 to 6.263381 306,629 Hartford Stock HLS Fund -- Class IB 19,011,012 0.559049 to 0.714561 11,354,168 Hartford U.S. Government Securities HLS Fund -- Class IA 289,666 9.528529 to 9.624617 2,781,369 Hartford U.S. Government Securities HLS Fund -- Class IB 933,488 1.070749 to 1.106661 1,026,137 Hartford Value HLS Fund -- Class IA 27,198 7.027403 to 7.098480 192,670 Hartford Value HLS Fund -- Class IB 33,215 0.917040 to 0.927671 30,568 Hartford Value Opportunities HLS Fund -- Class IA 12,113 6.304630 to 6.368473 76,799 Hartford Value Opportunities HLS Fund -- Class IB 33,806 0.836856 to 0.864920 28,846 Hartford Equity Income HLS Fund -- Class IA 25,726 7.663732 to 7.747694 197,958 Hartford Equity Income HLS Fund -- Class IB 25,659 1.016830 to 1.043394 26,225 American Funds Asset Allocation HLS Fund -- Class IB 657,572 7.192825 to 7.250974 4,756,804 American Funds Blue Chip Income and Growth HLS Fund -- Class IB 366,599 6.626079 to 6.679716 2,440,396 American Funds Bond HLS Fund -- Class IB 1,451,874 8.832849 to 8.904119 12,902,737 American Funds Global Bond HLS Fund -- Class IB 279,328 9.689117 to 9.767251 2,721,688
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-46 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- American Funds Global Growth and Income HLS Fund -- Class IB 1,150,363 $5.958336 to $6.006580 $6,891,232 American Funds Global Growth HLS Fund -- Class IB 264,144 6.300038 to 6.351012 1,673,223 American Funds Global Small Capitalization HLS Fund -- Class IB 520,456 5.013031 to 5.053663 2,622,803 American Funds Growth HLS Fund -- Class IB 3,301,903 5.783494 to 5.832309 19,213,474 American Funds Growth-Income HLS Fund -- Class IB 2,018,173 6.395572 to 6.447345 12,978,183 American Funds International HLS Fund -- Class IB 1,950,069 5.990544 to 6.039025 11,752,320 American Funds New World HLS Fund -- Class IB 574,364 5.905372 to 5.953164 3,409,654 Huntington VA Income Equity Fund 1,201,639 0.835090 to 9.000740 1,948,340 Huntington VA Dividend Capture Fund 2,597,572 1.010235 to 10.390814 6,019,722 Huntington VA Growth Fund 1,539,639 0.622655 to 8.780391 1,918,602 Huntington VA Mid Corp America Fund 1,169,263 1.066714 to 11.154446 3,291,053 Huntington VA New Economy Fund 1,493,938 0.882906 to 9.379736 2,815,072 Huntington VA Rotating Markets Fund 446,466 0.921840 to 10.756810 1,149,856 Huntington VA International Equity Fund 1,488,256 0.992130 to 9.499496 3,605,752 Huntington VA Macro 100 Fund 1,225,651 0.686243 to 7.579899 943,741 Huntington VA Mortgage Securities Fund 816,450 1.067436 to 10.803418 2,494,020 Huntington VA Situs Fund 4,390,238 0.816019 to 6.571252 3,928,069 Lord Abbett America's Value Portfolio -- Class VC 86,092 7.801894 to 7.906371 676,928 Lord Abbett Bond-Debenture Portfolio -- Class VC 699,991 8.262872 to 8.373519 5,824,862 Lord Abbett Growth and Income Portfolio -- Class VC 255,356 6.848122 to 6.916778 1,761,482 MFS(R) Core Equity Series -- Class INIT 1,124,919 4.353958 to 6.894720 6,297,672 MFS(R) Growth Series -- Class INIT 2,274,432 3.909155 to 6.530042 12,067,667 MFS(R) Growth Series -- Class SRV 15,449 6.723051 to 6.813219 104,569 MFS(R) Global Equity Series -- Class INIT 749,303 9.228134 to 11.782035 7,703,651 MFS(R) High Income Series -- Class INIT 5,703,115 8.478974 to 9.719249 50,830,016 MFS(R) Investors Growth Stock Series -- Class INIT 2,423,874 4.248537 to 6.184005 12,657,141 MFS(R) Investors Trust Series -- Class INIT 16,646,176 6.505269 to 8.149753 116,369,433 MFS(R) Investors Trust Series -- Class SRV 8,861 7.080043 to 7.133283 63,059 MFS(R) Mid Cap Growth Series -- Class INIT 5,647,082 2.933931 to 3.324203 17,681,671 MFS(R) New Discovery Series -- Class INIT 8,465,121 5.168903 to 9.400994 58,701,326 MFS(R) Total Return Series -- Class INIT 34,253,445 10.012378 to 12.666027 376,536,078 MFS(R) Total Return Series -- Class SRV 505,795 7.960270 to 8.066907 4,053,556 MFS(R) Value Series -- Class INIT 4,969,397 11.556828 to 12.641840 59,955,477 MFS(R) Value Series -- Class SRV 898,053 7.204764 to 7.301353 6,518,067 MFS(R) Research Bond Series -- Class INIT 4,174,817 9.750337 to 10.403409 41,915,238 MFS(R) Research Bond Series -- Class SRV 35,338 9.473703 to 9.568638 337,184 MFS(R) Research International Series -- Class INIT 2,272,688 8.987191 to 9.566686 21,055,601 MFS(R) Research Series -- Class INIT 277,826 7.797435 to 8.307570 2,224,424 BlackRock Global Growth V.I. Fund -- Class I 3,119 10.185255 to 10.466966 31,960 BlackRock Large Cap Growth V.I. Fund -- Class I 67,903 6.082537 to 7.557161 475,749 Van Kampen -- UIF International Growth Equity Portfolio -- Class II 3,434 6.635832 to 6.694338 22,828 Van Kampen -- UIF Mid Cap Growth Portfolio -- Class II 136,135 5.790212 to 5.867795 794,251 Van Kampen -- UIF U.S. Mid Cap Value Portfolio -- Class II 59,488 6.255779 to 7.993753 377,827 Morgan Stanley -- Focus Growth Portfolio -- Class Y 818 3.850448 to 3.850448 3,149 Morgan Stanley -- Capital Opportunities Portfolio -- Class Y 49,549 2.571081 to 2.719763 131,135
SA-47 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley -- Mid Cap Growth Portfolio -- Class Y 1,674 $5.538087 to $5.858325 $9,698 Morgan Stanley -- Flexible Income Portfolio -- Class Y 3,868 9.088189 to 9.117210 35,243 Morgan Stanley -- Dividend Growth Portfolio -- Class Y 602 8.005295 to 8.005295 4,818 Morgan Stanley -- Global Equity Portfolio -- Class Y 1,426 6.338401 to 6.606951 9,264 MTB Large Cap Growth Fund II 24,857 6.692300 to 6.736962 167,267 MTB Large Cap Value Fund II 29,834 6.551149 to 6.594862 196,544 MTB Moderate Growth Fund II 1,506 7.468262 to 7.468262 11,250 Columbia Marsico International Opportunities VS Fund -- Class B 13,963,158 1.012127 to 1.071276 14,549,099 Columbia High Yield VS Fund 10,845,110 1.100653 to 1.164936 12,317,476 Columbia Marsico Focused Equities VS Fund -- Class A 14,430,400 0.763373 to 0.808002 11,387,513 Columbia Marsico Growth VS Fund -- Class A 13,985,416 0.753832 to 0.795926 10,829,714 Columbia Marsico 21st Century VS Fund -- Class A 3,447,657 1.065417 to 1.127674 3,793,449 Columbia Marsico Midcap Growth VS Fund -- Class A 23,779,874 0.555411 to 0.587876 13,599,147 Oppenheimer Capital Appreciation Fund/VA -- Class SRV 20,118 5.985860 to 6.045910 121,151 Oppenheimer Global Securities Fund/VA -- Class SRV 555,494 6.480915 to 6.567771 3,625,000 Oppenheimer Main Street Fund(R)/VA -- Class SRV 59,943 6.705097 to 6.755457 403,550 Oppenheimer Main Street Small Cap Fund(R)/VA -- Class SRV 359,086 6.698951 to 6.788641 2,422,359 Oppenheimer Value Fund/VA -- Class SRV 9,436 6.282392 to 6.345401 59,582 Putnam VT Diversified Income Fund -- Class IB 925,486 7.045284 to 7.140272 6,570,180 Putnam VT Global Asset Allocation Fund -- Class IB 14,862 6.860423 to 6.929740 102,589 Putnam VT International Growth and Income Fund -- Class IB 6,937 5.844073 to 5.888359 40,729 Putnam VT International Equity Fund -- Class IB 11,979 6.018823 to 6.082250 72,546 Putnam VT Small Cap Value Fund -- Class IB 11,498 6.560349 to 6.598994 75,622 JPMorgan Insurance Trust Balanced Portfolio - 1 146,483 7.830554 to 8.990880 1,299,224 JPMorgan Insurance Trust Core Bond Portfolio - 1 5,156,611 9.671833 to 16.327571 56,439,054 JPMorgan Insurance Trust Diversified Equity Portfolio - 1 860,583 8.300173 to 13.542527 7,484,287 JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - 1 850,965 6.584381 to 19.666866 7,534,356 JPMorgan Insurance Trust Equity Index Portfolio - 1 3,976,359 6.841823 to 8.103676 31,843,554 JPMorgan Insurance Trust Government Bond Portfolio - 1 2,438,346 10.476460 to 12.038210 28,980,975 JPMorgan Insurance Trust Intrepid Growth Portfolio - 1 385,721 7.208078 to 11.027385 2,910,662 JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio - 1 983,108 6.298312 to 8.181217 7,926,275 JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio - 1 745,447 6.922182 to 13.984447 6,508,780 Jennison 20/20 Focus Portfolio -- Class II 104,871 0.883954 to 9.158214 212,539 Jennison Portfolio -- Class II 221,202 0.595194 to 4.468193 292,844 Prudential Value Portfolio -- Class II 146,144 0.760203 to 0.803702 114,639 Prudential Series International Growth -- Class II 6,472 0.661706 to 0.687546 4,335 Legg Mason Partners Variable Capital and Income Portfolio -- Class I 12,313 6.420171 to 6.420171 79,048 Legg Mason Partners Variable Fundamental Value Portfolio -- Class I 154,958 6.116948 to 6.170510 955,897 Legg Mason Partners Variable Global High Yield Bond Portfolio -- Class I 58,287 1.063733 to 1.095461 63,689 Legg Mason Partners Variable Investors Portfolio -- Class I 357,918 0.906691 to 0.942777 336,664 Van Kampen LIT Growth and Income Portfolio -- Class II 100,992 7.243699 to 11.523308 834,319
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-48 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Comstock Portfolio -- Class II 29,626 $9.854026 to $10.365093 $298,231 Wells Fargo Advantage VT Asset Allocation Fund 10,126 0.947268 to 0.947268 9,592 Wells Fargo Advantage VT Total Return Bond Fund 6,897 1.255427 to 1.255427 8,659 Wells Fargo Advantage VT Equity Income Fund 19,588 0.863150 to 0.892888 17,249 Wells Fargo Advantage VT C&B Large Cap Value Fund 6,182 0.810118 to 0.817742 5,019 Wells Fargo Advantage VT International Core Fund 8,227 0.870506 to 0.870506 7,162 Wells Fargo Advantage VT Large Company Growth Fund 8,200 0.660646 to 0.660646 5,418 Wells Fargo Advantage VT Small Cap Growth Fund 7,325 0.882620 to 0.902819 6,505 Wells Fargo Advantage VT Discovery Fund 225 8.434447 to 8.434447 1,898 RidgeWorth Variable Trust Large Cap Growth Stock Fund 774,078 0.841306 to 8.654363 3,527,282 RidgeWorth Variable Trust Large Cap Core Equity Fund 89,116 1.097280 to 10.813157 714,981 RidgeWorth Variable Trust Mid-Cap Core Equity Fund 113,235 1.095997 to 10.883701 952,887 RidgeWorth Variable Trust Large Cap Value Equity Fund 762,976 1.182704 to 12.165974 3,661,432 ANNUITY CONTRACTS IN THE ANNUITY PERIOD (BY SUB-ACCOUNT): AIM V.I. Basic Value Fund -- Class S1 645 0.703625 to 0.703625 454 AIM V.I. Core Equity Fund -- Class S1 2,004 8.604829 to 8.721214 17,383 AIM V.I. Government Securities Fund -- Class S1 47,707 1.266919 to 1.300667 61,547 AIM V.I. International Growth Fund -- Class S1 593 1.393396 to 1.393396 826 AIM V.I. Mid Cap Core Equity Fund -- Class S1 48,178 1.234571 to 1.261793 60,434 AIM V.I. Small Cap Equity Fund -- Class S1 1,200 9.939839 to 10.122694 12,013 American Funds Global Growth and Income Fund -- Class 2 2,809 6.978708 to 7.036361 19,703 American Funds Asset Allocation Fund -- Class 2 26,690 9.593372 to 10.679383 271,795 American Funds Blue Chip Income and Growth Fund -- Class 2 116,562 0.749957 to 0.770577 88,296 American Funds Bond Fund -- Class 2 7,729 12.778416 to 13.020256 99,963 American Funds Global Growth Fund -- Class 2 3,504 8.293011 to 10.926441 35,917 American Funds Growth Fund -- Class 2 27,417 6.013473 to 9.162892 234,808 American Funds Growth-Income Fund -- Class 2 42,046 8.684945 to 9.971411 388,845 American Funds International Fund -- Class 2 10,578 8.278355 to 11.105759 113,265 American Funds New World Fund -- Class 2 227 16.353895 to 17.289562 3,790 American Funds Global Small Capitalization Fund -- Class 2 2,331 8.414653 to 11.655071 25,745 Evergreen VA Growth Fund -- Class I 2,087 0.913474 to 0.913474 1,907 Evergreen VA Special Values Fund -- Class I 1,417 1.323348 to 1.323348 1,875 Franklin Rising Dividends Securities Fund -- Class 2 11,814 10.609078 to 10.791151 127,244 Franklin Income Securities Fund -- Class 2 24,166 10.990668 to 11.218437 270,809 Franklin Large Cap Growth Securities Fund -- Class 2 882 7.975992 to 8.168556 7,147 Franklin Global Real Estate Securities Fund -- Class 2 205 12.606898 to 12.606898 2,585 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 7,754 4.772038 to 8.432728 43,769 Franklin Strategic Income Securities Fund -- Class 1 6,744 13.403601 to 14.679825 95,233 Mutual Shares Securities Fund -- Class 2 9,199 10.375965 to 12.342244 107,302 Templeton Developing Markets Securities Fund -- Class 1 143 12.242263 to 14.130658 1,849 Templeton Foreign Securities Fund -- Class 2 4,717 8.703316 to 9.716874 43,459 Templeton Global Asset Allocation Fund -- Class 2 284 13.024531 to 13.024531 3,700 Templeton Growth Securities Fund -- Class 2 23,131 8.835794 to 9.806542 210,930 Mutual Discovery Securities Fund -- Class 2 2,903 15.639213 to 15.683617 45,506 Franklin Flex Cap Growth Securities Fund -- Class 2 929 7.725433 to 7.725433 7,180
SA-49 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Hartford Advisers HLS Fund -- Class IB 2,399 $0.905287 to $0.905287 $2,171 Hartford Capital Appreciation HLS Fund -- Class IB 653 1.449484 to 1.449484 946 Hartford International Opportunities HLS Fund -- Class IB 776 1.062596 to 1.062596 825 Hartford Money Market HLS Fund -- Class IA 66,177 1.091814 to 1.178435 74,088 Hartford Money Market HLS Fund -- Class IB 74,153 1.047422 to 1.047422 77,670 MFS(R) Global Equity Series -- Class INIT 830 9.756642 to 9.756642 8,102 MFS(R) High Income Series -- Class INIT 2,548 9.017888 to 9.147900 23,184 MFS(R) Investors Growth Stock Series -- Class INIT 1,310 6.069512 to 6.069512 7,948 MFS(R) Investors Trust Series -- Class INIT 2,929 6.843588 to 7.994749 21,615 MFS(R) New Discovery Series -- Class INIT 2,689 5.478800 to 9.222129 18,932 MFS(R) Total Return Series -- Class INIT 30,020 10.532912 to 12.261013 340,999 MFS(R) Value Series -- Class INIT 70 12.323309 to 12.323309 863 MFS(R) Research International Series -- Class INIT 657 9.272428 to 9.272428 6,087
# Rounded unit values THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-50 ------------------------------------------------------------------------------- [This page intentionally left blank] SA-51 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $10,275 $ -- ----------- ------------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (5,713) (18,903) ----------- ------------- Total Expense (5,713) (18,903) ----------- ------------- Net investment income (loss) 4,562 (18,903) ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 44 (19,363) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (174,855) (1,364,421) ----------- ------------- Net gain (loss) on investments (174,811) (1,383,784) ----------- ------------- Net increase (decrease) in net assets resulting from operations $(170,249) $(1,402,687) =========== =============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-52 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS AIM V.I. SMALL/MID-CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- $485,847 ----------- --------- ----------- -------------- EXPENSE: Administrative charges -- -- -- (86,404) Mortality and Expense Risk charges (3,279) (616) (4,480) (986,036) ----------- --------- ----------- -------------- Total Expense (3,279) (616) (4,480) (1,072,440) ----------- --------- ----------- -------------- Net investment income (loss) (3,279) (616) (4,480) (586,593) ----------- --------- ----------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (419) (184) 1,447 (148,954) Net realized gain on distributions -- -- -- 10,509,917 Net unrealized appreciation (depreciation) of investments during the year (169,854) (28,098) (266,577) (48,829,594) ----------- --------- ----------- -------------- Net gain (loss) on investments (170,273) (28,282) (265,130) (38,468,631) ----------- --------- ----------- -------------- Net increase (decrease) in net assets resulting from operations $(173,552) $(28,898) $(269,610) $(39,055,224) =========== ========= =========== ============== AIM V.I. AIM V.I. AIM V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $2,013,957 $14,438,311 -------------- -------------- ------------- EXPENSE: Administrative charges (41,948) (162,973) (521,523) Mortality and Expense Risk charges (492,470) (1,661,312) (5,899,917) -------------- -------------- ------------- Total Expense (534,418) (1,824,285) (6,421,440) -------------- -------------- ------------- Net investment income (loss) (534,418) 189,672 8,016,871 -------------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (547,793) (54,957) 551,535 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (14,401,749) (34,782,165) 28,107,906 -------------- -------------- ------------- Net gain (loss) on investments (14,949,542) (34,837,122) 28,659,441 -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $(15,483,960) $(34,647,450) $36,676,312 ============== ============== =============
(a) From inception May 1, 2008 to December 31, 2008. SA-53 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. HIGH INTERNATIONAL YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $93,805 $425,268 ----------- -------------- EXPENSE: Administrative charges (1,960) (102,903) Mortality and Expense Risk charges (21,064) (1,138,202) ----------- -------------- Total Expense (23,024) (1,241,105) ----------- -------------- Net investment income (loss) 70,781 (815,837) ----------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (35,515) (1,459,079) Net realized gain on distributions -- 1,038,789 Net unrealized appreciation (depreciation) of investments during the year (351,544) (36,231,702) ----------- -------------- Net gain (loss) on investments (387,059) (36,651,992) ----------- -------------- Net increase (decrease) in net assets resulting from operations $(316,278) $(37,467,829) =========== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-54 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I. MID CAP CORE SMALL CAP LARGE CAP CAPITAL EQUITY FUND EQUITY FUND GROWTH FUND DEVELOPMENT FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,500,177 $ -- $2,092 $ -- -------------- -------------- ------------- ----------- EXPENSE: Administrative charges (145,125) -- (33,050) -- Mortality and Expense Risk charges (1,670,714) (658,464) (319,302) (13,476) -------------- -------------- ------------- ----------- Total Expense (1,815,839) (658,464) (352,352) (13,476) -------------- -------------- ------------- ----------- Net investment income (loss) (315,662) (658,464) (350,260) (13,476) -------------- -------------- ------------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,934,350 (524,074) (174,908) (204,603) Net realized gain on distributions 10,909,748 135,257 -- 99,673 Net unrealized appreciation (depreciation) of investments during the year (44,844,227) (13,293,457) (8,559,247) (364,126) -------------- -------------- ------------- ----------- Net gain (loss) on investments (32,000,129) (13,682,274) (8,734,155) (469,056) -------------- -------------- ------------- ----------- Net increase (decrease) in net assets resulting from operations $(32,315,791) $(14,340,738) $(9,084,415) $(482,532) ============== ============== ============= =========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- INVESTMENT INCOME: Dividends $3,803,146 $2,528,933 $10,038,085 ------------- -------------- --------------- EXPENSE: Administrative charges -- -- (707,825) Mortality and Expense Risk charges (1,318,313) (2,193,456) (6,756,112) ------------- -------------- --------------- Total Expense (1,318,313) (2,193,456) (7,463,937) ------------- -------------- --------------- Net investment income (loss) 2,484,833 335,477 2,574,148 ------------- -------------- --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (768,184) (3,501,083) (5,520,367) Net realized gain on distributions 29,191 980,131 17,491,070 Net unrealized appreciation (depreciation) of investments during the year (2,710,220) (63,489,579) (160,790,126) ------------- -------------- --------------- Net gain (loss) on investments (3,449,213) (66,010,531) (148,819,423) ------------- -------------- --------------- Net increase (decrease) in net assets resulting from operations $(964,380) $(65,675,054) $(146,245,275) ============= ============== ===============
SA-55 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $3,620,732 $18,806,833 -------------- -------------- EXPENSE: Administrative charges (270,096) (591,337) Mortality and Expense Risk charges (3,050,555) (5,612,201) -------------- -------------- Total Expense (3,320,651) (6,203,538) -------------- -------------- Net investment income (loss) 300,081 12,603,295 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (588,600) (2,473,755) Net realized gain on distributions 12,568,207 896,865 Net unrealized appreciation (depreciation) of investments during the year (95,097,292) (51,032,009) -------------- -------------- Net gain (loss) on investments (83,117,685) (52,608,899) -------------- -------------- Net increase (decrease) in net assets resulting from operations $(82,817,604) $(40,005,604) ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-56 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $2,211,069 $8,278,855 $16,451,700 $5,605,885 -------------- --------------- --------------- --------------- EXPENSE: Administrative charges (218,854) (1,777,440) (1,659,011) (503,758) Mortality and Expense Risk charges (2,063,662) (16,800,140) (15,673,153) (4,735,814) -------------- --------------- --------------- --------------- Total Expense (2,282,516) (18,577,580) (17,332,164) (5,239,572) -------------- --------------- --------------- --------------- Net investment income (loss) (71,447) (10,298,725) (880,464) 366,313 -------------- --------------- --------------- --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,460,980) (4,432,115) (8,747,696) (2,754,617) Net realized gain on distributions 11,024,533 119,559,907 65,427,563 41,165,265 Net unrealized appreciation (depreciation) of investments during the year (70,662,030) (674,837,722) (510,650,771) (199,517,067) -------------- --------------- --------------- --------------- Net gain (loss) on investments (61,098,477) (559,709,930) (453,970,904) (161,106,419) -------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $(61,169,924) $(570,008,655) $(454,851,368) $(160,740,106) ============== =============== =============== =============== AMERICAN FUNDS BB&T AMERICAN FUNDS GLOBAL SMALL MID CAP NEW WORLD FUND CAPITALIZATION FUND GROWTH VIF SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) ----------------------------- ------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $1,626,829 $ -- $ -- -------------- -------------- ----------- EXPENSE: Administrative charges (196,344) (183,065) -- Mortality and Expense Risk charges (1,866,767) (1,751,257) (1,159) -------------- -------------- ----------- Total Expense (2,063,111) (1,934,322) (1,159) -------------- -------------- ----------- Net investment income (loss) (436,282) (1,934,322) (1,159) -------------- -------------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (4,512,576) (1,930,832) (293) Net realized gain on distributions 9,554,182 15,081,521 37,903 Net unrealized appreciation (depreciation) of investments during the year (66,134,719) (86,480,303) (127,947) -------------- -------------- ----------- Net gain (loss) on investments (61,093,113) (73,329,614) (90,337) -------------- -------------- ----------- Net increase (decrease) in net assets resulting from operations $(61,529,395) $(75,263,936) $(91,496) ============== ============== ===========
(a) From inception May 1, 2008 to December 31, 2008. SA-57 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
BB&T CAPITAL MANAGER BB&T EQUITY VIF LARGE CAP VIF SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $2 $166 ---- -------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges -- (94) ---- -------- Total Expense -- (94) ---- -------- Net investment income (loss) 2 72 ---- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions -- (10) Net realized gain on distributions -- 3,047 Net unrealized appreciation (depreciation) of investments during the year 5 (7,089) ---- -------- Net gain (loss) on investments 5 (4,052) ---- -------- Net increase (decrease) in net assets resulting from operations $7 $(3,980) ==== ========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-58 -------------------------------------------------------------------------------
BB&T COLUMBIA SPECIAL BB&T COLUMBIA SMALL COMPANY OPPORTUNITIES TOTAL RETURN ASSET ALLOCATION GROWTH EQUITY VIF BOND VIF VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $2,056 $9,380 $203,326 $ -- ----------- --------- ------------- ------------- EXPENSE: Administrative charges -- -- -- -- Mortality and Expense Risk charges (8,031) (3,573) (121,611) (288,471) ----------- --------- ------------- ------------- Total Expense (8,031) (3,573) (121,611) (288,471) ----------- --------- ------------- ------------- Net investment income (loss) (5,975) 5,807 81,715 (288,471) ----------- --------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (7,215) (2,005) (361,397) (430,594) Net realized gain on distributions 34,836 -- 733,468 1,693,554 Net unrealized appreciation (depreciation) of investments during the year (419,419) 8,263 (2,500,394) (7,941,741) ----------- --------- ------------- ------------- Net gain (loss) on investments (391,798) 6,258 (2,128,323) (6,678,781) ----------- --------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(397,773) $12,065 $(2,046,608) $(6,967,252) =========== ========= ============= ============= COLUMBIA EVERGREEN VA LARGE CAP VALUE DIVERSIFIED CAPITAL EVERGREEN VA VS FUND BUILDER FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (B) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ INVESTMENT INCOME: Dividends $564,893 $ -- $592 -------------- ----------- ------------- EXPENSE: Administrative charges -- (1,225) (3,917) Mortality and Expense Risk charges (493,169) (9,939) (31,117) -------------- ----------- ------------- Total Expense (493,169) (11,164) (35,034) -------------- ----------- ------------- Net investment income (loss) 71,724 (11,164) (34,442) -------------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (896,735) (62,818) (55,316) Net realized gain on distributions 3,561,664 -- -- Net unrealized appreciation (depreciation) of investments during the year (13,576,084) (303,445) (938,643) -------------- ----------- ------------- Net gain (loss) on investments (10,911,155) (366,263) (993,959) -------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(10,839,431) $(377,427) $(1,028,401) ============== =========== =============
(a) From inception May 1, 2008 to December 31, 2008. (b) Formerly Evergreen VA Balanced Fund. Change effective May 30, 2008. SA-59 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
EVERGREEN VA INTERNATIONAL EVERGREEN VA EQUITY FUND OMEGA FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- ------------ --------- EXPENSE: Administrative charges (4,189) (376) Mortality and Expense Risk charges (34,292) (2,622) ------------ --------- Total Expense (38,481) (2,998) ------------ --------- Net investment income (loss) (38,481) (2,998) ------------ --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (26,200) (1,247) Net realized gain on distributions 54,226 -- Net unrealized appreciation (depreciation) of investments during the year (1,145,568) (58,519) ------------ --------- Net gain (loss) on investments (1,117,542) (59,766) ------------ --------- Net increase (decrease) in net assets resulting from operations $(1,156,023) $(62,764) ============ =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-60 -------------------------------------------------------------------------------
EVERGREEN VA EVERGREEN VA FIDELITY VIP FIDELITY VIP SPECIAL FUNDAMENTAL GROWTH CONTRAFUND(R) VALUES FUND LARGE CAP FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $201,878 $58,612 $2,117 $84,996 ------------- ----------- ----------- ------------- EXPENSE: Administrative charges (33,435) (2,931) -- -- Mortality and Expense Risk charges (271,365) (27,170) (2,067) (43,808) ------------- ----------- ----------- ------------- Total Expense (304,800) (30,101) (2,067) (43,808) ------------- ----------- ----------- ------------- Net investment income (loss) (102,922) 28,511 50 41,188 ------------- ----------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (425,950) (12,428) (5,956) (16,792) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (5,695,557) (869,718) (105,103) (2,313,445) ------------- ----------- ----------- ------------- Net gain (loss) on investments (6,121,507) (882,146) (111,059) (2,330,237) ------------- ----------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(6,224,429) $(853,635) $(111,009) $(2,289,049) ============= =========== =========== ============= FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------- ------------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,332 $2,502 $639 ------------- ----------- --------- EXPENSE: Administrative charges -- -- -- Mortality and Expense Risk charges (28,420) (1,555) (964) ------------- ----------- --------- Total Expense (28,420) (1,555) (964) ------------- ----------- --------- Net investment income (loss) (20,088) 947 (325) ------------- ----------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,687) (177) (836) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (1,380,284) (108,717) (39,503) ------------- ----------- --------- Net gain (loss) on investments (1,381,971) (108,894) (40,339) ------------- ----------- --------- Net increase (decrease) in net assets resulting from operations $(1,402,059) $(107,947) $(40,664) ============= =========== =========
(a) From inception May 1, 2008 to December 31, 2008. SA-61 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN DIVIDENDS INCOME SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $6,401,446 $61,804,377 --------------- --------------- EXPENSE: Administrative charges (514,244) (1,759,471) Mortality and Expense Risk charges (5,505,351) (17,916,803) --------------- --------------- Total Expense (6,019,595) (19,676,274) --------------- --------------- Net investment income (loss) 381,851 42,128,103 --------------- --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (8,683,377) (30,022,555) Net realized gain on distributions 2,763,274 25,876,284 Net unrealized appreciation (depreciation) of investments during the year (106,894,996) (434,920,137) --------------- --------------- Net gain (loss) on investments (112,815,099) (439,066,408) --------------- --------------- Net increase (decrease) in net assets resulting from operations $(112,433,248) $(396,938,305) =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-62 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN FRANKLIN LARGE CAP GLOBAL SMALL-MID CAP SMALL CAP GROWTH REAL ESTATE GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $916,049 $31,140 $ -- $20,664 -------------- ------------- -------------- ------------- EXPENSE: Administrative charges (108,880) (4,690) (170,268) -- Mortality and Expense Risk charges (1,167,245) (42,568) (1,675,674) (48,346) -------------- ------------- -------------- ------------- Total Expense (1,276,125) (47,258) (1,845,942) (48,346) -------------- ------------- -------------- ------------- Net investment income (loss) (360,076) (16,118) (1,845,942) (27,682) -------------- ------------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,644,861) 65,818 (353,717) (170,738) Net realized gain on distributions 4,710,478 850,471 12,915,955 139,925 Net unrealized appreciation (depreciation) of investments during the year (31,775,489) (2,389,270) (64,746,002) (1,889,787) -------------- ------------- -------------- ------------- Net gain (loss) on investments (28,709,872) (1,472,981) (52,183,764) (1,920,600) -------------- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $(29,069,948) $(1,489,099) $(54,029,706) $(1,948,282) ============== ============= ============== ============= FRANKLIN TEMPLETON STRATEGIC DEVELOPING INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------- INVESTMENT INCOME: Dividends $16,344,916 $19,648,146 $2,048,936 -------------- --------------- -------------- EXPENSE: Administrative charges (390,686) (1,124,867) (116,299) Mortality and Expense Risk charges (3,779,064) (10,311,986) (1,109,925) -------------- --------------- -------------- Total Expense (4,169,750) (11,436,853) (1,226,224) -------------- --------------- -------------- Net investment income (loss) 12,175,166 8,211,293 822,712 -------------- --------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,629,759) (10,901,699) (2,652,443) Net realized gain on distributions 565,895 27,918,788 13,592,382 Net unrealized appreciation (depreciation) of investments during the year (41,812,529) (325,992,069) (59,327,846) -------------- --------------- -------------- Net gain (loss) on investments (43,876,393) (308,974,980) (48,387,907) -------------- --------------- -------------- Net increase (decrease) in net assets resulting from operations $(31,701,227) $(300,763,687) $(47,565,195) ============== =============== ==============
SA-63 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON FOREIGN GLOBAL ASSET SECURITIES FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $5,418,098 $289,773 --------------- ------------- EXPENSE: Administrative charges (390,887) (4,153) Mortality and Expense Risk charges (3,691,429) (37,377) --------------- ------------- Total Expense (4,082,316) (41,530) --------------- ------------- Net investment income (loss) 1,335,782 248,243 --------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,203,269) (258,872) Net realized gain on distributions 22,173,789 362,508 Net unrealized appreciation (depreciation) of investments during the year (139,432,881) (1,120,999) --------------- ------------- Net gain (loss) on investments (118,462,361) (1,017,363) --------------- ------------- Net increase (decrease) in net assets resulting from operations $(117,126,579) $(769,120) =============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-64 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON FLEX CAP LARGE CAP GROWTH MUTUAL DISCOVERY GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,373,331 $3,674,721 $23,060 $ -- --------------- -------------- ------------- ------------- EXPENSE: Administrative charges (794,080) (245,402) (34,733) (13,491) Mortality and Expense Risk charges (7,331,694) (2,665,370) (330,384) (123,553) --------------- -------------- ------------- ------------- Total Expense (8,125,774) (2,910,772) (365,117) (137,044) --------------- -------------- ------------- ------------- Net investment income (loss) 247,557 763,949 (342,057) (137,044) --------------- -------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (18,682,270) (2,919,746) (520,500) (200,007) Net realized gain on distributions 32,985,688 6,874,696 -- -- Net unrealized appreciation (depreciation) of investments during the year (266,321,931) (61,515,118) (8,580,828) (3,012,685) --------------- -------------- ------------- ------------- Net gain (loss) on investments (252,018,513) (57,560,168) (9,101,328) (3,212,692) --------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(251,770,956) $(56,796,219) $(9,443,385) $(3,349,736) =============== ============== ============= ============= HARTFORD TEMPLETON HARTFORD LARGECAP GLOBAL INCOME ADVISERS GROWTH SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (A) ----------------------------- ------------------------------------------------------------- INVESTMENT INCOME: Dividends $17,938 $611,673 $344 ---------- ------------- --------- EXPENSE: Administrative charges -- (43,788) -- Mortality and Expense Risk charges (25,409) (429,821) (213) ---------- ------------- --------- Total Expense (25,409) (473,609) (213) ---------- ------------- --------- Net investment income (loss) (7,471) 138,064 131 ---------- ------------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 738 (1,629,393) (15) Net realized gain on distributions -- 151,151 302 Net unrealized appreciation (depreciation) of investments during the year 196,745 (7,876,804) (10,150) ---------- ------------- --------- Net gain (loss) on investments 197,483 (9,355,046) (9,863) ---------- ------------- --------- Net increase (decrease) in net assets resulting from operations $190,012 $(9,216,982) $(9,732) ========== ============= =========
(a) From inception May 1, 2008 to December 31, 2008. SA-65 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD TOTAL CAPITAL RETURN BOND APPRECIATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $6,350,539 $1,735,379 -------------- -------------- EXPENSE: Administrative charges (133,400) (99,755) Mortality and Expense Risk charges (1,486,330) (1,144,799) -------------- -------------- Total Expense (1,619,730) (1,244,554) -------------- -------------- Net investment income (loss) 4,730,809 490,825 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,783,102) (2,022,222) Net realized gain on distributions -- 5,887,396 Net unrealized appreciation (depreciation) of investments during the year (11,316,092) (45,705,910) -------------- -------------- Net gain (loss) on investments (13,099,194) (41,840,736) -------------- -------------- Net increase (decrease) in net assets resulting from operations $(8,368,385) $(41,349,911) ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-66 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD DIVIDEND FUNDAMENTAL GLOBAL HARTFORD AND GROWTH GROWTH ADVISERS GLOBAL EQUITY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)(C)(D)(E) ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $1,442,013 $168 $7,952 $3,799 -------------- --------- --------- ----------- EXPENSE: Administrative charges (78,135) -- (322) (322) Mortality and Expense Risk charges (883,869) (592) (2,744) (4,745) -------------- --------- --------- ----------- Total Expense (962,004) (592) (3,066) (5,067) -------------- --------- --------- ----------- Net investment income (loss) 480,009 (424) 4,886 (1,268) -------------- --------- --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (440,531) (14,547) (16,736) (262,929) Net realized gain on distributions 938,653 7,819 3,848 4,147 Net unrealized appreciation (depreciation) of investments during the year (21,364,443) (17,162) (73,707) 65,719 -------------- --------- --------- ----------- Net gain (loss) on investments (20,866,321) (23,890) (86,595) (193,063) -------------- --------- --------- ----------- Net increase (decrease) in net assets resulting from operations $(20,386,312) $(24,314) $(81,709) $(194,331) ============== ========= ========= =========== HARTFORD HARTFORD HARTFORD DISCIPLINED GLOBAL HEALTH GLOBAL GROWTH EQUITY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- INVESTMENT INCOME: Dividends $683 $5,673 $53,575 ----------- ----------- ------------- EXPENSE: Administrative charges (745) (2,032) (850) Mortality and Expense Risk charges (6,280) (17,845) (24,339) ----------- ----------- ------------- Total Expense (7,025) (19,877) (25,189) ----------- ----------- ------------- Net investment income (loss) (6,342) (14,204) 28,386 ----------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (8,946) (86,558) 5,581 Net realized gain on distributions 22,268 56,217 115,661 Net unrealized appreciation (depreciation) of investments during the year (159,344) (932,568) (1,190,649) ----------- ----------- ------------- Net gain (loss) on investments (146,022) (962,909) (1,069,407) ----------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(152,364) $(977,113) $(1,041,021) =========== =========== =============
(a) From inception May 1, 2008 to December 31, 2008. (c) Effective August 22, 2008, Hartford Global Communications HLS Fund merged with Hartford Global Equity HLS Fund. (d) Effective August 22, 2008, Hartford Global Financial Services HLS Fund merged with Hartford Global Equity HLS Fund. (e) Effective August 22, 2008, Hartford Global Technology HLS Fund merged with Hartford Global Equity HLS Fund. SA-67 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH GROWTH OPPORTUNITIES HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $843 $46,188 --------- ------------- EXPENSE: Administrative charges (71) (221) Mortality and Expense Risk charges (1,621) (44,404) --------- ------------- Total Expense (1,692) (44,625) --------- ------------- Net investment income (loss) (849) 1,563 --------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,551) (38,495) Net realized gain on distributions 2,669 57,206 Net unrealized appreciation (depreciation) of investments during the year (68,838) (2,642,588) --------- ------------- Net gain (loss) on investments (67,720) (2,623,877) --------- ------------- Net increase (decrease) in net assets resulting from operations $(68,569) $(2,622,314) ========= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-68 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL HIGH YIELD INDEX GROWTH SMALL COMPANY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $105,113 $9,452 $3,601 $908 ----------- ----------- ----------- --------- EXPENSE: Administrative charges (504) (915) -- -- Mortality and Expense Risk charges (7,794) (7,746) (4,186) (1,523) ----------- ----------- ----------- --------- Total Expense (8,298) (8,661) (4,186) (1,523) ----------- ----------- ----------- --------- Net investment income (loss) 96,815 791 (585) (615) ----------- ----------- ----------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (11,448) (126,825) (35,175) (14,507) Net realized gain on distributions -- 13,584 18,013 2,807 Net unrealized appreciation (depreciation) of investments during the year (293,150) (153,366) (240,533) (45,598) ----------- ----------- ----------- --------- Net gain (loss) on investments (304,598) (266,607) (257,695) (57,298) ----------- ----------- ----------- --------- Net increase (decrease) in net assets resulting from operations $(207,783) $(265,816) $(258,280) $(57,913) =========== =========== =========== ========= HARTFORD HARTFORD INTERNATIONAL MIDCAP HARTFORD OPPORTUNITIES GROWTH MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ INVESTMENT INCOME: Dividends $182,898 $3,520 $6,658 ------------- ----------- ------------- EXPENSE: Administrative charges (14,052) -- (3,962) Mortality and Expense Risk charges (147,242) (4,065) (33,203) ------------- ----------- ------------- Total Expense (161,294) (4,065) (37,165) ------------- ----------- ------------- Net investment income (loss) 21,604 (545) (30,507) ------------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (171,137) (6,631) (91,964) Net realized gain on distributions 354,533 1,527 124,958 Net unrealized appreciation (depreciation) of investments during the year (4,900,773) (256,961) (1,080,272) ------------- ----------- ------------- Net gain (loss) on investments (4,717,377) (262,065) (1,047,278) ------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(4,695,773) $(262,610) $(1,077,785) ============= =========== =============
(a) From inception May 1, 2008 to December 31, 2008. SA-69 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,108 $8,066,931 ----------- ------------- EXPENSE: Administrative charges -- (723,737) Mortality and Expense Risk charges (3,902) (6,922,383) ----------- ------------- Total Expense (3,902) (7,646,120) ----------- ------------- Net investment income (loss) (2,794) 420,811 ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (3,079) -- Net realized gain on distributions 57,142 -- Net unrealized appreciation (depreciation) of investments during the year (184,647) -- ----------- ------------- Net gain (loss) on investments (130,584) -- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(133,378) $420,811 =========== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-70 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD SMALLCAP VALUE SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $2,477 $1,352 $1,218 $310,906 --------- ------------- ----------- -------------- EXPENSE: Administrative charges -- (10,662) (129) (33,645) Mortality and Expense Risk charges (879) (110,337) (2,781) (325,951) --------- ------------- ----------- -------------- Total Expense (879) (120,999) (2,910) (359,596) --------- ------------- ----------- -------------- Net investment income (loss) 1,598 (119,647) (1,692) (48,690) --------- ------------- ----------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,576) (27,299) (97,300) (752,726) Net realized gain on distributions 86 21,693 737 113,250 Net unrealized appreciation (depreciation) of investments during the year (13,476) (3,068,937) (82,941) (9,358,575) --------- ------------- ----------- -------------- Net gain (loss) on investments (14,966) (3,074,543) (179,504) (9,998,051) --------- ------------- ----------- -------------- Net increase (decrease) in net assets resulting from operations $(13,368) $(3,194,190) $(181,196) $(10,046,741) ========= ============= =========== ============== HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD VALUE SECURITIES VALUE OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (F) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- INVESTMENT INCOME: Dividends $161,907 $4,783 $2,762 ----------- --------- --------- EXPENSE: Administrative charges (1,780) -- (105) Mortality and Expense Risk charges (23,919) (1,810) (1,489) ----------- --------- --------- Total Expense (25,699) (1,810) (1,594) ----------- --------- --------- Net investment income (loss) 136,208 2,973 1,168 ----------- --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (74,893) (524) (54,294) Net realized gain on distributions -- 4,320 502 Net unrealized appreciation (depreciation) of investments during the year (118,974) (76,875) (16,482) ----------- --------- --------- Net gain (loss) on investments (193,867) (73,079) (70,274) ----------- --------- --------- Net increase (decrease) in net assets resulting from operations $(57,659) $(70,106) $(69,106) =========== ========= =========
(a) From inception May 1, 2008 to December 31, 2008. (f) Effective September 26, 2008, Hartford Mortgage Securities HLS Fund merged with Hartford U.S. Government Securities HLS Fund. SA-71 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD EQUITY AMERICAN FUNDS INCOME ASSET ALLOCATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $7,839 $ -- --------- ----------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (1,662) (24,628) --------- ----------- Total Expense (1,662) (24,628) --------- ----------- Net investment income (loss) 6,177 (24,628) --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,347) (3,883) Net realized gain on distributions 4,598 -- Net unrealized appreciation (depreciation) of investments during the year (44,701) (791,868) --------- ----------- Net gain (loss) on investments (42,450) (795,751) --------- ----------- Net increase (decrease) in net assets resulting from operations $(36,273) $(820,379) ========= ===========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-72 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP AMERICAN FUNDS INCOME AND AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH GROWTH BOND GLOBAL BOND AND INCOME HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- $ -- ----------- ----------- --------- ------------- EXPENSE: Administrative charges -- -- -- -- Mortality and Expense Risk charges (14,732) (56,814) (15,262) (39,466) ----------- ----------- --------- ------------- Total Expense (14,732) (56,814) (15,262) (39,466) ----------- ----------- --------- ------------- Net investment income (loss) (14,732) (56,814) (15,262) (39,466) ----------- ----------- --------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (6,266) (5,658) (86,985) (8,742) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (506,640) (488,607) 55,780 (1,880,955) ----------- ----------- --------- ------------- Net gain (loss) on investments (512,906) (494,265) (31,205) (1,889,697) ----------- ----------- --------- ------------- Net increase (decrease) in net assets resulting from operations $(527,638) $(551,079) $(46,467) $(1,929,163) =========== =========== ========= ============= AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS GLOBAL GROWTH CAPITALIZATION GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- --------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $234,736 ----------- ----------- ------------- EXPENSE: Administrative charges -- -- -- Mortality and Expense Risk charges (10,633) (14,226) (98,698) ----------- ----------- ------------- Total Expense (10,633) (14,226) (98,698) ----------- ----------- ------------- Net investment income (loss) (10,633) (14,226) 136,038 ----------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (29,251) (4,492) (39,194) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (443,589) (976,554) (5,786,786) ----------- ----------- ------------- Net gain (loss) on investments (472,840) (981,046) (5,825,980) ----------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(483,473) $(995,272) $(5,689,942) =========== =========== =============
(a) From inception May 1, 2008 to December 31, 2008. SA-73 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GROWTH-INCOME INTERNATIONAL HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $212,102 $ -- ------------- ------------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (71,171) (58,304) ------------- ------------- Total Expense (71,171) (58,304) ------------- ------------- Net investment income (loss) 140,931 (58,304) ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (17,666) (24,555) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (3,340,099) (2,820,854) ------------- ------------- Net gain (loss) on investments (3,357,765) (2,845,409) ------------- ------------- Net increase (decrease) in net assets resulting from operations $(3,216,834) $(2,903,713) ============= =============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-74 -------------------------------------------------------------------------------
AMERICAN FUNDS HUNTINGTON VA HUNTINGTON VA NEW WORLD INCOME DIVIDEND HUNTINGTON VA HLS FUND EQUITY FUND CAPTURE FUND GROWTH FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $143,965 $832,716 $25,989 ------------- ------------- ------------- ------------- EXPENSE: Administrative charges -- (4,247) (14,842) (4,161) Mortality and Expense Risk charges (19,656) (34,138) (121,897) (32,306) ------------- ------------- ------------- ------------- Total Expense (19,656) (38,385) (136,739) (36,467) ------------- ------------- ------------- ------------- Net investment income (loss) (19,656) 105,580 695,977 (10,478) ------------- ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (11,255) (22,838) (163,905) (24,385) Net realized gain on distributions -- 153,446 410,671 194,169 Net unrealized appreciation (depreciation) of investments during the year (986,390) (1,300,867) (3,472,564) (1,182,380) ------------- ------------- ------------- ------------- Net gain (loss) on investments (997,645) (1,170,259) (3,225,798) (1,012,596) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(1,017,301) $(1,064,679) $(2,529,821) $(1,023,074) ============= ============= ============= ============= HUNTINGTON VA HUNTINGTON VA HUNTINGTON VA MID CORP NEW ROTATING AMERICA FUND ECONOMY FUND MARKETS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $55,713 $33,946 $45,386 ------------- ------------- ------------- EXPENSE: Administrative charges (8,942) (8,264) (3,457) Mortality and Expense Risk charges (73,372) (64,804) (28,802) ------------- ------------- ------------- Total Expense (82,314) (73,068) (32,259) ------------- ------------- ------------- Net investment income (loss) (26,601) (39,122) 13,127 ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (50,322) (61,379) (75,278) Net realized gain on distributions 217,976 570,542 148,682 Net unrealized appreciation (depreciation) of investments during the year (2,302,466) (3,437,102) (1,016,882) ------------- ------------- ------------- Net gain (loss) on investments (2,134,812) (2,927,939) (943,478) ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(2,161,413) $(2,967,061) $(930,351) ============= ============= =============
(a) From inception May 1, 2008 to December 31, 2008. SA-75 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HUNTINGTON VA INTERNATIONAL HUNTINGTON VA EQUITY FUND MACRO 100 FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $132,017 $22,398 ------------- ----------- EXPENSE: Administrative charges -- (1,344) Mortality and Expense Risk charges (70,556) (17,966) ------------- ----------- Total Expense (70,556) (19,310) ------------- ----------- Net investment income (loss) 61,461 3,088 ------------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (95,842) (34,923) Net realized gain on distributions 100,461 -- Net unrealized appreciation (depreciation) of investments during the year (2,335,079) (464,366) ------------- ----------- Net gain (loss) on investments (2,330,460) (499,289) ------------- ----------- Net increase (decrease) in net assets resulting from operations $(2,268,999) $(496,201) ============= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-76 -------------------------------------------------------------------------------
HUNTINGTON VA LORD ABBETT LORD ABBETT MORTGAGE HUNTINGTON VA AMERICA'S VALUE BOND-DEBENTURE SECURITIES FUND SITUS FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (G) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $189,357 $12,755 $31,785 $424,967 ----------- ------------- ----------- ------------- EXPENSE: Administrative charges -- (3,221) -- -- Mortality and Expense Risk charges (34,769) (85,765) (3,024) (28,368) ----------- ------------- ----------- ------------- Total Expense (34,769) (88,986) (3,024) (28,368) ----------- ------------- ----------- ------------- Net investment income (loss) 154,588 (76,231) 28,761 396,599 ----------- ------------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (6,313) (88,307) (334) (1,526) Net realized gain on distributions 3,489 89,568 19,077 16,143 Net unrealized appreciation (depreciation) of investments during the year (144,466) (2,598,615) (123,731) (1,014,844) ----------- ------------- ----------- ------------- Net gain (loss) on investments (147,290) (2,597,354) (104,988) (1,000,227) ----------- ------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $7,298 $(2,673,585) $(76,227) $(603,628) =========== ============= =========== ============= LORD ABBETT GROWTH AND INCOME MFS(R) CORE MFS(R) GROWTH PORTFOLIO EQUITY SERIES SERIES SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (H) ----------------------------- ----------------------------------------------------------------------- INVESTMENT INCOME: Dividends $34,470 $73,797 $41,726 ----------- ------------- ------------- EXPENSE: Administrative charges -- (14,894) (29,888) Mortality and Expense Risk charges (8,748) (145,344) (288,813) ----------- ------------- ------------- Total Expense (8,748) (160,238) (318,701) ----------- ------------- ------------- Net investment income (loss) 25,722 (86,441) (276,975) ----------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (858) (357,253) (1,751,884) Net realized gain on distributions 8,070 -- -- Net unrealized appreciation (depreciation) of investments during the year (334,850) (4,053,465) (6,272,999) ----------- ------------- ------------- Net gain (loss) on investments (327,638) (4,410,718) (8,024,883) ----------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(301,916) $(4,497,159) $(8,301,858) =========== ============= =============
(a) From inception May 1, 2008 to December 31, 2008. (g) Formerly Huntington VA Situs Small Cap Fund. Change effective January 24, 2008. (h) Formerly MFS Emerging Growth Series. Change effective May 1, 2008. SA-77 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) GLOBAL MFS(R) HIGH EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------- INVESTMENT INCOME: Dividends $92,569 $6,658,501 ------------- -------------- EXPENSE: Administrative charges (15,990) (117,154) Mortality and Expense Risk charges (157,539) (1,143,848) ------------- -------------- Total Expense (173,529) (1,261,002) ------------- -------------- Net investment income (loss) (80,960) 5,397,499 ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (42,308) (1,600,570) Net realized gain on distributions 766,548 -- Net unrealized appreciation (depreciation) of investments during the year (4,840,919) (25,851,675) ------------- -------------- Net gain (loss) on investments (4,116,679) (27,452,245) ------------- -------------- Net increase (decrease) in net assets resulting from operations $(4,197,639) $(22,054,746) ============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-78 -------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH MFS(R) INVESTORS MFS(R) MID CAP MFS(R) NEW STOCK SERIES TRUST SERIES GROWTH SERIES DISCOVERY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $112,237 $1,320,726 $ -- $ -- ------------- -------------- -------------- -------------- EXPENSE: Administrative charges (31,065) (271,423) (52,103) (148,792) Mortality and Expense Risk charges (300,378) (2,543,770) (518,678) (1,404,839) ------------- -------------- -------------- -------------- Total Expense (331,443) (2,815,193) (570,781) (1,553,631) ------------- -------------- -------------- -------------- Net investment income (loss) (219,206) (1,494,467) (570,781) (1,553,631) ------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (263,872) (2,108,359) (469,291) (1,175,122) Net realized gain on distributions 917,256 10,905,104 4,274,597 18,002,458 Net unrealized appreciation (depreciation) of investments during the year (8,791,972) (70,598,251) (23,308,949) (56,795,043) ------------- -------------- -------------- -------------- Net gain (loss) on investments (8,138,588) (61,801,506) (19,503,643) (39,967,707) ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $(8,357,794) $(63,295,973) $(20,074,424) $(41,521,338) ============= ============== ============== ============== MFS(R) TOTAL MFS(R) VALUE MFS(R) RESEARCH RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- INVESTMENT INCOME: Dividends $15,041,785 $918,854 $1,063,015 ---------------- -------------- ------------- EXPENSE: Administrative charges (808,708) (109,035) (65,591) Mortality and Expense Risk charges (7,550,218) (1,231,081) (612,538) ---------------- -------------- ------------- Total Expense (8,358,926) (1,340,116) (678,129) ---------------- -------------- ------------- Net investment income (loss) 6,682,859 (421,262) 384,886 ---------------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (6,852,738) (1,042,281) (87,256) Net realized gain on distributions 29,793,043 3,100,458 -- Net unrealized appreciation (depreciation) of investments during the year (154,337,021) (32,559,787) (2,046,667) ---------------- -------------- ------------- Net gain (loss) on investments (131,396,716) (30,501,610) (2,133,923) ---------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $(124,713,857) $(30,922,872) $(1,749,037) ================ ============== =============
SA-79 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) RESEARCH MFS(R) RESEARCH INTERNATIONAL SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $160,550 $18,326 -------------- ------------- EXPENSE: Administrative charges (40,025) (5,733) Mortality and Expense Risk charges (372,126) (53,556) -------------- ------------- Total Expense (412,151) (59,289) -------------- ------------- Net investment income (loss) (251,601) (40,963) -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (370,228) (195,693) Net realized gain on distributions 925,516 -- Net unrealized appreciation (depreciation) of investments during the year (14,028,132) (1,154,825) -------------- ------------- Net gain (loss) on investments (13,472,844) (1,350,518) -------------- ------------- Net increase (decrease) in net assets resulting from operations $(13,724,445) $(1,391,481) ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-80 -------------------------------------------------------------------------------
VAN KAMPEN -- VAN KAMPEN -- BLACKROCK BLACKROCK UIF INTERNATIONAL UIF MID CAP GLOBAL LARGE CAP GROWTH EQUITY GROWTH GROWTH V.I. FUND GROWTH V.I. FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (P) SUB-ACCOUNT (A) ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $175 $2,954 $1 $1,549 ----------- ----------- --------- ----------- EXPENSE: Administrative charges (407) (1,077) -- -- Mortality and Expense Risk charges (3,851) (12,170) (714) (4,216) ----------- ----------- --------- ----------- Total Expense (4,258) (13,247) (714) (4,216) ----------- ----------- --------- ----------- Net investment income (loss) (4,083) (10,293) (713) (2,667) ----------- ----------- --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 91,289 68,409 382 (1,432) Net realized gain on distributions -- -- 87 59,051 Net unrealized appreciation (depreciation) of investments during the year (188,451) (404,026) (22,613) (328,318) ----------- ----------- --------- ----------- Net gain (loss) on investments (97,162) (335,617) (22,144) (270,699) ----------- ----------- --------- ----------- Net increase (decrease) in net assets resulting from operations $(101,245) $(345,910) $(22,857) $(273,366) =========== =========== ========= =========== VAN KAMPEN -- MORGAN STANLEY -- UIF U.S. MORGAN STANLEY -- CAPITAL MID CAP VALUE FOCUS GROWTH OPPORTUNITIES PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (Q) SUB-ACCOUNT (I) SUB-ACCOUNT (R) ----------------------------- ------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,218 $4 $ -- ----------- -------- ----------- EXPENSE: Administrative charges -- (9) (394) Mortality and Expense Risk charges (2,541) (105) (3,376) ----------- -------- ----------- Total Expense (2,541) (114) (3,770) ----------- -------- ----------- Net investment income (loss) (1,323) (110) (3,770) ----------- -------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (12,827) (17) (3,961) Net realized gain on distributions 51,068 -- -- Net unrealized appreciation (depreciation) of investments during the year (159,652) (2,723) (116,155) ----------- -------- ----------- Net gain (loss) on investments (121,411) (2,740) (120,116) ----------- -------- ----------- Net increase (decrease) in net assets resulting from operations $(122,734) $(2,850) $(123,886) =========== ======== ===========
(a) From inception May 1, 2008 to December 31, 2008. (i) Funded as of February 13, 2008. (p) Formerly reported as International Growth Equity Fund. (q) Formerly reported as U.S. Mid Cap Value. (r) Formerly reported as Capital Opportunities. SA-81 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MORGAN STANLEY -- MID CAP MORGAN STANLEY -- GROWTH FLEXIBLE INCOME PORTFOLIO PORTFOLIO SUB-ACCOUNT (J) SUB-ACCOUNT (S) --------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $69 $1,919 -------- --------- EXPENSE: Administrative charges (30) (154) Mortality and Expense Risk charges (199) (1,123) -------- --------- Total Expense (229) (1,277) -------- --------- Net investment income (loss) (160) 642 -------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (47) (8,800) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (8,577) (10,443) -------- --------- Net gain (loss) on investments (8,624) (19,243) -------- --------- Net increase (decrease) in net assets resulting from operations $(8,784) $(18,601) ======== =========
(j) Formerly Developing Growth. Change effective May 1, 2008. (s) Formerly reported as Flexible Income. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-82 -------------------------------------------------------------------------------
MORGAN STANLEY -- DIVIDEND MORGAN STANLEY -- GROWTH GLOBAL EQUITY MTB LARGE CAP MTB LARGE CAP PORTFOLIO PORTFOLIO GROWTH FUND II VALUE FUND II SUB-ACCOUNT (T) SUB-ACCOUNT (U) SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $23 $90 $989 $1,422 -------- -------- --------- --------- EXPENSE: Administrative charges (13) (24) -- -- Mortality and Expense Risk charges (97) (221) (863) (934) -------- -------- --------- --------- Total Expense (110) (245) (863) (934) -------- -------- --------- --------- Net investment income (loss) (87) (155) 126 488 -------- -------- --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (24) (35) (318) (320) Net realized gain on distributions -- 880 -- -- Net unrealized appreciation (depreciation) of investments during the year (2,824) (7,735) (49,032) (48,744) -------- -------- --------- --------- Net gain (loss) on investments (2,848) (6,890) (49,350) (49,064) -------- -------- --------- --------- Net increase (decrease) in net assets resulting from operations $(2,935) $(7,045) $(49,224) $(48,576) ======== ======== ========= ========= COLUMBIA MARSICO INTERNATIONAL COLUMBIA MTB MODERATE OPPORTUNITIES HIGH YIELD GROWTH FUND II VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- INVESTMENT INCOME: Dividends $199 $313,927 $1,919,695 -------- -------------- ------------- EXPENSE: Administrative charges -- (48,988) (35,919) Mortality and Expense Risk charges (45) (487,422) (344,450) -------- -------------- ------------- Total Expense (45) (536,410) (380,369) -------- -------------- ------------- Net investment income (loss) 154 (222,483) 1,539,326 -------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1) 1,861,286 (62,964) Net realized gain on distributions 722 4,792,022 -- Net unrealized appreciation (depreciation) of investments during the year (3,015) (22,405,409) (6,431,112) -------- -------------- ------------- Net gain (loss) on investments (2,294) (15,752,101) (6,494,076) -------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $(2,140) $(15,974,584) $(4,954,750) ======== ============== =============
(a) From inception May 1, 2008 to December 31, 2008. (t) Formerly reported as Dividend Growth. (u) Formerly reported as Global Equity. SA-83 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
COLUMBIA MARSICO COLUMBIA MARSICO FOCUSED EQUITIES GROWTH VS FUND VS FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $19,424 $54,912 -------------- ------------- EXPENSE: Administrative charges (38,496) (33,744) Mortality and Expense Risk charges (357,137) (331,564) -------------- ------------- Total Expense (395,633) (365,308) -------------- ------------- Net investment income (loss) (376,209) (310,396) -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 898,947 1,219,078 Net realized gain on distributions 3,206,812 -- Net unrealized appreciation (depreciation) of investments during the year (13,887,907) (9,582,385) -------------- ------------- Net gain (loss) on investments (9,782,148) (8,363,307) -------------- ------------- Net increase (decrease) in net assets resulting from operations $(10,158,357) $(8,673,703) ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-84 -------------------------------------------------------------------------------
OPPENHEIMER COLUMBIA MARSICO COLUMBIA MARSICO CAPITAL OPPENHEIMER 21ST CENTURY MIDCAP GROWTH APPRECIATION GLOBAL SECURITIES VS FUND VS FUND FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- $ -- ------------- -------------- --------- ----------- EXPENSE: Administrative charges (12,220) (43,460) -- -- Mortality and Expense Risk charges (120,793) (430,167) (1,021) (17,682) ------------- -------------- --------- ----------- Total Expense (133,013) (473,627) (1,021) (17,682) ------------- -------------- --------- ----------- Net investment income (loss) (133,013) (473,627) (1,021) (17,682) ------------- -------------- --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 69,909 55,458 (102) 3 Net realized gain on distributions 125,971 3,116,967 -- -- Net unrealized appreciation (depreciation) of investments during the year (3,733,077) (14,737,116) (64,167) (741,647) ------------- -------------- --------- ----------- Net gain (loss) on investments (3,537,197) (11,564,691) (64,269) (741,644) ------------- -------------- --------- ----------- Net increase (decrease) in net assets resulting from operations $(3,670,210) $(12,038,318) $(65,290) $(759,326) ============= ============== ========= =========== OPPENHEIMER OPPENHEIMER MAIN STREET OPPENHEIMER MAIN STREET SMALL CAP VALUE FUND(R)/VA FUND(R)/VA FUND/VA SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- --------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- --------- ----------- --------- EXPENSE: Administrative charges -- -- -- Mortality and Expense Risk charges (2,143) (12,172) (432) --------- ----------- --------- Total Expense (2,143) (12,172) (432) --------- ----------- --------- Net investment income (loss) (2,143) (12,172) (432) --------- ----------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (118) (2,149) (44) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (92,287) (588,762) (18,939) --------- ----------- --------- Net gain (loss) on investments (92,405) (590,911) (18,983) --------- ----------- --------- Net increase (decrease) in net assets resulting from operations $(94,548) $(603,083) $(19,415) ========= =========== =========
(a) From inception May 1, 2008 to December 31, 2008. SA-85 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET INCOME FUND ALLOCATION FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) ---------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- ------------- --------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (33,426) (841) ------------- --------- Total Expense (33,426) (841) ------------- --------- Net investment income (loss) (33,426) (841) ------------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (3,118) (561) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (1,493,415) (33,247) ------------- --------- Net gain (loss) on investments (1,496,533) (33,808) ------------- --------- Net increase (decrease) in net assets resulting from operations $(1,529,959) $(34,649) ============= =========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-86 -------------------------------------------------------------------------------
PUTNAM VT JPMORGAN INTERNATIONAL PUTNAM VT PUTNAM VT INSURANCE TRUST GROWTH AND INTERNATIONAL SMALL CAP BALANCED INCOME FUND EQUITY FUND VALUE FUND PORTFOLIO - 1 SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- $51,035 --------- --------- --------- ----------- EXPENSE: Administrative charges -- -- -- -- Mortality and Expense Risk charges (274) (361) (466) (24,592) --------- --------- --------- ----------- Total Expense (274) (361) (466) (24,592) --------- --------- --------- ----------- Net investment income (loss) (274) (361) (466) 26,443 --------- --------- --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (174) (16) (207) (42,118) Net realized gain on distributions -- -- -- 209,091 Net unrealized appreciation (depreciation) of investments during the year (16,345) (18,454) (26,877) (638,028) --------- --------- --------- ----------- Net gain (loss) on investments (16,519) (18,470) (27,084) (471,055) --------- --------- --------- ----------- Net increase (decrease) in net assets resulting from operations $(16,793) $(18,831) $(27,550) $(444,612) ========= ========= ========= =========== JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST CORE BOND DIVERSIFIED EQUITY INTREPID MID CAP PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $3,215,736 $115,495 $52,064 ------------- ------------- ------------- EXPENSE: Administrative charges -- -- -- Mortality and Expense Risk charges (936,393) (164,140) (154,230) ------------- ------------- ------------- Total Expense (936,393) (164,140) (154,230) ------------- ------------- ------------- Net investment income (loss) 2,279,343 (48,645) (102,166) ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (42,988) (130,266) (85,663) Net realized gain on distributions -- 996,699 829,108 Net unrealized appreciation (depreciation) of investments during the year (2,452,024) (5,145,009) (5,325,097) ------------- ------------- ------------- Net gain (loss) on investments (2,495,012) (4,278,576) (4,581,652) ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $(215,669) $(4,327,221) $(4,683,818) ============= ============= =============
(a) From inception May 1, 2008 to December 31, 2008. SA-87 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST EQUITY INDEX GOVERNMENT BOND PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $800,817 $1,320,237 -------------- ------------ EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (656,723) (416,887) -------------- ------------ Total Expense (656,723) (416,887) -------------- ------------ Net investment income (loss) 144,094 903,350 -------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (276,419) 46,726 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (18,957,816) 1,174,680 -------------- ------------ Net gain (loss) on investments (19,234,235) 1,221,406 -------------- ------------ Net increase (decrease) in net assets resulting from operations $(19,090,141) $2,124,756 ============== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-88 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST DIVERSIFIED DIVERSIFIED JENNISON 20/20 INTREPID GROWTH MID CAP GROWTH MID CAP VALUE FOCUS PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $23,635 $ -- $138,716 $ -- ------------- ------------- ------------- ----------- EXPENSE: Administrative charges -- -- -- (532) Mortality and Expense Risk charges (46,721) (191,689) (146,596) (5,461) ------------- ------------- ------------- ----------- Total Expense (46,721) (191,689) (146,596) (5,993) ------------- ------------- ------------- ----------- Net investment income (loss) (23,086) (191,689) (7,880) (5,993) ------------- ------------- ------------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (7,881) (136,924) (88,152) (2,414) Net realized gain on distributions -- 2,368,791 2,124,490 24,368 Net unrealized appreciation (depreciation) of investments during the year (1,504,594) (8,505,613) (5,888,361) (166,250) ------------- ------------- ------------- ----------- Net gain (loss) on investments (1,512,475) (6,273,746) (3,852,023) (144,296) ------------- ------------- ------------- ----------- Net increase (decrease) in net assets resulting from operations $(1,535,561) $(6,465,435) $(3,859,903) $(150,289) ============= ============= ============= =========== PRUDENTIAL PRUDENTIAL SERIES JENNISON VALUE INTERNATIONAL PORTFOLIO PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ---------------------------------------------------------------- INVESTMENT INCOME: Dividends $316 $2,810 $89 ----------- ----------- -------- EXPENSE: Administrative charges (694) -- -- Mortality and Expense Risk charges (7,111) (3,464) (118) ----------- ----------- -------- Total Expense (7,805) (3,464) (118) ----------- ----------- -------- Net investment income (loss) (7,489) (654) (29) ----------- ----------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (25,498) (15,824) 1,239 Net realized gain on distributions -- 43,125 1,403 Net unrealized appreciation (depreciation) of investments during the year (164,165) (130,400) (7,189) ----------- ----------- -------- Net gain (loss) on investments (189,663) (103,099) (4,547) ----------- ----------- -------- Net increase (decrease) in net assets resulting from operations $(197,152) $(103,753) $(4,576) =========== =========== ========
SA-89 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
LEGG MASON LEGG MASON PARTNERS VARIABLE PARTNERS VARIABLE CAPITAL AND INCOME FUNDAMENTAL VALUE PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,165 $23,081 --------- ----------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (2,886) (23,335) --------- ----------- Total Expense (2,886) (23,335) --------- ----------- Net investment income (loss) (1,721) (254) --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (57,785) (209,021) Net realized gain on distributions 4,215 1,228 Net unrealized appreciation (depreciation) of investments during the year (11,461) (492,318) --------- ----------- Net gain (loss) on investments (65,031) (700,111) --------- ----------- Net increase (decrease) in net assets resulting from operations $(66,752) $(700,365) ========= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-90 -------------------------------------------------------------------------------
LEGG MASON PARTNERS VARIABLE LEGG MASON VAN KAMPEN LIT GLOBAL HIGH PARTNERS VARIABLE GROWTH AND VAN KAMPEN LIT YIELD BOND INVESTORS INCOME COMSTOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (V) SUB-ACCOUNT (W) ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $9,445 $6,108 $6,866 $10,071 --------- ----------- ----------- ----------- EXPENSE: Administrative charges (180) (866) (790) (868) Mortality and Expense Risk charges (1,527) (7,378) (8,532) (7,755) --------- ----------- ----------- ----------- Total Expense (1,707) (8,244) (9,322) (8,623) --------- ----------- ----------- ----------- Net investment income (loss) 7,738 (2,136) (2,456) 1,448 --------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (12,803) 5,176 (17,891) (11,411) Net realized gain on distributions -- 16,953 13,340 24,734 Net unrealized appreciation (depreciation) of investments during the year (38,861) (263,509) (214,183) (198,841) --------- ----------- ----------- ----------- Net gain (loss) on investments (51,664) (241,380) (218,734) (185,518) --------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations $(43,926) $(243,516) $(221,190) $(184,070) ========= =========== =========== =========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ASSET TOTAL RETURN EQUITY ALLOCATION FUND BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- INVESTMENT INCOME: Dividends $289 $410 $473 -------- ------ --------- EXPENSE: Administrative charges -- -- -- Mortality and Expense Risk charges (218) (116) (380) -------- ------ --------- Total Expense (218) (116) (380) -------- ------ --------- Net investment income (loss) 71 294 93 -------- ------ --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (13) -- (599) Net realized gain on distributions 956 -- 3,931 Net unrealized appreciation (depreciation) of investments during the year (5,207) (208) (14,660) -------- ------ --------- Net gain (loss) on investments (4,264) (208) (11,328) -------- ------ --------- Net increase (decrease) in net assets resulting from operations $(4,193) $86 $(11,235) ======== ====== =========
(v) Formerly reported as Growth and Income. (w) Formerly reported as Comstock. SA-91 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT C&B LARGE CAP INTERNATIONAL VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------- INVESTMENT INCOME: Dividends $155 $180 -------- -------- EXPENSE: Administrative charges -- -- Mortality and Expense Risk charges (177) (169) -------- -------- Total Expense (177) (169) -------- -------- Net investment income (loss) (22) 11 -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,379) (17) Net realized gain on distributions -- 1,880 Net unrealized appreciation (depreciation) of investments during the year (2,664) (7,078) -------- -------- Net gain (loss) on investments (5,043) (5,215) -------- -------- Net increase (decrease) in net assets resulting from operations $(5,065) $(5,204) ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-92 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO RIDGEWORTH ADVANTAGE VT ADVANTAGE VT WELLS FARGO VARIABLE TRUST LARGE COMPANY SMALL CAP ADVANTAGE VT LARGE CAP GROWTH GROWTH FUND GROWTH FUND DISCOVERY FUND STOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (K) SUB-ACCOUNT (L) ------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $21 $ -- $ -- $13,788 -------- -------- ------ ------------- EXPENSE: Administrative charges -- -- -- (10,286) Mortality and Expense Risk charges (137) (190) (26) (99,841) -------- -------- ------ ------------- Total Expense (137) (190) (26) (110,127) -------- -------- ------ ------------- Net investment income (loss) (116) (190) (26) (96,339) -------- -------- ------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (48) (1,890) (1) (28,476) Net realized gain on distributions -- 3,442 -- 834,181 Net unrealized appreciation (depreciation) of investments during the year (3,480) (7,248) (902) (3,491,676) -------- -------- ------ ------------- Net gain (loss) on investments (3,528) (5,696) (903) (2,685,971) -------- -------- ------ ------------- Net increase (decrease) in net assets resulting from operations $(3,644) $(5,886) $(929) $(2,782,310) ======== ======== ====== ============= RIDGEWORTH RIDGEWORTH RIDGEWORTH VARIABLE TRUST VARIABLE TRUST VARIABLE TRUST LARGE CAP CORE MID-CAP CORE LARGE CAP VALUE EQUITY FUND EQUITY FUND EQUITY FUND SUB-ACCOUNT (M) SUB-ACCOUNT (N) SUB-ACCOUNT (O) ----------------------------- --------------------------------------------------------------------- INVESTMENT INCOME: Dividends $10,793 $9,996 $104,533 ----------- ----------- ------------- EXPENSE: Administrative charges (2,149) (2,783) (9,199) Mortality and Expense Risk charges (19,754) (27,301) (84,721) ----------- ----------- ------------- Total Expense (21,903) (30,084) (93,920) ----------- ----------- ------------- Net investment income (loss) (11,110) (20,088) 10,613 ----------- ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (22,341) (41,525) (18,975) Net realized gain on distributions 118,960 173,335 403,874 Net unrealized appreciation (depreciation) of investments during the year (590,644) (827,254) (2,361,464) ----------- ----------- ------------- Net gain (loss) on investments (494,025) (695,444) (1,976,565) ----------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $(505,135) $(715,532) $(1,965,952) =========== =========== =============
(k) Funded as of February 12, 2008. (l) Formerly STI Classic VT Large Cap Growth Stock Fund. Change effective May 1, 2008. (m) Formerly STI Classic VT Large Cap Core Equity Fund. Change effective May 1, 2008. (n) Formerly STI Classic VT Mid-Cap Core Equity Fund. Change effective May 1, 2008. (o) Formerly STI Classic VT Large Cap Value Equity Fund. Change effective May 1, 2008. SA-93 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $4,562 $(18,903) Net realized gain (loss) on security transactions 44 (19,363) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (174,855) (1,364,421) ------------ ------------- Net increase (decrease) in net assets resulting from operations (170,249) (1,402,687) ------------ ------------- UNIT TRANSACTIONS: Purchases 468,810 2,554,188 Net transfers 910,518 2,342,527 Surrenders for benefit payments and fees (11,442) (50,165) Net annuity transactions -- -- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 1,367,886 4,846,550 ------------ ------------- Net increase (decrease) in net assets 1,197,637 3,443,863 NET ASSETS: Beginning of year -- -- ------------ ------------- End of year $1,197,637 $3,443,863 ============ =============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-94 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS AIM V.I. SMALL/MID-CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(3,279) $(616) $(4,480) $(586,593) Net realized gain (loss) on security transactions (419) (184) 1,447 (148,954) Net realized gain on distributions -- -- -- 10,509,917 Net unrealized appreciation (depreciation) of investments during the year (169,854) (28,098) (266,577) (48,829,594) ----------- ---------- ------------ -------------- Net increase (decrease) in net assets resulting from operations (173,552) (28,898) (269,610) (39,055,224) ----------- ---------- ------------ -------------- UNIT TRANSACTIONS: Purchases 379,671 92,271 457,237 802,294 Net transfers 372,447 27,436 587,226 (3,933,868) Surrenders for benefit payments and fees (10,210) (1,895) (5,620) (6,078,582) Net annuity transactions -- -- -- 2,025 ----------- ---------- ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions 741,908 117,812 1,038,843 (9,208,131) ----------- ---------- ------------ -------------- Net increase (decrease) in net assets 568,356 88,914 769,233 (48,263,355) NET ASSETS: Beginning of year -- -- -- 81,979,199 ----------- ---------- ------------ -------------- End of year $568,356 $88,914 $769,233 $33,715,844 =========== ========== ============ ============== AIM V.I. AIM V.I. AIM V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(534,418) $189,672 $8,016,871 Net realized gain (loss) on security transactions (547,793) (54,957) 551,535 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (14,401,749) (34,782,165) 28,107,906 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (15,483,960) (34,647,450) 36,676,312 -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 796,198 1,773,650 11,770,960 Net transfers (2,493,298) (6,633,387) 82,331,963 Surrenders for benefit payments and fees (3,771,538) (8,507,062) (35,590,404) Net annuity transactions -- (3,282) (8,022) -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (5,468,638) (13,370,081) 58,504,497 -------------- -------------- -------------- Net increase (decrease) in net assets (20,952,598) (48,017,531) 95,180,809 NET ASSETS: Beginning of year 39,709,942 118,284,738 315,462,288 -------------- -------------- -------------- End of year $18,757,344 $70,267,207 $410,643,097 ============== ============== ==============
(a) From inception May 1, 2008 to December 31, 2008. SA-95 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. HIGH INTERNATIONAL YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $70,781 $(815,837) Net realized gain (loss) on security transactions (35,515) (1,459,079) Net realized gain on distributions -- 1,038,789 Net unrealized appreciation (depreciation) of investments during the year (351,544) (36,231,702) ------------ -------------- Net increase (decrease) in net assets resulting from operations (316,278) (37,467,829) ------------ -------------- UNIT TRANSACTIONS: Purchases 6,783 8,036,925 Net transfers (114,345) 15,711,004 Surrenders for benefit payments and fees (144,354) (5,967,320) Net annuity transactions -- 1,981 ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions (251,916) 17,782,590 ------------ -------------- Net increase (decrease) in net assets (568,194) (19,685,239) NET ASSETS: Beginning of year 1,309,653 75,959,529 ------------ -------------- End of year $741,459 $56,274,290 ============ ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-96 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I. MID CAP CORE SMALL CAP LARGE CAP CAPITAL EQUITY FUND EQUITY FUND GROWTH FUND DEVELOPMENT FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(315,662) $(658,464) $(350,260) $(13,476) Net realized gain (loss) on security transactions 1,934,350 (524,074) (174,908) (204,603) Net realized gain on distributions 10,909,748 135,257 -- 99,673 Net unrealized appreciation (depreciation) of investments during the year (44,844,227) (13,293,457) (8,559,247) (364,126) -------------- -------------- -------------- ----------- Net increase (decrease) in net assets resulting from operations (32,315,791) (14,340,738) (9,084,415) (482,532) -------------- -------------- -------------- ----------- UNIT TRANSACTIONS: Purchases 1,397,015 3,867,755 924,071 110,275 Net transfers (6,357,431) 11,848,362 (1,283,388) 727,771 Surrenders for benefit payments and fees (9,452,720) (3,013,559) (2,211,570) (19,397) Net annuity transactions 4,246 11,615 792 -- -------------- -------------- -------------- ----------- Net increase (decrease) in net assets resulting from unit transactions (14,408,890) 12,714,173 (2,570,095) 818,649 -------------- -------------- -------------- ----------- Net increase (decrease) in net assets (46,724,681) (1,626,565) (11,654,510) 336,117 NET ASSETS: Beginning of year 118,825,638 33,071,587 24,397,254 189,153 -------------- -------------- -------------- ----------- End of year $72,100,957 $31,445,022 $12,742,744 $525,270 ============== ============== ============== =========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,484,833 $335,477 $2,574,148 Net realized gain (loss) on security transactions (768,184) (3,501,083) (5,520,367) Net realized gain on distributions 29,191 980,131 17,491,070 Net unrealized appreciation (depreciation) of investments during the year (2,710,220) (63,489,579) (160,790,126) ------------- -------------- --------------- Net increase (decrease) in net assets resulting from operations (964,380) (65,675,054) (146,245,275) ------------- -------------- --------------- UNIT TRANSACTIONS: Purchases 3,039,490 8,033,833 9,119,347 Net transfers 55,083,697 19,210,716 (19,343,471) Surrenders for benefit payments and fees (6,398,129) (8,417,005) (44,820,937) Net annuity transactions -- 3,381 (25,346) ------------- -------------- --------------- Net increase (decrease) in net assets resulting from unit transactions 51,725,058 18,830,925 (55,070,407) ------------- -------------- --------------- Net increase (decrease) in net assets 50,760,678 (46,844,129) (201,315,682) NET ASSETS: Beginning of year 30,855,370 134,512,390 501,772,240 ------------- -------------- --------------- End of year $81,616,048 $87,668,261 $300,456,558 ============= ============== ===============
SA-97 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $300,081 $12,603,295 Net realized gain (loss) on security transactions (588,600) (2,473,755) Net realized gain on distributions 12,568,207 896,865 Net unrealized appreciation (depreciation) of investments during the year (95,097,292) (51,032,009) --------------- -------------- Net increase (decrease) in net assets resulting from operations (82,817,604) (40,005,604) --------------- -------------- UNIT TRANSACTIONS: Purchases 4,299,442 7,700,726 Net transfers (9,972,509) 6,968,156 Surrenders for benefit payments and fees (15,833,778) (34,904,588) Net annuity transactions (7,841) (29,352) --------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (21,514,686) (20,265,058) --------------- -------------- Net increase (decrease) in net assets (104,332,290) (60,270,662) NET ASSETS: Beginning of year 233,620,876 365,606,275 --------------- -------------- End of year $129,288,586 $305,335,613 =============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-98 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(71,447) $(10,298,725) $(880,464) $366,313 Net realized gain (loss) on security transactions (1,460,980) (4,432,115) (8,747,696) (2,754,617) Net realized gain on distributions 11,024,533 119,559,907 65,427,563 41,165,265 Net unrealized appreciation (depreciation) of investments during the year (70,662,030) (674,837,722) (510,650,771) (199,517,067) ------------- --------------- --------------- -------------- Net increase (decrease) in net assets resulting from operations (61,169,924) (570,008,655) (454,851,368) (160,740,106) ------------- --------------- --------------- -------------- UNIT TRANSACTIONS: Purchases 4,911,221 30,681,592 27,148,084 8,716,379 Net transfers (5,457,903) 6,461,237 14,593,982 (6,196,040) Surrenders for benefit payments and fees (10,347,784) (87,778,989) (85,211,765) (23,525,865) Net annuity transactions (12,157) (15,482) (65,666) (28,209) ------------- --------------- --------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (10,906,623) (50,651,642) (43,535,365) (21,033,735) ------------- --------------- --------------- -------------- Net increase (decrease) in net assets (72,076,547) (620,660,297) (498,386,733) (181,773,841) NET ASSETS: Beginning of year 159,001,257 1,294,497,680 1,177,011,167 382,340,934 ------------- --------------- --------------- -------------- End of year $86,924,710 $673,837,383 $678,624,434 $200,567,093 ============= =============== =============== ============== AMERICAN FUNDS BB&T AMERICAN FUNDS GLOBAL SMALL MID CAP NEW WORLD FUND CAPITALIZATION FUND GROWTH VIF SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) ----------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(436,282) $(1,934,322) $(1,159) Net realized gain (loss) on security transactions (4,512,576) (1,930,832) (293) Net realized gain on distributions 9,554,182 15,081,521 37,903 Net unrealized appreciation (depreciation) of investments during the year (66,134,719) (86,480,303) (127,947) ------------- ------------- ---------- Net increase (decrease) in net assets resulting from operations (61,529,395) (75,263,936) (91,496) ------------- ------------- ---------- UNIT TRANSACTIONS: Purchases 4,604,293 3,366,854 205,739 Net transfers (3,798,221) (13,107,387) 31,385 Surrenders for benefit payments and fees (8,523,358) (8,427,586) (596) Net annuity transactions (707) 637 -- ------------- ------------- ---------- Net increase (decrease) in net assets resulting from unit transactions (7,717,993) (18,167,482) 236,528 ------------- ------------- ---------- Net increase (decrease) in net assets (69,247,388) (93,431,418) 145,032 NET ASSETS: Beginning of year 140,998,528 152,453,939 -- ------------- ------------- ---------- End of year $71,751,140 $59,022,521 $145,032 ============= ============= ==========
(a) From inception May 1, 2008 to December 31, 2008. SA-99 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
BB&T CAPITAL MANAGER BB&T EQUITY VIF LARGE CAP VIF SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $2 $72 Net realized gain (loss) on security transactions -- (10) Net realized gain on distributions -- 3,047 Net unrealized appreciation (depreciation) of investments during the year 5 (7,089) ----- --------- Net increase (decrease) in net assets resulting from operations 7 (3,980) ----- --------- UNIT TRANSACTIONS: Purchases -- 14,029 Net transfers 209 -- Surrenders for benefit payments and fees -- -- Net annuity transactions -- -- ----- --------- Net increase (decrease) in net assets resulting from unit transactions 209 14,029 ----- --------- Net increase (decrease) in net assets 216 10,049 NET ASSETS: Beginning of year -- -- ----- --------- End of year $216 $10,049 ===== =========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-100 -------------------------------------------------------------------------------
BB&T COLUMBIA SPECIAL BB&T COLUMBIA SMALL COMPANY OPPORTUNITIES TOTAL RETURN ASSET ALLOCATION GROWTH EQUITY VIF BOND VIF VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(5,975) $5,807 $81,715 $(288,471) Net realized gain (loss) on security transactions (7,215) (2,005) (361,397) (430,594) Net realized gain on distributions 34,836 -- 733,468 1,693,554 Net unrealized appreciation (depreciation) of investments during the year (419,419) 8,263 (2,500,394) (7,941,741) ------------ ---------- ------------- -------------- Net increase (decrease) in net assets resulting from operations (397,773) 12,065 (2,046,608) (6,967,252) ------------ ---------- ------------- -------------- UNIT TRANSACTIONS: Purchases 1,331,217 424,242 7,616 26,791 Net transfers 238,241 143,065 122,509 (855,404) Surrenders for benefit payments and fees (13,525) (10,163) (1,685,491) (3,334,762) Net annuity transactions -- -- -- -- ------------ ---------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 1,555,933 557,144 (1,555,366) (4,163,375) ------------ ---------- ------------- -------------- Net increase (decrease) in net assets 1,158,160 569,209 (3,601,974) (11,130,627) NET ASSETS: Beginning of year -- -- 7,823,135 19,752,130 ------------ ---------- ------------- -------------- End of year $1,158,160 $569,209 $4,221,161 $8,621,503 ============ ========== ============= ============== COLUMBIA EVERGREEN VA LARGE CAP VALUE DIVERSIFIED CAPITAL EVERGREEN VA VS FUND BUILDER FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (B) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $71,724 $(11,164) $(34,442) Net realized gain (loss) on security transactions (896,735) (62,818) (55,316) Net realized gain on distributions 3,561,664 -- -- Net unrealized appreciation (depreciation) of investments during the year (13,576,084) (303,445) (938,643) -------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations (10,839,431) (377,427) (1,028,401) -------------- ----------- ------------- UNIT TRANSACTIONS: Purchases 30,008 111,187 43,453 Net transfers (1,487,781) 67,730 (12,065) Surrenders for benefit payments and fees (5,808,305) (71,755) (53,218) Net annuity transactions -- -- (326) -------------- ----------- ------------- Net increase (decrease) in net assets resulting from unit transactions (7,266,078) 107,162 (22,156) -------------- ----------- ------------- Net increase (decrease) in net assets (18,105,509) (270,265) (1,050,557) NET ASSETS: Beginning of year 33,056,589 733,475 2,407,327 -------------- ----------- ------------- End of year $14,951,080 $463,210 $1,356,770 ============== =========== =============
(a) From inception May 1, 2008 to December 31, 2008. (b) Formerly Evergreen VA Balanced Fund. Change effective May 30, 2008. SA-101 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
EVERGREEN VA INTERNATIONAL EVERGREEN VA EQUITY FUND OMEGA FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(38,481) $(2,998) Net realized gain (loss) on security transactions (26,200) (1,247) Net realized gain on distributions 54,226 -- Net unrealized appreciation (depreciation) of investments during the year (1,145,568) (58,519) ------------- ---------- Net increase (decrease) in net assets resulting from operations (1,156,023) (62,764) ------------- ---------- UNIT TRANSACTIONS: Purchases 205,287 12,850 Net transfers 491,770 (12,361) Surrenders for benefit payments and fees (112,776) (31,004) Net annuity transactions -- -- ------------- ---------- Net increase (decrease) in net assets resulting from unit transactions 584,281 (30,515) ------------- ---------- Net increase (decrease) in net assets (571,742) (93,279) NET ASSETS: Beginning of year 2,297,560 254,676 ------------- ---------- End of year $1,725,818 $161,397 ============= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-102 -------------------------------------------------------------------------------
EVERGREEN VA EVERGREEN VA FIDELITY VIP FIDELITY VIP SPECIAL FUNDAMENTAL GROWTH CONTRAFUND(R) VALUES FUND LARGE CAP FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(102,922) $28,511 $50 $41,188 Net realized gain (loss) on security transactions (425,950) (12,428) (5,956) (16,792) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (5,695,557) (869,718) (105,103) (2,313,445) ------------- ------------ ----------- ------------- Net increase (decrease) in net assets resulting from operations (6,224,429) (853,635) (111,009) (2,289,049) ------------- ------------ ----------- ------------- UNIT TRANSACTIONS: Purchases 907,997 1,275,562 299,629 5,110,501 Net transfers 198,155 1,909,237 58,854 5,225,563 Surrenders for benefit payments and fees (901,010) (85,473) (7,353) (135,151) Net annuity transactions (321) -- -- -- ------------- ------------ ----------- ------------- Net increase (decrease) in net assets resulting from unit transactions 204,821 3,099,326 351,130 10,200,913 ------------- ------------ ----------- ------------- Net increase (decrease) in net assets (6,019,608) 2,245,691 240,121 7,911,864 NET ASSETS: Beginning of year 18,670,161 986,814 -- -- ------------- ------------ ----------- ------------- End of year $12,650,553 $3,232,505 $240,121 $7,911,864 ============= ============ =========== ============= FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(20,088) $947 $(325) Net realized gain (loss) on security transactions (1,687) (177) (836) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (1,380,284) (108,717) (39,503) ------------- ----------- ---------- Net increase (decrease) in net assets resulting from operations (1,402,059) (107,947) (40,664) ------------- ----------- ---------- UNIT TRANSACTIONS: Purchases 3,303,052 166,167 87,761 Net transfers 3,813,056 237,985 50,838 Surrenders for benefit payments and fees (60,521) (2,932) 385 Net annuity transactions -- -- -- ------------- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions 7,055,587 401,220 138,984 ------------- ----------- ---------- Net increase (decrease) in net assets 5,653,528 293,273 98,320 NET ASSETS: Beginning of year -- -- -- ------------- ----------- ---------- End of year $5,653,528 $293,273 $98,320 ============= =========== ==========
(a) From inception May 1, 2008 to December 31, 2008. SA-103 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN DIVIDENDS INCOME SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $381,851 $42,128,103 Net realized gain (loss) on security transactions (8,683,377) (30,022,555) Net realized gain on distributions 2,763,274 25,876,284 Net unrealized appreciation (depreciation) of investments during the year (106,894,996) (434,920,137) --------------- ---------------- Net increase (decrease) in net assets resulting from operations (112,433,248) (396,938,305) --------------- ---------------- UNIT TRANSACTIONS: Purchases 12,029,082 45,943,421 Net transfers (9,125,614) (34,950,526) Surrenders for benefit payments and fees (25,733,065) (98,374,707) Net annuity transactions 16,767 (41,420) --------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (22,812,830) (87,423,232) --------------- ---------------- Net increase (decrease) in net assets (135,246,078) (484,361,537) NET ASSETS: Beginning of year 402,951,148 1,320,870,762 --------------- ---------------- End of year $267,705,070 $836,509,225 =============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-104 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN FRANKLIN LARGE CAP GLOBAL SMALL-MID CAP SMALL CAP GROWTH REAL ESTATE GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(360,076) $(16,118) $(1,845,942) $(27,682) Net realized gain (loss) on security transactions (1,644,861) 65,818 (353,717) (170,738) Net realized gain on distributions 4,710,478 850,471 12,915,955 139,925 Net unrealized appreciation (depreciation) of investments during the year (31,775,489) (2,389,270) (64,746,002) (1,889,787) -------------- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations (29,069,948) (1,489,099) (54,029,706) (1,948,282) -------------- ------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 814,555 2,356 3,489,990 1,412,449 Net transfers (4,124,500) (508,348) 431,735 6,868,080 Surrenders for benefit payments and fees (5,777,475) (938,455) (9,598,682) (179,300) Net annuity transactions (1,333) (557) (12,510) -- -------------- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (9,088,753) (1,445,004) (5,689,467) 8,101,229 -------------- ------------- -------------- ------------- Net increase (decrease) in net assets (38,158,701) (2,934,103) (59,719,173) 6,152,947 NET ASSETS: Beginning of year 86,852,753 4,617,593 128,817,255 149,590 -------------- ------------- -------------- ------------- End of year $48,694,052 $1,683,490 $69,098,082 $6,302,537 ============== ============= ============== ============= FRANKLIN TEMPLETON STRATEGIC DEVELOPING INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $12,175,166 $8,211,293 $822,712 Net realized gain (loss) on security transactions (2,629,759) (10,901,699) (2,652,443) Net realized gain on distributions 565,895 27,918,788 13,592,382 Net unrealized appreciation (depreciation) of investments during the year (41,812,529) (325,992,069) (59,327,846) -------------- --------------- -------------- Net increase (decrease) in net assets resulting from operations (31,701,227) (300,763,687) (47,565,195) -------------- --------------- -------------- UNIT TRANSACTIONS: Purchases 11,483,020 21,672,973 3,298,894 Net transfers 24,706,834 (31,422,769) (8,509,711) Surrenders for benefit payments and fees (22,086,519) (59,399,080) (5,762,300) Net annuity transactions 29,103 19,147 (370) -------------- --------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 14,132,438 (69,129,729) (10,973,487) -------------- --------------- -------------- Net increase (decrease) in net assets (17,568,789) (369,893,416) (58,538,682) NET ASSETS: Beginning of year 225,723,908 824,291,652 96,615,099 -------------- --------------- -------------- End of year $208,155,119 $454,398,236 $38,076,417 ============== =============== ==============
SA-105 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON FOREIGN GLOBAL ASSET SECURITIES FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,335,782 $248,243 Net realized gain (loss) on security transactions (1,203,269) (258,872) Net realized gain on distributions 22,173,789 362,508 Net unrealized appreciation (depreciation) of investments during the year (139,432,881) (1,120,999) --------------- ------------- Net increase (decrease) in net assets resulting from operations (117,126,579) (769,120) --------------- ------------- UNIT TRANSACTIONS: Purchases 3,479,579 6,359 Net transfers (1,084,848) (436,455) Surrenders for benefit payments and fees (18,660,804) (606,921) Net annuity transactions (9,588) (768) --------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (16,275,661) (1,037,785) --------------- ------------- Net increase (decrease) in net assets (133,402,240) (1,806,905) NET ASSETS: Beginning of year 293,780,662 3,513,906 --------------- ------------- End of year $160,378,422 $1,707,001 =============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-106 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON FLEX CAP LARGE CAP GROWTH MUTUAL DISCOVERY GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $247,557 $763,949 $(342,057) $(137,044) Net realized gain (loss) on security transactions (18,682,270) (2,919,746) (520,500) (200,007) Net realized gain on distributions 32,985,688 6,874,696 -- -- Net unrealized appreciation (depreciation) of investments during the year (266,321,931) (61,515,118) (8,580,828) (3,012,685) --------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations (251,770,956) (56,796,219) (9,443,385) (3,349,736) --------------- -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 14,766,580 8,338,353 1,268,749 218,245 Net transfers (33,851,995) (6,886,208) 3,025,162 926,543 Surrenders for benefit payments and fees (41,855,372) (12,083,912) (1,543,664) (513,484) Net annuity transactions (24,067) (9,394) (1,447) -- --------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (60,964,854) (10,641,161) 2,748,800 631,304 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets (312,735,810) (67,437,380) (6,694,585) (2,718,432) NET ASSETS: Beginning of year 616,364,620 193,089,613 23,052,317 8,985,602 --------------- -------------- ------------- ------------- End of year $303,628,810 $125,652,233 $16,357,732 $6,267,170 =============== ============== ============= ============= HARTFORD TEMPLETON HARTFORD LARGECAP GLOBAL INCOME ADVISERS GROWTH SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (A) -------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(7,471) $138,064 $131 Net realized gain (loss) on security transactions 738 (1,629,393) (15) Net realized gain on distributions -- 151,151 302 Net unrealized appreciation (depreciation) of investments during the year 196,745 (7,876,804) (10,150) ------------ -------------- --------- Net increase (decrease) in net assets resulting from operations 190,012 (9,216,982) (9,732) ------------ -------------- --------- UNIT TRANSACTIONS: Purchases 1,947,777 645,680 1,197 Net transfers 3,424,393 (1,911,672) 40,813 Surrenders for benefit payments and fees (73,394) (4,495,124) (504) Net annuity transactions -- (1,220) -- ------------ -------------- --------- Net increase (decrease) in net assets resulting from unit transactions 5,298,776 (5,762,336) 41,506 ------------ -------------- --------- Net increase (decrease) in net assets 5,488,788 (14,979,318) 31,774 NET ASSETS: Beginning of year -- 31,379,395 -- ------------ -------------- --------- End of year $5,488,788 $16,400,077 $31,774 ============ ============== =========
(a) From inception May 1, 2008 to December 31, 2008. SA-107 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD TOTAL CAPITAL RETURN BOND APPRECIATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $4,730,809 $490,825 Net realized gain (loss) on security transactions (1,783,102) (2,022,222) Net realized gain on distributions -- 5,887,396 Net unrealized appreciation (depreciation) of investments during the year (11,316,092) (45,705,910) -------------- -------------- Net increase (decrease) in net assets resulting from operations (8,368,385) (41,349,911) -------------- -------------- UNIT TRANSACTIONS: Purchases 19,613,645 23,475,694 Net transfers 17,438,830 24,293,730 Surrenders for benefit payments and fees (18,265,616) (12,347,824) Net annuity transactions -- (629) -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 18,786,859 35,420,971 -------------- -------------- Net increase (decrease) in net assets 10,418,474 (5,928,940) NET ASSETS: Beginning of year 81,507,118 75,384,246 -------------- -------------- End of year $91,925,592 $69,455,306 ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-108 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD DIVIDEND FUNDAMENTAL GLOBAL HARTFORD AND GROWTH GROWTH ADVISERS GLOBAL EQUITY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)(C)(D)(E) ---------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $480,009 $(424) $4,886 $(1,268) Net realized gain (loss) on security transactions (440,531) (14,547) (16,736) (262,929) Net realized gain on distributions 938,653 7,819 3,848 4,147 Net unrealized appreciation (depreciation) of investments during the year (21,364,443) (17,162) (73,707) 65,719 -------------- ---------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (20,386,312) (24,314) (81,709) (194,331) -------------- ---------- ----------- ----------- UNIT TRANSACTIONS: Purchases 14,118,787 96,324 2,000 -- Net transfers 13,950,705 17,376 (39,719) 58,567 Surrenders for benefit payments and fees (9,415,033) (5,034) (40,007) (77,283) Net annuity transactions -- -- -- -- -------------- ---------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 18,654,459 108,666 (77,726) (18,716) -------------- ---------- ----------- ----------- Net increase (decrease) in net assets (1,731,853) 84,352 (159,435) (213,047) NET ASSETS: Beginning of year 55,551,761 8,602 286,149 468,795 -------------- ---------- ----------- ----------- End of year $53,819,908 $92,954 $126,714 $255,748 ============== ========== =========== =========== HARTFORD HARTFORD HARTFORD DISCIPLINED GLOBAL HEALTH GLOBAL GROWTH EQUITY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(6,342) $(14,204) $28,386 Net realized gain (loss) on security transactions (8,946) (86,558) 5,581 Net realized gain on distributions 22,268 56,217 115,661 Net unrealized appreciation (depreciation) of investments during the year (159,344) (932,568) (1,190,649) ----------- ------------- ------------- Net increase (decrease) in net assets resulting from operations (152,364) (977,113) (1,041,021) ----------- ------------- ------------- UNIT TRANSACTIONS: Purchases -- 100,828 2,404,863 Net transfers (85,510) (97,927) 1,882,248 Surrenders for benefit payments and fees (158,283) (279,686) (195,609) Net annuity transactions -- -- -- ----------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (243,793) (276,785) 4,091,502 ----------- ------------- ------------- Net increase (decrease) in net assets (396,157) (1,253,898) 3,050,481 NET ASSETS: Beginning of year 719,870 2,037,101 839,952 ----------- ------------- ------------- End of year $323,713 $783,203 $3,890,433 =========== ============= =============
(a) From inception May 1, 2008 to December 31, 2008. (c) Effective August 22, 2008, Hartford Global Communications HLS Fund merged with Hartford Global Equity HLS Fund. (d) Effective August 22, 2008, Hartford Global Financial Services HLS Fund merged with Hartford Global Equity HLS Fund. (e) Effective August 22, 2008, Hartford Global Technology HLS Fund merged with Hartford Global Equity HLS Fund. SA-109 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH GROWTH OPPORTUNITIES HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(849) $1,563 Net realized gain (loss) on security transactions (1,551) (38,495) Net realized gain on distributions 2,669 57,206 Net unrealized appreciation (depreciation) of investments during the year (68,838) (2,642,588) -------- ----------- Net increase (decrease) in net assets resulting from operations (68,569) (2,622,314) -------- ----------- UNIT TRANSACTIONS: Purchases 90,465 5,666,154 Net transfers 250,698 5,574,617 Surrenders for benefit payments and fees (31,496) (126,950) Net annuity transactions -- -- -------- ----------- Net increase (decrease) in net assets resulting from unit transactions 309,667 11,113,821 -------- ----------- Net increase (decrease) in net assets 241,098 8,491,507 NET ASSETS: Beginning of year 81,031 219,476 -------- ----------- End of year $322,129 $8,710,983 ======== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-110 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL HIGH YIELD INDEX GROWTH SMALL COMPANY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $96,815 $791 $(585) $(615) Net realized gain (loss) on security transactions (11,448) (126,825) (35,175) (14,507) Net realized gain on distributions -- 13,584 18,013 2,807 Net unrealized appreciation (depreciation) of investments during the year (293,150) (153,366) (240,533) (45,598) --------- --------- --------- --------- Net increase (decrease) in net assets resulting from operations (207,783) (265,816) (258,280) (57,913) --------- --------- --------- --------- UNIT TRANSACTIONS: Purchases 374,640 1,800 262,881 -- Net transfers 421,774 (107,156) (88,733) (75,154) Surrenders for benefit payments and fees (131,240) (215,463) (82,509) (16,633) Net annuity transactions -- -- -- -- --------- --------- --------- --------- Net increase (decrease) in net assets resulting from unit transactions 665,174 (320,819) 91,639 (91,787) --------- --------- --------- --------- Net increase (decrease) in net assets 457,391 (586,635) (166,641) (149,700) NET ASSETS: Beginning of year 418,896 944,583 407,542 215,034 --------- --------- --------- --------- End of year $876,287 $357,948 $240,901 $65,334 ========= ========= ========= ========= HARTFORD HARTFORD INTERNATIONAL MIDCAP HARTFORD OPPORTUNITIES GROWTH MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- --------------------------------------------------------- OPERATIONS: Net investment income (loss) $21,604 $(545) $(30,507) Net realized gain (loss) on security transactions (171,137) (6,631) (91,964) Net realized gain on distributions 354,533 1,527 124,958 Net unrealized appreciation (depreciation) of investments during the year (4,900,773) (256,961) (1,080,272) ----------- --------- ---------- Net increase (decrease) in net assets resulting from operations (4,695,773) (262,610) (1,077,785) ----------- --------- ---------- UNIT TRANSACTIONS: Purchases 1,647,861 388,253 4,875 Net transfers 129,294 617,627 (82,235) Surrenders for benefit payments and fees (1,393,798) (11,322) (788,399) Net annuity transactions (508) -- -- ----------- --------- ---------- Net increase (decrease) in net assets resulting from unit transactions 382,849 994,558 (865,759) ----------- --------- ---------- Net increase (decrease) in net assets (4,312,924) 731,948 (1,943,544) NET ASSETS: Beginning of year 10,712,256 -- 3,610,718 ----------- --------- ---------- End of year $6,399,332 $731,948 $1,667,174 =========== ========= ==========
(a) From inception May 1, 2008 to December 31, 2008. SA-111 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,794) $420,811 Net realized gain (loss) on security transactions (3,079) -- Net realized gain on distributions 57,142 -- Net unrealized appreciation (depreciation) of investments during the year (184,647) -- ----------- --------------- Net increase (decrease) in net assets resulting from operations (133,378) 420,811 ----------- --------------- UNIT TRANSACTIONS: Purchases -- 19,431,271 Net transfers (64,680) 423,137,848 Surrenders for benefit payments and fees (28,742) (154,492,375) Net annuity transactions -- (18,637) ----------- --------------- Net increase (decrease) in net assets resulting from unit transactions (93,422) 288,058,107 ----------- --------------- Net increase (decrease) in net assets (226,800) 288,478,918 NET ASSETS: Beginning of year 389,766 271,466,457 ----------- --------------- End of year $162,966 $559,945,375 =========== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-112 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD SMALLCAP VALUE SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,598 $(119,647) $(1,692) $(48,690) Net realized gain (loss) on security transactions (1,576) (27,299) (97,300) (752,726) Net realized gain on distributions 86 21,693 737 113,250 Net unrealized appreciation (depreciation) of investments during the year (13,476) (3,068,937) (82,941) (9,358,575) ---------- ------------- ----------- -------------- Net increase (decrease) in net assets resulting from operations (13,368) (3,194,190) (181,196) (10,046,741) ---------- ------------- ----------- -------------- UNIT TRANSACTIONS: Purchases -- 803,430 178,202 211,988 Net transfers 147,277 (83,194) 215,682 (571,143) Surrenders for benefit payments and fees 30,939 (1,720,271) (47,643) (4,067,909) Net annuity transactions -- -- -- -- ---------- ------------- ----------- -------------- Net increase (decrease) in net assets resulting from unit transactions 178,216 (1,000,035) 346,241 (4,427,064) ---------- ------------- ----------- -------------- Net increase (decrease) in net assets 164,848 (4,194,225) 165,045 (14,473,805) NET ASSETS: Beginning of year -- 8,578,219 151,586 26,134,602 ---------- ------------- ----------- -------------- End of year $164,848 $4,383,994 $316,631 $11,660,797 ========== ============= =========== ============== HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD VALUE SECURITIES VALUE OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (F) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $136,208 $2,973 $1,168 Net realized gain (loss) on security transactions (74,893) (524) (54,294) Net realized gain on distributions -- 4,320 502 Net unrealized appreciation (depreciation) of investments during the year (118,974) (76,875) (16,482) ------------ ---------- ----------- Net increase (decrease) in net assets resulting from operations (57,659) (70,106) (69,106) ------------ ---------- ----------- UNIT TRANSACTIONS: Purchases 1,904,862 131,689 93,402 Net transfers 939,660 14,952 (79,742) Surrenders for benefit payments and fees (185,243) (18,041) (84,112) Net annuity transactions -- -- -- ------------ ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 2,659,279 128,600 (70,452) ------------ ---------- ----------- Net increase (decrease) in net assets 2,601,620 58,494 (139,558) NET ASSETS: Beginning of year 1,205,886 164,744 245,203 ------------ ---------- ----------- End of year $3,807,506 $223,238 $105,645 ============ ========== ===========
(a) From inception May 1, 2008 to December 31, 2008. (f) Effective September 26, 2008, Hartford Mortgage Securities HLS Fund merged with Hartford U.S. Government Securities HLS Fund. SA-113 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HARTFORD EQUITY AMERICAN FUNDS INCOME ASSET ALLOCATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (A) ---------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $6,177 $(24,628) Net realized gain (loss) on security transactions (2,347) (3,883) Net realized gain on distributions 4,598 -- Net unrealized appreciation (depreciation) of investments during the year (44,701) (791,868) ---------- ------------ Net increase (decrease) in net assets resulting from operations (36,273) (820,379) ---------- ------------ UNIT TRANSACTIONS: Purchases 81,519 2,783,744 Net transfers 131,289 2,827,804 Surrenders for benefit payments and fees (9,708) (34,365) Net annuity transactions -- -- ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions 203,100 5,577,183 ---------- ------------ Net increase (decrease) in net assets 166,827 4,756,804 NET ASSETS: Beginning of year 57,356 -- ---------- ------------ End of year $224,183 $4,756,804 ========== ============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-114 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP AMERICAN FUNDS INCOME AND AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH GROWTH BOND GLOBAL BOND AND INCOME HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(14,732) $(56,814) $(15,262) $(39,466) Net realized gain (loss) on security transactions (6,266) (5,658) (86,985) (8,742) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (506,640) (488,607) 55,780 (1,880,955) ------------ ------------- ------------ ------------- Net increase (decrease) in net assets resulting from operations (527,638) (551,079) (46,467) (1,929,163) ------------ ------------- ------------ ------------- UNIT TRANSACTIONS: Purchases 1,554,095 6,280,733 3,043,173 4,270,913 Net transfers 1,458,335 7,384,680 (208,398) 4,596,471 Surrenders for benefit payments and fees (44,396) (211,597) (66,620) (46,989) Net annuity transactions -- -- -- -- ------------ ------------- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 2,968,034 13,453,816 2,768,155 8,820,395 ------------ ------------- ------------ ------------- Net increase (decrease) in net assets 2,440,396 12,902,737 2,721,688 6,891,232 NET ASSETS: Beginning of year -- -- -- -- ------------ ------------- ------------ ------------- End of year $2,440,396 $12,902,737 $2,721,688 $6,891,232 ============ ============= ============ ============= AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS GLOBAL GROWTH CAPITALIZATION GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(10,633) $(14,226) $136,038 Net realized gain (loss) on security transactions (29,251) (4,492) (39,194) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (443,589) (976,554) (5,786,786) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations (483,473) (995,272) (5,689,942) ------------ ------------ ------------- UNIT TRANSACTIONS: Purchases 1,664,106 1,604,839 11,873,760 Net transfers 521,703 2,060,626 13,261,962 Surrenders for benefit payments and fees (29,113) (47,390) (232,306) Net annuity transactions -- -- -- ------------ ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 2,156,696 3,618,075 24,903,416 ------------ ------------ ------------- Net increase (decrease) in net assets 1,673,223 2,622,803 19,213,474 NET ASSETS: Beginning of year -- -- -- ------------ ------------ ------------- End of year $1,673,223 $2,622,803 $19,213,474 ============ ============ =============
(a) From inception May 1, 2008 to December 31, 2008. SA-115 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GROWTH-INCOME INTERNATIONAL HLS FUND HLS FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $140,931 $(58,304) Net realized gain (loss) on security transactions (17,666) (24,555) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (3,340,099) (2,820,854) ------------- ------------- Net increase (decrease) in net assets resulting from operations (3,216,834) (2,903,713) ------------- ------------- UNIT TRANSACTIONS: Purchases 8,495,442 7,083,560 Net transfers 7,845,327 7,698,762 Surrenders for benefit payments and fees (145,752) (126,289) Net annuity transactions -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 16,195,017 14,656,033 ------------- ------------- Net increase (decrease) in net assets 12,978,183 11,752,320 NET ASSETS: Beginning of year -- -- ------------- ------------- End of year $12,978,183 $11,752,320 ============= =============
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-116 -------------------------------------------------------------------------------
AMERICAN FUNDS HUNTINGTON VA HUNTINGTON VA NEW WORLD INCOME DIVIDEND HUNTINGTON VA HLS FUND EQUITY FUND CAPTURE FUND GROWTH FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(19,656) $105,580 $695,977 $(10,478) Net realized gain (loss) on security transactions (11,255) (22,838) (163,905) (24,385) Net realized gain on distributions -- 153,446 410,671 194,169 Net unrealized appreciation (depreciation) of investments during the year (986,390) (1,300,867) (3,472,564) (1,182,380) ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (1,017,301) (1,064,679) (2,529,821) (1,023,074) ----------- ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 2,301,491 420,216 570,642 495,572 Net transfers 2,147,763 386,136 319,869 572,263 Surrenders for benefit payments and fees (22,299) (232,347) (731,438) (213,055) Net annuity transactions -- -- -- -- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 4,426,955 574,005 159,073 854,780 ----------- ----------- ----------- ----------- Net increase (decrease) in net assets 3,409,654 (490,674) (2,370,748) (168,294) NET ASSETS: Beginning of year -- 2,439,014 8,390,470 2,086,896 ----------- ----------- ----------- ----------- End of year $3,409,654 $1,948,340 $6,019,722 $1,918,602 =========== =========== =========== =========== HUNTINGTON VA HUNTINGTON VA HUNTINGTON VA MID CORP NEW ROTATING AMERICA FUND ECONOMY FUND MARKETS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(26,601) $(39,122) $13,127 Net realized gain (loss) on security transactions (50,322) (61,379) (75,278) Net realized gain on distributions 217,976 570,542 148,682 Net unrealized appreciation (depreciation) of investments during the year (2,302,466) (3,437,102) (1,016,882) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (2,161,413) (2,967,061) (930,351) ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 449,025 644,372 80,796 Net transfers 62,300 422,069 (11,772) Surrenders for benefit payments and fees (373,702) (392,860) (166,882) Net annuity transactions -- -- -- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 137,623 673,581 (97,858) ----------- ----------- ----------- Net increase (decrease) in net assets (2,023,790) (2,293,480) (1,028,209) NET ASSETS: Beginning of year 5,314,843 5,108,552 2,178,065 ----------- ----------- ----------- End of year $3,291,053 $2,815,072 $1,149,856 =========== =========== ===========
(a) From inception May 1, 2008 to December 31, 2008. SA-117 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
HUNTINGTON VA INTERNATIONAL HUNTINGTON VA EQUITY FUND MACRO 100 FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $61,461 $3,088 Net realized gain (loss) on security transactions (95,842) (34,923) Net realized gain on distributions 100,461 -- Net unrealized appreciation (depreciation) of investments during the year (2,335,079) (464,366) ------------- ------------ Net increase (decrease) in net assets resulting from operations (2,268,999) (496,201) ------------- ------------ UNIT TRANSACTIONS: Purchases 1,025,157 140,987 Net transfers 946,401 105,884 Surrenders for benefit payments and fees (296,046) (158,373) Net annuity transactions -- -- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions 1,675,512 88,498 ------------- ------------ Net increase (decrease) in net assets (593,487) (407,703) NET ASSETS: Beginning of year 4,199,239 1,351,444 ------------- ------------ End of year $3,605,752 $943,741 ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-118 -------------------------------------------------------------------------------
HUNTINGTON VA LORD ABBETT LORD ABBETT MORTGAGE HUNTINGTON VA AMERICA'S VALUE BOND-DEBENTURE SECURITIES FUND SITUS FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (G) SUB-ACCOUNT (A) SUB-ACCOUNT (A) --------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $154,588 $(76,231) $28,761 $396,599 Net realized gain (loss) on security transactions (6,313) (88,307) (334) (1,526) Net realized gain on distributions 3,489 89,568 19,077 16,143 Net unrealized appreciation (depreciation) of investments during the year (144,466) (2,598,615) (123,731) (1,014,844) ------------ ------------- ----------- ------------- Net increase (decrease) in net assets resulting from operations 7,298 (2,673,585) (76,227) (603,628) ------------ ------------- ----------- ------------- UNIT TRANSACTIONS: Purchases 640,210 667,859 344,184 2,885,096 Net transfers 246,299 528,406 413,333 3,611,454 Surrenders for benefit payments and fees (188,721) (338,128) (4,362) (68,060) Net annuity transactions -- -- -- -- ------------ ------------- ----------- ------------- Net increase (decrease) in net assets resulting from unit transactions 697,788 858,137 753,155 6,428,490 ------------ ------------- ----------- ------------- Net increase (decrease) in net assets 705,086 (1,815,448) 676,928 5,824,862 NET ASSETS: Beginning of year 1,788,934 5,743,517 -- -- ------------ ------------- ----------- ------------- End of year $2,494,020 $3,928,069 $676,928 $5,824,862 ============ ============= =========== ============= LORD ABBETT GROWTH AND INCOME MFS(R) CORE MFS(R) GROWTH PORTFOLIO EQUITY SERIES SERIES SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT (H) -------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $25,722 $(86,441) $(276,975) Net realized gain (loss) on security transactions (858) (357,253) (1,751,884) Net realized gain on distributions 8,070 -- -- Net unrealized appreciation (depreciation) of investments during the year (334,850) (4,053,465) (6,272,999) ------------ ------------- -------------- Net increase (decrease) in net assets resulting from operations (301,916) (4,497,159) (8,301,858) ------------ ------------- -------------- UNIT TRANSACTIONS: Purchases 829,500 45,841 538,635 Net transfers 1,264,950 (395,164) (367,545) Surrenders for benefit payments and fees (31,052) (1,364,142) (2,533,046) Net annuity transactions -- -- -- ------------ ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 2,063,398 (1,713,465) (2,361,956) ------------ ------------- -------------- Net increase (decrease) in net assets 1,761,482 (6,210,624) (10,663,814) NET ASSETS: Beginning of year -- 12,508,296 22,836,050 ------------ ------------- -------------- End of year $1,761,482 $6,297,672 $12,172,236 ============ ============= ==============
(a) From inception May 1, 2008 to December 31, 2008. (g) Formerly Huntington VA Situs Small Cap Fund. Change effective January 24, 2008. (h) Formerly MFS Emerging Growth Series. Change effective May 1, 2008. SA-119 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) GLOBAL MFS(R) HIGH EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(80,960) $5,397,499 Net realized gain (loss) on security transactions (42,308) (1,600,570) Net realized gain on distributions 766,548 -- Net unrealized appreciation (depreciation) of investments during the year (4,840,919) (25,851,675) ------------ ------------- Net increase (decrease) in net assets resulting from operations (4,197,639) (22,054,746) ------------ ------------- UNIT TRANSACTIONS: Purchases 234,053 695,580 Net transfers 1,793,539 (603,468) Surrenders for benefit payments and fees (838,617) (8,071,641) Net annuity transactions 11,159 7,861 ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 1,200,134 (7,971,668) ------------ ------------- Net increase (decrease) in net assets (2,997,505) (30,026,414) NET ASSETS: Beginning of year 10,709,258 80,879,614 ------------ ------------- End of year $7,711,753 $50,853,200 ============ =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-120 -------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH MFS(R) INVESTORS MFS(R) MID CAP MFS(R) NEW STOCK SERIES TRUST SERIES GROWTH SERIES DISCOVERY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(219,206) $(1,494,467) $(570,781) $(1,553,631) Net realized gain (loss) on security transactions (263,872) (2,108,359) (469,291) (1,175,122) Net realized gain on distributions 917,256 10,905,104 4,274,597 18,002,458 Net unrealized appreciation (depreciation) of investments during the year (8,791,972) (70,598,251) (23,308,949) (56,795,043) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations (8,357,794) (63,295,973) (20,074,424) (41,521,338) ------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 209,113 4,993,009 514,536 951,046 Net transfers (1,255,890) 8,143,119 108,551 1,721,072 Surrenders for benefit payments and fees (2,131,379) (13,962,592) (2,969,079) (7,488,350) Net annuity transactions (225) 107 -- 10,274 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (3,178,381) (826,357) (2,345,992) (4,805,958) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets (11,536,175) (64,122,330) (22,420,416) (46,327,296) NET ASSETS: Beginning of year 24,201,264 180,576,437 40,102,087 105,047,554 ------------- ------------- ------------- ------------- End of year $12,665,089 $116,454,107 $17,681,671 $58,720,258 ============= ============= ============= ============= MFS(R) TOTAL MFS(R) VALUE MFS(R) RESEARCH RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- OPERATIONS: Net investment income (loss) $6,682,859 $(421,262) $384,886 Net realized gain (loss) on security transactions (6,852,738) (1,042,281) (87,256) Net realized gain on distributions 29,793,043 3,100,458 -- Net unrealized appreciation (depreciation) of investments during the year (154,337,021) (32,559,787) (2,046,667) -------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations (124,713,857) (30,922,872) (1,749,037) -------------- ------------- ------------ UNIT TRANSACTIONS: Purchases 14,625,160 9,416,672 2,852,945 Net transfers (11,472,904) 17,141,857 15,894,335 Surrenders for benefit payments and fees (42,392,240) (5,966,519) (3,470,536) Net annuity transactions 104,993 1,746 400 -------------- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (39,134,991) 20,593,756 15,277,144 -------------- ------------- ------------ Net increase (decrease) in net assets (163,848,848) (10,329,116) 13,528,107 NET ASSETS: Beginning of year 544,779,481 76,803,523 28,724,315 -------------- ------------- ------------ End of year $380,930,633 $66,474,407 $42,252,422 ============== ============= ============
SA-121 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MFS(R) RESEARCH MFS(R) RESEARCH INTERNATIONAL SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(251,601) $(40,963) Net realized gain (loss) on security transactions (370,228) (195,693) Net realized gain on distributions 925,516 -- Net unrealized appreciation (depreciation) of investments during the year (14,028,132) (1,154,825) -------------- ------------- Net increase (decrease) in net assets resulting from operations (13,724,445) (1,391,481) -------------- ------------- UNIT TRANSACTIONS: Purchases 2,984,724 56,671 Net transfers 13,292,667 36,015 Surrenders for benefit payments and fees (1,759,378) (227,665) Net annuity transactions 11,020 -- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 14,529,033 (134,979) -------------- ------------- Net increase (decrease) in net assets 804,588 (1,526,460) NET ASSETS: Beginning of year 20,257,100 3,750,884 -------------- ------------- End of year $21,061,688 $2,224,424 ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-122 -------------------------------------------------------------------------------
VAN KAMPEN -- VAN KAMPEN -- BLACKROCK BLACKROCK UIF INTERNATIONAL UIF MID CAP GLOBAL LARGE CAP GROWTH EQUITY GROWTH GROWTH V.I. FUND GROWTH V.I. FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (P) SUB-ACCOUNT (A) ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(4,083) $(10,293) $(713) $(2,667) Net realized gain (loss) on security transactions 91,289 68,409 382 (1,432) Net realized gain on distributions -- -- 87 59,051 Net unrealized appreciation (depreciation) of investments during the year (188,451) (404,026) (22,613) (328,318) ----------- ----------- --------- ------------ Net increase (decrease) in net assets resulting from operations (101,245) (345,910) (22,857) (273,366) ----------- ----------- --------- ------------ UNIT TRANSACTIONS: Purchases -- -- -- 603,383 Net transfers (4,636) 26,443 2,000 480,216 Surrenders for benefit payments and fees (188,563) (69,742) (19,594) (15,982) Net annuity transactions -- -- -- -- ----------- ----------- --------- ------------ Net increase (decrease) in net assets resulting from unit transactions (193,199) (43,299) (17,594) 1,067,617 ----------- ----------- --------- ------------ Net increase (decrease) in net assets (294,444) (389,209) (40,451) 794,251 NET ASSETS: Beginning of year 326,404 864,958 63,279 -- ----------- ----------- --------- ------------ End of year $31,960 $475,749 $22,828 $794,251 =========== =========== ========= ============ VAN KAMPEN -- MORGAN STANLEY -- UIF U.S. MORGAN STANLEY -- CAPITAL MID CAP VALUE FOCUS GROWTH OPPORTUNITIES PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (Q) SUB-ACCOUNT (I) SUB-ACCOUNT (R) ----------------------------- ------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(1,323) $(110) $(3,770) Net realized gain (loss) on security transactions (12,827) (17) (3,961) Net realized gain on distributions 51,068 -- -- Net unrealized appreciation (depreciation) of investments during the year (159,652) (2,723) (116,155) ----------- -------- ----------- Net increase (decrease) in net assets resulting from operations (122,734) (2,850) (123,886) ----------- -------- ----------- UNIT TRANSACTIONS: Purchases 284,179 6,000 22,909 Net transfers 193,532 -- 48,164 Surrenders for benefit payments and fees (18,651) (1) (9,244) Net annuity transactions -- -- -- ----------- -------- ----------- Net increase (decrease) in net assets resulting from unit transactions 459,060 5,999 61,829 ----------- -------- ----------- Net increase (decrease) in net assets 336,326 3,149 (62,057) NET ASSETS: Beginning of year 41,501 -- 193,192 ----------- -------- ----------- End of year $377,827 $3,149 $131,135 =========== ======== ===========
(a) From inception May 1, 2008 to December 31, 2008. (i) Funded as of February 13, 2008. (p) Formerly reported as International Growth Equity Fund. (q) Formerly reported as U.S. Mid Cap Value. (r) Formerly reported as Capital Opportunities. SA-123 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
MORGAN STANLEY -- MID CAP MORGAN STANLEY -- GROWTH FLEXIBLE INCOME PORTFOLIO PORTFOLIO SUB-ACCOUNT (J) SUB-ACCOUNT (S) ---------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(160) $642 Net realized gain (loss) on security transactions (47) (8,800) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (8,577) (10,443) --------- --------- Net increase (decrease) in net assets resulting from operations (8,784) (18,601) --------- --------- UNIT TRANSACTIONS: Purchases 6,500 -- Net transfers -- 9,937 Surrenders for benefit payments and fees (45) (50,693) Net annuity transactions -- -- --------- --------- Net increase (decrease) in net assets resulting from unit transactions 6,455 (40,756) --------- --------- Net increase (decrease) in net assets (2,329) (59,357) NET ASSETS: Beginning of year 12,027 94,600 --------- --------- End of year $9,698 $35,243 ========= =========
(j) Formerly Developing Growth. Change effective May 1, 2008. (s) Formerly reported as Flexible Income. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-124 -------------------------------------------------------------------------------
MORGAN STANLEY -- DIVIDEND MORGAN STANLEY -- GROWTH GLOBAL EQUITY MTB LARGE CAP MTB LARGE CAP PORTFOLIO PORTFOLIO GROWTH FUND II VALUE FUND II SUB-ACCOUNT (T) SUB-ACCOUNT (U) SUB-ACCOUNT (A) SUB-ACCOUNT (A) --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(87) $(155) $126 $488 Net realized gain (loss) on security transactions (24) (35) (318) (320) Net realized gain on distributions -- 880 -- -- Net unrealized appreciation (depreciation) of investments during the year (2,824) (7,735) (49,032) (48,744) -------- -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (2,935) (7,045) (49,224) (48,576) -------- -------- ---------- ---------- UNIT TRANSACTIONS: Purchases -- 6,000 121,915 126,191 Net transfers -- 2,000 98,420 122,782 Surrenders for benefit payments and fees (30) (32) (3,844) (3,853) Net annuity transactions -- -- -- -- -------- -------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (30) 7,968 216,491 245,120 -------- -------- ---------- ---------- Net increase (decrease) in net assets (2,965) 923 167,267 196,544 NET ASSETS: Beginning of year 7,783 8,341 -- -- -------- -------- ---------- ---------- End of year $4,818 $9,264 $167,267 $196,544 ======== ======== ========== ========== COLUMBIA MARSICO INTERNATIONAL COLUMBIA MTB MODERATE OPPORTUNITIES HIGH YIELD GROWTH FUND II VS FUND VS FUND SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $154 $(222,483) $1,539,326 Net realized gain (loss) on security transactions (1) 1,861,286 (62,964) Net realized gain on distributions 722 4,792,022 -- Net unrealized appreciation (depreciation) of investments during the year (3,015) (22,405,409) (6,431,112) --------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (2,140) (15,974,584) (4,954,750) --------- -------------- -------------- UNIT TRANSACTIONS: Purchases 6,414 50,308 49,870 Net transfers 6,976 (1,612,832) (1,952,041) Surrenders for benefit payments and fees -- (5,952,763) (4,614,076) Net annuity transactions -- -- -- --------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 13,390 (7,515,287) (6,516,247) --------- -------------- -------------- Net increase (decrease) in net assets 11,250 (23,489,871) (11,470,997) NET ASSETS: Beginning of year -- 38,038,970 23,788,473 --------- -------------- -------------- End of year $11,250 $14,549,099 $12,317,476 ========= ============== ==============
(a) From inception May 1, 2008 to December 31, 2008. (t) Formerly reported as Dividend Growth. (u) Formerly reported as Global Equity. SA-125 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
COLUMBIA MARSICO COLUMBIA MARSICO FOCUSED EQUITIES GROWTH VS FUND VS FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(376,209) $(310,396) Net realized gain (loss) on security transactions 898,947 1,219,078 Net realized gain on distributions 3,206,812 -- Net unrealized appreciation (depreciation) of investments during the year (13,887,907) (9,582,385) -------------- -------------- Net increase (decrease) in net assets resulting from operations (10,158,357) (8,673,703) -------------- -------------- UNIT TRANSACTIONS: Purchases 40,997 55,934 Net transfers (1,874,271) (1,427,643) Surrenders for benefit payments and fees (4,926,196) (4,050,473) Net annuity transactions -- -- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (6,759,470) (5,422,182) -------------- -------------- Net increase (decrease) in net assets (16,917,827) (14,095,885) NET ASSETS: Beginning of year 28,305,340 24,925,599 -------------- -------------- End of year $11,387,513 $10,829,714 ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-126 -------------------------------------------------------------------------------
OPPENHEIMER COLUMBIA MARSICO COLUMBIA MARSICO CAPITAL OPPENHEIMER 21ST CENTURY MIDCAP GROWTH APPRECIATION GLOBAL SECURITIES VS FUND VS FUND FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT (A) --------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(133,013) $(473,627) $(1,021) $(17,682) Net realized gain (loss) on security transactions 69,909 55,458 (102) 3 Net realized gain on distributions 125,971 3,116,967 -- -- Net unrealized appreciation (depreciation) of investments during the year (3,733,077) (14,737,116) (64,167) (741,647) ------------- -------------- ---------- ------------ Net increase (decrease) in net assets resulting from operations (3,670,210) (12,038,318) (65,290) (759,326) ------------- -------------- ---------- ------------ UNIT TRANSACTIONS: Purchases 2,246 46,802 154,979 1,638,183 Net transfers (587,682) (1,604,126) 32,305 2,805,125 Surrenders for benefit payments and fees (1,190,857) (5,049,205) (843) (58,982) Net annuity transactions -- -- -- -- ------------- -------------- ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions (1,776,293) (6,606,529) 186,441 4,384,326 ------------- -------------- ---------- ------------ Net increase (decrease) in net assets (5,446,503) (18,644,847) 121,151 3,625,000 NET ASSETS: Beginning of year 9,239,952 32,243,994 -- -- ------------- -------------- ---------- ------------ End of year $3,793,449 $13,599,147 $121,151 $3,625,000 ============= ============== ========== ============ OPPENHEIMER OPPENHEIMER MAIN STREET OPPENHEIMER MAIN STREET SMALL CAP VALUE FUND(R)/VA FUND(R)/VA FUND/VA SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) -------------------------- ----------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,143) $(12,172) $(432) Net realized gain (loss) on security transactions (118) (2,149) (44) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (92,287) (588,762) (18,939) ---------- ------------ --------- Net increase (decrease) in net assets resulting from operations (94,548) (603,083) (19,415) ---------- ------------ --------- UNIT TRANSACTIONS: Purchases 256,025 1,330,813 39,491 Net transfers 252,941 1,727,201 39,630 Surrenders for benefit payments and fees (10,868) (32,572) (124) Net annuity transactions -- -- -- ---------- ------------ --------- Net increase (decrease) in net assets resulting from unit transactions 498,098 3,025,442 78,997 ---------- ------------ --------- Net increase (decrease) in net assets 403,550 2,422,359 59,582 NET ASSETS: Beginning of year -- -- -- ---------- ------------ --------- End of year $403,550 $2,422,359 $59,582 ========== ============ =========
(a) From inception May 1, 2008 to December 31, 2008. SA-127 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET INCOME FUND ALLOCATION FUND SUB-ACCOUNT (A) SUB-ACCOUNT (A) ----------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(33,426) $(841) Net realized gain (loss) on security transactions (3,118) (561) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (1,493,415) (33,247) ------------- ---------- Net increase (decrease) in net assets resulting from operations (1,529,959) (34,649) ------------- ---------- UNIT TRANSACTIONS: Purchases 4,184,394 113,411 Net transfers 4,015,639 25,093 Surrenders for benefit payments and fees (99,894) (1,266) Net annuity transactions -- -- ------------- ---------- Net increase (decrease) in net assets resulting from unit transactions 8,100,139 137,238 ------------- ---------- Net increase (decrease) in net assets 6,570,180 102,589 NET ASSETS: Beginning of year -- -- ------------- ---------- End of year $6,570,180 $102,589 ============= ==========
(a) From inception May 1, 2008 to December 31, 2008. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-128 -------------------------------------------------------------------------------
PUTNAM VT JPMORGAN INTERNATIONAL PUTNAM VT PUTNAM VT INSURANCE TRUST GROWTH AND INTERNATIONAL SMALL CAP BALANCED INCOME FUND EQUITY FUND VALUE FUND PORTFOLIO - 1 SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(274) $(361) $(466) $26,443 Net realized gain (loss) on security transactions (174) (16) (207) (42,118) Net realized gain on distributions -- -- -- 209,091 Net unrealized appreciation (depreciation) of investments during the year (16,345) (18,454) (26,877) (638,028) --------- --------- ---------- ------------ Net increase (decrease) in net assets resulting from operations (16,793) (18,831) (27,550) (444,612) --------- --------- ---------- ------------ UNIT TRANSACTIONS: Purchases 43,059 64,961 84,734 70,010 Net transfers 15,129 26,498 20,249 76,117 Surrenders for benefit payments and fees (666) (82) (1,811) (149,180) Net annuity transactions -- -- -- -- --------- --------- ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions 57,522 91,377 103,172 (3,053) --------- --------- ---------- ------------ Net increase (decrease) in net assets 40,729 72,546 75,622 (447,665) NET ASSETS: Beginning of year -- -- -- 1,746,889 --------- --------- ---------- ------------ End of year $40,729 $72,546 $75,622 $1,299,224 ========= ========= ========== ============ JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST CORE BOND DIVERSIFIED EQUITY INTREPID MID CAP PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,279,343 $(48,645) $(102,166) Net realized gain (loss) on security transactions (42,988) (130,266) (85,663) Net realized gain on distributions -- 996,699 829,108 Net unrealized appreciation (depreciation) of investments during the year (2,452,024) (5,145,009) (5,325,097) ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations (215,669) (4,327,221) (4,683,818) ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 3,089,157 100,762 438,641 Net transfers 1,058,275 648,712 1,921,435 Surrenders for benefit payments and fees (4,125,343) (683,969) (714,834) Net annuity transactions -- -- -- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 22,089 65,505 1,645,242 ------------- ------------- ------------- Net increase (decrease) in net assets (193,580) (4,261,716) (3,038,576) NET ASSETS: Beginning of year 56,632,634 11,746,003 10,572,932 ------------- ------------- ------------- End of year $56,439,054 $7,484,287 $7,534,356 ============= ============= =============
(a) From inception May 1, 2008 to December 31, 2008. SA-129 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST EQUITY INDEX GOVERNMENT BOND PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $144,094 $903,350 Net realized gain (loss) on security transactions (276,419) 46,726 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (18,957,816) 1,174,680 -------------- ------------- Net increase (decrease) in net assets resulting from operations (19,090,141) 2,124,756 -------------- ------------- UNIT TRANSACTIONS: Purchases 1,391,591 802,506 Net transfers 9,517,740 5,404,060 Surrenders for benefit payments and fees (2,743,095) (1,811,141) Net annuity transactions -- -- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 8,166,236 4,395,425 -------------- ------------- Net increase (decrease) in net assets (10,923,905) 6,520,181 NET ASSETS: Beginning of year 42,767,459 22,460,794 -------------- ------------- End of year $31,843,554 $28,980,975 ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-130 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST DIVERSIFIED DIVERSIFIED JENNISON 20/20 INTREPID GROWTH MID CAP GROWTH MID CAP VALUE FOCUS PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(23,086) $(191,689) $(7,880) $(5,993) Net realized gain (loss) on security transactions (7,881) (136,924) (88,152) (2,414) Net realized gain on distributions -- 2,368,791 2,124,490 24,368 Net unrealized appreciation (depreciation) of investments during the year (1,504,594) (8,505,613) (5,888,361) (166,250) ------------ ------------ ------------ ---------- Net increase (decrease) in net assets resulting from operations (1,535,561) (6,465,435) (3,859,903) (150,289) ------------ ------------ ------------ ---------- UNIT TRANSACTIONS: Purchases 422,357 195,301 93,985 590 Net transfers 2,335,107 166,970 157,194 100,756 Surrenders for benefit payments and fees (163,581) (899,655) (568,998) (116,198) Net annuity transactions -- -- -- -- ------------ ------------ ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions 2,593,883 (537,384) (317,819) (14,852) ------------ ------------ ------------ ---------- Net increase (decrease) in net assets 1,058,322 (7,002,819) (4,177,722) (165,141) NET ASSETS: Beginning of year 1,852,340 14,929,094 10,686,502 377,680 ------------ ------------ ------------ ---------- End of year $2,910,662 $7,926,275 $6,508,780 $212,539 ============ ============ ============ ========== PRUDENTIAL PRUDENTIAL SERIES JENNISON VALUE INTERNATIONAL PORTFOLIO PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------- OPERATIONS: Net investment income (loss) $(7,489) $(654) $(29) Net realized gain (loss) on security transactions (25,498) (15,824) 1,239 Net realized gain on distributions -- 43,125 1,403 Net unrealized appreciation (depreciation) of investments during the year (164,165) (130,400) (7,189) ---------- ---------- -------- Net increase (decrease) in net assets resulting from operations (197,152) (103,753) (4,576) ---------- ---------- -------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers (5,209) 3,252 -- Surrenders for benefit payments and fees (148,772) (37,787) (18) Net annuity transactions -- -- -- ---------- ---------- -------- Net increase (decrease) in net assets resulting from unit transactions (153,981) (34,535) (18) ---------- ---------- -------- Net increase (decrease) in net assets (351,133) (138,288) (4,594) NET ASSETS: Beginning of year 643,977 252,927 8,929 ---------- ---------- -------- End of year $292,844 $114,639 $4,335 ========== ========== ========
SA-131 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
LEGG MASON LEGG MASON PARTNERS VARIABLE PARTNERS VARIABLE CAPITAL AND INCOME FUNDAMENTAL VALUE PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,721) $(254) Net realized gain (loss) on security transactions (57,785) (209,021) Net realized gain on distributions 4,215 1,228 Net unrealized appreciation (depreciation) of investments during the year (11,461) (492,318) ----------- ------------- Net increase (decrease) in net assets resulting from operations (66,752) (700,365) ----------- ------------- UNIT TRANSACTIONS: Purchases -- -- Net transfers (29,603) (110,667) Surrenders for benefit payments and fees (174,425) (595,379) Net annuity transactions -- -- ----------- ------------- Net increase (decrease) in net assets resulting from unit transactions (204,028) (706,046) ----------- ------------- Net increase (decrease) in net assets (270,780) (1,406,411) NET ASSETS: Beginning of year 349,828 2,362,308 ----------- ------------- End of year $79,048 $955,897 =========== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-132 -------------------------------------------------------------------------------
LEGG MASON PARTNERS VARIABLE LEGG MASON VAN KAMPEN LIT GLOBAL HIGH PARTNERS VARIABLE GROWTH AND VAN KAMPEN LIT YIELD BOND INVESTORS INCOME COMSTOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (V) SUB-ACCOUNT (W) ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $7,738 $(2,136) $(2,456) $1,448 Net realized gain (loss) on security transactions (12,803) 5,176 (17,891) (11,411) Net realized gain on distributions -- 16,953 13,340 24,734 Net unrealized appreciation (depreciation) of investments during the year (38,861) (263,509) (214,183) (198,841) ---------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (43,926) (243,516) (221,190) (184,070) ---------- ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases -- 900 322,295 11,500 Net transfers (19,599) (16,274) 367,473 (28,814) Surrenders for benefit payments and fees (11,351) (294,539) (25,761) (13,012) Net annuity transactions -- -- -- -- ---------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (30,950) (309,913) 664,007 (30,326) ---------- ----------- ----------- ----------- Net increase (decrease) in net assets (74,876) (553,429) 442,817 (214,396) NET ASSETS: Beginning of year 138,565 890,093 391,502 512,627 ---------- ----------- ----------- ----------- End of year $63,689 $336,664 $834,319 $298,231 ========== =========== =========== =========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ASSET TOTAL RETURN EQUITY ALLOCATION FUND BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- OPERATIONS: Net investment income (loss) $71 $294 $93 Net realized gain (loss) on security transactions (13) -- (599) Net realized gain on distributions 956 -- 3,931 Net unrealized appreciation (depreciation) of investments during the year (5,207) (208) (14,660) --------- ------- --------- Net increase (decrease) in net assets resulting from operations (4,193) 86 (11,235) --------- ------- --------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers -- -- 427 Surrenders for benefit payments and fees 1 -- (3,182) Net annuity transactions -- -- -- --------- ------- --------- Net increase (decrease) in net assets resulting from unit transactions 1 -- (2,755) --------- ------- --------- Net increase (decrease) in net assets (4,192) 86 (13,990) NET ASSETS: Beginning of year 13,784 8,573 31,239 --------- ------- --------- End of year $9,592 $8,659 $17,249 ========= ======= =========
(v) Formerly reported as Growth and Income. (w) Formerly reported as Comstock. SA-133 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT C&B LARGE CAP INTERNATIONAL VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(22) $11 Net realized gain (loss) on security transactions (2,379) (17) Net realized gain on distributions -- 1,880 Net unrealized appreciation (depreciation) of investments during the year (2,664) (7,078) -------- --------- Net increase (decrease) in net assets resulting from operations (5,065) (5,204) -------- --------- UNIT TRANSACTIONS: Purchases 9,009 -- Net transfers (320) 1,371 Surrenders for benefit payments and fees (4,865) (8) Net annuity transactions -- -- -------- --------- Net increase (decrease) in net assets resulting from unit transactions 3,824 1,363 -------- --------- Net increase (decrease) in net assets (1,241) (3,841) NET ASSETS: Beginning of year 6,260 11,003 -------- --------- End of year $5,019 $7,162 ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-134 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO RIDGEWORTH ADVANTAGE VT ADVANTAGE VT WELLS FARGO VARIABLE TRUST LARGE COMPANY SMALL CAP ADVANTAGE VT LARGE CAP GROWTH GROWTH FUND GROWTH FUND DISCOVERY FUND STOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (K) SUB-ACCOUNT (L) -------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(116) $(190) $(26) $(96,339) Net realized gain (loss) on security transactions (48) (1,890) (1) (28,476) Net realized gain on distributions -- 3,442 -- 834,181 Net unrealized appreciation (depreciation) of investments during the year (3,480) (7,248) (902) (3,491,676) -------- --------- ------- ------------- Net increase (decrease) in net assets resulting from operations (3,644) (5,886) (929) (2,782,310) -------- --------- ------- ------------- UNIT TRANSACTIONS: Purchases -- 3,754 2,827 58,133 Net transfers 421 325 -- (214,323) Surrenders for benefit payments and fees (7) (1,895) -- (1,065,339) Net annuity transactions -- -- -- -- -------- --------- ------- ------------- Net increase (decrease) in net assets resulting from unit transactions 414 2,184 2,827 (1,221,529) -------- --------- ------- ------------- Net increase (decrease) in net assets (3,230) (3,702) 1,898 (4,003,839) NET ASSETS: Beginning of year 8,648 10,207 -- 7,531,121 -------- --------- ------- ------------- End of year $5,418 $6,505 $1,898 $3,527,282 ======== ========= ======= ============= RIDGEWORTH RIDGEWORTH RIDGEWORTH VARIABLE TRUST VARIABLE TRUST VARIABLE TRUST LARGE CAP CORE MID-CAP CORE LARGE CAP VALUE EQUITY FUND EQUITY FUND EQUITY FUND SUB-ACCOUNT (M) SUB-ACCOUNT (N) SUB-ACCOUNT (O) ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(11,110) $(20,088) $10,613 Net realized gain (loss) on security transactions (22,341) (41,525) (18,975) Net realized gain on distributions 118,960 173,335 403,874 Net unrealized appreciation (depreciation) of investments during the year (590,644) (827,254) (2,361,464) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations (505,135) (715,532) (1,965,952) ------------ ------------ ------------- UNIT TRANSACTIONS: Purchases 18,072 33,288 156,836 Net transfers (60,708) 17,296 789,898 Surrenders for benefit payments and fees (241,300) (249,430) (612,345) Net annuity transactions -- -- -- ------------ ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (283,936) (198,846) 334,389 ------------ ------------ ------------- Net increase (decrease) in net assets (789,071) (914,378) (1,631,563) NET ASSETS: Beginning of year 1,504,052 1,867,265 5,292,995 ------------ ------------ ------------- End of year $714,981 $952,887 $3,661,432 ============ ============ =============
(k) Funded as of February 12, 2008. (l) Formerly STI Classic VT Large Cap Growth Stock Fund. Change effective May 1, 2008. (m) Formerly STI Classic VT Large Cap Core Equity Fund. Change effective May 1, 2008. (n) Formerly STI Classic VT Mid-Cap Core Equity Fund. Change effective May 1, 2008. (o) Formerly STI Classic VT Large Cap Value Equity Fund. Change effective May 1, 2008. SA-135 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. BASIC CAPITAL VALUE FUND APPRECIATION FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,171,157) $(776,811) Net realized gain (loss) on security transactions 3,314,298 898,208 Net realized gain on distributions 4,751,678 -- Net unrealized appreciation (depreciation) of investments during the year (6,879,867) 3,793,937 -------------- ------------- Net increase (decrease) in net assets resulting from operations 14,952 3,915,334 -------------- ------------- UNIT TRANSACTIONS: Purchases 3,225,728 1,686,865 Net transfers (7,130,378) (3,614,791) Surrenders for benefit payments and fees (9,374,499) (5,235,986) Net annuity transactions (29,524) -- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (13,308,673) (7,163,912) -------------- ------------- Net increase (decrease) in net assets (13,293,721) (3,248,578) NET ASSETS: Beginning of year 95,272,920 42,958,520 -------------- ------------- End of year $81,979,199 $39,709,942 ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-136 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I. CORE GOVERNMENT HIGH INTERNATIONAL EQUITY FUND SECURITIES FUND YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(974,037) $7,366,490 $66,509 $(687,584) Net realized gain (loss) on security transactions 1,930,054 174,476 24,754 1,561,880 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 6,567,795 5,068,661 (98,175) 4,430,573 -------------- -------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations 7,523,812 12,609,627 (6,912) 5,304,869 -------------- -------------- ------------ -------------- UNIT TRANSACTIONS: Purchases 3,035,848 47,957,638 16,270 26,048,476 Net transfers (5,891,460) 45,661,523 (69,088) 17,416,223 Surrenders for benefit payments and fees (9,471,733) (21,335,229) (241,646) (17,848,561) Net annuity transactions (4,266) (15,551) -- 1,285 -------------- -------------- ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions (12,331,611) 72,268,381 (294,464) 25,617,423 -------------- -------------- ------------ -------------- Net increase (decrease) in net assets (4,807,799) 84,878,008 (301,376) 30,922,292 NET ASSETS: Beginning of year 123,092,537 230,584,280 1,611,029 45,037,237 -------------- -------------- ------------ -------------- End of year $118,284,738 $315,462,288 $1,309,653 $75,959,529 ============== ============== ============ ============== AIM V.I. AIM V.I. AIM V.I. MID CAP CORE SMALL CAP LARGE CAP EQUITY FUND EQUITY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,981,820) $(456,429) $(433,037) Net realized gain (loss) on security transactions 1,256,125 19,969 507,296 Net realized gain on distributions 1,726,513 900,342 -- Net unrealized appreciation (depreciation) of investments during the year 7,604,745 (46,345) 2,828,997 -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 8,605,563 417,537 2,903,256 -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 6,609,028 8,761,799 1,649,449 Net transfers (3,907,374) 5,163,493 279,267 Surrenders for benefit payments and fees (8,849,937) (1,163,296) (2,843,508) Net annuity transactions (38,905) (719) -- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (6,187,188) 12,761,277 (914,792) -------------- ------------- ------------- Net increase (decrease) in net assets 2,418,375 13,178,814 1,988,464 NET ASSETS: Beginning of year 116,407,263 19,892,773 22,408,790 -------------- ------------- ------------- End of year $118,825,638 $33,071,587 $24,397,254 ============== ============= =============
SA-137 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AIM V.I. AMERICAN FUNDS CAPITAL GLOBAL DEVELOPMENT FUND BOND FUND SUB-ACCOUNT (A) SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(182) $539,085 Net realized gain (loss) on security transactions (1) 19,979 Net realized gain on distributions 7,480 -- Net unrealized appreciation (depreciation) of investments during the year (7,775) 577,059 ---------- ------------- Net increase (decrease) in net assets resulting from operations (478) 1,136,123 ---------- ------------- UNIT TRANSACTIONS: Purchases 51,982 6,276,855 Net transfers 137,650 21,251,004 Surrenders for benefit payments and fees (1) (696,613) Net annuity transactions -- -- ---------- ------------- Net increase (decrease) in net assets resulting from unit transactions 189,631 26,831,246 ---------- ------------- Net increase (decrease) in net assets 189,153 27,967,369 NET ASSETS: Beginning of year -- 2,888,001 ---------- ------------- End of year $189,153 $30,855,370 ========== =============
(a) From inception November 12, 2007 to December 31, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-138 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET INCOME AND AMERICAN FUNDS INCOME FUND ALLOCATION FUND GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $516,669 $1,887,097 $1,707,962 $20,648,796 Net realized gain (loss) on security transactions 75,524 2,145,813 2,582,979 253,528 Net realized gain on distributions 4,112,634 16,571,433 7,830,862 -- Net unrealized appreciation (depreciation) of investments during the year 3,186,260 1,541,116 (11,330,772) (15,869,276) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 7,891,087 22,145,459 791,031 5,033,048 ------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 39,100,344 34,003,409 18,228,692 30,808,775 Net transfers 47,437,697 11,156,323 (5,410,192) 34,910,080 Surrenders for benefit payments and fees (3,287,879) (38,553,292) (21,078,312) (27,779,109) Net annuity transactions (8,941) 20,371 43 35,841 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 83,241,221 6,626,811 (8,259,769) 37,975,587 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets 91,132,308 28,772,270 (7,468,738) 43,008,635 NET ASSETS: Beginning of year 43,380,082 472,999,970 241,089,614 322,597,640 ------------- ------------- ------------- ------------- End of year $134,512,390 $501,772,240 $233,620,876 $365,606,275 ============= ============= ============= ============= AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $1,444,505 $(12,177,973) $(2,825,932) Net realized gain (loss) on security transactions 2,229,133 10,559,242 9,024,902 Net realized gain on distributions 5,755,377 83,188,818 37,947,583 Net unrealized appreciation (depreciation) of investments during the year 7,352,756 33,495,714 (10,935,887) ------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations 16,781,771 115,065,801 33,210,666 ------------- --------------- --------------- UNIT TRANSACTIONS: Purchases 18,675,589 150,942,396 136,265,996 Net transfers 8,247,453 24,183,891 18,167,306 Surrenders for benefit payments and fees (11,690,791) (86,873,936) (88,887,423) Net annuity transactions (2,154) (47,856) (148,819) ------------- --------------- --------------- Net increase (decrease) in net assets resulting from unit transactions 15,230,097 88,204,495 65,397,060 ------------- --------------- --------------- Net increase (decrease) in net assets 32,011,868 203,270,296 98,607,726 NET ASSETS: Beginning of year 126,989,389 1,091,227,384 1,078,403,441 ------------- --------------- --------------- End of year $159,001,257 $1,294,497,680 $1,177,011,167 ============= =============== ===============
SA-139 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS INTERNATIONAL FUND NEW WORLD FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(792,504) $1,725,052 Net realized gain (loss) on security transactions 2,155,488 1,024,442 Net realized gain on distributions 16,916,884 6,890,165 Net unrealized appreciation (depreciation) of investments during the year 38,353,609 18,618,524 -------------- -------------- Net increase (decrease) in net assets resulting from operations 56,633,477 28,258,183 -------------- -------------- UNIT TRANSACTIONS: Purchases 41,046,143 19,076,818 Net transfers 7,941,237 14,083,853 Surrenders for benefit payments and fees (30,542,119) (6,646,381) Net annuity transactions (23,554) 3,156 -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 18,421,707 26,517,446 -------------- -------------- Net increase (decrease) in net assets 75,055,184 54,775,629 NET ASSETS: Beginning of year 307,285,750 86,222,899 -------------- -------------- End of year $382,340,934 $140,998,528 ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-140 -------------------------------------------------------------------------------
COLUMBIA AMERICAN FUNDS COLUMBIA SMALL COMPANY COLUMBIA GLOBAL SMALL ASSET ALLOCATION GROWTH LARGE CAP VALUE CAPITALIZATION FUND FUND VS FUND VS FUND VS SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,589,458 $63,684 $(441,966) $(235,621) Net realized gain (loss) on security transactions 1,382,287 4,668 241,360 358,181 Net realized gain on distributions 10,737,599 740,842 -- 2,552,725 Net unrealized appreciation (depreciation) of investments during the year 9,556,013 (274,516) 2,525,994 (2,296,772) -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 23,265,357 534,678 2,325,388 378,513 -------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 16,532,981 40,317 119,683 209,493 Net transfers 3,300,187 134,774 (862,110) 151,582 Surrenders for benefit payments and fees (11,838,374) (1,403,211) (3,558,008) (6,855,935) Net annuity transactions (3,715) -- (16,459) (74,326) -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 7,991,079 (1,228,120) (4,316,894) (6,569,186) -------------- ------------- ------------- ------------- Net increase (decrease) in net assets 31,256,436 (693,442) (1,991,506) (6,190,673) NET ASSETS: Beginning of year 121,197,503 8,516,577 21,743,636 39,247,262 -------------- ------------- ------------- ------------- End of year $152,453,939 $7,823,135 $19,752,130 $33,056,589 ============== ============= ============= ============= EVERGREEN VA EVERGREEN VA EVERGREEN VA INTERNATIONAL BALANCED FUND GROWTH FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $15,730 $(38,081) $22,425 Net realized gain (loss) on security transactions 740 4,089 (1,553) Net realized gain on distributions -- 424,741 159,888 Net unrealized appreciation (depreciation) of investments during the year (1,388) (245,370) 7,905 ---------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 15,082 145,379 188,665 ---------- ------------ ------------ UNIT TRANSACTIONS: Purchases 286,292 524,639 655,221 Net transfers 78,839 292,885 225,005 Surrenders for benefit payments and fees (12,708) (76,065) (76,139) Net annuity transactions -- (592) -- ---------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 352,423 740,867 804,087 ---------- ------------ ------------ Net increase (decrease) in net assets 367,505 886,246 992,752 NET ASSETS: Beginning of year 365,970 1,521,081 1,304,808 ---------- ------------ ------------ End of year $733,475 $2,407,327 $2,297,560 ========== ============ ============
SA-141 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
EVERGREEN VA EVERGREEN VA SPECIAL OMEGA FUND VALUES FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(2,869) $(32,979) Net realized gain (loss) on security transactions (26,033) 5,838 Net realized gain on distributions -- 2,522,108 Net unrealized appreciation (depreciation) of investments during the year 21,339 (4,411,901) ---------- ------------- Net increase (decrease) in net assets resulting from operations (7,563) (1,916,934) ---------- ------------- UNIT TRANSACTIONS: Purchases 112,960 3,706,199 Net transfers 27,050 2,616,991 Surrenders for benefit payments and fees (10,700) (635,976) Net annuity transactions -- (496) ---------- ------------- Net increase (decrease) in net assets resulting from unit transactions 129,310 5,686,718 ---------- ------------- Net increase (decrease) in net assets 121,747 3,769,784 NET ASSETS: Beginning of year 132,929 14,900,377 ---------- ------------- End of year $254,676 $18,670,161 ========== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-142 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN EVERGREEN VA RISING FRANKLIN LARGE CAP FUNDAMENTAL DIVIDENDS INCOME GROWTH LARGE CAP FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(6,049) $2,258,861 $19,790,874 $(958,031) Net realized gain (loss) on security transactions 9,832 121,480 532,965 393,868 Net realized gain on distributions 74,224 5,543,192 7,694,797 654,351 Net unrealized appreciation (depreciation) of investments during the year (23,094) (27,575,354) (10,860,054) 3,432,448 ---------- -------------- ---------------- ------------- Net increase (decrease) in net assets resulting from operations 54,913 (19,651,821) 17,158,582 3,522,636 ---------- -------------- ---------------- ------------- UNIT TRANSACTIONS: Purchases 240,670 82,090,247 211,165,726 7,883,305 Net transfers (39,374) 31,807,691 112,576,654 4,746,778 Surrenders for benefit payments and fees (9,097) (22,154,055) (73,690,540) (5,941,368) Net annuity transactions -- 9,414 68,434 (1,900) ---------- -------------- ---------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 192,199 91,753,297 250,120,274 6,686,815 ---------- -------------- ---------------- ------------- Net increase (decrease) in net assets 247,112 72,101,476 267,278,856 10,209,451 NET ASSETS: Beginning of year 739,702 330,849,672 1,053,591,906 76,643,302 ---------- -------------- ---------------- ------------- End of year $986,814 $402,951,148 $1,320,870,762 $86,852,753 ========== ============== ================ ============= FRANKLIN FRANKLIN FRANKLIN GLOBAL SMALL-MID CAP SMALL CAP REAL ESTATE GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT (B) SUB-ACCOUNT SUB-ACCOUNT (A) ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $46,177 $(2,284,159) $(131) Net realized gain (loss) on security transactions 322,778 1,496,033 (92) Net realized gain on distributions 439,491 8,924,791 -- Net unrealized appreciation (depreciation) of investments during the year (2,234,298) 2,240,702 (2,228) ------------- -------------- ---------- Net increase (decrease) in net assets resulting from operations (1,425,852) 10,377,367 (2,451) ------------- -------------- ---------- UNIT TRANSACTIONS: Purchases 13,202 12,190,154 34,299 Net transfers (514,814) 2,530,923 117,908 Surrenders for benefit payments and fees (940,520) (9,752,300) (166) Net annuity transactions 552 (3,021) -- ------------- -------------- ---------- Net increase (decrease) in net assets resulting from unit transactions (1,441,580) 4,965,756 152,041 ------------- -------------- ---------- Net increase (decrease) in net assets (2,867,432) 15,343,123 149,590 NET ASSETS: Beginning of year 7,485,025 113,474,132 -- ------------- -------------- ---------- End of year $4,617,593 $128,817,255 $149,590 ============= ============== ==========
(a) From inception November 12, 2007 to December 31, 2007. (b) Formerly Franklin Real Estate Fund. Change effective May 1, 2007. SA-143 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
FRANKLIN STRATEGIC INCOME MUTUAL SHARES SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $6,957,397 $(2,623,769) Net realized gain (loss) on security transactions 158,211 2,124,666 Net realized gain on distributions 587,747 28,473,401 Net unrealized appreciation (depreciation) of investments during the year 825,863 (18,985,766) -------------- -------------- Net increase (decrease) in net assets resulting from operations 8,529,218 8,988,532 -------------- -------------- UNIT TRANSACTIONS: Purchases 24,033,666 111,793,509 Net transfers 26,078,522 37,898,853 Surrenders for benefit payments and fees (16,556,686) (53,393,110) Net annuity transactions (9,112) 55,328 -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 33,546,390 96,354,580 -------------- -------------- Net increase (decrease) in net assets 42,075,608 105,343,112 NET ASSETS: Beginning of year 183,648,300 718,948,540 -------------- -------------- End of year $225,723,908 $824,291,652 ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-144 -------------------------------------------------------------------------------
TEMPLETON DEVELOPING TEMPLETON TEMPLETON TEMPLETON MARKETS FOREIGN GLOBAL ASSET GROWTH SECURITIES FUND SECURITIES FUND ALLOCATION FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $491,554 $545,493 $579,415 $(2,681,706) Net realized gain (loss) on security transactions 434,535 2,233,837 29,330 618,529 Net realized gain on distributions 5,746,159 12,708,896 831,891 25,482,518 Net unrealized appreciation (depreciation) of investments during the year 11,023,732 19,272,853 (1,157,122) (22,113,561) ----------- ------------ ----------- ------------ Net increase (decrease) in net assets resulting from operations 17,695,980 34,761,079 283,514 1,305,780 ----------- ------------ ----------- ------------ UNIT TRANSACTIONS: Purchases 10,876,889 24,303,849 36,374 85,597,126 Net transfers 7,860,705 (3,386,953) 36,704 20,161,436 Surrenders for benefit payments and fees (4,515,563) (18,807,331) (519,089) (36,192,463) Net annuity transactions 1,589 (10) (873) (18,602) ----------- ------------ ----------- ------------ Net increase (decrease) in net assets resulting from unit transactions 14,223,620 2,109,555 (446,884) 69,547,497 ----------- ------------ ----------- ------------ Net increase (decrease) in net assets 31,919,600 36,870,634 (163,370) 70,853,277 NET ASSETS: Beginning of year 64,695,499 256,910,028 3,677,276 545,511,343 ----------- ------------ ----------- ------------ End of year $96,615,099 $293,780,662 $3,513,906 $616,364,620 =========== ============ =========== ============ FRANKLIN FRANKLIN FLEX CAP LARGE CAP MUTUAL DISCOVERY GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(592,618) $(304,096) $(911) Net realized gain (loss) on security transactions 199,390 59,995 20,384 Net realized gain on distributions 1,950,839 -- 4,350 Net unrealized appreciation (depreciation) of investments during the year 12,284,970 2,194,616 (241,829) ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations 13,842,581 1,950,515 (218,006) ------------ ----------- ----------- UNIT TRANSACTIONS: Purchases 35,644,729 3,015,572 1,720,855 Net transfers 23,533,673 3,626,282 1,053,249 Surrenders for benefit payments and fees (11,107,688) (1,015,585) (539,991) Net annuity transactions 2,615 11,545 -- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 48,073,329 5,637,814 2,234,113 ------------ ----------- ----------- Net increase (decrease) in net assets 61,915,910 7,588,329 2,016,107 NET ASSETS: Beginning of year 131,173,703 15,463,988 6,969,495 ------------ ----------- ----------- End of year $193,089,613 $23,052,317 $8,985,602 ============ =========== ===========
SA-145 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
HARTFORD HARTFORD TOTAL ADVISERS RETURN BOND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(68,663) $2,358,262 Net realized gain (loss) on security transactions 48,469 (257,245) Net realized gain on distributions 3,481,821 -- Net unrealized appreciation (depreciation) of investments during the year (1,821,233) (196,219) ------------- -------------- Net increase (decrease) in net assets resulting from operations 1,640,394 1,904,798 ------------- -------------- UNIT TRANSACTIONS: Purchases 89,721 346,678 Net transfers (1,333,530) 4,909,107 Surrenders for benefit payments and fees (7,305,122) (12,477,469) Net annuity transactions (20,319) (15,286) ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (8,569,250) (7,236,970) ------------- -------------- Net increase (decrease) in net assets (6,928,856) (5,332,172) NET ASSETS: Beginning of year 38,308,251 86,839,290 ------------- -------------- End of year $31,379,395 $81,507,118 ============= ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-146 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD CAPITAL DIVIDEND FUNDAMENTAL GLOBAL APPRECIATION AND GROWTH GROWTH ADVISERS HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (C) SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(1,499,265) $(430,075) $(110) $(2,571) Net realized gain (loss) on security transactions 2,738,623 2,015,892 17 (2,295) Net realized gain on distributions 12,539,102 4,453,240 739 21,346 Net unrealized appreciation (depreciation) of investments during the year (3,021,107) (2,475,544) 368 23,949 -------------- -------------- ------- ---------- Net increase (decrease) in net assets resulting from operations 10,757,353 3,563,513 1,014 40,429 -------------- -------------- ------- ---------- UNIT TRANSACTIONS: Purchases 223,551 221,487 -- -- Net transfers (1,877,504) (1,138,680) 385 62 Surrenders for benefit payments and fees (14,212,715) (9,381,066) (528) (79,307) Net annuity transactions (29,364) -- -- -- -------------- -------------- ------- ---------- Net increase (decrease) in net assets resulting from unit transactions (15,896,032) (10,298,259) (143) (79,245) -------------- -------------- ------- ---------- Net increase (decrease) in net assets (5,138,679) (6,734,746) 871 (38,816) NET ASSETS: Beginning of year 80,522,925 62,286,507 7,731 324,965 -------------- -------------- ------- ---------- End of year $75,384,246 $55,551,761 $8,602 $286,149 ============== ============== ======= ========== HARTFORD HARTFORD GLOBAL GLOBAL FINANCIAL HARTFORD COMMUNICATIONS SERVICES GLOBAL HEALTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(49) $(962) $(12,758) Net realized gain (loss) on security transactions 1 6,913 36,012 Net realized gain on distributions 1,270 13,761 108,206 Net unrealized appreciation (depreciation) of investments during the year 107 (25,249) (87,681) ------- --------- ----------- Net increase (decrease) in net assets resulting from operations 1,329 (5,537) 43,779 ------- --------- ----------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers 440 5 (32,215) Surrenders for benefit payments and fees (8) (19,641) (265,775) Net annuity transactions -- -- -- ------- --------- ----------- Net increase (decrease) in net assets resulting from unit transactions 432 (19,636) (297,990) ------- --------- ----------- Net increase (decrease) in net assets 1,761 (25,173) (254,211) NET ASSETS: Beginning of year 5,979 83,637 974,081 ------- --------- ----------- End of year $7,740 $58,464 $719,870 ======= ========= ===========
(c) Formerly Hartford Focus HLS Fund. Change effective July 27, 2007. SA-147 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
HARTFORD HARTFORD GLOBAL GLOBAL GROWTH TECHNOLOGY HLS FUND HLS FUND SUB-ACCOUNT (D) SUB-ACCOUNT ----------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(31,172) $(7,033) Net realized gain (loss) on security transactions 105,820 (51,650) Net realized gain on distributions 225,920 -- Net unrealized appreciation (depreciation) of investments during the year 160,341 118,010 ------------ ----------- Net increase (decrease) in net assets resulting from operations 460,909 59,327 ------------ ----------- UNIT TRANSACTIONS: Purchases 4,421 -- Net transfers (87,948) 5,685 Surrenders for benefit payments and fees (789,773) (191,560) Net annuity transactions -- -- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions (873,300) (185,875) ------------ ----------- Net increase (decrease) in net assets (412,391) (126,548) NET ASSETS: Beginning of year 2,449,492 529,139 ------------ ----------- End of year $2,037,101 $402,591 ============ ===========
(d) Formerly Hartford Global Leaders HLS Fund. Change effective July 27, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-148 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED HARTFORD GROWTH HARTFORD EQUITY GROWTH OPPORTUNITIES HIGH YIELD HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(6,266) $(1,123) $(2,704) $25,510 Net realized gain (loss) on security transactions 15,054 1,460 1,568 (1,291) Net realized gain on distributions 2,877 5,467 34,151 -- Net unrealized appreciation (depreciation) of investments during the year 45,751 5,139 6,859 (19,577) ----------- --------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 57,416 10,943 39,874 4,642 ----------- --------- ---------- ---------- UNIT TRANSACTIONS: Purchases 677 127 680 -- Net transfers 27,438 4,326 47,085 12,667 Surrenders for benefit payments and fees (168,935) (24,618) (41,032) (89,188) Net annuity transactions -- -- -- -- ----------- --------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (140,820) (20,165) 6,733 (76,521) ----------- --------- ---------- ---------- Net increase (decrease) in net assets (83,404) (9,222) 46,607 (71,879) NET ASSETS: Beginning of year 923,356 90,253 172,869 490,775 ----------- --------- ---------- ---------- End of year $839,952 $81,031 $219,476 $418,896 =========== ========= ========== ========== HARTFORD HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL INDEX GROWTH SMALL COMPANY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (E) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(5,165) $(5,395) $(7) Net realized gain (loss) on security transactions (51,944) 29,906 101 Net realized gain on distributions 54,955 73,583 34,358 Net unrealized appreciation (depreciation) of investments during the year 63,366 (3,166) (19,790) ------------ ----------- ---------- Net increase (decrease) in net assets resulting from operations 61,212 94,928 14,662 ------------ ----------- ---------- UNIT TRANSACTIONS: Purchases 1,800 932 115 Net transfers (193,804) 26,614 24,901 Surrenders for benefit payments and fees (477,972) (276,980) (33,171) Net annuity transactions -- -- -- ------------ ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions (669,976) (249,434) (8,155) ------------ ----------- ---------- Net increase (decrease) in net assets (608,764) (154,506) 6,507 NET ASSETS: Beginning of year 1,553,347 562,048 208,527 ------------ ----------- ---------- End of year $944,583 $407,542 $215,034 ============ =========== ==========
(e) Formerly Hartford International Capital Appreciation HLS Fund. Change effective July 27, 2007. SA-149 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
HARTFORD INTERNATIONAL HARTFORD OPPORTUNITIES MIDCAP HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(121,404) $(59,312) Net realized gain (loss) on security transactions 670,943 297,198 Net realized gain on distributions 1,989,956 582,191 Net unrealized appreciation (depreciation) of investments during the year (248,095) (123,907) ------------- ------------- Net increase (decrease) in net assets resulting from operations 2,291,400 696,170 ------------- ------------- UNIT TRANSACTIONS: Purchases 61,607 6,000 Net transfers 128,047 (84,067) Surrenders for benefit payments and fees (2,322,020) (2,413,802) Net annuity transactions (604) -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (2,132,970) (2,491,869) ------------- ------------- Net increase (decrease) in net assets 158,430 (1,795,699) NET ASSETS: Beginning of year 10,553,826 5,406,417 ------------- ------------- End of year $10,712,256 $3,610,718 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-150 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD MORTGAGE HARTFORD MIDCAP VALUE MONEY MARKET SECURITIES SMALL COMPANY HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(6,196) $6,388,102 $22,900 $(182,878) Net realized gain (loss) on security transactions 17,635 -- (1,215) 107,340 Net realized gain on distributions 80,025 -- -- 1,312,375 Net unrealized appreciation (depreciation) of investments during the year (77,174) (10) (12,627) (172,346) ----------- ------------- ---------- ------------ Net increase (decrease) in net assets resulting from operations 14,290 6,388,092 9,058 1,064,491 ----------- ------------- ---------- ------------ UNIT TRANSACTIONS: Purchases -- 27,437,802 -- 14,129 Net transfers (20,419) 174,324,045 214,486 (39,498) Surrenders for benefit payments and fees (133,527) (99,982,404) (54,943) (1,912,477) Net annuity transactions -- 32,604 -- -- ----------- ------------- ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions (153,946) 101,812,047 159,543 (1,937,846) ----------- ------------- ---------- ------------ Net increase (decrease) in net assets (139,656) 108,200,139 168,601 (873,355) NET ASSETS: Beginning of year 529,422 163,266,318 418,977 9,451,574 ----------- ------------- ---------- ------------ End of year $389,766 $271,466,457 $587,578 $8,578,219 =========== ============= ========== ============ HARTFORD HARTFORD HARTFORD U.S. GOVERNMENT SMALLCAP GROWTH STOCK SECURITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,490) $(360,279) $13,447 Net realized gain (loss) on security transactions (365) 647,632 1,953 Net realized gain on distributions 12,187 3,912,998 -- Net unrealized appreciation (depreciation) of investments during the year (14,782) (2,977,974) 1,248 ---------- ------------ ----------- Net increase (decrease) in net assets resulting from operations (5,450) 1,222,377 16,648 ---------- ------------ ----------- UNIT TRANSACTIONS: Purchases 745 97,076 471 Net transfers 7,838 (836,935) 23,491 Surrenders for benefit payments and fees (27,898) (5,291,736) (106,652) Net annuity transactions -- -- -- ---------- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions (19,315) (6,031,595) (82,690) ---------- ------------ ----------- Net increase (decrease) in net assets (24,765) (4,809,218) (66,042) NET ASSETS: Beginning of year 176,351 30,943,820 684,350 ---------- ------------ ----------- End of year $151,586 $26,134,602 $618,308 ========== ============ ===========
SA-151 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
HARTFORD HARTFORD VALUE VALUE OPPORTUNITIES HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,548) $(1,854) Net realized gain (loss) on security transactions 23,752 5,916 Net realized gain on distributions 21,296 39,370 Net unrealized appreciation (depreciation) of investments during the year (26,434) (59,949) ----------- ---------- Net increase (decrease) in net assets resulting from operations 17,066 (16,517) ----------- ---------- UNIT TRANSACTIONS: Purchases -- 775 Net transfers (22,868) (23,900) Surrenders for benefit payments and fees (85,448) (50,035) Net annuity transactions -- -- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions (108,316) (73,160) ----------- ---------- Net increase (decrease) in net assets (91,250) (89,677) NET ASSETS: Beginning of year 255,994 334,880 ----------- ---------- End of year $164,744 $245,203 =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-152 -------------------------------------------------------------------------------
HARTFORD EQUITY HUNTINGTON VA HUNTINGTON VA INCOME INCOME DIVIDEND HUNTINGTON VA HLS FUND EQUITY FUND CAPTURE FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(8) $(2,761) $102,418 $(21,239) Net realized gain (loss) on security transactions 3,718 20,387 14,009 15,700 Net realized gain on distributions 1,893 70,741 345,714 186 Net unrealized appreciation (depreciation) of investments during the year (2,411) (134,852) (1,180,471) 188,302 --------- ------------ ------------- ------------ Net increase (decrease) in net assets resulting from operations 3,192 (46,485) (718,330) 182,949 --------- ------------ ------------- ------------ UNIT TRANSACTIONS: Purchases -- 730,219 3,041,234 851,173 Net transfers 39,131 208,514 793,085 259,440 Surrenders for benefit payments and fees (39,873) (252,262) (549,070) (163,235) Net annuity transactions -- -- -- -- --------- ------------ ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (742) 686,471 3,285,249 947,378 --------- ------------ ------------- ------------ Net increase (decrease) in net assets 2,450 639,986 2,566,919 1,130,327 NET ASSETS: Beginning of year 54,906 1,799,028 5,823,551 956,569 --------- ------------ ------------- ------------ End of year $57,356 $2,439,014 $8,390,470 $2,086,896 ========= ============ ============= ============ HUNTINGTON VA HUNTINGTON VA HUNTINGTON VA MID CORP NEW ROTATING AMERICA FUND ECONOMY FUND MARKETS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(63,570) $(67,704) $(20,139) Net realized gain (loss) on security transactions 46,516 34,482 23,756 Net realized gain on distributions 52,384 72,933 81,029 Net unrealized appreciation (depreciation) of investments during the year 226,354 308,888 20,150 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 261,684 348,599 104,796 ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 1,389,344 1,744,269 655,786 Net transfers 273,712 329,184 130,484 Surrenders for benefit payments and fees (402,783) (229,166) (100,065) Net annuity transactions -- -- -- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 1,260,273 1,844,287 686,205 ------------ ------------ ------------ Net increase (decrease) in net assets 1,521,957 2,192,886 791,001 NET ASSETS: Beginning of year 3,792,886 2,915,666 1,387,064 ------------ ------------ ------------ End of year $5,314,843 $5,108,552 $2,178,065 ============ ============ ============
SA-153 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
HUNTINGTON VA INTERNATIONAL HUNTINGTON VA EQUITY FUND MACRO 100 FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(41,518) $(15,815) Net realized gain (loss) on security transactions 3,063 3,296 Net realized gain on distributions 4,358 199,643 Net unrealized appreciation (depreciation) of investments during the year 317,622 (254,699) ------------ ------------ Net increase (decrease) in net assets resulting from operations 283,525 (67,575) ------------ ------------ UNIT TRANSACTIONS: Purchases 2,052,768 538,571 Net transfers 887,979 107,313 Surrenders for benefit payments and fees (166,022) (130,405) Net annuity transactions -- -- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 2,774,725 515,479 ------------ ------------ Net increase (decrease) in net assets 3,058,250 447,904 NET ASSETS: Beginning of year 1,140,989 903,540 ------------ ------------ End of year $4,199,239 $1,351,444 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-154 -------------------------------------------------------------------------------
HUNTINGTON VA HUNTINGTON VA MORTGAGE SITUS SMALL MFS CORE MFS EMERGING SECURITIES FUND CAP FUND EQUITY SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (F) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $4,301 $(65,719) $(196,065) $(330,766) Net realized gain (loss) on security transactions 138 6,736 114,392 (1,075,281) Net realized gain on distributions 273 301,070 -- -- Net unrealized appreciation (depreciation) of investments during the year 25,937 39,284 1,395,286 4,604,082 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 30,649 281,371 1,313,613 3,198,035 ------------ ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 851,322 2,212,792 135,052 1,443,310 Net transfers 350,074 444,097 (782,736) 2,509,484 Surrenders for benefit payments and fees (97,292) (302,663) (2,503,095) (2,301,773) Net annuity transactions -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 1,104,104 2,354,226 (3,150,779) 1,651,021 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets 1,134,753 2,635,597 (1,837,166) 4,849,056 NET ASSETS: Beginning of year 654,181 3,107,920 14,345,462 17,986,994 ------------ ------------ ------------ ------------ End of year $1,788,934 $5,743,517 $12,508,296 $22,836,050 ============ ============ ============ ============ MFS INVESTORS MFS GLOBAL MFS HIGH GROWTH EQUITY SERIES INCOME SERIES STOCK SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- OPERATIONS: Net investment income (loss) $22,461 $4,304,276 $(359,130) Net realized gain (loss) on security transactions 299,322 (24,645) 300,947 Net realized gain on distributions 691,552 -- -- Net unrealized appreciation (depreciation) of investments during the year (278,979) (4,370,989) 2,367,727 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 734,356 (91,358) 2,309,544 ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 1,028,628 5,264,747 945,203 Net transfers (587,259) 1,092,820 (2,198,200) Surrenders for benefit payments and fees (1,200,118) (7,402,038) (2,959,869) Net annuity transactions -- (8,035) (1,168) ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (758,749) (1,052,506) (4,214,034) ------------ ------------ ------------ Net increase (decrease) in net assets (24,393) (1,143,864) (1,904,490) NET ASSETS: Beginning of year 10,733,651 82,023,478 26,105,754 ------------ ------------ ------------ End of year $10,709,258 $80,879,614 $24,201,264 ============ ============ ============
(f) Formerly MFS Capital Opportunities Series. Change effective May 1, 2007. SA-155 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
MFS INVESTORS MFS MID CAP TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,660,403) $(694,560) Net realized gain (loss) on security transactions 903,480 1,035,528 Net realized gain on distributions 1,364,134 1,530,503 Net unrealized appreciation (depreciation) of investments during the year 12,498,845 1,301,880 -------------- ------------- Net increase (decrease) in net assets resulting from operations 13,106,056 3,173,351 -------------- ------------- UNIT TRANSACTIONS: Purchases 24,879,409 1,308,605 Net transfers 7,527,705 (3,142,948) Surrenders for benefit payments and fees (12,728,747) (2,793,753) Net annuity transactions (5,082) -- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 19,673,285 (4,628,096) -------------- ------------- Net increase (decrease) in net assets 32,779,341 (1,454,745) NET ASSETS: Beginning of year 147,797,096 41,556,832 -------------- ------------- End of year $180,576,437 $40,102,087 ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-156 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL MFS VALUE MFS RESEARCH DISCOVERY SERIES RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,937,168) $3,504,933 $(593,374) $128,989 Net realized gain (loss) on security transactions 408,724 1,573,542 242,714 18,853 Net realized gain on distributions 7,259,998 12,250,570 925,336 -- Net unrealized appreciation (depreciation) of investments during the year (5,756,874) (6,817,988) 2,463,723 338,722 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations (25,320) 10,511,057 3,038,399 486,564 -------------- -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 15,058,060 75,398,526 18,978,767 8,414,225 Net transfers 853,105 26,817,075 10,747,299 10,521,556 Surrenders for benefit payments and fees (7,451,264) (37,979,800) (6,715,753) (1,827,395) Net annuity transactions (2,318) (52,322) 1,290 -- -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 8,457,583 64,183,479 23,011,603 17,108,386 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets 8,432,263 74,694,536 26,050,002 17,594,950 NET ASSETS: Beginning of year 96,615,291 470,084,945 50,753,521 11,129,365 -------------- -------------- ------------- ------------- End of year $105,047,554 $544,779,481 $76,803,523 $28,724,315 ============== ============== ============= ============= BLACKROCK MFS RESEARCH MFS RESEARCH GLOBAL INTERNATIONAL SERIES SERIES GROWTH V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(209,750) $(30,014) $(2,637) Net realized gain (loss) on security transactions 38,503 11,061 2,572 Net realized gain on distributions 96,970 -- -- Net unrealized appreciation (depreciation) of investments during the year 1,070,746 228,404 83,460 ------------- ------------ ---------- Net increase (decrease) in net assets resulting from operations 996,469 209,451 83,395 ------------- ------------ ---------- UNIT TRANSACTIONS: Purchases 7,705,374 1,138,566 -- Net transfers 4,706,847 974,595 (1,800) Surrenders for benefit payments and fees (507,779) (67,497) (1) Net annuity transactions -- -- -- ------------- ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions 11,904,442 2,045,664 (1,801) ------------- ------------ ---------- Net increase (decrease) in net assets 12,900,911 2,255,115 81,594 NET ASSETS: Beginning of year 7,356,189 1,495,769 244,810 ------------- ------------ ---------- End of year $20,257,100 $3,750,884 $326,404 ============= ============ ==========
SA-157 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
BLACKROCK INTERNATIONAL LARGE CAP GROWTH GROWTH V.I. FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT (G) -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(14,862) $(363) Net realized gain (loss) on security transactions 79,028 18 Net realized gain on distributions -- 1,309 Net unrealized appreciation (depreciation) of investments during the year (9,453) (422) ----------- --------- Net increase (decrease) in net assets resulting from operations 54,713 542 ----------- --------- UNIT TRANSACTIONS: Purchases 26,968 54,954 Net transfers 11,364 7,782 Surrenders for benefit payments and fees (175,821) 1 Net annuity transactions -- -- ----------- --------- Net increase (decrease) in net assets resulting from unit transactions (137,489) 62,737 ----------- --------- Net increase (decrease) in net assets (82,776) 63,279 NET ASSETS: Beginning of year 947,734 -- ----------- --------- End of year $864,958 $63,279 =========== =========
(g) Funded as of February 8, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-158 -------------------------------------------------------------------------------
U.S. MID CAP CAPITAL DEVELOPING FLEXIBLE VALUE OPPORTUNITIES GROWTH INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(325) $(1,785) $(123) $2,174 Net realized gain (loss) on security transactions 14 420 6 1 Net realized gain on distributions 4,145 -- -- -- Net unrealized appreciation (depreciation) of investments during the year (3,639) 15,175 1,839 (1,286) --------- ---------- --------- --------- Net increase (decrease) in net assets resulting from operations 195 13,810 1,722 889 --------- ---------- --------- --------- UNIT TRANSACTIONS: Purchases 29,229 116,021 1,800 28,000 Net transfers 2,518 47,269 2,021 50,584 Surrenders for benefit payments and fees -- (112) (32) (1) Net annuity transactions -- -- -- -- --------- ---------- --------- --------- Net increase (decrease) in net assets resulting from unit transactions 31,747 163,178 3,789 78,583 --------- ---------- --------- --------- Net increase (decrease) in net assets 31,942 176,988 5,511 79,472 NET ASSETS: Beginning of year 9,559 16,204 6,516 15,128 --------- ---------- --------- --------- End of year $41,501 $193,192 $12,027 $94,600 ========= ========== ========= ========= COLUMBIA MARSICO INTERNATIONAL DIVIDEND OPPORTUNITIES GROWTH GLOBAL EQUITY FUND VS SUB-ACCOUNT (G) SUB-ACCOUNT (G) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(30) $(65) $(776,002) Net realized gain (loss) on security transactions 1 4 3,553,710 Net realized gain on distributions -- 723 1,559,685 Net unrealized appreciation (depreciation) of investments during the year 75 (30) 1,912,729 ------- ------- ------------- Net increase (decrease) in net assets resulting from operations 46 632 6,250,122 ------- ------- ------------- UNIT TRANSACTIONS: Purchases -- -- 160,030 Net transfers 7,737 7,709 (2,289,310) Surrenders for benefit payments and fees -- -- (6,362,524) Net annuity transactions -- -- (27,435) ------- ------- ------------- Net increase (decrease) in net assets resulting from unit transactions 7,737 7,709 (8,519,239) ------- ------- ------------- Net increase (decrease) in net assets 7,783 8,341 (2,269,117) NET ASSETS: Beginning of year -- -- 40,308,087 ------- ------- ------------- End of year $7,783 $8,341 $38,038,970 ======= ======= =============
(g) Funded as of February 8, 2007. SA-159 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
COLUMBIA COLUMBIA MARSICO HIGH YIELD FOCUSED EQUITIES FUND VS FUND VS SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $794,048 $(565,768) Net realized gain (loss) on security transactions 463,716 2,462,633 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (1,279,100) 1,284,808 ------------- ------------- Net increase (decrease) in net assets resulting from operations (21,336) 3,181,673 ------------- ------------- UNIT TRANSACTIONS: Purchases 125,312 190,058 Net transfers (207,048) (778,024) Surrenders for benefit payments and fees (4,944,868) (4,630,896) Net annuity transactions -- (39,037) ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (5,026,604) (5,257,899) ------------- ------------- Net increase (decrease) in net assets (5,047,940) (2,076,226) NET ASSETS: Beginning of year 28,836,413 30,381,566 ------------- ------------- End of year $23,788,473 $28,305,340 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-160 -------------------------------------------------------------------------------
JPMORGAN COLUMBIA MARSICO COLUMBIA MARSICO COLUMBIA MARSICO INSURANCE TRUST GROWTH 21ST CENTURY MIDCAP GROWTH BALANCED FUND VS FUND VS FUND VS PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(522,795) $(139,350) $(664,992) $21,118 Net realized gain (loss) on security transactions 1,823,943 175,966 1,049,981 18,612 Net realized gain on distributions -- 457,562 6,413,660 9,280 Net unrealized appreciation (depreciation) of investments during the year 2,393,240 906,613 (1,358,335) 18,900 ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations 3,694,388 1,400,791 5,440,314 67,910 ------------- ------------- ------------- ------------ UNIT TRANSACTIONS: Purchases 149,207 31,034 208,263 99,917 Net transfers (1,378,756) 702,429 (1,917,309) 138,615 Surrenders for benefit payments and fees (4,704,596) (1,260,183) (5,656,651) (206,386) Net annuity transactions -- -- -- -- ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (5,934,145) (526,720) (7,365,697) 32,146 ------------- ------------- ------------- ------------ Net increase (decrease) in net assets (2,239,757) 874,071 (1,925,383) 100,056 NET ASSETS: Beginning of year 27,165,356 8,365,881 34,169,377 1,646,833 ------------- ------------- ------------- ------------ End of year $24,925,599 $9,239,952 $32,243,994 $1,746,889 ============= ============= ============= ============ JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST CORE BOND DIVERSIFIED EQUITY INTREPID MID CAP PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,385,053 $(70,471) $(98,927) Net realized gain (loss) on security transactions 8,792 33,808 (3,049) Net realized gain on distributions -- 484,553 591,424 Net unrealized appreciation (depreciation) of investments during the year 929,109 471,689 (623,558) ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 2,322,954 919,579 (134,110) ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 7,562,645 1,354,991 2,406,776 Net transfers 9,669,206 107,553 2,791,022 Surrenders for benefit payments and fees (2,513,238) (508,410) (376,224) Net annuity transactions -- -- -- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 14,718,613 954,134 4,821,574 ------------- ------------- ------------- Net increase (decrease) in net assets 17,041,567 1,873,713 4,687,464 NET ASSETS: Beginning of year 39,591,067 9,872,290 5,885,468 ------------- ------------- ------------- End of year $56,632,634 $11,746,003 $10,572,932 ============= ============= =============
SA-161 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST EQUITY INDEX GOVERNMENT BOND PORTFOLIO - 1 PORTFOLIO - 1 SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(104,087) $613,607 Net realized gain (loss) on security transactions 24,880 1,364 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,245,495 532,443 ------------- ------------- Net increase (decrease) in net assets resulting from operations 1,166,288 1,147,414 ------------- ------------- UNIT TRANSACTIONS: Purchases 6,056,108 2,814,380 Net transfers 3,237,110 3,723,385 Surrenders for benefit payments and fees (1,940,607) (992,457) Net annuity transactions -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 7,352,611 5,545,308 ------------- ------------- Net increase (decrease) in net assets 8,518,899 6,692,722 NET ASSETS: Beginning of year 34,248,560 15,768,072 ------------- ------------- End of year $42,767,459 $22,460,794 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-162 -------------------------------------------------------------------------------
JPMORGAN JPMORGAN JPMORGAN INSURANCE TRUST INSURANCE TRUST INSURANCE TRUST DIVERSIFIED DIVERSIFIED JENNISON 20/20 INTREPID GROWTH MID CAP GROWTH MID CAP VALUE FOCUS PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO - 1 PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(12,357) $(229,764) $25,215 $(5,437) Net realized gain (loss) on security transactions 824 66,569 22,996 10,387 Net realized gain on distributions -- 2,225,004 5,003,545 34,802 Net unrealized appreciation (depreciation) of investments during the year 64,005 (114,896) (5,141,397) (13,114) ------------ ------------- ------------- ---------- Net increase (decrease) in net assets resulting from operations 52,472 1,946,913 (89,641) 26,638 ------------ ------------- ------------- ---------- UNIT TRANSACTIONS: Purchases 857,148 1,356,802 417,282 920 Net transfers 733,390 205,543 (134,437) 62,911 Surrenders for benefit payments and fees (42,657) (791,306) (544,952) (24,206) Net annuity transactions -- -- -- -- ------------ ------------- ------------- ---------- Net increase (decrease) in net assets resulting from unit transactions 1,547,881 771,039 (262,107) 39,625 ------------ ------------- ------------- ---------- Net increase (decrease) in net assets 1,600,353 2,717,952 (351,748) 66,263 NET ASSETS: Beginning of year 251,987 12,211,142 11,038,250 311,417 ------------ ------------- ------------- ---------- End of year $1,852,340 $14,929,094 $10,686,502 $377,680 ============ ============= ============= ========== PRUDENTIAL PRUDENTIAL SERIES JENNISON VALUE INTERNATIONAL PORTFOLIO PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (H) ----------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(11,101) $(1,833) $(331) Net realized gain (loss) on security transactions 29,770 5,603 4,200 Net realized gain on distributions -- 29,859 1,617 Net unrealized appreciation (depreciation) of investments during the year 44,325 (30,952) (1,159) ----------- ---------- --------- Net increase (decrease) in net assets resulting from operations 62,994 2,677 4,327 ----------- ---------- --------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers (86,048) 10,976 (17,302) Surrenders for benefit payments and fees (53,530) (4,971) (3,040) Net annuity transactions -- -- -- ----------- ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (139,578) 6,005 (20,342) ----------- ---------- --------- Net increase (decrease) in net assets (76,584) 8,682 (16,015) NET ASSETS: Beginning of year 720,561 244,245 24,944 ----------- ---------- --------- End of year $643,977 $252,927 $8,929 =========== ========== =========
(h) Formerly SP William Blair International Growth Portfolio. Change effective January 31, 2007. SA-163 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
LEGG MASON LEGG MASON PARTNERS VARIABLE PARTNERS VARIABLE CAPITAL AND INCOME FUNDAMENTAL VALUE PORTFOLIO PORTFOLIO SUB-ACCOUNT (I)(J)(K) SUB-ACCOUNT (K)(L) ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,711 $(850) Net realized gain (loss) on security transactions 57,303 618,389 Net realized gain on distributions 58,930 267,653 Net unrealized appreciation (depreciation) of investments during the year (107,835) (869,529) ----------- ------------ Net increase (decrease) in net assets resulting from operations 11,109 15,663 ----------- ------------ UNIT TRANSACTIONS: Purchases 10,862 840 Net transfers 8,758 (29,118) Surrenders for benefit payments and fees (41,353) (600,586) Net annuity transactions -- -- ----------- ------------ Net increase (decrease) in net assets resulting from unit transactions (21,733) (628,864) ----------- ------------ Net increase (decrease) in net assets (10,624) (613,201) NET ASSETS: Beginning of year 360,452 2,975,509 ----------- ------------ End of year $349,828 $2,362,308 =========== ============
(i) Effective April 27, 2007, Legg Mason Partners Variable Total Return Portfolio merged with Legg Mason Partners Variable Multiple Discipline Portfolio -- Balanced All Cap Growth and Value. (j) Formerly Legg Mason Partners Variable Multiple Discipline Portfolio -- Balanced All Cap Growth and Value. Change effective April 27, 2007. (k) From inception May 1, 2007 to December 31, 2007. (l) Effective April 28, 2007, Legg Mason Partners Variable All Cap Portfolio merged with Legg Mason Partners Variable Fundamental Value Portfolio. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-164 -------------------------------------------------------------------------------
LEGG MASON PARTNERS VARIABLE LEGG MASON GLOBAL HIGH PARTNERS VARIABLE YIELD BOND INVESTORS GROWTH AND PORTFOLIO PORTFOLIO INCOME COMSTOCK SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $7,783 $(2,232) $(2,657) $(4,566) Net realized gain (loss) on security transactions 11,225 20,114 (11) 79 Net realized gain on distributions 701 24,216 2,949 4,112 Net unrealized appreciation (depreciation) of investments during the year (19,865) (15,669) (9,833) (29,662) ----------- ----------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (156) 26,429 (9,552) (30,037) ----------- ----------- ---------- ---------- UNIT TRANSACTIONS: Purchases -- 2,580 248,983 357,277 Net transfers (23,602) 22,059 99,848 30,696 Surrenders for benefit payments and fees (89,317) (125,741) (962) (3,023) Net annuity transactions -- -- -- -- ----------- ----------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (112,919) (101,102) 347,869 384,950 ----------- ----------- ---------- ---------- Net increase (decrease) in net assets (113,075) (74,673) 338,317 354,913 NET ASSETS: Beginning of year 251,640 964,766 53,185 157,714 ----------- ----------- ---------- ---------- End of year $138,565 $890,093 $391,502 $512,627 =========== =========== ========== ========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ASSET TOTAL RETURN EQUITY ALLOCATION FUND BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- OPERATIONS: Net investment income (loss) $55 $269 $(3) Net realized gain (loss) on security transactions 1 -- (20) Net realized gain on distributions 210 -- 2,116 Net unrealized appreciation (depreciation) of investments during the year 468 120 (1,714) --------- ------- --------- Net increase (decrease) in net assets resulting from operations 734 389 379 --------- ------- --------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers -- -- 292 Surrenders for benefit payments and fees -- 1 (505) Net annuity transactions -- -- -- --------- ------- --------- Net increase (decrease) in net assets resulting from unit transactions -- 1 (213) --------- ------- --------- Net increase (decrease) in net assets 734 390 166 NET ASSETS: Beginning of year 13,050 8,183 31,073 --------- ------- --------- End of year $13,784 $8,573 $31,239 ========= ======= =========
SA-165 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT C&B LARGE CAP INTERNATIONAL VALUE FUND CORE FUND SUB-ACCOUNT (M) SUB-ACCOUNT ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $11 $(200) Net realized gain (loss) on security transactions -- 83 Net realized gain on distributions -- 775 Net unrealized appreciation (depreciation) of investments during the year (6) 419 ------- --------- Net increase (decrease) in net assets resulting from operations 5 1,077 ------- --------- UNIT TRANSACTIONS: Purchases 6,255 -- Net transfers -- (407) Surrenders for benefit payments and fees -- (7) Net annuity transactions -- -- ------- --------- Net increase (decrease) in net assets resulting from unit transactions 6,255 (414) ------- --------- Net increase (decrease) in net assets 6,260 663 NET ASSETS: Beginning of year -- 10,340 ------- --------- End of year $6,260 $11,003 ======= =========
(m) Funded as of November 27, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-166 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT STI CLASSIC VT LARGE COMPANY SMALL CAP LARGE CAP GROWTH GROWTH FUND GROWTH FUND STOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (N) ------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(161) $(127) $(122,527) Net realized gain (loss) on security transactions 47 169 150,978 Net realized gain on distributions -- 984 441,166 Net unrealized appreciation (depreciation) of investments during the year 602 (209) 458,970 ------- --------- ------------- Net increase (decrease) in net assets resulting from operations 488 817 928,587 ------- --------- ------------- UNIT TRANSACTIONS: Purchases -- 3,649 507,736 Net transfers 12 (807) (23,231) Surrenders for benefit payments and fees (6) (5) (1,046,945) Net annuity transactions -- -- -- ------- --------- ------------- Net increase (decrease) in net assets resulting from unit transactions 6 2,837 (562,440) ------- --------- ------------- Net increase (decrease) in net assets 494 3,654 366,147 NET ASSETS: Beginning of year 8,154 6,553 7,164,974 ------- --------- ------------- End of year $8,648 $10,207 $7,531,121 ======= ========= ============= STI CLASSIC VT STI CLASSIC VT STI CLASSIC VT LARGE CAP CORE MID-CAP CORE LARGE CAP VALUE EQUITY FUND EQUITY FUND EQUITY FUND SUB-ACCOUNT (O) SUB-ACCOUNT (P) SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(16,699) $(36,530) $(18,910) Net realized gain (loss) on security transactions 155,977 38,293 65,320 Net realized gain on distributions 120,990 302,511 -- Net unrealized appreciation (depreciation) of investments during the year (268,742) (250,139) (10,078) ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations (8,474) 54,135 36,332 ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 128,762 66,953 1,040,462 Net transfers 2,095 (11,400) 421,767 Surrenders for benefit payments and fees (537,769) (127,652) (553,933) Net annuity transactions -- -- -- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (406,912) (72,099) 908,296 ------------ ------------ ------------ Net increase (decrease) in net assets (415,386) (17,964) 944,628 NET ASSETS: Beginning of year 1,919,438 1,885,229 4,348,367 ------------ ------------ ------------ End of year $1,504,052 $1,867,265 $5,292,995 ============ ============ ============
(n) Formerly STI Classic VT Capital Appreciation Fund. Change effective May 31, 2007. (o) Formerly STI Classic VT Large Cap Relative Value Fund. Change effective May 31, 2007. (p) Formerly STI Classic VT Mid-Cap Equity Fund. Change effective May 31, 2007. SA-167 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008 ------------------------------------------------------------------------------- 1. ORGANIZATION: Separate Account Seven (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 annuity contract owners of the Company in various mutual funds (the "Funds") as directed by the contract owners. The Account invests in the following sub-accounts (collectively, the "Sub-Accounts"): the AllianceBernstein VPS Balanced Wealth Strategy Portfolio, AllianceBernstein VPS International Value Portfolio, AllianceBernstein VPS Small/Mid-Cap Value Portfolio, AllianceBernstein VPS Value Portfolio, AllianceBernstein VPS International Growth Portfolio, AIM V.I. Basic Value Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Core Equity Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund, AIM V.I. International Growth Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Small Cap Equity Fund, AIM V.I. Large Cap Growth Fund, AIM V.I. Capital Development Fund, American Funds Global Bond Fund, American Funds Global Growth and Income Fund, American Funds Asset Allocation Fund, American Funds Blue Chip Income and Growth Fund, American Funds Bond Fund, American Funds Global Growth Fund, American Funds Growth Fund, American Funds Growth-Income Fund, American Funds International Fund, American Funds New World Fund, American Funds Global Small Capitalization Fund, BB&T Mid Cap Growth VIF, BB&T Capital Manager Equity VIF, BB&T Large Cap VIF, BB&T Special Opportunities Equity VIF, BB&T Total Return Bond VIF, Columbia Asset Allocation VS Fund, Columbia Small Company Growth VS Fund , Columbia Large Cap Value VS Fund, Evergreen VA Diversified Capital Builder Fund, Evergreen VA Growth Fund, Evergreen VA International Equity Fund, Evergreen VA Omega Fund, Evergreen VA Special Values Fund, Evergreen VA Fundamental Large Cap Fund, Fidelity VIP Growth Portfolio, Fidelity VIP Contrafund(R) Portfolio, Fidelity VIP Mid Cap Portfolio, Fidelity VIP Value Strategies Portfolio, Fidelity VIP Dynamic Capital Appreciation Portfolio, Franklin Rising Dividends Securities Fund, Franklin Income Securities Fund, Franklin Large Cap Growth Securities Fund, Franklin Global Real Estate Securities Fund, Franklin Small-Mid Cap Growth Securities Fund, Franklin Small Cap Value Securities Fund, Franklin Strategic Income Securities Fund, Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund, Templeton Foreign Securities Fund, Templeton Global Asset Allocation Fund, Templeton Growth Securities Fund, Mutual Discovery Securities Fund, Franklin Flex Cap Growth Securities Fund, Franklin Large Cap Value Securities Fund, Templeton Global Income Securities Fund, Hartford Advisers HLS Fund, Hartford LargeCap Growth HLS Fund, Hartford Total Return Bond HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford Fundamental Growth HLS Fund, Hartford Global Advisers HLS Fund, Hartford Global Equity HLS Fund, Hartford Global Health HLS Fund, Hartford Global Growth HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Growth HLS Fund, Hartford Growth Opportunities HLS Fund, Hartford High Yield HLS Fund, Hartford Index HLS Fund, Hartford International Growth HLS Fund, Hartford International Small Company HLS Fund, Hartford International Opportunities HLS Fund, Hartford MidCap Growth HLS Fund, Hartford MidCap HLS Fund, Hartford MidCap Value HLS Fund, Hartford Money Market HLS Fund, Hartford SmallCap Value HLS Fund, Hartford Small Company HLS Fund, Hartford SmallCap Growth HLS Fund, Hartford Stock HLS Fund, Hartford U.S. Government Securities HLS Fund, Hartford Value HLS Fund, Hartford Value Opportunities HLS Fund, Hartford Equity Income HLS Fund, American Funds Asset Allocation HLS Fund, American Funds Blue Chip Income and Growth HLS Fund, American Funds Bond HLS Fund, American Funds Global Bond HLS Fund, American Funds Global Growth and Income HLS Fund, American Funds Global Growth HLS Fund, American Funds Global Small Capitalization HLS Fund, American Funds Growth HLS Fund, American Funds Growth-Income HLS Fund, American Funds International HLS Fund, American Funds New World HLS Fund, Huntington VA Income Equity Fund, Huntington VA Dividend Capture Fund, Huntington VA Growth Fund, Huntington VA Mid Corp America Fund, Huntington VA New Economy Fund, Huntington VA Rotating Markets Fund, Huntington VA International Equity Fund, Huntington VA Macro 100 Fund, Huntington VA Mortgage Securities Fund, Huntington VA Situs Fund, Lord Abbett America's Value Portfolio, Lord Abbett Bond-Debenture Portfolio, Lord Abbett Growth and Income Portfolio, MFS(R) Core Equity Series, MFS(R) Growth Series, MFS(R) Global Equity Series, MFS(R) High Income Series, MFS(R) Investors Growth Stock Series, MFS(R) Investors Trust Series, MFS(R) Mid Cap Growth Series, MFS(R) New Discovery Series, MFS(R) Total Return Series, MFS(R) Value SA-168 ------------------------------------------------------------------------------- Series, MFS(R) Research Bond Series, MFS(R) Research International Series, MFS(R) Research Series, BlackRock Global Growth V.I. Fund, BlackRock Large Cap Growth V.I. Fund, Van Kampen -- UIF International Growth Equity Portfolio, Van Kampen -- UIF Mid Cap Growth Portfolio, Van Kampen -- UIF U.S. Mid Cap Value Portfolio, Morgan Stanley -- Focus Growth Portfolio, Morgan Stanley -- Capital Opportunities Portfolio, Morgan Stanley -- Mid Cap Growth Portfolio, Morgan Stanley --Flexible Income Portfolio, Morgan Stanley -- Dividend Growth Portfolio, Morgan Stanley -- Global Equity Portfolio, MTB Large Cap Growth Fund II, MTB Large Cap Value Fund II, MTB Moderate Growth Fund II, Columbia Marsico International Opportunities VS Fund, Columbia High Yield VS Fund, Columbia Marsico Focused Equities VS Fund, Columbia Marsico Growth VS Fund, Columbia Marsico 21st Century VS Fund, Columbia Marsico Midcap Growth VS Fund, Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund(R)/VA, Oppenheimer Main Street Small Cap Fund(R)/VA, Oppenheimer Value Fund/VA, Putnam VT Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT International Growth and Income Fund, Putnam VT International Equity Fund, Putnam VT Small Cap Value Fund, JPMorgan Insurance Trust Balanced Portfolio - 1, JPMorgan Insurance Trust Core Bond Portfolio - 1, JPMorgan Insurance Trust Diversified Equity Portfolio - 1, JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - 1, JPMorgan Insurance Trust Equity Index Portfolio - 1, JPMorgan Insurance Trust Government Bond Portfolio - 1, JPMorgan Insurance Trust Intrepid Growth Portfolio - 1, JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio - 1, JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio - 1, Jennison 20/20 Focus Portfolio, Jennison Portfolio, Prudential Value Portfolio, Prudential Series International Growth, Legg Mason Partners Variable Capital and Income Portfolio, Legg Mason Partners Variable Fundamental Value Portfolio, Legg Mason Partners Variable Global High Yield Bond Portfolio, Legg Mason Partners Variable Investors Portfolio, Van Kampen LIT Growth and Income Portfolio, Van Kampen LIT Comstock Portfolio, Wells Fargo Advantage VT Asset Allocation Fund, Wells Fargo Advantage VT Total Return Bond Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund, Wells Fargo Advantage VT Small Cap Growth Fund, Wells Fargo Advantage VT Discovery Fund, RidgeWorth Variable Trust Large Cap Growth Stock Fund, RidgeWorth Variable Trust Large Cap Core Equity Fund, RidgeWorth Variable Trust Mid-Cap Core Equity Fund, and RidgeWorth Variable Trust Large Cap Value Equity Fund. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant accounting policies of the Account, which are in accordance with accounting principles generally accepted in the United States of America: 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 using the last in, first out method. Dividend and net realized gain on distributions income is accrued as of the ex-dividend date. Net realized gain on distributions 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, 2008. 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 accounting principles generally accepted in the United States of America 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. f) MORTALITY RISK -- Net assets allocated to contracts in the annuity period are computed according to the 1983a Individual Annuitant Mortality Table and the Annuity 2000 Table. The Mortality Risk is fully borne by the Company and may result in additional amounts being transferred into the variable annuity account by the SA-169 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 ------------------------------------------------------------------------------- Company to cover greater longevity of contract owners than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Company. g) FAIR VALUE MEASUREMENTS -- On January 1, 2008, the Account adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements" ("SFAS 157"). For financial statement elements currently required to be measured at fair value, SFAS 157 redefines fair value, establishes a framework for measuring fair value under U.S. GAAP, establishes a hierarchy based on the level of observable inputs used to measure fair value and enhances disclosures about fair value measurements. The new definition of fair value focuses on the price that would be received to sell the asset or paid to transfer the liability regardless of whether an observable liquid market price existed (an exit price). The following section applies the SFAS 157 fair value hierarchy and disclosure requirements to the Account's financial instruments that are carried at fair value. SFAS 157 establishes a fair value hierarchy that prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2, and 3). LEVEL 1: Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Account has the ability to access at the measurement date. Level 1 investments include highly liquid open ended management investment companies ("mutual funds"). LEVEL 2: Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most debt securities and some preferred stocks are model priced by vendors using observable inputs and are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with observable market inputs, including interest rate, foreign currency and certain credit swap contracts. LEVEL 3: Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities such as highly structured and/or lower quality asset-backed securities ("ABS") and commercial mortgage-backed securities ("CMBS"), including ABS backed by sub-prime loans, and private placement debt and equity securities. Embedded derivatives and complex derivatives securities, including equity derivatives, longer dated interest rate swaps and certain complex credit derivatives are also included in Level 3. Because Level 3 fair values, by their nature, contain unobservable market inputs as there is no observable market for these assets and liabilities, considerable judgment is used to determine the SFAS 157 Level 3 fair values. Level 3 fair values represent the best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. The adoption of SFAS 157 did not have a material impact on the results of the Account. As of December 31, 2008, the Account invests in mutual funds which are carried at fair value and represent Level 1 investments under the SFAS 157 hierarchy levels. There were no Level 2 or Level 3 investments in the Account. h) ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, AN INTERPRETATION OF FASB STATEMENT NO. 109 -- In July 2006, the FASB released "Accounting for Uncertainty in Income Taxes" ("FIN 48") to clarify accounting for income taxes recognized in the financial statements in accordance with FASB 109, "Accounting for Income Taxes." FIN 48 is effective for fiscal years beginning after December 15, 2006 and prescribes a comprehensive model for how an entity should recognize, measure, present and disclose in its financial statements uncertain tax positions that the entity has taken or expects to take on a tax return. Upon adoption, as of the first quarter of 2007, FIN 48 did not have an effect on the Account's financial condition. 3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES: Certain amounts are deducted from the contracts as described below: a) MORTALITY AND EXPENSE RISK CHARGES -- The Company will make deductions at a maximum annual rate of 1.55% of the contract's value for the mortality and expense risks which the company undertakes. b) TAX EXPENSE CHARGE -- If applicable, the Company will make deductions at a maximum rate of 3.5% of the contract's value to meet premium tax requirements. An additional tax charge based on a percentage of the contract's value may be assessed on partial withdrawals or surrenders. These expenses are included in surrenders for benefit payments and fees on the accompanying statements of changes in net assets. c) ADMINISTRATIVE CHARGE -- The Company will make deductions to cover administrative expenses at a maximum annual rate of 0.20% of the contract's value. SA-170 ------------------------------------------------------------------------------- d) ANNUAL MAINTENANCE FEE -- An annual maintenance fee in the amount of $30 may be charged from the contract's value each contract year. However, this fee is not applicable to contracts with values of $50,000 or more, as determined on the most recent contract anniversary. These expenses are included in surrenders for benefit payments and fees on the accompanying statements of changes in net assets. 4. PURCHASES AND SALES OF INVESTMENTS: The cost of purchases and proceeds from sales of investments for the year ended December 31, 2008 were as follows:
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio $1,410,679 $38,230 AllianceBernstein VPS International Value Portfolio 5,104,105 276,456 AllianceBernstein VPS Small/Mid-Cap Value Portfolio 760,262 21,633 AllianceBernstein VPS Value Portfolio 119,866 2,670 AllianceBernstein VPS International Growth Portfolio 1,083,455 49,092 AIM V.I. Basic Value Fund 18,959,851 18,244,655 AIM V.I. Capital Appreciation Fund 5,197,638 11,200,696 AIM V.I. Core Equity Fund 9,531,532 22,711,941 AIM V.I. Government Securities Fund 181,462,602 114,941,231 AIM V.I. High Yield Fund 298,710 479,844 AIM V.I. International Growth Fund 33,208,527 15,202,987 AIM V.I. Mid Cap Core Equity Fund 29,411,786 33,226,609 AIM V.I. Small Cap Equity Fund 21,467,535 9,276,563 AIM V.I. Large Cap Growth Fund 5,362,290 8,282,532 AIM V.I. Capital Development Fund 1,532,365 627,519 American Funds Global Bond Fund 93,172,644 38,933,564 American Funds Global Growth and Income Fund 47,607,971 27,461,438 American Funds Asset Allocation Fund 64,346,649 99,351,838 American Funds Blue Chip Income and Growth Fund 37,556,147 46,202,522 American Funds Bond Fund 74,965,342 81,730,238 American Funds Global Growth Fund 33,990,051 33,943,591 American Funds Growth Fund 212,077,326 153,467,782 American Funds Growth-Income Fund 167,629,823 146,618,073 American Funds International Fund 82,072,336 61,574,484 American Funds New World Fund 42,058,172 40,658,266 American Funds Global Small Capitalization Fund 30,603,229 35,623,509 BB&T Mid Cap Growth VIF 291,384 18,112 BB&T Capital Manager Equity VIF 211 -- BB&T Large Cap VIF 17,242 94 BB&T Special Opportunities Equity VIF 1,655,289 70,495 BB&T Total Return Bond VIF 652,581 89,629 Columbia Asset Allocation VS Fund 1,517,053 2,257,236 Columbia Small Company Growth VS Fund 2,768,889 5,527,177 Columbia Large Cap Value VS Fund 5,633,602 9,266,289 Evergreen VA Diversified Capital Builder Fund 372,909 276,911 Evergreen VA Growth Fund 256,436 313,034 Evergreen VA International Equity Fund 1,084,878 484,851 Evergreen VA Omega Fund 38,604 72,117 Evergreen VA Special Values Fund 4,007,483 3,905,585 Evergreen VA Fundamental Large Cap Fund 3,271,647 143,808
SA-171 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio $430,769 $79,589 Fidelity VIP Contrafund(R) Portfolio 10,698,164 456,049 Fidelity VIP Mid Cap Portfolio 7,121,035 85,533 Fidelity VIP Value Strategies Portfolio 407,047 4,880 Fidelity VIP Dynamic Capital Appreciation Portfolio 158,959 20,300 Franklin Rising Dividends Securities Fund 36,019,766 55,687,459 Franklin Income Securities Fund 170,310,004 189,728,843 Franklin Large Cap Growth Securities Fund 13,673,193 18,411,540 Franklin Global Real Estate Securities Fund 1,035,770 1,646,423 Franklin Small-Mid Cap Growth Securities Fund 28,744,444 23,363,896 Franklin Small Cap Value Securities Fund 11,455,599 3,242,127 Franklin Strategic Income Securities Fund 81,087,283 54,213,785 Mutual Shares Securities Fund 89,357,097 122,356,731 Templeton Developing Markets Securities Fund 30,311,798 26,870,191 Templeton Foreign Securities Fund 58,148,429 50,914,522 Templeton Global Asset Allocation Fund 849,792 1,276,826 Templeton Growth Securities Fund 66,367,877 94,099,500 Mutual Discovery Securities Fund 39,853,676 42,856,190 Franklin Flex Cap Growth Securities Fund 8,323,856 5,917,112 Franklin Large Cap Value Securities Fund 3,379,602 2,885,342 Templeton Global Income Securities Fund 5,472,362 181,057 Hartford Advisers HLS Fund 2,768,006 8,241,130 Hartford LargeCap Growth HLS Fund 47,861 5,922 Hartford Total Return Bond HLS Fund 55,591,932 32,074,272 Hartford Capital Appreciation HLS Fund 63,431,561 21,632,362 Hartford Dividend and Growth HLS Fund 36,693,465 16,620,318 Hartford Fundamental Growth HLS Fund 200,692 84,631 Hartford Global Advisers HLS Fund 13,819 82,810 Hartford Global Equity HLS Fund 444,482 460,319 Hartford Global Health HLS Fund 23,876 251,742 Hartford Global Growth HLS Fund 234,552 469,324 Hartford Disciplined Equity HLS Fund 4,498,702 263,152 Hartford Growth HLS Fund 356,383 44,895 Hartford Growth Opportunities HLS Fund 11,417,957 245,363 Hartford High Yield HLS Fund 985,080 223,091 Hartford Index HLS Fund 49,325 355,769 Hartford International Growth HLS Fund 382,580 273,513 Hartford International Small Company HLS Fund 3,716 93,311 Hartford International Opportunities HLS Fund 4,120,337 3,361,350 Hartford MidCap Growth HLS Fund 1,073,120 77,580 Hartford MidCap HLS Fund 133,232 904,541 Hartford MidCap Value HLS Fund 58,940 98,013 Hartford Money Market HLS Fund 551,200,960 262,721,808 Hartford SmallCap Value HLS Fund 201,691 21,791 Hartford Small Company HLS Fund 1,837,398 2,935,385 Hartford SmallCap Growth HLS Fund 582,129 236,841 Hartford Stock HLS Fund 2,227,180 6,589,683 Hartford U.S. Government Securities HLS Fund 4,116,904 1,321,418 Hartford Value HLS Fund 264,559 128,665 Hartford Value Opportunities HLS Fund 106,029 174,811
SA-172 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Hartford Equity Income HLS Fund $240,757 $26,881 American Funds Asset Allocation HLS Fund 5,734,189 181,634 American Funds Blue Chip Income and Growth HLS Fund 3,156,672 203,368 American Funds Bond HLS Fund 13,841,875 444,873 American Funds Global Bond HLS Fund 5,329,569 2,576,676 American Funds Global Growth and Income HLS Fund 9,090,752 309,822 American Funds Global Growth HLS Fund 2,547,303 401,240 American Funds Global Small Capitalization HLS Fund 3,739,583 135,733 American Funds Growth HLS Fund 25,396,995 357,535 American Funds Growth-Income HLS Fund 16,683,879 347,928 American Funds International HLS Fund 14,836,864 239,132 American Funds New World HLS Fund 4,628,514 221,215 Huntington VA Income Equity Fund 1,206,969 373,939 Huntington VA Dividend Capture Fund 2,612,125 1,346,403 Huntington VA Growth Fund 1,484,578 446,107 Huntington VA Mid Corp America Fund 1,146,343 817,344 Huntington VA New Economy Fund 1,883,637 678,636 Huntington VA Rotating Markets Fund 440,994 377,042 Huntington VA International Equity Fund 2,482,692 645,258 Huntington VA Macro 100 Fund 380,461 288,876 Huntington VA Mortgage Securities Fund 1,437,810 581,945 Huntington VA Situs Fund 1,506,817 635,344 Lord Abbett America's Value Portfolio 812,377 11,384 Lord Abbett Bond-Debenture Portfolio 7,030,926 189,694 Lord Abbett Growth and Income Portfolio 2,243,017 145,811 MFS(R) Core Equity Series 1,025,538 2,825,443 MFS(R) Growth Series 6,249,132 8,888,063 MFS(R) Global Equity Series 5,218,506 3,332,783 MFS(R) High Income Series 21,217,183 23,791,352 MFS(R) Investors Growth Stock Series 3,013,076 5,493,407 MFS(R) Investors Trust Series 33,126,789 24,542,510 MFS(R) Mid Cap Growth Series 11,233,936 9,876,112 MFS(R) New Discovery Series 30,602,376 18,959,509 MFS(R) Total Return Series 84,557,626 87,216,708 MFS(R) Value Series 38,033,995 14,761,036 MFS(R) Research Bond Series 28,712,863 13,050,832 MFS(R) Research International Series 21,009,990 5,807,041 MFS(R) Research Series 1,977,863 2,153,805 BlackRock Global Growth V.I. Fund 829 198,111 BlackRock Large Cap Growth V.I. Fund 225,714 279,306 Van Kampen -- UIF International Growth Equity Portfolio 2,086 20,306 Van Kampen -- UIF Mid Cap Growth Portfolio 1,160,893 36,892 Van Kampen -- UIF U.S. Mid Cap Value Portfolio 565,209 56,404 Morgan Stanley -- Focus Growth Portfolio 6,004 115 Morgan Stanley -- Capital Opportunities Portfolio 77,509 19,450 Morgan Stanley -- Mid Cap Growth Portfolio 6,569 274 Morgan Stanley -- Flexible Income Portfolio 11,840 51,954 Morgan Stanley -- Dividend Growth Portfolio 24 141 Morgan Stanley -- Global Equity Portfolio 8,969 276 MTB Large Cap Growth Fund II 218,014 1,397
SA-173 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- MTB Large Cap Value Fund II $247,077 $1,469 MTB Moderate Growth Fund II 14,310 44 Columbia Marsico International Opportunities VS Fund 7,103,685 10,049,432 Columbia High Yield VS Fund 2,734,686 7,711,612 Columbia Marsico Focused Equities VS Fund 4,070,791 7,999,650 Columbia Marsico Growth VS Fund 1,184,949 6,917,527 Columbia Marsico 21st Century VS Fund 1,037,897 2,821,233 Columbia Marsico Midcap Growth VS Fund 4,937,001 8,900,192 Oppenheimer Capital Appreciation Fund/VA 187,327 1,907 Oppenheimer Global Securities Fund/VA 4,560,200 193,542 Oppenheimer Main Street Fund(R)/VA 512,869 16,914 Oppenheimer Main Street Small Cap Fund(R)/VA 3,101,257 87,980 Oppenheimer Value Fund/VA 80,222 1,657 Putnam VT Diversified Income Fund 8,314,174 247,461 Putnam VT Global Asset Allocation Fund 139,480 3,083 Putnam VT International Growth and Income Fund 59,036 1,788 Putnam VT International Equity Fund 91,664 648 Putnam VT Small Cap Value Fund 105,125 2,419 JPMorgan Insurance Trust Balanced Portfolio - 1 649,046 416,566 JPMorgan Insurance Trust Core Bond Portfolio - 1 17,006,869 14,705,440 JPMorgan Insurance Trust Diversified Equity Portfolio - 1 2,490,242 1,476,682 JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - 1 3,784,973 1,412,789 JPMorgan Insurance Trust Equity Index Portfolio - 1 12,069,022 3,758,689 JPMorgan Insurance Trust Government Bond Portfolio - 1 10,624,724 5,325,948 JPMorgan Insurance Trust Intrepid Growth Portfolio - 1 2,835,610 264,813 JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio - 1 4,185,372 2,545,655 JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio - 1 3,451,015 1,652,224 Jennison 20/20 Focus Portfolio 149,449 145,925 Jennison Portfolio 10,793 172,263 Prudential Value Portfolio 49,265 41,329 Prudential Series International Growth 7,053 5,697 Legg Mason Partners Variable Capital and Income Portfolio 9,675 211,207 Legg Mason Partners Variable Fundamental Value Portfolio 40,878 745,952 Legg Mason Partners Variable Global High Yield Bond Portfolio 11,700 34,912 Legg Mason Partners Variable Investors Portfolio 37,718 332,813 Van Kampen LIT Growth and Income Portfolio 787,026 112,136 Van Kampen LIT Comstock Portfolio 73,487 77,630 Wells Fargo Advantage VT Asset Allocation Fund 1,246 218 Wells Fargo Advantage VT Total Return Bond Fund 410 116 Wells Fargo Advantage VT Equity Income Fund 5,146 3,877 Wells Fargo Advantage VT C&B Large Cap Value Fund 9,747 5,945 Wells Fargo Advantage VT International Core Fund 3,429 175 Wells Fargo Advantage VT Large Company Growth Fund 711 414 Wells Fargo Advantage VT Small Cap Growth Fund 8,036 2,600 Wells Fargo Advantage VT Discovery Fund 2,827 26 RidgeWorth Variable Trust Large Cap Growth Stock Fund 1,553,036 2,036,723 RidgeWorth Variable Trust Large Cap Core Equity Fund 249,516 425,602 RidgeWorth Variable Trust Mid-Cap Core Equity Fund 398,264 443,863 RidgeWorth Variable Trust Large Cap Value Equity Fund 1,948,730 1,199,856 ---------------- ---------------- $3,147,927,087 $2,392,728,696 ================ ================
SA-174 ------------------------------------------------------------------------------- 5. CHANGES IN UNITS OUTSTANDING: The changes in units outstanding for the year ended December 31, 2008 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------ AllianceBernstein VPS Balanced Wealth Strategy Portfolio 163,913 1,707 162,206 AllianceBernstein VPS International Value Portfolio 709,347 37,766 671,581 AllianceBernstein VPS Small/Mid-Cap Value Portfolio 87,442 2,298 85,144 AllianceBernstein VPS Value Portfolio 14,194 287 13,907 AllianceBernstein VPS International Growth Portfolio 149,886 8,312 141,574 AIM V.I. Basic Value Fund 8,030,378 15,317,345 (7,286,967) AIM V.I. Capital Appreciation Fund 4,381,593 8,991,828 (4,610,235) AIM V.I. Core Equity Fund 814,216 2,703,216 (1,889,000) AIM V.I. Government Securities Fund 144,595,893 94,840,344 49,755,549 AIM V.I. High Yield Fund 173,911 400,316 (226,405) AIM V.I. International Growth Fund 14,631,165 8,153,928 6,477,237 AIM V.I. Mid Cap Core Equity Fund 11,029,177 20,287,892 (9,258,715) AIM V.I. Small Cap Equity Fund 1,656,363 724,653 931,710 AIM V.I. Large Cap Growth Fund 512,810 772,922 (260,112) AIM V.I. Capital Development Fund 173,955 93,320 80,635 American Funds Global Bond Fund 8,041,174 3,525,681 4,515,493 American Funds Global Growth and Income Fund 4,207,978 2,793,508 1,414,470 American Funds Asset Allocation Fund 3,040,257 7,949,357 (4,909,100) American Funds Blue Chip Income and Growth Fund 22,288,170 44,347,200 (22,059,030) American Funds Bond Fund 4,308,379 5,987,430 (1,679,051) American Funds Global Growth Fund 1,569,873 2,553,566 (983,693) American Funds Growth Fund 7,948,778 13,334,479 (5,385,701) American Funds Growth-Income Fund 7,086,818 11,893,845 (4,807,027) American Funds International Fund 2,716,607 4,424,550 (1,707,943) American Funds New World Fund 1,301,502 1,824,112 (522,610) American Funds Global Small Capitalization Fund 985,415 2,089,146 (1,103,731) BB&T Mid Cap Growth VIF 27,196 1,737 25,459 BB&T Capital Manager Equity VIF 33 -- 33 BB&T Large Cap VIF 1,486 -- 1,486 BB&T Special Opportunities Equity VIF 181,830 8,963 172,867 BB&T Total Return Bond VIF 65,822 8,989 56,833 Columbia Asset Allocation VS Fund 577,659 2,143,085 (1,565,426) Columbia Small Company Growth VS Fund 1,155,483 4,839,821 (3,684,338) Columbia Large Cap Value VS Fund 1,495,409 8,350,911 (6,855,502) Evergreen VA Diversified Capital Builder Fund 370,285 303,403 66,882 Evergreen VA Growth Fund 243,872 298,422 (54,550) Evergreen VA International Equity Fund 806,753 333,594 473,159 Evergreen VA Omega Fund 48,514 77,887 (29,373) Evergreen VA Special Values Fund 2,303,783 2,442,013 (138,230) Evergreen VA Fundamental Large Cap Fund 1,997,045 112,331 1,884,714 Fidelity VIP Growth Portfolio 49,979 8,838 41,141 Fidelity VIP Contrafund(R) Portfolio 1,300,408 52,171 1,248,237 Fidelity VIP Mid Cap Portfolio 887,960 7,204 880,756 Fidelity VIP Value Strategies Portfolio 55,522 459 55,063 Fidelity VIP Dynamic Capital Appreciation Portfolio 17,441 2,006 15,435
SA-175 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------ Franklin Rising Dividends Securities Fund 2,146,350 4,162,049 (2,015,699) Franklin Income Securities Fund 7,119,631 13,314,642 (6,195,011) Franklin Large Cap Growth Securities Fund 747,776 1,653,896 (906,120) Franklin Global Real Estate Securities Fund 9,083 84,646 (75,563) Franklin Small-Mid Cap Growth Securities Fund 1,811,719 2,434,045 (622,326) Franklin Small Cap Value Securities Fund 1,375,592 387,075 988,517 Franklin Strategic Income Securities Fund 4,778,204 3,568,113 1,210,091 Mutual Shares Securities Fund 3,608,158 8,234,401 (4,626,243) Templeton Developing Markets Securities Fund 855,872 1,244,364 (388,492) Templeton Foreign Securities Fund 2,698,261 3,987,151 (1,288,890) Templeton Global Asset Allocation Fund 14,917 85,003 (70,086) Templeton Growth Securities Fund 2,315,852 7,246,758 (4,930,906) Mutual Discovery Securities Fund 1,805,319 2,267,697 (462,378) Franklin Flex Cap Growth Securities Fund 783,759 558,923 224,836 Franklin Large Cap Value Securities Fund 357,839 284,674 73,165 Templeton Global Income Securities Fund 570,229 15,541 554,688 Hartford Advisers HLS Fund 1,082,820 8,181,173 (7,098,353) Hartford LargeCap Growth HLS Fund 5,695 649 5,046 Hartford Total Return Bond HLS Fund 10,619,185 23,440,019 (12,820,834) Hartford Capital Appreciation HLS Fund 9,901,839 14,413,899 (4,512,060) Hartford Dividend and Growth HLS Fund 5,672,268 13,088,886 (7,416,618) Hartford Fundamental Growth HLS Fund 23,553 12,844 10,709 Hartford Global Advisers HLS Fund 1,040 42,958 (41,918) Hartford Global Equity HLS Fund 53,220 734,861 (681,641) Hartford Global Health HLS Fund 1,075 127,954 (126,879) Hartford Global Growth HLS Fund 25,339 219,535 (194,196) Hartford Disciplined Equity HLS Fund 528,611 155,506 373,105 Hartford Growth HLS Fund 49,233 26,685 22,548 Hartford Growth Opportunities HLS Fund 1,454,362 69,475 1,384,887 Hartford High Yield HLS Fund 102,926 100,963 1,963 Hartford Index HLS Fund 6,384 73,770 (67,386) Hartford International Growth HLS Fund 47,509 110,028 (62,519) Hartford International Small Company HLS Fund -- 41,443 (41,443) Hartford International Opportunities HLS Fund 1,021,516 2,302,568 (1,281,052) Hartford MidCap Growth HLS Fund 138,852 11,596 127,256 Hartford MidCap HLS Fund 1,803 221,229 (219,426) Hartford MidCap Value HLS Fund 709 66,525 (65,816) Hartford Money Market HLS Fund 475,825,508 230,219,915 245,605,593 Hartford SmallCap Value HLS Fund 23,987 2,178 21,809 Hartford Small Company HLS Fund 531,735 2,033,814 (1,502,079) Hartford SmallCap Growth HLS Fund 67,398 89,602 (22,204) Hartford Stock HLS Fund 1,944,088 7,211,499 (5,267,411) Hartford U.S. Government Securities HLS Fund 1,140,324 666,736 473,588 Hartford Value HLS Fund 33,686 88,753 (55,067) Hartford Value Opportunities HLS Fund 12,302 131,344 (119,042) Hartford Equity Income HLS Fund 26,712 14,376 12,336 American Funds Asset Allocation HLS Fund 679,198 21,626 657,572 American Funds Blue Chip Income and Growth HLS Fund 387,663 21,064 366,599
SA-176 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------ American Funds Bond HLS Fund 1,499,908 48,035 1,451,873 American Funds Global Bond HLS Fund 561,493 282,165 279,328 American Funds Global Growth and Income HLS Fund 1,190,892 40,529 1,150,363 American Funds Global Growth HLS Fund 312,913 48,769 264,144 American Funds Global Small Capitalization HLS Fund 541,196 20,741 520,455 American Funds Growth HLS Fund 3,348,676 46,773 3,301,903 American Funds Growth-Income HLS Fund 2,062,932 44,758 2,018,174 American Funds International HLS Fund 1,982,413 32,344 1,950,069 American Funds New World HLS Fund 605,518 31,155 574,363 Huntington VA Income Equity Fund 574,798 149,947 424,851 Huntington VA Dividend Capture Fund 735,645 441,843 293,802 Huntington VA Growth Fund 774,886 281,476 493,410 Huntington VA Mid Corp America Fund 358,849 216,291 142,558 Huntington VA New Economy Fund 557,898 182,209 375,689 Huntington VA Rotating Markets Fund 92,812 115,057 (22,245) Huntington VA International Equity Fund 543,768 185,970 357,798 Huntington VA Macro 100 Fund 293,700 299,955 (6,255) Huntington VA Mortgage Securities Fund 295,417 158,241 137,176 Huntington VA Situs Fund 951,059 495,497 455,562 Lord Abbett America's Value Portfolio 87,085 993 86,092 Lord Abbett Bond-Debenture Portfolio 716,325 16,333 699,992 Lord Abbett Growth and Income Portfolio 260,669 5,313 255,356 MFS(R) Core Equity Series 134,377 337,883 (203,506) MFS(R) Growth Series 875,124 1,242,686 (367,562) MFS(R) Global Equity Series 312,489 234,639 77,850 MFS(R) High Income Series 1,302,210 1,972,408 (670,198) MFS(R) Investors Growth Stock Series 282,129 733,498 (451,369) MFS(R) Investors Trust Series 2,278,866 2,634,785 (355,919) MFS(R) Mid Cap Growth Series 1,318,731 1,772,891 (454,160) MFS(R) New Discovery Series 1,265,875 1,842,104 (576,229) MFS(R) Total Return Series 3,348,473 6,592,012 (3,243,539) MFS(R) Value Series 2,615,175 967,989 1,647,186 MFS(R) Research Bond Series 2,708,201 1,241,091 1,467,110 MFS(R) Research International Series 1,477,632 443,586 1,034,046 MFS(R) Research Series 178,005 194,200 (16,195) BlackRock Global Growth V.I. Fund 1 13,835 (13,834) BlackRock Large Cap Growth V.I. Fund 21,600 25,068 (3,468) Van Kampen -- UIF International Growth Equity Portfolio 164 1,555 (1,391) Van Kampen -- UIF Mid Cap Growth Portfolio 141,415 5,282 136,133 Van Kampen -- UIF U.S. Mid Cap Value Portfolio 61,980 5,650 56,330 Morgan Stanley -- Focus Growth Portfolio 818 -- 818 Morgan Stanley -- Capital Opportunities Portfolio 18,075 5,022 13,053 Morgan Stanley -- Mid Cap Growth Portfolio 628 5 623 Morgan Stanley -- Flexible Income Portfolio 843 4,948 (4,105) Morgan Stanley -- Dividend Growth Portfolio 1 3 (2) Morgan Stanley -- Global Equity Portfolio 754 3 751 MTB Large Cap Growth Fund II 25,003 146 24,857 MTB Large Cap Value Fund II 30,031 197 29,834
SA-177 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------ MTB Moderate Growth Fund II 1,506 -- 1,506 Columbia Marsico International Opportunities VS Fund 1,483,127 5,938,758 (4,455,631) Columbia High Yield VS Fund 596,559 5,182,913 (4,586,354) Columbia Marsico Focused Equities VS Fund 779,330 6,987,720 (6,208,390) Columbia Marsico Growth VS Fund 1,131,890 6,231,367 (5,099,477) Columbia Marsico 21st Century VS Fund 584,230 1,783,706 (1,199,476) Columbia Marsico Midcap Growth VS Fund 2,577,514 9,566,048 (6,988,534) Oppenheimer Capital Appreciation Fund/VA 20,251 133 20,118 Oppenheimer Global Securities Fund/VA 567,098 11,605 555,493 Oppenheimer Main Street Fund(R)/VA 62,043 2,100 59,943 Oppenheimer Main Street Small Cap Fund(R)/VA 366,994 7,908 359,086 Oppenheimer Value Fund/VA 9,457 20 9,437 Putnam VT Diversified Income Fund 953,281 27,796 925,485 Putnam VT Global Asset Allocation Fund 15,183 320 14,863 Putnam VT International Growth and Income Fund 7,141 203 6,938 Putnam VT International Equity Fund 12,034 55 11,979 Putnam VT Small Cap Value Fund 11,759 262 11,497 JPMorgan Insurance Trust Balanced Portfolio - 1 36,996 37,338 (342) JPMorgan Insurance Trust Core Bond Portfolio - 1 1,310,998 1,291,765 19,233 JPMorgan Insurance Trust Diversified Equity Portfolio - 1 118,198 123,631 (5,433) JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - 1 243,136 112,912 130,224 JPMorgan Insurance Trust Equity Index Portfolio - 1 1,034,237 359,052 675,185 JPMorgan Insurance Trust Government Bond Portfolio - 1 845,300 451,455 393,845 JPMorgan Insurance Trust Intrepid Growth Portfolio - 1 266,763 26,240 240,523 JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio - 1 167,745 207,496 (39,751) JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio - 1 103,212 134,207 (30,995) Jennison 20/20 Focus Portfolio 46,509 40,614 5,895 Jennison Portfolio 1,969 112,513 (110,544) Prudential Value Portfolio 2,422 38,499 (36,077) Prudential Series International Growth 4,458 4,429 29 Legg Mason Partners Variable Capital and Income Portfolio 798 23,414 (22,616) Legg Mason Partners Variable Fundamental Value Portfolio 3,132 87,645 (84,513) Legg Mason Partners Variable Global High Yield Bond Portfolio 3,169 31,297 (28,128) Legg Mason Partners Variable Investors Portfolio 16,023 258,562 (242,539) Van Kampen LIT Growth and Income Portfolio 86,212 8,446 77,766 Van Kampen LIT Comstock Portfolio 2,598 5,031 (2,433) Wells Fargo Advantage VT Asset Allocation Fund -- -- -- Wells Fargo Advantage VT Total Return Bond Fund -- -- -- Wells Fargo Advantage VT Equity Income Fund 594 3,157 (2,563) Wells Fargo Advantage VT C&B Large Cap Value Fund 8,196 6,953 1,243 Wells Fargo Advantage VT International Core Fund 1,212 7 1,205 Wells Fargo Advantage VT Large Company Growth Fund 683 323 360 Wells Fargo Advantage VT Small Cap Growth Fund 3,399 2,697 702 Wells Fargo Advantage VT Discovery Fund 225 -- 225 RidgeWorth Variable Trust Large Cap Growth Stock Fund 113,052 278,420 (165,368) RidgeWorth Variable Trust Large Cap Core Equity Fund 17,993 28,019 (10,026) RidgeWorth Variable Trust Mid-Cap Core Equity Fund 28,376 27,747 629 RidgeWorth Variable Trust Large Cap Value Equity Fund 250,231 170,935 79,296
SA-178 ------------------------------------------------------------------------------- The changes in units outstanding for the year ended December 31, 2007 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) --------------------------------------------------------------------------------------------------- AIM V.I. Basic Value Fund 4,231,122 13,091,950 (8,860,828) AIM V.I. Capital Appreciation Fund 3,686,620 8,640,887 (4,954,267) AIM V.I. Core Equity Fund 752,589 2,250,726 (1,498,137) AIM V.I. Government Securities Fund 99,221,691 34,182,778 65,038,913 AIM V.I. High Yield Fund 46,500 270,398 (223,898) AIM V.I. International Growth Fund 22,304,592 11,517,880 10,786,712 AIM V.I. Mid Cap Core Equity Fund 9,698,334 13,389,396 (3,691,062) AIM V.I. Small Cap Equity Fund 1,216,946 364,140 852,806 AIM V.I. Large Cap Growth Fund 514,118 595,633 (81,515) AIM V.I. Capital Development Fund 19,348 -- 19,348 American Funds Global Bond Fund 2,776,567 240,529 2,536,038 American Funds Global Growth and Income Fund 7,770,159 599,422 7,170,737 American Funds Asset Allocation Fund 4,330,160 3,935,008 395,152 American Funds Blue Chip Income and Growth Fund 26,729,596 33,537,207 (6,807,611) American Funds Bond Fund 5,873,860 3,139,121 2,734,739 American Funds Global Growth Fund 2,495,032 1,442,198 1,052,834 American Funds Growth Fund 15,283,508 8,851,732 6,431,776 American Funds Growth-Income Fund 11,854,423 7,911,472 3,942,951 American Funds International Fund 4,269,807 3,043,112 1,226,695 American Funds New World Fund 2,098,751 1,051,149 1,047,602 American Funds Global Small Capitalization Fund 1,890,307 1,494,361 395,946 Columbia Asset Allocation Fund VS 944,494 2,059,221 (1,114,727) Columbia Small Company Growth Fund VS 789,223 4,116,741 (3,327,518) Columbia Large Cap Value Fund VS 1,896,444 6,900,746 (5,004,302) Evergreen VA Balanced Fund 380,938 52,823 328,115 Evergreen VA Growth Fund 848,186 242,064 606,122 Evergreen VA International Equity Fund 619,046 104,123 514,923 Evergreen VA Omega Fund 1,044,467 924,851 119,616 Evergreen VA Special Values Fund 3,920,620 629,927 3,290,693 Evergreen VA Fundamental Large Cap Fund 188,827 44,420 144,407 Franklin Rising Dividends Securities Fund 7,493,020 1,655,833 5,837,187 Franklin Income Securities Fund 19,210,845 3,711,718 15,499,127 Franklin Large Cap Growth Securities Fund 1,449,189 893,360 555,829 Franklin Global Real Estate Securities Fund 19,390 75,898 (56,508) Franklin Small-Mid Cap Growth Securities Fund 2,273,051 1,850,785 422,266 Franklin Small Cap Value Securities Fund 16,687 506 16,181 Franklin Strategic Income Securities Fund 3,745,268 1,578,827 2,166,441 Mutual Shares Securities Fund 8,538,617 3,496,942 5,041,675 Templeton Developing Markets Securities Fund 1,178,172 676,716 501,456 Templeton Foreign Securities Fund 2,514,907 2,417,725 97,182 Templeton Global Asset Allocation Fund 26,698 52,389 (25,691) Templeton Growth Securities Fund 7,480,411 3,362,536 4,117,875 Mutual Discovery Securities Fund 3,102,388 867,379 2,235,009 Franklin Flex Cap Growth Securities Fund 671,877 204,472 467,405 Franklin Large Cap Value Securities Fund 327,070 139,862 187,208 Hartford Advisers HLS Fund 1,171,581 8,413,655 (7,242,074) Hartford Total Return Bond HLS Fund 6,166,121 11,903,761 (5,737,640)
SA-179 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) --------------------------------------------------------------------------------------------------- Hartford Capital Appreciation HLS Fund 2,216,089 11,302,385 (9,086,296) Hartford Dividend and Growth HLS Fund 2,821,731 10,106,667 (7,284,936) Hartford Fundamental Growth HLS Fund 315 432 (117) Hartford Global Advisers HLS Fund 142 38,198 (38,056) Hartford Global Communications HLS Fund 308 6 302 Hartford Global Financial Services HLS Fund 4 13,845 (13,841) Hartford Global Health HLS Fund 3,741 139,089 (135,348) Hartford Global Growth HLS Fund 24,181 410,582 (386,401) Hartford Global Technology HLS Fund 9,201 326,396 (317,195) Hartford Disciplined Equity HLS Fund 19,134 116,661 (97,527) Hartford Growth HLS Fund 3,051 18,180 (15,129) Hartford Growth Opportunities HLS Fund 25,080 25,377 (297) Hartford High Yield HLS Fund 6,838 61,771 (54,933) Hartford Index HLS Fund 2,077 124,139 (122,062) Hartford International Growth HLS Fund 36,266 177,466 (141,200) Hartford International Small Company HLS Fund 12,416 16,007 (3,591) Hartford International Opportunities HLS Fund 1,481,270 2,856,878 (1,375,608) Hartford MidCap HLS Fund 2,410 561,400 (558,990) Hartford MidCap Value HLS Fund 1,916 84,440 (82,524) Hartford Money Market HLS Fund 335,262,172 241,906,652 93,355,520 Hartford Mortgage Securities HLS Fund 76,199 18,779 57,420 Hartford Small Company HLS Fund 467,990 1,613,504 (1,145,514) Hartford SmallCap Growth HLS Fund 6,260 19,962 (13,702) Hartford Stock HLS Fund 1,032,326 6,394,844 (5,362,518) Hartford U.S. Government Securities HLS Fund 21,200 95,473 (74,273) Hartford Value HLS Fund 37,322 114,529 (77,207) Hartford Value Opportunities HLS Fund 7,348 49,871 (42,523) Hartford Equity Income HLS Fund 26,550 26,624 (74) Huntington VA Income Equity Fund 517,364 51,103 466,261 Huntington VA Dividend Capture Fund 1,592,239 120,277 1,471,962 Huntington VA Growth Fund 861,070 102,224 758,846 Huntington VA Mid Corp America Fund 522,047 113,866 408,181 Huntington VA New Economy Fund 618,743 91,935 526,808 Huntington VA Rotating Markets Fund 274,724 21,589 253,135 Huntington VA International Equity Fund 824,955 45,000 779,955 Huntington VA Macro 100 Fund 606,151 164,593 441,558 Huntington VA Mortgage Securities Fund 447,026 63,319 383,707 Huntington VA Situs Small Cap Fund 1,889,506 288,357 1,601,149 MFS Core Equity Series 105,460 449,354 (343,894) MFS Emerging Growth Series 1,047,995 784,929 263,066 MFS Global Equity Series 198,888 253,248 (54,360) MFS High Income Series 1,217,616 1,319,970 (102,354) MFS Investors Growth Stock Series 309,946 840,947 (531,001) MFS Investors Trust Series 3,518,307 1,698,433 1,819,874 MFS Mid Cap Growth Series 828,043 1,545,683 (717,640) MFS New Discovery Series 1,976,561 1,388,241 588,320 MFS Total Return Series 7,568,632 3,366,237 4,202,395 MFS Value Series 1,932,094 672,845 1,259,249
SA-180 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) --------------------------------------------------------------------------------------------------- MFS Research Bond Series 2,037,454 383,487 1,653,967 MFS Research International Series 943,539 204,005 739,534 MFS Research Series 214,477 50,860 163,617 BlackRock Global Growth V.I. Fund (1) 101 (102) BlackRock Large Cap Growth V.I. Fund 7,077 18,896 (11,819) International Growth Equity Fund 4,825 -- 4,825 U.S. Mid Cap Value 2,457 134 2,323 Capital Opportunities 34,192 1,219 32,973 Developing Growth 366 3 363 Flexible Income 6,673 -- 6,673 Dividend Growth 604 -- 604 Global Equity 674 -- 674 Columbia Marsico International Opportunities Fund VS 934,705 5,390,309 (4,455,604) Columbia High Yield Fund VS 764,560 3,995,574 (3,231,014) Columbia Marsico Focused Equities Fund VS 1,508,861 5,526,754 (4,017,893) Columbia Marsico Growth Fund VS 1,043,877 5,888,811 (4,844,934) Columbia Marsico 21st Century Fund VS 918,384 1,184,503 (266,119) Columbia Marsico Midcap Growth Fund VS 1,348,889 8,851,909 (7,503,020) JPMorgan Insurance Trust Balanced Portfolio - 1 20,056 17,846 2,210 JPMorgan Insurance Trust Core Bond Portfolio - 1 1,535,148 157,810 1,377,338 JPMorgan Insurance Trust Diversified Equity Portfolio - 1 164,551 89,862 74,689 JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - 1 346,949 31,001 315,948 JPMorgan Insurance Trust Equity Index Portfolio - 1 768,250 203,267 564,983 JPMorgan Insurance Trust Government Bond Portfolio - 1 591,933 67,016 524,917 JPMorgan Insurance Trust Intrepid Growth Portfolio - 1 130,361 4,659 125,702 JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio - 1 171,504 114,262 57,242 JPMorgan Insurance Trust Diversified Mid Cap Value Portfolio - 1 73,360 93,375 (20,015) Jennison 20/20 Focus Portfolio 5,443 10,098 (4,655) Jennison Portfolio 14,502 65,016 (50,514) Prudential Value Portfolio 15,600 11,315 4,285 Prudential Series International Growth -- 14,575 (14,575) Legg Mason Partners Variable Capital and Income Portfolio 47,048 283,420 (236,372) Legg Mason Partners Variable Fundamental Value Portfolio 311,619 1,991,003 (1,679,384) Legg Mason Partners Variable Global High Yield Bond Portfolio 2,801 70,914 (68,113) Legg Mason Partners Variable Investors Portfolio 20,593 86,582 (65,989) Growth and Income 20,204 108 20,096 Comstock 22,901 267 22,634 Wells Fargo Advantage VT Asset Allocation Fund -- -- -- Wells Fargo Advantage VT Total Return Bond Fund -- -- -- Wells Fargo Advantage VT Equity Income Fund 255 415 (160) Wells Fargo Advantage VT C&B Large Cap Value Fund 4,939 -- 4,939 Wells Fargo Advantage VT International Core Fund 28 304 (276) Wells Fargo Advantage VT Large Company Growth Fund 254 223 31 Wells Fargo Advantage VT Small Cap Growth Fund 2,421 568 1,853 STI Classic VT Large Cap Growth Stock Fund 237,230 174,407 62,823 STI Classic VT Large Cap Core Equity Fund 18,257 34,308 (16,051) STI Classic VT Mid-Cap Core Equity Fund 14,115 16,655 (2,540) STI Classic VT Large Cap Value Equity Fund 298,941 58,200 240,741
SA-181 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 ------------------------------------------------------------------------------- 6. FINANCIAL HIGHLIGHTS: The following is a summary of units, unit fair value, contract owners' equity, expense ratios, investment income ratios, and total return showing the minimum and maximum contract charges for each series in each Sub-Account that has outstanding units.
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2008 Lowest contract charges 4,406 $7.429046 $32,734 Highest contract charges 297 7.327822 2,176 Remaining contract charges 157,503 -- 1,162,727 ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2008 Lowest contract charges 1,991 5.159378 10,272 Highest contract charges 418 5.088962 2,125 Remaining contract charges 669,172 -- 3,431,466 ALLIANCEBERNSTEIN VPS SMALL/MID-CAP VALUE PORTFOLIO 2008 Lowest contract charges 360 6.719459 2,421 Highest contract charges 482 6.627915 3,197 Remaining contract charges 84,302 -- 562,738 ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2008 Lowest contract charges 5,039 6.414435 32,322 Highest contract charges 1,733 6.350732 11,004 Remaining contract charges 7,135 -- 45,588 ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2008 Lowest contract charges 41,382 5.454337 225,713 Highest contract charges 404 5.397825 2,182 Remaining contract charges 99,788 -- 541,338 AIM V.I. BASIC VALUE FUND 2008 Lowest contract charges 13,134 0.736367 9,671 Highest contract charges 20,183 0.665662 13,435 Remaining contract charges 48,395,430 -- 33,692,738 2007 Lowest contract charges 13,149 1.539735 20,246 Highest contract charges 20,190 1.415834 28,586 Remaining contract charges 55,682,375 -- 81,930,367 2006 Lowest contract charges 13,159 1.529265 20,122 Highest contract charges 19,533 1.430310 27,938 Remaining contract charges 64,543,850 -- 95,224,860 2005 Lowest contract charges 4,429 1.362431 6,034 Highest contract charges 15,469 1.296106 20,049 Remaining contract charges 70,510,230 -- 93,589,833 2004 Lowest contract charges 14,913 1.316677 19,633 Highest contract charges 338,958 1.258072 426,433 Remaining contract charges 73,492,934 -- 93,997,564 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2008 Lowest contract charges 0.70% 2.40% (28.64)% Highest contract charges 1.98% -- (29.42)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2008 Lowest contract charges 0.71% -- (52.21)% Highest contract charges 1.97% -- (52.73)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS SMALL/MID-CAP VALUE PORTFOLIO 2008 Lowest contract charges 0.67% -- (37.81)% Highest contract charges 1.98% -- (38.49)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2008 Lowest contract charges 1.05% -- (39.30)% Highest contract charges 1.99% -- (39.78)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2008 Lowest contract charges 1.02% -- (47.88)% Highest contract charges 1.98% -- (48.31)% Remaining contract charges -- -- -- AIM V.I. BASIC VALUE FUND 2008 Lowest contract charges 0.85% 0.91% (52.18)% Highest contract charges 2.56% 0.90% (52.98)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 0.60% 0.69% Highest contract charges 2.54% 0.61% (1.01)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.42% 12.25% Highest contract charges 2.55% 0.41% 10.35% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.32% 9.20% Highest contract charges 2.52% 0.17% 3.08% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% -- 10.02% Highest contract charges 2.46% -- 8.33% Remaining contract charges -- -- --
SA-182 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND 2008 Lowest contract charges 1,414 $6.563072 $9,282 Highest contract charges 9,198 0.819924 7,541 Remaining contract charges 22,104,905 -- 18,740,521 2007 Lowest contract charges 1,405 1.606895 2,257 Highest contract charges 8,611 1.462664 12,595 Remaining contract charges 26,715,736 -- 39,695,090 2006 Lowest contract charges 1,405 1.448235 2,040 Highest contract charges 8,071 1.339480 10,811 Remaining contract charges 31,670,543 -- 42,945,669 2005 Lowest contract charges 1,406 1.375395 1,934 Highest contract charges 14,540 1.293952 18,815 Remaining contract charges 14,335,563 -- 18,104,870 2004 Lowest contract charges 3,083 1.275804 3,933 Highest contract charges 545 1.218998 665 Remaining contract charges 14,608,245 -- 17,212,008 AIM V.I. CORE EQUITY FUND 2008 Lowest contract charges 269 8.890218 2,393 Highest contract charges 16 8.328570 129 Remaining contract charges 9,307,730 -- 70,264,685 2007 Lowest contract charges 269 12.834710 3,458 Highest contract charges 1,063 12.230262 12,996 Remaining contract charges 11,195,683 -- 118,268,284 2006 Lowest contract charges 271 11.972479 3,230 Highest contract charges 891 11.604187 10,340 Remaining contract charges 12,693,990 -- 123,078,967 2005 Lowest contract charges 94 10.346561 972 Highest contract charges 297 10.204436 3,027 Remaining contract charges 18,666 -- 191,463 AIM V.I. GOVERNMENT SECURITIES FUND 2008 Lowest contract charges 118,115 1.325847 156,603 Highest contract charges 368,983 1.198564 442,250 Remaining contract charges 325,787,602 -- 410,044,244 2007 Lowest contract charges 74,927 1.190613 89,209 Highest contract charges 72,103 1.094766 78,936 Remaining contract charges 276,372,121 -- 315,294,143 2006 Lowest contract charges 5,947 1.129202 6,715 Highest contract charges 32,415 1.056100 34,234 Remaining contract charges 211,441,876 -- 230,543,331 2005 Lowest contract charges 6,162 1.113189 6,859 Highest contract charges 1,605,015 1.047274 1,680,890 Remaining contract charges 168,644,111 -- 180,709,907 2004 Lowest contract charges 19,935 1.105472 22,035 Highest contract charges 348,325 1.056247 367,917 Remaining contract charges 118,099,582 -- 126,808,385 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND 2008 Lowest contract charges 0.71% -- (37.46)% Highest contract charges 2.56% -- (43.94)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.97% -- 10.96% Highest contract charges 2.54% -- 9.20% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.94% 0.06% 5.30% Highest contract charges 2.54% 0.10% 3.62% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.97% 0.33% 7.81% Highest contract charges 2.47% 0.06% 6.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% -- 5.62% Highest contract charges 2.41% -- 3.99% Remaining contract charges -- -- -- AIM V.I. CORE EQUITY FUND 2008 Lowest contract charges 0.86% 0.33% (30.73)% Highest contract charges 2.61% 0.09% (31.90)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 1.13% 7.20% Highest contract charges 2.54% 1.17% 5.40% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.86% 0.64% 15.72% Highest contract charges 2.53% 0.85% 13.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.91% 13.82% 7.33% Highest contract charges 2.44% 4.86% 6.16% Remaining contract charges -- -- -- AIM V.I. GOVERNMENT SECURITIES FUND 2008 Lowest contract charges 0.85% 4.76% 11.36% Highest contract charges 2.51% 8.58% 9.48% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 8.17% 5.44% Highest contract charges 2.52% 3.80% 3.66% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.84% 10.24% 2.67% Highest contract charges 2.53% 5.88% 0.94% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.96% 1.72% 0.70% Highest contract charges 2.47% 5.14% 0.85% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 4.23% 1.59% Highest contract charges 2.45% 8.85% 0.03% Remaining contract charges -- -- --
SA-183 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AIM V.I. HIGH YIELD FUND 2008 Lowest contract charges 156,379 $0.960119 $150,142 Highest contract charges 56,016 0.909386 50,940 Remaining contract charges 581,430 -- 540,377 2007 Lowest contract charges 217,215 1.314284 285,483 Highest contract charges 129,482 1.254847 162,480 Remaining contract charges 673,533 -- 861,690 2006 Lowest contract charges 249,291 1.320408 329,164 Highest contract charges 131,068 1.270812 166,563 Remaining contract charges 863,769 -- 1,115,302 2005 Lowest contract charges 288,284 1.212824 349,637 Highest contract charges 106,920 1.176633 125,805 Remaining contract charges 1,073,299 -- 1,278,697 2004 Lowest contract charges 422,299 1.201005 507,185 Highest contract charges 5,724 1.174516 6,722 Remaining contract charges 1,174,916 -- 1,392,801 AIM V.I. INTERNATIONAL GROWTH FUND 2008 Lowest contract charges 402 6.433855 2,585 Highest contract charges 18,422 1.289787 23,760 Remaining contract charges 39,229,564 -- 56,247,945 2007 Lowest contract charges 36,254 2.413489 87,498 Highest contract charges 8,081 2.219333 17,933 Remaining contract charges 32,726,816 -- 75,854,098 2006 Lowest contract charges 8,403 2.121749 17,832 Highest contract charges 312,363 1.987459 620,810 Remaining contract charges 21,663,673 -- 44,398,595 2005 Lowest contract charges 629,932 1.661728 1,046,775 Highest contract charges 207,228 1.589077 329,301 Remaining contract charges 13,292,941 -- 21,579,639 2004 Lowest contract charges 257,992 1.428246 368,476 Highest contract charges 2,706 1.381589 3,739 Remaining contract charges 5,091,769 -- 7,142,795 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AIM V.I. HIGH YIELD FUND 2008 Lowest contract charges 1.71% 7.28% (26.95)% Highest contract charges 2.51% 4.89% (27.53)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 6.57% (0.46)% Highest contract charges 2.49% 7.17% (1.26)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% 7.84% 8.87% Highest contract charges 2.50% 9.48% 8.00% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% 7.79% 0.98% Highest contract charges 2.46% 17.65% 0.18% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 3.27% 9.37% Highest contract charges 2.49% 3.75% 8.50% Remaining contract charges -- -- -- AIM V.I. INTERNATIONAL GROWTH FUND 2008 Lowest contract charges 0.69% 1.32% (37.64)% Highest contract charges 2.55% 0.88% (41.88)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 0.46% 13.75% Highest contract charges 2.23% -- 11.84% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.87% 7.34% 27.15% Highest contract charges 2.50% 1.25% 25.07% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.86% 16.35% Highest contract charges 2.45% 1.39% 15.02% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.34% 1.09% 22.34% Highest contract charges 2.47% 0.94% 20.95% Remaining contract charges -- -- --
SA-184 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND 2008 Lowest contract charges 84,946 $1.291991 $109,749 Highest contract charges 6,431 1.167979 7,512 Remaining contract charges 58,905,654 -- 71,983,696 2007 Lowest contract charges 46,790 1.822898 85,293 Highest contract charges 11,084 1.676212 18,580 Remaining contract charges 68,197,872 -- 118,721,765 2006 Lowest contract charges 21,069 1.678202 35,359 Highest contract charges 5,855 1.569599 9,190 Remaining contract charges 71,919,884 -- 116,362,714 2005 Lowest contract charges 7,853 1.521487 11,948 Highest contract charges 15,209 1.447415 22,014 Remaining contract charges 75,328,078 -- 111,600,334 2004 Lowest contract charges 32,304 1.444712 46,667 Highest contract charges 184,485 1.380406 254,664 Remaining contract charges 65,791,466 -- 92,311,846 AIM V.I. SMALL CAP EQUITY FUND 2008 Lowest contract charges 7,604 10.335807 78,597 Highest contract charges 2,281 9.512314 21,698 Remaining contract charges 3,181,479 -- 31,344,727 2007 Lowest contract charges 407,985 14.937331 6,094,211 Highest contract charges 1,947 14.206294 27,665 Remaining contract charges 1,849,722 -- 26,949,711 2006 Lowest contract charges 5,270 14.579513 76,824 Highest contract charges 1,084 13.854438 15,024 Remaining contract charges 1,400,494 -- 19,800,925 2005 Lowest contract charges 114 12.450323 1,423 Highest contract charges 19,967 12.113955 241,875 Remaining contract charges 945,925 -- 11,607,519 2004 Lowest contract charges 34,537 11.646808 402,239 Highest contract charges 3,738 11.488515 42,941 Remaining contract charges 530,997 -- 6,140,237 AIM V.I. LARGE CAP GROWTH FUND 2008 Lowest contract charges 148,100 7.970578 1,180,440 Highest contract charges 1,742 7.611709 13,259 Remaining contract charges 1,481,223 -- 11,549,045 2007 Lowest contract charges 159,815 13.091210 2,092,173 Highest contract charges 1,660 12.652975 20,999 Remaining contract charges 1,729,702 -- 22,284,082 2006 Lowest contract charges 94,375 11.474082 1,082,856 Highest contract charges 1,711 11.223754 19,203 Remaining contract charges 1,876,606 -- 21,306,731 2005 Lowest contract charges 2,138 10.763925 23,012 Highest contract charges 3,646 10.674076 38,919 Remaining contract charges 60,480 -- 648,082 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AIM V.I. MID CAP CORE EQUITY FUND 2008 Lowest contract charges 0.85% 1.49% (29.12)% Highest contract charges 2.56% 1.15% (30.32)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 0.27% 8.62% Highest contract charges 2.54% 0.26% 6.79% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.56% 10.30% Highest contract charges 2.55% 0.43% 8.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 3.07% 9.01% Highest contract charges 2.43% 1.03% 4.91% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.17% 12.74% Highest contract charges 2.47% 0.29% 11.01% Remaining contract charges -- -- -- AIM V.I. SMALL CAP EQUITY FUND 2008 Lowest contract charges 0.89% -- (31.96)% Highest contract charges 2.56% -- (33.04)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.07% 3.78% Highest contract charges 2.52% 0.04% 2.54% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% -- 16.33% Highest contract charges 2.55% -- 14.48% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.27% -- 6.77% Highest contract charges 2.47% -- 5.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.34% 0.01% 7.94% Highest contract charges 2.42% 0.01% 6.71% Remaining contract charges -- -- -- AIM V.I. LARGE CAP GROWTH FUND 2008 Lowest contract charges 1.35% 0.01% (39.12)% Highest contract charges 2.56% 0.01% (39.84)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.04% 14.09% Highest contract charges 2.54% 0.03% 12.73% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.36% 6.60% Highest contract charges 2.53% 0.28% 5.33% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.32% -- 13.83% Highest contract charges 2.27% -- 13.08% Remaining contract charges -- -- --
SA-185 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND 2008 Lowest contract charges 1,442 $5.911614 $8,525 Highest contract charges 10,059 5.060475 50,901 Remaining contract charges 88,482 -- 465,844 2007 Lowest contract charges 3,357 9.789131 32,861 Highest contract charges 4,225 9.765867 41,259 Remaining contract charges 11,766 -- 115,033 AMERICAN FUNDS GLOBAL BOND FUND 2008 Lowest contract charges 31,899 11.355894 362,246 Highest contract charges 4,489 10.931491 49,071 Remaining contract charges 7,298,403 -- 81,204,731 2007 Lowest contract charges 32,523 11.067360 359,940 Highest contract charges 41,064 10.843071 445,258 Remaining contract charges 2,745,711 -- 30,050,172 2006 Lowest contract charges 79,113 10.206665 807,470 Highest contract charges 127 10.179637 1,294 Remaining contract charges 204,020 -- 2,079,237 AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2008 Lowest contract charges 95,472 7.143265 681,980 Highest contract charges 2,068 6.817920 14,099 Remaining contract charges 12,472,218 -- 86,972,182 2007 Lowest contract charges 61,479 12.245550 752,840 Highest contract charges 5,849 11.888755 69,535 Remaining contract charges 11,087,960 -- 133,690,015 2006 Lowest contract charges 15,747 10.961310 172,585 Highest contract charges 19,621 10.828350 212,465 Remaining contract charges 3,949,183 -- 42,995,032 AMERICAN FUNDS ASSET ALLOCATION FUND 2008 Lowest contract charges 31,684 10.886366 344,922 Highest contract charges 6,550 9.236588 60,498 Remaining contract charges 30,897,960 -- 300,051,138 2007 Lowest contract charges 20,251 15.575983 315,432 Highest contract charges 7,457 13.442506 100,235 Remaining contract charges 35,817,586 -- 501,356,573 2006 Lowest contract charges 9,093 14.742829 134,058 Highest contract charges 10,842 12.941607 140,311 Remaining contract charges 35,430,207 -- 472,725,601 2005 Lowest contract charges 3,416 12.967584 44,295 Highest contract charges 11,106 11.578387 128,589 Remaining contract charges 32,875,512 -- 388,850,776 2004 Lowest contract charges 31,500 12.192260 384,068 Highest contract charges 140,955 10.888180 1,534,739 Remaining contract charges 27,604,737 -- 303,881,995 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AIM V.I. CAPITAL DEVELOPMENT FUND 2008 Lowest contract charges 1.03% -- (43.02)% Highest contract charges 2.19% -- (48.18)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.35% -- 2.47% Highest contract charges 0.59% -- 2.35% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL BOND FUND 2008 Lowest contract charges 0.85% 5.30% 2.61% Highest contract charges 2.53% 7.67% 0.88% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.83% 6.48% 8.30% Highest contract charges 2.48% 7.15% 6.53% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.33% 1.99% 1.78% Highest contract charges 0.61% 2.04% 1.62% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2008 Lowest contract charges 0.85% 2.42% (41.67)% Highest contract charges 2.56% 0.78% (42.65)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 2.98% 11.72% Highest contract charges 2.50% 7.08% 9.83% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.63% 1.31% 9.68% Highest contract charges 1.85% 1.07% 8.48% Remaining contract charges -- -- -- AMERICAN FUNDS ASSET ALLOCATION FUND 2008 Lowest contract charges 0.85% 3.06% (30.11)% Highest contract charges 2.56% 2.40% (31.29)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 2.51% 5.65% Highest contract charges 2.55% 1.97% 3.87% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 2.93% 13.69% Highest contract charges 2.55% 2.20% 11.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 5.75% 10.09% Highest contract charges 2.50% 5.87% 6.39% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 2.06% 7.32% Highest contract charges 2.48% 4.16% 5.67% Remaining contract charges -- -- --
SA-186 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2008 Lowest contract charges 263,465 $0.785507 $206,954 Highest contract charges 54,412 0.708958 38,576 Remaining contract charges 173,344,993 -- 129,043,056 2007 Lowest contract charges 191,542 1.247705 238,988 Highest contract charges 50,195 1.145462 57,497 Remaining contract charges 195,480,163 -- 233,324,391 2006 Lowest contract charges 91,280 1.233362 112,581 Highest contract charges 41,115 1.151721 47,353 Remaining contract charges 202,397,116 -- 240,929,680 2005 Lowest contract charges 20,649 1.059379 21,875 Highest contract charges 23,959 1.006214 24,108 Remaining contract charges 195,958,735 -- 202,234,532 2004 Lowest contract charges 246,118 1.010226 248,636 Highest contract charges 848,687 0.963014 817,298 Remaining contract charges 173,410,785 -- 169,988,158 AMERICAN FUNDS BOND FUND 2008 Lowest contract charges 68,208 13.272523 905,291 Highest contract charges 6,222 11.336185 70,531 Remaining contract charges 24,821,207 -- 304,359,791 2007 Lowest contract charges 28,035 14.766189 413,969 Highest contract charges 7,873 12.828250 100,996 Remaining contract charges 26,538,780 -- 365,091,310 2006 Lowest contract charges 14,443 14.412511 208,210 Highest contract charges 7,791 12.735633 99,228 Remaining contract charges 23,817,715 -- 322,290,202 2005 Lowest contract charges 1,240 13.586510 16,852 Highest contract charges 3,804 12.211532 46,457 Remaining contract charges 21,249,400 -- 273,375,519 2004 Lowest contract charges 17,553 13.723684 240,877 Highest contract charges 51,011 12.337271 629,330 Remaining contract charges 18,012,718 -- 232,492,034 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2008 Lowest contract charges 0.85% 2.56% (37.04)% Highest contract charges 2.55% 1.88% (38.11)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 2.85% 1.16% Highest contract charges 2.54% 2.48% (0.54)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.94% 16.42% Highest contract charges 2.55% 1.10% 14.46% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 10.76% Highest contract charges 2.52% 1.77% 4.54% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.67% 8.71% Highest contract charges 2.48% 0.76% 7.04% Remaining contract charges -- -- -- AMERICAN FUNDS BOND FUND 2008 Lowest contract charges 0.85% 7.74% (10.12)% Highest contract charges 2.55% 5.01% (11.63)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 8.33% 2.45% Highest contract charges 2.55% 7.60% 0.73% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 4.20% 6.08% Highest contract charges 2.55% 3.91% 4.29% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 1.99% Highest contract charges 2.51% 2.31% 0.97% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 3.86% 4.72% Highest contract charges 2.48% 3.61% 3.11% Remaining contract charges -- -- --
SA-187 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH FUND 2008 Lowest contract charges 11,719 $11.033186 $129,295 Highest contract charges 686 7.177236 4,922 Remaining contract charges 9,066,411 -- 86,790,493 2007 Lowest contract charges 11,047 18.060908 199,520 Highest contract charges 710 11.950746 8,483 Remaining contract charges 10,050,752 -- 158,793,254 2006 Lowest contract charges 5,571 15.860019 88,303 Highest contract charges 158,950 10.690350 1,699,231 Remaining contract charges 8,845,154 -- 125,201,855 2005 Lowest contract charges 1,628 13.282208 21,622 Highest contract charges 134,658 9.101673 1,225,609 Remaining contract charges 7,790,394 -- 93,579,489 2004 Lowest contract charges 7,631 11.947825 91,171 Highest contract charges 44,539 8.180564 364,354 Remaining contract charges 6,533,491 -- 70,518,602 AMERICAN FUNDS GROWTH FUND 2008 Lowest contract charges 74,093 9.340560 692,068 Highest contract charges 42,650 5.694785 242,881 Remaining contract charges 91,301,399 -- 672,902,434 2007 Lowest contract charges 55,979 16.813360 941,192 Highest contract charges 39,001 10.427125 406,671 Remaining contract charges 96,708,863 -- 1,293,149,817 2006 Lowest contract charges 28,337 15.093084 427,690 Highest contract charges 23,101 9.520749 219,938 Remaining contract charges 90,320,629 -- 1,090,579,756 2005 Lowest contract charges 4,752 13.810812 65,627 Highest contract charges 11,673 8.861284 103,435 Remaining contract charges 79,425,073 -- 886,438,634 2004 Lowest contract charges 42,471 12.197135 518,021 Highest contract charges 468,853 7.827248 3,669,828 Remaining contract charges 65,048,899 -- 642,758,376 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH FUND 2008 Lowest contract charges 0.85% 1.90% (38.91)% Highest contract charges 2.56% 1.80% (39.94)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 3.35% 13.88% Highest contract charges 2.51% 2.74% 11.96% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.96% 19.41% Highest contract charges 2.50% 0.87% 17.46% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.42% 17.60% Highest contract charges 2.48% 0.60% 11.26% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.39% 12.41% Highest contract charges 2.46% 0.46% 10.69% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH FUND 2008 Lowest contract charges 0.85% 0.91% (44.45)% Highest contract charges 2.55% 0.79% (45.39)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 0.91% 11.40% Highest contract charges 2.54% 0.99% 9.52% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.31% 9.29% Highest contract charges 2.55% 0.89% 7.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 1.64% 19.29% Highest contract charges 2.48% 1.84% 13.27% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.18% 11.43% Highest contract charges 2.47% 0.31% 9.72% Remaining contract charges -- -- --
SA-188 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- AMERICAN FUNDS GROWTH-INCOME FUND 2008 Lowest contract charges 84,806 $10.164721 $862,030 Highest contract charges 19,805 8.412561 166,609 Remaining contract charges 76,719,563 -- 677,595,796 2007 Lowest contract charges 65,162 16.494469 1,074,817 Highest contract charges 20,295 13.885894 281,809 Remaining contract charges 81,545,744 -- 1,175,654,541 2006 Lowest contract charges 30,992 15.836641 491,741 Highest contract charges 11,471 13.560686 155,556 Remaining contract charges 77,645,787 -- 1,077,756,144 2005 Lowest contract charges 5,878 13.864101 81,500 Highest contract charges 5,016 12.075123 60,575 Remaining contract charges 69,325,145 -- 846,621,187 2004 Lowest contract charges 66,034 13.442572 887,665 Highest contract charges 318,876 11.710192 3,734,103 Remaining contract charges 56,093,003 -- 657,483,748 AMERICAN FUNDS INTERNATIONAL FUND 2008 Lowest contract charges 35,928 10.739914 385,864 Highest contract charges 1,663 7.140203 11,876 Remaining contract charges 21,021,137 -- 200,169,353 2007 Lowest contract charges 15,095 18.715376 282,505 Highest contract charges 816 12.656410 10,325 Remaining contract charges 22,750,760 -- 382,048,104 2006 Lowest contract charges 6,037 15.726302 94,926 Highest contract charges 365,767 10.833523 3,962,545 Remaining contract charges 21,168,172 -- 303,228,279 2005 Lowest contract charges 304 13.330608 4,054 Highest contract charges 204,547 9.335922 1,909,635 Remaining contract charges 16,402,746 -- 201,791,781 2004 Lowest contract charges 11,445 11.258248 128,862 Highest contract charges 65,212 7.878061 513,741 Remaining contract charges 12,141,199 -- 126,332,462 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ AMERICAN FUNDS GROWTH-INCOME FUND 2008 Lowest contract charges 0.85% 1.98% (38.38)% Highest contract charges 2.55% 1.64% (39.42)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 1.84% 4.15% Highest contract charges 2.54% 2.14% 2.40% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 2.37% 14.23% Highest contract charges 2.55% 1.69% 12.30% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 3.07% 9.51% Highest contract charges 2.52% 2.29% 3.17% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.88% 9.33% Highest contract charges 2.47% 1.62% 7.65% Remaining contract charges -- -- -- AMERICAN FUNDS INTERNATIONAL FUND 2008 Lowest contract charges 0.85% 2.89% (42.61)% Highest contract charges 2.54% 2.20% (43.58)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 2.26% 19.01% Highest contract charges 2.53% 2.72% 17.00% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 3.11% 17.97% Highest contract charges 2.50% 1.95% 16.04% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 3.44% 23.72% Highest contract charges 2.48% 2.10% 18.51% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 2.98% 18.19% Highest contract charges 2.47% 2.34% 16.37% Remaining contract charges -- -- --
SA-189 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- AMERICAN FUNDS NEW WORLD FUND 2008 Lowest contract charges 7,463 $17.624614 $131,533 Highest contract charges 1,124 14.217246 15,979 Remaining contract charges 4,583,912 -- 71,603,628 2007 Lowest contract charges 6,716 30.846472 207,169 Highest contract charges 3,780 25.310667 95,668 Remaining contract charges 5,104,613 -- 140,695,691 2006 Lowest contract charges 2,255 23.530316 53,065 Highest contract charges 86,947 19.667749 1,710,049 Remaining contract charges 3,978,305 -- 84,459,785 2005 Lowest contract charges 181 18.191741 3,284 Highest contract charges 47,782 15.208322 726,678 Remaining contract charges 2,906,114 -- 47,451,190 2004 Lowest contract charges 589 15.210970 8,943 Highest contract charges 16,540 12.914857 213,606 Remaining contract charges 2,187,806 -- 30,241,675 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2008 Lowest contract charges 13,324 11.177252 148,927 Highest contract charges 1,416 7.836227 11,093 Remaining contract charges 5,965,073 -- 58,862,501 2007 Lowest contract charges 11,982 24.253651 290,619 Highest contract charges 1,409 17.296552 24,377 Remaining contract charges 7,070,153 -- 152,138,943 2006 Lowest contract charges 3,305 20.144150 66,605 Highest contract charges 141,109 14.633974 2,064,983 Remaining contract charges 6,543,184 -- 119,065,915 2005 Lowest contract charges 766 16.376893 12,548 Highest contract charges 88,832 12.095083 1,074,428 Remaining contract charges 5,643,817 -- 84,443,111 2004 Lowest contract charges 10,996 13.406321 147,425 Highest contract charges 33,221 9.893043 328,654 Remaining contract charges 4,343,215 -- 53,267,193 BB&T MID CAP GROWTH VIF 2008 Lowest contract charges 15,669 5.704645 89,384 Highest contract charges 5,521 5.680961 31,365 Remaining contract charges 4,269 -- 24,283 BB&T CAPITAL MANAGER EQUITY VIF 2008 Lowest contract charges 33 6.658485 216 Highest contract charges -- -- -- Remaining contract charges -- -- -- BB&T LARGE CAP VIF 2008 Lowest contract charges 1,486 6.764032 10,049 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ AMERICAN FUNDS NEW WORLD FUND 2008 Lowest contract charges 0.85% 1.22% (42.86)% Highest contract charges 2.55% 0.88% (43.83)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 4.21% 31.09% Highest contract charges 2.48% 6.33% 28.89% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.20% 31.47% Highest contract charges 2.50% 1.56% 29.32% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% -- 19.60% Highest contract charges 2.48% 1.22% 17.76% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 2.29% 17.68% Highest contract charges 2.47% 2.52% 15.87% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2008 Lowest contract charges 0.85% -- (53.92)% Highest contract charges 2.56% -- (54.70)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 3.62% 20.40% Highest contract charges 2.49% 4.10% 18.37% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.52% 23.00% Highest contract charges 2.50% 0.48% 20.99% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 0.25% 24.21% Highest contract charges 2.48% 0.92% 22.26% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% -- 19.74% Highest contract charges 2.46% -- 17.90% Remaining contract charges -- -- -- BB&T MID CAP GROWTH VIF 2008 Lowest contract charges 1.04% -- (46.64)% Highest contract charges 1.45% -- (46.82)% Remaining contract charges -- -- -- BB&T CAPITAL MANAGER EQUITY VIF 2008 Lowest contract charges 0.63% 44.26% (35.99)% Highest contract charges -- -- -- Remaining contract charges -- -- -- BB&T LARGE CAP VIF 2008 Lowest contract charges 1.30% 2.29% (35.07)% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-190 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- BB&T SPECIAL OPPORTUNITIES EQUITY VIF 2008 Lowest contract charges 48,591 $6.719519 $326,506 Highest contract charges 1,605 6.652817 10,676 Remaining contract charges 122,671 -- 820,978 BB&T TOTAL RETURN BOND VIF 2008 Lowest contract charges 21,257 10.041380 213,447 Highest contract charges 1,066 9.941791 10,593 Remaining contract charges 34,510 -- 345,169 COLUMBIA ASSET ALLOCATION VS FUND 2008 Lowest contract charges 1,440,481 0.831921 1,198,366 Highest contract charges 25,402 0.787961 20,016 Remaining contract charges 3,718,422 -- 3,002,779 2007 Lowest contract charges 1,872,849 1.180583 2,211,054 Highest contract charges 45,656 1.127195 51,463 Remaining contract charges 4,831,226 -- 5,560,618 2006 Lowest contract charges 2,135,920 1.099916 2,349,334 Highest contract charges 25,402 1.058605 26,890 Remaining contract charges 5,703,136 -- 6,140,353 COLUMBIA SMALL COMPANY GROWTH VS FUND 2008 Lowest contract charges 2,073,138 0.788228 1,634,105 Highest contract charges 9,133 0.744658 6,801 Remaining contract charges 9,148,845 -- 6,980,597 2007 Lowest contract charges 2,501,808 1.354933 3,389,782 Highest contract charges 1,206 1.291004 1,557 Remaining contract charges 12,412,440 -- 16,360,791 2006 Lowest contract charges 3,103,781 1.214678 3,770,094 Highest contract charges 443,797 1.169031 518,812 Remaining contract charges 14,695,394 -- 17,454,730 COLUMBIA LARGE CAP VALUE VS FUND 2008 Lowest contract charges 3,061,773 0.812983 2,489,170 Highest contract charges 60,617 0.768066 46,558 Remaining contract charges 15,779,643 -- 12,415,352 2007 Lowest contract charges 3,866,530 1.314135 5,081,142 Highest contract charges 21,708 1.252159 27,182 Remaining contract charges 21,869,297 -- 27,948,265 2006 Lowest contract charges 28,571 1.306154 37,318 Highest contract charges 1,052,999 1.252160 1,318,524 Remaining contract charges 29,680,267 -- 37,891,420 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ BB&T SPECIAL OPPORTUNITIES EQUITY VIF 2008 Lowest contract charges 1.04% 0.26% (36.71)% Highest contract charges 1.89% 1.68% (37.22)% Remaining contract charges -- -- -- BB&T TOTAL RETURN BOND VIF 2008 Lowest contract charges 1.04% 3.37% 0.39% Highest contract charges 1.90% 3.14% (0.41)% Remaining contract charges -- -- -- COLUMBIA ASSET ALLOCATION VS FUND 2008 Lowest contract charges 1.70% 3.50% (29.53)% Highest contract charges 2.51% 3.37% (30.10)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 2.91% 7.33% Highest contract charges 2.49% 3.07% 6.48% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.16% 2.08% 4.87% Highest contract charges 1.70% 2.54% 4.31% Remaining contract charges -- -- -- COLUMBIA SMALL COMPANY GROWTH VS FUND 2008 Lowest contract charges 1.71% -- (41.83)% Highest contract charges 2.53% -- (42.32)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% -- 11.55% Highest contract charges 2.23% -- 10.60% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.16% -- (5.42)% Highest contract charges 1.70% -- (5.93)% Remaining contract charges -- -- -- COLUMBIA LARGE CAP VALUE VS FUND 2008 Lowest contract charges 1.71% 2.38% (38.14)% Highest contract charges 2.54% 2.94% (38.66)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 1.44% 1.00% Highest contract charges 2.23% -- 0.15% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.73% 5.29% 16.60% Highest contract charges 1.70% 1.37% 6.86% Remaining contract charges -- -- --
SA-191 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- EVERGREEN VA DIVERSIFIED CAPITAL BUILDER FUND 2008 Lowest contract charges 2,320 $5.849215 $13,571 Highest contract charges 1,328 0.545565 724 Remaining contract charges 750,620 -- 448,915 2007 Lowest contract charges 47,654 1.104691 52,643 Highest contract charges 1,291 1.026684 1,326 Remaining contract charges 638,441 -- 679,506 2006 Lowest contract charges 29,320 1.049553 30,773 Highest contract charges 3,330 0.986711 3,286 Remaining contract charges 326,621 -- 331,911 2005 Lowest contract charges 5,024 0.968453 4,865 Highest contract charges 29,762 0.920995 27,411 Remaining contract charges 93,066 -- 86,874 EVERGREEN VA GROWTH FUND 2008 Lowest contract charges 251,562 0.913474 229,795 Highest contract charges 22,659 0.613641 13,904 Remaining contract charges 1,626,240 -- 1,113,071 2007 Lowest contract charges 256,017 1.572762 402,653 Highest contract charges 21,820 1.068772 23,321 Remaining contract charges 1,677,174 -- 1,981,353 2006 Lowest contract charges 152,313 1.435554 218,653 Highest contract charges 18,026 0.986828 17,789 Remaining contract charges 1,178,550 -- 1,284,639 2005 Lowest contract charges 38,637 1.310456 50,633 Highest contract charges 6,964 0.911255 6,346 Remaining contract charges 355,953 -- 381,008 EVERGREEN VA INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 209,007 1.312121 274,242 Highest contract charges 47,997 0.756032 36,288 Remaining contract charges 1,667,878 -- 1,415,288 2007 Lowest contract charges 175,346 2.272957 398,554 Highest contract charges 50,700 1.324838 67,169 Remaining contract charges 1,225,677 -- 1,831,837 2006 Lowest contract charges 116,173 2.003304 232,729 Highest contract charges 47,763 1.181155 56,415 Remaining contract charges 772,864 -- 1,015,664 2005 Lowest contract charges 15,966 1.648684 26,324 Highest contract charges 48,849 0.983301 48,033 Remaining contract charges 270,219 -- 300,482 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ EVERGREEN VA DIVERSIFIED CAPITAL BUILDER FUND 2008 Lowest contract charges 0.93% -- (45.30)% Highest contract charges 2.43% -- (46.86)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 4.82% 5.25% Highest contract charges 2.51% 3.03% 4.05% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% 3.92% 8.37% Highest contract charges 2.50% 3.01% 7.14% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.35% 2.48% 6.62% Highest contract charges 2.48% 1.90% 5.81% Remaining contract charges -- -- -- EVERGREEN VA GROWTH FUND 2008 Lowest contract charges 1.35% 0.03% (41.92)% Highest contract charges 2.51% 0.03% (42.58)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% -- 9.56% Highest contract charges 2.49% -- 8.30% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 9.55% Highest contract charges 2.50% -- 8.29% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.31% -- 16.46% Highest contract charges 2.44% -- 15.57% Remaining contract charges -- -- -- EVERGREEN VA INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 1.35% -- (42.27)% Highest contract charges 2.51% -- (42.93)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 3.14% 13.46% Highest contract charges 2.49% 2.59% 12.17% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 4.69% 21.51% Highest contract charges 2.50% 3.76% 20.12% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.28% 14.32% 16.57% Highest contract charges 2.44% 4.43% 15.69% Remaining contract charges -- -- --
SA-192 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- EVERGREEN VA OMEGA FUND 2008 Lowest contract charges 697 $8.077427 $5,631 Highest contract charges 20,071 0.494777 9,931 Remaining contract charges 258,142 -- 145,835 2007 Lowest contract charges 127,971 0.939459 120,223 Highest contract charges 2,746 0.926225 2,543 Remaining contract charges 177,566 -- 131,910 2006 Lowest contract charges 26,854 0.850503 22,840 Highest contract charges 2,857 0.842721 2,407 Remaining contract charges 158,956 -- 107,682 2005 Lowest contract charges 7,362 0.811784 5,977 Highest contract charges 49,541 0.625043 30,965 Remaining contract charges -- -- -- EVERGREEN VA SPECIAL VALUES FUND 2008 Lowest contract charges 18,893 7.101381 134,165 Highest contract charges 146,118 0.958172 140,007 Remaining contract charges 11,332,376 -- 12,376,381 2007 Lowest contract charges 1,650,958 1.952678 3,223,790 Highest contract charges 154,078 1.430216 220,365 Remaining contract charges 9,830,581 -- 15,226,006 2006 Lowest contract charges 1,124,999 2.140076 2,407,587 Highest contract charges 147,871 1.585609 234,465 Remaining contract charges 7,072,054 -- 12,258,325 2005 Lowest contract charges 259,683 1.784602 463,431 Highest contract charges 72,143 1.337525 96,493 Remaining contract charges 2,642,940 -- 3,996,291 EVERGREEN VA FUNDAMENTAL LARGE CAP FUND 2008 Lowest contract charges 88,112 7.417026 653,529 Highest contract charges 1,466 7.343408 10,767 Remaining contract charges 2,492,521 -- 2,568,209 2007 Lowest contract charges 21,930 1.457076 31,953 Highest contract charges 101,482 1.331900 135,164 Remaining contract charges 573,973 -- 819,697 2006 Lowest contract charges 32,304 1.363805 44,057 Highest contract charges 39,424 1.257282 49,567 Remaining contract charges 481,250 -- 646,078 2005 Lowest contract charges 2,628 1.224825 3,219 Highest contract charges 18,328 1.221742 22,391 Remaining contract charges 6,235 -- 7,589 FIDELITY VIP GROWTH PORTFOLIO 2008 Lowest contract charges 10,064 5.861477 58,991 Highest contract charges 812 5.802725 4,709 Remaining contract charges 30,265 -- 176,421 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ EVERGREEN VA OMEGA FUND 2008 Lowest contract charges 1.04% -- (26.39)% Highest contract charges 2.15% -- (28.78)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.57% 10.46% Highest contract charges 1.83% 0.56% 9.91% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 4.59% Highest contract charges 1.85% -- 4.07% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.52% -- 12.59% Highest contract charges 1.59% -- 12.51% Remaining contract charges -- -- -- EVERGREEN VA SPECIAL VALUES FUND 2008 Lowest contract charges 1.02% 1.55% (31.98)% Highest contract charges 2.50% 1.12% (33.01)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.63% (8.76)% Highest contract charges 2.49% 1.52% (9.80)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 1.21% 19.92% Highest contract charges 2.49% 0.89% 18.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.31% 4.60% 14.80% Highest contract charges 2.44% 2.82% 13.93% Remaining contract charges -- -- -- EVERGREEN VA FUNDAMENTAL LARGE CAP FUND 2008 Lowest contract charges 1.02% 4.85% (31.02)% Highest contract charges 1.91% 16.03% (31.57)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.35% 0.81% 6.84% Highest contract charges 2.18% 1.28% 5.94% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 2.34% 11.16% Highest contract charges 2.20% 2.60% 10.22% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.49% 3.52% 9.52% Highest contract charges 1.83% 1.91% 9.30% Remaining contract charges -- -- -- FIDELITY VIP GROWTH PORTFOLIO 2008 Lowest contract charges 1.04% 1.17% (43.29)% Highest contract charges 2.03% 3.66% (43.74)% Remaining contract charges -- -- --
SA-193 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- FIDELITY VIP CONTRAFUND(R) PORTFOLIO 2008 Lowest contract charges 17,756 $6.378773 $113,259 Highest contract charges 727 6.291088 4,570 Remaining contract charges 1,229,754 -- 7,794,035 FIDELITY VIP MID CAP PORTFOLIO 2008 Lowest contract charges 2,243 6.461003 14,489 Highest contract charges 3,769 6.374875 24,030 Remaining contract charges 874,744 -- 5,615,009 FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2008 Lowest contract charges 8,866 5.349991 47,430 Highest contract charges 595 5.294088 3,151 Remaining contract charges 45,602 -- 242,692 FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2008 Lowest contract charges 2,356 6.404294 15,085 Highest contract charges 7,888 6.356132 50,138 Remaining contract charges 5,191 -- 33,097 FRANKLIN RISING DIVIDENDS SECURITIES FUND 2008 Lowest contract charges 29,552 11.000356 325,085 Highest contract charges 4,862 10.091165 49,062 Remaining contract charges 25,304,822 -- 267,330,923 2007 Lowest contract charges 22,530 15.218488 342,877 Highest contract charges 4,353 14.200576 61,821 Remaining contract charges 27,328,052 -- 402,546,450 2006 Lowest contract charges 8,997 15.772306 141,877 Highest contract charges 2,203 14.969769 32,978 Remaining contract charges 21,506,548 -- 330,674,817 2005 Lowest contract charges 871 13.581424 11,827 Highest contract charges 1,698 13.111329 22,258 Remaining contract charges 14,583,801 -- 194,671,832 2004 Lowest contract charges 5,943 13.343129 79,254 Highest contract charges 111,923 13.010868 1,456,211 Remaining contract charges 8,292,825 -- 109,031,559 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ FIDELITY VIP CONTRAFUND(R) PORTFOLIO 2008 Lowest contract charges 0.71% 3.06% (39.95)% Highest contract charges 1.99% 5.76% (40.61)% Remaining contract charges -- -- -- FIDELITY VIP MID CAP PORTFOLIO 2008 Lowest contract charges 0.70% 0.73% (37.06)% Highest contract charges 2.02% 0.44% (37.73)% Remaining contract charges -- -- -- FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2008 Lowest contract charges 1.03% 2.75% (48.87)% Highest contract charges 1.99% 4.86% (49.30)% Remaining contract charges -- -- -- FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2008 Lowest contract charges 1.03% 1.21% (37.82)% Highest contract charges 1.80% 0.83% (38.19)% Remaining contract charges -- -- -- FRANKLIN RISING DIVIDENDS SECURITIES FUND 2008 Lowest contract charges 0.85% 1.75% (27.72)% Highest contract charges 2.55% 1.73% (28.94)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 2.11% (3.51)% Highest contract charges 2.54% 1.85% (5.14)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.18% 16.13% Highest contract charges 2.55% 1.00% 14.17% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 5.93% Highest contract charges 2.53% 1.61% 0.82% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.71% 9.95% Highest contract charges 2.47% 0.49% 8.26% Remaining contract charges -- -- --
SA-194 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- FRANKLIN INCOME SECURITIES FUND 2008 Lowest contract charges 94,680 $11.435856 $1,082,746 Highest contract charges 9,275 10.385353 96,327 Remaining contract charges 77,300,374 -- 835,330,152 2007 Lowest contract charges 73,282 16.395959 1,201,526 Highest contract charges 11,939 15.145488 180,828 Remaining contract charges 83,514,119 -- 1,319,488,408 2006 Lowest contract charges 33,408 15.937182 532,424 Highest contract charges 11,079 14.974072 165,894 Remaining contract charges 68,055,726 -- 1,052,893,588 2005 Lowest contract charges 6,361 13.593697 86,464 Highest contract charges 7,475 12.991094 97,111 Remaining contract charges 51,728,813 -- 688,265,865 2004 Lowest contract charges 7,534 13.642332 102,782 Highest contract charges 225,859 13.122761 2,963,897 Remaining contract charges 29,949,118 -- 399,400,715 FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 2,097 8.326926 17,459 Highest contract charges 190 7.561687 1,439 Remaining contract charges 6,149,864 -- 48,675,154 2007 Lowest contract charges 2,065 12.827021 26,483 Highest contract charges 68 11.848456 808 Remaining contract charges 7,056,138 -- 86,825,462 2006 Lowest contract charges 37 12.177757 461 Highest contract charges 68 11.441566 781 Remaining contract charges 6,502,337 -- 76,642,060 2005 Lowest contract charges 541,016 11.028606 5,966,657 Highest contract charges 60,857 10.594401 644,746 Remaining contract charges 4,566,383 -- 49,282,808 2004 Lowest contract charges 217 11.174616 2,439 Highest contract charges 14,152 10.748796 152,115 Remaining contract charges 3,164,948 -- 34,515,753 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ FRANKLIN INCOME SECURITIES FUND 2008 Lowest contract charges 0.85% 5.42% (30.25)% Highest contract charges 2.56% 5.41% (31.43)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 3.23% 2.88% Highest contract charges 2.54% 3.12% 1.15% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 3.65% 17.24% Highest contract charges 2.55% 4.00% 15.26% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 2.03% 4.02% Highest contract charges 2.51% 0.98% 0.95% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 3.03% 12.78% Highest contract charges 2.47% 2.82% 11.05% Remaining contract charges -- -- -- FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 0.85% 1.27% (35.08)% Highest contract charges 2.07% 0.39% (36.18)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.82% 0.10% 5.33% Highest contract charges 2.57% 0.73% 3.56% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% -- 9.96% Highest contract charges 2.51% 0.93% 8.11% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.58% 0.30% Highest contract charges 2.47% 0.48% 1.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.69% 6.91% Highest contract charges 2.47% 0.39% 5.27% Remaining contract charges -- -- --
SA-195 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2008 Lowest contract charges 56,403 $12.606898 $711,068 Highest contract charges 466 10.630848 4,958 Remaining contract charges 80,277 -- 967,464 2007 Lowest contract charges 98,366 22.193451 2,183,091 Highest contract charges 692 20.767079 14,362 Remaining contract charges 113,651 -- 2,420,140 2006 Lowest contract charges 114,766 28.439936 3,263,902 Highest contract charges 692 26.866489 18,585 Remaining contract charges 153,759 -- 4,202,538 2005 Lowest contract charges 135,819 23.916634 3,248,336 Highest contract charges 692 22.809046 15,783 Remaining contract charges 183,911 -- 4,238,338 2004 Lowest contract charges 163,732 21.373611 3,499,540 Highest contract charges 703 20.578259 14,465 Remaining contract charges 220,761 -- 4,569,790 FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 15,564 8.215174 127,858 Highest contract charges 11,030 4.482015 49,438 Remaining contract charges 10,801,032 -- 68,920,786 2007 Lowest contract charges 13,533 14.408266 194,991 Highest contract charges 5,738 7.996026 45,877 Remaining contract charges 11,430,681 -- 128,576,387 2006 Lowest contract charges 6,948 13.062801 90,794 Highest contract charges 4,625 7.373627 34,103 Remaining contract charges 11,016,113 -- 113,349,235 2005 Lowest contract charges 780 12.120647 9,455 Highest contract charges 3,530 6.959172 24,568 Remaining contract charges 10,588,793 -- 102,124,884 2004 Lowest contract charges 1,897 11.869463 22,508 Highest contract charges 71,934 6.816177 490,318 Remaining contract charges 9,722,180 -- 92,613,848 FRANKLIN SMALL CAP VALUE SECURITIES FUND 2008 Lowest contract charges 1,904 6.154292 11,717 Highest contract charges 544 6.021529 3,275 Remaining contract charges 1,002,250 -- 6,287,545 2007 Lowest contract charges 3,088 9.253378 28,574 Highest contract charges 544 9.230086 5,023 Remaining contract charges 12,549 -- 115,993 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2008 Lowest contract charges 1.41% 1.04% (43.20)% Highest contract charges 2.50% 1.19% (43.82)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 2.30% (21.96)% Highest contract charges 2.35% 2.26% (22.70)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 2.05% 18.91% Highest contract charges 2.35% 1.98% 17.79% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.42% 11.90% Highest contract charges 2.34% 1.39% 10.84% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.87% 29.97% Highest contract charges 2.35% 1.89% 28.74% Remaining contract charges -- -- -- FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 0.85% -- (42.98)% Highest contract charges 2.55% -- (43.95)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% -- 10.30% Highest contract charges 2.54% -- 8.44% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 7.77% Highest contract charges 2.55% -- 5.96% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 15.29% Highest contract charges 2.43% -- 2.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 10.42% Highest contract charges 2.48% -- 8.72% Remaining contract charges -- -- -- FRANKLIN SMALL CAP VALUE SECURITIES FUND 2008 Lowest contract charges 0.84% 0.85% (33.59)% Highest contract charges 2.55% 1.76% (34.71)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.36% -- (0.01)% Highest contract charges 0.61% -- (0.13)% Remaining contract charges -- -- --
SA-196 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- FRANKLIN STRATEGIC INCOME SECURITIES FUND 2008 Lowest contract charges 4,231 $8.778651 $37,143 Highest contract charges 2,123 12.729023 27,027 Remaining contract charges 15,646,835 -- 208,090,949 2007 Lowest contract charges 21,176 16.963013 359,205 Highest contract charges 2,685 14.676700 39,410 Remaining contract charges 14,419,237 -- 225,325,293 2006 Lowest contract charges 6,276 16.108811 101,072 Highest contract charges 2,043 14.176524 28,968 Remaining contract charges 12,268,338 -- 183,518,260 2005 Lowest contract charges 559 14.972815 8,372 Highest contract charges 1,100 13.402661 14,737 Remaining contract charges 10,290,707 -- 144,203,380 2004 Lowest contract charges 3,038 15.102795 45,897 Highest contract charges 47,514 13.521731 642,473 Remaining contract charges 7,548,776 -- 105,994,364 MUTUAL SHARES SECURITIES FUND 2008 Lowest contract charges 70,645 12.581516 888,824 Highest contract charges 18,232 10.174951 185,510 Remaining contract charges 42,382,285 -- 453,323,902 2007 Lowest contract charges 54,739 20.176053 1,104,424 Highest contract charges 20,374 16.597302 338,150 Remaining contract charges 47,022,292 -- 822,849,078 2006 Lowest contract charges 20,877 19.664073 410,501 Highest contract charges 9,334 16.453485 153,584 Remaining contract charges 42,025,519 -- 718,384,455 2005 Lowest contract charges 3,463 16.752733 58,007 Highest contract charges 3,478 14.257743 49,590 Remaining contract charges 34,585,852 -- 505,438,067 2004 Lowest contract charges 8,663 15.549701 134,691 Highest contract charges 149,130 13.236404 1,973,943 Remaining contract charges 23,871,228 -- 320,263,265 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- FRANKLIN STRATEGIC INCOME SECURITIES FUND 2008 Lowest contract charges 0.70% 2.87% (13.92)% Highest contract charges 2.56% 9.29% (13.27)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 4.36% 5.30% Highest contract charges 2.54% 4.70% 3.53% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 3.67% 7.59% Highest contract charges 2.54% 5.61% 5.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.87% 2.59% Highest contract charges 2.49% -- 0.83% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.93% 2.30% 8.97% Highest contract charges 2.47% 2.21% 7.30% Remaining contract charges -- -- -- MUTUAL SHARES SECURITIES FUND 2008 Lowest contract charges 0.85% 3.31% (37.64)% Highest contract charges 2.56% 3.18% (38.70)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 1.27% 2.60% Highest contract charges 2.54% 1.20% 0.87% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.17% 17.38% Highest contract charges 2.55% 1.45% 15.40% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 10.46% Highest contract charges 2.49% -- 7.77% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.78% 11.57% Highest contract charges 2.47% 0.71% 9.85% Remaining contract charges -- -- --
SA-197 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2008 Lowest contract charges 5,118 $14.404613 $73,725 Highest contract charges 113 12.027511 1,358 Remaining contract charges 3,066,752 -- 38,001,334 2007 Lowest contract charges 4,939 30.661983 151,452 Highest contract charges 2,510 26.042533 65,367 Remaining contract charges 3,453,026 -- 96,398,280 2006 Lowest contract charges 1,278 23.955722 30,574 Highest contract charges 61,613 20.726343 1,277,019 Remaining contract charges 2,896,128 -- 63,387,906 2005 Lowest contract charges 295 19.120676 5,636 Highest contract charges 39,021 16.546237 645,650 Remaining contract charges 2,292,645 -- 39,605,788 2004 Lowest contract charges 250 15.109178 3,807 Highest contract charges 8,288 13.278865 110,059 Remaining contract charges 1,303,962 -- 17,781,859 TEMPLETON FOREIGN SECURITIES FUND 2008 Lowest contract charges 12,799 9.905208 126,779 Highest contract charges 49 8.211268 400 Remaining contract charges 18,013,328 -- 160,251,243 2007 Lowest contract charges 9,268 16.755358 155,292 Highest contract charges 29 14.128636 407 Remaining contract charges 19,305,769 -- 293,624,963 2006 Lowest contract charges 2,250 14.636053 32,941 Highest contract charges 255,931 12.571975 3,217,555 Remaining contract charges 18,959,703 -- 253,659,532 2005 Lowest contract charges 865 12.154452 10,515 Highest contract charges 170,418 10.613973 1,808,809 Remaining contract charges 15,710,185 -- 175,539,175 2004 Lowest contract charges 1,390 11.321045 15,764 Highest contract charges 43,672 9.878123 431,401 Remaining contract charges 10,548,259 -- 108,883,014 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2008 Lowest contract charges 0.85% 3.15% (53.02)% Highest contract charges 2.58% 5.57% (53.82)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 1.71% 27.99% Highest contract charges 2.42% -- 25.84% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.82% 27.35% Highest contract charges 2.50% 1.31% 25.26% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 1.43% 26.55% Highest contract charges 2.47% 1.33% 24.61% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% -- 23.65% Highest contract charges 2.47% 2.14% 21.75% Remaining contract charges -- -- -- TEMPLETON FOREIGN SECURITIES FUND 2008 Lowest contract charges 0.85% 2.46% (40.88)% Highest contract charges 2.55% 4.61% (41.88)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 1.21% 14.48% Highest contract charges 2.62% -- 12.55% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.16% 20.42% Highest contract charges 2.50% 1.24% 18.45% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% 0.13% 12.21% Highest contract charges 2.48% 0.97% 7.45% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 1.33% 17.41% Highest contract charges 2.47% 1.00% 15.60% Remaining contract charges -- -- --
SA-198 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- TEMPLETON GLOBAL ASSET ALLOCATION FUND 2008 Lowest contract charges 1,517 $13.972496 $21,192 Highest contract charges 4,733 12.346332 58,438 Remaining contract charges 126,937 -- 1,627,371 2007 Lowest contract charges 1,517 18.832232 28,572 Highest contract charges 3,755 16.680252 62,632 Remaining contract charges 198,001 -- 3,422,702 2006 Lowest contract charges 1,519 17.281807 26,228 Highest contract charges 3,755 15.491752 58,169 Remaining contract charges 223,690 -- 3,592,879 2005 Lowest contract charges 1,518 14.405588 21,871 Highest contract charges 3,755 13.069300 49,073 Remaining contract charges 232,045 -- 3,127,195 2004 Lowest contract charges 1,519 14.043980 21,331 Highest contract charges 2,286 12.251426 28,004 Remaining contract charges 287,874 -- 3,803,126 TEMPLETON GROWTH SECURITIES FUND 2008 Lowest contract charges 42,917 9.996674 429,028 Highest contract charges 13,647 8.149626 111,219 Remaining contract charges 33,901,733 -- 303,088,563 2007 Lowest contract charges 43,133 17.480379 753,978 Highest contract charges 14,246 14.495551 206,501 Remaining contract charges 38,831,824 -- 615,404,141 2006 Lowest contract charges 19,335 17.225283 333,017 Highest contract charges 11,465 14.528955 166,569 Remaining contract charges 34,740,528 -- 545,011,757 2005 Lowest contract charges 6,054 14.262017 86,335 Highest contract charges 4,841 12.235707 59,229 Remaining contract charges 27,039,258 -- 353,013,575 2004 Lowest contract charges 2,658 13.443331 35,739 Highest contract charges 313,025 11.535531 3,610,905 Remaining contract charges 14,511,112 -- 177,137,908 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- TEMPLETON GLOBAL ASSET ALLOCATION FUND 2008 Lowest contract charges 0.95% 10.55% (25.81)% Highest contract charges 2.01% 10.67% (26.58)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.95% 17.34% 8.97% Highest contract charges 2.14% 17.36% 7.67% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% 7.05% 19.97% Highest contract charges 2.15% 7.06% 18.54% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 3.70% 2.58% Highest contract charges 2.14% 3.75% 1.35% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 3.28% 14.63% Highest contract charges 2.05% 2.87% 13.37% Remaining contract charges -- -- -- TEMPLETON GROWTH SECURITIES FUND 2008 Lowest contract charges 0.85% 1.75% (42.81)% Highest contract charges 2.56% 1.69% (43.78)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 1.26% 1.48% Highest contract charges 2.54% 1.20% (0.23)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.20% 20.78% Highest contract charges 2.55% 1.47% 18.74% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.67% 9.79% Highest contract charges 2.52% -- 6.12% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 1.31% 14.93% Highest contract charges 2.47% 0.62% 13.16% Remaining contract charges -- -- --
SA-199 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MUTUAL DISCOVERY SECURITIES FUND 2008 Lowest contract charges 48,850 $15.987575 $780,999 Highest contract charges 6,212 14.666576 91,112 Remaining contract charges 8,343,642 -- 124,780,122 2007 Lowest contract charges 40,428 22.537085 911,137 Highest contract charges 9,278 21.030000 195,118 Remaining contract charges 8,811,376 -- 191,983,358 2006 Lowest contract charges 16,775 20.321572 340,880 Highest contract charges 1,762 19.287666 33,987 Remaining contract charges 6,607,536 -- 130,798,836 2005 Lowest contract charges 1,558 16.655119 25,945 Highest contract charges 2,176 16.078683 34,984 Remaining contract charges 3,889,622 -- 63,647,577 2004 Lowest contract charges 296 14.593317 4,317 Highest contract charges 26,457 14.229936 376,479 Remaining contract charges 2,154,077 -- 30,968,068 FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 2,066 7.981607 16,489 Highest contract charges 30,626 7.491831 229,448 Remaining contract charges 2,092,255 -- 16,111,795 2007 Lowest contract charges 4,238 12.444192 52,743 Highest contract charges 1,641 11.858630 19,458 Remaining contract charges 1,894,232 -- 22,980,116 2006 Lowest contract charges 678 10.978096 7,429 Highest contract charges 1,270 10.640852 13,512 Remaining contract charges 1,430,758 -- 15,443,047 2005 Lowest contract charges 46 10.524182 484 Highest contract charges 15,384 10.380183 159,686 Remaining contract charges 606,408 -- 6,330,485 FRANKLIN LARGE CAP VALUE SECURITIES FUND 2008 Lowest contract charges 250 7.585679 1,895 Highest contract charges 49 7.106541 348 Remaining contract charges 854,194 -- 6,264,927 2007 Lowest contract charges 250 11.800600 2,950 Highest contract charges 25 11.245329 283 Remaining contract charges 781,053 -- 8,982,369 2006 Lowest contract charges 92,929 11.823520 1,098,765 Highest contract charges 13,874 11.576666 160,617 Remaining contract charges 487,317 -- 5,710,113 2005 Lowest contract charges 8,796 10.314563 90,723 Highest contract charges 8,117 10.215971 82,925 Remaining contract charges 132,345 -- 1,359,418 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- MUTUAL DISCOVERY SECURITIES FUND 2008 Lowest contract charges 0.85% 2.37% (29.06)% Highest contract charges 2.56% 1.85% (30.26)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 1.22% 10.90% Highest contract charges 2.52% 1.07% 9.03% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.11% 22.01% Highest contract charges 2.55% 1.20% 19.96% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.82% -- 13.98% Highest contract charges 2.34% -- 13.05% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.62% -- 17.08% Highest contract charges 2.48% 1.19% 15.28% Remaining contract charges -- -- -- FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2008 Lowest contract charges 0.86% 0.14% (35.86)% Highest contract charges 2.51% 0.12% (36.91)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 0.13% 13.36% Highest contract charges 2.54% 0.13% 11.44% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.01% 4.31% Highest contract charges 2.54% 0.01% 2.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.86% 0.71% 11.76% Highest contract charges 2.45% 0.25% 10.55% Remaining contract charges -- -- -- FRANKLIN LARGE CAP VALUE SECURITIES FUND 2008 Lowest contract charges 0.86% -- (35.72)% Highest contract charges 2.39% -- (36.81)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.86% 3.39% (1.11)% Highest contract charges 2.44% 4.03% (2.77)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.73% 14.63% Highest contract charges 2.50% 1.59% 13.32% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 1.16% 6.25% Highest contract charges 2.44% 2.93% 5.44% Remaining contract charges -- -- --
SA-200 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- TEMPLETON GLOBAL INCOME SECURITIES FUND 2008 Lowest contract charges 843 $9.955924 $8,389 Highest contract charges 4,893 9.822923 48,067 Remaining contract charges 548,952 -- 5,432,332 HARTFORD ADVISERS HLS FUND 2008 Lowest contract charges 27,135 7.222661 195,985 Highest contract charges 22,539 0.719130 16,209 Remaining contract charges 20,424,061 -- 16,187,883 2007 Lowest contract charges 2,926,523 1.346358 3,940,147 Highest contract charges 24,470 1.081903 26,474 Remaining contract charges 24,621,095 -- 27,412,774 2006 Lowest contract charges 5,165,865 1.283584 6,630,820 Highest contract charges 24,470 1.043392 25,532 Remaining contract charges 29,623,827 -- 31,651,899 2005 Lowest contract charges 5,862,533 1.178754 6,910,484 Highest contract charges 24,470 0.969260 23,718 Remaining contract charges 34,715,244 -- 34,284,325 2004 Lowest contract charges 6,377,220 1.117498 7,126,531 Highest contract charges 1,252,341 0.929969 1,164,638 Remaining contract charges 38,659,817 -- 36,482,628 HARTFORD LARGECAP GROWTH HLS FUND 2008 Lowest contract charges 1,605 6.314875 10,136 Highest contract charges 34 6.272651 213 Remaining contract charges 3,407 -- 21,425 HARTFORD TOTAL RETURN BOND HLS FUND 2008 Lowest contract charges 31,034 9.060101 281,170 Highest contract charges 119,833 1.105264 132,447 Remaining contract charges 51,439,155 -- 91,511,975 2007 Lowest contract charges 1,104,972 1.509593 1,668,058 Highest contract charges 88,976 1.230471 109,482 Remaining contract charges 63,216,908 -- 79,729,578 2006 Lowest contract charges 1,192,897 1.466249 1,749,082 Highest contract charges 56,895 1.208958 68,784 Remaining contract charges 68,898,704 -- 85,021,424 2005 Lowest contract charges 1,335,796 1.422302 1,899,906 Highest contract charges 56,895 1.186291 67,494 Remaining contract charges 75,027,974 -- 90,433,823 2004 Lowest contract charges 1,277,261 1.411419 1,802,750 Highest contract charges 1,540,308 1.191419 1,835,153 Remaining contract charges 69,839,752 -- 84,155,955 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- TEMPLETON GLOBAL INCOME SECURITIES FUND 2008 Lowest contract charges 0.70% 0.64% 0.44% Highest contract charges 2.01% -- (0.70)% Remaining contract charges -- -- -- HARTFORD ADVISERS HLS FUND 2008 Lowest contract charges 1.03% 14.16% (30.69)% Highest contract charges 2.56% 2.67% (33.53)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.38% 4.89% Highest contract charges 2.54% 1.93% 3.69% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 2.03% 8.89% Highest contract charges 2.55% 2.15% 7.65% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 2.85% 5.48% Highest contract charges 2.52% 4.40% 4.28% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.82% 2.05% Highest contract charges 2.45% 2.95% 0.93% Remaining contract charges -- -- -- HARTFORD LARGECAP GROWTH HLS FUND 2008 Lowest contract charges 1.37% 2.37% (39.20)% Highest contract charges 1.96% 1.84% (39.52)% Remaining contract charges -- -- -- HARTFORD TOTAL RETURN BOND HLS FUND 2008 Lowest contract charges 0.69% 23.23% (8.99)% Highest contract charges 2.55% 6.83% (10.18)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 4.77% 2.96% Highest contract charges 2.53% 7.54% 1.78% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 4.39% 3.09% Highest contract charges 2.55% 4.58% 1.91% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 7.07% 0.77% Highest contract charges 2.52% 10.33% 0.38% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 4.55% 2.91% Highest contract charges 2.47% 4.52% 1.79% Remaining contract charges -- -- --
SA-201 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD CAPITAL APPRECIATION HLS FUND 2008 Lowest contract charges 62,587 $5.861911 $366,878 Highest contract charges 10,035 0.848255 8,513 Remaining contract charges 38,397,694 -- 69,079,915 2007 Lowest contract charges 3,850,996 2.708673 10,431,089 Highest contract charges 10,035 1.603556 16,092 Remaining contract charges 39,121,345 -- 64,937,065 2006 Lowest contract charges 5,371,565 2.357117 12,661,408 Highest contract charges 1,763,707 1.413662 2,493,286 Remaining contract charges 44,933,400 -- 65,368,231 2005 Lowest contract charges 5,697,035 2.054889 11,706,774 Highest contract charges 1,817,152 1.246038 2,264,240 Remaining contract charges 52,925,549 -- 67,477,143 2004 Lowest contract charges 6,012,800 1.807982 10,871,033 Highest contract charges 1,656,954 1.108442 1,836,638 Remaining contract charges 57,211,800 -- 64,630,767 HARTFORD DIVIDEND AND GROWTH HLS FUND 2008 Lowest contract charges 31,353 7.184273 225,245 Highest contract charges 19,922 0.889157 17,714 Remaining contract charges 32,263,259 -- 53,576,949 2007 Lowest contract charges 1,148,371 1.680583 1,929,933 Highest contract charges 21,628 1.353370 29,271 Remaining contract charges 38,561,153 -- 53,592,557 2006 Lowest contract charges 1,882,130 1.578268 2,970,507 Highest contract charges 21,628 1.285670 27,807 Remaining contract charges 45,112,330 -- 59,288,193 2005 Lowest contract charges 2,027,107 1.333084 2,702,304 Highest contract charges 21,628 1.098498 23,759 Remaining contract charges 51,477,020 -- 57,505,690 2004 Lowest contract charges 2,179,542 1.279022 2,787,681 Highest contract charges 1,101,916 1.066670 1,175,381 Remaining contract charges 47,389,011 -- 51,174,113 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- HARTFORD CAPITAL APPRECIATION HLS FUND 2008 Lowest contract charges 0.70% 8.23% (44.67)% Highest contract charges 2.56% 1.56% (47.10)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.06% 14.92% Highest contract charges 2.23% -- 13.60% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.10% 14.71% Highest contract charges 2.50% 1.11% 13.45% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.61% 13.66% Highest contract charges 2.49% 0.61% 12.41% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.22% 17.41% Highest contract charges 2.46% 0.44% 16.13% Remaining contract charges -- -- -- HARTFORD DIVIDEND AND GROWTH HLS FUND 2008 Lowest contract charges 0.69% 11.47% (31.56)% Highest contract charges 2.56% 1.90% (34.30)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.07% 6.48% Highest contract charges 2.54% 1.42% 5.27% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.44% 18.39% Highest contract charges 2.55% 1.50% 17.04% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.58% 4.23% Highest contract charges 2.52% 2.72% 3.04% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.19% 10.58% Highest contract charges 2.48% 2.51% 9.37% Remaining contract charges -- -- --
SA-202 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD FUNDAMENTAL GROWTH HLS FUND 2008 Lowest contract charges 4,499 $6.234829 $28,052 Highest contract charges 827 6.193128 5,121 Remaining contract charges 12,046 -- 59,781 2007 Lowest contract charges 6,663 1.291171 8,602 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 6,780 1.140237 7,731 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 6,898 1.056464 7,288 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 7,307 0.977503 7,143 Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD GLOBAL ADVISERS HLS FUND 2008 Lowest contract charges 62,193 1.508217 93,801 Highest contract charges 22,121 1.487931 32,913 Remaining contract charges -- -- -- 2007 Lowest contract charges 104,108 2.271611 236,493 Highest contract charges 22,124 2.244431 49,656 Remaining contract charges -- -- -- 2006 Lowest contract charges 142,160 1.980819 281,593 Highest contract charges 22,128 1.960059 43,372 Remaining contract charges -- -- -- 2005 Lowest contract charges 155,595 1.850300 287,897 Highest contract charges 27,213 1.833652 49,899 Remaining contract charges -- -- -- 2004 Lowest contract charges 194,988 1.819776 354,834 Highest contract charges 27,217 1.806109 49,157 Remaining contract charges -- -- -- HARTFORD GLOBAL EQUITY HLS FUND 2008 Lowest contract charges 32,417 6.147729 199,293 Highest contract charges 2,150 6.098927 13,112 Remaining contract charges 7,081 -- 43,343 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ----------------------------------------------------- HARTFORD FUNDAMENTAL GROWTH HLS FUND 2008 Lowest contract charges 1.05% 0.51% (41.60)% Highest contract charges 1.69% 0.08% (41.91)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.06% 13.24% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.52% 7.93% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.31% 8.08% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.39% 0.14% 1.47% Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD GLOBAL ADVISERS HLS FUND 2008 Lowest contract charges 1.41% 3.56% (33.61)% Highest contract charges 1.55% 4.37% (33.71)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.55% 14.68% Highest contract charges 1.55% 0.64% 14.51% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 2.40% 7.05% Highest contract charges 1.55% 2.44% 6.89% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 3.26% 1.68% Highest contract charges 1.55% 3.31% 1.53% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 10.90% Highest contract charges 1.55% -- 10.74% Remaining contract charges -- -- -- HARTFORD GLOBAL EQUITY HLS FUND 2008 Lowest contract charges 1.17% 1.56% (41.32)% Highest contract charges 1.91% 2.15% (41.69)% Remaining contract charges -- -- --
SA-203 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD GLOBAL HEALTH HLS FUND 2008 Lowest contract charges 183,370 $1.605923 $294,478 Highest contract charges 365 1.560245 570 Remaining contract charges 18,084 -- 28,665 2007 Lowest contract charges 286,382 2.193343 628,133 Highest contract charges 355 2.138451 759 Remaining contract charges 41,961 -- 90,978 2006 Lowest contract charges 417,758 2.101222 877,801 Highest contract charges 342 2.055824 703 Remaining contract charges 45,946 -- 95,577 2005 Lowest contract charges 421,501 1.921259 809,812 Highest contract charges 322 1.886344 608 Remaining contract charges 45,962 -- 87,555 2004 Lowest contract charges 441,436 1.737313 766,912 Highest contract charges 294 1.711710 503 Remaining contract charges 56,658 -- 97,744 HARTFORD GLOBAL GROWTH HLS FUND 2008 Lowest contract charges 552,065 1.183214 653,212 Highest contract charges 2,660 5.357859 14,253 Remaining contract charges 57,914 -- 115,738 2007 Lowest contract charges 715,426 2.530315 1,810,252 Highest contract charges 9,380 2.445701 22,941 Remaining contract charges 82,029 -- 203,908 2006 Lowest contract charges 1,052,674 2.057130 2,165,485 Highest contract charges 32,456 1.998303 64,857 Remaining contract charges 108,106 -- 219,150 2005 Lowest contract charges 1,109,958 1.832185 2,033,649 Highest contract charges 27,431 1.788716 49,067 Remaining contract charges 126,922 -- 229,762 2004 Lowest contract charges 1,169,200 1.815622 2,122,825 Highest contract charges 27,431 1.781427 48,867 Remaining contract charges 114,663 -- 206,442 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD GLOBAL HEALTH HLS FUND 2008 Lowest contract charges 1.41% 0.14% (26.78)% Highest contract charges 1.63% 0.17% (27.04)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% -- 4.38% Highest contract charges 1.61% -- 4.02% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% -- 9.37% Highest contract charges 1.70% -- 8.99% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% -- 10.59% Highest contract charges 1.70% -- 10.20% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 10.96% Highest contract charges 1.74% -- 10.57% Remaining contract charges -- -- -- HARTFORD GLOBAL GROWTH HLS FUND 2008 Lowest contract charges 1.41% 0.38% (53.24)% Highest contract charges 1.63% 2.65% (48.99)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.05% 23.00% Highest contract charges 1.90% 0.09% 22.39% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.45% 12.28% Highest contract charges 1.90% 0.42% 11.72% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.47% 0.91% Highest contract charges 1.89% 0.48% 0.41% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.39% 17.24% Highest contract charges 1.84% 2.89% 16.65% Remaining contract charges -- -- --
SA-204 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD DISCIPLINED EQUITY HLS FUND 2008 Lowest contract charges 1,086 $6.860722 $7,453 Highest contract charges 4,711 6.769289 31,893 Remaining contract charges 936,764 -- 3,851,087 2007 Lowest contract charges 482,787 1.479497 714,282 Highest contract charges 294 1.430014 421 Remaining contract charges 86,375 -- 125,249 2006 Lowest contract charges 551,685 1.388298 765,903 Highest contract charges 388 1.348591 524 Remaining contract charges 114,910 -- 156,929 2005 Lowest contract charges 601,321 1.255097 754,715 Highest contract charges 4,261 1.225316 5,222 Remaining contract charges 110,102 -- 136,264 2004 Lowest contract charges 679,473 1.197237 813,490 Highest contract charges 64,584 1.178956 76,142 Remaining contract charges 54,318 -- 64,542 HARTFORD GROWTH HLS FUND 2008 Lowest contract charges 2,762 6.607896 18,248 Highest contract charges 305 6.519796 1,985 Remaining contract charges 73,277 -- 301,896 2007 Lowest contract charges 53,796 1.506262 81,031 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 64,590 1.311312 84,697 Highest contract charges 4,335 1.281511 5,556 Remaining contract charges -- -- -- 2005 Lowest contract charges 20,772 1.274338 26,471 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 20,506 1.237646 25,380 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD DISCIPLINED EQUITY HLS FUND 2008 Lowest contract charges 0.70% 2.94% (33.15)% Highest contract charges 2.03% 2.86% (33.86)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.74% 6.57% Highest contract charges 1.80% 0.66% 6.04% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.73% 10.61% Highest contract charges 1.90% 0.03% 10.06% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.88% 4.83% Highest contract charges 1.86% 1.33% 4.31% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.99% 6.64% Highest contract charges 1.75% 0.82% 6.26% Remaining contract charges -- -- -- HARTFORD GROWTH HLS FUND 2008 Lowest contract charges 0.69% 1.42% (38.00)% Highest contract charges 1.95% 2.65% (38.66)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% -- 14.87% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% -- 2.90% Highest contract charges 1.89% -- 2.39% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% -- 2.97% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 10.66% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-205 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD GROWTH OPPORTUNITIES HLS FUND 2008 Lowest contract charges 5,640 $6.075105 $34,266 Highest contract charges 769 5.991598 4,608 Remaining contract charges 1,488,340 -- 8,672,109 2007 Lowest contract charges 85,630 2.009325 172,058 Highest contract charges 19,869 1.953917 38,822 Remaining contract charges 4,363 -- 8,596 2006 Lowest contract charges 89,417 1.575584 140,884 Highest contract charges 16,379 1.539813 25,221 Remaining contract charges 4,363 -- 6,764 2005 Lowest contract charges 55,927 1.429248 79,933 Highest contract charges 4,363 1.411014 6,157 Remaining contract charges -- -- -- 2004 Lowest contract charges 14,402 1.249263 17,991 Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD HIGH YIELD HLS FUND 2008 Lowest contract charges 1,762 7.677483 13,525 Highest contract charges 459 7.575364 3,478 Remaining contract charges 299,934 -- 859,284 2007 Lowest contract charges 246,057 1.400582 344,623 Highest contract charges 20,416 1.353719 27,637 Remaining contract charges 33,719 -- 46,636 2006 Lowest contract charges 304,898 1.385264 422,366 Highest contract charges 16,621 1.345629 22,365 Remaining contract charges 33,606 -- 46,044 2005 Lowest contract charges 276,005 1.266816 349,648 Highest contract charges 4,425 1.236741 5,472 Remaining contract charges 43,244 -- 54,159 2004 Lowest contract charges 302,110 1.261345 381,064 Highest contract charges 16,133 1.242075 20,038 Remaining contract charges 35,438 -- 44,363 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD GROWTH OPPORTUNITIES HLS FUND 2008 Lowest contract charges 0.70% 1.74% (40.40)% Highest contract charges 1.98% 2.99% (41.05)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.02% 27.53% Highest contract charges 1.89% 0.03% 26.89% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.55% 10.24% Highest contract charges 1.91% 1.27% 9.69% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% -- 14.41% Highest contract charges 1.62% -- 14.01% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 15.27% Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD HIGH YIELD HLS FUND 2008 Lowest contract charges 0.66% 114.51% (25.94)% Highest contract charges 2.03% 57.32% (26.72)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 7.09% 1.11% Highest contract charges 1.89% 7.51% 0.60% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 15.32% 9.35% Highest contract charges 1.90% 23.35% 8.80% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 6.24% 0.43% Highest contract charges 1.87% 9.82% 0.07% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 4.73% 5.65% Highest contract charges 1.74% 4.54% 5.28% Remaining contract charges -- -- --
SA-206 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD INDEX HLS FUND 2008 Lowest contract charges 93,979 $3.363785 $316,124 Highest contract charges 395 3.235025 1,277 Remaining contract charges 12,218 -- 40,547 2007 Lowest contract charges 152,594 5.437964 829,802 Highest contract charges 472 5.256090 2,480 Remaining contract charges 20,912 -- 112,301 2006 Lowest contract charges 254,344 5.255117 1,336,605 Highest contract charges 472 5.104819 2,409 Remaining contract charges 41,224 -- 214,333 2005 Lowest contract charges 276,112 4.627286 1,277,651 Highest contract charges 1,594 4.581945 7,306 Remaining contract charges 39,164 -- 179,590 2004 Lowest contract charges 280,634 4.501460 1,263,261 Highest contract charges 1,594 4.466279 7,121 Remaining contract charges 48,607 -- 217,159 HARTFORD INTERNATIONAL GROWTH HLS FUND 2008 Lowest contract charges 499 4.903365 2,445 Highest contract charges 1,853 4.837910 8,967 Remaining contract charges 143,518 -- 229,489 2007 Lowest contract charges 169,271 1.965895 332,769 Highest contract charges 22,827 1.905033 43,486 Remaining contract charges 16,291 -- 31,287 2006 Lowest contract charges 300,778 1.612967 485,146 Highest contract charges 27,022 1.570859 42,448 Remaining contract charges 21,789 -- 34,454 2005 Lowest contract charges 178,475 1.321537 235,862 Highest contract charges 646 1.293488 835 Remaining contract charges 23,200 -- 30,161 2004 Lowest contract charges 19,876 1.265573 25,154 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD INDEX HLS FUND 2008 Lowest contract charges 1.41% 1.56% (38.14)% Highest contract charges 1.93% 1.77% (38.45)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.07% 3.48% Highest contract charges 1.89% 1.42% 2.96% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.43% 13.57% Highest contract charges 1.91% 6.21% 13.00% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.59% 2.80% Highest contract charges 1.60% 1.61% 2.59% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.07% 8.59% Highest contract charges 1.61% 1.12% 8.37% Remaining contract charges -- -- -- HARTFORD INTERNATIONAL GROWTH HLS FUND 2008 Lowest contract charges 0.70% 3.59% (51.51)% Highest contract charges 2.02% 3.08% (52.03)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.35% 21.88% Highest contract charges 1.89% 0.43% 21.27% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.52% 22.05% Highest contract charges 1.90% 1.19% 21.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 0.63% 4.42% Highest contract charges 0.93% -- 3.90% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.39% -- 22.68% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-207 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND 2008 Lowest contract charges 47,992 $1.361330 $65,334 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 89,435 2.404350 215,034 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 91,651 2.242458 205,523 Highest contract charges 1,375 2.183990 3,004 Remaining contract charges -- -- -- 2005 Lowest contract charges 49,065 1.762674 86,486 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 16,255 1.510987 24,562 Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 2008 Lowest contract charges 486 6.271971 3,046 Highest contract charges 11,301 0.962384 10,876 Remaining contract charges 4,750,773 -- 6,385,410 2007 Lowest contract charges 731,012 1.870595 1,367,428 Highest contract charges 11,301 1.713829 19,368 Remaining contract charges 5,301,299 -- 9,325,460 2006 Lowest contract charges 1,020,222 1.492426 1,522,605 Highest contract charges 414,109 1.385228 573,636 Remaining contract charges 5,984,889 -- 8,457,585 2005 Lowest contract charges 1,036,986 1.219069 1,264,158 Highest contract charges 679,901 1.144025 777,824 Remaining contract charges 6,925,700 -- 8,040,102 2004 Lowest contract charges 993,897 1.081252 1,074,653 Highest contract charges 224,490 1.025909 230,306 Remaining contract charges 5,574,286 -- 5,783,224 HARTFORD MIDCAP GROWTH HLS FUND 2008 Lowest contract charges 3,214 5.770819 18,549 Highest contract charges 11,160 5.871243 65,525 Remaining contract charges 112,882 -- 647,874 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND 2008 Lowest contract charges 1.41% 0.84% (43.38)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.40% 7.22% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.87% 27.22% Highest contract charges 1.90% 2.47% 26.59% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 2.75% 16.66% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 15.05% Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 2008 Lowest contract charges 0.71% 5.86% (39.82)% Highest contract charges 2.56% 1.99% (43.85)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.75% 25.34% Highest contract charges 2.23% 11.91% 23.91% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.21% 22.42% Highest contract charges 2.50% 1.10% 21.08% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% -- 12.75% Highest contract charges 2.48% -- 11.51% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.57% 16.15% Highest contract charges 2.38% 2.29% 14.88% Remaining contract charges -- -- -- HARTFORD MIDCAP GROWTH HLS FUND 2008 Lowest contract charges 0.71% 0.82% (43.74)% Highest contract charges 1.83% 1.58% (44.45)% Remaining contract charges -- -- --
SA-208 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD MIDCAP HLS FUND 2008 Lowest contract charges 551,989 $2.870203 $1,584,319 Highest contract charges 29,261 2.831583 82,855 Remaining contract charges -- -- -- 2007 Lowest contract charges 763,479 4.512098 3,444,892 Highest contract charges 37,197 4.458080 165,826 Remaining contract charges -- -- -- 2006 Lowest contract charges 1,287,144 3.978508 5,120,913 Highest contract charges 72,522 3.936774 285,504 Remaining contract charges -- -- -- 2005 Lowest contract charges 1,396,539 3.619701 5,055,053 Highest contract charges 85,490 3.587107 306,662 Remaining contract charges -- -- -- 2004 Lowest contract charges 1,516,966 3.151045 4,780,030 Highest contract charges 35,052 3.102928 108,763 Remaining contract charges 113,078 -- 353,634 HARTFORD MIDCAP VALUE HLS FUND 2008 Lowest contract charges 95,231 1.011759 96,351 Highest contract charges 1,581 0.975511 1,543 Remaining contract charges 65,170 -- 65,072 2007 Lowest contract charges 134,922 1.720458 232,128 Highest contract charges 1,466 1.667164 2,444 Remaining contract charges 91,410 -- 155,194 2006 Lowest contract charges 198,287 1.712649 339,596 Highest contract charges 22,315 1.679024 37,468 Remaining contract charges 89,720 -- 152,358 2005 Lowest contract charges 214,820 1.477045 317,298 Highest contract charges 22,119 1.453117 32,142 Remaining contract charges 90,261 -- 132,389 2004 Lowest contract charges 261,848 1.365266 357,491 Highest contract charges 22,813 1.347852 30,749 Remaining contract charges 90,865 -- 123,374 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD MIDCAP HLS FUND 2008 Lowest contract charges 1.41% 0.25% (36.39)% Highest contract charges 1.55% 0.26% (36.48)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.18% 13.41% Highest contract charges 1.55% 0.16% 13.24% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.84% 9.91% Highest contract charges 1.55% 0.80% 9.75% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.07% 14.87% Highest contract charges 1.55% 0.06% 14.70% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.11% 14.53% Highest contract charges 1.75% 0.10% 14.13% Remaining contract charges -- -- -- HARTFORD MIDCAP VALUE HLS FUND 2008 Lowest contract charges 1.41% 0.44% (41.19)% Highest contract charges 1.91% 0.50% (41.49)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.22% 0.46% Highest contract charges 1.89% 0.38% (0.05)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.57% 15.95% Highest contract charges 1.75% 0.58% 15.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.10% 8.19% Highest contract charges 1.74% 0.10% 7.81% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.01% 14.40% Highest contract charges 1.75% 0.01% 14.00% Remaining contract charges -- -- --
SA-209 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD MONEY MARKET HLS FUND 2008 Lowest contract charges 166,462 $1.200294 $199,803 Highest contract charges 3,148 0.989484 3,115 Remaining contract charges 491,981,705 -- 559,742,457 2007 Lowest contract charges 119,533 1.185236 141,675 Highest contract charges 3,148 0.996396 3,136 Remaining contract charges 246,423,041 -- 271,321,646 2006 Lowest contract charges 162,505 1.139019 185,099 Highest contract charges 1,953 1.011338 1,975 Remaining contract charges 153,025,744 -- 163,079,244 2005 Lowest contract charges 143,674 1.115170 160,191 Highest contract charges 698,834 0.959978 670,865 Remaining contract charges 112,044,334 -- 115,995,826 2004 Lowest contract charges 39,819 1.094675 43,588 Highest contract charges 1,071,892 0.959450 1,028,427 Remaining contract charges 88,628,571 -- 91,023,043 HARTFORD SMALLCAP VALUE HLS FUND 2008 Lowest contract charges 199 7.573923 1,507 Highest contract charges 3,769 7.535915 28,404 Remaining contract charges 17,841 -- 134,937 HARTFORD SMALL COMPANY HLS FUND 2008 Lowest contract charges 26,782 6.664054 178,476 Highest contract charges 195,257 0.889390 173,660 Remaining contract charges 3,537,407 -- 4,031,858 2007 Lowest contract charges 644,044 1.999048 1,287,475 Highest contract charges 294,643 1.538611 453,341 Remaining contract charges 4,322,838 -- 6,837,403 2006 Lowest contract charges 1,034,849 1.779188 1,841,188 Highest contract charges 332,633 1.384540 460,544 Remaining contract charges 5,039,557 -- 7,149,842 2005 Lowest contract charges 1,117,590 1.580822 1,766,710 Highest contract charges 331,040 1.243780 411,741 Remaining contract charges 6,180,211 -- 7,841,673 2004 Lowest contract charges 1,159,866 1.328086 1,540,401 Highest contract charges 372,636 1.056494 393,687 Remaining contract charges 7,108,102 -- 7,626,084 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD MONEY MARKET HLS FUND 2008 Lowest contract charges 0.84% 1.91% 1.27% Highest contract charges 2.38% 2.06% (0.69)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.87% 4.83% 4.06% Highest contract charges 2.24% 3.80% 2.05% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.60% 4.90% 3.82% Highest contract charges 2.56% 4.71% 2.07% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.94% 2.71% 1.87% Highest contract charges 2.50% 2.54% 0.06% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.90% 0.01% Highest contract charges 2.46% 1.00% 1.79% Remaining contract charges -- -- -- HARTFORD SMALLCAP VALUE HLS FUND 2008 Lowest contract charges 1.56% 12.22% (26.72)% Highest contract charges 2.10% 3.40% (27.01)% Remaining contract charges -- -- -- HARTFORD SMALL COMPANY HLS FUND 2008 Lowest contract charges 1.04% 0.29% (36.34)% Highest contract charges 2.51% -- (42.20)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% -- 12.36% Highest contract charges 2.49% -- 11.13% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.10% 12.55% Highest contract charges 2.50% 0.11% 11.32% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% -- 19.03% Highest contract charges 2.49% -- 17.73% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 10.35% Highest contract charges 2.49% -- 9.14% Remaining contract charges -- -- --
SA-210 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD SMALLCAP GROWTH HLS FUND 2008 Lowest contract charges 3,181 $6.938674 $22,070 Highest contract charges 284 6.846178 1,944 Remaining contract charges 86,481 -- 292,617 2007 Lowest contract charges 87,574 1.358036 118,929 Highest contract charges 5,669 1.320592 7,486 Remaining contract charges 18,907 -- 25,171 2006 Lowest contract charges 98,923 1.406553 139,141 Highest contract charges 5,754 1.374628 7,909 Remaining contract charges 21,175 -- 29,301 2005 Lowest contract charges 87,090 1.338187 116,544 Highest contract charges 631 1.314363 829 Remaining contract charges 19,482 -- 25,738 2004 Lowest contract charges 53,236 1.225032 65,216 Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD STOCK HLS FUND 2008 Lowest contract charges 33,393 6.263381 209,153 Highest contract charges 958,069 0.559049 535,608 Remaining contract charges 18,068,574 -- 10,916,036 2007 Lowest contract charges 3,754,373 1.277448 4,796,017 Highest contract charges 969,640 1.010530 979,850 Remaining contract charges 19,603,434 -- 20,358,735 2006 Lowest contract charges 5,155,251 1.226336 6,322,070 Highest contract charges 1,118,721 0.980820 1,097,264 Remaining contract charges 23,415,993 -- 23,524,486 2005 Lowest contract charges 5,450,383 1.087385 5,926,665 Highest contract charges 1,136,270 0.879295 999,117 Remaining contract charges 26,765,950 -- 23,984,706 2004 Lowest contract charges 5,842,903 1.008454 5,892,298 Highest contract charges 715,689 0.824491 590,079 Remaining contract charges 24,855,123 -- 20,796,205 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD SMALLCAP GROWTH HLS FUND 2008 Lowest contract charges 0.68% 1.91% (34.82)% Highest contract charges 2.03% 1.08% (35.52)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.02% (3.45)% Highest contract charges 1.89% 0.02% (3.93)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.13% 5.11% Highest contract charges 1.89% 0.16% 4.59% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 0.16% 9.24% Highest contract charges 0.93% -- 8.69% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 13.54% Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD STOCK HLS FUND 2008 Lowest contract charges 1.04% 5.35% (41.13)% Highest contract charges 2.51% 1.89% (44.68)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.65% 4.17% Highest contract charges 2.49% 0.70% 3.03% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.09% 12.78% Highest contract charges 2.50% 1.09% 11.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.56% 7.83% Highest contract charges 2.49% 1.71% 6.65% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.93% 2.46% Highest contract charges 2.48% 1.64% 1.34% Remaining contract charges -- -- --
SA-211 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2008 Lowest contract charges 120,474 $9.624617 $1,159,517 Highest contract charges 1,406 9.528529 13,394 Remaining contract charges 1,101,273 -- 2,634,595 2007 Lowest contract charges 476,692 1.132329 539,772 Highest contract charges 2,931 1.101078 3,227 Remaining contract charges 67,657 -- 75,309 2006 Lowest contract charges 547,866 1.102881 604,233 Highest contract charges 2,931 1.077824 3,159 Remaining contract charges 70,756 -- 76,958 2005 Lowest contract charges 535,185 1.077947 576,901 Highest contract charges 783 1.058738 829 Remaining contract charges 70,207 -- 74,880 2004 Lowest contract charges 683,975 1.079155 738,114 Highest contract charges 1,498 1.069109 1,602 Remaining contract charges 26,410 -- 28,387 HARTFORD VALUE HLS FUND 2008 Lowest contract charges 12,754 7.098480 90,532 Highest contract charges 84 7.027403 591 Remaining contract charges 47,576 -- 132,115 2007 Lowest contract charges 91,158 1.429723 130,330 Highest contract charges 3,449 1.410824 4,865 Remaining contract charges 20,874 -- 29,549 2006 Lowest contract charges 104,647 1.333769 139,575 Highest contract charges 3,452 1.318772 4,553 Remaining contract charges 84,589 -- 111,866 2005 Lowest contract charges 104,208 1.113029 115,986 Highest contract charges 3,457 1.102708 3,812 Remaining contract charges 81,660 -- 90,255 2004 Lowest contract charges 13,289 1.046429 13,906 Highest contract charges 12,082 1.033088 12,482 Remaining contract charges 87,064 -- 90,599 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2008 Lowest contract charges 1.01% 16.44% (1.84)% Highest contract charges 2.04% 6.96% (2.62)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 3.51% 2.67% Highest contract charges 1.86% 3.69% 2.16% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 3.23% 2.31% Highest contract charges 1.86% 2.01% 1.80% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 2.50% 0.11% Highest contract charges 0.94% -- 0.61% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 3.36% 0.40% Highest contract charges 1.78% 0.86% 0.05% Remaining contract charges -- -- -- HARTFORD VALUE HLS FUND 2008 Lowest contract charges 1.03% 8.27% (33.31)% Highest contract charges 2.04% 15.93% (33.85)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.92% 7.19% Highest contract charges 1.60% 1.02% 6.98% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.87% 19.83% Highest contract charges 1.60% 0.87% 19.59% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 2.37% 6.37% Highest contract charges 1.59% 2.01% 6.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.27% 8.90% Highest contract charges 1.68% -- 8.52% Remaining contract charges -- -- --
SA-212 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD VALUE OPPORTUNITIES HLS FUND 2008 Lowest contract charges 1,720 $6.368473 $10,954 Highest contract charges 1,250 6.304630 7,883 Remaining contract charges 42,950 -- 86,808 2007 Lowest contract charges 142,934 1.491912 213,245 Highest contract charges 22,028 1.450756 31,958 Remaining contract charges -- -- -- 2006 Lowest contract charges 181,366 1.618630 293,564 Highest contract charges 26,119 1.581867 41,316 Remaining contract charges -- -- -- 2005 Lowest contract charges 124,158 1.382540 171,652 Highest contract charges 611 1.357902 830 Remaining contract charges -- -- -- 2004 Lowest contract charges 9,269 1.297525 12,026 Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD EQUITY INCOME HLS FUND 2008 Lowest contract charges 1,197 7.747694 9,275 Highest contract charges 5,006 7.663732 38,362 Remaining contract charges 45,182 -- 176,546 2007 Lowest contract charges 12,249 1.489076 18,240 Highest contract charges 25,142 1.458445 36,669 Remaining contract charges 1,658 -- 2,447 2006 Lowest contract charges 17,507 1.415573 24,782 Highest contract charges 21,333 1.393396 29,726 Remaining contract charges 283 -- 398 2005 Lowest contract charges 16,805 1.191368 20,022 Highest contract charges 701 1.178576 826 Remaining contract charges -- -- -- AMERICAN FUNDS ASSET ALLOCATION HLS FUND 2008 Lowest contract charges 209,923 7.250974 1,522,147 Highest contract charges 501 7.192825 3,603 Remaining contract charges 447,148 -- 3,231,054 AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH HLS FUND 2008 Lowest contract charges 55,223 6.679716 368,874 Highest contract charges 5,552 6.626079 36,786 Remaining contract charges 305,824 -- 2,034,736 AMERICAN FUNDS BOND HLS FUND 2008 Lowest contract charges 616,495 8.904119 5,489,348 Highest contract charges 3,625 8.832849 32,022 Remaining contract charges 831,753 -- 7,381,367 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD VALUE OPPORTUNITIES HLS FUND 2008 Lowest contract charges 1.03% 3.63% (37.09)% Highest contract charges 2.00% 11.13% (37.59)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.86% (7.83)% Highest contract charges 1.89% 0.85% (8.29)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.20% 17.08% Highest contract charges 1.90% 2.10% 16.49% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 1.33% 6.55% Highest contract charges 0.93% -- 6.02% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.39% 0.23% 16.93% Highest contract charges -- -- -- Remaining contract charges -- -- -- HARTFORD EQUITY INCOME HLS FUND 2008 Lowest contract charges 0.70% 8.25% (27.26)% Highest contract charges 1.74% 14.28% (27.89)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.42% 5.19% Highest contract charges 1.89% 1.83% 4.67% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.60% 18.82% Highest contract charges 1.89% 6.07% 18.23% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.38% 2.91% 3.10% Highest contract charges 0.94% -- 2.59% Remaining contract charges -- -- -- AMERICAN FUNDS ASSET ALLOCATION HLS FUND 2008 Lowest contract charges 0.83% -- (28.01)% Highest contract charges 1.63% -- (28.59)% Remaining contract charges -- -- -- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH HLS FUND 2008 Lowest contract charges 0.83% -- (34.65)% Highest contract charges 1.63% -- (35.17)% Remaining contract charges -- -- -- AMERICAN FUNDS BOND HLS FUND 2008 Lowest contract charges 0.83% -- (11.11)% Highest contract charges 1.62% -- (11.82)% Remaining contract charges -- -- --
SA-213 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL BOND HLS FUND 2008 Lowest contract charges 86,824 $9.767251 $848,031 Highest contract charges 2,576 9.689117 24,958 Remaining contract charges 189,928 -- 1,848,699 AMERICAN FUNDS GLOBAL GROWTH AND INCOME HLS FUND 2008 Lowest contract charges 312,976 6.006580 1,879,917 Highest contract charges 13,741 5.958336 81,872 Remaining contract charges 823,646 -- 4,929,443 AMERICAN FUNDS GLOBAL GROWTH HLS FUND 2008 Lowest contract charges 58,352 6.351012 370,593 Highest contract charges 1,883 6.300038 11,862 Remaining contract charges 203,909 -- 1,290,768 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION HLS FUND 2008 Lowest contract charges 127,078 5.053663 642,210 Highest contract charges 1,108 5.013031 5,555 Remaining contract charges 392,269 -- 1,975,038 AMERICAN FUNDS GROWTH HLS FUND 2008 Lowest contract charges 1,172,167 5.832309 6,836,442 Highest contract charges 1,516 5.783494 8,767 Remaining contract charges 2,128,220 -- 12,368,265 AMERICAN FUNDS GROWTH-INCOME HLS FUND 2008 Lowest contract charges 593,646 6.447345 3,827,440 Highest contract charges 45,595 6.395572 291,606 Remaining contract charges 1,378,933 -- 8,859,137 AMERICAN FUNDS INTERNATIONAL HLS FUND 2008 Lowest contract charges 765,494 6.039025 4,622,839 Highest contract charges 12,261 5.990544 73,447 Remaining contract charges 1,172,314 -- 7,056,034 AMERICAN FUNDS NEW WORLD HLS FUND 2008 Lowest contract charges 138,017 5.953164 821,640 Highest contract charges 4,004 5.905372 23,642 Remaining contract charges 432,342 -- 2,564,372 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ AMERICAN FUNDS GLOBAL BOND HLS FUND 2008 Lowest contract charges 0.83% -- (2.15)% Highest contract charges 1.62% -- (2.93)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH AND INCOME HLS FUND 2008 Lowest contract charges 0.83% -- (40.40)% Highest contract charges 1.64% -- (40.88)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH HLS FUND 2008 Lowest contract charges 0.84% -- (36.85)% Highest contract charges 1.62% -- (37.36)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION HLS FUND 2008 Lowest contract charges 0.83% -- (49.91)% Highest contract charges 1.64% -- (50.31)% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH HLS FUND 2008 Lowest contract charges 0.83% 2.50% (42.11)% Highest contract charges 1.60% 5.18% (42.59)% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH-INCOME HLS FUND 2008 Lowest contract charges 0.83% 3.11% (36.71)% Highest contract charges 1.63% 3.50% (37.22)% Remaining contract charges -- -- -- AMERICAN FUNDS INTERNATIONAL HLS FUND 2008 Lowest contract charges 0.83% -- (39.97)% Highest contract charges 1.63% -- (40.45)% Remaining contract charges -- -- -- AMERICAN FUNDS NEW WORLD HLS FUND 2008 Lowest contract charges 0.83% -- (40.78)% Highest contract charges 1.63% -- (41.25)% Remaining contract charges -- -- --
SA-214 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HUNTINGTON VA INCOME EQUITY FUND 2008 Lowest contract charges 23,111 $6.791597 $156,960 Highest contract charges 3,888 8.570547 33,323 Remaining contract charges 1,174,639 -- 1,758,057 2007 Lowest contract charges 588,221 1.372128 807,115 Highest contract charges 4,986 14.136235 70,485 Remaining contract charges 183,580 -- 1,561,414 2006 Lowest contract charges 172,442 1.377826 237,595 Highest contract charges 5,262 14.359121 75,558 Remaining contract charges 132,822 -- 1,485,875 2005 Lowest contract charges 15,565 1.240399 19,306 Highest contract charges 5,238 13.076432 68,489 Remaining contract charges 97,364 -- 1,289,834 2004 Lowest contract charges 5,594 13.241853 74,085 Highest contract charges 3,918 13.019064 51,015 Remaining contract charges 74,294 -- 974,760 HUNTINGTON VA DIVIDEND CAPTURE FUND 2008 Lowest contract charges 27,009 7.028026 189,818 Highest contract charges 7,540 9.895638 74,615 Remaining contract charges 2,563,023 -- 5,755,289 2007 Lowest contract charges 1,247,927 1.477762 1,844,140 Highest contract charges 8,054 14.107888 113,619 Remaining contract charges 1,047,789 -- 6,432,711 2006 Lowest contract charges 397,917 1.595687 634,953 Highest contract charges 7,096 15.409957 109,346 Remaining contract charges 426,795 -- 5,079,252 2005 Lowest contract charges 76,430 1.387277 106,030 Highest contract charges 6,302 13.552210 85,409 Remaining contract charges 224,152 -- 3,063,959 2004 Lowest contract charges 8,898 13.641047 121,388 Highest contract charges 3,765 13.411543 50,491 Remaining contract charges 87,725 -- 1,184,756 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HUNTINGTON VA INCOME EQUITY FUND 2008 Lowest contract charges 1.02% 13.17% (35.42)% Highest contract charges 2.51% 5.83% (39.37)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.49% (0.41)% Highest contract charges 2.49% 1.80% (1.55)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 1.60% 11.08% Highest contract charges 2.50% 1.92% 9.81% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.32% 1.25% 3.40% Highest contract charges 2.49% 1.71% 0.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% -- 11.74% Highest contract charges 2.46% -- 10.85% Remaining contract charges -- -- -- HUNTINGTON VA DIVIDEND CAPTURE FUND 2008 Lowest contract charges 1.03% 18.64% (31.59)% Highest contract charges 2.51% 10.83% (29.86)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 2.81% (7.39)% Highest contract charges 2.49% 3.40% (8.45)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.60% 15.02% Highest contract charges 2.50% 3.32% 13.71% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.29% 2.16% 4.20% Highest contract charges 2.48% 3.20% 1.05% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 0.05% 11.84% Highest contract charges 2.46% -- 10.95% Remaining contract charges -- -- --
SA-215 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HUNTINGTON VA GROWTH FUND 2008 Lowest contract charges 24,262 $6.775378 $164,381 Highest contract charges 2,564 8.360654 21,440 Remaining contract charges 1,512,812 -- 1,732,781 2007 Lowest contract charges 836,922 1.024222 857,194 Highest contract charges 3,586 13.805801 49,502 Remaining contract charges 205,720 -- 1,180,200 2006 Lowest contract charges 134,031 0.905081 121,308 Highest contract charges 3,709 12.340854 45,773 Remaining contract charges 149,642 -- 789,488 2005 Lowest contract charges 45,909 0.849930 39,020 Highest contract charges 3,679 11.742513 43,202 Remaining contract charges 60,173 -- 715,534 2004 Lowest contract charges 4,549 12.158550 55,307 Highest contract charges 2,710 11.953918 32,393 Remaining contract charges 46,966 -- 565,512 HUNTINGTON VA MID CORP AMERICA FUND 2008 Lowest contract charges 17,481 6.455900 112,854 Highest contract charges 3,554 10.621312 37,748 Remaining contract charges 1,148,228 -- 3,140,451 2007 Lowest contract charges 601,487 1.781308 1,071,433 Highest contract charges 3,317 17.804561 59,056 Remaining contract charges 421,901 -- 4,184,354 2006 Lowest contract charges 301,645 1.660206 500,791 Highest contract charges 2,796 16.786040 46,928 Remaining contract charges 314,083 -- 3,245,167 2005 Lowest contract charges 54,155 1.569226 84,982 Highest contract charges 2,287 16.049710 36,703 Remaining contract charges 141,793 -- 1,967,504 2004 Lowest contract charges 6,408 14.854866 95,191 Highest contract charges 922 14.604930 13,462 Remaining contract charges 45,358 -- 667,308 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HUNTINGTON VA GROWTH FUND 2008 Lowest contract charges 1.03% 2.05% (34.95)% Highest contract charges 2.51% 1.08% (39.44)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.29% 13.16% Highest contract charges 2.49% 0.43% 11.87% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.09% 6.31% Highest contract charges 2.50% 0.42% 5.10% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.47% -- 3.50% Highest contract charges 2.49% 0.49% 1.77% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 0.01% 3.89% Highest contract charges 2.45% -- 3.07% Remaining contract charges -- -- -- HUNTINGTON VA MID CORP AMERICA FUND 2008 Lowest contract charges 1.03% 2.13% (39.57)% Highest contract charges 2.51% 1.22% (40.35)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.48% 7.29% Highest contract charges 2.49% 0.56% 6.07% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.31% 5.80% Highest contract charges 2.50% 0.37% 4.59% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.25% 0.07% 14.24% Highest contract charges 2.48% 0.11% 9.89% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 0.02% 14.94% Highest contract charges 2.46% 0.01% 14.03% Remaining contract charges -- -- --
SA-216 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HUNTINGTON VA NEW ECONOMY FUND 2008 Lowest contract charges 39,953 $5.332800 $213,059 Highest contract charges 1,740 8.931398 15,544 Remaining contract charges 1,452,247 -- 2,586,469 2007 Lowest contract charges 828,545 1.904692 1,578,123 Highest contract charges 2,389 19.342180 46,207 Remaining contract charges 287,317 -- 3,484,222 2006 Lowest contract charges 370,392 1.716058 635,614 Highest contract charges 2,267 17.627960 39,958 Remaining contract charges 218,784 -- 2,240,094 2005 Lowest contract charges 57,877 1.577247 91,287 Highest contract charges 2,334 16.389399 38,247 Remaining contract charges 95,435 -- 1,444,062 2004 Lowest contract charges 3,932 15.093436 59,356 Highest contract charges 1,750 14.839470 25,963 Remaining contract charges 36,504 -- 545,245 HUNTINGTON VA ROTATING MARKETS FUND 2008 Lowest contract charges 344 6.434817 2,212 Highest contract charges 1,852 10.242381 18,964 Remaining contract charges 444,267 -- 1,128,680 2007 Lowest contract charges 286,453 1.625080 465,509 Highest contract charges 2,461 18.127386 44,618 Remaining contract charges 179,794 -- 1,667,938 2006 Lowest contract charges 84,660 1.509664 127,806 Highest contract charges 2,094 17.034600 35,678 Remaining contract charges 128,819 -- 1,223,580 2005 Lowest contract charges 5,423 1.279296 6,938 Highest contract charges 1,626 14.602090 23,750 Remaining contract charges 68,598 -- 1,014,739 2004 Lowest contract charges 4,823 13.886007 66,966 Highest contract charges 970 13.652372 13,237 Remaining contract charges 61,173 -- 841,991 HUNTINGTON VA INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 64,663 6.227854 402,714 Highest contract charges 3,140 0.992130 3,115 Remaining contract charges 1,420,451 -- 3,199,923 2007 Lowest contract charges 101,809 16.198358 1,649,135 Highest contract charges 3,144 1.711354 5,381 Remaining contract charges 1,025,503 -- 2,544,723 2006 Lowest contract charges 37,900 14.430333 546,914 Highest contract charges 82,936 1.553815 128,868 Remaining contract charges 229,665 -- 465,207 2005 Lowest contract charges 685 11.630368 7,971 Highest contract charges 15,596 1.263000 19,697 Remaining contract charges 5,367 -- 21,530 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HUNTINGTON VA NEW ECONOMY FUND 2008 Lowest contract charges 1.02% 0.51% (47.93)% Highest contract charges 2.52% 0.84% (53.82)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.15% 10.99% Highest contract charges 2.49% 0.17% 9.72% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.08% 8.80% Highest contract charges 2.50% 0.12% 7.56% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.26% -- 15.94% Highest contract charges 2.49% -- 10.45% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% -- 16.75% Highest contract charges 2.44% -- 15.82% Remaining contract charges -- -- -- HUNTINGTON VA ROTATING MARKETS FUND 2008 Lowest contract charges 1.00% 8.52% (38.68)% Highest contract charges 2.51% 2.56% (43.50)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.77% 7.65% Highest contract charges 2.49% 0.82% 6.42% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 0.56% 18.01% Highest contract charges 2.50% 0.58% 16.66% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.22% -- 13.36% Highest contract charges 2.48% 0.64% 6.96% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 0.48% 9.75% Highest contract charges 2.44% 0.16% 8.88% Remaining contract charges -- -- -- HUNTINGTON VA INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 1.02% 6.75% (40.18)% Highest contract charges 2.51% 2.74% (42.03)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.01% 12.25% Highest contract charges 2.48% 0.02% 10.97% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 2.48% 24.08% Highest contract charges 2.19% 1.80% 23.03% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.22% 14.70% 15.18% Highest contract charges 2.15% 1.08% 14.71% Remaining contract charges -- -- --
SA-217 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HUNTINGTON VA MACRO 100 FUND 2008 Lowest contract charges 9,567 $7.579899 $72,520 Highest contract charges 26,111 0.686243 17,918 Remaining contract charges 1,189,972 -- 853,303 2007 Lowest contract charges 578,064 1.108493 640,780 Highest contract charges 21,412 1.064643 22,796 Remaining contract charges 632,429 -- 687,868 2006 Lowest contract charges 267,069 1.155831 308,687 Highest contract charges 17,754 1.122950 19,937 Remaining contract charges 505,524 -- 574,916 2005 Lowest contract charges 37,620 1.092207 41,089 Highest contract charges 8,916 1.073412 9,570 Remaining contract charges 222,121 -- 240,013 2004 Lowest contract charges 13,580 1.050977 14,273 Highest contract charges 49,494 1.048339 51,886 Remaining contract charges 21,023 -- 22,056 HUNTINGTON VA MORTGAGE SECURITIES FUND 2008 Lowest contract charges 40,289 9.968448 401,616 Highest contract charges 1,238 1.067436 1,322 Remaining contract charges 774,923 -- 2,091,082 2007 Lowest contract charges 90,663 10.719929 971,899 Highest contract charges 1,240 1.071435 1,328 Remaining contract charges 587,371 -- 815,707 2006 Lowest contract charges 27,961 10.454920 292,340 Highest contract charges 46,821 1.065020 49,865 Remaining contract charges 220,785 -- 311,976 2005 Lowest contract charges 1,548 10.007438 15,493 Highest contract charges 7,302 1.030448 7,525 Remaining contract charges 5,651 -- 5,852 HUNTINGTON VA SITUS FUND 2008 Lowest contract charges 37,689 6.571252 247,660 Highest contract charges 16,877 0.816019 13,772 Remaining contract charges 4,335,671 -- 3,666,637 2007 Lowest contract charges 867,456 1.482212 1,285,753 Highest contract charges 14,542 1.423618 20,703 Remaining contract charges 3,052,677 -- 4,437,061 2006 Lowest contract charges 426,891 1.348911 575,837 Highest contract charges 7,995 1.310568 10,478 Remaining contract charges 1,898,640 -- 2,521,605 2005 Lowest contract charges 40,251 1.304158 52,493 Highest contract charges 2,500 1.281741 3,204 Remaining contract charges 778,086 -- 1,003,374 2004 Lowest contract charges 3,979 1.124039 4,472 Highest contract charges 11,840 1.123192 13,299 Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HUNTINGTON VA MACRO 100 FUND 2008 Lowest contract charges 1.03% 6.73% (28.46)% Highest contract charges 2.50% 1.92% (35.54)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.39% (4.10)% Highest contract charges 2.49% 0.40% (5.19)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.07% 5.83% Highest contract charges 2.50% 0.13% 4.62% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.31% 0.16% 14.04% Highest contract charges 2.45% 0.19% 2.55% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.83% -- 5.10% Highest contract charges 1.06% -- 4.83% Remaining contract charges -- -- -- HUNTINGTON VA MORTGAGE SECURITIES FUND 2008 Lowest contract charges 1.03% 12.13% (1.40)% Highest contract charges 2.49% 8.15% (0.37)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.63% 2.54% Highest contract charges 2.48% 2.84% 1.36% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.26% 4.47% Highest contract charges 2.18% -- 3.59% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.08% -- 0.27% Highest contract charges 2.02% -- 0.61% Remaining contract charges -- -- -- HUNTINGTON VA SITUS FUND 2008 Lowest contract charges 1.02% 0.86% (37.24)% Highest contract charges 2.51% 0.24% (42.68)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.43% 9.88% Highest contract charges 2.48% 0.39% 8.63% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 0.12% 3.43% Highest contract charges 2.50% 0.09% 2.25% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.26% -- 20.04% Highest contract charges 2.45% 0.01% 14.29% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.01% -- 12.40% Highest contract charges 1.07% -- 12.32% Remaining contract charges -- -- --
SA-218 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- LORD ABBETT AMERICA'S VALUE PORTFOLIO 2008 Lowest contract charges 4,295 $7.906371 $33,958 Highest contract charges 620 7.801894 4,838 Remaining contract charges 81,177 -- 638,132 LORD ABBETT BOND-DEBENTURE PORTFOLIO 2008 Lowest contract charges 2,063 8.373519 17,275 Highest contract charges 6,312 8.262872 52,157 Remaining contract charges 691,617 -- 5,755,430 LORD ABBETT GROWTH AND INCOME PORTFOLIO 2008 Lowest contract charges 87,029 6.916778 601,960 Highest contract charges 273 6.848122 1,868 Remaining contract charges 168,054 -- 1,157,654 MFS(R) CORE EQUITY SERIES 2008 Lowest contract charges 230 6.894720 1,587 Highest contract charges 2,006 4.353958 8,735 Remaining contract charges 1,122,681 -- 6,287,350 2007 Lowest contract charges 231 11.440100 2,640 Highest contract charges 1,687 7.337532 12,377 Remaining contract charges 1,326,505 -- 12,493,279 2006 Lowest contract charges 232 10.390804 2,404 Highest contract charges 2,005 6.768617 13,569 Remaining contract charges 1,670,080 -- 14,329,489 2005 Lowest contract charges 232 9.217904 2,138 Highest contract charges 3,157 6.098386 19,251 Remaining contract charges 1,958,914 -- 15,047,096 2004 Lowest contract charges 230 9.151640 2,130 Highest contract charges 3,043 6.149111 18,712 Remaining contract charges 2,218,608 -- 17,092,503 MFS(R) GROWTH SERIES 2008 Lowest contract charges 451 6.530042 2,943 Highest contract charges 5,190 3.915227 20,321 Remaining contract charges 2,284,240 -- 12,148,972 2007 Lowest contract charges 454 10.523433 4,777 Highest contract charges 5,192 6.418030 33,321 Remaining contract charges 2,651,797 -- 22,797,952 2006 Lowest contract charges 98,320 8.678651 853,284 Highest contract charges 5,111 5.433347 27,768 Remaining contract charges 2,290,946 -- 17,105,942 2005 Lowest contract charges 77,507 8.153094 631,920 Highest contract charges 3,879 5.165968 20,039 Remaining contract charges 2,416,051 -- 17,405,243 2004 Lowest contract charges 62,174 7.568372 470,548 Highest contract charges 11,808 4.855786 57,337 Remaining contract charges 2,481,207 -- 16,809,258 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ LORD ABBETT AMERICA'S VALUE PORTFOLIO 2008 Lowest contract charges 0.70% 11.02% (23.83)% Highest contract charges 2.01% 19.21% (24.64)% Remaining contract charges -- -- -- LORD ABBETT BOND-DEBENTURE PORTFOLIO 2008 Lowest contract charges 0.70% 16.56% (18.69)% Highest contract charges 2.02% 18.22% (19.56)% Remaining contract charges -- -- -- LORD ABBETT GROWTH AND INCOME PORTFOLIO 2008 Lowest contract charges 1.03% 6.01% (34.34)% Highest contract charges 2.02% 7.42% (34.86)% Remaining contract charges -- -- -- MFS(R) CORE EQUITY SERIES 2008 Lowest contract charges 0.95% 0.78% (39.73)% Highest contract charges 2.50% 0.78% (40.66)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.94% 0.34% 10.10% Highest contract charges 2.49% 0.34% 8.41% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.98% 0.44% 12.72% Highest contract charges 2.50% 0.51% 10.99% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.98% 0.74% 0.72% Highest contract charges 2.49% 0.74% 0.83% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.36% 11.40% Highest contract charges 2.46% 0.40% 9.69% Remaining contract charges -- -- -- MFS(R) GROWTH SERIES 2008 Lowest contract charges 0.85% 0.23% (37.95)% Highest contract charges 2.56% 0.23% (39.00)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.86% -- 20.15% Highest contract charges 2.54% -- 18.12% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 6.45% Highest contract charges 2.55% -- 5.18% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% -- 7.73% Highest contract charges 2.52% -- 6.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.35% -- 11.45% Highest contract charges 2.46% -- 10.17% Remaining contract charges -- -- --
SA-219 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS(R) GLOBAL EQUITY SERIES 2008 Lowest contract charges 3,963 $11.782035 $46,690 Highest contract charges 7,008 9.228134 64,672 Remaining contract charges 739,161 -- 7,600,391 2007 Lowest contract charges 3,633 17.942006 65,182 Highest contract charges 9,662 14.287162 138,037 Remaining contract charges 658,987 -- 10,506,039 2006 Lowest contract charges 34,570 16.420004 567,659 Highest contract charges 4,954 13.415376 66,463 Remaining contract charges 687,118 -- 10,099,529 2005 Lowest contract charges 18,887 13.377978 252,672 Highest contract charges 4,223 11.056369 46,694 Remaining contract charges 650,175 -- 7,844,416 2004 Lowest contract charges 7,781 12.593096 97,993 Highest contract charges 1,477 10.528057 15,547 Remaining contract charges 734,952 -- 8,440,222 MFS(R) HIGH INCOME SERIES 2008 Lowest contract charges 1,401 9.590820 13,439 Highest contract charges 437 8.508150 3,716 Remaining contract charges 5,703,823 -- 50,836,045 2007 Lowest contract charges 1,073 13.526642 14,511 Highest contract charges 396 12.205674 4,836 Remaining contract charges 6,374,390 -- 80,860,267 2006 Lowest contract charges 507 13.404996 6,793 Highest contract charges 349 12.303290 4,295 Remaining contract charges 6,477,357 -- 82,012,390 2005 Lowest contract charges 1,790 12.450166 22,292 Highest contract charges 349 11.434854 3,993 Remaining contract charges 6,857,178 -- 79,955,561 2004 Lowest contract charges 3,098 12.303541 38,111 Highest contract charges 30,723 11.488203 352,956 Remaining contract charges 6,233,648 -- 72,407,930 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS(R) GLOBAL EQUITY SERIES 2008 Lowest contract charges 0.85% 1.18% (34.33)% Highest contract charges 2.51% 1.17% (35.41)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% -- 8.27% Highest contract charges 2.49% 2.02% 6.50% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.51% 22.74% Highest contract charges 2.50% 0.49% 21.34% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.22% 6.23% Highest contract charges 2.48% 0.28% 5.02% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.34% 0.26% 16.70% Highest contract charges 2.46% -- 15.36% Remaining contract charges -- -- -- MFS(R) HIGH INCOME SERIES 2008 Lowest contract charges 0.85% 7.65% (29.10)% Highest contract charges 2.62% 5.23% (30.29)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.85% 7.12% 0.91% Highest contract charges 2.54% 6.58% (0.79)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 9.44% Highest contract charges 2.55% 7.79% 7.60% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 9.04% 1.19% Highest contract charges 2.45% -- 0.42% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 4.96% 8.12% Highest contract charges 2.47% 2.81% 6.46% Remaining contract charges -- -- --
SA-220 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS(R) INVESTORS GROWTH STOCK SERIES 2008 Lowest contract charges 53 $6.184005 $329 Highest contract charges 799 4.308344 3,440 Remaining contract charges 2,424,330 -- 12,661,320 2007 Lowest contract charges 54 9.904658 535 Highest contract charges 799 7.001540 5,591 Remaining contract charges 2,875,698 -- 24,195,138 2006 Lowest contract charges 54 8.992777 492 Highest contract charges 799 6.449766 5,150 Remaining contract charges 3,406,699 -- 26,100,112 2005 Lowest contract charges 55 8.451965 468 Highest contract charges 28,943 6.156607 178,189 Remaining contract charges 4,015,498 -- 28,897,793 2004 Lowest contract charges 57 8.178342 459 Highest contract charges 19,597 6.041268 118,388 Remaining contract charges 4,563,595 -- 32,178,546 MFS(R) INVESTORS TRUST SERIES 2008 Lowest contract charges 1,780 8.149753 14,506 Highest contract charges 5,497 6.595768 36,254 Remaining contract charges 16,650,689 -- 116,403,347 2007 Lowest contract charges 2,803,203 12.109375 33,945,037 Highest contract charges 3,178 10.111297 32,131 Remaining contract charges 14,207,504 -- 146,599,269 2006 Lowest contract charges 1,872,392 11.127182 20,834,429 Highest contract charges 221 9.403315 2,080 Remaining contract charges 13,321,398 -- 126,960,587 2005 Lowest contract charges 1,019,422 9.981433 10,175,294 Highest contract charges 114,688 8.545435 980,060 Remaining contract charges 11,000,648 -- 94,594,486 2004 Lowest contract charges 446,808 9.427597 4,212,333 Highest contract charges 31,576 8.164604 257,806 Remaining contract charges 7,691,741 -- 62,913,124 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS(R) INVESTORS GROWTH STOCK SERIES 2008 Lowest contract charges 0.97% 0.58% (37.57)% Highest contract charges 2.56% 0.58% (38.47)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.91% 0.32% 10.14% Highest contract charges 2.54% 0.32% 8.56% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.99% -- 6.40% Highest contract charges 2.54% -- 4.87% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.00% 0.35% 3.35% Highest contract charges 2.49% 0.31% 1.91% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 7.99% Highest contract charges 2.47% -- 6.49% Remaining contract charges -- -- -- MFS(R) INVESTORS TRUST SERIES 2008 Lowest contract charges 0.85% -- (33.65)% Highest contract charges 2.55% 0.65% (34.77)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.75% 8.83% Highest contract charges 2.40% 0.41% 7.53% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.43% 11.48% Highest contract charges 2.55% 0.60% 10.15% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.47% 5.88% Highest contract charges 2.48% 0.36% 4.66% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.34% 0.37% 9.86% Highest contract charges 2.46% 0.25% 8.61% Remaining contract charges -- -- --
SA-221 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS(R) MID CAP GROWTH SERIES 2008 Lowest contract charges 1,226 $3.233557 $3,963 Highest contract charges 635 3.136146 1,991 Remaining contract charges 5,645,219 -- 17,675,717 2007 Lowest contract charges 287 6.732442 1,930 Highest contract charges 635 6.642002 4,216 Remaining contract charges 6,100,318 -- 40,095,941 2006 Lowest contract charges 886 6.195864 5,496 Highest contract charges 1,293 6.204074 8,022 Remaining contract charges 6,816,701 -- 41,543,314 2005 Lowest contract charges 277 6.172433 1,709 Highest contract charges 118,933 6.212611 738,885 Remaining contract charges 7,286,345 -- 44,086,442 2004 Lowest contract charges 743 6.043547 4,493 Highest contract charges 24,295 6.177888 150,090 Remaining contract charges 7,201,116 -- 43,055,062 MFS(R) NEW DISCOVERY SERIES 2008 Lowest contract charges 978 9.400994 9,194 Highest contract charges 593 5.168903 3,066 Remaining contract charges 8,466,239 -- 58,707,998 2007 Lowest contract charges 984 15.627695 15,382 Highest contract charges 644 8.740299 5,628 Remaining contract charges 9,042,411 -- 105,026,544 2006 Lowest contract charges 184 15.374161 2,840 Highest contract charges 544 8.745989 4,758 Remaining contract charges 8,454,991 -- 96,607,693 2005 Lowest contract charges 3,567 13.920832 49,658 Highest contract charges 136 7.924706 1,077 Remaining contract charges 6,826,612 -- 69,770,928 2004 Lowest contract charges 3,564 13.353210 47,633 Highest contract charges 36,507 7.727987 282,123 Remaining contract charges 4,251,036 -- 42,642,471 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS(R) MID CAP GROWTH SERIES 2008 Lowest contract charges 0.86% -- (51.97)% Highest contract charges 2.56% -- (52.78)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.86% -- 8.89% Highest contract charges 2.55% 0.13% 7.06% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.13% -- 1.37% Highest contract charges 2.54% -- (0.04)% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.98% -- 2.13% Highest contract charges 2.47% -- 0.56% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 13.48% Highest contract charges 2.47% -- 11.73% Remaining contract charges -- -- -- MFS(R) NEW DISCOVERY SERIES 2008 Lowest contract charges 0.85% -- (39.84)% Highest contract charges 2.56% -- (40.86)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% -- 1.65% Highest contract charges 2.54% -- (0.07)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.87% -- 12.26% Highest contract charges 2.55% -- 10.36% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% -- 4.25% Highest contract charges 2.54% -- 2.60% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 5.51% Highest contract charges 2.48% -- 3.89% Remaining contract charges -- -- --
SA-222 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS(R) TOTAL RETURN SERIES 2008 Lowest contract charges 36,873 $12.498652 $460,866 Highest contract charges 2,263 10.592590 23,972 Remaining contract charges 34,750,124 -- 380,445,795 2007 Lowest contract charges 22,048 16.188154 356,908 Highest contract charges 2,549 13.955001 35,565 Remaining contract charges 38,008,202 -- 544,387,008 2006 Lowest contract charges 9,242 15.666027 144,750 Highest contract charges 2,532 13.736415 34,777 Remaining contract charges 33,818,630 -- 469,905,418 2005 Lowest contract charges 1,925 14.120252 27,181 Highest contract charges 296,300 12.605897 3,735,130 Remaining contract charges 27,862,055 -- 350,520,528 2004 Lowest contract charges 13,307 14.092027 187,554 Highest contract charges 96,608 12.570577 1,214,418 Remaining contract charges 20,952,129 -- 261,180,901 MFS(R) VALUE SERIES 2008 Lowest contract charges 4,323 12.597874 54,460 Highest contract charges 1,954 11.556828 22,577 Remaining contract charges 5,861,241 -- 66,397,370 2007 Lowest contract charges 4,611 18.846102 86,898 Highest contract charges 1,506 17.585857 26,482 Remaining contract charges 4,214,215 -- 76,690,143 2006 Lowest contract charges 1,146 17.614057 20,192 Highest contract charges 468 16.717946 7,818 Remaining contract charges 2,959,469 -- 50,725,511 2005 Lowest contract charges 230 14.700660 3,380 Highest contract charges 70,042 14.206107 995,022 Remaining contract charges 1,526,354 -- 22,051,129 2004 Lowest contract charges 150 14.004824 2,083 Highest contract charges 23,394 13.656146 319,470 Remaining contract charges 965,392 -- 13,312,711 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS(R) TOTAL RETURN SERIES 2008 Lowest contract charges 0.85% 2.72% (22.79)% Highest contract charges 2.56% 3.11% (24.10)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 2.17% 3.33% Highest contract charges 2.54% 2.51% 1.59% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.84% 1.63% 10.95% Highest contract charges 2.54% 0.57% 9.08% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 3.75% Highest contract charges 2.48% 1.43% 0.28% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 1.63% 10.27% Highest contract charges 2.48% 1.17% 8.57% Remaining contract charges -- -- -- MFS(R) VALUE SERIES 2008 Lowest contract charges 0.85% 1.77% (33.15)% Highest contract charges 2.55% 1.25% (34.28)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 0.77% 7.00% Highest contract charges 2.50% 0.84% 5.19% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.00% 19.82% Highest contract charges 2.57% -- 17.80% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.85% -- 6.68% Highest contract charges 2.48% 0.62% 4.03% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.93% -- 14.09% Highest contract charges 2.46% 0.06% 12.34% Remaining contract charges -- -- --
SA-223 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS(R) RESEARCH BOND SERIES 2008 Lowest contract charges 894 $10.403409 $9,305 Highest contract charges 2,704 9.750337 26,367 Remaining contract charges 4,206,556 -- 42,216,750 2007 Lowest contract charges 1,564 10.656122 16,667 Highest contract charges 2,030 10.244550 20,801 Remaining contract charges 2,739,450 -- 28,686,847 2006 Lowest contract charges 2,071 10.344135 21,411 Highest contract charges 372 10.084786 3,747 Remaining contract charges 1,086,634 -- 11,104,207 2005 Lowest contract charges 1,142 10.056830 11,486 Highest contract charges 372 9.942911 3,698 Remaining contract charges 256,785 -- 2,568,470 MFS(R) RESEARCH INTERNATIONAL SERIES 2008 Lowest contract charges 3,962 9.566686 37,904 Highest contract charges 1,866 8.987191 16,768 Remaining contract charges 2,267,514 -- 21,007,016 2007 Lowest contract charges 3,508 16.749135 58,758 Highest contract charges 839 16.005105 13,426 Remaining contract charges 1,234,949 -- 20,184,916 2006 Lowest contract charges 57,081 14.847352 847,466 Highest contract charges 7,176 14.564440 104,514 Remaining contract charges 435,505 -- 6,404,209 2005 Lowest contract charges 3,179 11.985466 38,100 Highest contract charges 1,814 11.893036 21,579 Remaining contract charges 66,857 -- 797,595 MFS(R) RESEARCH SERIES 2008 Lowest contract charges 12,056 8.307570 100,158 Highest contract charges 7,958 7.797435 62,054 Remaining contract charges 257,811 -- 2,062,212 2007 Lowest contract charges 9,121 13.109180 119,573 Highest contract charges 6,540 12.509501 81,813 Remaining contract charges 278,359 -- 3,549,498 2006 Lowest contract charges 1,347 11.678964 15,712 Highest contract charges 3,642 11.330079 41,259 Remaining contract charges 125,414 -- 1,438,798 2005 Lowest contract charges 4,416 10.617084 46,890 Highest contract charges 2,363 10.515260 24,850 Remaining contract charges 69,469 -- 734,015 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS(R) RESEARCH BOND SERIES 2008 Lowest contract charges 0.86% -- (3.19)% Highest contract charges 2.55% 2.51% (4.82)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.15% 3.55% 3.02% Highest contract charges 2.46% 2.44% 1.58% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.15% 4.16% 2.86% Highest contract charges 2.55% 4.18% 1.43% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.04% -- 0.71% Highest contract charges 2.47% -- 0.22% Remaining contract charges -- -- -- MFS(R) RESEARCH INTERNATIONAL SERIES 2008 Lowest contract charges 0.85% 0.83% (42.88)% Highest contract charges 2.55% 0.56% (43.85)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% -- 11.87% Highest contract charges 2.23% -- 9.98% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.08% 23.88% Highest contract charges 2.50% 1.44% 22.46% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.31% 3.07% 19.63% Highest contract charges 2.41% 4.40% 18.72% Remaining contract charges -- -- -- MFS(R) RESEARCH SERIES 2008 Lowest contract charges 0.85% 0.63% (36.63)% Highest contract charges 2.51% 0.52% (37.67)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.84% 0.22% 12.25% Highest contract charges 2.49% 0.66% 10.41% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 9.54% Highest contract charges 2.50% 0.52% 7.75% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.33% -- 12.08% Highest contract charges 2.44% -- 11.23% Remaining contract charges -- -- --
SA-224 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- BLACKROCK GLOBAL GROWTH V.I. FUND 2008 Lowest contract charges 570 $10.466966 $5,961 Highest contract charges 1,485 10.185255 15,127 Remaining contract charges 1,064 -- 10,872 2007 Lowest contract charges 834 19.680286 16,421 Highest contract charges 15,055 19.227626 289,471 Remaining contract charges 1,064 -- 20,512 2006 Lowest contract charges 936 14.616321 13,674 Highest contract charges 15,055 14.337316 215,848 Remaining contract charges 1,064 -- 15,288 2005 Lowest contract charges 1,025 9.430327 9,663 Highest contract charges 15,823 11.994124 189,785 Remaining contract charges 1,064 -- 12,783 2004 Lowest contract charges 1,025 8.340096 8,553 Highest contract charges 15,121 10.639336 160,881 Remaining contract charges 8,145 -- 86,783 BLACKROCK LARGE CAP GROWTH V.I. FUND 2008 Lowest contract charges 386 6.265303 2,416 Highest contract charges 21,304 7.308137 155,695 Remaining contract charges 46,213 -- 317,638 2007 Lowest contract charges 1,621 12.955864 20,997 Highest contract charges 3,416 12.591905 43,018 Remaining contract charges 66,334 -- 800,943 2006 Lowest contract charges 2,283 10.024557 22,882 Highest contract charges 26,968 11.920245 321,464 Remaining contract charges 53,939 -- 603,388 2005 Lowest contract charges 2,283 9.482120 21,644 Highest contract charges 52,952 11.348752 600,939 Remaining contract charges 73,889 -- 800,988 2004 Lowest contract charges 3,886 10.588346 41,143 Highest contract charges 52,646 10.469597 551,177 Remaining contract charges 70,796 -- 704,529 VAN KAMPEN -- UIF INTERNATIONAL GROWTH EQUITY PORTFOLIO 2008 Lowest contract charges 656 6.694338 4,392 Highest contract charges 2,778 6.635832 18,436 Remaining contract charges -- -- -- 2007 Lowest contract charges 713 13.181607 9,396 Highest contract charges 1,495 13.082745 19,562 Remaining contract charges 2,617 -- 34,321 VAN KAMPEN -- UIF MID CAP GROWTH PORTFOLIO 2008 Lowest contract charges 7,501 5.867795 44,013 Highest contract charges 1,207 5.790212 6,989 Remaining contract charges 127,425 -- 743,249 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ BLACKROCK GLOBAL GROWTH V.I. FUND 2008 Lowest contract charges 1.66% 0.34% (46.82)% Highest contract charges 2.06% 0.05% (47.03)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.65% 1.03% 34.65% Highest contract charges 2.04% 1.09% 34.11% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.63% 1.58% 20.02% Highest contract charges 2.05% 0.96% 19.54% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.74% 1.25% 13.07% Highest contract charges 2.04% 1.25% 12.73% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.75% 1.66% 13.22% Highest contract charges 2.05% 1.66% 12.89% Remaining contract charges -- -- -- BLACKROCK LARGE CAP GROWTH V.I. FUND 2008 Lowest contract charges 1.40% 3.29% (41.52)% Highest contract charges 2.15% 0.65% (41.96)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.65% 0.29% 6.61% Highest contract charges 2.07% 2.49% 6.08% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.29% 5.72% Highest contract charges 2.06% 0.19% 5.04% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.38% 0.35% 9.10% Highest contract charges 2.04% 0.19% 8.40% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.65% 0.28% 5.47% Highest contract charges 2.05% 0.25% 5.05% Remaining contract charges -- -- -- VAN KAMPEN -- UIF INTERNATIONAL GROWTH EQUITY PORTFOLIO 2008 Lowest contract charges 1.36% -- (49.22)% Highest contract charges 1.71% -- (49.39)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.30% 0.58% 12.73% Highest contract charges 1.84% 0.20% 12.17% Remaining contract charges -- -- -- VAN KAMPEN -- UIF MID CAP GROWTH PORTFOLIO 2008 Lowest contract charges 0.70% 0.33% (45.31)% Highest contract charges 2.03% 0.60% (45.89)% Remaining contract charges -- -- --
SA-225 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- VAN KAMPEN -- UIF U.S. MID CAP VALUE PORTFOLIO 2008 Lowest contract charges 3,750 $6.339560 $23,773 Highest contract charges 1,472 6.255779 9,210 Remaining contract charges 54,266 -- 344,844 2007 Lowest contract charges 996 13.831448 13,778 Highest contract charges 788 12.062939 9,507 Remaining contract charges 1,374 -- 18,216 2006 Lowest contract charges 59 11.473975 679 Highest contract charges 776 11.444937 8,880 Remaining contract charges -- -- -- MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2008 Lowest contract charges 818 3.850448 3,149 Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- CAPITAL OPPORTUNITIES PORTFOLIO 2008 Lowest contract charges 5,240 2.719763 14,252 Highest contract charges 10,535 2.571081 27,086 Remaining contract charges 33,773 -- 89,797 2007 Lowest contract charges 3,976 5.422083 21,556 Highest contract charges 9,263 5.185166 48,030 Remaining contract charges 23,256 -- 123,606 2006 Lowest contract charges 2,101 4.615129 9,694 Highest contract charges 1,421 4.579776 6,510 Remaining contract charges -- -- -- MORGAN STANLEY -- MID CAP GROWTH PORTFOLIO 2008 Lowest contract charges 1,195 5.858325 6,998 Highest contract charges 299 5.538087 1,657 Remaining contract charges 180 -- 1,043 2007 Lowest contract charges 870 11.462786 9,971 Highest contract charges 181 11.365645 2,056 Remaining contract charges -- -- -- 2006 Lowest contract charges 688 9.473026 6,516 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ VAN KAMPEN -- UIF U.S. MID CAP VALUE PORTFOLIO 2008 Lowest contract charges 0.70% 0.25% (39.56)% Highest contract charges 2.04% -- (40.20)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.00% 6.30% Highest contract charges 2.19% 0.58% 5.40% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.62% -- 15.97% Highest contract charges 1.10% -- 15.75% Remaining contract charges -- -- -- MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2008 Lowest contract charges 2.50% 0.08% (52.77)% Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- CAPITAL OPPORTUNITIES PORTFOLIO 2008 Lowest contract charges 1.35% -- (49.84)% Highest contract charges 2.51% -- (50.42)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% -- 17.49% Highest contract charges 2.48% -- 16.14% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 13.36% Highest contract charges 1.69% -- 13.21% Remaining contract charges -- -- -- MORGAN STANLEY -- MID CAP GROWTH PORTFOLIO 2008 Lowest contract charges 1.35% 0.46% (48.89)% Highest contract charges 2.50% 0.53% (49.48)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.35% 0.14% 21.00% Highest contract charges 1.63% 0.17% 20.64% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% -- 15.63% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-226 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MORGAN STANLEY -- FLEXIBLE INCOME PORTFOLIO 2008 Lowest contract charges 3,208 $9.117210 $29,246 Highest contract charges 660 9.088189 5,997 Remaining contract charges -- -- -- 2007 Lowest contract charges 7,310 11.866969 86,756 Highest contract charges 663 11.835112 7,844 Remaining contract charges -- -- -- 2006 Lowest contract charges 1,300 11.640579 15,128 Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- DIVIDEND GROWTH PORTFOLIO 2008 Lowest contract charges 602 8.005295 4,818 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 604 12.876060 7,783 Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- GLOBAL EQUITY PORTFOLIO 2008 Lowest contract charges 854 6.606951 5,639 Highest contract charges 571 6.338401 3,625 Remaining contract charges -- -- -- 2007 Lowest contract charges 674 12.383314 8,341 Highest contract charges -- -- -- Remaining contract charges -- -- -- MTB LARGE CAP GROWTH FUND II 2008 Lowest contract charges 17,202 6.736962 115,892 Highest contract charges 132 6.692300 884 Remaining contract charges 7,523 -- 50,491 MTB LARGE CAP VALUE FUND II 2008 Lowest contract charges 21,135 6.594862 139,384 Highest contract charges 142 6.551149 930 Remaining contract charges 8,557 -- 56,230 MTB MODERATE GROWTH FUND II 2008 Lowest contract charges 1,506 7.468262 11,250 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MORGAN STANLEY -- FLEXIBLE INCOME PORTFOLIO 2008 Lowest contract charges 1.65% 2.53% (23.17)% Highest contract charges 1.70% 2.11% (23.21)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.64% 6.37% 1.95% Highest contract charges 1.68% 6.13% 1.89% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.62% 5.29% 3.07% Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- DIVIDEND GROWTH PORTFOLIO 2008 Lowest contract charges 1.71% 0.36% (37.83)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.69% 1.09% 2.20% Highest contract charges -- -- -- Remaining contract charges -- -- -- MORGAN STANLEY -- GLOBAL EQUITY PORTFOLIO 2008 Lowest contract charges 1.70% 0.70% (46.65)% Highest contract charges 2.50% 0.78% (47.07)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.69% 0.44% 14.19% Highest contract charges -- -- -- Remaining contract charges -- -- -- MTB LARGE CAP GROWTH FUND II 2008 Lowest contract charges 1.03% 1.14% (36.58)% Highest contract charges 1.68% 0.54% (36.92)% Remaining contract charges -- -- -- MTB LARGE CAP VALUE FUND II 2008 Lowest contract charges 1.03% 1.60% (36.42)% Highest contract charges 1.69% 1.46% (36.76)% Remaining contract charges -- -- -- MTB MODERATE GROWTH FUND II 2008 Lowest contract charges 1.04% 4.57% (28.00)% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-227 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES VS FUND 2008 Lowest contract charges 2,421,741 $1.071276 $2,594,353 Highest contract charges 14,590 1.012127 14,767 Remaining contract charges 11,526,826 -- 11,939,979 2007 Lowest contract charges 2,912,089 2.115341 6,160,062 Highest contract charges 873,698 2.019711 1,764,618 Remaining contract charges 14,633,001 -- 30,114,290 2006 Lowest contract charges 3,491,387 1.797836 6,276,941 Highest contract charges 993,268 1.730327 1,718,678 Remaining contract charges 18,389,737 -- 32,312,468 2005 Lowest contract charges 4,149,631 1.484030 6,158,177 Highest contract charges 1,049,724 1.439763 1,511,354 Remaining contract charges 21,703,017 -- 31,608,105 2004 Lowest contract charges 3,457,927 1.262880 4,366,946 Highest contract charges 854,670 1.235040 1,055,552 Remaining contract charges 19,955,338 -- 24,837,751 COLUMBIA HIGH YIELD VS FUND 2008 Lowest contract charges 2,248,669 1.164936 2,619,556 Highest contract charges 3,018 1.100653 3,322 Remaining contract charges 8,593,424 -- 9,694,598 2007 Lowest contract charges 3,326,528 1.575227 5,240,036 Highest contract charges 3,018 1.501025 4,531 Remaining contract charges 12,101,919 -- 18,543,906 2006 Lowest contract charges 4,010,585 1.573202 6,309,462 Highest contract charges 545,774 1.514137 826,376 Remaining contract charges 14,106,120 -- 21,700,575 2005 Lowest contract charges 4,503,330 1.438402 6,477,599 Highest contract charges 477,309 1.395509 666,089 Remaining contract charges 16,754,788 -- 23,665,261 2004 Lowest contract charges 5,147,879 1.432207 7,372,828 Highest contract charges 350,579 1.400647 491,038 Remaining contract charges 17,707,468 -- 25,007,663 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ COLUMBIA MARSICO INTERNATIONAL OPPORTUNITIES VS FUND 2008 Lowest contract charges 1.71% 1.25% (49.36)% Highest contract charges 2.53% 1.76% (49.79)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 0.11% 17.66% Highest contract charges 2.49% 0.11% 16.72% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% 0.28% 21.15% Highest contract charges 2.50% 0.29% 20.18% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.69% 0.09% 17.51% Highest contract charges 2.49% 0.10% 16.58% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 0.43% 14.63% Highest contract charges 2.48% 0.56% 13.72% Remaining contract charges -- -- -- COLUMBIA HIGH YIELD VS FUND 2008 Lowest contract charges 1.71% 10.06% (26.05)% Highest contract charges 2.55% 10.51% (26.67)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 4.99% 0.13% Highest contract charges 2.24% -- (0.72)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% 2.50% 9.37% Highest contract charges 2.50% 2.68% 8.50% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% 0.16% 0.43% Highest contract charges 2.49% 0.18% 0.37% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 6.57% 9.53% Highest contract charges 2.47% 12.71% 8.66% Remaining contract charges -- -- --
SA-228 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- COLUMBIA MARSICO FOCUSED EQUITIES VS FUND 2008 Lowest contract charges 3,505,937 $0.808002 $2,832,805 Highest contract charges 18,947 0.763373 14,464 Remaining contract charges 10,905,516 -- 8,540,244 2007 Lowest contract charges 4,705,021 1.400168 6,587,820 Highest contract charges 18,947 1.334152 25,278 Remaining contract charges 15,914,822 -- 21,692,242 2006 Lowest contract charges 5,334,158 1.253960 6,688,822 Highest contract charges 408,968 1.206847 493,562 Remaining contract charges 18,913,557 -- 23,199,182 2005 Lowest contract charges 6,477,361 1.178027 7,630,506 Highest contract charges 419,957 1.142878 479,959 Remaining contract charges 22,278,564 -- 25,776,431 2004 Lowest contract charges 6,613,404 1.086242 7,183,756 Highest contract charges 373,554 1.062295 396,824 Remaining contract charges 22,415,920 -- 24,015,948 COLUMBIA MARSICO GROWTH VS FUND 2008 Lowest contract charges 2,277,410 0.795926 1,812,650 Highest contract charges 602,663 0.753832 454,307 Remaining contract charges 11,105,343 -- 8,562,757 2007 Lowest contract charges 3,113,073 1.336980 4,162,117 Highest contract charges 807,292 1.276468 1,030,483 Remaining contract charges 15,164,528 -- 19,732,999 2006 Lowest contract charges 3,807,635 1.157582 4,407,652 Highest contract charges 840,103 1.114060 935,925 Remaining contract charges 19,282,089 -- 21,821,779 2005 Lowest contract charges 4,255,572 1.109812 4,722,885 Highest contract charges 833,330 1.076669 897,221 Remaining contract charges 22,445,598 -- 24,457,423 2004 Lowest contract charges 4,462,849 1.050589 4,688,621 Highest contract charges 408,188 1.027402 419,373 Remaining contract charges 21,313,110 -- 22,074,902 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ COLUMBIA MARSICO FOCUSED EQUITIES VS FUND 2008 Lowest contract charges 1.71% 0.10% (42.29)% Highest contract charges 2.56% 0.10% (42.78)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 0.12% 11.66% Highest contract charges 2.23% -- 10.72% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 6.45% Highest contract charges 2.50% -- 5.60% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.69% -- 8.45% Highest contract charges 2.49% -- 7.59% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% -- 9.47% Highest contract charges 2.48% -- 8.60% Remaining contract charges -- -- -- COLUMBIA MARSICO GROWTH VS FUND 2008 Lowest contract charges 1.71% 0.32% (40.47)% Highest contract charges 2.51% 0.33% (40.94)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 0.08% 15.50% Highest contract charges 2.49% 0.08% 14.58% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 4.30% Highest contract charges 2.50% -- 3.47% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% -- 5.64% Highest contract charges 2.48% -- 4.80% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% -- 11.13% Highest contract charges 2.48% -- 10.25% Remaining contract charges -- -- --
SA-229 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- COLUMBIA MARSICO 21ST CENTURY VS FUND 2008 Lowest contract charges 836,900 $1.127674 $943,750 Highest contract charges 20,917 1.065417 22,285 Remaining contract charges 2,589,840 -- 2,827,414 2007 Lowest contract charges 1,002,544 2.032516 2,037,686 Highest contract charges 283,373 1.940597 549,913 Remaining contract charges 3,361,216 -- 6,652,353 2006 Lowest contract charges 1,096,576 1.733100 1,900,474 Highest contract charges 223,075 1.668003 372,090 Remaining contract charges 3,593,601 -- 6,093,317 2005 Lowest contract charges 1,184,692 1.472145 1,744,039 Highest contract charges 217,214 1.428223 310,230 Remaining contract charges 3,667,521 -- 5,301,096 2004 Lowest contract charges 1,203,123 1.387941 1,669,862 Highest contract charges 89,641 1.357351 121,675 Remaining contract charges 2,540,812 -- 3,476,569 COLUMBIA MARSICO MIDCAP GROWTH VS FUND 2008 Lowest contract charges 3,828,424 0.587876 2,250,639 Highest contract charges 41,689 0.555411 23,155 Remaining contract charges 19,909,763 -- 11,325,353 2007 Lowest contract charges 4,698,220 1.073257 5,042,397 Highest contract charges 22,269 1.022650 22,773 Remaining contract charges 26,047,921 -- 27,178,824 2006 Lowest contract charges 5,996,410 0.910638 5,460,558 Highest contract charges 1,594,421 0.876416 1,397,376 Remaining contract charges 30,680,599 -- 27,311,443 2005 Lowest contract charges 6,959,737 0.787041 5,477,598 Highest contract charges 1,679,899 0.763540 1,282,670 Remaining contract charges 36,877,154 -- 28,485,292 2004 Lowest contract charges 7,035,039 0.761027 5,353,852 Highest contract charges 1,196,727 0.744232 890,643 Remaining contract charges 34,397,556 -- 25,803,885 OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2008 Lowest contract charges 5,113 6.045910 30,912 Highest contract charges 1,185 5.985860 7,094 Remaining contract charges 13,820 -- 83,145 OPPENHEIMER GLOBAL SECURITIES FUND/VA 2008 Lowest contract charges 543 6.567771 3,569 Highest contract charges 3,020 6.480915 19,571 Remaining contract charges 551,930 -- 3,601,860 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ COLUMBIA MARSICO 21ST CENTURY VS FUND 2008 Lowest contract charges 1.71% -- (44.52)% Highest contract charges 2.53% -- (44.99)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 0.50% 17.28% Highest contract charges 2.49% 0.53% 16.34% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% 0.18% 17.73% Highest contract charges 2.50% 0.18% 16.79% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% -- 6.07% Highest contract charges 2.48% -- 5.22% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% -- 20.29% Highest contract charges 2.43% -- 19.33% Remaining contract charges -- -- -- COLUMBIA MARSICO MIDCAP GROWTH VS FUND 2008 Lowest contract charges 1.71% -- (45.23)% Highest contract charges 2.55% -- (45.69)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.70% 0.11% 17.86% Highest contract charges 2.23% -- 16.86% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 15.70% Highest contract charges 2.50% -- 14.78% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% -- 3.42% Highest contract charges 2.49% -- 2.59% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% -- 12.16% Highest contract charges 2.48% -- 11.27% Remaining contract charges -- -- -- OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2008 Lowest contract charges 1.02% -- (44.44)% Highest contract charges 2.04% -- (44.88)% Remaining contract charges -- -- -- OPPENHEIMER GLOBAL SECURITIES FUND/VA 2008 Lowest contract charges 0.69% -- (38.04)% Highest contract charges 1.97% -- (38.70)% Remaining contract charges -- -- --
SA-230 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET FUND(R)/VA 2008 Lowest contract charges 22,966 $6.755457 $155,149 Highest contract charges 19,920 6.705097 133,568 Remaining contract charges 17,057 -- 114,833 OPPENHEIMER MAIN STREET SMALL CAP FUND(R)/VA 2008 Lowest contract charges 1,808 6.788641 12,273 Highest contract charges 3,427 6.698951 22,959 Remaining contract charges 353,851 -- 2,387,127 OPPENHEIMER VALUE FUND/VA 2008 Lowest contract charges 878 6.345401 5,571 Highest contract charges 821 6.282392 5,158 Remaining contract charges 7,738 -- 48,853 PUTNAM VT DIVERSIFIED INCOME FUND 2008 Lowest contract charges 816 7.140272 5,827 Highest contract charges 5,623 7.045284 39,612 Remaining contract charges 919,046 -- 6,524,741 PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2008 Lowest contract charges 2,323 6.929740 16,098 Highest contract charges 386 6.860423 2,650 Remaining contract charges 12,154 -- 83,841 PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND 2008 Lowest contract charges 2,324 5.888359 13,685 Highest contract charges 1,210 5.844073 7,074 Remaining contract charges 3,404 -- 19,970 PUTNAM VT INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 1,035 6.082250 6,294 Highest contract charges 511 6.018823 3,075 Remaining contract charges 10,433 -- 63,177 PUTNAM VT SMALL CAP VALUE FUND 2008 Lowest contract charges 1,660 6.598994 10,953 Highest contract charges 515 6.560349 3,378 Remaining contract charges 9,322 -- 61,291 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ OPPENHEIMER MAIN STREET FUND(R)/VA 2008 Lowest contract charges 1.03% -- (36.02)% Highest contract charges 1.77% -- (36.40)% Remaining contract charges -- -- -- OPPENHEIMER MAIN STREET SMALL CAP FUND(R)/VA 2008 Lowest contract charges 0.70% -- (35.55)% Highest contract charges 2.01% -- (36.23)% Remaining contract charges -- -- -- OPPENHEIMER VALUE FUND/VA 2008 Lowest contract charges 0.99% -- (41.14)% Highest contract charges 2.05% -- (41.61)% Remaining contract charges -- -- -- PUTNAM VT DIVERSIFIED INCOME FUND 2008 Lowest contract charges 0.71% -- (30.36)% Highest contract charges 2.02% -- (31.10)% Remaining contract charges -- -- -- PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2008 Lowest contract charges 1.02% -- (32.74)% Highest contract charges 2.03% -- (33.27)% Remaining contract charges -- -- -- PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND 2008 Lowest contract charges 1.03% -- (44.38)% Highest contract charges 1.80% -- (44.71)% Remaining contract charges -- -- -- PUTNAM VT INTERNATIONAL EQUITY FUND 2008 Lowest contract charges 1.04% -- (42.12)% Highest contract charges 1.98% -- (42.60)% Remaining contract charges -- -- -- PUTNAM VT SMALL CAP VALUE FUND 2008 Lowest contract charges 1.04% -- (36.06)% Highest contract charges 1.55% -- (36.36)% Remaining contract charges -- -- --
SA-231 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- JPMORGAN INSURANCE TRUST BALANCED PORTFOLIO - 1 2008 Lowest contract charges 53,068 $8.990880 $477,128 Highest contract charges 809 7.830554 6,335 Remaining contract charges 92,606 -- 815,761 2007 Lowest contract charges 39,088 12.039706 470,609 Highest contract charges 83,705 11.815996 989,054 Remaining contract charges 24,032 -- 287,226 2006 Lowest contract charges 28,417 11.497963 326,732 Highest contract charges 93,311 11.340863 1,058,230 Remaining contract charges 22,887 -- 261,871 2005 Lowest contract charges 27,233 10.501235 285,976 Highest contract charges 107,199 10.409670 1,115,902 Remaining contract charges 14,350 -- 150,252 2004 Lowest contract charges 24,275 10.384343 252,078 Highest contract charges 65,371 10.345397 676,286 Remaining contract charges 1,017 -- 10,552 JPMORGAN INSURANCE TRUST CORE BOND PORTFOLIO - 1 2008 Lowest contract charges 143,185 9.736334 1,394,097 Highest contract charges 188,506 10.505735 1,980,392 Remaining contract charges 4,824,919 -- 53,064,565 2007 Lowest contract charges 2,381,632 10.917888 26,002,390 Highest contract charges 232,127 10.595114 2,459,413 Remaining contract charges 2,523,618 -- 28,170,831 2006 Lowest contract charges 1,524,302 10.409823 15,867,716 Highest contract charges 169,434 10.183203 1,725,377 Remaining contract charges 2,066,303 -- 21,997,974 2005 Lowest contract charges 823,980 10.132437 8,348,927 Highest contract charges 99,284 9.991450 991,991 Remaining contract charges 1,499,287 -- 15,534,711 2004 Lowest contract charges 187,591 10.030484 1,881,624 Highest contract charges 27,585 9.970362 275,031 Remaining contract charges 375,404 -- 3,819,516 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ JPMORGAN INSURANCE TRUST BALANCED PORTFOLIO - 1 2008 Lowest contract charges 1.35% 3.13% (25.32)% Highest contract charges 1.66% -- (24.08)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 2.88% 4.71% Highest contract charges 1.85% 3.01% 4.19% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.53% 9.49% Highest contract charges 1.85% 2.96% 8.95% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.35% 2.71% 1.13% Highest contract charges 1.84% 2.38% 0.62% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 3.84% Highest contract charges 1.36% -- 3.45% Remaining contract charges -- -- -- JPMORGAN INSURANCE TRUST CORE BOND PORTFOLIO - 1 2008 Lowest contract charges 1.03% -- (0.47)% Highest contract charges 2.15% 5.70% (0.84)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 4.28% 4.88% Highest contract charges 2.14% 4.39% 4.05% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 3.09% 2.74% Highest contract charges 2.15% 3.19% 1.92% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 2.81% 1.02% Highest contract charges 2.13% 2.21% 0.21% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 0.31% Highest contract charges 1.58% -- 0.30% Remaining contract charges -- -- --
SA-232 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- JPMORGAN INSURANCE TRUST DIVERSIFIED EQUITY PORTFOLIO - 1 2008 Lowest contract charges 388,838 $8.621776 $3,352,475 Highest contract charges 42,756 8.300173 354,884 Remaining contract charges 428,989 -- 3,776,928 2007 Lowest contract charges 384,638 13.403310 5,155,416 Highest contract charges 44,133 13.007139 574,044 Remaining contract charges 437,245 -- 6,016,543 2006 Lowest contract charges 317,213 12.300087 3,901,748 Highest contract charges 42,667 12.032363 513,382 Remaining contract charges 431,447 -- 5,457,160 2005 Lowest contract charges 186,991 10.733991 2,007,163 Highest contract charges 24,185 10.584669 255,986 Remaining contract charges 323,483 -- 3,564,796 2004 Lowest contract charges 48,950 10.632360 520,459 Highest contract charges 8,746 10.568653 92,432 Remaining contract charges 85,021 -- 923,035 JPMORGAN INSURANCE TRUST INTREPID MID CAP PORTFOLIO - 1 2008 Lowest contract charges 985 6.611804 6,513 Highest contract charges 28,749 8.469233 243,481 Remaining contract charges 821,230 -- 7,284,362 2007 Lowest contract charges 301,133 14.573924 4,388,690 Highest contract charges 23,787 14.143199 336,431 Remaining contract charges 395,820 -- 5,847,811 2006 Lowest contract charges 143,463 14.360212 2,060,153 Highest contract charges 14,187 14.047695 199,294 Remaining contract charges 247,142 -- 3,626,021 2005 Lowest contract charges 20,859 12.754866 266,058 Highest contract charges 3,465 12.577499 43,586 Remaining contract charges 34,963 -- 451,103 2004 Lowest contract charges 11,242 11.040622 124,120 Highest contract charges 120 10.974483 1,316 Remaining contract charges 5,120 -- 56,315 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ JPMORGAN INSURANCE TRUST DIVERSIFIED EQUITY PORTFOLIO - 1 2008 Lowest contract charges 1.35% 1.13% (35.67)% Highest contract charges 2.15% 1.12% (36.19)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.98% 8.97% Highest contract charges 2.14% 0.99% 8.10% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.72% 14.59% Highest contract charges 2.15% 0.69% 13.68% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.71% 0.96% Highest contract charges 2.13% 0.64% 0.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 6.32% Highest contract charges 1.57% -- 5.69% Remaining contract charges -- -- -- JPMORGAN INSURANCE TRUST INTREPID MID CAP PORTFOLIO - 1 2008 Lowest contract charges 1.03% -- (36.24)% Highest contract charges 2.15% 0.55% (40.12)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.51% 1.49% Highest contract charges 2.14% 0.53% 0.68% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 0.17% 12.59% Highest contract charges 2.14% 0.21% 11.69% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.12% 15.53% Highest contract charges 2.12% 0.02% 14.61% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.98% -- 10.41% Highest contract charges 1.52% -- 9.75% Remaining contract charges -- -- --
SA-233 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- JPMORGAN INSURANCE TRUST EQUITY INDEX PORTFOLIO - 1 2008 Lowest contract charges 835 $6.841823 $5,711 Highest contract charges 179,982 7.801356 1,404,103 Remaining contract charges 3,795,542 -- 30,433,740 2007 Lowest contract charges 1,479,699 13.080749 19,355,568 Highest contract charges 163,764 12.694071 2,078,832 Remaining contract charges 1,657,711 -- 21,333,059 2006 Lowest contract charges 1,079,426 12.615484 13,617,496 Highest contract charges 140,112 12.340879 1,729,109 Remaining contract charges 1,516,653 -- 18,901,955 2005 Lowest contract charges 634,662 11.078689 7,031,221 Highest contract charges 80,918 10.924560 883,992 Remaining contract charges 1,163,885 -- 12,792,715 2004 Lowest contract charges 160,426 10.750194 17,246,030 Highest contract charges 28,387 10.685771 303,333 Remaining contract charges 303,116 -- 3,247,384 JPMORGAN INSURANCE TRUST GOVERNMENT BOND PORTFOLIO - 1 2008 Lowest contract charges 15,691 10.520054 165,071 Highest contract charges 67,175 11.589247 778,504 Remaining contract charges 2,355,480 -- 28,037,400 2007 Lowest contract charges 932,741 11.089679 10,343,796 Highest contract charges 70,623 10.761819 760,036 Remaining contract charges 1,041,137 -- 11,356,962 2006 Lowest contract charges 609,811 10.457261 6,376,951 Highest contract charges 54,126 10.229605 553,690 Remaining contract charges 855,647 -- 8,837,431 2005 Lowest contract charges 336,907 10.243778 3,451,197 Highest contract charges 30,740 10.101247 310,511 Remaining contract charges 636,529 -- 6,468,917 2004 Lowest contract charges 90,724 10.072294 913,811 Highest contract charges 7,463 10.011926 74,717 Remaining contract charges 174,290 -- 1,749,231 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ JPMORGAN INSURANCE TRUST EQUITY INDEX PORTFOLIO - 1 2008 Lowest contract charges 1.03% -- (35.43)% Highest contract charges 2.15% 1.97% (38.54)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.31% 3.69% Highest contract charges 2.14% 1.34% 2.86% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 1.19% 13.87% Highest contract charges 2.15% 1.18% 12.97% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 1.03% 3.06% Highest contract charges 2.13% 0.92% 2.24% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 7.50% Highest contract charges 1.57% -- 6.86% Remaining contract charges -- -- -- JPMORGAN INSURANCE TRUST GOVERNMENT BOND PORTFOLIO - 1 2008 Lowest contract charges 1.01% -- 6.50% Highest contract charges 2.15% 5.37% 7.69% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 4.65% 6.05% Highest contract charges 2.14% 4.79% 5.20% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 4.27% 2.08% Highest contract charges 2.15% 4.29% 1.27% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 3.54% 1.70% Highest contract charges 2.12% 2.33% 0.89% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 0.72% Highest contract charges 1.58% -- 0.12% Remaining contract charges -- -- --
SA-234 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- JPMORGAN INSURANCE TRUST INTREPID GROWTH PORTFOLIO - 1 2008 Lowest contract charges 209,460 $7.487459 $1,568,322 Highest contract charges 11,368 7.208078 81,942 Remaining contract charges 164,893 -- 1,260,398 2007 Lowest contract charges 78,056 12.486286 974,629 Highest contract charges 4,440 12.117122 53,802 Remaining contract charges 62,702 -- 823,909 2006 Lowest contract charges 4,520 11.345689 51,280 Highest contract charges 9,047 11.190639 101,238 Remaining contract charges 5,929 -- 99,469 2005 Lowest contract charges 7,343 10.913451 80,141 Highest contract charges 4,051 10.818288 43,820 Remaining contract charges 895 -- 14,477 2004 Lowest contract charges 1,852 10.529602 19,502 Highest contract charges 7,147 10.490110 74,970 Remaining contract charges -- -- -- JPMORGAN INSURANCE TRUST DIVERSIFIED MID CAP GROWTH PORTFOLIO - 1 2008 Lowest contract charges 6,039 6.324547 38,192 Highest contract charges 42,248 7.876044 332,746 Remaining contract charges 934,820 -- 7,555,337 2007 Lowest contract charges 412,613 14.751510 6,086,670 Highest contract charges 38,548 14.315500 551,835 Remaining contract charges 571,697 -- 8,290,589 2006 Lowest contract charges 347,835 12.753368 4,436,049 Highest contract charges 36,793 12.475767 459,020 Remaining contract charges 580,988 -- 7,316,073 2005 Lowest contract charges 212,798 11.604997 2,469,519 Highest contract charges 24,255 11.443567 277,564 Remaining contract charges 408,414 -- 4,700,749 2004 Lowest contract charges 62,277 10.588191 659,405 Highest contract charges 6,699 10.524737 70,500 Remaining contract charges 103,047 -- 1,087,224 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ JPMORGAN INSURANCE TRUST INTREPID GROWTH PORTFOLIO - 1 2008 Lowest contract charges 1.35% 0.77% (40.04)% Highest contract charges 2.15% 0.76% (40.51)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.33% 0.06% 10.05% Highest contract charges 2.09% -- 9.18% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.08% 3.96% Highest contract charges 1.85% 0.05% 3.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.33% 0.24% 3.65% Highest contract charges 1.85% 0.61% 3.13% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.01% -- 5.30% Highest contract charges 1.33% -- 4.90% Remaining contract charges -- -- -- JPMORGAN INSURANCE TRUST DIVERSIFIED MID CAP GROWTH PORTFOLIO - 1 2008 Lowest contract charges 1.03% -- (41.53)% Highest contract charges 2.15% -- (44.98)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% -- 15.67% Highest contract charges 2.14% -- 14.75% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 9.90% Highest contract charges 2.15% -- 9.02% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% -- 9.60% Highest contract charges 2.12% -- 8.73% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 5.88% Highest contract charges 1.57% -- 5.25% Remaining contract charges -- -- --
SA-235 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- JPMORGAN INSURANCE TRUST DIVERSIFIED MID CAP VALUE PORTFOLIO - 1 2008 Lowest contract charges 120 $6.922182 $832 Highest contract charges 30,193 8.337009 251,720 Remaining contract charges 715,134 -- 6,256,228 2007 Lowest contract charges 309,617 13.605633 4,212,537 Highest contract charges 31,132 13.203462 411,049 Remaining contract charges 435,693 -- 6,062,916 2006 Lowest contract charges 290,672 13.665218 3,972,101 Highest contract charges 32,728 13.367802 437,506 Remaining contract charges 473,057 -- 6,628,643 2005 Lowest contract charges 237,454 11.866729 2,817,808 Highest contract charges 31,840 11.701685 372,585 Remaining contract charges 403,128 -- 4,908,479 2004 Lowest contract charges 62,019 10.959001 679,670 Highest contract charges 6,759 10.893345 73,631 Remaining contract charges 80,392 -- 896,873 JENNISON 20/20 FOCUS PORTFOLIO 2008 Lowest contract charges 6,751 9.158214 61,828 Highest contract charges 10,055 0.883954 8,889 Remaining contract charges 88,064 -- 141,822 2007 Lowest contract charges 3,510 15.325556 53,795 Highest contract charges 10,055 1.490377 14,986 Remaining contract charges 85,410 -- 308,899 2006 Lowest contract charges 4,677 14.113382 66,009 Highest contract charges 10,055 1.382824 13,905 Remaining contract charges 88,898 -- 231,503 2005 Lowest contract charges 8,468 12.597739 106,673 Highest contract charges 37,495 1.249990 46,869 Remaining contract charges 39,351 -- 150,522 2004 Lowest contract charges 6,762 10.535427 71,240 Highest contract charges 37,505 1.051640 39,442 Remaining contract charges 46,117 -- 141,002 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- JPMORGAN INSURANCE TRUST DIVERSIFIED MID CAP VALUE PORTFOLIO - 1 2008 Lowest contract charges 1.07% 0.01% (34.13)% Highest contract charges 2.16% 1.54% (36.86)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.35% 1.81% (0.44)% Highest contract charges 2.14% 1.85% (1.23)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.75% 15.16% Highest contract charges 2.15% 0.76% 14.24% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.49% 8.28% Highest contract charges 2.12% 0.32% 7.42% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.99% -- 9.59% Highest contract charges 1.57% -- 8.93% Remaining contract charges -- -- -- JENNISON 20/20 FOCUS PORTFOLIO 2008 Lowest contract charges 1.40% -- (40.24)% Highest contract charges 2.15% -- (40.69)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 0.12% 8.59% Highest contract charges 2.14% 0.12% 7.78% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% -- 12.03% Highest contract charges 2.12% -- 11.19% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% -- 19.58% Highest contract charges 1.99% -- 18.86% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% -- 13.77% Highest contract charges 2.00% -- 13.09% Remaining contract charges -- -- --
SA-236 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- JENNISON PORTFOLIO 2008 Lowest contract charges 26,423 $4.468193 $118,065 Highest contract charges 18,456 0.595194 10,985 Remaining contract charges 176,324 -- 163,795 2007 Lowest contract charges 28,165 7.256419 204,374 Highest contract charges 19,973 0.975858 19,491 Remaining contract charges 283,609 -- 420,112 2006 Lowest contract charges 31,922 6.596442 210,568 Highest contract charges 23,017 0.895571 20,613 Remaining contract charges 327,322 -- 489,380 2005 Lowest contract charges 32,822 6.599289 216,602 Highest contract charges 24,037 0.904505 21,741 Remaining contract charges 343,605 -- 521,472 2004 Lowest contract charges 35,011 5.869216 205,483 Highest contract charges 25,090 0.812119 20,376 Remaining contract charges 373,387 -- 504,637 PRUDENTIAL VALUE PORTFOLIO 2008 Lowest contract charges 34,590 0.803702 27,800 Highest contract charges 10,690 0.760203 8,127 Remaining contract charges 100,864 -- 78,712 2007 Lowest contract charges 32,753 1.418866 46,472 Highest contract charges 10,690 1.352184 14,455 Remaining contract charges 138,778 -- 192,000 2006 Lowest contract charges 32,999 1.399343 46,175 Highest contract charges 10,690 1.343621 14,363 Remaining contract charges 134,247 -- 183,707 2005 Lowest contract charges 48,722 1.188242 57,893 Highest contract charges 6,461 1.149511 7,426 Remaining contract charges 178,327 -- 207,993 2004 Lowest contract charges 47,799 1.036859 49,561 Highest contract charges 6,461 1.010609 6,529 Remaining contract charges 186,586 -- 190,690 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- JENNISON PORTFOLIO 2008 Lowest contract charges 1.40% 0.07% (38.42)% Highest contract charges 2.36% 0.07% (39.01)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% -- 10.01% Highest contract charges 2.34% -- 8.97% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% -- (0.04)% Highest contract charges 2.35% -- (0.99)% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% -- 12.44% Highest contract charges 2.34% -- 11.38% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.04% 7.70% Highest contract charges 2.35% 0.04% 6.68% Remaining contract charges -- -- -- PRUDENTIAL VALUE PORTFOLIO 2008 Lowest contract charges 1.40% 1.40% (43.36)% Highest contract charges 2.16% 1.39% (43.78)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.02% 1.40% Highest contract charges 2.14% 1.01% 0.64% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.41% 0.97% 17.77% Highest contract charges 2.14% 1.14% 16.89% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 0.87% 14.60% Highest contract charges 2.14% 0.86% 13.74% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.95% 14.22% Highest contract charges 2.15% 0.96% 13.37% Remaining contract charges -- -- --
SA-237 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- PRUDENTIAL SERIES INTERNATIONAL GROWTH 2008 Lowest contract charges 2,014 $0.687546 $1,385 Highest contract charges 4,458 0.661706 2,950 Remaining contract charges -- -- -- 2007 Lowest contract charges 2,028 1.408201 2,855 Highest contract charges 4,415 1.375730 6,074 Remaining contract charges -- -- -- 2006 Lowest contract charges 2,040 1.198770 2,446 Highest contract charges 4,418 1.175236 5,192 Remaining contract charges 14,560 -- 17,306 2005 Lowest contract charges 2,055 1.008958 2,073 Highest contract charges 4,421 0.992620 4,389 Remaining contract charges 6,781 -- 6,794 2004 Lowest contract charges 2,071 0.883610 1,831 Highest contract charges 4,425 0.872343 3,860 Remaining contract charges -- -- -- LEGG MASON PARTNERS VARIABLE CAPITAL AND INCOME PORTFOLIO 2008 Lowest contract charges 12,313 6.420171 79,048 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 29,134 10.019402 291,906 Highest contract charges 94 9.985693 934 Remaining contract charges 5,701 -- 56,988 2006 Lowest contract charges 217,607 1.334751 290,452 Highest contract charges 9,473 1.296582 12,282 Remaining contract charges 44,221 -- 57,718 2005 Lowest contract charges 225,603 1.202497 271,288 Highest contract charges 703 1.173958 826 Remaining contract charges 46,121 -- 54,425 2004 Lowest contract charges 240,282 1.180317 283,609 Highest contract charges 57,913 1.162314 67,313 Remaining contract charges 59,417 -- 69,604 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- PRUDENTIAL SERIES INTERNATIONAL GROWTH 2008 Lowest contract charges 1.40% 1.31% (51.18)% Highest contract charges 1.90% 1.84% (51.42)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.39% 0.38% 17.47% Highest contract charges 1.75% 0.38% 17.06% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.45% 18.81% Highest contract charges 1.75% 1.45% 18.40% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.39% 0.22% 14.19% Highest contract charges 1.75% 0.22% 13.79% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.38% -- 14.51% Highest contract charges 1.75% -- 14.11% Remaining contract charges -- -- -- LEGG MASON PARTNERS VARIABLE CAPITAL AND INCOME PORTFOLIO 2008 Lowest contract charges 1.41% 0.68% (35.92)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 0.94% 1.36% 0.55% Highest contract charges 1.26% 0.79% 0.21% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 2.12% 11.00% Highest contract charges 1.90% 3.39% 10.45% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.95% 1.88% Highest contract charges 0.94% 89.76% 1.37% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.80% 7.23% Highest contract charges 1.75% 2.00% 6.85% Remaining contract charges -- -- --
SA-238 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE FUNDAMENTAL VALUE PORTFOLIO 2008 Lowest contract charges 147,243 $6.170510 $908,565 Highest contract charges 2,623 6.116948 16,047 Remaining contract charges 5,093 -- 31,285 2007 Lowest contract charges 220,928 9.866295 2,179,744 Highest contract charges 4,099 9.829750 40,289 Remaining contract charges 14,445 -- 142,275 2006 Lowest contract charges 1,743,672 1.553472 2,708,746 Highest contract charges 53,339 1.509106 80,495 Remaining contract charges 121,845 -- 186,268 2005 Lowest contract charges 1,999,252 1.333798 2,666,598 Highest contract charges 38,404 1.302192 50,010 Remaining contract charges 141,334 -- 186,018 2004 Lowest contract charges 2,054,471 1.300004 2,670,819 Highest contract charges 63,160 1.280175 80,856 Remaining contract charges 131,905 -- 170,177 LEGG MASON PARTNERS VARIABLE GLOBAL HIGH YIELD BOND PORTFOLIO 2008 Lowest contract charges 53,153 1.095461 58,227 Highest contract charges 5,134 1.063733 5,462 Remaining contract charges -- -- -- 2007 Lowest contract charges 81,278 1.605919 130,526 Highest contract charges 5,137 1.564895 8,039 Remaining contract charges -- -- -- 2006 Lowest contract charges 149,388 1.629638 243,449 Highest contract charges 5,140 1.593576 8,191 Remaining contract charges -- -- -- 2005 Lowest contract charges 194,126 1.493640 289,954 Highest contract charges 5,144 1.465714 7,539 Remaining contract charges -- -- -- 2004 Lowest contract charges 182,558 1.459055 266,361 Highest contract charges 26,460 1.436801 38,018 Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- LEGG MASON PARTNERS VARIABLE FUNDAMENTAL VALUE PORTFOLIO 2008 Lowest contract charges 1.41% 1.43% (37.46)% Highest contract charges 1.91% 1.26% (37.77)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.03% 1.24% (4.33)% Highest contract charges 1.39% 1.00% (4.65)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.29% 16.47% Highest contract charges 1.90% 1.30% 15.89% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.87% 2.60% Highest contract charges 1.79% 5.81% 2.09% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.54% 6.81% Highest contract charges 1.74% 0.56% 6.43% Remaining contract charges -- -- -- LEGG MASON PARTNERS VARIABLE GLOBAL HIGH YIELD BOND PORTFOLIO 2008 Lowest contract charges 1.40% 7.68% (31.79)% Highest contract charges 1.75% 11.09% (32.03)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 5.52% (1.46)% Highest contract charges 1.74% 7.21% (1.80)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 4.90% 9.11% Highest contract charges 1.75% 6.00% 8.72% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 6.13% 2.37% Highest contract charges 1.76% 2.08% 2.01% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 6.86% 9.54% Highest contract charges 1.75% 6.52% 9.16% Remaining contract charges -- -- --
SA-239 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE INVESTORS PORTFOLIO 2008 Lowest contract charges 322,956 $0.942777 $304,476 Highest contract charges 14,042 0.906691 12,732 Remaining contract charges 20,920 -- 19,456 2007 Lowest contract charges 545,041 1.485115 809,448 Highest contract charges 20,987 1.435434 30,125 Remaining contract charges 34,429 -- 50,520 2006 Lowest contract charges 614,137 1.449498 890,191 Highest contract charges 17,129 1.408038 24,118 Remaining contract charges 35,180 -- 50,457 2005 Lowest contract charges 653,183 1.242971 811,888 Highest contract charges 36,179 1.231762 44,564 Remaining contract charges -- -- -- 2004 Lowest contract charges 650,321 1.183257 769,497 Highest contract charges 38,117 1.174341 44,763 Remaining contract charges -- -- -- VAN KAMPEN LIT GROWTH AND INCOME PORTFOLIO 2008 Lowest contract charges 17,005 7.322402 124,517 Highest contract charges 5,355 10.893737 58,331 Remaining contract charges 78,630 -- 651,471 2007 Lowest contract charges 3,924 17.229559 67,607 Highest contract charges 4,968 16.476878 81,850 Remaining contract charges 14,332 -- 242,045 2006 Lowest contract charges 2,394 17.033843 40,772 Highest contract charges 734 16.903161 12,413 Remaining contract charges -- -- -- 2005 Lowest contract charges 10,126 1.170742 11,855 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 10,126 1.135949 11,502 Highest contract charges -- -- -- Remaining contract charges -- -- -- VAN KAMPEN LIT COMSTOCK PORTFOLIO 2008 Lowest contract charges 6,816 10.365093 70,648 Highest contract charges 10,548 9.854026 103,944 Remaining contract charges 12,263 -- 123,639 2007 Lowest contract charges 6,221 16.364834 101,813 Highest contract charges 11,199 15.738155 176,247 Remaining contract charges 14,640 -- 234,567 2006 Lowest contract charges 1,914 16.982646 32,506 Highest contract charges 2,522 16.521234 41,673 Remaining contract charges 4,989 -- 83,535 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- LEGG MASON PARTNERS VARIABLE INVESTORS PORTFOLIO 2008 Lowest contract charges 1.41% 1.06% (36.52)% Highest contract charges 1.91% 1.00% (36.84)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.40% 1.18% 2.46% Highest contract charges 1.89% 1.27% 1.95% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 1.65% 16.62% Highest contract charges 1.90% 4.40% 16.03% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.23% 5.05% Highest contract charges 1.55% 1.20% 4.89% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.47% 8.84% Highest contract charges 1.55% 1.48% 8.68% Remaining contract charges -- -- -- VAN KAMPEN LIT GROWTH AND INCOME PORTFOLIO 2008 Lowest contract charges 0.70% -- (30.20)% Highest contract charges 2.51% 1.86% (33.89)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.03% 1.15% Highest contract charges 2.48% 0.27% (0.01)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% -- 11.24% Highest contract charges 1.68% -- 11.09% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.84% 2.07% 3.06% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.82% 3.48% 7.34% Highest contract charges -- -- -- Remaining contract charges -- -- -- VAN KAMPEN LIT COMSTOCK PORTFOLIO 2008 Lowest contract charges 1.35% 2.28% (36.66)% Highest contract charges 2.51% 2.31% (37.39)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.83% (3.64)% Highest contract charges 2.47% 0.44% (4.74)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 11.38% Highest contract charges 2.47% -- 10.90% Remaining contract charges -- -- --
SA-240 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND 2008 Lowest contract charges 10,126 $0.947268 $9,592 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 10,126 1.361298 13,784 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 10,126 1.288809 13,050 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2008 Lowest contract charges 6,897 1.255427 8,659 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 6,897 1.242914 8,573 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 6,897 1.186333 8,183 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 6,897 1.157855 7,986 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND 2008 Lowest contract charges 11,475 0.892888 10,246 Highest contract charges 8,113 0.863150 7,003 Remaining contract charges -- -- -- 2007 Lowest contract charges 14,341 1.424572 20,430 Highest contract charges 7,810 1.384045 10,809 Remaining contract charges -- -- -- 2006 Lowest contract charges 14,341 1.404613 20,143 Highest contract charges 7,970 1.371494 10,930 Remaining contract charges -- -- -- 2005 Lowest contract charges 14,752 1.200923 17,715 Highest contract charges 12,534 1.178478 14,772 Remaining contract charges -- -- -- 2004 Lowest contract charges 6,349 1.139247 7,233 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND 2008 Lowest contract charges 1.85% 2.46% (30.41)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.84% 2.25% 5.62% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.85% 2.32% 10.09% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2008 Lowest contract charges 1.35% 4.78% 1.01% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.35% 4.57% 4.77% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 4.39% 2.46% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 1.33% 3.78% 0.56% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND 2008 Lowest contract charges 1.36% 1.91% (37.32)% Highest contract charges 1.85% 1.94% (37.64)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.35% 1.52% 1.42% Highest contract charges 1.85% 1.50% 0.92% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 1.56% 16.96% Highest contract charges 1.85% 1.47% 16.38% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 1.70% 3.96% Highest contract charges 1.84% 1.57% 3.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.79% 2.36% 9.05% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-241 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND 2008 Lowest contract charges 1,488 $0.817742 $1,217 Highest contract charges 4,694 0.810118 3,802 Remaining contract charges -- -- -- 2007 Lowest contract charges 4,939 1.267393 6,260 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND 2008 Lowest contract charges 8,227 0.870506 7,162 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 7,022 1.567025 11,003 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 7,298 1.416803 10,340 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 7,360 1.194669 8,793 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1,216 1.109528 1,349 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND 2008 Lowest contract charges 8,200 0.660646 5,418 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 7,840 1.103110 8,648 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 7,809 1.044218 8,154 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 6,863 1.039324 7,132 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1,070 1.001632 1,072 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND 2008 Lowest contract charges 1.55% 1.28% (36.02)% Highest contract charges 1.65% 1.52% (36.08)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.60% 3.41% (2.79)% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND 2008 Lowest contract charges 1.85% 1.98% (44.45)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.84% 0.01% 10.60% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.85% 1.69% 18.59% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 1.83% 2.85% 7.67% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.72% -- 7.62% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND 2008 Lowest contract charges 1.86% 0.28% (40.11)% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2007 Lowest contract charges 1.84% -- 5.64% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.85% -- 0.47% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 1.83% 0.18% 3.76% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.81% -- 1.36% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-242 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2008 Lowest contract charges 555 $0.902819 $501 Highest contract charges 4,317 0.882620 3,810 Remaining contract charges 2,453 -- 2,194 2007 Lowest contract charges 2,411 1.552301 3,743 Highest contract charges 4,212 1.534932 6,464 Remaining contract charges -- -- -- 2006 Lowest contract charges 4,770 1.373834 6,553 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 4,601 1.140072 5,246 Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 764 1.093116 835 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2008 Lowest contract charges 225 8.434447 1,898 Highest contract charges -- -- -- Remaining contract charges -- -- -- RIDGEWORTH VARIABLE TRUST LARGE CAP GROWTH STOCK FUND 2008 Lowest contract charges 282,145 0.878212 247,784 Highest contract charges 26,357 8.240611 217,196 Remaining contract charges 465,577 -- 3,062,302 2007 Lowest contract charges 338,213 1.500630 507,532 Highest contract charges 23,471 14.244303 334,327 Remaining contract charges 577,763 -- 6,689,262 2006 Lowest contract charges 275,418 1.319453 363,402 Highest contract charges 24,120 12.669242 305,586 Remaining contract charges 577,086 -- 6,495,986 2005 Lowest contract charges 106,832 1.206733 128,918 Highest contract charges 16,411 11.720910 192,352 Remaining contract charges 528,364 -- 5,837,027 2004 Lowest contract charges 22,239 12.334257 274,306 Highest contract charges 2,721 12.126652 32,994 Remaining contract charges 359,349 -- 4,387,702 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** --------------------------------- ----------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2008 Lowest contract charges 1.55% -- (42.33)% Highest contract charges 1.86% -- (42.50)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.60% -- 11.95% Highest contract charges 1.85% -- 11.73% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.85% -- 20.50% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2005 Lowest contract charges 1.82% -- 4.30% Highest contract charges -- -- -- Remaining contract charges -- -- -- 2004 Lowest contract charges 1.71% -- 11.68% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2008 Lowest contract charges 1.35% -- (45.10)% Highest contract charges -- -- -- Remaining contract charges -- -- -- RIDGEWORTH VARIABLE TRUST LARGE CAP GROWTH STOCK FUND 2008 Lowest contract charges 1.36% 0.26% (41.48)% Highest contract charges 2.51% 0.27% (42.15)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.42% 13.73% Highest contract charges 2.50% 0.43% 12.43% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.31% 9.34% Highest contract charges 2.50% 0.30% 8.09% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.32% 0.27% 4.42% Highest contract charges 2.47% 0.17% 3.35% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 0.27% 4.95% Highest contract charges 2.36% 1.51% 4.12% Remaining contract charges -- -- --
SA-243 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------- RIDGEWORTH VARIABLE TRUST LARGE CAP CORE EQUITY FUND 2008 Lowest contract charges 23,928 $1.097280 $26,255 Highest contract charges 1,318 10.296326 13,570 Remaining contract charges 63,869 -- 675,156 2007 Lowest contract charges 14,127 1.791100 25,303 Highest contract charges 7,563 17.109521 129,406 Remaining contract charges 77,451 -- 1,349,343 2006 Lowest contract charges 6,798 1.801290 12,244 Highest contract charges 8,918 17.379730 154,987 Remaining contract charges 99,476 -- 1,752,207 2005 Lowest contract charges 14,729 15.647881 230,482 Highest contract charges 9,192 15.313092 140,753 Remaining contract charges 105,763 -- 1,633,590 2004 Lowest contract charges 14,754 14.598347 215,383 Highest contract charges 21,153 14.379145 304,157 Remaining contract charges 131,768 -- 1,905,742 RIDGEWORTH VARIABLE TRUST MID-CAP CORE EQUITY FUND 2008 Lowest contract charges 21,821 1.104438 24,100 Highest contract charges 4,096 10.363506 42,451 Remaining contract charges 87,319 -- 886,336 2007 Lowest contract charges 7,002 1.886371 13,208 Highest contract charges 4,756 17.905858 85,151 Remaining contract charges 100,849 -- 1,768,906 2006 Lowest contract charges 5,176 1.817794 9,411 Highest contract charges 4,764 17.454443 83,151 Remaining contract charges 105,207 -- 1,792,667 2005 Lowest contract charges 9,250 16.572461 153,301 Highest contract charges 3,658 16.163856 59,120 Remaining contract charges 96,304 -- 1,573,989 2004 Lowest contract charges 8,960 14.745157 132,091 Highest contract charges 7,001 14.497064 101,495 Remaining contract charges 108,377 -- 1,581,712 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ----------------------------------------------------- RIDGEWORTH VARIABLE TRUST LARGE CAP CORE EQUITY FUND 2008 Lowest contract charges 1.35% 1.09% (38.74)% Highest contract charges 2.34% -- (39.44)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.20% (0.57)% Highest contract charges 2.34% 1.15% (1.56)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 1.38% 14.64% Highest contract charges 2.35% 1.26% 13.50% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.69% 0.93% 7.19% Highest contract charges 2.36% 0.90% 6.50% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 0.92% 12.38% Highest contract charges 2.35% 0.78% 11.65% Remaining contract charges -- -- -- RIDGEWORTH VARIABLE TRUST MID-CAP CORE EQUITY FUND 2008 Lowest contract charges 1.35% 0.77% (41.45)% Highest contract charges 2.51% 0.72% (42.12)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 0.24% 3.77% Highest contract charges 2.49% 0.23% 2.59% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% 0.40% 9.23% Highest contract charges 2.50% 0.38% 7.98% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.69% 0.45% 12.39% Highest contract charges 2.51% 0.43% 11.50% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 0.71% 14.85% Highest contract charges 2.48% 0.78% 13.94% Remaining contract charges -- -- --
SA-244 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY -------------------------------------------------------------------------- RIDGEWORTH VARIABLE TRUST LARGE CAP VALUE EQUITY FUND 2008 Lowest contract charges 394,343 $1.234561 $486,841 Highest contract charges 17,793 11.584565 206,127 Remaining contract charges 350,840 -- 2,968,464 2007 Lowest contract charges 318,614 1.861796 593,194 Highest contract charges 12,653 17.672549 223,606 Remaining contract charges 352,413 -- 4,476,195 2006 Lowest contract charges 174,843 1.822311 318,618 Highest contract charges 11,921 17.497735 208,585 Remaining contract charges 256,175 -- 3,821,164 2005 Lowest contract charges 53,603 1.508288 80,849 Highest contract charges 8,136 14.649853 119,189 Remaining contract charges 201,268 -- 2,737,677 2004 Lowest contract charges 6,486 14.725680 95,514 Highest contract charges 1,842 14.477953 26,667 Remaining contract charges 110,424 -- 1,609,878 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ----------------------------------------------------- RIDGEWORTH VARIABLE TRUST LARGE CAP VALUE EQUITY FUND 2008 Lowest contract charges 1.35% 2.24% (33.69)% Highest contract charges 2.50% 2.22% (34.45)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.63% 2.17% Highest contract charges 2.49% 1.60% 1.00% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 1.55% 20.82% Highest contract charges 2.50% 1.50% 19.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.31% 2.07% 4.97% Highest contract charges 2.47% 1.77% 1.19% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% 1.62% 13.35% Highest contract charges 2.45% 2.23% 12.45% Remaining contract charges -- -- --
* This represents the annualized contract expenses of the Sub-Account for the year indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the Funds and charges made directly to contract owner accounts through the redemption of units. ** These amounts represent the dividends, excluding distributions of capital gains, received by the Sub-Account from the Fund, net of management fees assessed by the Fund's Manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the Fund in which the Sub-Accounts invest. *** This represents the total return for the year indicated and reflects a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the year indicated or from the effective date through the end of the reporting period. # Rounded unit values SA-245 SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2008 ------------------------------------------------------------------------------- Summary of the Account's expense charges, including Mortality and Expense Risk Charges, Administrative Charges, Riders (if applicable) and Annual Maintenance Fees assessed. These fees are either assessed as a direct reduction in unit values or through a redemption of units for all contracts contained within the Account. MORTALITY AND EXPENSE RISK CHARGES: The Company will charge an expense ranging from 0.40% to 1.55% of the contract's value for mortality and expense risks undertaken by the Company. These charges are a reduction in unit values. ADMINISTRATIVE CHARGES: The Company will charge an expense ranging from 0.15% to 0.20% of the contract's value for administrative services provided by the Company. These charges are a reduction in unit values. RIDERS: The Company will charge an expense for various Rider charges, such as MAV/EPB Death Benefit Charge, The Hartford's Principal First Charge, The Hartford's Principal First Preferred Charge, MAV70 Death Benefit Charge, Optional Death Benefit Charge and Earnings Protection Benefit Charge. These charges range from 0.15% to 0.75%. These charges are a reduction in unit values. The Company will charge an expense for Rider charges related to The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects, and The Hartford's Lifetime Income Builder Portfolios. The Company initially makes deductions of 0.30%, 0.40%, 0.40%, 0.55% and 0.65% respectively. The Company has the right to increase both The Hartford's Lifetime Income Builder and The Hartford's Lifetime Income Builder II to a maximum charge of 0.75% and the right to increase both The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios to a maximum charge of 1.50%. This charge is a redemption of units. ANNUAL MAINTENANCE FEE: An annual maintenance fee of $30 may be charged to the contract's value each contract year. However, this fee is not applicable to contracts with values of $50,000 or more, as determined on the most recent contract anniversary. These expenses are included in surrenders for benefit payments and fees in the accompanying statements of changes in net assets. These charges are a redemption of units. SA-246 Report of Independent RegisterF-2 ED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of Hartford Life Insurance Company Hartford, Connecticut We have audited the accompanying consolidated balance sheets of Hartford Life Insurance Company and its subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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, such consolidated financial statements present fairly, in all material respects, the financial position of Hartford Life Insurance Company and its subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 of the consolidated financial statements, the Company changed its method of accounting and reporting for the fair value measurement of financial instruments in 2008. DELOITTE & TOUCHE LLP Hartford, Connecticut February 11, 2009 (April 29, 2009 as to the effects of the change in reporting entity structure and the retrospective adoption of FASB Statement No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS, described in Note 1 and Note 17) HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 (IN MILLIONS) -------------------------------------------------------------------------------- REVENUES Fee income and other $4,155 $4,470 $3,881 Earned premiums 984 983 547 Net investment income (loss) Securities available-for-sale and other 2, 588 3,056 2,752 Equity securities held for trading (246) 1 16 --------- -------- -------- TOTAL NET INVESTMENT INCOME (LOSS) 2,342 3,057 2,768 Net realized capital losses (5,763) (934) (298) --------- -------- -------- TOTAL REVENUES 1,718 7,576 6,898 --------- -------- -------- BENEFITS, LOSSES AND EXPENSES Benefits, loss and loss adjustment expenses 4,047 3,982 3,205 Benefits, loss and loss adjustment expenses -- returns credited on International unit-linked bonds and pension products (246) 1 16 Insurance expenses and other 1,940 1,832 1,359 Amortization of deferred policy acquisition costs and present value of future profits 1,620 605 1,238 Goodwill impairment 184 -- -- Dividends to policyholders 13 11 22 --------- -------- -------- TOTAL BENEFITS, LOSSES AND EXPENSES 7,558 6,431 5,840 --------- -------- -------- INCOME (LOSS) BEFORE INCOME TAX EXPENSE (5,840) 1,145 1,058 Income tax expense (benefit) (2,181) 252 182 --------- -------- -------- NET INCOME (LOSS) $ (3,659) $ 893 $ 876 --------- -------- -------- LESS: NET (INCOME) LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTEREST 105 (7) (3) --------- -------- -------- NET INCOME (LOSS) ATTRIBUTABLE TO HARTFORD LIFE INSURANCE COMPANY (3,554) 886 873 --------- -------- --------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-3 Hartford Life Insurance CompanyF-4 AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 2007 (IN MILLIONS, EXCEPT FOR SHARE DATA) ---------------------------------------------------------------------------- ASSETS Investments Fixed maturities, available-for-sale, at fair value (amortized cost of $48,444 and $46,243) $39,560 $45,646 Equity securities, held for trading, at fair value (cost of $1,830 and $1,128) 1,634 1,248 Equity securities, available for sale, at fair value (cost of $614 and $781) 434 740 Policy loans, at outstanding balance 2,154 2,016 Mortgage loans on real estate 4,896 4,166 Limited partnership and other alternative investments 1,033 1,246 Other investments 1,237 486 Short-term investments 5,742 929 ----------- ----------- TOTAL INVESTMENTS 56,690 56,477 ----------- ----------- Cash 661 423 Premiums receivable and agents' balances 25 35 Reinsurance recoverables 3,195 1,732 Deferred income taxes 3,444 -- Deferred policy acquisition costs and present value of future profits 9,944 8,601 Goodwill 462 567 Other assets 3,267 1,603 Separate account assets 130,171 199,924 ----------- ----------- TOTAL ASSETS $ 207,859 $ 269,362 ----------- ----------- LIABILITIES Reserve for future policy benefits and unpaid losses and loss adjustment expenses $10,602 $9,442 Other policyholder funds and benefits payable 52,647 42,396 Other policyholder funds and benefits payable -- International unit-linked bonds and pension products 1,613 1,217 Consumer notes 1,210 809 Deferred income taxes -- 155 Other liabilities 8,373 6,544 Separate account liabilities 130,171 199,924 ----------- ----------- TOTAL LIABILITIES 204,616 260,487 ----------- ----------- COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 10) STOCKHOLDER'S EQUITY Common stock -- 1,000 shares authorized, issued and outstanding, par value $5,690 6 6 Capital surplus 6,157 3,746 Accumulated other comprehensive loss, net of tax (4,531) (447) Retained earnings 1,446 5,315 ----------- ----------- TOTAL STOCKHOLDER'S EQUITY 3,078 8,620 ----------- ----------- Noncontrolling interest 165 255 ----------- ----------- TOTAL EQUITY 3,243 8,875 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 207,859 $269,362 ----------- -----------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) NET NET (LOSS) UNREALIZED GAIN ON CAPITAL GAINS CASH FLOW FOREIGN COMMON (LOSSES) ON HEDGING CURRENCY STOCK CAPITAL SECURITIES, INSTRUMENTS, TRANSLATION SURPLUS NET OF TAX NET OF TAX ADJS (IN MILLIONS) -------------------------------------------------------------------------------------------------------------------------- 2008 Balance, December 31, 2007 $6 $3,746 $(318) $(137) $8 Comprehensive income Net loss Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (4,488) Net gains on cash flow hedging instruments 577 Cumulative translation adjustments (173) Total other comprehensive loss Total comprehensive loss Capital contribution from parent (3) 2,411 Dividends declared Cumulative effect of accounting changes, net of tax Change in noncontrolling interest ownership Noncontrolling income (loss) --- ----- -------- ------ ------ BALANCE, DECEMBER 31, 2008 $ 6 $ 6,157 $ (4,806) $ 440 $ (165) --- ----- -------- ------ ------ 2007 Balance, December 31, 2006 $6 $3,317 $503 $(210) $(4) Comprehensive income Net income Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (821) Net loss on cash flow hedging instruments 73 Cumulative translation adjustments 12 Total other comprehensive income Total comprehensive income Capital contribution from parent 429 Dividends declared Cumulative effect of accounting changes, net of tax Change in noncontrolling interest ownership Noncontrolling income (loss) --- ----- -------- ------ ------ BALANCE, DECEMBER 31, 2007 $ 6 $ 3,746 $ (318) $ (137) $ 8 --- ----- -------- ------ ------ 2006 Balance, December 31, 2005 6 3,080 583 (113) (32) Comprehensive income Net income Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (80) Net gains on cash flow hedging instruments (97) Cumulative translation adjustments 28 Total other comprehensive income Total comprehensive income Capital contribution from parent 237 Dividends declared Cumulative effect of accounting changes, net of tax Change in noncontrolling interest ownership Noncontrolling income (loss) --- ----- -------- ------ ------ BALANCE, DECEMBER 31, 2006 $ 6 $ 3,317 $ 503 $ (210) $ (4) --- ----- -------- ------ ------ NON- TOTAL CONTROLLING RETAINED STOCKHOLDER'S INTEREST TOTAL EARNINGS EQUITY (NOTE 17) EQUITY (IN MILLIONS) ----------------------------- ---------------------------------------------------------------------------- 2008 Balance, December 31, 2007 $5,315 $8,620 $255 $8875 Comprehensive income Net loss (3,554) (3,554) (3,554) Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (4,488) (4,488) Net gains on cash flow hedging instruments 577 577 Cumulative translation adjustments (173) (173) -------- -------- Total other comprehensive loss (4,084) (4,084) -------- -------- Total comprehensive loss (7,638) (7,638) Capital contribution from parent (3) 2,411 2,411 Dividends declared (313) (313) (313) Cumulative effect of accounting changes, net of tax (2) (2) (2) Change in noncontrolling interest ownership 15 15 Noncontrolling income (loss) (105) (105) -------- -------- ------ -------- BALANCE, DECEMBER 31, 2008 $ 1,446 $ 3,078 165 3,243 -------- -------- ------ -------- 2007 Balance, December 31, 2006 $4,894 $8,506 142 8,648 Comprehensive income Net income 886 886 886 Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (821) (821) Net loss on cash flow hedging instruments 73 73 Cumulative translation adjustments 12 12 -------- -------- Total other comprehensive income (736) (736) -------- -------- Total comprehensive income 150 150 Capital contribution from parent 429 429 Dividends declared (461) (461) (461) Cumulative effect of accounting changes, net of tax (4) (4) (4) Change in noncontrolling interest ownership 106 106 Noncontrolling income (loss) 7 7 -------- -------- ------ -------- BALANCE, DECEMBER 31, 2007 $ 5,315 $ 8,620 $255 $ 8,875 -------- -------- ------ -------- 2006 Balance, December 31, 2005 4,500 8,024 65 8,089 Comprehensive income Net income 873 873 873 Other comprehensive income, net of tax net change in unrealized capital gains (losses) on securities (1)(2) (80) (80) Net gains on cash flow hedging instruments (97) (97) Cumulative translation adjustments 28 28 -------- Total other comprehensive income (149) (149) -------- -------- Total comprehensive income 724 724 Capital contribution from parent 237 237 Dividends declared (479) (479) (479) Cumulative effect of accounting changes, net of tax Change in noncontrolling interest ownership 74 74 Noncontrolling income (loss) 3 3 -------- -------- ------ -------- BALANCE, DECEMBER 31, 2006 $ 4,894 $ 8,506 $ 142 $ 8,648 -------- -------- ------ --------
(1) Net change in unrealized capital gain on securities is reflected net of tax provision (benefit) and other items of $2,416, $443 and $43 for the years ended December 31, 2008, 2007 and 2006, respectively. Net (loss) gain on cash flow hedging instruments is net of tax provision (benefit) of $(310), $(39) and $52 for the years ended December 31, 2008, 2007 and 2006, respectively. There is no tax effect on cumulative translation adjustments. (2) There were reclassification adjustments for after-tax gains (losses) realized in net income of $(1,396), $(135), and $(75) for the years ended December 31, 2008, 2007 and 2006, respectively. (3) The Company received a noncash asset capital contribution of $180 from its parent company during 2008 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-5 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 (IN MILLIONS) ----------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income(loss) $(3,659) $893 $876 Adjustments to reconcile net income(loss) to net cash provided by operating activities Amortization of deferred policy acquisition costs and present value of future profits 1,620 605 1,238 Additions to deferred policy acquisition costs and present value of future profits (1,258) (1,557) (1,457) Change in: Reserve for future policy benefits, unpaid losses and loss adjustment expenses 1,161 1,228 838 Reinsurance recoverables (29) (235) (47) Receivables 66 188 7 Payables and accruals (369) 585 222 Accrued and deferred income taxes (2,166) (112) 378 Net realized capital losses 5,763 934 298 Net receipts from investment contracts related to policyholder funds -- International unit-linked bonds and pension products 396 867 329 Net increase in equity securities held for trading (386) (877) (332) Depreciation and amortization 78 441 395 Goodwill impairment 184 -- -- Other, net (190) (345) 12 ---------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES $1,211 $2,615 $2,757 ---------- -------- -------- INVESTING ACTIVITIES Proceeds from the sale/maturity/prepayment of: Fixed maturities and short-term investments, available for sale $12,104 $19,094 $21,646 Equity securities, available-for-sale 140 315 282 Mortgage loans 325 958 301 Partnerships 250 175 91 Derivatives 1,676 -- -- Payments for the purchase of: Fixed maturities and short-term investments, available for sale (18, 216) (22,027) (24,152) Equity securities, available-for-sale (144) (484) (455) Mortgage loans (1,067) (2,492) (1,574) Partnerships (330) (607) (496) Derivatives -- (237) (84) Purchase price of business acquired (78) (10) Change in policy loans, net (139) (6) (39) Change in payables for collateral under securities lending, net (974) 1,306 788 Change in all other, net (144) (357) (633) ---------- -------- -------- NET CASH USED FOR INVESTING ACTIVITIES $(6,597) $(4,372) $(4,325) ---------- -------- -------- FINANCING ACTIVITIES Deposits and other additions to investment and universal life-type contracts 22,449 33,282 26,983 Withdrawals and other deductions from investment and universal life-type contracts (28,105) (31,299) (26,688) Net transfers (to)/from separate accounts related to investment and universal life-type contracts 7,074 (607) 1,389 Issuance of structured financing 2,001 -- -- Capital contributions 2,231 397 64 Dividends paid (299) $(459) $(371) Proceeds from issuance of consumer notes 445 551 258 Repayment at maturity of consumer notes (44) -- -- ---------- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES $5,752 $1,865 $1,635 ---------- -------- -------- Impact of foreign exchange (128) 3 23 Net (decrease) increase in cash 238 111 90 ---------- -------- -------- Cash -- beginning of year 423 312 222 ---------- -------- -------- Cash -- end of year $661 $423 $312 ---------- -------- -------- Supplemental Disclosure of Cash Flow Information: Net Cash Paid (Received) During the Year for: Income taxes $(183) $329 $(121)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-6 SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING AND FINANCING ACTIVITIES: The Company made noncash dividends of $54 related to the guaranteed minimum income and accumulation benefit reinsurance agreements with Hartford Life Insurance K.K and received a noncash asset capital contributions of $180 from its parent company during 2008. The Company made noncash dividends of $2 and received a noncash capital contributions of $20 from its parent company during 2007 related to the guaranteed minimum income benefit reinsurance agreement with Hartford Life Insurance K.K. F-7 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED) -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES BASIS OF PRESENTATION These consolidated financial statements include Hartford Life Insurance Company and its wholly-owned subsidiaries (collectively, "Hartford Life Insurance Company" or the "Company"), Hartford Life and Annuity Insurance Company ("HLAI") and Hartford International Life Reassurance Corporation ("HLRe"), Hartford Financial Services LLC ("HFSC"), Hartford Life International LTD ("HLINT") and Woodbury Financial Services Corporation ("WFS"). The Company is a wholly-owned subsidiary of Hartford Life and Accident Insurance Company ("HLA"), which is a wholly-owned subsidiary of Hartford Life, Inc. ("Hartford Life"). Hartford Life is a direct wholly-owned subsidiary of Hartford Holdings, Inc., a direct wholly-owned subsidiary of The Hartford Financial Services Group, Inc. ("The Hartford"), the Company's ultimate parent company. Effective March 31,2009, Hartford Life changed its reporting entity structure to contribute certain wholly owned subsidiaries, including Hartford Life's European Insurance Operations, several broker dealer entities and investment advisory and service entities to the Company. The contribution of subsidiaries was effected to more closely align servicing entities with the writing company issuing the business they service as well as to more efficiently deploy capital across the organization. The change in reporting entity was retrospectively applied to the financial statements of the Company for all periods presented. The contributed subsidiaries resulted in an increase in equity of $1.3 billion as of March 31, 2009. Along with its parent, HLA, the Company is a financial services and insurance group which provides (a) investment products, such as individual variable annuities and fixed market value adjusted annuities, mutual funds and retirement plan services; (b) individual life insurance; (c) group benefits products such as group life and group disability insurance that is directly written by the Company and is substantially ceded to its parent, HLA, (d) private placement life insurance and (e) assumes fixed market value adjusted annuities, guaranteed minimum withdrawal benefits ("GMWB"), guaranteed minimum income benefits ("GMIB"), guaranteed minimum accumulation benefits ("GMAB") and guaranteed minimum death benefits ("GMDB") from Hartford Life's Japan operations. The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America ("U.S. GAAP"), which differ materially from the accounting practices prescribed by various insurance regulatory authorities. CONSOLIDATION The consolidated financial statements include the accounts of Hartford Life Insurance Company and affiliated entities in which the Company directly or indirectly has a controlling financial interest and those variable interest entities in which the Company is the primary beneficiary. The Company determines if it is the primary beneficiary using both qualitative and quantitative analyses. Entities in which Hartford Life Insurance Company does not have a controlling financial interest but in which the Company has significant influence over the operating and financing decisions are reported using the equity method. All material intercompany transactions and balances between Hartford Life Insurance Company and its subsidiaries and affiliates have been eliminated. USE OF ESTIMATES The preparation of financial statements, in conformity with U.S. GAAP, 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 estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and other universal life-type contracts; living benefits required to be fair valued; valuation of investments and derivative instruments, evaluation of other-than-temporary impairments on available-for-sale securities; and contingencies relating to corporate litigation and regulatory matters; and goodwill impairment. ADOPTION OF NEW ACCOUNTING STANDARDS Amendments to the Impairment Guidance of EITF Issue No. 99-20 In January 2009, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP") No. EITF 99-20-1, "Amendments to the Impairment Guidance of EITF Issue No. 99-20," ("FSP EITF 99-20-1"). The FSP amends the impairment guidance of Emerging Issues Task Force ("EITF") Issue No. 99-20, "Recognition of Interest Income and Impairment of Purchased Beneficial Interest and Beneficial Interest that Continue to Be Held by a Transferor in Securitized F-8 Financial Assets," by removing the exclusive reliance upon market participant assumptions about future cash flows when evaluating impairment of securities within its scope. FSP EITF 99-20-1 requires companies to follow the impairment guidance in Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), which permits the use of reasonable management judgment of the probability that the holder will be unable to collect all amounts due. The FSP is effective prospectively for interim and annual reporting periods ending after December 15, 2008. The Company adopted the FSP on December 31, 2008 and the adoption did not have a material effect on the Company's consolidated financial statements. FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities." The purpose of this FSP is to promptly improve disclosures by public entities and enterprises until pending amendments to SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"), and FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities" ("FIN 46(R)"), are finalized and approved by the FASB. The FSP amends SFAS 140 to require public entities to provide additional disclosures about transferors' continuing involvements with transferred financial assets. It also amends FIN 46(R) to require public enterprises, to provide additional disclosures about their involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for financial statements issued for fiscal years and interim periods ending after December 15, 2008. For periods after the initial adoption date, comparative disclosures are required. The Company adopted the FSP on December 31, 2008. See Note 4 for the new disclosures. Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 In September 2008, the FASB issued FSP No. FAS 133-1 and FIN 45-4 "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161" ("FSP FAS 133-1 and FIN 45-4"). This FSP amends SFAS 133 to require disclosures by entities that assume credit risk through the sale of credit derivatives including credit derivatives embedded in a hybrid instrument. The intent of these enhanced disclosures is to enable users of financial statements to assess the potential effect on its financial position, financial performance, and cash flows from these credit derivatives. This FSP also amends FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others", to require an additional disclosure about the current status of the payment/performance risk of a guarantee. FSP FAS 133-1 and FIN 45-4 are effective for financial statements issued for fiscal years and interim periods ending after November 15, 2008. For periods after the initial adoption date, comparative disclosures are required. The Company adopted FSP FAS 133-1 and FIN 45-4 on December 31, 2008. See Note 4 for the new disclosures. Fair Value Measurements On January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), which was issued by the FASB in September 2006. The Company also adopted on January 1, 2008, the SFAS 157 related FASB Staff Position ("FSP") described below. For financial statement elements currently required to be measured at fair value, SFAS 157 redefines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. The new definition of fair value focuses on the price that would be received to sell the asset or paid to transfer the liability regardless of whether an observable liquid market price existed (an exit price). SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels ("Level 1, 2, and 3"). The Company applied the provisions of SFAS 157 prospectively to financial assets and financial liabilities that are required to be measured at fair value under existing U.S. GAAP. The Company also recorded in opening retained earnings the cumulative effect of applying SFAS 157 to certain customized derivatives measured at fair value in accordance with EITF Issue No. 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Involved in Energy Trading and Risk Management Activities" ("EITF 02-3"). See Note 3 for additional information regarding SFAS 157. Specifically, see the SFAS 157 Transition discussion within Note 3 for information regarding the effects of applying SFAS 157 on the Company's consolidated financial statements in 2008. In February 2008, the FASB issued FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157" ("FSP FAS 157-2") which delays the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for certain nonfinancial assets and nonfinancial liabilities. Examples of applicable nonfinancial assets and nonfinancial liabilities to which FSP FAS 157-2 applies include, but are not limited to: - Nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination that are not subsequently remeasured at fair value; F-9 - Reporting units measured at fair value in the goodwill impairment test as described in SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), and nonfinancial assets and nonfinancial liabilities measured at fair value in the SFAS 142 goodwill impairment test, if applicable; and - Nonfinancial long-lived assets measured at fair value for impairment assessment under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." As a result of the issuance of FSP FAS 157-2, the Company did not apply the provisions of SFAS 157 to the nonfinancial assets, nonfinancial liabilities and reporting units within the scope of FSP FAS 157-2. Fair Value Option for Financial Assets and Financial Liabilities In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115" ("SFAS 159"). The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported net income caused by measuring related assets and liabilities differently. This statement permits entities to choose, at specified election dates, to measure certain eligible items at fair value (i.e., the fair value option). SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. On January 1, 2008, the Company did not elect to apply the provisions of SFAS 159 to financial assets and liabilities. Amendment of FASB Interpretation No. 39 In April 2007, the FASB issued FASB Staff Position No. FIN 39-1, "Amendment of FASB Interpretation No. 39" ("FSP FIN 39-1"). FSP FIN 39-1 amends FIN 39, "Offsetting of Amounts Related to Certain Contacts", by permitting a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in the statement of financial position in accordance with FIN 39. FSP FIN 39-1 also amends FIN 39 by modifying certain terms. FSP FIN 39-1 is effective for reporting periods beginning after November 15, 2007, with early application permitted. The Company early adopted FSP FIN 39-1 on December 31, 2007, by electing to offset cash collateral against amounts recognized for derivative instruments under the same master netting arrangements. The Company recorded the effect of adopting FSP FIN 39-1 as a change in accounting principle through retrospective application. See Note 4 for further discussions on the adoption of FSP FIN 39-1. Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 The Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109" ("FIN 48"), dated June 2006. FIN 48 requires companies to recognize the tax benefits of uncertain tax positions only when the position is "more likely than not" to be sustained assuming examination by tax authorities. The amount recognized represents the largest amount of tax benefit that is greater than 50% likely of being realized. A liability is recognized for any benefit claimed, or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements, along with any interest and penalty (if applicable) on the excess. The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the adoption, the Company recognized a $11 decrease in the liability for unrecognized tax benefits and a corresponding increase in the January 1, 2007 balance of retained earnings. The Company had no unrecognized tax benefits as of January 1, 2007. The Company does not believe it would be subject to any penalties in any open tax years and, therefore, has not booked any such amounts. The Company classifies interest and penalties (if applicable) as income tax expense in the financial statements. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company's federal income tax returns are routinely audited by the Internal Revenue Service ("IRS"). During 2008, the IRS completed its examination of the Company's U.S. income tax returns for 2002 through 2003. The Company received notification of the approval by the Joint Committee on Taxation of the results of the examination subsequent to December 31, 2008. The examination will not have a material effect on the Company's net income or financial position. The 2004 through 2006 examination began during 2008, and is expected to close by the end of 2010. In addition, the Company is working with the IRS on a possible settlement of an issue related to prior periods which, if settled, may result in the booking of tax benefits in 2009. Such benefits are not expected to be material to the Company's net income or financial position. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years. Accounting by Insurance Enterprises for Deferred Acquisition Costs ("DAC") in Connection with Modifications or Exchanges of Insurance Contracts In September 2005, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs ("DAC") in Connection with Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"). SOP 05-1 provides guidance on accounting by insurance enterprises for F-10 DAC on internal replacements of insurance and investment contracts. An internal replacement is a modification in product benefits, features, rights or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. Modifications that result in a replacement contract that is substantially changed from the replaced contract should be accounted for as an extinguishment of the replaced contract. Unamortized DAC, unearned revenue liabilities and deferred sales inducements from the replaced contract must be written-off. Modifications that result in a contract that is substantially unchanged from the replaced contract should be accounted for as a continuation of the replaced contract. The Company adopted SOP 05-1 on January 1, 2007 and recognized the cumulative effect of the adoption of SOP 05-1 as a reduction in retained earnings of $14, after-tax. Disclosures about Derivative Instruments and Hedging Activities In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 amends and expands disclosures about an entity's derivative and hedging activities with the intent of providing users of financial statements with an enhanced understanding of (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS 161 encourages, but does not require, comparative disclosures. The Company adopted SFAS 161 on January 1, 2009. The adoption of this FSP by the Company is expected to result in expanded disclosures related to derivative instruments and hedging activities. Business Combinations In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS 141(R)"). This statement replaces SFAS No. 141, "Business Combinations" ("SFAS 141") and establishes the principles and requirements for how the acquirer in a business combination: (a) measures and recognizes the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquired entity, (b) measures and recognizes positive goodwill acquired or a gain from bargain purchase (negative goodwill), and (c) determines the disclosure information that is decision-useful to users of financial statements in evaluating the nature and financial effects of the business combination. Some of the significant changes to the existing accounting guidance on business combinations made by SFAS 141(R) include the following: - Most of the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree shall be measured at their acquisition-date fair values in accordance with SFAS 157 fair value rather than SFAS 141's requirement based on estimated fair values; - Acquisition-related costs incurred by the acquirer shall be expensed in the periods in which the costs are incurred rather than included in the cost of the acquired entity; - Goodwill shall be measured as the excess of the consideration transferred, including the fair value of any contingent consideration, plus the fair value of any noncontrolling interest in the acquiree, over the fair values of the acquired identifiable net assets, rather than measured as the excess of the cost of the acquired entity over the estimated fair values of the acquired identifiable net assets; - Contractual pre-acquisition contingencies are to be recognized at their acquisition date fair values and noncontractual pre-acquisition contingencies are to be recognized at their acquisition date fair values only if it is more likely than not that the contingency gives rise to an asset or liability, whereas SFAS 141 generally permits the deferred recognition of pre-acquisition contingencies until the recognition criteria of SFAS No. 5, "Accounting for Contingencies" are met; and - Contingent consideration shall be recognized at the acquisition date rather than when the contingency is resolved and consideration is issued or becomes issuable. SFAS 141(R) is effective for and shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, with earlier adoption prohibited. Assets and liabilities that arose from business combinations with acquisition dates prior to the SFAS 141(R) effective date shall not be adjusted upon adoption of SFAS 141(R) with certain exceptions for acquired deferred tax assets and acquired income tax positions. The adoption of SFAS 141(R) on January 1, 2009, did not have a material effect on the Company's consolidated financial statements. Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" ("SFAS 160"). This statement amends Accounting Research Bulletin No. 51, "Consolidated Financial Statements". Noncontrolling interest refers to the minority interest portion of the equity of a subsidiary that is not attributable directly or indirectly to a parent. SFAS 160 establishes accounting and reporting standards that require for-profit entities that prepare F-11 consolidated financial statements to: (a) present noncontrolling interests as a component of equity, separate from the parent's equity, (b) separately present the amount of consolidated net income attributable to noncontrolling interests in the income statement, (c) consistently account for changes in a parent's ownership interests in a subsidiary in which the parent entity has a controlling financial interest as equity transactions, (d) require an entity to measure at fair value its remaining interest in a subsidiary that is deconsolidated, and (e) require an entity to provide sufficient disclosures that identify and clearly distinguish between interests of the parent and interests of noncontrolling owners. SFAS 160 applies to all for-profit entities that prepare consolidated financial statements, and affects those for-profit entities that have outstanding noncontrolling interests in one or more subsidiaries or that deconsolidate a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 with earlier adoption prohibited. The Company adopted SFAS 160 on January 1, 2009. Upon adoption, the Company reclassified $65 of noncontrolling interest, recorded in other liabilities, to equity, as of January 1, 2006. See the Company's Condensed Consolidated Statement of Changes in Equity. The adoption of SFAS 160 resulted in certain reclassifications of noncontrolling interests within the Company's Condensed Consolidated Statements of Operations. The adoption of SFAS 160 did not impact the Company's accounting for separate account assets and liabilities. The FASB has added the following topic to the Emerging Issues Task Force ("EITF") agenda, "CONSIDERATION OF AN INSURER'S ACCOUNTING FOR MAJORITY OWNED INVESTMENTS WHEN THE OWNERSHIP IS THROUGH A SEPARATE ACCOUNT". This topic will be discussed at a future EITF meeting. The FASB has expressed three separate views on the treatment of noncontrolling interest in majority owned separate accounts, upon implementation of SFAS 160, all of which are acceptable to the United States Securities and Exchange Commission. The Company follows one of these three acceptable views and currently excludes the noncontrolling interest from its majority owned separate accounts. The resolution of this EITF agenda item on the Company's accounting for separate account assets and liabilities is not known at this time. ACCOUNTING POLICIES INVESTMENTS The Company's investments in fixed maturities include bonds, redeemable preferred stock and commercial paper. These investments, along with certain equity securities, which include common and non-redeemable preferred stocks, are classified as "available-for-sale" and are carried at fair value. The after-tax difference from cost or amortized cost is reflected in stockholders' equity as a component of Accumulated Other Comprehensive Income ("AOCI"), after adjustments for the effect of deducting the life and pension policyholders' share of the immediate participation guaranteed contracts and certain life and annuity deferred policy acquisition costs and reserve adjustments. The equity investments associated with the U.K. variable annuity products are recorded at fair value and are classified as "trading" with changes in fair value recorded in net investment income. Policy loans are carried at outstanding balance. Mortgage loans on real estate are recorded at the outstanding principal balance adjusted for amortization of premiums or discounts and net of valuation allowances, if any. Short-term investments are carried at amortized cost, which approximates fair value. Limited partnerships and other alternative investments are reported at their carrying value with the change in carrying value accounted for under the equity method and accordingly the Company's share of earnings are included in net investment income. Recognition of limited partnerships and other alternative investment income is delayed due to the availability of the related financial statements, as private equity and other funds are generally on a three-month delay and hedge funds are on a one-month delay. Accordingly, income at December 31, 2008 may not include the full impact of current year changes in valuation of the underlying assets and liabilities. Other investments primarily consist of derivatives instruments which are carried at fair value. OTHER-THAN-TEMPORARY IMPAIRMENTS ON AVAILABLE-FOR-SALE SECURITIES One of the significant estimates related to available-for-sale securities is the evaluation of investments for other-than-temporary impairments. If a decline in the fair value of an available-for-sale security is judged to be other-than-temporary, a charge is recorded in net realized capital losses equal to the difference between the fair value and cost or amortized cost basis 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. The fair value of the other-than-temporarily impaired investment becomes its new cost basis. For fixed maturities, the Company accretes the new cost basis to par or to the estimated future cash flows over the expected remaining life of the security by adjusting the security's yield. The evaluation of securities for impairments is a quantitative and qualitative process, which is subject to risks and uncertainties and is intended to determine whether declines in the fair value of investments should be recognized in current period earnings. The risks and uncertainties include changes in general economic conditions, the issuer's financial condition and/or future prospects, the effects of changes in interest rates or credit spreads and the expected recovery period. The Company has a security monitoring process overseen by a committee of investment and accounting professionals ("the committee") that identifies securities that, due to certain characteristics, as described below, are subjected to an enhanced analysis on a quarterly basis. Based on this evaluation, during 2008, the Company concluded $1.9 billion of unrealized losses were other-than-temporarily impaired and as of December 31, 2008, the Company's unrealized losses on available-for-sale securities of $9.8 billion were temporarily impaired. F-12 Securities not subject to EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continued to Be Held by a Transferor in Securitized Financial Assets" ("non-EITF Issue No. 99-20 securities") that are in an unrealized loss position, are reviewed at least quarterly to determine if an other-than-temporary impairment is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether a decline in value for non-EITF Issue No. 99-20 securities is other-than-temporary include: (a) the length of time and extent to which the fair value has been less than cost or amortized cost and the expected recovery period of the security, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. Through September 30, 2008, for securitized financial assets with contractual cash flows, including those subject to EITF Issue No. 99-20, the Company periodically updated its best estimate of cash flows over the life of the security. The Company's best estimate of cash flows used severe economic recession assumptions due to market uncertainty, similar to those the Company believed market participants would use. If the fair value of a securitized financial asset was less than its cost or amortized cost and there has been an adverse change in timing or amount of anticipated future cash flows since the last revised estimate, an other-than-temporary impairment charge was recognized. The Company also considered its intent and ability to retain a temporarily depressed security until recovery. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. In addition, projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. Beginning in the fourth quarter of 2008, the Company implemented FSP No. EITF 99-20-1, "Amendments to the Impairment Guidance of EITF Issue No. 99-20". Upon implementation, the Company continued to utilize the impairment process described above; however, rather than exclusively relying upon market participant assumptions management judgment was also used in assessing the probability that an adverse change in future cash flows has occurred. Each quarter, during this analysis, the Company asserts its intent and ability to retain until recovery those securities judged to be temporarily impaired. Once identified, these securities are systematically restricted from trading unless approved by the committee. The committee will only authorize the sale of these securities based on predefined criteria that relate to events that could not have been reasonably foreseen at the time the committee rendered its judgment on the Company's intent and ability to retain such securities until recovery. Examples of the criteria include, but are not limited to, the deterioration in the issuer's creditworthiness, a change in regulatory requirements or a major business combination or major disposition. MORTGAGE LOAN IMPAIRMENTS Mortgage loans on real estate are considered to be impaired when management estimates that based upon current information and events, it is probable that the Company will be unable to collect amounts due according to the contractual terms of the loan agreement. For mortgage loans that are deemed impaired, a valuation allowance is established for the difference between the carrying amount and the Company's share of either (a) the present value of the expected future cash flows discounted at the loan's original effective interest rate, (b) the loan's observable market price or (c) the fair value of the collateral. Changes in valuation allowances are recorded in net realized capital gains and losses. NET REALIZED CAPITAL GAINS AND LOSSES Net realized capital gains and losses from investment sales, after deducting the life and pension policyholders' share for certain products, are reported as a component of revenues and are determined on a specific identification basis. Net realized capital gains and losses also result from fair value changes in derivatives contracts (both free-standing and embedded) that do not qualify, or are not designated, as a hedge for accounting purposes, and the change in value of derivatives in certain fair-value hedge relationships. Impairments are recognized as net realized capital losses when investment losses in value are deemed other-than-temporary. Recoveries of principal received by the Company in excess of expected realizable value from securities previously recorded as other-than-temporarily impaired are included in net realized capital gains. Foreign currency transaction remeasurements are also included in net realized capital gains and losses. NET INVESTMENT INCOME Interest income from fixed maturities and mortgage loans on real estate is recognized when earned on the constant effective yield method based on estimated timing of cash flows. The amortization of premium and accretion of discount for fixed maturities also takes into consideration call and maturity dates that produce the lowest yield. For securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future principal repayments using the retrospective method; however, if these investments are impaired, any yield adjustments are made using the prospective method. Prepayment fees on fixed maturities and mortgage loans are recorded in net investment income when earned. For limited partnerships, the equity method of accounting is used to recognize the Company's share of earnings. For fixed maturities that have had an other-than-temporary impairment loss, the Company amortizes the new cost basis to par or to the estimated future value over the expected remaining life of the security by adjusting the security's yield. F-13 Net investment income on equity securities held for trading includes dividend income and the changes in market value of the securities associated with the variable annuity products sold in the United Kingdom. The returns on these policyholder-directed investments inure to the benefit of the variable annuity policyholders but the underlying funds do not meet the criteria for separate account reporting as provided in SOP 03-1. Accordingly, these assets are reflected in the Company's general account and the returns credited to the policyholders are reflected in interest credited, a component of benefits, losses and loss adjustment expenses. DERIVATIVE INSTRUMENTS Overview The Company utilizes a variety of derivative instruments, including swaps, caps, floors, forwards, futures and options through one of four Company-approved objectives: to hedge risk arising from interest rate, equity market, credit spread including issuer default, price or currency exchange rate risk or volatility; to manage liquidity; to control transaction costs; or to enter into replication transactions. For a further discussion of derivative instruments, see the Derivative Instruments section of Note 4. The Company's derivative transactions are used in strategies permitted under the derivative use plans required by the State of Connecticut and the State of New York insurance departments. Accounting and Financial Statement Presentation of Derivative Instruments and Hedging Activities Derivative instruments are recognized on the consolidated balance sheets at fair value. As of December 31, 2008 and 2007, approximately 95% and 89% of derivatives, respectively, based upon notional values, were priced by valuation models, which utilize independent market data, while the remaining 5% and 11%, respectively, were priced by broker quotations. The derivatives are valued using mid-market level inputs that are predominantly observable in the market place. Inputs used to value derivatives include, but are not limited to, interest swap rates, foreign currency forward and spot rates, credit spreads, interest and equity volatility and equity index levels. The Company performs a monthly analysis on the derivative valuation which includes both quantitative and qualitative analysis. Examples of procedures performed include, but are not limited to, review of pricing statistics and trends, back testing recent trades, analyzing changes in the market environment and monitoring trading volume. This discussion on derivative pricing excludes the GMWB rider and associated reinsurance contracts as well as the embedded derivatives associated with the GMAB product, which are discussed in Note 3. On the date the derivative contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability ("fair-value" hedge), (2) a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset or liability ("cash-flow" hedge), (3) a foreign-currency fair-value or cash-flow hedge ("foreign-currency" hedge), (4) a hedge of a net investment in a foreign operation ("net investment" hedge) or (5) held for other investment and/or risk management purposes, which primarily involve managing asset or liability related risks which do not qualify for hedge accounting. Fair-Value Hedges Changes in the fair value of a derivative that is designated and qualifies as a fair-value hedge, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings with any differences between the net change in fair value of the derivative and the hedged item representing the hedge ineffectiveness. Periodic cash flows and accruals of income/expense ("periodic derivative net coupon settlements") are recorded in the line item of the consolidated statements of operations in which the cash flows of the hedged item are recorded. Cash-Flow Hedges Changes in the fair value of a derivative that is designated and qualifies as a cash-flow hedge are recorded in AOCI and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Gains and losses on derivative contracts that are reclassified from AOCI to current period earnings are included in the line item in the consolidated statements of operations in which the cash flows of the hedged item are recorded. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized capital gains and losses. Periodic derivative net coupon settlements are recorded in the line item of the consolidated statements of operations in which the cash flows of the hedged item are recorded. Foreign-Currency Hedges Changes in the fair value of derivatives that are designated and qualify as foreign-currency hedges are recorded in either current period earnings or AOCI, depending on whether the hedged transaction is a fair-value hedge or a cash-flow hedge, respectively. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized capital gains and losses. Periodic derivative net coupon settlements are recorded in the line item of the consolidated statements of operations in which the cash flows of the hedged item are recorded. F-14 Other Investment and/or Risk Management Activities The Company's other investment and/or risk management activities primarily relate to strategies used to reduce economic risk or replicate permitted investments and do not receive hedge accounting treatment. Changes in the fair value, including periodic derivative net coupon settlements, of derivative instruments held for other investment and/or risk management purposes are reported in current period earnings as net realized capital gains and losses. Hedge Documentation and Effectiveness Testing To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in fair value or cash flow of the hedged item. At hedge inception, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking each hedge transaction. The documentation process includes linking derivatives that are designated as fair-value, cash-flow, foreign-currency or net investment hedges to specific assets or liabilities on the balance sheet or to specific forecasted transactions and defining the effectiveness and ineffectiveness testing methods to be used. The Company also formally assesses both at the hedge's inception and ongoing on a quarterly basis, whether the derivatives that are used in hedging transactions have been and are expected to continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. Hedge effectiveness is assessed using qualitative and quantitative methods. Qualitative methods may include comparison of critical terms of the derivative to the hedged item. Quantitative methods include regression or other statistical analysis of changes in fair value or cash flows associated with the hedge relationship. Hedge ineffectiveness of the hedge relationships are measured each reporting period using the "Change in Variable Cash Flows Method", the "Change in Fair Value Method", the "Hypothetical Derivative Method", or the "Dollar Offset Method". Discontinuance of Hedge Accounting The Company discontinues hedge accounting prospectively when (1) it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; (2) the derivative is dedesignated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the derivative continues to be carried at fair value on the balance sheet with changes in its fair value recognized in current period earnings. When hedge accounting is discontinued because the Company becomes aware that it is not probable that the forecasted transaction will occur, the derivative continues to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in AOCI are recognized immediately in earnings. In other situations in which hedge accounting is discontinued on a cash-flow hedge, including those where the derivative is sold, terminated or exercised, amounts previously deferred in AOCI are reclassified into earnings when earnings are impacted by the variability of the cash flow of the hedged item. Embedded Derivatives The Company purchases and issues financial instruments and products that contain embedded derivative instruments. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated balance sheets, is carried at fair value with changes in fair value reported in net realized capital gains and losses. Credit Risk The Company's derivative counterparty exposure policy 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. For each legal entity of the Company's credit exposures are generally quantified daily, netted by counterparty and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of derivatives exceeds the contractual thresholds which do not exceed $10, except for reinsurance derivatives. The Company also minimizes the credit risk in derivative instruments by entering into transactions with high quality counterparties rated A2/A or better, which are monitored and evaluated by the Company's risk management team and reviewed by senior management. In addition, the compliance unit monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company also maintains a policy of requiring that derivative contracts, other than exchange traded contracts, certain currency forward contracts, and certain embedded derivatives, be governed by an International Swaps and Derivatives Association Master Agreement which is structured by legal entity and by counterparty and permits right of offset. F-15 Product Derivatives The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit ("GMWB") rider. The Company has also assumed, through reinsurance, from HLIKK GMIB, GMWB and GMAB. The fair value of the GMIB, GMWB and GMAB is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. Because of the dynamic and complex nature of these cash flows, best estimate assumptions and stochastic techniques under a variety of market return scenarios are used. Estimating these cash flows involves numerous estimates and subjective judgments including those regarding expected market rates of return, market volatility, correlations of market returns and discount rates. At each valuation date, the Company assumes expected returns based on risk-free rates as represented by the current LIBOR forward curve rates; market volatility assumptions for each underlying index based on a blend of observed market "implied volatility" data and annualized standard deviations of monthly returns using the most recent 20 years of observed market performance correlations of market returns across underlying indices based on actual observed market returns and relationships over the ten years preceding the valuation date; and current risk-free spot rates, as represented by the current LIBOR spot curve, to determine the present value of expected future cash flows produced in the stochastic projection process. In valuing the embedded derivative, the Company attributes to the derivative a portion of the fees collected from the contract holder equal to the present value of future GMWB claims (the "Attributed Fees"). All changes in the fair value of the embedded GMWB derivative are recorded in net realized capital gains and losses. The excess of fees collected from the contract holder over the Attributed Fees are associated with the host variable annuity contract recorded in fee income. The Company has reinsurance arrangements in place to transfer a portion of its risk of loss due to GMWB. These arrangements are recognized as derivatives and carried at fair value in reinsurance recoverables. Changes in the fair value of the reinsurance agreements are recorded in net realized capital gains and losses. See Note 3 for a complete discussion of GMWB reinsurance valuation. SEPARATE ACCOUNTS The Company maintains separate account assets, which are reported at fair value. Separate account liabilities are reported at amounts consistent with separate account assets. Separate accounts include contracts, wherein the policyholder assumes the investment risk. Separate account assets are segregated from other investments and investment income and gains and losses accrue directly to the policyholder. DEFERRED POLICY ACQUISITION COSTS AND PRESENT VALUE OF FUTURE PROFITS The deferred policy acquisition costs asset and present value of future profits ("PVFP") intangible asset (hereafter, referred to collectively as "DAC") related to investment contracts and universal life-type contracts (including variable annuities) are amortized in the same way, over the estimated life of the contracts acquired using the retrospective deposit method. Under the retrospective deposit method, acquisition costs are amortized in proportion to the present value of estimated gross profits ("EGPs"). EGPs are also used to amortize other assets and liabilities on the Company's balance sheet, such as sales inducement assets and unearned revenue reserves ("URR"). Components of EGPs are used to determine reserves for guaranteed minimum death, income and universal life secondary guarantee benefits accounted for and collectively referred to as "SOP 03-1 reserves". At December 31, 2008 and 2007, the carrying value of the Company's DAC asset was $9.9 billion and $8.6 billion, respectively. At December 31, 2008, the sales inducement, unearned revenue reserves, and SOP 03-1 balances were $533 , $1.5 billion and $925 , respectively. At December 31, 2007, the sales inducement, unearned revenue reserves and SOP 03-1 reserves were $459 , $1.0 billion and $552 , respectively. For most contracts, the Company estimates gross profits over a 20 year horizon as estimated profits emerging subsequent to that time-frame are immaterial. The Company uses other amortization bases for amortizing DAC, such as gross costs (net of reinsurance), as a replacement for EGPs when EGPs are expected to be negative for multiple years of the contract's life. Actual gross profits, in a given reporting period, that vary from management's initial estimates result in increases or decreases in the rate of amortization, commonly referred to as a "true-up", which are recorded in the current period. The true-up recorded for the years ended December 31, 2008, 2007 and 2006 was an increase (decrease) to amortization of $138, $(9) and $45, respectively. Products sold in a particular year are aggregated into cohorts. Future gross profits for each cohort are projected over the estimated lives of the underlying contracts, and are, to a large extent, a function of future account value projections for variable annuity products and to a lesser extent for variable universal life products. The projection of future account values requires the use of certain assumptions. The assumptions considered to be important in the projection of future account value, and hence the EGPs, include separate account fund performance, which is impacted by separate account fund mix, less fees assessed against the contract holder's account balance, surrender and lapse rates, interest margin, mortality, and hedging costs. The assumptions are developed as part of an annual process and are dependent upon the Company's current best estimates of future events. The Company's current 20 year separate account return assumption is approximately 7.2% F-16 (after fund fees, but before mortality and expense charges). The Company estimates gross profits using the mean of EGPs derived from a set of stochastic scenarios that have been calibrated to our estimated separate account return. Estimating future gross profits is a complex process requiring considerable judgment and the forecasting of events well into the future. Given the current volatility in the capital markets and the evaluation of other factors, the Company will continually evaluate its separate account return estimation process and may change that process from time to time. The Company plans to complete a comprehensive assumptions study and refine its estimate of future gross profits during the third quarter of each year. Upon completion of an assumption study, the Company revises its assumptions to reflect its current best estimate, thereby changing its estimate of projected account values and the related EGPs in the DAC, sales inducement and unearned revenue reserve amortization models as well as SOP 03-1 reserving models. The DAC asset, as well as the sales inducement asset, unearned revenue reserves and SOP 03-1 reserves are adjusted with an offsetting benefit or charge to income to reflect such changes in the period of the revision, a process known as an "Unlock". An Unlock that results in an after-tax benefit generally occurs as a result of actual experience or future expectations of product profitability being favorable compared to previous estimates. An Unlock that results in an after-tax charge generally occurs as a result of actual experience or future expectations of product profitability being unfavorable compared to previous estimates. In addition to when a comprehensive assumption study is completed, revisions to best estimate assumptions used to estimate future gross profits are necessary when the EGPs in the Company's models fall outside of an independently determined reasonable range of EGPs. The Company performs a quantitative process each quarter to determine the reasonable range of EGPs. This process involves the use of internally developed models, which run a large number of stochastically determined scenarios of separate account fund performance. Incorporated in each scenario are assumptions with respect to lapse rates, mortality and expenses, based on the Company's most recent assumption study. These scenarios are run for the Company's individual variable annuity businesses, the Company's Retirement Plans businesses, and for the Company's individual variable universal life business and are used to calculate statistically significant ranges of reasonable EGPs. The statistical ranges produced from the stochastic scenarios are compared to the present value of EGPs used in the Company's models. If EGPs used in the Company's models fall outside of the statistical ranges of reasonable EGPs, an "Unlock" would be necessary. If EGPs used in the Company's models fall inside of the statistical ranges of reasonable EGPs, the Company will not solely rely on the results of the quantitative analysis to determine the necessity of an Unlock. In addition, the Company considers, on a quarterly basis, other qualitative factors such as product, regulatory and policyholder behavior trends and may also revise EGPs if those trends are expected to be significant and were not or could not be included in the statistically significant ranges of reasonable EGPs. As of December 31, 2008, the EGPs used in the Company's models fell within the statistical ranges of reasonable EGPs. As a result of this statistical test and review of qualitative factors, the Company did not "Unlock" the EGPs used in the Company's models during the fourth quarter of 2008. Unlock and Results As described above, as of September 30 2008, the Company completed a comprehensive study of assumptions underlying EGPs, resulting in an Unlock. The study covered all assumptions, including mortality, lapses, expenses, interest rate spreads, hedging costs, and separate account values, in substantially all product lines. The new best estimate assumptions were applied to the current policy related in-force or account returns to project future gross profits. The after-tax impact on the Company's assets and liabilities as a result of the Unlock during the third quarter of 2008 was as follows:
UNEARNED DEATH AND DAC AND REVENUE INCOME BENEFIT PVFP RESERVES RESERVES (1) --------------------------------------------------------------------------------------- SEGMENT AFTER-TAX (CHARGE) BENEFIT Retail $(648) $18 $(75) Individual Life (29) (12) (3) Retirement Plans (49) -- -- ------- ----- ----- TOTAL $(726) $6 $(78) ------- ----- ----- SALES INDUCEMENT ASSETS TOTAL (2) ------------------------------ ------------------------------------ SEGMENT AFTER-TAX (CHARGE) BENEFIT Retail $(27) $(732) Individual Life -- (44) Retirement Plans -- (49) ----- ------- TOTAL $(27) $(825) ----- -------
(1) As a result of the Unlock, death benefit reserves, in Retail, increased $389, pre-tax, offset by an increase of $273, pre-tax, in reinsurance recoverables. (2) The following were the most significant contributors to the Unlock amounts recorded during the third quarter of 2008: - Actual separate account returns from the period ending July 31, 2007 to September 30, 2008 were significantly below our aggregated estimated return - The Company reduced its 20 year projected separate account return assumption from 7.8% to 7.2% in the U.S. - In Retirement Plans, the Company reduced its estimate of future fees as plans meet contractual size limits("breakpoints") causing a lower fee schedule to apply and the Company increased its assumption for future deposits by existing plan participants. F-17 The after-tax impact on the Company's assets and liabilities as a result of the Unlock during the third quarter of 2007 was as follows:
UNEARNED DEATH AND DAC AND REVENUE INCOME BENEFIT PVFP RESERVES RESERVES (1) --------------------------------------------------------------------------------------- SEGMENT AFTER-TAX (CHARGE) BENEFIT Retail $180 $(5) $(4) Individual Life 24 (8) -- Retirement Plans (9) -- -- Institutional 1 -- -- ------ ----- ---- TOTAL $196 $(13) $(4) ------ ----- ---- SALES INDUCEMENT ASSETS TOTAL (2) ------------------------------ ---------------------------------- SEGMENT AFTER-TAX (CHARGE) BENEFIT Retail $9 $180 Individual Life -- 16 Retirement Plans -- (9) Institutional -- 1 ---- ------ TOTAL $9 $188 ---- ------
(1) As a result of the Unlock, death benefit reserves, in Retail, decreased $4, pre-tax, offset by a decrease of $10, pre-tax, in reinsurance recoverables. (2) The following were the most significant contributors to the Unlock amounts recorded during the third quarter of 2007: - Actual separate account returns were above our aggregated estimated return. - During the third quarter of 2007, the Company estimated gross profits using the mean of EGPs derived from a set of stochastic scenarios that have been calibrated to our estimated separate account return as compared to prior year where we used a single deterministic estimation. The impact of this change in estimation was a benefit of $20, after-tax, for U.S. variable annuities. - As part of its continual enhancement to its assumption setting processes and in connection with its assumption study, the Company included dynamic lapse behavior assumptions. Dynamic lapses reflect that lapse behavior will be different depending upon market movements. The impact of this assumption change along with other base lapse rate changes was an approximate benefit of $40, after-tax, for U.S. variable annuities. An "Unlock" only revises EGPs to reflect current best estimate assumptions. With or without an Unlock, and even after an Unlock occurs, the Company must also test the aggregate recoverability of the DAC and sales inducement assets by comparing the existing DAC balance to the present value of future EGPs. In addition, the Company routinely stress tests its DAC and sales inducement assets for recoverability against severe declines in its separate account assets, which could occur if the equity markets experienced a significant sell-off, as the majority of policyholders' funds in the separate accounts is invested in the equity market. As of December 31, 2008, the Company believed U.S. individual variable annuity EGPs could fall, through a combination of negative market returns, lapses and mortality, by at least 6 % before portions of its DAC and sales inducement assets would be unrecoverable. RESERVE FOR FUTURE POLICY BENEFITS AND UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Liabilities for the Company's group life and disability contracts as well its individual term life insurance policies include amounts for unpaid losses and future policy benefits. Liabilities for unpaid losses include estimates of amounts to fully settle known reported claims as well as claims related to insured events that the Company estimates have been incurred but have not yet been reported. Liabilities for future policy benefits are calculated by the net level premium method using interest, withdrawal and mortality assumptions appropriate at the time the policies were issued. The methods used in determining the liability for unpaid losses and future policy benefits are standard actuarial methods recognized by the American Academy of Actuaries. For the tabular reserves, discount rates are based on the Company's earned investment yield and the morbidity/mortality tables used are standard industry tables modified to reflect the Company's actual experience when appropriate. In particular, for the Company's group disability known claim reserves, the morbidity table for the early durations of claim is based exclusively on the Company's experience, incorporating factors such as gender, elimination period and diagnosis. These reserves are computed such that they are expected to meet the Company's future policy obligations. Future policy benefits are computed at amounts that, with additions from estimated premiums to be received and with interest on such reserves compounded annually at certain assumed rates, are expected to be sufficient to meet the Company's policy obligations at their maturities or in the event of an insured's death. Changes in or deviations from the assumptions used for mortality, morbidity, expected future premiums and interest can significantly affect the Company's reserve levels and related future operations and, as such, provisions for adverse deviation are built into the long-tailed liability assumptions. Certain contracts classified as universal life-type may also include additional death or other insurance benefit features, such as guaranteed minimum death benefits offered with variable annuity contracts or no lapse guarantees offered with universal life insurance contracts. An additional liability is established for these benefits by estimating the expected present value of the benefits in excess of the projected account value in proportion to the present value of total expected assessments. Excess benefits are accrued as a liability as actual assessments are recorded. Determination of the expected value of excess benefits and assessments are based on a range of scenarios and assumptions including those related to market rates of return and F-18 volatility, contract surrender rates and mortality experience. Revisions to assumptions are made consistent with the Company's process for a DAC unlock. See Life Deferred Policy Acquisition Costs and Present value of Future Benefits in this Note. OTHER POLICYHOLDER FUNDS AND BENEFITS PAYABLE The Company has classified its fixed and variable annuities, 401(k), certain governmental annuities, private placement life insurance ("PPLI"), variable universal life insurance, universal life insurance and interest sensitive whole life insurance as universal life-type contracts. The liability for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the financial statement date (commonly referred to as the account value), including credited interest, amounts that have been assessed to compensate the Company for services to be performed over future periods, and any amounts previously assessed against policyholders that are refundable on termination of the contract. The Company has classified its institutional and governmental products, without life contingencies, including funding agreements, certain structured settlements and guaranteed investment contracts, as investment contracts. The liability for investment contracts is equal to the balance that accrues to the benefit of the contract holder as of the financial statement date, which includes the accumulation of deposits plus credited interest, less withdrawals and amounts assessed through the financial statement date. Contract holder funds include funding agreements held by Variable Interest Entities issuing medium-term notes. REVENUE RECOGNITION For investment and universal life-type contracts, the amounts collected from policyholders are considered deposits and are not included in revenue. Fee income for universal life-type contracts consists of policy charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances and are recognized in the period in which services are provided. For the Company's traditional life and group disability products premiums are recognized as revenue when due from policyholders. FOREIGN CURRENCY TRANSLATION Foreign currency translation gains and losses are reflected in stockholders' equity as a component of accumulated other comprehensive income. The Company's foreign subsidiaries' balance sheet accounts are translated at the exchange rates in effect at each year end and income statement accounts are translated at the average rates of exchange prevailing during the year. The national currencies of the international operations are generally their functional currencies. DIVIDENDS TO POLICYHOLDERS Policyholder dividends are paid to certain policies, which are referred to as participating policies. Such dividends are accrued using an estimate of the amount to be paid based on underlying contractual obligations under policies and applicable state laws. Participating life insurance in-force accounted for 7%, 7% and 3% as of December 31, 2008, 2007 and 2006, respectively, of total life insurance in-force. Dividends to policyholders were $13, $11 and $22 for the years ended December 31, 2008, 2007 and 2006, respectively. There were no additional amounts of income allocated to participating policyholders. If limitations exist on the amount of net income from participating life insurance contracts that may be distributed to stockholder's, the policyholder's share of net income on those contracts that cannot be distributed is excluded from stockholder's equity by a charge to operations and a credit to a liability. MUTUAL FUNDS The Company maintains a retail mutual fund operation, whereby the Company, through wholly-owned subsidiaries, provides investment management and administrative services to The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc ("The mutual funds"), families of 62 mutual funds and 1 closed end fund. The Company charges fees to the shareholders of the mutual funds, which are recorded as revenue by the Company. Investors can purchase "shares" in the mutual funds, all of which are registered with the Securities and Exchange Commission ("SEC"), in accordance with the Investment Company Act of 1940. The mutual funds are owned by the shareholders of those funds and not by the Company. As such, the mutual fund assets and liabilities and related investment returns are not reflected in the Company's consolidated financial statements since they are not assets, liabilities and operations of the Company. REINSURANCE Through both facultative and treaty reinsurance agreements, the Company cedes a share of the risks it has underwritten to other insurance companies. Assumed reinsurance refers to the Company's acceptance of certain insurance risks that other insurance companies have underwritten. Reinsurance accounting is followed for ceded and assumed transactions when the risk transfer provisions of SFAS 113, "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts," have been met. To meet risk F-19 transfer requirements, a reinsurance contract must include insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss to the reinsurer. Earned premiums and incurred losses and loss adjustment expenses reflect the net effects of ceded and assumed reinsurance transactions. Included in other assets are prepaid reinsurance premiums, which represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of the reinsurance contracts. Reinsurance recoverables include balances due from reinsurance companies for paid and unpaid losses and loss adjustment expenses and are presented net of an allowance for uncollectible reinsurance. GOODWILL Goodwill represents the excess of costs over the fair value of net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event, as defined in SFAS 142, "Goodwill and Other Intangible Assets" (SFAS 142), has occurred. The goodwill impairment test follows a two step process as defined in SFAS 142. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. This allocation is similar to a purchase price allocation performed in purchase accounting. If the carrying amount of the reporting unit goodwill exceeds the implied goodwill value, an impairment loss shall be recognized in an amount equal to that excess. INCOME TAXES The Company recognizes taxes payable or refundable for the current year and deferred taxes for the tax consequences of differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. See Note 11 for a further discussion of the account for income taxes. CONTINGENCIES Management follows the requirements of SFAS No. 5 "Accounting for Contingencies." This statement requires management to evaluate each contingent matter separately. A loss is recorded if probable and reasonably estimable. Management establishes reserves for these contingencies at the "best estimate", or, if no one number within the range of possible losses is more probable then any other, the Company records an estimated reserve of the low end of the range of losses. 2. SEGMENT INFORMATION The Company has three groups comprised of four reporting segments: The Retail Products Group ("Retail") and Individual Life segments makes up the Individual Markets Group. The Retirement Plans segment represents the Employer Market Group and the Institutional Solutions Group ("Institutional") make up its own group. In 2007, the Company changed its reporting for realized gains and losses, as well as credit risk charges previously allocated between Other and each of the reporting segments. All segment data for prior reporting periods have been adjusted to reflect the current segment reporting. Retail offers individual variable and fixed market value adjusted ("MVA") annuities and retail mutual funds, 529 college savings plans, Canadian and offshore investment products. Retirement Plans provides products and services to corporations pursuant to Section 401(k) and products and services to municipalities and not-for-profit organizations under Section 457 and 403(b) of the IRS code. Retirement Plans also offers mutual funds to institutional investors. Institutional provides customized investment, insurance, and income solutions to select markets. Products include stable value contracts, institutional annuities (primarily terminal funding cases), variable Private Placement Life Insurance ("PPLI") owned by corporations and high net worth individuals, and mutual funds owned by institutional investors. Furthermore, Institutional offers individual products including structured settlements, single premium immediate annuities, and longevity assurance. Individual Life sells a variety of life insurance products, including variable universal life, universal life, interest sensitive whole life and term life. F-20 The Company includes in an Other category its leveraged PPLI product line of business; corporate items not directly allocated to any of its reporting segments; intersegment eliminations, GMIB, GMDB, GMWB, and GMAB reinsurance assumed from Hartford Life Insurance KK ("HLIKK"), a related party and subsidiary of Hartford Life, certain group benefit products, including group life and group disability insurance that is directly written by the Company and for which nearly half is ceded to its parent, HLA, as well as operations in the U.K. and a 50% owned joint venture in Brazil. The Company's European operation, Hartford Life Limited, began selling unit-linked investment bonds and pension products in the United Kingdom in April 2005. Unit-linked bonds and pension products are similar to variable annuities marketed in the United States and Japan, and are distributed through independent financial advisors. Hartford Life Limited established its operations in Dublin, Ireland with a branch office in London to help market and service its business in the United Kingdom. . The Brazil joint venture operates under the name Icatu-Hartford and distributes pension, life insurance and other insurance and savings products through broker-dealer organizations and various partnerships. The accounting policies of the reportable operating segments are the same as those described in the summary of significant accounting policies in Note 1. The Company evaluates performance of its segments based on revenues, net income and the segment's return on allocated capital. Each operating segment is allocated corporate surplus as needed to support its business. The following tables represent summarized financial information concerning the Company's segments.
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 --------------------------------------------------------------------------------------------------------- REVENUES BY PRODUCT LINE REVENUES LIFE Earned premiums, fees, and other considerations RETAIL Individual annuity: Individual variable annuity $1,943 $2,225 $1,957 Fixed / MVA Annuity (5) 1 3 Other 3 -- -- Retail mutual funds 736 751 580 -------- -------- -------- TOTAL RETAIL 2,677 2,977 2,540 INDIVIDUAL LIFE Total Individual Life 792 771 790 Total Individual Markets Group 3,469 3,748 3,330 RETIREMENT PLANS 401(k) 290 187 160 403(b)/457 48 55 52 -------- -------- -------- TOTAL RETIREMENT PLANS 338 242 212 INSTITUTIONAL IIP 929 1,018 630 PPLI 118 224 103 -------- -------- -------- TOTAL INSTITUTIONAL 1,047 1,242 733 OTHER 285 221 153 -------- -------- -------- TOTAL LIFE PREMIUMS, FEES, AND OTHER CONSIDERATIONS 5,139 5,453 4,428 -------- -------- -------- Net investment income 2,342 3,057 2,768 Net realized capital losses (5,763) (934) (298) -------- -------- -------- TOTAL LIFE 1,718 7,576 6,898 -------- -------- --------
F-21
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 ---------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) Retail (1,248) $809 $526 Individual Life (47) 175 143 Retirement Plans (157) 61 101 Institutional (504) 12 72 Other (1,598) (171) 31 --------- -------- -------- TOTAL NET INCOME $ (3,554) $ 886 $ 873 --------- -------- -------- NET INVESTMENT INCOME Retail 755 $810 $834 Individual Life 308 331 293 Retirement Plans 342 355 326 Institutional 988 1,227 987 Other (51) 334 328 --------- -------- -------- TOTAL NET INVESTMENT INCOME $ 2,342 $ 3,057 $ 2,768 --------- -------- -------- AMORTIZATION OF DEFERRED POLICY ACQUISITION AND PRESENT VALUE OF FUTURE PROFITS Retail 1,347 $404 $977 Individual Life 166 117 235 Retirement Plans 91 58 (4) Institutional 19 23 32 Other (3) 3 (1) --------- -------- -------- TOTAL AMORTIZATION OF DAC $ 1,620 $ 605 $ 1,239 --------- -------- -------- INCOME TAX EXPENSE (BENEFIT) Retail (894) $213 $24 Individual Life (36) 85 64 Retirement Plans (132) 18 39 Institutional (283) (2) 28 Other (836) (59) 25 --------- -------- -------- TOTAL INCOME TAX EXPENSE $ (2,181) $ 255 $ 180 --------- -------- --------
DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------- ASSETS Retail $97,453 $136,604 Individual Life 13,347 15,277 Retirement Plans 22,668 28,162 Institutional 59,638 77,988 Other 14,753 11,331 ----------- ----------- TOTAL ASSETS $ 207,859 $ 269,362 ----------- ----------- DAC Retail $5,802 $5,317 Individual Life 3,000 2,411 Retirement Plans 877 658 Institutional 156 143 Other 109 72 ----------- ----------- TOTAL DAC $9,944 $ 8,601 ----------- ----------- RESERVE FOR FUTURE POLICY BENEFITS Retail $1,337 $945 Individual Life 726 685 Retirement Plans 313 333 Institutional 7,467 6,657 Other 759 822 ----------- ----------- TOTAL RESERVE FOR FUTURE POLICY BENEFITS $10,602 $ 9,442 ----------- ----------- OTHER POLICYHOLDER FUNDS Retail $22,122 $15,391 Individual Life 5,553 5,210 Retirement Plans 6,437 5,591 Institutional 11,249 12,455 Other 8,899 4,966 ----------- ----------- TOTAL OTHER POLICYHOLDER FUNDS $ 54,260 $ 43,613 ----------- -----------
F-22 3. FAIR VALUE MEASUREMENTS The following financial instruments are carried at fair value in the Company's consolidated financial statements: fixed maturities, equity securities, short term investments, freestanding and embedded derivatives, and separate account assets. These fair value disclosures include information regarding the valuation of the Company's guaranteed benefits products and the impact of the adoption of SFAS 157, followed by the fair value measurement and disclosure requirements of SFAS 157. ACCOUNTING FOR GUARANTEED BENEFITS OFFERED WITH VARIABLE ANNUITIES Many of the variable annuity contracts issued or reinsured by the Company offer various guaranteed minimum death, withdrawal, income and accumulation benefits. Those benefits are accounted for under SFAS 133 or AICPA Statement of Position No. 03-1 "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"). Guaranteed minimum benefits and reinsurance of guaranteed minimum benefits often meet the definition of an embedded derivative under SFAS 133 as they have notional amounts (the guaranteed balance) and underlyings (the investment fund options), they require no initial net investment and they have terms that require or permit net settlement. However, certain guaranteed minimum benefits settle only upon a single insurable event, such as death (guaranteed minimum death benefits or "GMDB") or living (life contingent portion of guaranteed minimum withdrawal benefits or "GMWB"), and as such are outside of the scope of SFAS 133 under the "insurance contract exception". Guaranteed minimum benefits that are outside of the scope of SFAS 133 or do not meet the net settlement requirements of SFAS 133 are accounted for as insurance benefits under SOP 03-1. Guaranteed Benefits Accounted for at Fair Value Prior to SFAS 157 The non-life contingent portion of GMWBs issued by the Company meet the definition of an embedded derivative under SFAS 133, and as such are recorded at fair value with changes in fair value recorded in net realized capital gains (losses) in net income. In bifurcating the embedded derivative, the Company attributes to the derivative a portion of total fees, in basis points, to be collected from the contract holder (the "Attributed Fees"). Attributed Fees are set equal to the present value of future claims, in basis points, (excluding margins for risk) expected to be paid for the guaranteed living benefit embedded derivative at the inception of the contract. The excess of total fees collected from the contract holder over the Attributed Fees are associated with the host variable annuity contract and are recorded in fee income. In subsequent valuations, both the present value of future claims expected to be paid and the present value of Attributed Fees expected to be collected are revalued based on current market conditions and policyholder behavior assumptions. The difference between each of the two components represents the fair value of the embedded derivative. GMWBs provide the policyholder with a guaranteed remaining balance ("GRB") if the account value is reduced to a contractually specified minimum level, through a combination of market declines and withdrawals. The GRB is generally equal to premiums less withdrawals. If the GRB exceeds the account value for any policy, the contract is "in-the-money" by the difference between the GRB and the account value. A GMWB contract is 'in the money' if the contract holder's guaranteed remaining benefit becomes greater than the account value. As of December 31, 2008 and December 31, 2007, 88% and 19%, respectively, of all unreinsured U.S. GMWB 'in-force' contracts were 'in the money'. For contracts that were 'in the money' the Company's exposure to the guaranteed remaining benefit, after reinsurance, as of December 31, 2008 and December 31, 2007, was $ 7.4 billion and $139, respectively. However, the only ways the GMWB contract holder can monetize the excess of the GRB over the account value of the contract is upon death or if their account value is reduced to a contractually specified minimum level, through a combination of a series of withdrawals that do not exceed a specific percentage of the premiums paid per year and market declines. If the account value is reduced to the contractually specified minimum level, the contract holder will receive an annuity equal to the remaining GRB and for the Company's "life-time" GMWB products payments can continue beyond the GRB. As the amount of the excess of the GRB over the account value can fluctuate with equity market returns on a daily basis and the ultimate lifetime GMWB payments can exceed the GRB, the ultimate amount to be paid by the Company, if any, is uncertain and could be significantly more or less than $ 7.4 billion. Significant declines in equity markets since December 31, 2008 have significantly increased our exposure to these guarantees. Certain GMWBs, GMIBs and guaranteed minimum accumulation benefits ("GMAB") reinsured by the Company meet the definition a freestanding derivative, even though in-form they are reinsurance. Accordingly, the following GMWB, GMIB and GMAB reinsurance agreements are recorded at fair value on the Company's balance sheet, with prospective changes in fair value recorded in net realized capital gains (losses) in net income: - REINSURED GMIB: Effective July 31, 2006, a subsidiary of the Company, Hartford Life and Annuity Insurance Company ("HLAI"), entered into a reinsurance agreement with Hartford Life, Insurance KK ("HLIKK"), a wholly owned Japanese subsidiary of Hartford Life, Inc. ("Hartford Life"). Through this agreement, HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force, as of July 31, 2006, and prospective GMIB riders issued by HLIKK on its variable annuity business except for policies and GMIB riders issued prior to April 1, 2005. The agreement also includes GMDB on covered contracts that have an associated GMIB rider. The GMDB portion of the rider is accounted for under SOP 03-1. F-23 - REINSURED GMAB: Effective September 30, 2007, HLAI entered into another reinsurance agreement where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force and prospective GMAB riders issued by HLIKK on certain of its variable annuity business. The GMAB provides the policyholder with the GRB if the account value is less than premiums after an accumulation period, generally 10 years, and if the account value has not dropped below 80% of the initial deposit, at which point a GMIB must either be exercised or the policyholder can elect to surrender 80% of the initial deposit without a surrender charge. The GRB is generally equal to premiums less surrenders. During the fourth quarter of 2008, nearly all contractholder account values had dropped below 80% of the initial deposit, at which point the GMIB was exercised. - REINSURED GMWB: Effective February 29, 2008, HLAI entered into a reinsurance agreement where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force and prospective GMWB riders issued by HLIKK on certain variable annuity business. The contracts underlying the GMWB, GMIB and GMAB reinsurance contracts are 'in the money' if the contract holder's GRB is greater than the account value. For contracts that were 'in the money' the Company's exposure related to GMWB, GMIB and GMAB, as of December 31, 2008 and December 31, 2007, was $4.2 billion and $130, respectively. However, for GMIB's, the only way the contract holder can monetize the excess of the GRB over the account value of the contract is upon annuitization and the amount to be paid by the Company will either be in the form of a lump sum, or over the annuity period for certain GMIB's or over the annuity period only for other GMIB's. For GMAB's the only way that the contract holder can monetize the excess of the GRB over the account value of the contract is through a lump sum payment after a ten year waiting period. As the amount of the excess of the GRB over the account value can fluctuate with equity market returns on a daily basis, the ultimate amount to be paid by the Company, if any, is uncertain and could be significantly more or less than $4.2 billion. Significant declines in equity markets since December 31, 2008 have significantly increased our exposure to these guarantees. Due to the significance of the non-observable inputs associated with pricing the reinsurance of the GMWB, GMIB and GMAB products that are free standing derivatives, the initial difference between the transaction price and the modeled value was recorded in additional paid-in capital because the reinsurance arrangements are between entities that are under common control of The Hartford Financial Services Group, Inc. ("The Hartford"). Derivatives That Hedge Capital Markets Risk for Guaranteed Minimum Benefits Accounted for as Derivatives Changes in capital markets or policyholder behavior may increase or decrease the Company's exposure to benefits under the guarantees. The Company uses derivative transactions, including GMWB reinsurance (described below) which meets the definition of a derivative under SFAS 133 and customized derivative transactions, to mitigate some of that exposure. Derivatives are recorded at fair value with changes in fair value recorded in net realized capital gains (losses) in net income. GMWB Reinsurance The Company has entered into reinsurance arrangements to offset a portion of its exposure to the GMWB for the remaining lives of covered contracts. Reinsurance contracts covering GMWB are considered freestanding derivatives that are recorded at fair value, with changes in fair value recorded in net realized gains/losses in net income. Customized Derivatives The Company has entered into customized swap contracts to hedge certain risk components for the remaining term of certain blocks of non-reinsured U.S. GMWB riders. These customized derivative contracts provide protection from capital markets risks based on policyholder behavior assumptions specified by the Company at the inception of the derivative transactions. Due to the significance of the non-observable inputs associated with pricing swap contracts entered into in 2007, the initial difference between the transaction price and modeled value of $51 was deferred in accordance with EITF 02-3 and included in other assets in the condensed consolidated balance sheets. The swap contract entered into in 2008 resulted in a loss at inception of approximately $20 before the effects of DAC amortization and income taxes, as market values on similar instruments were lower than the transaction price. Other Derivative Instruments The Company uses other hedging instruments to hedge its unreinsured GMWB exposure. These instruments include interest rate futures and swaps, variance swaps, S&P 500 and NASDAQ index put options and futures contracts. The Company also uses EAFE Index swaps to hedge GMWB exposure to international equity markets. The Company also utilizes option contracts as well as futures contracts to partially economically hedge the statutory reserve impact of equity risk arising primarily from GMDB and GMWB obligations against a decline in the equity markets. F-24 ADOPTION OF SFAS 157 FOR GUARANTEED BENEFITS OFFERED WITH VARIABLE ANNUITIES THAT ARE REQUIRED TO BE FAIR VALUED Fair values for GMWB embedded derivatives, reinsured GMWB, GMIB and GMAB freestanding derivatives, reinsurance of GMWB and customized derivatives that hedge certain equity markets exposure for GMWB contracts are calculated based upon internally developed models because active, observable markets do not exist for those items. Below is a description of the Company's fair value methodologies for guaranteed benefit liabilities, the related reinsurance and customized derivatives, all accounted for under SFAS 133, prior to the adoption of SFAS 157 and subsequent to adoption of SFAS 157. Pre-SFAS 157 Fair Value Prior to January 1, 2008, the Company used the guidance prescribed in SFAS 133 and other related accounting literature on fair value which represented the amount for which a financial instrument could be exchanged in a current transaction between knowledgeable, unrelated willing parties. However, under that accounting literature, when an estimate of fair value was made for liabilities where no market observable transactions existed for that liability or similar liabilities, market risk margins were only included in the valuation if the margin was identifiable, measurable and significant. If a reliable estimate of market risk margins was not obtainable, the present value of expected future cash flows under a risk neutral framework, discounted at the risk free rate of interest, was the best available estimate of fair value in the circumstances ("Pre-SFAS 157 Fair Value"). The Pre-SFAS 157 Fair Value was calculated based on actuarial and capital market assumptions related to projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior such as lapses, fund selection, resets and withdrawal utilization (for the customized derivatives, policyholder behavior is prescribed in the derivative contract). Because of the dynamic and complex nature of these cash flows, best estimate assumptions and a Monte Carlo stochastic process involving the generation of thousands of scenarios that assume risk neutral returns consistent with swap rates and a blend of observable implied index volatility levels were used. Estimating these cash flows involved numerous estimates and subjective judgments including those regarding expected markets rates of return, market volatility, correlations of market index returns to funds, fund performance, discount rates and policyholder behavior. At each valuation date, the Company assumed expected returns based on: - risk-free rates as represented by the current LIBOR forward curve rates; - forward market volatility assumptions for each underlying index based primarily on a blend of observed market "implied volatility" data; - correlations of market returns across underlying indices based on actual observed market returns and relationships over the ten years preceding the valuation date; - three years of history for fund regression; and - current risk-free spot rates as represented by the current LIBOR spot curve to determine the present value of expected future cash flows produced in the stochastic projection process. As many guaranteed benefit obligations are relatively new in the marketplace, actual policyholder behavior experience is limited. As a result, estimates of future policyholder behavior are subjective and based on analogous internal and external data. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions for this component of the fair value model. Fair Value Under SFAS 157 The Company's SFAS 157 fair value is calculated as an aggregation of the following components: Pre-SFAS 157 Fair Value; Actively-Managed Volatility Adjustment; Credit Standing Adjustment; Market Illiquidity Premium and Behavior Risk Margin. The resulting aggregation is reconciled or calibrated, if necessary, to market information that is, or may be, available to the Company, but may not be observable by other market participants, including reinsurance discussions and transactions. The Company believes the aggregation of each of these components, as necessary and as reconciled or calibrated to the market information available to the Company, results in an amount that the Company would be required to transfer, for a liability or receive for an asset, to market participants in an active liquid market, if one existed, for those market participants to assume the risks associated with the guaranteed minimum benefits and the related reinsurance and customized derivatives required to be fair valued. The SFAS 157 fair value is likely to materially diverge from the ultimate settlement of the liability as the Company believes settlement will be based on our best estimate assumptions rather than those best estimate assumptions plus risk margins. In the absence of any transfer of the guaranteed benefit liability to a third party, the release of risk margins is likely to be reflected as realized gains in future periods' net income. Each of the components described below are unobservable in the market place and require subjectivity by the Company in determining their value. - ACTIVELY-MANAGED VOLATILITY ADJUSTMENT. This component incorporates the basis differential between the observable index implied volatilities used to calculate the Pre-SFAS 157 component and the actively-managed funds underlying the variable annuity product. The Actively-Managed Volatility Adjustment is calculated using historical fund and weighted index volatilities. F-25 - CREDIT STANDING ADJUSTMENT. This component makes an adjustment that market participants would make to reflect the risk that guaranteed benefit obligations or the GMWB reinsurance recoverables will not be fulfilled ("nonperformance risk"). SFAS 157 explicitly requires nonperformance risk to be reflected in fair value. The Company calculates the Credit Standing Adjustment by using default rates provided by rating agencies, adjusted for market recoverability, reflecting the long-term nature of living benefit obligations and the priority of payment on these obligations versus long-term debt. - MARKET ILLIQUIDITY PREMIUM. This component makes an adjustment that market participants would require to reflect that guaranteed benefit obligations are illiquid and have no market observable exit prices in the capital markets. - BEHAVIOR RISK MARGIN. This component adds a margin that market participants would require for the risk that the Company's assumptions about policyholder behavior used in the Pre-SFAS 157 model could differ from actual experience. The Behavior Risk Margin is calculated by taking the difference between adverse policyholder behavior assumptions and the best estimate assumptions used in the Pre-SFAS 157 model using interest rate and volatility assumptions that the Company believes market participants would use in developing risk margins. SFAS 157 Transition The Company applied the provisions of SFAS 157 prospectively to financial instruments that are recorded at fair value including guaranteed living benefits that are required to be fair valued. The Company also applied the provisions of SFAS 157 using limited retrospective application (i.e., cumulative effect adjustment through opening retained earnings) to certain customized derivatives historically measured at fair value in accordance with EITF 02-3. The impact on January 1, 2008 of adopting SFAS 157 for guaranteed benefits accounted for under SFAS 133 and the related reinsurance, was a reduction to net income of $311, after the effects of DAC amortization and income taxes. Moreover, the adoption of SFAS 157 has resulted in lower variable annuity fee income for new business issued in 2008 as Attributed Fees have increased consistent with incorporating additional risk margins and other indicia of "exit value" in the valuation of the embedded derivative. The level of Attributed Fees for new business each quarter also depends on the level of equity index volatility, as well as other factors, including interest rates. As equity index volatility has risen, interest rates have declined, and the Company adopted SFAS 157, the fees ascribed to the new business cohorts issued in 2008 have risen to levels above the rider fee for most products. The extent of any excess of Attributed Fee over rider fee will vary by product. The Company also recognized a decrease in opening retained earnings of $51 in relation to the loss deferred in accordance with EITF 02-3 on customized derivatives purchased in 2007, and used to hedge a portion of the U.S. GMWB risk. In addition, the change in value of the customized derivatives due to the initial adoption of SFAS 157 of $41 was recorded as an increase in opening retained earnings with subsequent changes in fair value recorded in net realized capital gains (losses) in net income. After amortization of DAC and the effect of income taxes, the impact on opening retained earnings is a decrease of $3. The Company's adoption of SFAS 157 did not materially impact the fair values of other financial instruments, including, but not limited to, other derivative instruments used to hedge guaranteed minimum benefits. The SFAS 157 transition amounts, before the effects of DAC amortization and income taxes, as of January 1, 2008 are shown below by type of guaranteed benefit liability and derivative asset.
TRANSITION SFAS 157 PRE-SFAS 157 ADJUSTMENT GAIN FAIR VALUE FAIR VALUE (LOSS) ASSET (LIABILITY) ASSET (LIABILITY) [BEFORE DAC AND TAX] --------------------------------------------------------------------------------------------------------------------------------- GUARANTEED BENEFITS U.S. GUARANTEED MINIMUM WITHDRAWAL BENEFITS $(1,114) $(553) $(561) NON-LIFE CONTINGENT PORTION OF "FOR LIFE" GUARANTEED MINIMUM WITHDRAWAL BENEFITS U.S. Riders (319) (154) (165) International Riders (17) (7) (10) --------- ------- ------- TOTAL (336) (161) (175) --------- ------- ------- REINSURED GUARANTEED LIVING BENEFITS Guaranteed Minimum Income Benefits (220) (72) (148) Guaranteed Minimum Accumulation Benefits (22) 2 (24) --------- ------- ------- TOTAL (242) (70) (172) --------- ------- ------- TOTAL GUARANTEED BENEFITS (1,692) (784) (908) --------- ------- ------- GMWB REINSURANCE 238 128 110 --------- ------- ------- TOTAL $(1,454) $(656) $(798) --------- ------- -------
F-26 The transition adjustment as of January 1, 2008 was comprised of the following amounts by transition component:
TRANSITION ADJUSTMENT GAIN (LOSS) [BEFORE TAX AND DAC AMORTIZATION] -------------------------------------------------------------------------------- Actively-Managed Volatility Adjustment $(100) Credit Standing Adjustment 5 Market Illiquidity Premium (262) Behavior Risk Margin (441) ------- TOTAL SFAS 157 TRANSITION ADJUSTMENT BEFORE TAX AND DAC AMORTIZATION $(798) -------
Fair Value Disclosures The following section applies the SFAS 157 fair value hierarchy and disclosure requirements to the Company's financial instruments that are carried at fair value. SFAS 157 establishes a fair value hierarchy that prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2, and 3). Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include highly liquid U.S. Treasury securities, money market funds, certain mortgage-backed securities, and exchange traded equity and derivative securities. Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most debt securities and some preferred stocks are model priced by vendors using observable inputs and are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with observable market inputs, including interest rate, foreign currency and certain credit swap contracts. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities such as highly structured and/or lower quality asset-backed securities ("ABS") and commercial mortgage- backed securities ("CMBS"), including ABS backed by sub-prime loans, and private placement debt and equity securities. Embedded derivatives and complex derivatives securities, including equity derivatives, longer dated interest rate swaps and certain complex credit derivatives are also included in Level 3. Because Level 3 fair values, by their nature, contain unobservable market inputs as there is no observable market for these assets and liabilities, considerable judgment is used to determine the SFAS 157 Level 3 fair values. Level 3 fair values represent the Company's best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. F-27 The following table presents the Company's assets and liabilities that are carried at fair value by SFAS 157 hierarchy levels, as of December 31, 2008:
QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT SIGNIFICANT IDENTICAL OBSERVABLE UNOBSERVABLE ASSETS INPUTS INPUTS TOTAL (LEVEL 1) (LEVEL 2) (LEVEL 3) --------------------------------------------------------------------------------------------------------------------------------- ASSETS ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS Fixed maturities, available-for-sale $39,560 $3,502 $27,316 $8,742 Equity securities, held for trading 1,634 1,634 -- -- Equity securities, available-for-sale 434 148 227 59 Other investments Other derivatives used to hedge U.S. GMWB 600 -- 13 587 Other derivatives (1) 522 -- 588 (66) ----------- ----------- --------- --------- TOTAL OTHER INVESTMENTS 1,122 -- 601 521 Short-term investments 5,742 4,030 1,712 -- Reinsurance recoverables 1,302 -- -- 1,302 Separate account assets (2),(5) 126,367 94,394 31,187 786 ----------- ----------- --------- --------- TOTAL ASSETS ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS $176,161 $103,708 $61,043 $11,410 ----------- ----------- --------- --------- LIABILITIES ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS Other policyholder funds and benefits payable U.S. GMWB $(6,526) $ -- $ -- $(6,526) U.K. GMWB (64) -- -- (64) Reinsured Japan GMIB (2,581) -- -- (2,581) Reinsured Japan GMAB (1) -- -- (1) Reinsured Japan GMWB (34) -- -- (34) Institutional Notes (41) -- -- (41) Equity Linked Notes (8) -- -- (8) Total other policyholder funds and benefits payable (9,255) -- -- (9,255) Customized derivatives used to hedge U.S. GMWB 941 -- -- 941 Other derivatives used to hedge U.S. GMWB 1,123 -- 14 1,109 Macro hedge program 137 -- -- 137 Other investments 5 -- 173 (168) Total Other liabilities 2,206 -- 187 2,019 Consumer notes (4) (5) -- -- (5) ----------- ----------- --------- --------- TOTAL LIABILITIES ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS $(7,054) -- $187 $(7,241) ----------- ----------- --------- ---------
(1) Includes over-the-counter derivative instruments in a net asset value position which may require the counterparty to pledge collateral to the Company. At December 31, 2008, $507 was the amount of cash collateral liability that was netted against the derivative asset value on the condensed consolidated balance sheet, and is excluded from the table above. See footnote 3 below for derivative liabilities. (2) Pursuant to the conditions set forth in SOP 03-1, the value of separate account liabilities is set to equal the fair value for separate account assets. (3) Includes over-the-counter derivative instruments in a net negative market value (derivative liability). In the SFAS 157 Level 3 roll forward table included below in this Note, the derivative asset and liability are referred to as "freestanding derivatives" and are presented on a net basis. (4) Represents embedded derivatives associated with non-funding agreement-backed consumer equity-linked notes. (5) Excludes approximately $3 billion of investment sales receivable net of investment purchases payable that are not subject to SFAS 157. In many situations, inputs used to measure the fair value of an asset or liability position may fall into different levels of the fair value hierarchy. In these situations, the Company will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. In most cases, both observable (e.g., changes in interest rates) and unobservable (e.g., changes in risk assumptions) inputs are used in the determination of fair values that the F-28 Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. Determination of fair values The valuation methodologies used to determine the fair values of assets and liabilities under the "exit price" notion of SFAS 157 reflect market-participant objectives and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines fair value based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company's credit standing, liquidity and, where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments listed in the above table. Fixed Maturity, Short-Term and Equity Securities, Available-for-Sale The fair value for fixed maturity, short term, and equity securities, available-for-sale, is determined by management after considering one of three primary sources of information: third party pricing services, independent broker quotations, or pricing matrices. Security pricing is applied using a "waterfall" approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flows and prepayments speeds. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, third party pricing services normally derive the security prices through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of ABS, collateralized mortgage obligations ("CMOs"), and mortgage-backed securities ("MBS") are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. Actual prepayment experience may vary from these estimates. Prices from third party pricing services are often unavailable for securities that are rarely traded or traded only in privately negotiated transactions. As a result, certain securities are priced via independent broker quotations which utilize inputs that may be difficult to corroborate with observable market based data. Additionally, the majority of these independent broker quotations are non-binding. A pricing matrix is used to price securities for which the Company is unable to obtain either a price from a third party pricing service or an independent broker quotation. The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, as assigned by a knowledgeable private placement broker, incorporate the issuer's credit rating and a risk premium, if warranted, due to the issuer's industry and the security's time to maturity. The issuer-specific yield adjustments, which can be positive or negative, are updated twice per year, as of June 30 and December 31, by the private placement broker and are intended to adjust security prices for issuer-specific factors. The Company assigns a credit rating to these securities based upon an internal analysis of the issuer's financial strength. The Company performs a monthly analysis on the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of third party pricing services methodologies, review of pricing statistics and trends, back testing recent trades, and monitoring of trading volumes. In addition, the Company ensures whether prices received from independent brokers represent a reasonable estimate of fair value through the use of internal and external cash flow models developed based on spreads, and when available, market indices. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly. At December 31, 2008, the Company made fair value determinations which lowered prices received from third party pricing services and brokers by a total of $92. The securities adjusted had an amortized cost and fair value after adjustment of $472 and $165, respectively, and were primarily CMBS securities. In accordance with SFAS 157, the Company has analyzed the third party pricing services valuation methodologies and related inputs, and has also evaluated the various types of securities in its investment portfolio to determine an appropriate SFAS 157 fair value hierarchy level based upon trading activity and the observability of market inputs. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the inputs used in pricing the securities are market observable. Due to a general lack of transparency in the process that the brokers use to develop prices, most valuations that are based on brokers' prices are classified as Level 3. Some valuations may be classified as Level 2 if the price can be corroborated. Internal matrix-priced securities, primarily consisting of certain private placement debt, are also classified as Level 3. The F-29 matrix pricing of certain private placement debt includes significant non-observable inputs, the internally determined credit rating of the security and an externally provided credit spread. The following table presents the fair value of the significant asset sectors within the SFAS 157 Level 3 securities classification as of December 31, 2008.
% OF TOTAL FAIR VALUE FAIR VALUE -------------------------------------------------------------------------------------------------- ABS Below Prime 1,405 16.0% Collateralized Loan Obligations (CLOs) 1,570 17.8% Other 443 5.0% Corporate Matrix priced private placements 3,038 34.5% Other 1,383 15.7% Commercial mortgage-backed securities ("CMBS") 659 7.5% Preferred stock 48 0.6% Other 255 2.9% ------- ------- TOTAL LEVEL 3 SECURITIES 8,801 100.0% ------- -------
- ABS below prime primarily represents sub-prime and Alt-A securities which are classified as Level 3 due to the lack of liquidity in the market. - ABS CLOs represent senior secured bank loan CLOs which are primarily priced by independent brokers. - ABS Other primarily represents broker priced securities. - Corporate-matrix priced represents private placement securities that are thinly traded and priced using a pricing matrix which includes significant non-observable inputs. - Corporate- other primarily represents broker-priced public securities and private placement securities qualified for sale under rule 144a and long-dated fixed maturities where the term of significant inputs may not be sufficient to be deemed observable. - CMBS primarily represents CMBS bonds and commercial real estate collateralized debt obligations ("CRE CDOs") which were either fair valued by the Company or by independent brokers due to the illiquidity of this sector. - Preferred stock primarily represents lower quality preferred securities that are less liquid due to market conditions. DERIVATIVE INSTRUMENTS, INCLUDING EMBEDDED DERIVATIVES WITHIN INVESTMENTS Derivative instruments are reported on the consolidated balance sheets at fair value and are reported in Other Investments and Other Liabilities. Embedded derivatives are reported with the host instruments on the consolidated balance sheet. Derivative instruments are fair valued using pricing valuation models, which utilize market data inputs or independent broker quotations. Excluding embedded derivatives, as of December 31, 2008, 95% of derivatives, based upon notional values, were priced by valuation models, which utilize independent market data. The remaining derivatives were priced by broker quotations. The derivatives are valued using mid-market inputs that are predominantly observable in the market. Inputs used to value derivatives include, but are not limited to, interest swap rates, foreign currency forward and spot rates, credit spreads and correlations, interest and equity volatility and equity index levels. The Company performs a monthly analysis on derivative valuations which includes both quantitative and qualitative analysis. Examples of procedures performed include, but are not limited to, review of pricing statistics and trends, back testing recent trades, analyzing the impacts of changes in the market environment and review of changes in market value for each derivative including those derivatives priced by brokers. Derivative instruments classified as Level 1 include futures and certain option contracts which are traded on active exchange markets. Derivative instruments classified as Level 2 primarily include interest rate, currency and certain credit default swaps. The derivative valuations are determined using pricing models with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Derivative instruments classified as Level 3 include complex derivatives, such as equity options and swaps, interest rate derivatives which have interest rate optionality, certain credit default swaps, and long-dated interest rate swaps. Also included in Level 3 classification for derivatives are customized equity swaps that partially hedge the U.S. GMWB liabilities. Additional information on the customized transactions is provided under the "Accounting for Guaranteed Benefits Offered With Variable Annuities" section of this Note 3. These derivative instruments are valued using pricing models which utilize both observable and unobservable inputs and, to a lesser extent, broker quotations. A derivative instrument containing F-30 Level 1 or Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has as least one significant Level 3 input. The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated assets and liabilities. Therefore the realized and unrealized gains and losses on derivatives reported in Level 3 may not reflect the offsetting impact of the realized and unrealized gains and losses of the associated assets and liabilities. U.S. GMWB REINSURANCE DERIVATIVE The fair value of the U.S. GMWB reinsurance derivative is calculated as an aggregation of the components described in the SFAS 157 Transition section of this Note 3. The fair value of the U.S. GMWB reinsurance derivative is modeled using significant unobservable policyholder behavior inputs, identical to those used in calculating the underlying liability such as lapses, fund selection, resets and withdrawal utilization, and risk margins. As a result, the U.S. GMWB reinsurance derivative is categorized as Level 3. SEPARATE ACCOUNT ASSETS Separate account assets are primarily invested in mutual funds but also have investments in fixed maturity and equity securities. The separate account investments are valued in the same manner, and using the same pricing sources and inputs, as the fixed maturity, equity security, and short-term investments of the Company. Open-ended mutual funds are included in Level 1. Most debt securities and short-term investments are included in Level 2. Level 3 assets include less liquid securities, such as highly structured and/or lower quality ABS and CMBS, ABS backed by sub-prime loans, and any investment priced solely by broker quotes. GMWB EMBEDDED DERIVATIVES AND REINSURED GMWB, GMAB AND GMIB FREE-STANDING DERIVATIVES (IN OTHER POLICYHOLDER FUNDS AND BENEFITS PAYABLE) The fair value of GMWB embedded derivative and reinsured GMWB, GMAB and GMIB free-standing derivatives, reported in Other Policyholder Funds and Benefits Payable on the Company's consolidated balance sheet, are calculated as an aggregation of the components described in the SFAS 157 Transition section of this Note 3. The fair value of those derivatives are modeled using significant unobservable policyholder behavior inputs, such as lapses, fund selection, resets and withdrawal utilization, and risk margins. As a result, the GMWB embedded derivatives and reinsured GMWB, GMAB and GMAB free-standing derivatives are categorized as Level 3. Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) The tables below provide a fair value rollforward for the year ending December 31, 2008 for the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement on a recurring basis. The Company classifies the fair values of financial instruments within Level 3 if there are no observable markets for the instruments or, in the absence of active markets, the majority of the inputs used to determine fair value are based on the Company's own assumptions about market participant assumptions. However, the Company prioritizes the use of market-based inputs over entity-based assumptions in determining Level 3 fair values in accordance with SFAS 157. Therefore, the gains and losses in the tables below include changes in fair value due partly to observable and unobservable factors. F-31 ROLL-FORWARD OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) FOR THE TWELVE MONTHS FROM JANUARY 1, 2008 TO DECEMBER 31, 2008
REALIZED/UNREALIZED SFAS 157 GAINS (LOSSES) FAIR VALUE INCLUDED IN: PURCHASES, AS OF NET ISSUANCES, JANUARY 1, INCOME AND 2008 (2),(3) AOCI (5) SETTLEMENTS ---------------------------------------------------------------------------------------------------------- ASSETS Fixed maturities $13,558 $(659) $(3,382) $526 Equity securities, available-for-sale 563 1 (27) 3 Freestanding derivatives (4) Customized derivatives used to hedge U.S. GMWB 91 850 -- -- Other freestanding derivatives used to hedge U.S. GMWB 564 1,161 -- (29) Macro hedge program 18 85 -- 34 Other freestanding derivatives (303) (316) 16 271 Total Freestanding Derivatives 370 1,780 16 276 Reinsurance recoverable (1),(2),(9) 238 962 -- 102 Separate accounts (6) 701 (204) -- (26) ------- ------- ------- ------- SUPPLEMENTAL ASSET INFORMATION: Total freestanding derivatives used to hedge U.S. GMWB including those in Levels 1, 2 and 3 (10) 643 3,374 -- (1,353) ------- ------- ------- ------- LIABILITIES Other policyholder funds and benefits payable accounted for at fair value (2) U.S. GMWB $(1,433) $(4,967) $ -- $(126) U.K. GMWB (17) (56) 13 (4) Reinsured Japan GMIB (220) (2,000) (256) (105) Reinsured Japan GMWB -- (28) (3) (3) Reinsured Japan GMAB (22) 32 (2) (9) Institutional Notes (24) (17) -- -- Equity Linked Notes (21) 13 -- -- Total other policyholder funds and benefits payable accounted for at fair value (2) (1,737) (7,023) (248) (247) Consumer notes (5) 5 -- (5) ------- ------- ------- ------- SUPPLEMENTAL INFORMATION: Net U.S. GMWB (Embedded derivatives, freestanding derivatives including those in Levels 1, 2 and 3 and reinsurance recoverable) (8) (552) (631) -- (1,377) ------- ------- ------- ------- CHANGES IN UNREALIZED GAINS (LOSSES) INCLUDED IN NET INCOME RELATED SFAS 157 TO FINANCIAL TRANSFERS IN FAIR VALUE INSTRUMENTS AND/OR AS OF STILL HELD AT (OUT) OF DECEMBER 31, DECEMBER 31, LEVEL 3 (7) 2008 2008 (3) ---------------------------------- ------------------------------------------------------- ASSETS Fixed maturities $(1,301) $8,742 $(515) Equity securities, available-for-sale (481) 59 (2) Freestanding derivatives (4) Customized derivatives used to hedge U.S. GMWB -- 941 850 Other freestanding derivatives used to hedge U.S. GMWB -- 1,696 1,043 Macro hedge program -- 137 102 Other freestanding derivatives 98 (234) (225) Total Freestanding Derivatives 98 2,540 1,770 Reinsurance recoverable (1),(2),(9) -- 1,302 962 Separate accounts (6) 315 786 (73) ------- ------- ------- SUPPLEMENTAL ASSET INFORMATION: Total freestanding derivatives used to hedge U.S. GMWB including those in Levels 1, 2 and 3 (10) -- 2,664 3,374 ------- ------- ------- LIABILITIES Other policyholder funds and benefits payable accounted for at fair value (2) U.S. GMWB $ -- $(6,526) $(4,967) U.K. GMWB -- (64) (56) Reinsured Japan GMIB -- (2,581) (2,000) Reinsured Japan GMWB -- (34) (28) Reinsured Japan GMAB -- (1) 32 Institutional Notes -- (41) (17) Equity Linked Notes -- (8) 13 Total other policyholder funds and benefits payable accounted for at fair value (2) -- (9,255) (7,023) Consumer notes -- (5) 5 ------- ------- ------- SUPPLEMENTAL INFORMATION: Net U.S. GMWB (Embedded derivatives, freestanding derivatives including those in Levels 1, 2 and 3 and reinsurance recoverable) (8) -- (2,560) (631) ------- ------- -------
(1) The January 1, 2008 fair value of $238 includes the pre-SFAS 157 fair value of $128 and transitional adjustment of $110. (2) The Company classifies all the gains and losses on GMWB reinsurance derivatives and GMWB embedded derivatives and reinsured GMWB, GMIB and GMAB free standing derivatives as unrealized gains/losses for purposes of disclosure in this table because it is impracticable to track on a contract-by-contract basis the realized gains/ losses for these derivatives and embedded derivatives. (3) All amounts in these columns are reported in net realized capital gains/losses, except for $6 for the twelve months ending December 31, 2008, which is reported in benefits, losses and loss adjustment expenses. All amounts are before income taxes and amortization of DAC. (4) The freestanding derivatives, excluding reinsurance derivatives instruments, are reported in this table on a net basis for asset/(liability) positions and reported on the consolidated balance sheet in other investments and other liabilities. (5) AOCI refers to "Accumulated other comprehensive income" in the consolidated statement of changes in stockholder's equity. All amounts are before income taxes and amortization of DAC. (6) The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities which results in a net zero impact on net income for the Company. (7) Transfers in and/or (out) of Level 3 during the twelve months ended December 31, 2008 are attributable to a change in the availability of market observable information for individual securities within respective categories. (8) The net loss on U.S. GMWB since January 1, 2008 was primarily related to liability model assumption updates for mortality in the first quarter and market-based hedge ineffectiveness due to extremely volatile capital markets in the second half of 2008. (9) During July 2008, the Company reinsured, with a third party, U.S. GMWB risks associated with approximately $7.8 billion of account value sold between 2003 and 2006. The reinsurance agreement is an 80% quota-share agreement. The third party's financial strength is rated A+ by A.M. Best, AA- by Standard and Poor's and Aa2 by Moody's. The reinsurance agreement will be accounted for as a freestanding derivative. F-32 (10) The 'Purchases, issuances, and settlements' primarily relates to the receipt of cash on futures and option contracts classified as Level 1 and interest rate, currency and credit default swaps classified as Level 2. For comparative and informational purposes only, the following tables rollforward the customized and freestanding derivatives used to hedge US GMWB, the reinsurance recoverable for US GMWB and the embedded derivatives reported in other policyholder funds and benefits payable for the year ended December 31, 2007. The fair value amounts in these following tables are the Pre-SFAS 157 fair values. ROLL-FORWARD FOR THE TWELVE MONTHS FROM JANUARY 1, 2007 TO DECEMBER 31, 2007
TOTAL REALIZED/UNREALIZED FAIR VALUE AS OF GAINS (LOSSES) PURCHASES, FAIR VALUE AS OF JANUARY 1, INCLUDED IN: ISSUANCES, AND DECEMBER 31, 2007 NET INCOME SETTLEMENTS 2007 --------------------------------------------------------------------------------------------------------------------------------- ASSETS Customized derivatives used to hedge US GMWB $ -- $50 $ -- $50 Other freestanding derivatives used to hedge US GMWB 346 198 48 592 Reinsurance recoverable for US GMWB (22) 127 23 128 LIABILITIES Other policyholder funds and benefits payable accounted for at fair value US GMWB $53 $(661) $(99) $(707) U.K. GMWB -- (8) -- (8) Reinsured Japan GMIB 119 (159) (32) (72) Reinsured Japan GMAB -- 3 (1) 2 Institutional Notes 4 (28) -- (24) Equity Linked Notes -- 1 (22) (21) Total other policyholder funds and benefits payable accounted for at fair value 176 (852) (154) (830) SUPPLEMENTAL INFORMATION: Net US GMWB (Embedded derivative, freestanding derivatives and reinsurance recoverable) (1) 377 (286) (28) 63 ----- ------ ------ ------
(1) The net loss on US GMWB was primarily due to liability model assumption updates made during the second and third quarter to reflect newly reliable market inputs for volatility and model refinements. The following table summarizes the notional amount and fair value of freestanding derivatives in other investments, reinsurance recoverables, embedded derivatives in other policyholder funds and benefits payable and consumer notes as of December 31, 2008, and December 31, 2007. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not necessarily reflective of credit risk. The fair value amounts of derivative assets and liabilities are presented on a net basis in the following table.
DECEMBER 31, 2008 DECEMBER 31, 2007 NOTIONAL FAIR NOTIONAL FAIR AMOUNT VALUE AMOUNT VALUE --------------------------------------------------------------------------------------------------------------------------------- Reinsurance recoverables for U.S. GMWB (1) $11,437 $1,302 $6,579 $128 Customized derivatives used to hedge U.S. GMWB (2) 10,464 941 12,784 50 Freestanding derivatives used to hedge U.S. GMWB 8,156 1,723 8,573 592 U.S. GMWB (3) 46,734 (6,526) 44,852 (707) U.K. GMWB (3) 1,672 (64) 1,048 (8) Reinsured Japan GMIB (4) 20,062 (2,581) 15,297 (72) Reinsured Japan GMWB (3) 361 (34) -- -- Reinsured Japan GMAB (5) 130 (1) 2,768 2 Macro hedge program (6) 2,188 137 661 18 Consumer Notes 70 (5) 19 (5) Equity Linked Notes 55 (8) 50 (21) ----------- --------- --------- ------ TOTAL $101,329 $(5,116) $92,631 $(23) ----------- --------- --------- ------
F-33 The decrease in the net fair value of the derivative instruments in the table above was primarily due to the adoption of SFAS 157 and the net effects of capital market movements during 2008. (1) The increase in notional amount of the reinsurance recoverables for U.S. GMWB was primarily due to the execution of a reinsurance transaction in July 2008. (2) The decrease in notional amount of customized derivatives used to hedge U.S. GMWB was primarily due to current market conditions causing policyholder account values to decrease. The notional on these customized derivatives is the policyholder account value. (3) The increase in notional amount of embedded derivatives associated with GMWB riders is primarily due to additional product sales. (4) The increase in notional amount of the internal reinsurance associated with GMIB was primarily due to the strengthening of the yen as compared to the U.S. dollar. (5) The decrease in notional amount of the Japan GMAB embedded derivative is primarily due to a significant decline in the equity markets triggering policyholders to elect the GMIB feature or lump sum payout in Japan's 3Win product. (6) The increase in notional amount of the macro hedge is primarily due to the rebalancing of the Company's risk management program to place a greater relative emphasis on the protection of statutory surplus. Financial Instruments Not Carried at Fair Value SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", requires additional disclosure of fair value information of financial instruments. The following include disclosures for other financial instruments not carried at fair value and not included in above FAS 157 discussion. The carrying amounts and fair values of the Company's financial instruments not carried at fair value, at December 31, 2008 and 2007 were as follows:
2008 2007 CARRYING FAIR CARRYING FAIR Amount Value Amount Value ------------------------------------------------------------------------------------------------------------------ ASSETS Policy loans $2,154 $2,366 $2,016 $2,061 Mortgage loans on real estate 4,896 4,265 4,166 4,169 LIABILITIES Other policyholder funds and benefits payable (1) $14,421 14,158 $15,148 $15,097 Consumer Notes 1,210 1,188 804 809 --------- --------- --------- ---------
(1) Excludes group accident and health and universal life insurance contracts, including corporate owned life insurance. - Fair value for policy loans and consumer notes were estimated using discounted cash flow calculations. - Fair values for mortgage loans on real estate were estimated using discounted cash flow calculations based on current incremental lending rates for similar type loans. Other policyholder funds and benefits payable, not carried at fair value and not included in above FAS 157 fair value information, is determined by estimating future cash flows, discounted at the current market rate. F-34 4. INVESTMENTS AND DERIVATIVE INSTRUMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- COMPONENTS OF NET INVESTMENT INCOME Fixed maturities (1) $2,458 $2,714 $2,464 Equity securities, available-for-sale 65 54 31 Equity securities, held for trading (246) 1 16 Mortgage loans 251 227 126 Policy loans 136 132 140 Limited partnerships and other alternative investments (224) 112 67 Other investments (33) (120) (21) --------- -------- -------- Gross investment income 2,407 3,120 2,823 Less: Investment expenses 65 63 55 --------- -------- -------- NET INVESTMENT INCOME $2,342 $3,057 $2,768 --------- -------- -------- COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $(1,737) $(248) $(105) Equity securities (166) (46) (3) Foreign currency transaction remeasurements (450) 102 18 Derivatives and other (2) (3,410) (742) (208) --------- -------- -------- NET REALIZED CAPITAL GAINS (LOSSES) $(5,763) $(934) $(298) --------- -------- --------
(1) Includes income on short-term bonds. (2) Primarily consists of changes in fair value on non-qualifying derivatives, hedge ineffectiveness on qualifying derivative instruments, foreign currency gains and losses, and other investment gains and losses.
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- COMPONENTS OF NET UNREALIZED GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITIES Fixed maturities $(8,884) $(597) $800 Equity securities (181) (41) 8 Net unrealized gains (losses) credited to policyholders (101) 3 (4) --------- ------- ----- Net unrealized gains (losses) (9,165) (635) 804 Deferred income taxes and other items (4,359) (317) 301 --------- ------- ----- Net unrealized gains (losses), net of tax -- end of year (4,806) (318) 503 Net unrealized gains (losses), net of tax -- beginning of year (318) 503 577 --------- ------- ----- CHANGE IN UNREALIZED GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITIES $(4,488) $(821) $(74) --------- ------- -----
The change in net unrealized gain (loss) on equity securities, classified as held for trading, included in net investment income during the years ended December 31, 2008, 2007 and 2006, was $(250), $(17), and $12, respectively, substantially all of which have corresponding amounts credited to policyholders. This amount was not included in the table above.
DECEMBER 31, 2008 COST OR GROSS GROSS AMORTIZED UNREALIZED UNREALIZED COST GAINS LOSSES FAIR VALUE ------------------------------------------------------------------------------------------------------------ COMPONENTS OF AVAILABLE-FOR- SALE SECURITIES ABS $7,095 $9 $(2,134) $4,970 CMBS Agency backed 243 8 -- 251 Non-agency backed 9,566 15 (4,085) 5,496 CMOs Agency backed 539 30 (3) 566 Non-agency backed 320 -- (102) 218 Corporate 21,252 441 (2,958) 18,735 Government/government agencies Foreign 2,094 86 (33) 2,147 United States 5,033 75 (39) 5,069 MBS 1,385 23 (5) 1,403 States, municipalities and political subdivisions 917 8 (220) 705 Redeemable preferred stock -- -- -- -- ------- ----- ------- ------- FIXED MATURITIES 48,444 695 (9,579) 39,560 Equity securities, available- for-sale 614 4 (184) 434 ------- ----- ------- ------- TOTAL SECURITIES, AVAILABLE-FOR-SALE $49,058 $699 $(9,763) $39,994 ------- ----- ------- ------- DECEMBER 31, 2007 COST OR GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ----------------------------- --------------------------------------------------------------------- COMPONENTS OF AVAILABLE-FOR- SALE SECURITIES ABS $7,602 $24 $(519) $7,107 CMBS Agency backed 249 6 -- 255 Non-agency backed 11,266 153 (572) 10,847 CMOs Agency backed 793 18 (3) 808 Non-agency backed 411 4 (2) 413 Corporate 21,963 807 (571) 22,199 Government/government agencies Foreign 465 35 (2) 498 United States 516 14 (1) 529 MBS 1,750 15 (15) 1,750 States, municipalities and political subdivisions 1,226 32 (20) 1,238 Redeemable preferred stock 2 2 (2) 2 ------- ------ ------- ------- FIXED MATURITIES 46,243 $ 1,110 $ (1,707) $ 45,646 Equity securities, available- for-sale 781 10 (51) 740 ------- ------ ------- ------- TOTAL SECURITIES, AVAILABLE-FOR-SALE $47,024 1,120 (1,758) $46,386 ------- ------ ------- -------
F-35 The amortized cost and estimated fair value of fixed maturity investments by contractual maturity year are shown below.
DECEMBER 31, 2008 AMORTIZED COST FAIR VALUE -------------------------------------------------------------------------------- MATURITY One year or less $1,511 $1,564 Over one year through five years 9,297 8,757 Over five years through ten years 9,035 8,154 Over ten years 19,262 13,928 --------- --------- SUBTOTAL 39,105 32,403 ABS, MBS, and CMOs 9,339 7,157 --------- --------- TOTAL $48,444 $39,560 --------- ---------
Estimated maturities may differ from contractual maturities due to security call or prepayment provisions because of the potential for prepayment on certain mortgage-and asset-backed securities which is why ABS, MBS and CMOs are not categorized by contractual maturity. The CMBS are categorized by contractual maturity because they generally are not subject to prepayment risk as these securities are generally structured to include forms of call protections such as yield maintenance charges, prepayment penalties or lockouts, and defeasance.
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- SALES OF FIXED MATURITY AND AVAILABLE-FOR-SALE EQUITY SECURITY INVESTMENTS SALE OF FIXED MATURITIES Sale proceeds $9,366 $12,415 $16,159 Gross gains 291 246 210 Gross losses (472) (135) (230) SALE OF EQUITY SECURITIES, AVAILABLE-FOR-SALE Sale proceeds $126 $296 $249 Gross gains 11 12 5 Gross losses (21) (7) (5) ------- --------- ---------
CONCENTRATION OF CREDIT RISK The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk. Other than U.S. government and certain U.S. government agencies backed by the full faith and credit of the U.S. government, the Company's only exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity, is the Government of Japan, which represents $1.9 billion, or 61%, of stockholders' equity. For further discussion of concentration of credit risk, see the "Concentration of Credit Risk" section in Note 4 of Notes to Consolidated Financial Statements. The Company's largest exposures by issuer as of December 31, 2008 were the Government of Japan, JPMorgan Chase & Company and General Electric Company, which comprised approximately 3.3%, 0.5% and 0.4%, respectively, of total invested assets. Other than U.S. government and certain U.S. government agencies, the Company's largest three exposures by issuer as of December 31, 2007 were General Electric Company, Citigroup Inc. and Vodafone Group, which each comprise less than 0.5% of total invested assets. The Company's largest three exposures by sector, as of December 31, 2008 were commercial mortgage and real estate, basic industry and U.S. government/government agencies which comprised approximately 19%, 12% and 9%, respectively, of total invested assets. The Company's largest three exposures by sector, as of December 31, 2007 were commercial mortgage and real estate, financial services and residential mortgages which comprised approximately 28%, 14% and 9%, respectively, of total invested assets. The Company's investments in states, municipalities and political subdivisions are geographically dispersed throughout the United States. The largest concentrations, as of December 31, 2008, were in California, Illinois and Hawaii which each comprise less than 0.5% of total invested assets and as of December 31, 2007, were in California, Oregon and Illinois which each comprise less than 1% of total invested assets. F-36 SECURITY UNREALIZED LOSS AGING As part of the Company's ongoing security monitoring process by a committee of investment and accounting professionals, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For further discussion regarding the Company's other-than-temporary impairment policy, see the Other-Than-Temporary Impairments on Available-for-Sale Securities section of Note 1. Due to the issuers' continued satisfaction of the securities' obligations in accordance with their contractual terms and the expectation that they will continue to do so, management's intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value, as well as the evaluation of the fundamentals of the issuers' financial condition and other objective evidence, the Company believes that the prices of the securities in the sectors identified in the tables below were temporarily depressed as of December 31, 2008 and 2007. The following tables present the Company's unrealized loss aging for total fixed maturity and equity securities classified as available-for-sale by investment type and length of time the security was in a continuous unrealized loss position.
DECEMBER 31, 2008 LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ----------------------------------------------------------------------------------------------------- ABS $1,475 $1,169 $(306) CMBS -- Non-agency backed 4,108 2,992 (1,116) CMOs Agency backed 39 38 (1) Non-agency backed 252 176 (76) Corporate 11,101 9,500 (1,601) Government/government agencies Foreign 788 762 (26) United States 3,952 3,913 (39) MBS 46 46 -- States, municipalities and political 524 381 (143) subdivisions --------- --------- --------- TOTAL FIXED MATURITIES 22,285 18,977 (3,308) Equity securities, available-for-sale 433 296 (137) --------- --------- --------- TOTAL TEMPORARILY IMPAIRED SECURITIES $22,718 $19,273 $(3,445) --------- --------- --------- DECEMBER 31, 2008 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED COST VALUE LOSSES -------------------------------------- ----------------------------------------------------------------- ABS $5,463 $3,635 $(1,828) CMBS -- Non-agency backed 5,300 2,331 (2,969) CMOs Agency backed 32 30 (2) Non-agency backed 68 42 (26) Corporate 4,757 3,400 (1,357) Government/government agencies Foreign 29 22 (7) United States 38 38 -- MBS 183 178 (5) States, municipalities and political 297 220 (77) subdivisions --------- -------- --------- TOTAL FIXED MATURITIES 16,167 9,896 (6,271) Equity securities, available-for-sale 136 89 (47) --------- -------- --------- TOTAL TEMPORARILY IMPAIRED SECURITIES $16,303 $9,985 $(6,318) --------- -------- ---------
DECEMBER 31, 2008 TOTAL AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ------------------------------------------------------------------------------------------------------- ABS $6,938 $4,804 $(2,134) CMBS -- Non-agency backed 9,408 5,323 (4,085) CMOs Agency backed 71 68 (3) Non-agency backed 320 218 (102) Corporate 15,858 12,900 (2,958) Government/government agencies Foreign 817 784 (33) United States 3,990 3,951 (39) MBS 229 224 (5) States, municipalities and political 821 601 (220) subdivisions --------- --------- --------- TOTAL FIXED MATURITIES 38,452 28,873 (9,579) Equity securities, available-for-sale 569 385 (184) --------- --------- --------- TOTAL TEMPORARILY IMPAIRED SECURITIES $39,021 $29,258 $(9,763) --------- --------- ---------
F-37
DECEMBER 31, 2007 LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ----------------------------------------------------------------------------------------------------- ABS $6,271 $5,789 $(482) CMBS -- Non-agency backed 5,493 5,010 (483) CMOs Agency backed 270 268 (2) Non-agency backed 97 96 (1) Corporate 8,381 7,947 (434) Government/government agencies Foreign 86 84 (2) United States 136 135 (1) MBS 49 48 (1) States, municipalities and political subdivisions 383 373 (10) Redeemable preferred stock 4 2 (2) --------- --------- --------- TOTAL FIXED MATURITIES 21,170 19,752 (1,418) Equity securities, available-for-sale 615 565 (50) --------- --------- --------- TOTAL TEMPORARILY IMPAIRED SECURITIES $21,785 $20,317 $(1,468) --------- --------- --------- DECEMBER 31, 2007 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED COST VALUE LOSSES -------------------------------------- -------------------------------------------------------------- ABS $497 460 $(37) CMBS -- Non-agency backed 1,808 1,719 (89) CMOs Agency backed 60 59 (1) Non-agency backed 33 32 (1) Corporate 2,554 2,417 (137) Government/government agencies Foreign 43 43 -- United States 7 7 -- MBS 760 746 (14) States, municipalities and political subdivisions 189 179 (10) Redeemable preferred stock -- -- -- -------- -------- ------- TOTAL FIXED MATURITIES 5,951 5,662 (289) Equity securities, available-for-sale 20 19 (1) -------- -------- ------- TOTAL TEMPORARILY IMPAIRED SECURITIES $5,971 $5,681 $(290) -------- -------- -------
DECEMBER 31, 2007 TOTAL AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ------------------------------------------------------------------------------------------------------- ABS $6,768 $6,249 $(519) CMBS -- Non-agency backed 7,301 6,729 (572) CMOs Agency backed 330 327 (3) Non-agency backed 130 128 (2) Corporate 10,935 10,364 (571) Government/government agencies Foreign 129 127 (2) United States 143 142 (1) MBS 809 794 (15) States, municipalities and political subdivisions 572 552 (20) Redeemable preferred stock 4 2 (2) --------- --------- --------- TOTAL FIXED MATURITIES 27,121 25,414 (1,707) Equity securities, available-for-sale 635 584 (51) --------- --------- --------- TOTAL TEMPORARILY IMPAIRED SECURITIES $27,756 $25,998 $(1,758) --------- --------- ---------
As of December 31, 2008, available-for-sale securities in an unrealized loss position, comprised of approximately 4,156 securities, were primarily concentrated in securitized assets, specifically CMBS and financial services sector securities. The increase in unrealized losses was largely the result of credit spread widening primarily due to continued deterioration in the U.S. housing market, tightened lending conditions and the market's flight to quality securities, as well as, a U.S. recession and a declining global economy. As of December 31, 2008, 60% of securities in an unrealized loss position were depressed less than 20% of amortized cost. Based upon the Company's current evaluation of these securities in accordance with its impairment policy and the Company's intent to retain these investments for a period of time sufficient to allow for recovery in value, the Company has determined that these securities are temporarily impaired. F-38 The following tables present the Company's unrealized loss aging by length of time the security was in a continuous greater than 20% unrealized loss position. SECURITIZED ASSETS DEPRESSED OVER 20%
DECEMBER 31, 2008 COST OR AMORTIZED FAIR UNREALIZED ITEMS COST VALUE LOSS ----------------------------------------------------------------------------------------------- CONSECUTIVE MONTHS Three months or less 652 $7,786 $4,561 $(3,225) Greater than three to six months 119 1,122 444 (678) Greater than six to nine months 89 1,145 458 (687) Greater than nine to twelve months 143 1,363 391 (972) Greater than twelve months 31 311 57 (254) ------- --------- -------- --------- TOTAL 1,034 $11,727 $5,911 $(5,816) ------- --------- -------- --------- DECEMBER 31, 2007 COST OR AMORTIZED FAIR UNREALIZED ITEMS COST VALUE LOSS ------------------- -------------------------------------------------------------------------------------- CONSECUTIVE MONTHS Three months or less 115 $918 $613 $(305) Greater than three to six months 18 130 76 (54) Greater than six to nine months -- -- -- -- Greater than nine to twelve months -- -- -- -- Greater than twelve months 3 33 22 (11) ---- -------- ------ ------- TOTAL 136 $1,081 $711 $(370) ---- -------- ------ -------
ALL OTHER SECURITIES DEPRESSED OVER 20%
COST DECEMBER 31, 2008 AMORTIZED FAIR UNREALIZED ITEMS COST VALUE LOSS ----------------------------------------------------------------------------------------------------- CONSECUTIVE MONTHS Three months or less 564 $6,396 $4,188 $(2,171) Greater than three to six months 28 238 124 (114) Greater than six to nine months 14 173 102 (71) Greater than nine to twelve months 11 199 112 (87) Greater than twelve months -- -- -- -- ---- -------- -------- --------- TOTAL 617 $6,969 $4,526 $(2,443) ---- -------- -------- --------- COST ORDECEMBER 31, 2007 AMORTIZED FAIR UNREALIZED ITEMS COST VALUE LOSS ------------------- ----------------------------------------------------------------------------- CONSECUTIVE MONTHS Three months or less 52 $65 $50 $(15) Greater than three to six months 5 30 5 (25) Greater than six to nine months -- -- -- -- Greater than nine to twelve months -- -- -- -- Greater than twelve months 1 2 1 (1) --- ---- ---- ----- TOTAL 58 $97 $56 $(41) --- ---- ---- -----
The majority of securitized assets depressed over 20% for six consecutive months are primarily related to CMBS and sub-prime RMBS. Based upon the Company's cash flow modeling in a severe negative economic outlook, which shows no loss of principal and interest, and the Company's assertion of its ability and intent to retain the securities until recovery, it has been determined that these securities are temporarily impaired as of December 31, 2008. The majority of all other securities depressed over 20% for six consecutive months or greater in the tables above primarily relate to financial services sector securities that include corporate bonds, as well as, preferred equity issued by large high quality financial institutions that are lower in the capital structure and, as a result, have incurred greater price depressions. Based upon the Company's analysis of these securities and current macroeconomic conditions, the Company expects to see significant price recovery on these securities within a reasonable period of time and, therefore, has determined that these securities are temporarily impaired as of December 31, 2008. MORTGAGE LOANS The carrying value of mortgage loans on real estate was $4.9 billion and $4.2 billion as of December 31, 2008 and 2007, respectively. The Company's mortgage loans are collateralized by a variety of commercial and agricultural properties. The mortgage loans are diversified both geographically throughout the United States and by property type. At December 31, 2008, the Company held delinquent mortgage loans on two properties with a carrying value of $32 which were deemed impaired and accordingly, a valuation allowance of $13 was established. At December 31, 2007, the Company held no impaired, restructured, delinquent or in-process-of-foreclosure mortgage loans and therefore had no valuation allowance. F-39 The following table presents commercial mortgage loans by region and property type. COMMERCIAL MORTGAGE LOANS ON REAL ESTATE BY REGION
DECEMBER 31, 2008 DECEMBER 31, 2007 CARRYING PERCENT OF CARRYING PERCENT OF VALUE TOTAL VALUE TOTAL -------------------------------------------------------------------------------------------------------------------------------- East North Central $121 2.5% $101 2.4% Middle Atlantic 556 11.4% 503 12.1% Mountain 115 2.3% 101 2.4% New England 407 8.3% 348 8.4% Pacific 1,205 24.6% 959 23.0% South Atlantic 665 13.6% 749 18.0% West North Central 56 1.1% 25 0.6% West South Central 205 4.2% 179 4.3% Other (1) 1,566 32.0% 1,201 28.8% -------- ------- -------- ------- TOTAL $4,896 100.0% $4,166 100.0% -------- ------- -------- -------
(1) Includes multi-regional properties. COMMERCIAL MORTGAGE LOANS ON REAL ESTATE BY PROPERTY TYPE
DECEMBER 31, 2008 DECEMBER 31, 2007 CARRYING PERCENT OF CARRYING PERCENT OF VALUE TOTAL VALUE TOTAL -------------------------------------------------------------------------------------------------------------------------------- Industrial $790 16.1% $424 10.2% Lodging 383 7.8% 424 10.2% Agricultural 435 8.9% 236 5.7% Multifamily 798 16.3% 708 17.0% Office 1,456 29.8% 1,550 37.2% Retail 790 16.1% 702 16.8% Other 244 5.0% 122 2.9% -------- ------- -------- ------- TOTAL $4,896 100.0% $4,166 100.0% -------- ------- -------- -------
VARIABLE INTEREST ENTITIES ("VIE") The Company is involved with variable interest entities primarily through its affiliate, Hartford Investment Management Company ("HIMCO") as a collateral manager and as an investor through normal investment activities. The Company's involvement includes providing investment management and administrative services for a fee and holding ownership or other interests as an investor. VIEs may or may not be consolidated on the Company's consolidated financial statements. When the Company is the primary beneficiary of the VIE, all of the assets and liabilities of the VIE are consolidated into the Company's financial statements. The Company also reports a liability for the portion of the VIE that represents the minority interest of other investors in the VIE. When the Company concludes that it is not the primary beneficiary of the VIE, only the fair value of the Company's interest in the VIE is recorded in the Company's financial statements. At December 31, 2007, HIMCO was the collateral manager of four VIEs with provisions that allowed for termination if the fair value of the aggregate referenced bank loan portfolio declined below a stated level. These VIEs were market value CLOs that invested in senior secured bank loans through total return swaps. Two of these market value CLOs were consolidated, and two were not consolidated. During the first quarter of 2008, the fair value of the aggregate referenced bank loan portfolio declined below the stated level in all four market value CLOs and the total return swap counterparties terminated the transactions. Three of these CLOs were restructured from market value CLOs to cash flow CLOs without market value triggers and the remaining CLO terminated in January 2009. The Company realized a capital loss of $50, before-tax, from the termination of these CLOs. In connection with the restructurings, the Company purchased interests in two of the resulting VIEs, one of which the Company is the primary beneficiary. These purchases resulted in an increase in the Company's maximum exposure to loss for both consolidated and non-consolidated VIEs. F-40 As of December 31, 2008 and 2007, the Company had relationships with five and six VIEs, respectively, where the Company was the primary beneficiary. The following table sets forth the carrying value of assets and liabilities, and the Company's maximum exposure to loss on these consolidated VIEs.
DECEMBER 31, 2008 MAXIMUM TOTAL TOTAL EXPOSURE ASSETS LIABILITIES (1) TO LOSS (2) ----------------------------------------------------------------------------------------------- CLOs $339 $89 $237 Limited partnerships 151 72 79 Other investments 249 103 166 ------ ------ ------ TOTAL $739 $264 $482 ------ ------ ------ DECEMBER 31, 2007 MAXIMUM TOTAL TOTAL EXPOSURE ASSETS LIABILITIES (1) TO LOSS ----------------------------- ---------------------------------------------------------------- CLOs $128 $73 $74 Limited partnerships 309 121 188 Other investments 296 126 178 ------ ------ ------ TOTAL $733 $320 $440 ------ ------ ------
(1) Creditors have no recourse against the Company in the event of default by the VIE. Includes noncontrolling interest in limited partnerships and other investments of $154 and $242 as of December 31, 2008 and December 31, 2007, respectively, that is reported as a separate component of equity in the Company's Condensed Consolidated Balance Sheet pursuant to SFAS 160. (2) The Company's maximum exposure to loss represents the maximum loss amount that the Company could recognize as a reduction in net investment income or as a realized capital loss and is the consolidated assets net of liabilities at cost. The Company has no implied or unfunded commitments to these VIEs. CLOs represent one fund at December 31, 2008, which is a cash flow CLO financed by issuing debt in tranches of varying seniority and is a VIE due to the lack of voting equity in the capital structure. HIMCO provides collateral management services to the CLO and earns a fee for those services and the Company has investments in debt issued by the CLO. Taking those interests into consideration, the Company has performed a quantitative analysis and determined that it will absorb a majority of the expected losses or residual returns in the fund and as a result is the primary beneficiary. Consolidated assets are classified in cash and fixed maturities and consolidated liabilities are classified in other liabilities. At December 31, 2007, CLOs represent two market value CLOs, one of which converted to the cash flow CLO described above and the second which terminated during the fourth quarter of 2008. At December 31, 2008 and 2007, limited partnerships represent investments in two hedge funds that are financed by issuing equity shares to investors, and are VIEs based on the lack of decision making ability held by the equity investors. The primary source of variability generated by these VIEs is the fund's investment portfolio and that variability is passed to equity holders. The Company holds a majority interest in the equity of the funds and as a result will absorb the majority of the funds expected losses or residual returns and therefore is the primary beneficiary. Consolidated assets and liabilities are classified in other investments and other liabilities, respectively. Other investments at December 31, 2008 consist of two investment trusts that are financed by issuing beneficial interests that do not have voting rights to investors. The Company holds a majority of the beneficial interests issued by these trusts and as the majority holder, will absorb a majority of expected losses or residual returns and therefore is the primary beneficiary. The Company was not the primary beneficiary of one of those trusts at December 31, 2007. Consolidated assets and liabilities are classified in fixed maturities and other liabilities, respectively. At December 31, 2007, other investments included two investment trusts, one of which has liquidated and the second remains at December 31, 2008. As of December 31, 2008 and 2007, the Company also held significant variable interests in three and four VIEs, respectively, where the Company is not the primary beneficiary. That determination has been made based on a quantitative analysis of whether the Company will absorb a majority of the expected losses or residual returns of the VIE, considering its variable interests, as well as, those of other variable interest holders. These investments have been held by the Company for two years. The following table sets forth the carrying value of assets and liabilities that relate to the Company's variable interests in unconsolidated VIEs and the Company's maximum exposure to loss resulting from involvement with those VIEs.
MAXIMUM DECEMBER 31, 2008 EXPOSURE ASSETS LIABILITIES TO LOSS ------------------------------------------------------------------------------------------- CLOs $280 $ -- $316 CDOs 3 -- 13 ------ ---- ------ TOTAL (1) $283 $ -- $329 ------ ---- ------ MAXIMUM DECEMBER 31, 2007 EXPOSURE ASSETS LIABILITIES TO LOSS ----------------------------- ---------------------------------------------------------- CLOs $11 $ -- $14 CDOs 61 -- 86 ---- ---- ------ TOTAL (1) $72 $ -- $100 ---- ---- ------
(1) Maximum exposure to loss represents the Company's investment in securities issued by CLOs/CDOs at cost. The Company has no implied or unfunded commitments to these VIEs. F-41 At December 31, 2008, CLOs include one fund that is financed by issuing debt securities in tranches of varying seniority. That fund is a cash flow CLO and a VIE due to the lack of voting equity in its capital structure. The Company holds variable interests through fees earned by HIMCO as the collateral manager and investments in debt issued by the fund with a carrying amount at December 31, 2008 of $280. At December 31, 2007, CLOs represent two market value CLOs, one of which converted to the cash flow CLO described above and the second for which the Company is no longer involved with following its conversion from a market value to a cash flow CLO. At December 31, 2008 and 2007, CDOs consist of two VIEs that are financed by issuing debt having no voting rights to investors. The Company has variable interests in each CDO by virtue of its investment in that debt and fees received by HIMCO as the collateral manager. The carrying amount of the investment in debt issued by the CDO is $3 at December 31, 2008 and is classified in fixed maturities. DERIVATIVE INSTRUMENTS Overview The Company utilizes a variety of derivative instruments, including swaps, caps, floors, forwards, futures and options through one of four Company-approved objectives: to hedge risk arising from interest rate, equity market, credit spread including issuer default, price or currency exchange rate risk or volatility; to manage liquidity; to control transaction costs; or to enter into replication transactions. On the date the derivative contract is entered into, the Company designates the derivative as a fair-value hedge, a cash-flow hedge, a foreign-currency hedge, a net investment hedge, or held for other investment and/or risk management purposes. The Company's derivative transactions are used in strategies permitted under the derivative use plans required by the State of Connecticut and the State of New York insurance departments. Derivative instruments are recorded in the Consolidated Balance Sheets at fair value and are presented as assets or liabilities as determined by calculating the net position, taking into account income accruals and cash collateral held, for each derivative counterparty by legal entity. The fair value of derivative instruments, excluding income accruals and cash collateral held, are presented as of December 31, as follows:
ASSET VALUES LIABILITY VALUES 2008 2007 2008 2007 -------------------------------------------------------------------------------- Fixed maturities, available-for-sale $ -- $ -- $3 $ -- Other investments 1,122 446 -- -- Reinsurance recoverables 1,302 128 -- -- Other policyholder funds and benefits payable -- 2 9,214 809 Consumer notes -- -- 5 5 Other liabilities (1) 2,206 -- -- 354 -------- ------ -------- -------- TOTAL $4,630 $576 $9,222 $1,168 -------- ------ -------- --------
(1) Included in Other liabilities on the balance sheet is a liability value of $2,531 and $114 related to derivative collateral as of December 31, 2008 and 2007, respectively. The following table summarizes the derivative instruments used by the Company and the primary hedging strategies to which they relate. Derivatives in the Company's separate accounts are not included because the associated gains and losses accrue directly to policyholders. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not reflective of credit risk. The fair value amounts of derivative assets and liabilities are presented on a net basis as of December 31, 2008 and 2007. The total ineffectiveness of all cash-flow, fair-value and net investment hedges and total change in value of other derivative-based strategies which do not qualify for hedge accounting treatment, including periodic derivative net coupon settlements, ("non-qualifying strategies") are presented below on a before-tax basis for the years ended December 31, 2008 and 2007. F-42
HEDGE INEFFECTIVENESS, NOTIONAL AMOUNT FAIR VALUE BEFORE-TAX HEDGING STRATEGY 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- CASH-FLOW HEDGES Interest rate swaps Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed maturity securities to fixed rates. These derivatives are predominantly used to better match cash receipts from assets with cash disbursements required to fund liabilities The Company also enters into forward starting swap agreements to hedge the interest rate exposure related to the purchase of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in the benchmark interest rate, London- Interbank Offered Rate ("LIBOR"). These derivatives are primarily structured to hedge interest rate risk inherent in the assumptions used to price certain liabilities Interest rate swaps are also used to hedge a portion of the Company's floating-rate guaranteed investment contracts. These derivatives convert the floating-rate guaranteed investment contract payments to a fixed rate to better match the cash receipts earned from the supporting investment portfolio $6,798 $4,019 $422 $73 $7 2 Foreign currency swaps Foreign currency swaps are used to convert foreign denominated cash flows associated with certain foreign denominated fixed maturity investments to U.S. dollars. The foreign fixed maturities are primarily denominated in euros and are swapped to minimize cash flow fluctuations due to changes in currency rates. In addition, foreign currency swaps are also used to convert foreign denominated cash flows associated with certain liability payments to U.S. dollars in order to minimize cash flow fluctuations due to changes in currency rates 1,005 1,226 (21) (269) 1 (2) --------- -------- ------- ------- ---- ---- TOTAL CASH-FLOW HEDGES $7,803 $5,245 $401 $(196) $8 $ -- --------- -------- ------- ------- ---- ---- FAIR-VALUE HEDGES Interest rate swaps Interest rate swaps are used to hedge the changes in fair value of certain fixed rate liabilities and fixed maturity securities due to changes in the benchmark interest rate, LIBOR. 2,138 3,594 (86) (38) (1) -- Foreign currency swaps Foreign currency swaps are used to hedge the changes in fair value of certain foreign denominated fixed rate liabilities due to changes in foreign currency rates 696 696 (57) 25 -- -- --------- -------- ------- ------- ---- ---- TOTAL FAIR-VALUE HEDGES $2,834 $4,290 $(143) $(13) $(1) $ -- --------- -------- ------- ------- ---- ---- TOTAL CASH-FLOW AND FAIR-VALUE HEDGES $10,637 $9,535 $258 $(209) $7 $ -- --------- -------- ------- ------- ---- ----
F-43
DERIVATIVE CHANGE IN VALUE, NOTIONAL AMOUNT FAIR VALUE BEFORE-TAX HEDGING STRATEGY 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- NON-QUALIFYING STRATEGIES Interest rate swaps, caps, floors, and forwards The Company uses interest rate swaps, caps and floors to manage duration risk between assets and liabilities in certain portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, 2008 and 2007, the notional amount of interest rate swaps in offsetting relationships was $3.9 billion and $1.2 billion, respectively. The Company may also use interest rate forwards to replicate the purchase of mortgage-backed securities to manage duration risk and liquidity $5,269 $6,666 $(90) -- $3 $22 Foreign currency swaps, forwards, and swaptions The Company enters into foreign currency swaps and forwards to hedge the foreign currency exposures in certain of its foreign fixed maturity investments The Company also enters into foreign currency interest rate swaps and swaptions to hedge Yen interest rate exposures related to certain liability contracts sold in Japan 389 199 10 (8) 27 (8) Credit default swaps that sell credit protection The Company enters into credit default swap agreements in which the Company assumes credit risk of an individual entity, referenced index or asset pool. These contracts entitle the Company to receive a periodic fee in exchange for an obligation to compensate the derivative counterparty should a credit event occur on the part of the referenced security issuers. Also included are embedded derivatives associated with credit linked notes with a notional amount of $106 and $131 as of December 31, 2008 and 2007, respectively. The maximum potential future exposure to the Company is the notional amount of the swap contracts, which is $940 and $1,849, before-tax, as of December 31, 2008 and 2007, respectively 940 1,849 (309) (235) (313) (128)
F-44
DERIVATIVE CHANGE IN VALUE, NOTIONAL AMOUNT FAIR VALUE BEFORE-TAX HEDGING STRATEGY 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- Total return and credit index swaps The Company also assumes credit risk through total return and credit index swaps which reference a specific index or collateral portfolio. The maximum potential future exposure to the Company for the credit index swaps is the notional value and for the total return swaps is the cash collateral associated with the transaction, which has termination triggers that limit investment losses. The Company had no exposure to such contracts at December 31, 2008. As of December 31, 2007, the maximum potential future exposure to the Company from such contracts was $983, before-tax -- 1,731 -- (62) (99) (74) Credit default swaps that purchase credit protection The Company enters into credit default swap agreements in which the Company reduces credit risk to an individual entity. These contracts require the Company to pay a derivative counterparty a periodic fee in exchange for compensation from the counterparty should a credit event occur on the part of the referenced security issuer. The Company enters into these agreements as an efficient means to reduce credit exposure to specified issuers or sectors 2,633 3,494 246 56 211 59 Credit default swaps in offsetting positions The Company enters into credit default swap agreements to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward. 1,453 -- (8) -- -- -- Japanese fixed annuity hedging instruments The Company enters into currency rate swaps and forwards to mitigate the foreign currency exchange rate and Yen interest rate exposures associated with the Yen denominated individual fixed annuity product. The associated liability is adjusted for changes in spot rates which was $450 and $(102), before-tax, as of December 31, 2008 and 2007, respectively, and offsets the derivative change in value 2,334 1,849 383 (115) 487 53
F-45
DERIVATIVE CHANGE IN VALUE, NOTIONAL AMOUNT FAIR VALUE BEFORE-TAX HEDGING STRATEGY 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- GMWB product derivatives The Company offers certain variable annuity products with a GMWB rider primarily in the U.S and to a lesser extent, the U.K The GMWB is a bifurcated embedded derivative that provides the policyholder with a GRB if the account value is reduced to zero through a combination of market declines and withdrawals. The GRB is generally equal to premiums less withdrawals. The policyholder also has the option, after a specified time period, to reset the GRB to the then-current account value, if greater. The notional value of the embedded derivative is the GRB balance. For a further discussion, see the Derivative Instruments section of Note 2 $48,406 $45,900 $(6,590) $(715) $(5,785) $(670) GMWB reinsurance contracts The Company has entered into reinsurance arrangements to offset a portion of its risk exposure to the GMWB for the remaining lives of covered variable annuity contracts. Reinsurance contracts covering GMWB are accounted for as free-standing derivatives. The notional amount of the reinsurance contracts is the GRB amount 11,798 $6,579 1,268 128 1,073 127 GMWB hedging instruments The Company enters into derivative contracts to partially economically hedge exposure to the volatility associated with the portion of the GMWB liabilities which are not reinsured. These derivative contracts include customized swaps, interest rate swaps and futures, and equity swaps, put and call options, and futures, on certain indices including the S&P 500 index, EAFE index, and NASDAQ index 18,620 21,357 2,664 642 3,374 257 Guaranteed minimum benefit product reinsurance contracts Reinsurance arrangements are used to offset the Company's exposure to the GMIB and GMAB embedded derivatives for the lives of the host variable annuity contracts. The reinsurance contracts are accounted for as free-standing derivative contracts. The notional amount of the reinsurance contracts is the Yen denominated GRB balance value converted at the year-end Yen to U.S. dollar foreign spot exchange rate 20,192 18,065 (2,582) (70) (2,133) (156)
F-46
DERIVATIVE CHANGE IN VALUE, NOTIONAL AMOUNT FAIR VALUE BEFORE-TAX HEDGING STRATEGY 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- Equity index swaps, options, and futures The Company offers certain equity indexed products, which may contain an embedded derivative that requires bifurcation. The Company enters into S&P index swaps and options to economically hedge the equity volatility risk associated with these embedded derivatives. In addition, the Company is exposed to bifurcated options embedded in certain fixed maturity investments. The Company may also enter into equity indexed futures to hedge the equity volatility of certain liability contracts 249 149 (14) (22) (23) 2 Japan variable annuity hedging instruments The Company enters into foreign currency forward and option contracts that convert euros to Yen in order to economically hedge the foreign currency risk associated with certain Japanese variable annuity products 259 -- 35 -- 40 (10) Macro hedge program The Company utilizes option contracts as well as futures contracts to partially economically hedge the statutory reserve impact of equity risk arising primarily from GMDB and GMWB obligations against a decline in the equity markets. 2,188 661 137 18 74 (12) Coinsurance and modified coinsurance reinsurance contract During 2007, a subsidiary insurance company entered into a coinsurance with funds withheld and modified coinsurance reinsurance agreement ("Agreement") with an affiliate reinsurance company to provide statutory surplus relief for certain life insurance policies. The Agreement is accounted for as a financing transaction for GAAP and includes a compound embedded derivative 1,068 655 -- -- -- -- ----------- ----------- --------- ------- --------- ------- TOTAL NON-QUALIFYING STRATEGIES $115,798 $109,154 $(4,850) $(383) $(3,064) $(538) ----------- ----------- --------- ------- --------- ------- TOTAL DERIVATIVES (1) $126,435 $118,689 $(4,592) $(592) $(3,057) $(538) ----------- ----------- --------- ------- --------- -------
(1) Derivative change in value includes hedge ineffectiveness for cash-flow and fair-value hedges and total change in value, including periodic derivative net coupon settlements, for derivatives in non-qualifying strategies. Change in Notional Amount The notional amount of derivatives in cash-flow hedge relationships increased $2.6 billion since December 31, 2007, primarily due to an increase in interest rate swaps used to convert interest receipts on floating-rate securities to fixed rates. The Company increased the notional amount related to this strategy due to the significant decline in variable interest rates during 2008. F-47 The notional amount of derivatives in fair-value hedge relationships decreased $1.5 billion since December 31, 2007, primarily due to a decline in interest rate swaps used to convert interest receipts of fixed-rate securities to floating-rates. The Company decreased the notional amount related to this strategy due to the significant decline in variable interest rates during 2008. The notional amount of derivatives used in non-qualifying strategies increased $6.6 billion since December 31, 2007, primarily due to the following: - For a discussion on the increase in notional amount of derivatives associated with GMWB riders refer to Note 3. - For a discussion on the increase in notional amount of derivatives associated with GMIB reinsured from a related party refer to Note 3. - The Company increased the notional amount of derivatives associated with the macro hedge program. During the three months ended December 31, 2008, the Company rebalanced its risk management program to place a greater relative emphasis on the protection of statutory surplus. As a result, the Company added the equivalent of $1.9 billion notional of equity futures as part of the macro hedge program to partially economically hedge the statutory reserve impact of equity risk arising primarily from GMDB and GMWB obligations against a decline in the equity markets. - For a discussion on the decline in notional amount related to derivatives associated with GMAB reinsured from a related party refer to Note 4. - The notional amount related to credit derivatives declined primarily due to terminations and maturities of credit derivatives, which reduced the overall net credit exposure assumed by the Company through credit derivatives. Change in Fair Value The decrease of $4.0 billion in total fair value of derivative instruments since December 31, 2007, was primarily related to the following: - For a discussion on the decrease in fair value on GMWB related derivatives refer to note 3. - For a discussion on the decrease in fair value of derivatives associated with the reinsurance of GMIB, GMWB and GMAB reinsured from a related party refer to Note 3. - The fair value of the Japanese fixed annuity hedging instruments increased primarily due to the Japanese Yen strengthening against the U.S. dollar. - The fair value of interest rate derivatives increased primarily due to a decline in interest rates as well as an increase in notional amount. - The fair value of foreign currency swaps hedging foreign fixed rate bonds increased primarily due to the U.S. dollar strengthening against the euro. Net Realized Capital Gains (Losses) The total change in value for non-qualifying strategies, including periodic derivative net coupon settlements, are reported in net realized capital gains (losses). For the year ended December 31, 2008, the net realized capital loss of $3.1 billion related to non-qualifying strategies was primarily due to the following: - For a discussion on the net loss on derivatives associated with GMIB reinsured from a related party refer to Note 3. - For a discussion on the net loss on derivatives associated with GMWB related hedging derivatives refer to Note 3. - The net loss on credit default swaps was primarily due to losses on credit derivatives that sell credit protection, partially offset by gains on credit derivatives that purchase credit protection, both resulting from credit spreads widening significantly during the year. - The gain on the Japanese fixed annuity hedging instruments was primarily a result of the Japanese Yen strengthening against the U.S. dollar. - The net gain on the macro hedge program was primarily driven by a decline in the equity markets, partially offset by losses due to swap spreads tightening. For the year ended December 31, 2007, the net realized capital loss of $538 related to non-qualifying strategies was primarily related to the following: - For a discussion on the net loss associated with GMWB related derivatives refer to Note 3. - The net loss on credit derivatives, including credit default swaps, credit index swaps, and total return swaps, was a result of credit spreads widening. - For a discussion on the loss on derivatives associated with GMIB reinsured from a related party refer to Note 3. - The gain on the Japanese fixed annuity hedging instruments was primarily a result of the Japanese Yen strengthening against the U.S. dollar. F-48 For the year ended December 31, 2008, the Company incurred losses of $39 on derivative instruments due to counterparty default related to the bankruptcy of Lehman Brothers Holdings Inc. These losses were a result of the contractual collateral threshold amounts and open collateral calls in excess of such amounts immediately prior to the bankruptcy filing, as well as interest rate and credit spread movements from the date of the last collateral call to the date of the bankruptcy filing. For the year ended December 31, 2008 and 2007, the before tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $3 and ($16), respectively. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to interest income over the term of the investment cash flows. The maximum term over which the Company is hedging its exposure to the variability of future cash flows (for all forecasted transactions, excluding interest payments on existing variable-rate financial instruments) is five years. For the year ended December 31, 2008, the Company had $198, before-tax, of net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring. Of this amount, $202 resulted from the termination of an interest rate swap due to the sale of the related hedged structured security. The interest rate swap was used to convert the LIBOR based floating rate structured security to a fixed rate structured security. For the years ended December 31, 2007 and 2006, the Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring. CREDIT RISK ASSUMED THROUGH CREDIT DERIVATIVES The Company enters into credit default swaps that assume credit risk from a single entity, referenced index, or asset pool in order to synthetically replicate investment transactions. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced security issuer's debt obligation. A credit event is generally defined as default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers, baskets of up to five corporate issuers, and diversified portfolios of corporate issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and are typically divided into tranches that possess different credit ratings. The following table presents the notional amount, fair value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amount and fair value for credit derivatives in which the Company is assuming credit risk as of December 31, 2008.
AS OF DECEMBER 31, 2008 UNDERLYING REFERENCED WEIGHTED CREDIT OBLIGATION(S) (1) AVERAGE AVERAGE NOTIONAL FAIR YEARS TO CREDIT AMOUNT (2) VALUE MATURITY TYPE RATING ---------------------------------------------------------------------------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $47 $ -- 4 years Corporate A- Credit Below investment grade risk exposure 46 (12) 4 years Corporate CCC+ Credit Basket credit default swaps (4) Investment grade risk exposure 1,139 (196) 5 years Corporate A- Credit Investment grade risk exposure 203 (70) 42 years CMBS AAA Credit Below investment grade risk exposure 125 (104) 6 years Corporate BB+ Credit Credit linked notes Investment grade risk exposure 106 95 2 years Corporate BBB+ Credit -------- ------- TOTAL $1,666 $(287) -------- ------- OFFSETTING OFFSETTING NOTIONAL FAIR AMOUNT (3) VALUE (3) -------------------------------------- ------------------------------ CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $35 $(9) Below investment grade risk exposure -- -- Basket credit default swaps (4) Investment grade risk exposure 489 8 Investment grade risk exposure 203 70 Below investment grade risk exposure -- -- Credit linked notes Investment grade risk exposure -- -- ------ ---- TOTAL $727 $69 ------ ----
(1) The average credit ratings are based on availability and the midpoint of the applicable ratings among Moody's, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. F-49 (2) Notional amount is equal to the maximum potential future loss amount. There is no specific collateral related to these contracts or recourse provisions included in the contracts to offset losses. (3) The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of or losses paid related to the original swap. (4) Includes $1.3 billion of standard market indices of diversified portfolios of corporate issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index. Also includes $175 of customized diversified portfolios of corporate issuers. SECURITIES LENDING AND COLLATERAL ARRANGEMENTS The Company participates in securities lending programs to generate additional income, whereby certain domestic fixed income securities are loaned for a specified period of time from the Company's portfolio to qualifying third parties, via two lending agents. Borrowers of these securities provide collateral of 102% of the market value of the loaned securities and can return the securities to the Company for cash at varying maturity dates. Acceptable collateral may be in the form of cash or U.S. government securities. The market value of the loaned securities is monitored and additional collateral is obtained if the market value of the collateral falls below 100% of the market value of the loaned securities. Under the terms of securities lending programs, the lending agent indemnifies the Company against borrower defaults. As of December 31, 2008 and 2007, the fair value of the loaned securities was approximately $1.8 billion and $2.1 billion, respectively, and was included in fixed maturities and short-term investments in the consolidated balance sheets. As of December 31, 2008, the Company had received collateral against the loaned securities in the amount of $1.8 billion. The Company earns income from the cash collateral or receives a fee from the borrower. The Company recorded before-tax income from securities lending transactions, net of lending fees, of $18 and $6 for the years ended December 31, 2008 and 2007, respectively, which was included in net investment income. The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2008 and 2007, collateral pledged having a fair value of $821 and $355, respectively, was included in fixed maturities in the consolidated balance sheets. The classification and carrying amount of the loaned securities and the derivative instrument collateral pledged were as follows:
DECEMBER 31, 2008 2007 -------------------------------------------------------------------------------- LOANED SECURITIES AND COLLATERAL PLEDGED ABS $ -- $4 CMOs -- 21 CMBS -- 244 Corporate 1,386 1,554 MBS 374 221 Government/Government Agencies Foreign -- 14 United States 215 303 Short-term 617 1 Preferred stock 9 53 -------- -------- TOTAL $2,601 $2,415 -------- --------
As of December 31, 2008 and 2007, the Company had accepted collateral relating to securities lending programs and derivative instruments consisting of cash, U.S. government and U.S. government agency securities with a fair value of $5.6 billion and $3.3 billion, respectively. At December 31, 2008 and 2007, cash collateral of $5.1 billion and $3.1 billion, respectively, was invested and recorded in the consolidated balance sheets in fixed maturities and short-term investments with a corresponding amount predominately recorded in other liabilities. Included in this cash collateral was $3.3 billion and $290 for derivative cash collateral as of December 31, 2008 and 2007, respectively. In accordance with FSP FIN 39-1, a portion of the liability associated with the derivative cash collateral was reclassed out of other liabilities and into a receivable in other assets of $507 and $175 as of December 31, 2008 and 2007, respectively. For further discussion on the adoption of FSP FIN 39-1, see Note 2. The Company is only permitted by contract to sell or repledge the noncash collateral in the event of a default by the counterparty. The Company incurred counterparty default losses related to the bankruptcy of Lehman Brothers Holdings Inc. for the year ended December 31, 2008, and no counterparty default losses for the year ended December 31, 2007. As of December 31, 2008 and 2007, noncash collateral accepted was held in separate custodial accounts. SECURITIES ON DEPOSIT WITH STATES The Company is required by law to deposit securities with government agencies in states where it conducts business. As of December 31, 2008 and 2007, the fair value of securities on deposit was approximately $15 and $14, respectively. F-50 5. REINSURANCE The Company cedes insurance to other insurers in order to limit its maximum losses and to diversify its exposures and provide surplus relief. Such transfers do not relieve the Company of its primary liability under policies it wrote and, as such, failure of reinsurers to honor their obligations could result in losses to the Company. The Company also assumes reinsurance from other insurers and is a member of and participates in several reinsurance pools and associations. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. As of December 31, 2008 the Company's reinsurance-related concentrations of credit risk greater than 10% of the Company's stockholder's equity are as follows:
REINSURANCE RECOVERABLE -------------------------------------------------------------------------------- Transamerica Financial Life Insurance Company $736 Connecticut General Life Insurance Company $539
In accordance with normal industry practice, the Company is involved in both the cession and assumption of insurance with other insurance and reinsurance companies. As of December 31, 2008 and 2007, the Company's policy for the largest amount retained on any one life by any Company comprising the life operations was $10. For further discussion on ceded reinsurance, see Reinsurance in the Capital Markets Risk Management section of the MD&A. Insurance fees, earned premiums and other were comprised of the following:
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- Gross fee income, earned premiums and other $5,773 $6,134 $5,128 Reinsurance assumed 48 13 19 Reinsurance ceded (682) (694) (719) -------- -------- -------- NET FEE INCOME, EARNED PREMIUMS AND OTHER $ 5,139 $ 5,453 $ 4,428 -------- -------- --------
The Company reinsures certain of its risks to other reinsurers under yearly renewable term, coinsurance, and modified coinsurance arrangements. Yearly renewable term and coinsurance arrangements result in passing all or a portion of the risk to the reinsurer. Generally, the reinsurer receives a proportionate amount of the premiums less an allowance for commissions and expenses and is liable for a corresponding proportionate amount of all benefit payments. Modified coinsurance is similar to coinsurance except that the cash and investments that support the liabilities for contract benefits are not transferred to the assuming company, and settlements are made on a net basis between the companies. Coinsurance with funds withheld is a form of coinsurance except that the investment assets that support the liabilities are withheld by the ceding company. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. Insurance recoveries on ceded reinsurance contracts, which reduce death and other benefits were $465, $285 and $241 for the years ended December 31, 2008, 2007 and 2006, respectively. The Company also assumes reinsurance from other insurers. In addition, the Company reinsures a portion of U.S minimum death benefit guarantees as well as guaranteed minimum withdrawal benefits. The 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 $148, $132 and $166 in 2008, 2007 and 2006, respectively, and accident and health premium of $236, $243 and $259, respectively, to HLA. 6. DEFERRED POLICY ACQUISITION COSTS AND PRESENT VALUE OF FUTURE PROFITS Changes in deferred policy acquisition costs and present value of future profits is as follows:
2008 2007 2006 -------------------------------------------------------------------------------- BALANCE, JANUARY 1, BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE, PRE-TAX $ 8,601 $ 7,474 $ 7,198 Cumulative effect of accounting change, pre-tax (SOP05-1) -- (20) -- BALANCE, JANUARY 1, AS ADJUSTED 8,601 7,454 7,198 Deferred costs 1,258 1,557 1,457 Amortization -- Deferred policy acquisitions costs and present value of future profits (509) (907) (1,096) Amortization -- Unlock, pre-tax (1) (1,111) 302 (142) Adjustments to unrealized gains and losses on securities available-for-sale and other 1,747 194 57 Effect of currency translation (42) -- -- -------- -------- -------- BALANCE, DECEMBER 31 $ 9,944 $ 8,601 $ 7,474 -------- -------- --------
(1) For a discussion of unlock effects, see Unlock Results in Note 1. F-51 Estimated future net amortization expense of present value of future profits for the succeeding five years is as follows.
FOR THE YEARS ENDED DECEMBER 31, -------------------------------------------------------------------------------- 2009 $26 2010 $24 2011 $21 2012 $20 2013 $18
7. GOODWILL AND OTHER INTANGIBLE ASSETS As of December 31, 2008 and December 31, 2007, the carrying amount of goodwill for the Company's Individual Annuity, Other Retail, Retirement Plans and Individual Life reporting units was:
DECEMBER 31, DECEMBER 31, 2008 2007 -------------------------------------------------------------------------------- REPORTING UNIT Individual Annuity $ -- $184 Other Retail 159 159 Retirement Plans 79 -- Individual Life 224 224 ----- ------- TOTAL $462 $567 ----- -------
In 2008, the Company completed three acquisitions that resulted in additional goodwill of $79 in the Retirement Plans reporting unit. The Company's interim goodwill impairment test performed in accordance with SFAS No. 142 "Goodwill and Other Intangible Assets", and in connection with the preparation of our year end 2008 financial statements, resulted in a pre-tax impairment charge of $184 in the Individual Annuity reporting unit. The impairment charge taken in 2008 was primarily due to the Company's estimate of the Individual Annuity reporting unit's fair value falling significantly below its book value. The fair value of this reporting unit declined as the statutory and capital risks associated with the death and living benefit guarantees sold with products offered by this reporting unit increased. These concerns had a comparable impact on The Hartford's share price. The determination of fair value for the Individual Annuity reporting unit incorporated multiple inputs including discounted cash flow calculations, market participant assumptions and The Hartford's share price. No goodwill impairment charges were recorded for the year ended December 31, 2007 or as a result of the Company's 2008 annual goodwill impairment tests. The following table shows the Company's acquired intangible assets that continue to be subject to amortization and aggregate amortization expense, net of interest accretion, if any. Acquired intangible assets are included in other assets in the consolidated balance sheet. Except for goodwill, the Company has no intangible assets with indefinite useful lives.
2008 2007 GROSS ACCUMULATED GROSS ACCUMULATED CARRYING NET CARRYING NET AMOUNT AMORTIZATION AMOUNT AMORTIZATION --------------------------------------------------------------------------------------------------------------------------------- ACQUIRED INTANGIBLE ASSETS Servicing intangibles $14 $1 $ -- $ -- Other 1 -- -- -- ---- ---- ---- ---- TOTAL ACQUIRED INTANGIBLE ASSETS $15 $1 $ -- $ -- ---- ---- ---- ----
In 2008, the Company completed three acquisitions that resulted in additional acquired intangible assets of $15 in servicing intangibles and other. Net amortization expense for the years ended December 31, 2008, 2007 and 2006 was $1, $0 and $0, respectively, and included in other expense in the consolidated statement of operations. As of December 31, 2008, the weighted average amortization period was 20 years for servicing intangibles, 20 years for other and 20 years for total acquired intangible assets. The following is detail of the net acquired intangible asset activity for the year ended December 31, 2008
SERVICING INTANGIBLES OTHER TOTAL -------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2008 BALANCE, BEGINNING OF YEAR $ -- $ -- $ -- Acquisition of business 14 1 15 Amortization, net of the accretion of interest (1) -- (1) ---- ---- ---- BALANCE, ENDING OF YEAR $13 $ 1 $14 ---- ---- ----
F-52 Estimated future net amortization expense for the succeeding five years is as follows:
FOR THE YEARS ENDED DECEMBER 31, -------------------------------------------------------------------------------- 2009 $1 2010 1 2011 1 2012 1 2013 1 --------------------------------------------------------------------------------
For a discussion of present value of future profits that continue to be subject to amortization and aggregate amortization expense, see Note 6. 8. SEPARATE ACCOUNTS, DEATH BENEFITS AND OTHER INSURANCE BENEFIT FEATURES The Company records the variable portion of individual variable annuities, 401(k), institutional, 403(b)/457, private placement life and variable life insurance products within separate account assets and liabilities. Separate account assets are reported at fair value. Separate account liabilities are set equal to separate account assets. Separate account assets are segregated from other investments. Investment income and gains and losses from those separate account assets, which accrue directly to, and whereby investment risk is borne by the policyholder, are offset by the related liability changes within the same line item in the consolidated statements of operations. The fees earned for administrative and contract holder maintenance services performed for these separate accounts are included in fee income. During 2008, 2007 and 2006, there were no gains or losses on transfers of assets from the general account to the separate account. Many of the variable annuity and universal life ("UL") contracts issued by the Company offer various guaranteed minimum death and withdrawal benefits and UL secondary guarantee benefits. UL secondary guarantee benefits ensure that the policy will not terminate, and will continue to provide a death benefit, even if there is insufficient policy value to cover the monthly deductions and charges. Guaranteed minimum death benefits are offered in various forms as described in further detail throughout this Note 8. The Company currently reinsures a portion of the death benefit guarantees associated with its in-force block of business. The Company also assumes, through reinsurance, minimum death, income, withdrawal and accumulation benefits offered by an affiliate. Changes in the gross GMDB and UL secondary guarantee benefits sold with annuity and/or UL products accounted for and collectively known as "SOP 03-1 reserve liabilities" are as follows:
UL SECONDARY GMDB (1) GUARANTEES (1) -------------------------------------------------------------------------------- LIABILITY BALANCE AS OF JANUARY 1, 2008 $ 531 $ 19 Incurred 231 21 Unlock 389 -- Paid (269) -- ------ ---- LIABILITY BALANCE AS OF DECEMBER 31, 2008 $882 $40 ------ ----
(1) The reinsurance recoverable asset related to the GMDB was $593 as of December 31, 2008. The reinsurance recoverable asset related to the UL Secondary Guarantees was $16 as of December 31, 2008.
UL SECONDARY GMDB (1) GUARANTEES (1) -------------------------------------------------------------------------------- LIABILITY BALANCE AS OF JANUARY 1, 2007 $ 476 7 Incurred 144 12 Unlock (4) -- Paid (85) -- ------ --- LIABILITY BALANCE AS OF DECEMBER 31, 2007 $ 531 19 ------ ---
(1) The reinsurance recoverable asset related to the GMDB was $325 as of December 31, 2007. The reinsurance recoverable asset related to the UL Secondary Guarantees was $10 as of December 31, 2007. The net SOP 03-1 reserve liabilities are established by estimating the expected value of net reinsurance costs and death benefits in excess of the projected account balance. The excess death benefits and net reinsurance costs are recognized ratably over the accumulation period based on total expected assessments. The SOP 03-1 reserve liabilities are recorded in reserve for future policy benefits in the Company's consolidated balance sheets. Changes in the SOP 03-1 reserve liabilities are recorded in benefits, losses and loss adjustment expenses in the Company's consolidated statements of operations. In a manner consistent with the Company's accounting policy for deferred acquisition costs, the Company regularly evaluates estimates used and adjusts the additional liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised. As described within the Unlock and F-53 Results in Note 1, the Company Unlocked its assumptions related to its SOP 03-1 reserves during the third quarter of 2008 and 2007. The determination of the SOP 03-1 reserve liabilities and their related reinsurance recoverables, are based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience. The following assumptions were used as of December 31, 2008: GMDB: - 1000 stochastically generated investment performance scenarios for all issue years - For all issue years, the weighted average return is 8.3%; it varies by asset class with a low of 3% for cash and a high of 9% for aggressive equities. - Discount rate of 7.5% for issue year 2002 & prior; discount rate of 7% for issue year 2003 & 2004 and discount rate of 5.6% for issue year 2005 -- 2008. - Volatilities also vary by asset class with a low of 1% for cash, a high of 15% for aggressive equities, and a weighted average of 11%. - 100% of the Hartford experience mortality table was used for the mortality assumptions - Lapse rates by calendar year vary from a low of 8% to a high of 11%, with an average of 10% UL SECONDARY GUARANTEES: - Discount rate of 4.75% for issue year 2004, discount rate of 4.5% for issue year 2005 & 2006, discount rate of 4.25% for issue year 2007 and discount rate of 3.5% for issue year 2008. - 100% of the Hartford pricing mortality table for mortality assumptions. - Lapse rates for single life policies average 4% in policy years 1-10, declining to 0% by age 95. Lapse rate for last survivor policies declining to 0.5% by age 91. The following table provides details concerning GMDB exposure as of December 31, 2008: BREAKDOWN OF VARIABLE ANNUITY ACCOUNT VALUE BY GMDB TYPE AT DECEMBER 31, 2008
RETAINED WEIGHTED AVERAGE ACCOUNT NET AMOUNT NET AMOUNT ATTAINED AGE MAXIMUM ANNIVERSARY VALUE (MAV) (1) VALUE AT RISK AT RISK (8) OF ANNUITANT --------------------------------------------------------------------------------------------------------------------------------- MAV only $25,961 $14,743 $5,019 66 With 5% rollup (2) 1,858 1,153 481 65 With Earnings Protection Benefit Rider (EPB) (3) 5,068 2,447 241 62 With 5% rollup & EPB 742 400 75 65 --------- --------- --------- --- TOTAL MAV 33,629 18,743 5,816 Asset Protection Benefit (APB) (4) 25,601 9,166 6,019 63 Lifetime Income Benefit (LIB) (5) 1,137 487 487 61 Reset (6) (5-7 years) 3,440 1,190 1,189 67 Return of Premium (7)/Other 17,321 3,889 3,638 58 --------- --------- --------- --- TOTAL $81,128 $33,475 $17,149 63 --------- --------- --------- ---
(1) MAV: the death benefit is the greatest of current account value, net premiums paid and the highest account value on any anniversary before age 80 (adjusted for withdrawals). (2) Rollup: the death benefit is the greatest of the MAV, current account value, net premium paid and premiums (adjusted for withdrawals) accumulated at generally 5% simple interest up to the earlier of age 80 or 100% of adjusted premiums. (3) EPB: the death benefit is the greatest of the MAV, current account value, or contract value plus a percentage of the contract's growth. The contract's growth is account value less premiums net of withdrawals, subject to a cap of 200% of premiums net of withdrawals. (4) APB: the death benefit is the greater of current account value or MAV, not to exceed current account value plus 25% times the greater of net premiums and MAV (each adjusted for premiums in the past 12 months). (5) LIB: the death benefit is the greatest of current account value, net premiums paid, or for certain contracts a benefit amount that ratchets over time, generally based on market performance. F-54 (6) Reset: the death benefit is the greatest of current account value, net premiums paid and the most recent five to seven year anniversary account value before age 80 (adjusted for withdrawals). (7) Return of premium: the death benefit is the greater of current account value and net premiums paid. (8) Net amount at risk and retained net amount at risk are highly sensitive to equity market movements. For example, as equity market declines, net amount at risk and retained net amount at risk will generally increase. See Note 1 for a description of the Company's guaranteed living benefits that are accounted for at fair value. 9. SALES INDUCEMENTS The Company currently offers enhanced crediting rates or bonus payments to contract holders on certain of its individual and group annuity products. The expense associated with offering a bonus is deferred and amortized over the life of the related contract in a pattern consistent with the amortization of deferred policy acquisition costs. Amortization expense associated with expenses previously deferred is recorded over the remaining life of the contract. Consistent with the Company's Unlock, the Company unlocked the amortization of the sales inducement asset. See Note 1, for more information concerning the Unlock. Changes in deferred sales inducement activity were as follows for the year ended December 31:
2008 2007 -------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $459 $402 Cumulative effect of accounting change, pre-tax (SOP 05-1) (1) ------ ------ BALANCE, JANUARY 1, AS ADJUSTED 459 401 ------ ------ Sales inducements deferred 137 103 Unlock (43) -- Amortization charged to income (21) (49) ------ ------ BALANCE, END OF PERIOD $533 $ 459 ------ ------
10. COMMITMENTS AND CONTINGENCIES LITIGATION The Company is involved in claims litigation arising in the ordinary course of business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The Company accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves. Management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of the Company. The Company is also involved in other kinds of legal actions, some of which assert claims for substantial amounts. These actions include, among others, putative state and federal class actions seeking certification of a state or national class. Such putative class actions have alleged, for example, improper sales practices in connection with the sale of life insurance and other investment products; and improper fee arrangements in connection with investment products and structured settlements. The Company also is involved in individual actions in which punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of the Company. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated results of operations or cash flows in particular quarterly or annual periods. BROKER COMPENSATION LITIGATION -- Following the New York Attorney General's filing of a civil complaint against Marsh & McLennan Companies, Inc., and Marsh, Inc. (collectively, "Marsh") in October 2004 alleging that certain insurance companies, including The Hartford, participated with Marsh in arrangements to submit inflated bids for business insurance and paid contingent commissions to ensure that Marsh would direct business to them, private plaintiffs brought several lawsuits against The Hartford predicated on the allegations in the Marsh complaint, to which The Hartford was not party. Among these is a multidistrict litigation in the United States District Court for the District of New Jersey. There are two consolidated amended complaints filed in the multidistrict litigation, one related to conduct in connection with the sale of property-casualty insurance and the other related to alleged conduct in connection with the sale of group benefits products. The Company is named in the group benefits products complaint. The complaints assert, on behalf of a putative class of persons who purchased insurance through broker defendants, claims under the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), state law, and in the case of the group benefits products complaint, claims under the Employee Retirement Income Security Act of 1974 ("ERISA"). The claims are predicated upon allegedly undisclosed or otherwise improper payments of contingent commissions to the broker defendants to steer business to the insurance F-55 company defendants. The district court has dismissed the Sherman Act and RICO claims in both complaints for failure to state a claim and has granted the defendants' motions for summary judgment on the ERISA claims in the group-benefits products complaint. The district court further has declined to exercise supplemental jurisdiction over the state law claims, has dismissed those state law claims without prejudice, and has closed both cases. The plaintiffs have appealed the dismissal of claims in both consolidated amended complaints, except the ERISA claims. REGULATORY DEVELOPMENTS -- On July 23, 2007, The Hartford entered into an agreement (the "Agreement") with the New York Attorney General's Office, the Connecticut Attorney General's Office, and the Illinois Attorney General's Office to resolve (i) the previously disclosed investigations by these Attorneys General regarding, among other things, The Hartford's compensation agreements with brokers, alleged participation in arrangements to submit inflated bids, Compensation arrangements in connection with the administration of workers compensation plans and reporting of workers compensation premiums participants in finite reinsurance transactions sale of fixed and individual annuities used to fund structured settlements, and marketing and sale of individual and group variable annuity products and (ii) the previously disclosed investigation by the New York Attorney General's Office of aspects of The Hartford's variable annuity and mutual fund operations related to market timing. In light of the Agreement, the Staff of the Securities and Exchange Commission has informed The Hartford that it has determined to conclude its previously disclosed investigation into market timing without recommending any enforcement action. Under the terms of the Agreement, The Hartford paid $115, of which $84 represents restitution for market timing, $5 represents restitution for issues relating to the compensation of brokers, and $26 is a civil penalty. Hartford Life recorded charges of $54, after-tax, in the aggregate, none of which was attributed to the Company, through the first quarter of 2007 to establish a reserve for the market timing matters and, based on the settlement discussed above, Hartford Life recorded an additional charge of $21, after-tax, in the second quarter of 2007. In the second quarter of 2007, $75, after-tax, representing all of the charges that had been recorded at Hartford Life, was attributed to and recorded at the Company. COMMITMENTS The rent paid to Hartford Fire for operating leases entered into by the Company was $14, $27 and $35 for the years ended December 31, 2008, 2007 and 2006, respectively. Included in Hartford Fire's operating leases are the principal executive offices of Hartford Life Insurance Company, together with its parent, which are located in Simsbury, Connecticut. Rental expense for the facility located in Simsbury, Connecticut, which expired on December 31, 2008, as this operating lease has been be replaced by a capital lease between its parent Company HLA and Hartford Fire Insurance Company, amounted to approximately $0, $6 and $27 for the years ended December 31, 2008, 2007 and 2006, respectively. Future minimum rental commitments on all operating leases are as follows: 2009 10 2010 7 2011 5 2012 4 2013 2 Thereafter 1 --- TOTAL 29 ---
TAX MATTERS The Company's federal income tax returns are routinely audited by the Internal Revenue Service ("IRS"). During 2008, the IRS completed its examination of the Company's U.S. income tax returns for 2002 through 2003. The Company received notification of the approval by the Joint Committee on Taxation of the results of the examination subsequent to December 31, 2008. The examination will not have a material effect on the Company's net income or financial position. The 2004 through 2006 examination began during 2008, and is expected to close by the end of 2010. In addition, the Company is working with the IRS on a possible settlement of an issue related to prior periods which, if settled, may result in the booking of tax benefits in 2009. Such benefits are not expected to be material to the Company's net income or financial position. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years. The separate account dividends-received deduction ("DRD") is estimated for the current year using information from the prior year-end, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments. The estimated DRD was updated in the third quarter for the provision-to-filed-return adjustments, and in the fourth quarter based on current year ultimate mutual fund distributions and fee income from the Company's variable insurance products. The actual current year DRD varied from earlier estimates based on, but not limited to, changes in eligible dividends received by the mutual funds, amounts of distributions from these mutual funds, amounts of short-term capital gains and asset values at the mutual fund level and the Company's taxable income before the DRD. Given F-56 recent financial markets' volatility, the Company intends to review its DRD computations on a quarterly basis, beginning 2009. The Company recorded benefits of $176, $155 and $174 related to the separate account DRD in the years ended December 31, 2008, December 31, 2007 and December 31, 2006, respectively. The 2008 benefit included a benefit of $9 related to a true-up of the prior year tax return, the 2007 benefit included a charge of $1 related to a true-up of the prior year tax return, and the 2006 benefit included a benefit of $6 related to true-ups of the prior years' tax returns. In Revenue Ruling 2007-61, issued on September 25, 2007, the IRS announced its intention to issue regulations with respect to certain computational aspects of the DRD on separate account assets held in connection with variable annuity contracts. Revenue Ruling 2007-61 suspended Revenue Ruling 2007-54, issued in August 2007 that purported to change accepted industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS may ultimately propose for issuance in this area will be subject to public notice and comment, at which time insurance companies and other members of the public will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown, but they could result in the elimination of some or all of the separate account DRD tax benefit that the Company receives. Management believes that it is highly likely that any such regulations would apply prospectively only. The Company receives a foreign tax credit ("FTC") against its U.S. tax liability for foreign taxes paid by the Company including payments from its separate account assets. The separate account FTC is estimated for the current year using information from the most recent filed return, adjusted for the change in the allocation of separate account investments to the international equity markets during the current year. The actual current year FTC can vary from the estimates due to actual FTCs passed through by the mutual funds. The Company recorded benefits of $16, $11 and $17 related to separate account FTC in the years ended December 31, 2008, December 31, 2007 and December 31, 2006 respectively. These amounts included benefits related to true-ups of prior years' tax returns of $4, $0 and $7 in 2008, 2007 and 2006, respectively. UNFUNDED COMMITMENTS At December 31, 2008, the Company has outstanding commitments totaling approximately $610, of which approximately $539 is committed to fund limited partnership investments. These capital commitments can be called by the partnership during the commitment period (on average two to five years) to fund the purchase of new investments and partnership expenses. Once the commitment period expires, the Company is under no obligation to fund the remaining unfunded commitment but may elect to do so. The remaining outstanding commitments are primarily related to various funding obligations associated with investments in mortgage and construction loans. These have a commitment period of one month to three years. GUARANTY FUND AND OTHER INSURANCE-RELATED ASSESSMENTS In all states, insurers licensed to transact certain classes of insurance are required to become members of a guaranty fund. In most states, in the event of the insolvency of an insurer writing any such class of insurance in the state, members of the funds are assessed to pay certain claims of the insolvent insurer. A particular state's fund assesses its members based on their respective written premiums in the state for the classes of insurance in which the insolvent insurer was engaged. Assessments are generally limited for any year to one or two percent of premiums written per year depending on the state. The Company accounts for guaranty fund and other insurance assessments in accordance with Statement of Position No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments". Liabilities for guaranty fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated, and when the event obligating the Company to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of other liabilities in the Consolidated Balance Sheets. As of December 31, 2008 and 2007, the liability balance was $4 and $4, respectively. As of December 31, 2008 and 2007, $11 and $12, respectively, related to premium tax offsets were included in other assets. 11. INCOME TAX The Company is included in the Hartford's consolidated Federal income tax return. The Company and The Hartford have entered into a tax sharing agreement under which each member in the consolidated U.S. Federal income tax return will make payments between them such that, with respect to any period, the amount of taxes to be paid by the Company, subject to certain tax adjustments, is consistent with the "parent down" approach. Under this approach, the Company's deferred tax assets and tax attributes are considered realized by it so long as the group is able to recognize (or currently use) the related deferred tax asset or attribute. Thus the need for a valuation allowance is determined at the consolidated return level rather then at the level of the individual entities comprising the consolidated group. F-57 Income tax expense (benefit) is as follows:
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- INCOME TAX EXPENSE (BENEFIT) Current -- U.S. Federal $(686) $177 $170 --------- ------- ------- Deferred -- U.S. Federal Excluding NOL Carryforward (776) 75 12 -- Net Operating Loss Carryforward (719) -- -- --------- ------- ------- TOTAL DEFERRED (1,495) 75 12 --------- ------- ------- TOTAL INCOME TAX EXPENSE (BENEFIT) $(2,181) $252 $182 --------- ------- -------
A reconciliation of the tax provision at the U.S. Federal statutory rate to the provision (benefit) for income taxes is as follows:
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- Tax provision at the U.S. federal statutory rate $(2,007) $398 $369 Dividends received deduction (176) (155) (174) Penalties -- 7 -- Foreign related investments 3 (4) (8) Other (1) 6 (5) --------- ------ ------ TOTAL $(2,181) $252 $182 --------- ------ ------
Deferred tax assets (liabilities) include the following as of December 31:
2008 2007 -------------------------------------------------------------------------------- DEFERRED TAX ASSETS Tax basis deferred policy acquisition costs $660 $682 Net unrealized loss on investments 2,924 293 Investment-related items 2,424 460 Depreciable & Amortizable assets 64 74 NOL Carryover 768 19 Minimum tax credit 241 254 Capital Loss Carryforward 24 -- Foreign tax credit carryovers 18 -- Other 19 18 --------- --------- TOTAL DEFERRED TAX ASSETS 7,142 1,800 Valuation Allowance (49) (19) --------- --------- NET DEFERRED TAX ASSETS 7,093 1,781 --------- --------- Financial statement deferred policy acquisition costs and reserves (3,614) (1,910) Employee benefits (35) (26) --------- --------- TOTAL DEFERRED TAX LIABILITIES (3,649) (1,936) --------- --------- TOTAL DEFERRED TAX ASSET (LIABILITY) $3,444 $(155) --------- ---------
The Company had current federal income tax receivable of $566 and $63 as of December 31, 2008 and 2007, respectively. In management's judgment, the net deferred tax asset will more likely than not be realized. Included in the total deferred tax asset is a deferred tax asset of $768 with respect to net operating losses of $2,233, consisting of U.S. losses of $2,054, which expire from 2012-2023, and foreign losses of $179, which have no expiration. A valuation allowance of $49 has been recorded which relates to foreign operations. No valuation allowance has been recognized for realized or unrealized loss amounts, as the Company either has available tax-planning strategies that are prudent and feasible, or has the ability and intent to hold securities until their recovery. If the Company were to follow a "separate entity" approach, it would have to record a valuation allowance of $324 related to realized capital losses. In addition, the current tax benefit related to any of the Company's tax attributes realized by virtue of its inclusion in The Hartford's consolidated tax return would have been recorded directly to surplus rather than income. These benefits were $500, $0 and $0 for 2008, 2007 and 2006, respectively. F-58 The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. During 2008, the Internal Revenue Service ("IRS") completed its examination of the Company's U.S. income tax returns for 2002 through 2003. The Company received notification of the approval by the Joint Committee on Taxation of the results of the examination subsequent to December 31, 2008. The examination will not have a material effect on the Company's net income or financial position. The 2004 through 2006 examination began during 2008, and is expected to close by the end of 2010. In addition, the Company is working with the IRS on a possible settlement of an issue related to prior periods which if settled, may result in the booking of tax benefits in 2009. Such benefits are not expected to be material to the Company's net income or financial position or in the balance of uncertain tax positions. 12. DEBT CONSUMER NOTES On September 8, 2006, Hartford Life Insurance Company filed a shelf registration statement with the SEC (Registration Statement No. 333-137215), effective immediately, for the offering and sale of Hartford Life Income Notes SM and Hartford Life medium-term notes (collectively called "Consumer Notes"). There are no limitations on the ability to issue additional indebtedness in the form of Hartford Life Income Notes SM and Hartford Life medium-term notes. Institutional began issuing consumer notes through its Retail Investor Notes Program in September 2006. A consumer note is an investment product distributed through broker-dealers directly to retail investors as medium-term, publicly traded fixed or floating rate, or a combination of fixed and floating rate, notes. Consumer notes are part of the Company's spread-based business and proceeds are used to purchase investment products, primarily fixed rate bonds. Proceeds are not used for general operating purposes. Consumer notes maturities may extend up to 30 years and have contractual coupons based upon varying interest rates or indexes (e.g. consumer price index) and may include a call provision that allows the Company to extinguish the notes prior to its scheduled maturity date. Certain consumer notes may be redeemed by the holder in the event of death. Redemptions are subject to certain limitations, including calendar year aggregate and individual limits. The aggregate limit is equal to the greater of $1 or 1% of the aggregate principal amount of the notes as of the end of the prior year. The individual limit is $250 thousand per individual. Derivative instruments are utilized to hedge the Company's exposure to market risks in accordance with Company policy. As of December 31, 2008 and 2007, $1,210 and $ 809, respectively, of consumer notes were outstanding. As of December 31, 2008, these consumer notes have interest rates ranging from 4.0% to 6.3% for fixed notes and, for variable notes, based on December 31, 2008 rates, either consumer price index plus 80 to 267 basis points, or indexed to the S&P 500, Dow Jones Industrials, foreign currency, or the Nikkei 225. The aggregate maturities of Consumer Notes are as follows: $11 in 2009, $30 in 2010, $131 in 2011, $291 in 2012 and $751 thereafter. For 2008 and 2007, interest credited to holders of consumer notes was $ 59 and $11, respectively. During 2008, the Company made the decision to discontinue future issuances of consumer notes, this decision does not impact consumer notes currently outstanding. 13. STATUTORY RESULTS The domestic insurance subsidiaries of the Company prepare their statutory financial statements in conformity with statutory accounting practices prescribed or permitted by the applicable state insurance department which vary materially from GAAP. 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 differences between statutory financial statements and financial statements prepared in accordance with GAAP vary between domestic and foreign jurisdictions. The principal differences are that statutory financial statements do not reflect deferred policy acquisition costs and limit deferred income taxes, life benefit reserves predominately use interest rate and mortality assumptions prescribed by the NAIC, bonds are generally carried at amortized cost and reinsurance assets and liabilities are presented net of reinsurance. The statutory net income amounts for the years ended December 31, 2007 and 2006, and the statutory capital and surplus amounts as of December 31, 2007 and 2006 in the table below are based on actual statutory filings with the applicable regulatory authorities. The statutory net income amounts for the year ended December 31, 2008 the statutory capital and surplus amounts as of December 31, 2008 are estimates, as the respective 2008 statutory filings have not yet been made.
FOR THE YEARS ENDED DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- Statutory net income $(2,533) $255 $777 -------- ------- ------- Statutory capital and surplus $4,073 $4,448 $3,276 -------- ------- -------
F-59 The Company has received approval from the Connecticut Insurance Department regarding the use of two permitted practices in its statutory financial statements and those of its Connecticut-domiciled life insurance subsidiaries as of December 31, 2008. The first permitted practice relates to the statutory accounting for deferred income taxes. Specifically, this permitted practice modifies the accounting for deferred income taxes prescribed by the NAIC by increasing the realization period for deferred tax assets from one year to three years and increasing the asset recognition limit from 10% to 15% of adjusted statutory capital and surplus. The benefits of this permitted practice may not be considered by the Company when determining surplus available for dividends. The second permitted practice relates to the statutory reserving requirements for variable annuities with guaranteed living benefit riders. Actuarial guidelines prescribed by the NAIC require a stand-alone asset adequacy analysis reflecting only benefits, expenses and charges that are associated with the riders for variable annuities with guaranteed living benefits. The permitted practice allows for all benefits, expenses and charges associated with the variable annuity contract to be reflected in the stand-alone asset adequacy test. These permitted practices resulted in an increase to the Company's estimated statutory surplus of $956 as of December 31, 2008. The effects of these permitted practices are included in the 2008 amounts in the table above. 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 payment of dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut. Under these laws, the insurance subsidiaries may only make their dividend payments out of unassigned surplus. These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer's policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the twelve-month period ending on the thirty-first day of December last preceding, in each case determined under statutory insurance accounting principles. In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer's earned surplus, it requires the prior approval of the Connecticut Insurance Commissioner. The insurance holding company laws of the other jurisdictions in which The Hartford's insurance subsidiaries are incorporated (or deemed commercially domiciled) generally contain similar (although in certain instances somewhat more restrictive) limitations on the payment of dividends. With respect to dividends to HLA, it is estimated that the Company's dividend limitation under the holding company laws of Connecticut is approximately $374 in 2009. However, because the Company's earned surplus is negative as of December 31, 2008, the Company will not be permitted to pay any dividends to HLA in 2009 without prior approval from the insurance commissioner until such time as earned surplus becomes positive. 14. PENSION PLANS, POSTRETIREMENT, HEALTH CARE AND LIFE INSURANCE BENEFIT AND SAVINGS PLANS PENSION PLANS Hartford Life's employees are included in The Hartford's non-contributory defined benefit pension and postretirement health care and life insurance benefit plans. Defined benefit pension expense, postretirement health care and life insurance benefits expense allocated by The Hartford to the Company, was $24, $22 and $22 for the years ended December 31, 2008, 2007 and 2006, respectively. INVESTMENT AND SAVINGS PLAN Substantially all U.S. employees are eligible to participate in The Hartford's Investment and Savings Plan under which designated contributions may be invested in common stock of The Hartford or certain other investments. These contributions are matched, up to 3% of compensation, by the Company. In 2004, the Company began allocating a percentage of base salary to the Plan for eligible employees. In 2008, employees whose prior year earnings were less than $100,000 received a contribution of 1.5% of base salary and employees whose prior year earnings were more than $100,000 received a contribution of 0.5% of base salary. The cost to Hartford Life for this plan was approximately $10, $11 and $9 for the years ended December 31, 2008, 2007 and 2006, respectively. 15. STOCK COMPENSATION PLANS Hartford Life's employees are included in The Hartford 2005 Incentive Stock Plan and The Hartford Employee Stock Purchase Plan. The Hartford has two primary stock-based compensation plans which are described below. Shares issued in satisfaction of stock-based compensation may be made available from authorized but unissued shares, shares held by The Hartford in treasury or from shares purchased in the open market. The Hartford typically issues new shares in satisfaction of stock-based compensation. Hartford Life was allocated compensation expense of $18 million, $21 million and $19 million for the years ended December 31, 2008, 2007 and 2006, respectively. Hartford Life's income tax benefit recognized for stock-based compensation plans was $5 million, $7 million and $6 million for the years ended December 31, 2008, 2007 and 2006, respectively. Hartford Life did not capitalize any cost of stock-based compensation. F-60 Stock Plan In 2005, the shareholders of The Hartford approved The Hartford 2005 Incentive Stock Plan (the "2005 Stock Plan"), which superseded and replaced The Hartford Incentive Stock Plan and The Hartford Restricted Stock Plan for Non-employee Directors. The terms of the 2005 Stock Plan are substantially similar to the terms of these superseded plans. The 2005 Stock Plan provides for awards to be granted in the form of non-qualified or incentive stock options qualifying under Section 422 of the Internal Revenue Code, stock appreciation rights, restricted stock units, restricted stock, performance shares, or any combination of the foregoing. The fair values of awards granted under the 2005 Stock Plan are measured as of the grant date and expensed ratably over the awards' vesting periods, generally three years. For stock option awards granted or modified in 2006 and later, the Company began expensing awards to retirement-eligible employees hired before January 1, 2002 immediately or over a period shorter than the stated vesting period because the employees receive accelerated vesting upon retirement and therefore the vesting period is considered non-substantive. All awards provide for accelerated vesting upon a change in control of The Hartford as defined in the 2005 Stock Plan. Stock Option Awards Under the 2005 Stock Plan, all options granted have an exercise price equal to the market price of The Hartford's common stock on the date of grant, and an option's maximum term is ten years. Certain options become exercisable over a three year period commencing one year from the date of grant, while certain other options become exercisable at the later of the three years from the date of grant or upon the attainment of specified market appreciation of The Hartford's common shares. For any year, no individual employee may receive an award of options for more than 1,000,000 shares. As of December 31, 2008, The Hartford had not issued any incentive stock options under any plans. For all options granted or modified on or after January 1, 2004, The Hartford uses a hybrid lattice/Monte-Carlo based option valuation model (the "valuation model") that incorporates the possibility of early exercise of options into the valuation. The valuation model also incorporates The Hartford's historical termination and exercise experience to determine the option value. For these reasons, the Hartford believes the valuation model provides a fair value that is more representative of actual experience than the value calculated under the Black-Scholes model. Share Awards Share awards are valued equal to the market price of The Hartford's common stock on the date of grant, less a discount for those awards that do not provide for dividends during the vesting period. Share awards granted under the 2005 Plan and outstanding include restricted stock units, restricted stock and performance shares. Generally, restricted stock units vest after three years and restricted stock vests in three to five years. Performance shares become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment of specific performance goals achieved over a specified period, generally three years. The maximum award of restricted stock units, restricted stock or performance shares for any individual employee in any year is 200,000 shares or units. Employee Stock Purchase Plan In 1996, The Hartford established The Hartford Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of The Hartford may purchase common stock of The Hartford at a 15% discount from the lower of the closing market price at the beginning or end of the quarterly offering period. Employees purchase a variable number of shares of stock through payroll deductions elected as of the beginning of the quarter. The fair value is estimated based on the 15% discount off of the beginning stock price plus the value of three-month European call and put options on shares of stock at the beginning stock price calculated using the Black-Scholes model. 16. TRANSACTIONS WITH AFFILIATES Transactions of the Company with Hartford Fire Insurance Company, Hartford Holdings and its affiliates relate principally to tax settlements, reinsurance, insurance coverage, rental and service fees, payment of dividends and capital contributions. In addition, an affiliated entity purchased group annuity contracts from the Company to fund structured settlement periodic payment obligations assumed by the affiliated entity as part of claims settlements with property casualty insurance companies and self-insured entities. As of December 31, 2008 and 2007 the Company had $49 and $48 of reserves for claim annuities purchased by affiliated entities. 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. Hartford Life sells fixed market value adjusted ("MVA") annuity products to customers in Japan. The yen based MVA product is written by the Hartford Life Insurance KK ("HLIKK"), a wholly owned Japanese subsidiary of Hartford Life and subsequently reinsured to the Company. As of December 31, 2008 and 2007, $2.8 billion and $1.8 billion, respectively, of the account value had been assumed by the Company. F-61 Effective August 31, 2005, a subsidiary of the Company, Hartford Life and Annuity Insurance Company ("HLAI"), entered into a reinsurance agreement with Hartford Life, Insurance KK ("HLIKK"), a wholly owned Japanese subsidiary of Hartford Life, Inc. ("Hartford Life"). Through this agreement, HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force and prospective GMIB riders issued by HLIKK on its variable annuity business. Effective July 31, 2006, the agreement was modified to include the GMDB on covered contracts that have an associated GMIB rider. The modified reinsurance agreement applies to all contracts, GMIB riders and GMDB riders in-force and issued as of July 31, 2006 and prospectively, except for policies and GMIB riders issued prior to April 1, 2005, which were recaptured. Additionally, a tiered reinsurance premium structure was implemented. On the date of recapture, HLAI forgave the reinsurance derivative asset of $110 and paid HLIKK $38. The net result of the recapture was recorded as a dividend of $93, after-tax. GMIB riders issued by HLIKK subsequent to April 1, 2005 continue to be reinsured by HLAI. While the form of the agreement between HLAI and HLIKK for GMIB business is reinsurance, in substance and for accounting purposes the agreement is a free standing derivative. As such, the reinsurance agreement for GMIB business is recorded at fair value on the Company's balance sheet, with prospective changes in fair value recorded in net realized capital gains (losses) in net income. The fair value of GMIB liability at December 31, 2008 and December 31, 2007 is $2.6 (of which $148 relates to the adoption of SFAS 157) and $72, respectively. Effective September 30, 2007, HLAI entered into another reinsurance agreement where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force and prospective GMAB, GMIB and GMDB riders issued by HLIKK on certain of its variable annuity business. The reinsurance of the GMAB riders is accounted for as a free-standing derivative in accordance with SFAS 133. Accordingly, the reinsurance of the GMAB is recorded at fair value on the Company's balance sheet, with prospective changes in fair value recorded in net realized capital gains (losses) in net income. The fair value of the GMAB is liability of $1 at December 31, 2008. The fair value of the GMAB is an asset of $2 at December 31, 2007. This treaty covered HLIKK's "3 Win" annuity. This product contains a GMIB feature that triggers at a float value of 80% of original premium and gives the policyholder an option to receive either an immediate withdrawal of account value without surrender charges or a payout annuity of the original premium over time. As a result of capital markets underperformance, 97% of contracts, a total of $3.1 billion triggered during the fourth quarter of 2008, and of this amount $2.2 billion have elected the payout annuity. The Company received the proceeds of this triggering impact, net of the first annuity payout, through a structured financing transaction with HLIKK and will pay the associated benefits to HLIKK over a 12-year payout. Effective February 29, 2008, HLAI entered into another reinsurance agreement where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks associated with the in-force and prospective GMWB riders issued by HLIKK on certain variable annuity business. The reinsurance of the GMWB riders is accounted for as a free-standing derivative in accordance with SFAS 133. Accordingly, the reinsurance of the GMWB is recorded at fair value on the Company's balance sheet, with prospective changes in fair value recorded in net realized capital gains (losses) in net income. The fair value of the GMWB was a liability of $34 and $0 at December 31, 2008 and 2007, respectively. The Reinsurance Agreement for GMDB business is accounted for under SOP 03-1 "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"). As of December 31, 2008 the liability for the assumed reinsurance of the GMDB and the net amount at risk was $ 14 and $4.3 billion, respectively. As of December 31, 2007 the liability for the assumed reinsurance of the GMDB and the net amount at risk was $4 and $130, respectively. The Company has issued a guarantee to retirees and vested terminated employees ("Retirees") of The Hartford Retirement Plan for U.S. Employees ("the Plan") who retired or terminated prior to January 1, 2004. The Plan is sponsored by The Hartford. The guarantee is an irrevocable commitment to pay all accrued benefits which the Retiree or the Retiree's designated beneficiary is entitled to receive under the Plan in the event the Plan assets are insufficient to fund those benefits and The Hartford is unable to provide sufficient assets to fund those benefits. The Company believes that the likelihood that payments will be required under this guarantee is remote. Effective November 1, 2007, a subsidiary insurance company ("Ceding Company") entered into a coinsurance with funds withheld and modified coinsurance reinsurance agreement ("Agreement") with an affiliate reinsurance company ("Reinsurer") to provide statutory surplus relief for certain life insurance policies. The Agreement is accounted for as a financing transaction for GAAP. A standby unaffiliated third party Letter of Credit ("LOC") supports a portion of the statutory reserves that have been ceded to the Reinsurer. 17. EQUITY NONCONTROLLING INTERESTS The Company adopted SFAS 160 on January 1, 2009. The scope of this Statement applies to all entities that prepare consolidated financial statements and as such, includes variable interest entities in which the Company has concluded that it is the primary beneficiary. See Note 4 for further discussion of the Company's involvement in VIEs. The Company also holds the majority interest in certain general account mutual funds, in which it has provided seed money. The scope of FAS 160 F-62 also applies to these mutual fund investments. Upon adoption of SFAS 160, the Company reclassified $65 as of January 1, 2006 from liabilities to equity, representing the noncontrolling interest of other investors in these VIEs and mutual fund investments. The noncontrolling interest within these entities is likely to change, as these entities represent investment vehicles whereby investors may frequently redeem or contribute to these investments. As such, the change in noncontrolling ownership interest represented in the Company's Condensed Consolidated Statement of Changes in Stockholder's Equity will primarily represent redemptions and additional subscriptions within these investment vehicles. The following table represents the change in noncontrolling ownership interest recorded in the Company's Condensed Consolidated Statement of Changes in Stockholder's Equity for the VIEs and Mutual Fund Seed Investments as of Decemnber 31, 2008, 2007 and 2006:
DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------- Redemptions of The Hartford's interest in VIEs and Mutual Fund Investments resulting in deconsolidation (1) $(22) $(4) $ -- Net (Redemptions) and Subscriptions from noncontrolling interests $33 $110 $ -- ----- ------ ---- TOTAL CHANGE IN NONCONTROLLING INTEREST OWNERSHIP $15 $106 $74 ----- ------ ----
(1) The deconsolidation of The Hartford's interest in mutual funds and VIEs in 2008 and 2007 resulted in a realized capital gain of $1 and $1, respectively. 18. QUARTERLY RESULTS FOR 2008 AND 2007 (UNAUDITED)
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, 2008 2007 2008 2007 2008 2007 2008 2007 --------------------------------------------------------------------------------------------------------------------------------- Revenues $202 $1,916 $2,070 $1,902 $(77) $2,000 $(477) $1,758 ------- ------- ------- ------- -------- ------- -------- ------- Benefits, claims and expenses 1,187 1,529 1,630 1,738 2,804 1,527 1,938 1,637 ------- ------- ------- ------- -------- ------- -------- ------- Net income (loss) (1) (567) 296 362 147 (1,823) 332 (1,526) 111 ------- ------- ------- ------- -------- ------- -------- -------
(1) Included in the three months ended September 30, 2008 are net realized capital losses of $1.9 billion and a DAC unlock charge of $824. Included in the three months ended December 31, 2008 are net realized capital losses of $2.0 billion F-63 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) All financial statements are included in Part A and Part B of the Registration Statement. (b) (1) Resolution of the Board of Directors of Hartford Life Insurance Company ("Hartford") authorizing the establishment of the Separate Account.(1) (2) Not applicable. (3) (a) Amended and Restated Principal Underwriter Agreement.(1) (3) (b) Form of Dealer Agreement.(2) (4) Form of Individual Flexible Premium Variable Annuity Contract.(3) (5) Form of Application.(3) (6) (a) Articles of Incorporation of Hartford.(1) (6) (b) Bylaws of Hartford.(1) (7) Form of Reinsurance Agreement.(1) (8) Form of Participation Agreement.(2) (9) Opinion and Consent of Richard J. Wirth, Assistant General Counsel. (10) Consent of Deloitte & Touche LLP. (11) Letter regarding unaudited interim financial information. (12) Not applicable. (99) Copy of Power of Attorney. ------------ (1) Incorporated by reference to Post-Effective Amendment No. 3 to the Registration Statement File No. 333-148564 filed on February 9, 2009. (2) Incorporated by reference to the Initial Registration Statement File No. 333-148564 dated January 9, 2008. (3) Incorporated by reference to Post-Effective Amendment No. 10 to the Registration Statement File No. 333-136547, filed on August 14, 2009. ITEM 25 DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME POSITION WITH HARTFORD ------------------------------------------------------------------------------------------------------------------ Ricardo Anzaldua Assistant Secretary, Senior Vice President Robert Arena Executive Vice President Lynn R. Banziruk Assistant Vice President Richard E. Cady Assistant Vice President David A. Carlson Director of Taxes, Senior Vice President Henry Collie Assistant Actuary Kevin M. Connor Executive Vice President James Cubanski Assistant Secretary Rochelle S. Cummings Vice President James Davey Executive Vice President Peter Delehanty Senior Vice President Joseph G. Eck Vice President Jason S. Frain Actuary, Assistant Vice President Jennifer J. Geisler Senior Vice President Ronald R. Gendreau Executive Vice President John N. Giamalis Senior Vice President, Treasurer Christopher M. Grinnell Assistant Vice President Christopher J. Hanlon Senior Vice President Donald C. Hunt Secretary Jeannie M. Iannello Vice President Anne Iezzi Chief Compliance Officer, Vice President Edward Jaworski Assistant Vice President Thomas D. Jones Vice President Stephen T. Joyce Executive Vice President Thomas P. Kalmbach Actuary, Vice President Paula A. Knake Assistant Vice President Michael Knipper Senior Vice President Diane Krajewski Assistant Vice President Alan J. Kreczko Executive Vice President, General Counsel Lori A. LaForge Assistant Vice President Glenn D. Lammey Chief Financial Officer, Executive Vice President, Director* Alice Longworth Assistant Vice President Kenneth A. McCullum Actuary, Senior Vice President Gregory McGreevey Chief Investment Officer, Executive Vice President, Director* Ernest M. McNeill, Jr. Chief Accounting Officer, Senior Vice President William P. Meaney Senior Vice President Jonathan L. Mercier Assistant Vice President Vernon Meyer Senior Vice President Peter J. Michalik Vice President John J. Mittelstadt Vice President Harry S. Monti Senior Vice President Brian Murphy Executive Vice President Brian O'Connell Chief Information Officer, Vice President Jamie Ohl Senior Vice President John J. Pacheco, Jr. Assistant Vice President Colleen B. Pernerewski Chief Compliance Officer of Separate Accounts Craig R. Raymond Senior Vice President Robert W. Reiff Senior Vice President Sharon A. Ritchey Executive Vice President Stephen A. Roche Vice President Michael J. Roscoe Senior Vice President, Actuary Richard Rubin Assistant Vice President
NAME POSITION WITH HARTFORD ------------------------------------------------------------------------------------------------------------------ Scott R. Sanderson Vice President Jerry K. Scheinfeldt Assistant Vice President Wade A. Seward Vice President D. Keith Sloane Senior Vice President Richard Smolinski Actuary, Assistant Vice President Peter Smyth Executive Vice President Martin A. Swanson Vice President Charles D. Tatro Actuary, Vice President James E. Trimble Chief Actuary, Senior Vice President Charles N. Vest Actuary, Vice President Andrew J. Waggoner Vice President John C. Walters Chief Executive Officer, President, Chairman of the Board, Director* Richard J. Wirth Assistant Vice President
Unless otherwise indicated, the principal business address of each of the above individuals is Hartford Plaza, Hartford, CT 06115. * Denotes Board of Directors. ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT. Incorporated by reference to Post-Effective Amendment No. 3 to the Registration Statement File No. 333-148564 filed on February 9, 2009. ITEM 27. NUMBER OF CONTRACT OWNERS As of June 30, 2009, there were 97,687 Contract Owners. ITEM 28. INDEMNIFICATION Section 33-776 of the Connecticut General Statutes states that: "a corporation may provide indemnification of, or advance expenses to, a director, officer, employee or agent only as permitted by sections 33-770 to 33-779, inclusive." ARTICLE VIII, Section 1(a) of the By-laws of the Depositor (as amended and restated effective July 25, 2000) provides that the Corporation, to the fullest extent permitted by applicable law as then in effect, shall indemnify any person who was or is a director or officer of the Corporation and who was or is threatened to be made a defendant or respondent in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (each, a Proceeding"), by reason of the fact that such a person was or is a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan or other entity (a "Covered Entity"), against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement and actually and reasonably incurred by such person in connection with such Proceeding. Any such former or present director or officer of the Corporation finally determined to be entitled to indemnification as provided in this Article VIII is hereinafter called an "Indemnitee". Until such final determination is made such former or present director or officer shall be a "Potential Indemnitee" for purposes of this Article VIII. Notwithstanding the foregoing provisions of this Section 1(a), the Corporation shall not indemnify an Indemnitee with respect to any Proceeding commenced by such Indemnitee unless the commencement of such Proceeding by such Indemnitee has been approved by a majority vote of the Disinterested Directors (as defined in Section 5(d)); provided however, that such approval of a majority of the Disinterested Directors shall not be required with respect to any Proceeding commenced by such Indemnitee after a Change in Control (as defined in Section 5(d)) has occurred. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, 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 29. PRINCIPAL UNDERWRITERS (a) HSD acts as principal underwriter for the following investment companies: Hartford Life Insurance Company - DC Variable Account I Hartford Life Insurance Company - Separate Account One Hartford Life Insurance Company - Separate Account Two Hartford Life Insurance Company - Separate Account Two (DC Variable Account II) Hartford Life Insurance Company - Separate Account Two (QP Variable Account) Hartford Life Insurance Company - Separate Account Two (Variable Account "A") Hartford Life Insurance Company - Separate Account Two (NQ Variable Account) Hartford Life Insurance Company - Separate Account Ten Hartford Life Insurance Company - Separate Account Three Hartford Life Insurance Company - Separate Account Five Hartford Life Insurance Company - Separate Account Seven Hartford Life Insurance Company - Separate Account Eleven Hartford Life Insurance Company - Separate Account Twelve Hartford Life and Annuity Insurance Company - Separate Account One Hartford Life and Annuity Insurance Company - Separate Account Ten Hartford Life and Annuity Insurance Company - Separate Account Three Hartford Life and Annuity Insurance Company - Separate Account Five Hartford Life and Annuity Insurance Company - Separate Account Six Hartford Life and Annuity Insurance Company - Separate Account Seven American Maturity Life Insurance Company - Separate Account AMLVA American Maturity Life Insurance Company - Separate Account One Nutmeg Life Insurance Company - Separate Account One (b) Directors and Officers of HSD
POSITIONS AND OFFICES NAME WITH UNDERWRITER ------------------------------------------------------------------------------------------------------- Robert Arena (1) Senior Vice President/ Business Line Principal and Director Diana Benken (1) Chief Financial Officer and Controller/FINOP Kevin M. Connor (2) Director James Davey (1) Executive Vice President and Director Peter E. Delahanty (1) Senior Vice President/IIP Marketing John N. Giamalis (3) Treasurer Stephen T. Joyce (1) Senior Vice President/Business Line Principal Kenneth A. McCullum (1) Senior Vice President Vernon Meyer (1) Senior Vice President Jamie Ohl (1) Senior Vice President/Business Line Principal Mark A. Sides (4) Chief Legal Officer and Secretary Keith D. Sloane Senior Vice President Martin A. Swanson (1) Vice President/Marketing John C. Walters (1) Chief Executive Officer and President and Director Christopher S. Conner (2) AML Compliance Officer and Chief Compliance Officer
------------ (1) Address: 200 Hopmeadow Street, Simsbury, CT 06089 (2) Address: 1500 Liberty Ridge Dr., Wayne, PA 19087 (3) Address: One Hartford Plaza, Hartford, CT 06115 (4) Address: 500 Bielenberg Dr., Woodbury, MN 55125 ITEM 30. 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 31. MANAGEMENT SERVICES All management contracts are discussed in Part A and Part B of this Registration Statement. ITEM 32. UNDERTAKINGS (a) The Registrant hereby undertakes to file a post-effective amendment to this Registration Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old so long as payments under the variable annuity Contracts may be accepted. (b) The Registrant hereby undertakes to include either (1) as part of any application to purchase a Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) The Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Hartford hereby represents that the aggregate fees and charges under the Contract are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Hartford. The Registrant is relying on the no-action letter issued by the Division of Investment Management to American Counsel of Life Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has complied with conditions one through four of the no-action letter. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf, in the Town of Simsbury, and State of Connecticut on this 14th day of August, 2009. HARTFORD LIFE INSURANCE COMPANY - SEPARATE ACCOUNT SEVEN (Registrant) By: John C. Walters* *By: /s/ Richard J. Wirth ----------------------------------- ----------------------------------- John C. Walters, Richard J. Wirth Chief Executive Officer, President Attorney-in-Fact and Chairman of the Board
HARTFORD LIFE INSURANCE COMPANY (Depositor) By: John C. Walters* ----------------------------------- John C. Walters, Chief Executive Officer, President and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons and in the capacity and on the date indicated. Glenn D. Lammey, Chief Financial Officer, Executive Vice President, Director* Gregory McGreevey, Executive Vice President and Chief Financial Officer, Director* Ernest M. McNeill, Jr., Chief Accounting Officer, Senior Vice President* *By: /s/ Richard J. Wirth ----------------------------------- Richard J. Wirth John C. Walters, Chief Executive Officer, Attorney-in-Fact President, Chairman of the Board, Director* Date: August 14, 2009
333-148564 EXHIBIT INDEX (9) Opinion and Consent of Richard J. Wirth, Assistant General Counsel (10) Consent of Deloitte & Touche LLP. (11) Letter regarding unaudited interim financial information. (99) Power of Attorney
EX-99.9 2 a09-12980_1ex99d9.txt EX-99.9 [LOGO] THE HARTFORD August 14, 2009 Board of Directors Hartford Life Insurance Company 200 Hopmeadow Street Simsbury, CT 06089 RE: SEPARATE ACCOUNT SEVEN HARTFORD LIFE INSURANCE COMPANY File No. 333-148564 Dear Sir/Madam: I have acted as Counsel to Hartford Life Insurance Company (the "Company"), a Connecticut insurance company and Separate Account Seven (the "Account") in connection with the registration of an indefinite amount of securities in the form of variable annuity contracts (the "Contracts") with the Securities and Exchange Commission under the Securities Act of 1933, as amended. I have examined such documents (including the Form N-4 registration statement) and reviewed such questions of law as I considered necessary and appropriate, and on the basis of such examination and review, it is my opinion that: 1. The Company is a corporation duly organized and validly existing as a stock life insurance company under the laws of the State of Connecticut and is duly authorized by the Insurance Department of the State of Connecticut to issue the Contracts. 2. The Account is a duly authorized and existing separate account established pursuant to the provisions of Section 38a-433 of the Connecticut Statutes. 3. To the extent so provided under the contracts, that portion of the assets of the Account equal to the reserves and other contract liabilities with respect to the Account will not be chargeable with liabilities arising out of any other business that the Company may conduct. 4. The Contracts, when issued as contemplated by the Form N-4 Registration Statement, will constitute legal, validly issued and binding obligations of the Company. I hereby consent to the filing of this opinion as an exhibit to the Form N-4 registration statement for the Contacts and the Account. Sincerely yours, /s/ Richard J. Wirth -------------------------- Richard J. Wirth Assistant General Counsel EX-99.10 3 a09-12980_1ex99d10.txt EX-99.10 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Post-Effective Amendment No. 8 to Registration Statement No. 333-148564 of Hartford Life Insurance Company Separate Account Seven on Form N-4, of our report February 11, 2009 (April 29, 2009 as to the effects of the change in reporting entity structure and the retrospective adoption of FASB Statement No. 160, NONCONTROLLING INTERESTS IN CONSOLIDATED FINANCIAL STATEMENTS described in Note 1 and Note 17) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company's change in its method of accounting for the fair value measurement of financial instruments in 2008), relating to Hartford Life Insurance Company as of December 31, 2008 and 2007 and for each of the three years in the period ended December 31, 2008, and of our report dated February 18, 2009, relating to the statements of assets and liabilities of Hartford Life Insurance Company Separate Account Seven as of December 31, 2008, and the related statements of operations and changes in net assets for the respective stated periods then ended, both appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the reference to us under the heading "Experts" in such Statement of Additional Information. /s/ Deloitte & Touche LLP Hartford, Connecticut August 14, 2009 EX-99.11 4 a09-12980_1ex99d11.txt EX-99.11 August 14, 2009 Hartford Life Insurance Company 200 Hopmeadow Street Simsbury, CT 06089 We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of The Hartford Life Insurance Company and subsidiaries (the "Company") for the periods ended June 30, 2009 and 2008, and have issued our report dated July 29, 2009. As indicated in such report, because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which was included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, is being incorporated by reference in this Registration Statement. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ DELOITTE & TOUCHE LLP Hartford, Connecticut EX-99.99 5 a09-12980_1ex99d99.txt EX-99.99 HARTFORD LIFE INSURANCE COMPANY POWER OF ATTORNEY ------------ Glenn D. Lammey Gregory McGreevey Ernest M. McNeill, Jr. John C. Walters do hereby jointly and severally authorize Richard J. Wirth, Sarah M. Patterson, Christopher M. Grinnell, Shane E. Daly, Jerry K. Scheinfeldt and/or Lisa Proch, individually, to sign as their agent any and all pre-effective amendments and post-effective amendments filed on Form N-4 for the File Numbers listed on Appendix A attached hereto, with respect to Hartford Life Insurance Company and do hereby jointly and severally ratify such signatures heretofore made by such persons. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the purpose herein set forth. By: /s/ Glenn D. Lammey Dated as of July 1, 2009 ---------------------------------------------------- Glenn D. Lammey By: /s/ Gregory McGreevey Dated as of July 1, 2009 ---------------------------------------------------- Gregory McGreevey By: /s/ Ernest M. McNeill, Jr. Dated as of July 1, 2009 ---------------------------------------------------- Ernest M. McNeill, Jr. By: /s/ John C. Walters Dated as of July 1, 2009 ---------------------------------------------------- John C. Walters
APPENDIX A Hartford Life Insurance Company Power of Attorney Dated as of July 1, 2009 Filed on Form N-4 File Numbers: 033-06952 333-119415 033-17207 333-119417 033-19943 333-119419 033-19944 333-119422 033-19945 333-136543 033-19946 333-136547 033-19947 333-145655 033-19948 333-148553 033-19949 333-148554 033-59541 333-148563 033-73566 333-148564 033-73570 333-148570 033-80738 333-151805 333-101923 333-159545 333-101925 333-19605 333-101927 333-35000 333-101929 333-36132 333-101931 333-36136 333-101932 333-36138 333-101934 333-39604 333-101937 333-39612 333-101938 333-40414 333-101940 333-41213 333-101942 333-45301 333-101944 333-50467 333-101946 333-52711 333-101948 333-66343 333-101950 333-66939 333-101952 333-68463 333-101954 333-69439 333-102625 333-69475 333-104356 333-69485 333-105252 333-69489 333-105253 333-69493 333-105254 333-70153 333-105260 333-72042 333-105266 333-91925 333-105270 333-91927 333-119414 333-91929
COVER 6 filename6.txt [LOGO] THE HARTFORD August 14, 2009 Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-4644 Attention: Division of Investment Management RE: Hartford Life Insurance Company Separate Account Seven ("Registrant") File No. 333-148564 Post-Effective Amendment No. 8 Ladies and Gentlemen: Pursuant to the provisions of the Investment Company Act of 1940 and the Securities Act of 1933, we are electronically filing via EDGAR a copy of the above-referenced Registration Statement on Form N-4. In accordance with previous discussions, we request acceleration of the subject Registration Statement to August 14, 2009 notwithstanding anything to the contrary provided in our prior 485BXT filed with the Commission on July 30, 2009. If you have any questions concerning this filing, please call me at (860) 843-1941. Very truly yours, /s/ Richard J. Wirth ---------------------------------------- Richard J. Wirth Assistant General Counsel Enclosure CORRESP 7 filename7.txt [LOGO] THE HARTFORD August 14, 2009 VIA EDGAR Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-4644 Attention: Division of Investment Management Re: Hartford Life Insurance Company (the "Company") Hartford Life Insurance Company Separate Account Seven (the "Registrant") Post-Effective Amendment No. 8 to the Registration Statement on Form N-4 (the "Registration Statement") File No. 333-148564 Commissioners: Pursuant to Rule 461 under the Securities Act of 1933, the Company, on its own behalf and on behalf of the Registrant, and the principal underwriter hereby request that the above referenced Registration Statement electronically filed via EDGAR on August 14, 2009 be accelerated and declared effective on August 14, 2009 or as soon thereafter as is reasonable practicable. The Company hereby represents that, in accordance with the guidance provided in Investment Company Act Rel. No. IC-14575 (June 14, 1985), the Registration Statement contains multiple prospectuses that describe contracts that are essentially identical but for variations with respect to the underlying funds and distribution channels. Hartford Life Insurance Company By: John C. Walters By: /s/ Richard J Wirth ----------------------------------- ----------------------------------- John C. Walters, Chief Executive Richard J. Wirth, Officer, President and Chairman of Attorney-in-fact the Board
Hartford Securities Distribution Company, Inc. By: Richard E. Cady ----------------------------------- Richard E. Cady, Assistant Vice President