0001104659-13-031253.txt : 20130422 0001104659-13-031253.hdr.sgml : 20130422 20130422152923 ACCESSION NUMBER: 0001104659-13-031253 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 20130422 DATE AS OF CHANGE: 20130422 EFFECTIVENESS DATE: 20130501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD LIFE & ANNUITY INS CO SEPARATE ACOUNT VLII CENTRAL INDEX KEY: 0000940420 IRS NUMBER: 391052598 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-155092 FILM NUMBER: 13773724 BUSINESS ADDRESS: STREET 1: PO BOX 2999 STREET 2: C/O ITT HARTFORD LIFE INSURANCE CO CITY: HARTFORD STATE: CT ZIP: 06104-3999 BUSINESS PHONE: 8608433991 MAIL ADDRESS: STREET 1: HARTFORD LIFE INSURANCE CO. STREET 2: PO BOX 2999 CITY: HARTFORD STATE: CT ZIP: 06104 FORMER COMPANY: FORMER CONFORMED NAME: HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II DATE OF NAME CHANGE: 20020906 FORMER COMPANY: FORMER CONFORMED NAME: ITT HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II DATE OF NAME CHANGE: 19950329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD LIFE & ANNUITY INS CO SEPARATE ACOUNT VLII CENTRAL INDEX KEY: 0000940420 IRS NUMBER: 391052598 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07273 FILM NUMBER: 13773725 BUSINESS ADDRESS: STREET 1: PO BOX 2999 STREET 2: C/O ITT HARTFORD LIFE INSURANCE CO CITY: HARTFORD STATE: CT ZIP: 06104-3999 BUSINESS PHONE: 8608433991 MAIL ADDRESS: STREET 1: HARTFORD LIFE INSURANCE CO. STREET 2: PO BOX 2999 CITY: HARTFORD STATE: CT ZIP: 06104 FORMER COMPANY: FORMER CONFORMED NAME: HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II DATE OF NAME CHANGE: 20020906 FORMER COMPANY: FORMER CONFORMED NAME: ITT HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II DATE OF NAME CHANGE: 19950329 0000940420 S000002941 HARTFORD LIFE & ANNUITY INS CO SEPARATE ACOUNT VLII C000080426 Hartford Leaders VUL Joint Legacy II Series II 485BPOS 1 a13-3080_1485bpos.txt 485BPOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 2013 FILE NO. 333-155092 811-07273 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ PRE-EFFECTIVE AMENDMENT NO. / / POST-EFFECTIVE AMENDMENT NO. 9 /X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 80 /X/ HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT VL II (Exact Name of Registrant) HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (Name of Depositor) P.O. BOX 2999 HARTFORD, CT 06104-2999 (Address of Depositor's Principal Offices) (860) 843-8335 (Depositor's Telephone Number, Including Area Code) SUN-JIN MOON THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 751 BROAD STREET NEWARK, NJ 07102 (Name and Address of Agent for Service) ------------ INDIVIDUAL VARIABLE LIFE CONTRACTS -- THE REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. ------------ It is proposed that this filing will become effective: / / immediately upon filing pursuant to paragraph (b) of Rule 485 /X/ on May 1, 2013 pursuant to paragraph (b) of Rule 485 / / 60 days after filing pursuant to paragraph (a)(1) of Rule 485 / / on , 2012 pursuant to paragraph (a)(1) of Rule 485 / / this post-effective amendment designates a new effective date for a previously filed post-effective amendment. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ NOTICE TO EXISTING POLICY OWNERS Prospectuses for policies often undergo certain changes in their terms from year to year to reflect any changes in the policies. The changes include such things as the liberalization of benefits, the exercise of rights reserved under the policy, the alteration of administrative procedures and changes in the investment options available. Any such change may OR MAY NOT apply to policies issued prior to the effective date of the change. This product prospectus reflects the status of the product as of May 1, 2013. Therefore, this prospectus may contain information that is inapplicable to your policy. You should consult your policy to verify whether any particular provision applies to you and which investment options you may elect. In the event of any conflict between this prospectus and your policy, the terms of your policy will control. PART A HARTFORD LEADERS VUL JOINT LEGACY II FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES ISSUED BY: HARTFORD LIFE INSURANCE COMPANY -- HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL II OR HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT VL II ADMINISTERED BY: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 751 BROAD STREET NEWARK, NJ 07102 TELEPHONE: (800) 231-5453 PROSPECTUS DATED: MAY 1, 2013 [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This Prospectus describes information you should know before you purchase Series II of the Hartford Leaders VUL Joint Legacy II insurance Policy (Policy). This prospectus describes two policies (one issued by Hartford Life Insurance Company and one issued by Hartford Life and Annuity Insurance Company). Please read this prospectus carefully before you purchase the Policy. Some Policy features may not be available in some states. Hartford Leaders VUL Joint Legacy II is a contract between you and Hartford Life Insurance Company or Hartford Life and Annuity Insurance Company. Hartford Life and Annuity Insurance Company does not solicit or issue insurance products in New York. After you purchase the Policy you can refer to the first page of your Policy for the name of the issuing company. The issuing company is referred to in this prospectus as The Company. You agree to make sufficient premium payments to us, and we agree to pay a death benefit to your beneficiary. The Policy is a last survivor flexible premium variable universal life insurance Policy. It is: X Last survivor, because we pay a death benefit after the death of the last surviving insured. X Flexible premium, generally, you may decide when to make premium payments and in what amounts. X Variable, because the value of your life insurance Policy will fluctuate with the performance of the Sub-Accounts you select and the Fixed Account. You may allocate net premium and Account Value to the Sub-Accounts available under the Policy. The Policy offers a variety of Sub-Accounts. Each Sub-Account, in turn, invests in one of the following Underlying Funds. AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation Fund -- Series I Invesco V.I. Core Equity Fund -- Series I Invesco V.I. Global Real Estate Fund -- Series I Invesco V.I. International Growth Fund -- Series I Invesco V.I. Mid Cap Core Equity Fund -- Series I Invesco V.I. Small Cap Equity Fund -- Series I ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio -- Class B AllianceBernstein VPS International Value Portfolio -- Class B AllianceBernstein VPS Real Estate Investment Portfolio -- Class B AllianceBernstein VPS Small/Mid Cap Value Portfolio -- Class B AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund -- Class 2 American Funds Blue Chip Income and Growth Fund -- Class 2 American Funds Bond Fund -- Class 2 American Funds Global Bond Fund -- Class 2 American Funds Global Growth and Income Fund -- Class 2 American Funds Global Growth Fund -- Class 2 American Funds Global Small Capitalization Fund -- Class 2 American Funds Growth Fund -- Class 2 American Funds Growth-Income Fund -- Class 2 American Funds International Fund -- Class 2 American Funds New World Fund -- Class 2 FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2010 Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2020 Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2030 Portfolio -- Service Class 2 Fidelity(R) VIP Mid Cap Portfolio -- Service Class 2 Fidelity(R) VIP Strategic Income Portfolio -- Service Class 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund -- Class 2 Franklin Income Securities Fund -- Class 2 Franklin Rising Dividends Securities Fund -- Class 2 Franklin Small Cap Value Securities Fund -- Class 2 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 Franklin Strategic Income Securities Fund -- Class 1 Mutual Global Discovery Securities Fund -- Class 2 Mutual Shares Securities Fund -- Class 2 Templeton Developing Markets Securities Fund -- Class 1 Templeton Foreign Securities Fund -- Class 2 Templeton Global Bond Securities Fund -- Class 2 Templeton Growth Securities Fund -- Class 2 HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund -- Class IA Hartford U.S. Government Securities HLS Fund -- Class IA HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS Fund -- Class IA Hartford Disciplined Equity HLS Fund -- Class IA Hartford Dividend and Growth HLS Fund -- Class IA Hartford Global Growth HLS Fund -- Class IA Hartford Global Research HLS Fund -- Class IA Hartford Growth HLS Fund -- Class IA Hartford High Yield HLS Fund -- Class IA Hartford Index HLS Fund -- Class IA Hartford International Opportunities HLS Fund -- Class IA Hartford Money Market HLS Fund -- Class IA Hartford Small Company HLS Fund -- Class IA Hartford Total Return Bond HLS Fund -- Class IA Hartford Value HLS Fund -- Class IA LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio -- Class VC Lord Abbett Fundamental Equity Portfolio -- Class VC Lord Abbett Growth and Income Portfolio -- Class VC MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Initial Class MFS(R) Investors Trust Series -- Initial Class MFS(R) Research Bond Series -- Initial Class MFS(R) Total Return Series -- Initial Class MFS(R) Value Series -- Initial Class PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund -- Class IB Putnam VT Investors Fund -- Class IB Putnam VT Voyager Fund -- Class IB Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Policy and its features may not be available for sale in all states. This prospectus does not constitute an offering in any jurisdiction in which such offering may not be lawfully made. No person is authorized to make any representations in connection with this offering other than those contained in this prospectus. Replacing any existing life insurance Policy with this Policy may not be to your advantage. This Prospectus can also be obtained from the Securities and Exchange Commission's website (http://www.sec.gov). Prospectuses for the Underlying Funds can be obtained from your financial professional or by logging on to www.hartfordinvestor.com. The prospectuses contain detailed information, including risks, charges and fees, so please read it carefully before you invest or send money. This life insurance Policy IS NOT: - a bank deposit or obligation; - federally insured; or - endorsed by any bank or governmental agency. 3 ------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE --------------------------------------------------------------------------------------------------- SUMMARY OF BENEFITS AND RISKS 4 FEE TABLES 6 Hartford Life Insurance Company 6 Harford Life and Annuity Insurance Company 9 ABOUT US 15 The Insurance Companies 15 The Separate Accounts 15 The Funds 15 The Fixed Account 21 CHARGES AND DEDUCTIONS 21 YOUR POLICY 23 PREMIUMS 42 DEATH BENEFITS AND POLICY VALUES 44 MAKING WITHDRAWALS FROM YOUR POLICY 46 LOANS 46 LAPSE AND REINSTATEMENT 47 FEDERAL TAX CONSIDERATIONS 48 LEGAL PROCEEDINGS 53 RESTRICTIONS ON FINANCIAL TRANSACTIONS 54 ILLUSTRATIONS OF POLICY BENEFITS 54 FINANCIAL INFORMATION 54 GLOSSARY OF SPECIAL TERMS 55 APPENDIX A -- HYPOTHETICAL ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER 58 VALUES WHERE YOU CAN FIND MORE INFORMATION 63
4 ------------------------------------------------------------------------------- SUMMARY OF BENEFITS AND RISKS This section contains a summary of the benefits available under the Policy and the principal risks of purchasing the Policy. It is only a summary and you should read the entire prospectus. Please note that this prospectus describes two policies (one issued by Hartford Life Insurance Company and one issued by Hartford Life and Annuity Insurance Company); the material differences in these policies are described throughout this prospectus. BENEFITS OF YOUR POLICY POLICY SUMMARY -- We will pay the Death Benefit to the named Beneficiaries upon the death of the Last Surviving Insured. You, as the Policy Owner, pay the Premiums for the Policy and name the Beneficiary. There are two Insureds named in the Policy and they are the people whose lives are insured under the Policy. You allocate Premiums to the Underlying Funds and can accumulate Account Value on a tax-deferred basis. We deduct Policy fees and charges from the Premiums and the Account Value. You may access the Account Value through loans and withdrawals. FLEXIBILITY -- The Policy is designed to be flexible to meet your specific life insurance needs. You have the flexibility to choose death benefit options, investment options, and premiums you pay. DEATH BENEFIT -- While the Policy is in force and when the last surviving insured dies, we pay a death benefit to your beneficiary. You have four death benefit options available. Option A, B and C are available when you purchase your Policy. Option D is not available when you purchase your Policy, however, you may change from Option B to Option D. Your death benefit will never be less than the Minimum Death Benefit. See Death Benefits and Policy Values. - OPTION A (LEVEL OPTION): The death benefit is the current Face Amount. - OPTION B (RETURN OF ACCOUNT VALUE OPTION): The death benefit is the current Face Amount, plus the Account Value on the date we receive due proof of the last surviving insured's death. - OPTION C (RETURN OF PREMIUM OPTION): The death benefit is the current Face Amount, plus the sum of the premiums paid less withdrawals. This death benefit option is subject to an overall maximum, which is currently the Face Amount plus $5 million. However, an overall maximum of the Face Amount plus $10 million may be available subject to underwriting approval and will be shown in your Policy. - OPTION D (DECREASING OPTION): The death benefit is the current Face Amount, plus the lesser of: - the Account Value on the date we received due proof of the last surviving insured's death; or - the Account Value on the date of the change from death benefit Option B (Return of Account Value) to Option D (Decreasing Option), reduced by any withdrawals. The death benefit is reduced by any money you owe us, such as outstanding loans, loan interest or unpaid charges. You may change your death benefit option under certain circumstances. You may increase or decrease the Face Amount on your Policy under certain circumstances. NO-LAPSE GUARANTEE -- Generally, your death benefit coverage will last as long as there is enough value in your Policy to pay for the monthly charges we deduct. Since this is a variable life Policy, values of your Policy will fluctuate based on the performance of the underlying investment options you have chosen. Without the No-Lapse Guarantee, your Policy will lapse if the value of your Policy is insufficient to pay your monthly charges. If the No-Lapse Guarantee is available and your Policy Value is insufficient to pay your monthly charges, we will waive any portion of the monthly charges that could not be collected. Therefore, when the No-Lapse Guarantee feature is available, the Policy will not lapse, regardless of the investment performance of the underlying funds. If you take a loan on your Policy, the No-Lapse Guarantee will not protect the Policy from lapsing if there is Policy Indebtedness. Therefore, you should carefully consider the impact of taking Policy loans during the No-Lapse Guarantee Period. INVESTMENT OPTIONS -- You may invest in up to 20 different investment choices within your Policy, from the available investment options and a Fixed Account. You may transfer money among your investment choices, subject to restrictions. PREMIUM PAYMENTS -- You have the flexibility to choose how you pay premiums. You choose a planned premium when you purchase the Policy. You may change your planned premium, or pay additional premium any time, subject to certain limitations. RIGHT TO EXAMINE YOUR POLICY -- For 10 days after you receive your Policy, you may cancel it without paying a sales charge. A longer period is provided in some states. WITHDRAWALS -- You may take money out of your Policy once a month, subject to certain minimums. LOANS -- You may use this Policy as collateral to obtain a loan from Us. SETTLEMENT OPTIONS -- You or your beneficiary may choose to receive the proceeds of the Policy over a period of time by using one of several settlement options. OPTIONAL COVERAGE -- You may add other coverages to your Policy. See "Your Policy -- Other Benefits." SURRENDER -- You may surrender your Policy at any time for its Cash Surrender Value. Surrenders may also be subject to a Surrender Charge. TAX BENEFITS -- You are not generally taxed on the policy's earnings until you withdraw value from your Policy. Your beneficiary generally will not have to pay federal income tax on death benefit proceeds. 5 ------------------------------------------------------------------------------- RIDERS -- You may select from a variety of riders, including the Guaranteed Minimum Accumulation Benefit Rider, the Guaranteed Paid-Up Death Benefit Rider, and the Overloan Protection Rider. ILLUSTRATIONS -- You will receive personalized illustrations in connection with the purchase of the Policy that reflect your own particular circumstances. These hypothetical illustrations may help you to understand the long-term effects of different levels of investment performance, the possibility of termination, and the charges and deductions under the Policy. They will also help you to compare this Policy to other life insurance policies. The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or cash value. We have included an example of such an illustration as Appendix A to this prospectus. RISKS OF YOUR POLICY This is a brief description of the principal risks of the Policy. INVESTMENT PERFORMANCE -- The value of your Policy will fluctuate with the performance of the investment options you choose. Your investment options may decline in value, or they may not perform to your expectations. Your Policy values in the Sub-Accounts are not guaranteed. Charges and fees may have a significant impact on Policy Account Value and the investment performance of the Sub-Accounts (particularly with policies with lower Account Value). A comprehensive discussion of the risks of the underlying Funds held by each Sub-Account may be found in the underlying Fund's prospectus. You should read the prospectus of each Fund before investing. FIXED ACCOUNT TRANSFER RESTRICTIONS -- There are limitations on the timing, frequency and amount of transfers from the Fixed Account. These limitations are fully described in the "Your Policy" section of this prospectus. As a result of these limitations, it may take a significant amount of time (several years) to move Policy value in the Fixed Account to the Sub-Accounts. UNSUITABLE FOR SHORT-TERM SAVINGS -- The Policy is designed for long term financial planning. You should not purchase the Policy if you will need the premium payment in a short time period. RISK OF LAPSE -- Your Policy could terminate if the value of the Policy becomes too low to support the policy's monthly charges and the No Lapse Guarantee is unavailable. If this occurs, we will notify you in writing. You will then have a 61-day grace period to pay additional amounts to prevent the Policy from terminating. WITHDRAWAL LIMITATIONS -- You may request a withdrawal in writing. Withdrawals will reduce your Policy's death benefit, may increase the risk of Policy lapse and may be subject to a withdrawal charge. TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers and remaining balances, and to limit the number and frequency of transfers among your investment options and the Fixed Account. LOANS -- Using your Policy as collateral to obtain a loan from Us may increase the risk that your Policy will lapse, will have a permanent effect on the policy's Account Value, and will reduce the death proceeds. The No-Lapse Guarantee will not protect the Policy from lapsing if there is Policy Indebtedness. Therefore, you should carefully consider the impact of taking Policy loans during the No-Lapse Guarantee Period. ADVERSE TAX CONSEQUENCES -- You may be subject to income tax if you receive any loans, withdrawals or other amounts from the Policy, and you may be subject to a 10% penalty tax. Under certain circumstances, your Policy may become a modified endowment Policy under federal tax law. If these circumstances were to occur, loans and other pre-death distributions are includable in gross income on an income first basis, and may be subject to a 10% penalty (unless you have attained age 59 1/2). There could be significant adverse tax consequences if the Policy should lapse or be surrendered when there are loans outstanding. You should consult with a tax adviser before taking steps that may affect whether your Policy becomes a modified endowment Policy. There are other tax issues to consider when you own a life insurance Policy. See "Federal Tax Considerations." TAX LAW CHANGES -- Tax laws, regulations, and interpretations are subject to change. Such changes my impact the expected benefits of purchasing this Policy. CREDIT RISK (DEFAULT RISK) -- Any Death Benefit guarantee provided by the Policy or any rider and the Fixed Account obligations depend on the Company's financial ability to fulfill its obligations. You should review the Company's financial statements which are available upon request and are attached to the Statement of Additional Information (SAI). Additional information about the Company may be obtained by visiting our website at www.hartfordinvestor.com or on 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. INCREASE IN CURRENT FEES AND EXPENSES -- Certain Policy fees and expenses may be currently charged at less than their maximum amounts. We may increase these current fees and expenses up to the guaranteed maximum levels. 6 ------------------------------------------------------------------------------- FEE TABLES -- HARTFORD LIFE INSURANCE COMPANY The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. This table describes the maximum fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, take a withdrawal or transfer cash value between investment options. Your specific fees and charges are described on the specification page of your Policy. TRANSACTION FEES
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ Premium Charge When you make a Premium Payment. Maximum Charge: 6% of each Premium Payment Tax Charge When you make a Premium Payment. A percent of premium which varies by your state and municipality of residence. The range of tax charge is generally between 0% and 4%. This rate will change if your state or municipality changes its premium tax charges. It may change if you change your state or municipality of residence. Surrender Charge When you surrender your Policy during Minimum Charge (1)(3) the first 9 Policy years. $1.539 per $1,000 of the initial Face Amount in the first Policy year for two 20-year-old female preferred plus non-nicotine. Maximum Charge $63.00 per $1,000 of the initial Face Amount in the first Policy year for two 85-year-old male nicotine. Charge for a representative insured $9.420 per $1,000 of the initial Face Amount in the first Policy year for a 50-year-old male standard non-nicotine and a 50-year-old female standard non-nicotine. Face Amount Increase Each month for 12 months beginning on Maximum Charge: $1 per $1,000 of unscheduled increase in the Face Fee (2) the effective date of any unscheduled Amount (deducted on a monthly basis at a rate of 1/12 of $1 per increase in Face Amount you request. month per $1,000 of unscheduled increase in the Face Amount). Transfer Fees* When you make a transfer after the first Maximum Charge: $25 per transfer. transfer in any month. Withdrawal Charge When you take a withdrawal. Maximum Charge: $10 per withdrawal. Overloan Protection If you elect this rider, the charge is 7% of Account Value Rider deducted when you exercise the rider benefit.
(1) This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. (2) This fee will not be less than $500 or more than $3,000. (3) The Modification of Cash Surrender Value Endorsement may be available at Policy purchase, which provides for a waiver of surrender charges for a limited time. There is no additional charge for the endorsement. See "Modification of Cash Surrender Value Endorsement" section for more information. * A transfer is a transaction requested by you that involves reallocating part or all of your Policy Value among the Sub-Accounts. The fee is currently not being assessed. 7 ------------------------------------------------------------------------------- This table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses. CHARGES OTHER THAN FUND OPERATING EXPENSES
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ Cost of Insurance Monthly. Minimum Charge Charges (1) $0.0000 per $1,000 of the net amount at risk in the first Policy year for two 20-year-old female plus non-nicotine. Maximum Charge $0.1733 per $1,000 of the initial Face Amount in the first Policy year for two 85-year-old male standard nicotine. NOTE: Additional mortality fees may be assessed for risks associated with certain health conditions, occupations, aviation, avocations or driving history. The combination of insurance charges and additional mortality fees, if any, will not exceed $83.33 PER $1000 OF INSURANCE RISK. Charge for a representative insured $0.0003 per $1,000 of the net amount at risk in the first Policy year for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine. Mortality and Monthly. Maximum Charge: 0.75% Sub-account Accumulated Value, charged monthly Expense Risk Charge at a rate of 0.0625% (3) Monthly per $1,000 Monthly for the first seven (7) Policy Minimum Charge Charge (2) years. $0.42 per $1,000 of initial Face Amount (deducted on a monthly basis at a rate of $0.035 per month) during the first Policy year for two 20-year old female preferred plus non-nicotine. Maximum Charge $27.144 per $1,000 of initial Face Amount (deducted on a monthly basis at a rate of $2.262 per month) during the first Policy year for two 85-year old male standard nicotine. Charge for a representative insured $27.144 per $1,000 of initial Face Amount ($2.262 monthly) during the first Policy year for a 53-year old male standard non-nicotine and a 53-year old female standard non-nicotine. Administrative Monthly. Maximum Charge: $30 Charge (4) Loan Interest Rate Monthly if you have taken a loan on your Maximum Charge: 0.42% (5.0% annually) of Loan Indebtedness (5) Policy Estate Protection Monthly. Minimum Charge Rider (1) $0.02542 per $1000 of Face Amount for two 20-year-old female preferred plus non-nicotine in the first Policy year. Maximum Charge $0.33892 per $1000 of Face Amount for two 85-year-old male standard nicotine in the first Policy year. Charge for a representative insured $0.02579 per $1000 of Face Amount for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine in the first Policy year. Guaranteed Minimum Monthly Maximum Charge: 0.90% of Separate Account Value per year during the Accumulation Benefit GMAB Period Rider (GMAB) Guaranteed Paid-Up Monthly Maximum Charge: 0.75% of Separate Account Value per year during the Death Benefit Rider Rider Period (GMDB)
(1) This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. (2) The Monthly per $1,000 charge compensates us for expenses incurred in issuing, distributing and administering the pPolicy. This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. (3) The maximum mortality and expense risk charge for pPolicy years 1 - 10 is equal to 0.75% per year. For pPolicy years 11 - 20 it is equal to 0.50%. (4) The maximum administrative charge is $30.00 per month in pPolicy years 1 - 5 and $10.00 per month in years 6 and later. (5) During pPolicy years 1 - 10 the maximum Loan Interest Rate charge is 5.0%. During pPolicy years 11 and later the maximum Loan Interest Rate charge is 4%. The current Loan Interest Rate charge is 3%. Any Account Value in the Loan Account will be credited with interest at an annual rate of 3.0%. 8 -------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ LifeAccess Monthly. Minimum Charge Accelerated Benefit $0.00 per $1,000 of the benefit net amount at risk for two 30-year Rider old females preferred plus non-nicotine in the first Policy year. Maximum Charge $0.016920 per $1,000 of the benefit net amount at risk for two 80-year old males, standard nicotine in the first Policy year. Charge for a representative insured $0.000098 per $1,000 of the benefit net amount at risk for a 50-year old male standard non-nicotine and a 50 year old female standard non-nicotine in the first Policy year. Accelerated Death When you exercise the benefit. Maximum Charge $300 Benefit Rider for Terminal Illness
9 ------------------------------------------------------------------------------- FEE TABLES -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table describes the maximum fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, take a withdrawal or transfer cash value between investment options. Your specific fees and charges are described on the specification page of your Policy. TRANSACTION FEES
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ Premium Charge When you make a premium payment. Maximum Charge: 6% of each Premium Payment. In Oregon, the maximum is 8% of each premium payment. Tax Charge When you make a premium payment. A percent of premium which varies by your state and municipality of residence. The range of tax charge is generally between 0% and 4%. This rate will change if your state or municipality changes its tax charges. It may change if you change your state or municipality of residence. Surrender Charge When you surrender your Policy during Minimum Charge (1)(3) the first 9 Policy years. $1.539 per $1,000 of the initial Face Amount in the first Policy year for two 20-year-old female preferred plus non-nicotine. Maximum Charge $63.00 per $1,000 of the initial Face Amount in the first Policy year for two 85-year-old male nicotine. Charge for representative insured $11.132 per $1,000 of the initial Face Amount in the first Policy year for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine. Face Amount Increase Each month for 12 months beginning on Maximum Charge: $1 per $1,000 of unscheduled increase in the Face Fee (2) the effective date of any unscheduled Amount (deducted on a monthly basis at a rate of 1/12 of $1 per increase in Face Amount you request. month per $1,000 of unscheduled increase in the Face Amount). Transfer Fees* When you make a transfer after the first Maximum Charge: $25 per transfer. transfer in any month. Withdrawal Charge When you take a withdrawal. Maximum Charge: $10 per withdrawal. Overloan Protection If you elect this rider, the charge is 7% of Account Value Rider deducted when you exercise the rider benefit.
(1) This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. (2) This fee will not be less than $500 or more than $3,000. (3) The Modification of Cash Surrender Value Endorsement may be available at Policy purchase, which provides for a waiver of surrender charges for a limited time. There is no additional charge for the endorsement. See "Modification of Cash Surrender Value Endorsement" section for more information. * A transfer is a transaction requested by you that involves reallocating part or all of your Policy Value among the Sub-Accounts. The fee is currently not being assessed. 10 ------------------------------------------------------------------------------- The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses. CHARGES OTHER THAN FUND OPERATING EXPENSES
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ Cost of Insurance Monthly. Minimum Charge Charges (1) $0.0000 per $1,000 of the initial Face Amount in first Policy year for two 20-year-old female plus non-nicotine. Maximum Charge $0.1733 per $1,000 of the net amount at risk in first Policy year for two 85-year-old male standard nicotine. NOTE: Additional mortality fees may be assessed for risks associated with certain health conditions, occupations, aviation, avocations or driving history. The combination of insurance charges and additional mortality fees, if any, will not exceed $83.33 PER $1000 OF INSURANCE RISK. Charge for a representative insured $0.0003 per $1,000 of the net amount at risk in first Policy year for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine. Mortality and Monthly. Maximum Charge: 0.75% Sub-Account Accumulated Value, charged monthly Expense Risk Charge at a rate of 0.0625% (3) Monthly per $1,000 Monthly for the first seven (7) Policy Minimum Charge Charge (2) years. $0.42 per $1,000 of initial Face Amount (deducted on a monthly basis at a rate of $0.035 per month) during the first Policy year for two 20-year-old female plus non-nicotine. Maximum Charge $27.144 per $1,000 of initial Face Amount (deducted on a monthly basis at a rate of $2.262 per month) during the first Policy year for two 85-year-old male standard nicotine. Charge for a representative insured $2.052 per $1,000 of initial Face Amount ($0.171 monthly) during the first Policy year for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine. Administrative Monthly. Maximum Charge: $30.00 Charge (4) Loan Interest Rate Monthly if you have taken a loan on your Maximum Charge: 0.42% (5.0% annually) of Loan Indebtedness (5) Policy.
RIDER CHARGES WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED ------------------------------------------------------------------------------------------------------------------------------------ Estate Protection Monthly. Minimum Charge Rider (1) $0.02542 per $1,000 of the Face Amount for two 20-year-old female preferred plus non-nicotine in the first Policy year. Maximum Charge $0.33892 per $1,000 of the Face Amount for two 85-year-old male standard nicotine in the first Policy year. Charge for a representative insured $0.02579 per $1,000 of the Face Amount for a 53-year-old male standard non-nicotine and a 53-year-old female standard non-nicotine in the first Policy year. Guaranteed Minimum Monthly Maximum Charge: 0.90% of Separate Account Value per year during the Accumulation Benefit GMAB Period Rider (GMAB) Guaranteed Paid-Up Monthly Maximum Charge: 0.75% of Separate Account Value per year during the Death Benefit Rider Rider Period (GMDB) LifeAccess Monthly. Minimum Charge Accelerated Benefit $0.00 per $1,000 of the benefit net amount at risk for two 30-year Rider old females preferred plus non-nicotine in the first Policy year. Maximum Charge $0.016920 per $1,000 of the benefit net amount at risk for two 80-year old males, standard nicotine in the first Policy year. Charge for a representative insured $0.000098 per $1,000 of the benefit net amount at risk for a 53-year old male standard non-nicotine and a 53 year old female standard non-nicotine in the first Policy year.
(1) This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. 11 ------------------------------------------------------------------------------- (2) The Monthly per $1,000 charge compensates us for expenses incurred in issuing, distributing and administering the Policy. This charge varies based on individual characteristics. The charge shown in the table may not be representative of the charge that you will pay. You may obtain more information about the charge that would apply to you by contacting your financial representative for a personalized illustration. (3) The maximum mortality and expense risk charge for Policy years 1 - 10 is equal to 0.75% per year. For Policy years 11 - 20 it is equal to 0.60%. (4) The maximum administrative charge is $30.00 per month in Policy years 1 - 5 and $10.00 per month in Policy years 6 and later. (5) During Policy years 1 - 10 the maximum Loan Interest Rate charge is 5.0%. During Policy years 11 and later the maximum Loan Interest Rate charge is 4%. The current Loan Interest Rate charge is 3%. Any Account Value in the Loan Account will be credited with interest at an annual rate of 3.0%. 12 ------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES Each Sub-Account purchases shares of the corresponding Underlying Fund at net asset value. The net asset value of an Underlying Fund reflects the investment advisory fees and other expenses of the Underlying Fund that are deducted from the assets in that Underlying fund. These Underlying Fund expenses may vary from year to year and are more fully described in each underlying Fund's prospectus. The first table shows the minimum and maximum total operating expenses charged by the underlying Funds expressed as a percentage of average daily net assets, for the year ended December 31, 2012.
MINIMUM MAXIMUM -------------------------------------------------------------------------------------------------- Total Annual Fund Operating Expenses 0.33% 1.35% [expenses that are deducted from Underlying Fund assets, including management fees, distribution, and/or service (12b-1) fees and other expenses.]
INVESTMENT MANAGEMENT FEES AND OTHER EXPENSES The next table shows the Total Annual Fund Operating Expenses for each Underlying Fund. The fees and expenses are expressed as a percentage of average net assets for the year ended December 31, 2012. Actual fees and expenses for the Underlying Fund 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. The information presented, including any expense reimbursement arrangements, is based on publicly available information and is qualified in its entirety by the then current prospectus for each Underlying Fund.
DISTRIBUTION AND/OR SERVICE MANAGEMENT (12B-1) OTHER UNDERLYING FUND: FEES FEES EXPENSES -------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation 0.92% N/A 0.23% Fund -- Series I Invesco V.I. Core Equity Fund -- 0.61% N/A 0.29% Series I Invesco V.I. Global Real Estate Fund 0.75% N/A 0.39% -- Series I Invesco V.I. International Growth 0.71% N/A 0.30% Fund -- Series I Invesco V.I. Mid Cap Core Equity Fund 0.73% N/A 0.32% -- Series I Invesco V.I. Small Cap Equity Fund -- 0.74% 0.32% N/A Series I ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth 0.55% 0.25% 0.10% Strategy Portfolio -- Class B AllianceBernstein VPS International 0.75% 0.25% 0.06% Value Portfolio -- Class B AllianceBernstein VPS Real Estate 0.55% 0.25% 0.30% Investment Portfolio -- Class B AllianceBernstein VPS Small/Mid Cap 0.75% 0.25% 0.07% Value Portfolio -- Class B AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund 0.29% 0.25% 0.02% -- Class 2 American Funds Blue Chip Income and 0.41% 0.25% 0.02% Growth Fund -- Class 2 American Funds Bond Fund -- Class 2 0.37% 0.25% 0.02% American Funds Global Bond Fund -- 0.53% 0.25% 0.03% Class 2 American Funds Global Growth and 0.60% 0.25% 0.02% Income Fund -- Class 2 American Funds Global Growth Fund -- 0.53% 0.25% 0.03% Class 2 American Funds Global Small 0.71% 0.25% 0.04% Capitalization Fund -- Class 2 American Funds Growth Fund --Class 2 0.33% 0.25% 0.02% American Funds Growth-Income Fund -- 0.27% 0.25% 0.02% Class 2 American Funds International Fund -- 0.50% 0.25% 0.04% Class 2 American Funds New World Fund -- 0.74% 0.25% 0.05% Class 2 CONTRACTUAL FEE TOTAL WAIVER TOTAL ANNUAL ANNUAL AND/OR FUND OPERATING OPERATING EXPENSE EXPENSES AFTER UNDERLYING FUND: EXPENSES REIMBURSEMENT FEE WAIVER -------------------------------------- ---------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation 1.17% 0.37% 0.80% (1) Fund -- Series I Invesco V.I. Core Equity Fund -- 0.90% N/A 0.90% (2) Series I Invesco V.I. Global Real Estate Fund 1.14% N/A 1.14% (2) -- Series I Invesco V.I. International Growth 1.01% N/A 1.01% Fund -- Series I Invesco V.I. Mid Cap Core Equity Fund 1.05% N/A 1.05% (2) -- Series I Invesco V.I. Small Cap Equity Fund -- 1.06% N/A 1.06% (2) Series I ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth 0.90% N/A 0.90% Strategy Portfolio -- Class B AllianceBernstein VPS International 1.06% N/A 1.06% Value Portfolio -- Class B AllianceBernstein VPS Real Estate 1.10% N/A 1.10% Investment Portfolio -- Class B AllianceBernstein VPS Small/Mid Cap 1.07% N/A 1.07% Value Portfolio -- Class B AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund 0.56% N/A 0.56% -- Class 2 American Funds Blue Chip Income and 0.68% N/A 0.68% Growth Fund -- Class 2 American Funds Bond Fund -- Class 2 0.64% N/A 0.64% American Funds Global Bond Fund -- 0.81% N/A 0.81% Class 2 American Funds Global Growth and 0.87% N/A 0.87% Income Fund -- Class 2 American Funds Global Growth Fund -- 0.81% N/A 0.81% Class 2 American Funds Global Small 1.00% N/A 1.00% Capitalization Fund -- Class 2 American Funds Growth Fund --Class 2 0.60% N/A 0.60% American Funds Growth-Income Fund -- 0.54% N/A 0.54% Class 2 American Funds International Fund -- 0.79% N/A 0.79% Class 2 American Funds New World Fund -- 1.04% N/A 1.04% Class 2
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DISTRIBUTION AND/OR SERVICE MANAGEMENT (12B-1) OTHER UNDERLYING FUND: FEES FEES EXPENSES -------------------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) 0.56% 0.25% 0.08% Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2010 N/A 0.25% N/A Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2020 N/A 0.25% N/A Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2030 N/A 0.25% N/A Portfolio -- Service Class 2 Fidelity(R) VIP Mid Cap Portfolio - - 0.56% 0.25% 0.09% Service Class 2 Fidelity(R) VIP Strategic Income 0.56% 0.25% 0.13% Portfolio -- Service Class 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities 0.65% 0.25% 0.29% Fund -- Class 2 Franklin Income Securities Fund -- 0.45% 0.25% 0.02% Class 2 Franklin Rising Dividends Securities 0.61% 0.25% 0.02% Fund -- Class 2 Franklin Small Cap Value Securities 0.51% 0.25% 0.16% Fund -- Class 2 Franklin Small-Mid Cap Growth 0.51% 0.25% 0.29% Securities Fund -- Class 2 Franklin Strategic Income Securities 0.35% N/A 0.24% Fund -- Class 1 Mutual Global Discovery Securities 0.80% 0.25% 0.19% Fund -- Class 2 Mutual Shares Securities Fund -- 0.60% 0.25% 0.11% Class 2 Templeton Developing Markets 1.10% N/A 0.25% Securities Fund -- Class 1 Templeton Foreign Securities Fund - - 0.64% 0.25% 0.15% Class 2 Templeton Global Bond Securities Fund 0.46% 0.25% 0.09% -- Class 2 Templeton Growth Securities Fund - - 0.74% 0.25% 0.04% Class 2 HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS 0.61% N/A 0.04% Fund -- Class IA Hartford U.S. Government Securities 0.45% N/A 0.03% HLS Fund -- Class IA HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS 0.63% N/A 0.04% Fund -- Class IA Hartford Disciplined Equity HLS Fund 0.71% N/A 0.04% -- Class IA Hartford Dividend and Growth HLS Fund 0.64% N/A 0.03% -- Class IA Hartford Global Growth HLS Fund -- 0.75% N/A 0.07% Class IA Hartford Global Research HLS Fund -- 0.90% N/A 0.14% Class IA Hartford Growth HLS Fund -- Class IA 0.79% N/A 0.04% Hartford High Yield HLS Fund --Class 0.69% N/A 0.06% IA Hartford Index HLS Fund -- Class IA 0.30% N/A 0.03% Hartford International Opportunities 0.68% N/A 0.06% HLS Fund -- Class IA Hartford Money Market HLS Fund -- 0.40% N/A 0.02% Class IA Hartford Small Company HLS Fund -- 0.69% N/A 0.03% Class IA Hartford Total Return Bond HLS Fund 0.46% N/A 0.04% -- Class IA Hartford Value HLS Fund -- Class IA 0.73% N/A 0.03% LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio 0.50% N/A 0.43% -- Class VC Lord Abbett Fundamental Equity 0.75% N/A 0.44% Portfolio -- Class VC Lord Abbett Growth and Income 0.50% N/A 0.41% Portfolio -- Class VC CONTRACTUAL FEE TOTAL WAIVER TOTAL ANNUAL ANNUAL AND/OR FUND OPERATING OPERATING EXPENSE EXPENSES AFTER UNDERLYING FUND: EXPENSES REIMBURSEMENT FEE WAIVER -------------------------------------- ---------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) 0.89% N/A 0.89% Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2010 N/A N/A 0.81% Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2020 N/A N/A 0.84% Portfolio -- Service Class 2 Fidelity(R) VIP Freedom 2030 N/A N/A 0.90% Portfolio -- Service Class 2 Fidelity(R) VIP Mid Cap Portfolio - - 0.90% N/A 0.90% Service Class 2 Fidelity(R) VIP Strategic Income 0.94% N/A 0.94% Portfolio -- Service Class 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities 1.19% 0.26% 0.93% (3) Fund -- Class 2 Franklin Income Securities Fund -- 0.72% N/A 0.72% (4) Class 2 Franklin Rising Dividends Securities 0.88% N/A 0.88% (4) Fund -- Class 2 Franklin Small Cap Value Securities 0.92% N/A 0.92% Fund -- Class 2 Franklin Small-Mid Cap Growth 1.05% N/A 1.05% Securities Fund -- Class 2 Franklin Strategic Income Securities 0.60% 0.01% 0.59% (5) Fund -- Class 1 Mutual Global Discovery Securities 1.24% N/A 1.24% Fund -- Class 2 Mutual Shares Securities Fund -- 0.96% N/A 0.96% Class 2 Templeton Developing Markets 1.35% N/A 1.35% Securities Fund -- Class 1 Templeton Foreign Securities Fund - - 1.04% N/A 1.04% Class 2 Templeton Global Bond Securities Fund 0.80% N/A 0.80% (4) -- Class 2 Templeton Growth Securities Fund - - 1.03% N/A 1.03% (4) Class 2 HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS 0.65% N/A 0.65% Fund -- Class IA Hartford U.S. Government Securities 0.48% N/A 0.48% HLS Fund -- Class IA HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS 0.67% N/A 0.67% Fund -- Class IA Hartford Disciplined Equity HLS Fund 0.75% N/A 0.75% -- Class IA Hartford Dividend and Growth HLS Fund 0.67% N/A 0.67% -- Class IA Hartford Global Growth HLS Fund -- 0.82% N/A 0.82% Class IA Hartford Global Research HLS Fund -- 1.04% N/A 1.04% Class IA Hartford Growth HLS Fund -- Class IA 0.83% N/A 0.83% Hartford High Yield HLS Fund --Class 0.75% N/A 0.75% IA Hartford Index HLS Fund -- Class IA 0.33% N/A 0.33% Hartford International Opportunities 0.74% N/A 0.74% HLS Fund -- Class IA Hartford Money Market HLS Fund -- 0.42% N/A 0.42% Class IA Hartford Small Company HLS Fund -- 0.72% N/A 0.72% Class IA Hartford Total Return Bond HLS Fund 0.50% N/A 0.50% -- Class IA Hartford Value HLS Fund -- Class IA 0.76% N/A 0.76% LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio 0.93% 0.03% 0.90% (6) -- Class VC Lord Abbett Fundamental Equity 1.19% 0.04% 1.15% (7) Portfolio -- Class VC Lord Abbett Growth and Income 0.91% N/A 0.91% Portfolio -- Class VC
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DISTRIBUTION AND/OR SERVICE MANAGEMENT (12B-1) OTHER UNDERLYING FUND: FEES FEES EXPENSES -------------------------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Initial Class 0.75% N/A 0.07% MFS(R) Investors Trust Series -- 0.75% N/A 0.07% Initial Class MFS(R) Research Bond Series -- 0.50% N/A 0.06% Initial Class MFS(R) Total Return Series --Initial 0.75% N/A 0.05% Class MFS(R) Value Series -- Initial Class 0.72% N/A 0.06% PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund --Class 0.49% 0.25% 0.15% IB Putnam VT Investors Fund -- Class IB 0.57% 0.25% 0.17% Putnam VT Voyager Fund -- Class IB 0.57% 0.25% 0.15% CONTRACTUAL FEE TOTAL WAIVER TOTAL ANNUAL ANNUAL AND/OR FUND OPERATING OPERATING EXPENSE EXPENSES AFTER UNDERLYING FUND: EXPENSES REIMBURSEMENT FEE WAIVER -------------------------------------- ---------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Initial Class 0.82% N/A 0.82% MFS(R) Investors Trust Series -- 0.82% N/A 0.82% Initial Class MFS(R) Research Bond Series -- 0.56% N/A 0.56% Initial Class MFS(R) Total Return Series --Initial 0.80% 0.03% 0.77% (8) Class MFS(R) Value Series -- Initial Class 0.78% N/A 0.78% PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund --Class 0.92% N/A 0.92% IB Putnam VT Investors Fund -- Class IB 0.99% N/A 0.99% Putnam VT Voyager Fund -- Class IB 0.97% N/A 0.97%
NOTES (1) The Adviser has contractually agreed, through at least April 30, 2014, to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement to 0.78% of average daily net assets. Acquired Fund Fees and Expenses are also excluded in determining such obligation. Unless the Board of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2014. (2) The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit Total Annual Fund Operating Expenses to 2.00% of average daily net assets. Unless the Board of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. (3) 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 12b-1 fees and acquired fund fees and expenses) do not exceed 0.68% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2014. This waiver is separate from the waiver related to the Sweep Money Fund. (4) The Fund administration fee is paid indirectly through the management fee. (5) The manager and administrator have agreed in advance to reduce their fees as a result of the fund's investment in a Franklin Templeton money market fund ("Sweep Money Fund" shown above in the column "Acquired fund fees and expenses"). This reduction will continue until at least April 30, 2014. (6) For the period May 1, 2013 through April 30, 2014, Lord Abbett has contractually agreed to waive its fees and to reimburse expenses to the extent necessary to limit total net annual operating expenses to an annual rate of 0.90%. This agreement may be terminated only upon the approval of the Fund's Board of Directors. (7) For the period May 1, 2013 through April 30, 2014, Lord Abbett has contractually agreed to waive its fees and to reimburse expenses to the extent necessary to limit total net annual operating expenses to an annual rate of 1.15%. This agreement may be terminated only upon the approval of the Fund's Board of Directors. (8) Massachusetts Financial Services Company has agreed in writing to reduce its management fee to 0.70% of the fund's average daily net assets annually in excess of $1 billion and 0.65% of the fund's average daily net assets annually in excess of $2.5 billion to $3 billion. This written agreement will remain in effect until modified by the fund's Board of Trustees, but such agreement will continue until at least April 30, 2014. 15 ------------------------------------------------------------------------------- ABOUT US Your Policy will indicate which company issued your Policy. The company that issues your Policy is primarily determined by the state where you purchased the Policy. THE COMPANIES HARTFORD LIFE INSURANCE COMPANY -- We are a stock life insurance company engaged in the business of writing life insurance and annuities, both individual and group, in all states of the United States and the District of Columbia. We were originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Our offices are located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial Services Group, Inc., one of the largest financial service providers in the United States. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -- We are a stock life insurance company engaged in the business of writing life insurance and annuities, both individual and group, in all states of the United States, the District of Columbia and Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity Insurance Company. We were originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial Services Group, Inc., one of the largest financial service providers in the United States. On January 2, 2013, Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company (collectively, "Hartford") entered into agreements with The Prudential Insurance Company of America ("Prudential") under which Prudential will reinsure the obligations of Hartford under the variable life insurance policies and provide administration for the policies. Prudential is a New Jersey domiciled life insurance company with offices located in Newark, New Jersey. Prudential's mailing address is 213 Washington Street, Newark, NJ 07102. Prudential is ultimately controlled by Prudential Financial, Inc. THE SEPARATE ACCOUNTS HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL II -- established as a separate account under Connecticut law on September 30, 1994. The Separate Account is classified as a unit investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT VL II -- established as a separate account under Connecticut law on September 30, 1994. The Separate Account is classified as a unit investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940. Income, gains and losses credited to, or charged against, the Separate Account reflect the Separate Account's own investment experience and not the investment experience of the Company's other assets. The assets of the Separate Account may not be used to pay any liabilities of the Company other than those arising from the Policies. The Company is obligated to pay all amounts promised to Contract Owners in accordance with the terms of the Policy. THE FUNDS The Sub-Accounts of the Separate Account purchase shares of mutual funds set up exclusively for variable annuity and variable life insurance products. These funds are not the same mutual funds that you buy through your stockbroker or through a retail mutual fund, but they may have similar investment strategies and the same portfolio managers as retail mutual funds. You choose the Sub-Accounts that meet your investment style. We do not guarantee the investment results of any of the underlying Funds. Since each Underlying Fund has different investment objectives, each is subject to different risks. The underlying Funds may not be available in all states. You may also allocate some or all of your premium payments to the "Fixed Account," which pays a declared interest rate. See "The Fixed Account." Below is a table that lists the underlying Funds in which the Sub-accounts invest, each Fund's investment adviser and sub-adviser, if applicable, and each Fund's investment objective. More detailed information concerning a Fund's investment objective, investment strategies, risks and expenses is contained in each Fund's prospectus which may be obtained from us.
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation Fund -- Series I Total return with a low to moderate Invesco Advisers, Inc. correlation to traditional financial market indices Invesco V.I. Core Equity Fund -- Series I Seeks long-term growth of capital Invesco Advisers, Inc.
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FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- Invesco V.I. Global Real Estate Fund -- Series I Total return through growth of Invesco Advisers, Inc. Invesco capital and current income Asset Management Limited Invesco V.I. International Growth Fund -- Series I Seeks long-term growth of capital Invesco Advisers, Inc. Invesco V.I. Mid Cap Core Equity Fund -- Series I Seeks long-term growth of capital Invesco Advisers, Inc. Invesco V.I. Small Cap Equity Fund -- Series I Seeks long-term growth of capital Invesco Advisers, Inc. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Maximize total return consistent AllianceBernstein, L.P. Portfolio -- Class B with Adviser's determination of reasonable risk AllianceBernstein VPS International Value Portfolio -- Seeks long-term growth of capital AllianceBernstein, L.P. Class B AllianceBernstein VPS Real Estate Investment Portfolio Seeks total return from long-term AllianceBernstein, L.P. -- Class B growth of capital and income AllianceBernstein VPS Small/Mid Cap Value Portfolio -- Seeks long-term growth of capital AllianceBernstein, L.P. Class B AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund -- Class 2 Seeks high total return, including Capital Research and Management income and capital gains, Company consistent with the preservation of capital over the long term. American Funds Blue Chip Income and Growth Fund -- Seeks to produce income exceeding Capital Research and Management Class 2 the average yield on U.S. stocks Company generally and to provide an opportunity for growth of principal consistent with sound common stock investing. American Funds Bond Fund -- Class 2 Seeks a high level of current Capital Research and Management income as is consistent with Company preservation of capital. American Funds Global Bond Fund -- Class 2 Seeks a long term high level of Capital Research and Management total return consistent with Company prudent investment management. American Funds Global Growth and Income Fund -- Class Seeks to provide long-term growth Capital Research and Management 2 of capital while providing current Company income. American Funds Global Growth Fund -- Class 2 Seeks long-term growth of capital Capital Research and Management Company American Funds Global Small Capitalization Fund -- Seeks growth of capital over time Capital Research and Management Class 2 by investing primarily in stocks of Company smaller companies located around the world. American Funds Growth Fund -- Class 2 Seeks to provide growth of capital Capital Research and Management Company American Funds Growth-Income Fund -- Class 2 Seeks long-term growth of capital Capital Research and Management and income Company American Funds International Fund -- Class 2 Seeks long-term growth of capital Capital Research and Management Company American Funds New World Fund -- Class 2 Seeks long-term capital Capital Research and Management appreciation Company
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FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) Portfolio -- Service Seeks long-term capital Fidelity Management & Research Class 2 appreciation Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates Fidelity(R) VIP Freedom 2010 Portfolio -- Service Seeks high total return with a Strategic Advisers, Inc. Class 2 secondary objective of principal preservation as the fund approaches its target date and beyond Fidelity(R) VIP Freedom 2020 Portfolio -- Service Seeks high total return with a Strategic Advisers, Inc. Class 2 secondary objective of principal preservation as the fund approaches its target date and beyond Fidelity(R) VIP Freedom 2030 Portfolio -- Service Seeks high total return with a Strategic Advisers, Inc. Class 2 secondary objective of principal preservation as the fund approaches its target date and beyond Fidelity(R) VIP Mid Cap Portfolio -- Service Class 2 Seeks long-term growth of capital Fidelity Management & Research Company Sub-advised by FMR Co., Inc. and other Fidelity affiliates Fidelity(R) VIP Strategic Income Portfolio -- Service Seeks a high level of current Fidelity Investments Money Class 2 income. The fund may also seek Management capital appreciation FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund -- Class 2 Seeks capital appreciation Franklin Advisers, Inc. Franklin Income Securities Fund -- Class 2 Seeks to maximize income while Franklin Advisers, Inc. maintaining prospects for capital Sub-advised by Templeton Investment appreciation Counsel, LLC Franklin Rising Dividends Securities Fund -- Class 2 Seeks long-term capital Franklin Advisory Services, LLC appreciation with preservation of capital as an important consideration Franklin Small Cap Value Securities Fund -- Class 2 Seeks long-term total return Franklin Advisory Services, LLC Franklin Small-Mid Cap Growth Securities Fund -- Class Seeks long-term capital growth Franklin Advisers, Inc. 2 Franklin Strategic Income Securities Fund -- Class 1 Seeks a high level of current Franklin Advisers, Inc. income, with capital appreciation over the long term as a secondary goal Mutual Global Discovery Securities Fund -- Class 2 Seeks capital appreciation Franklin Mutual Advisers, LLC Sub-advised by Franklin Templeton Investment Management Limited Mutual Shares Securities Fund -- Class 2 Seeks capital appreciation, with Franklin Mutual Advisers, LLC income as a secondary goal Templeton Developing Markets Securities Fund -- Class Seeks long-term capital Templeton Asset Management Ltd. 1 appreciation Templeton Foreign Securities Fund -- Class 2 Seeks long-term capital growth Templeton Investment Counsel, LLC
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FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- Templeton Global Bond Securities Fund -- Class 2 Seeks high current income, Franklin Advisers, Inc. consistent with preservation of capital, with capital appreciation as a secondary consideration Templeton Growth Securities Fund -- Class 2 Seeks long-term capital growth Templeton Global Advisors Limited HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund -- Class IA Seeks capital appreciation Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP Hartford U.S. Government Securities HLS Fund -- Class Seeks to maximize total return Hartford Funds Management Company, IA while providing shareholders with a LLC high level of current income Sub-advised by Wellington consistent with prudent investment Management Company, LLP risk HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS Fund -- Class IA Seeks growth of capital Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP Hartford Disciplined Equity HLS Fund -- Class IA Seeks growth of capital Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP Hartford Dividend and Growth HLS Fund -- Class IA Seeks a high level of current Hartford Funds Management Company, income consistent with growth of LLC capital Sub-advised by Wellington Management Company, LLP Hartford Global Growth HLS Fund -- Class IA Seeks growth of capital Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP Hartford Global Research HLS Fund -- Class IA Seeks long-term capital Hartford Funds Management Company, appreciation LLC Sub-advised by Wellington Management Company, LLP Hartford Growth HLS Fund -- Class IA Seeks long-term capital Hartford Funds Management Company, appreciation LLC Sub-advised by Wellington Management Company, LLP Hartford High Yield HLS Fund -- Class IA Seeks to provide high current Hartford Funds Management Company, income, and long-term total return LLC Sub-advised by Wellington Management Company, LLP Hartford Index HLS Fund -- Class IA Seeks to provide investment results Hartford Funds Management Company, which approximate the price and LLC yield performance of publicly Sub-advised by Hartford Investment traded common stocks in the Management Company aggregate. Hartford International Opportunities HLS Fund -- Class Seeks long-term growth of capital Hartford Funds Management Company, IA LLC Sub-advised by Wellington Management Company, LLP
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FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- Hartford Money Market HLS Fund -- Class IA* Seeks maximum current income Hartford Funds Management Company, consistent with liquidity and LLC preservation of capital Sub-advised by Hartford Investment Management Company Hartford Small Company HLS Fund -- Class IA Seeks growth of capital Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP Hartford Total Return Bond HLS Fund -- Class IA Seeks a competitive total return, Hartford Funds Management Company, with income as a secondary LLC objective Sub-advised by Wellington Management Company, LLP Hartford Value HLS Fund -- Class IA Seeks long-term total return Hartford Funds Management Company, LLC Sub-advised by Wellington Management Company, LLP LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio -- Class VC Seeks high current income and the Lord, Abbett & Co. LLC opportunity for capital appreciation to produce a high total return Lord Abbett Fundamental Equity Portfolio -- Class VC Seeks long-term growth of capital Lord, Abbett & Co. LLC and income without excessive fluctuations in market value Lord Abbett Growth and Income Portfolio -- Class VC Seeks long-term growth of capital Lord, Abbett & Co. LLC and income without excessive fluctuations in market value MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Initial Class Seeks capital appreciation MFS Investment Management MFS(R) Investors Trust Series -- Initial Class Seeks capital appreciation MFS Investment Management MFS(R) Research Bond Series -- Initial Class Seeks total return with an emphasis MFS Investment Management on current income, but also considering capital appreciation MFS(R) Total Return Series -- Initial Class Seeks total return MFS Investment Management MFS(R) Value Series -- Initial Class Seeks capital appreciation MFS Investment Management PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund -- Class IB Capital growth and current income Putnam Investment Management, LLC Putnam VT Investors Fund -- Class IB Long-term growth of capital and any Putnam Investment Management, LLC increased income that results from this growth Putnam VT Voyager Fund -- Class IB Capital appreciation Putnam Investment Management, LLC
* 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. MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other separate accounts and our insurance company affiliates or other unaffiliated insurance companies to serve as the underlying investment for both variable annuity contracts and variable life insurance policies, a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of policy owners, and of owners of other contracts whose contract values are allocated to one or more of these other separate accounts investing in any one of the Funds. In the event of any 20 ------------------------------------------------------------------------------- such material conflicts, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another Underlying fund. There are certain risks associated with mixed and shared funding. These risks are disclosed in the Funds' prospectuses accompanying this prospectus. VOTING RIGHTS -- We currently vote shares of the underlying Funds owned by the Separate Account according to the instructions of Policy Owners. However, if the 1940 Act or any related regulations or interpretations should change and we decide that we are permitted to vote the shares of the underlying Funds in our own right, we may decide to do so. For Sub-Accounts in which you have invested as of the record date, we will notify you of shareholder's meetings of the Funds purchased by those Sub-Accounts. We will send you proxy materials and instructions for you to provide voting instruction. We will arrange for the handling and tallying of proxies received from you or other policy owners. If you give no instructions, we will vote those shares in the same proportion as shares for which we received instructions. As a result of proportional voting, the vote of a small number of policy owners could determine the outcome of a proposal subject to shareholder vote. We determine the number of Fund shares that you may instruct us to vote by applying a conversion factor to each policy owner's unit balance. The conversion factor is calculated by dividing the total number if shares attributable to each Sub-Account by the total number of units in each Sub-Account. Fractional votes will be counted. We determine the number of shares as to which the Policy Owner may give instructions as of the record date for a Fund's shareholder meeting. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- Subject to any applicable law, we may make certain changes to the Underlying Funds offered under your Policy. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Policy 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 or liquidation. We may eliminate the shares of any of the funds from the Policy for any reason and we may substitute shares of another registered investment company for 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 Policy necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Policy Owner, 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 AND PAYMENTS WE RECEIVE FROM FUNDS AND RELATED PARTIES -- We receive substantial fees and payments with respect to the Funds that are offered through your Contract (sometimes referred to as "revenue sharing" payments). We consider these fees and payments, among a number of facts, when deciding to include a Fund that we offer through the Contract. All of the Funds on the overall menu make payments to Hartford or an affiliate. We receive 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 Funds in amounts up to 0.55% of assets invested in a Fund. These fees and payments may include asset-based sales compensation and service fees under distribution and/or servicing plans adopted by Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940. These fees and payments may also include administrative service fees and additional payments, expense reimbursements and other compensation. Hartford expects to make a profit on the amount of the fees and payments that exceed Hartford's own expenses, including our expenses of payment compensation to broker-dealers, financial institutions and other persons for selling the Contracts. 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, 2012, 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): AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, Fidelity Distributors Corporation, Franklin Templeton Services, LLC, HL Investment Advisors, LLC Invesco Advisors Inc., Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., and Putnam Retail Management Limited Partnership. 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 amount of fees and compensation to us and not all Funds pay according to the same formula. Because of this, the amount of fees and payments received by Hartford varies by Fund and Hartford may receive 21 ------------------------------------------------------------------------------- greater or less fees and payments depending on the Funds you select. Revenue sharing payments and Rule 12b-1 fees did not exceed 0.50% and 0.25%, respectively, in 2012, and are not expected to exceed 0.50% and 0.25%, respectively, of the annual percentage of the average daily net assets (for instance, 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, 2012, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $10.7 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. THE FIXED ACCOUNT The portion of the prospectus relating to the Fixed Account is not registered under the 1933 Act and the Fixed Account is not registered as an investment company under the 1940 Act. The Fixed Account is not 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 Account. The following disclosure about the Fixed Account may be subject to certain generally applicable provisions of the federal securities laws regarding the accuracy and completeness of disclosure. The Fixed Account credits at least 3.0% per year. We are not obligated to, but may, credit more than 3.0% per year. If we do, such rates are determined at our sole discretion. Hartford does not guarantee that any crediting rate above the guarantee rate will remain for any guaranteed period of time. You assume the risk that, at any time, the Fixed Account may credit no more than 3.0%. CHARGES AND DEDUCTIONS DEDUCTIONS FROM PREMIUM Before your premium is allocated to the Sub-Accounts and/or the Fixed Account, we deduct a percentage from your premium for a Premium Charge and tax charges. The amount allocated after the deductions is called your Net Premium. PREMIUM CHARGES HARTFORD LIFE INSURANCE COMPANY POLICIES -- We deduct a premium charge from each premium you pay. The maximum premium charge under the Policy is 6% of premium. The premium charge compensates us for costs incurred in the distribution and sale of the Policy. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POLICIES -- We deduct a premium charge from each premium you pay. The maximum premium charge under the Policy is 6% of premium. The premium charge compensates us for costs incurred in the distribution and sale of the Policy. In Oregon, the maximum premium charge under the Policy is 8% of premium. TAX CHARGE -- We deduct a tax charge from each premium you pay. The tax charge covers taxes assessed against us by a state and/or other governmental entities. The range of such charge generally is between 0% and 4%. DEDUCTIONS FROM ACCOUNT VALUE MONTHLY DEDUCTION AMOUNTS -- Each month we will deduct an amount from your Account Value to pay for the benefits provided by your Policy. This amount is called the Monthly Deduction Amount and equals the sum of: - the charge for the cost of insurance; - the monthly administrative charge; - the monthly per $1,000 charge; - the mortality and expense risk charge; - any Face Amount increase fee; - any charges for additional benefits provided by rider; The Monthly Deduction Amount will vary from month to month. We will deduct the Monthly Deduction Amount on a pro rata basis from each available Sub-Account and the Fixed Account unless you choose the Allocation of Charges Option. ALLOCATION OF CHARGES OPTION -- You may provide us with written instructions to re-direct the deduction of your policy's Monthly Deduction Amount charges that are assessed on a monthly basis to specified Sub-Account(s) and/or the Fixed Account. If you do not provide us with written instructions, or if the assets in any of the specified Sub-Accounts or the Fixed Account are insufficient to pay the charge as requested, the Monthly Deduction Amount will then be deducted on a pro rata basis from each available Sub-Account and the Fixed Account. COST OF INSURANCE CHARGE -- The "cost of insurance" charge compensates the Company for providing insurance protection. It is deducted each month as part of the Monthly Deduction Amount and is designed to compensate the Company for the costs of paying death benefits. The charge for the cost of insurance equals: - the cost of insurance rate per $1,000, multiplied by - the amount at risk, divided by - $1,000. On any Monthly Activity Date, the amount at risk equals the Death Benefit less the Account Value on that date, prior to assessing the Monthly Deduction Amount. Cost of insurance rates will be determined on each Policy anniversary based on our future expectations of such factors as mortality, expenses, interest, persistency and taxes. The cost of insurance rates will not exceed those based on the 2001 Commissioners' Standard Ordinary Mortality Table (ANB), Male or Female, Unismoke Table, age nearest birthday (unisex rates may be required in some states). A table of guaranteed cost of insurance rates per $1,000 will be included in your 22 ------------------------------------------------------------------------------- Policy, however, we reserve the right to use rates less than those shown in the table. Substandard risks will be charged higher cost of insurance rates that will not exceed rates based on a multiple of 2001 Commissioners' Standard Ordinary Mortality Table (ANB), Male or Female, Unismoke Table, age nearest birthday (unisex rates may be required in some states and markets) plus any flat extra amount assessed. The multiple will be based on the insured's substandard rating. Any changes in the cost of insurance rates will be made uniformly for all insureds of the same issue ages, genders, risk classes and whose coverage has been in-force for the same length of time. No change in insurance class or cost will occur on account of deterioration of the insureds' health. Because your Account Value and death benefit may vary from month to month, the cost of insurance may also vary on each Monthly Activity Date. The cost of insurance depends on your policy's amount at risk. Items which may affect the amount at risk include the amount and timing of premium payments, investment performance, fees and charges assessed, rider charges, Policy loans and death benefit changes to the Face Amount. MONTHLY ADMINISTRATIVE CHARGE -- We deduct a monthly administrative charge from your Account Value to compensate us for certain Policy administrative and sales expenses and costs we incur in marketing, underwriting and acquiring policy owners issue and administrative costs of the Policy. During the first 5 Policy Years the charge is $30.00 per month, each year after the fifth Policy Year the charge is $10.00 per month. MORTALITY AND EXPENSE RISK CHARGE -- We deduct a mortality and expense risk charge each month from your Account Value. The mortality and expense risk charge compensates us for the mortality risks and expenses we assume under the Policies. The mortality risk assumed is that the actual life expectancy of insureds will be different than what we estimated based on actuarial assumptions. The expense risk assumed is that the expenses we incur for issuing and administering the policies will be greater than what we projected. The mortality and expense risk charge each month is equal to the: -the monthly mortality and expense risk rate; multiplied by - the sum of your accumulated values in the Sub-Accounts on the Monthly Activity Date, prior to assessing the Monthly Deduction Amount. HARTFORD LIFE INSURANCE COMPANY POLICIES -- During the first 10 Policy years, the maximum mortality and expense risk rate is 0.0625% per month. During Policy years 11-20 the maximum and the current (the amount we are currently charging) mortality and expense risk rate is 0.0417% per month. Thereafter, the maximum is 0.00% per month. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POLICES -- During the first 10 Policy years, the current (the amount we are currently charging) and maximum mortality and expense risk rate is 0.0625% per month. During Policy years 11-20 the maximum is 0.05% per month and the current mortality and expense risk rate is 0.0417% per month. After the 20th Policy year the current and maximum charge is 0.00% per month. The mortality and expense risk charge compensates us for mortality and expense risks assumed under the policies. The mortality risk assumed is that the cost of insurance charges are insufficient to meet actual claims. The expense risk assumed is that the expense incurred in issuing, distributing and administering the policies exceed the administrative charges and sales loads collected. Hartford may keep any difference between the cost it incurs and the charges it collects. MONTHLY PER $1,000 CHARGE -- The Monthly per $1,000 charge compensates us for certain administrative and sales expenses we incur in marketing, underwriting and acquiring policy owners. During the first 7 Policy years, the monthly per $1,000 of initial Face Amount is individualized based on issue ages, and is provided in the Policy. FACE AMOUNT INCREASE FEE -- We deduct a dollar amount from your Account Value for an unscheduled increase of the Face Amount on your Policy. We deduct the fee each month for twelve months after the increase. The fee is 1/12 of $1.00 per month per $1,000 of unscheduled increase in the Face Amount. The fee will not be less than 1/12 of $500 per month, but will not exceed 1/12 of $3,000 per month. This fee compensates us for underwriting and processing costs for such increases. RIDER CHARGE -- If your Policy includes riders, a charge applicable to the riders is made from the Account Value each month. The charge applicable to these riders is to compensate Hartford for the anticipated cost of providing these benefits and is specified on the applicable rider. For a description of the riders available, see "Your Policy -- Optional Supplemental Benefits." SURRENDER CHARGE -- During the first 9 Policy years, surrender charges will be deducted from your Account Value if: - you surrender your Policy The amount of surrender charge is individualized based on your issue ages, gender, insurance classes, duration and initial Face Amount. The charge compensates us for expenses incurred in issuing the Policy and the recovery of acquisition costs. Hartford may keep any difference between the cost it incurs and the charges it collects. The amount of surrender charge varies by Policy year. CHARGES FOR THE FUNDS The investment performance of each Fund reflects the management fee that the Fund pays to its investment manager as well as other operating expenses that the Fund incurs. Investment management fees are generally daily fees computed as a percentage of a Fund's average daily net assets as an annual rate. Please read the prospectus for each Fund for complete details. 23 ------------------------------------------------------------------------------- YOUR POLICY CONTRACT RIGHTS POLICY OWNER, OR "YOU" -- As long as your Policy is in force, you may exercise all rights under the Policy while either of the insureds is alive and no beneficiary has been irrevocably named. BENEFICIARY -- The beneficiary is the person you name in the application to receive any death benefit. You may change the beneficiary (unless irrevocably named) while either of the insureds is alive by notifying us in writing. If no beneficiary is living when the last surviving insured dies, the death benefit will be paid to you, if living; otherwise, it will be paid to your estate. INSURED -- The insured is the person on whose life the Policy is issued. You name the insured in the application of the Policy. The Policy Owner must have an insurable interest on the life of the insured in order for the Policy to be valid under state law and for the Policy to be considered life insurance for federal income tax purposes. An insurable interest generally exists when there is a demonstrable interest in something covered by an insurance Policy, the loss of which would cause deprivation or financial loss. There must be a valid insurable interest at the time the Policy is issued. If there is not a valid insurable interest, the Policy will not provide the intended benefits. Through our underwriting process, we will determine whether the insureds are insurable. You may request to change the Insured's risk class to a more favorable class if the health of the Insured has improved or if the Insured no longer uses nicotine. Upon providing us satisfactory evidence, we will review the risk classification. If we grant a change in risk classification, only future cost of insurance rates will be based on the more favorable class and all other contract terms and provisions will remain as established at issue. We will not change a risk class on account of deterioration of your health. ASSIGNMENT -- You may assign your Policy. Until you notify us in writing, no assignment will be effective against your Policy. We are not responsible for the validity of any assignment. STATEMENTS -- We will send you a statement at least once each year, showing: - the current Account Value, Cash Surrender Value and Face Amount; - the premiums paid, monthly deduction amounts and any loans since your last statement; - the amount of any Indebtedness; - any notifications required by the provisions of your Policy; and - any other information required by the Insurance Department of the state where your Policy was delivered. REPLACEMENTS A "replacement" occurs when a new Policy is purchased and, in connection with the sale, an existing Policy is surrendered, lapsed, forfeited, assigned to another insurer, otherwise terminated or used in a financial purchase. A "financial purchase" occurs when the purchase of a new life insurance Policy or annuity contract involves the use of money obtained from the values of an existing life insurance Policy or annuity contract through withdrawal, surrender or loan. There are some circumstances where replacing your existing life insurance Policy can benefit you. However, there are many circumstances where a replacement will not be in your best interest. You should carefully review the costs, benefits and features of your existing life insurance Policy against a proposed Policy to determine whether a replacement is in your best interest. CHANGE OF ADDRESS -- It is important that you notify us if you change your address. If your mail is returned to us, we are likely to suspend future mailings until an updated address is obtained. In addition, we may rely on third parties, including the US Postal Service, to update your current address. Unless preempted by ERISA, failure to give us a current address may result in payments due and payable on your life Policy being considered abandoned property under state law, and remitted to the applicable state. RIGHT TO EXAMINE A POLICY -- You have a limited right to return your Policy for cancellation. You may deliver or mail the Policy to us or to the agent from whom it was purchased any time during your free look period. FREE LOOK PERIOD FOR POLICIES ISSUED BY HARTFORD LIFE INSURANCE COMPANY: Your free look period begins on the day You receive Your Policy and ends ten days after You receive it. If you properly exercise your free look, the Contract will be rescinded and We will pay an amount equal to the greater of (a) the total premiums paid for the Policy less any Indebtedness; or (b) the sum of: i) the Account Value less any Indebtedness, on the date the returned Policy is received by Us or the agent from whom it was purchased; and, (ii) any deductions under the Policy or charges associated with the Separate Account, less applicable federal and state income tax withholding. FREE LOOK PERIOD FOR POLICIES ISSUED BY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY: Your free look period begins on the day You receive Your Policy and ends ten days after You receive it (or longer in some states). If you properly exercise your free look, the Contract will be rescinded and We will pay you an amount equal to the greater of (a) the total premiums paid for the Policy less any Indebtedness; or (b) the sum of: i) the Account Value less any Indebtedness, on the date the returned Policy is received by Us or the agent from whom it was purchased; and, (ii) any deductions under the Policy or charges associated with the Separate Account, less applicable federal and state income tax withholding. The state in which the Policy is issued determines 24 ------------------------------------------------------------------------------- the free look period. You should refer to your Policy for information. ISSUE FIRST(R) -- The Issue First(R) life insurance submission process can provide immediate insurance coverage provided the proposed Primary Insured ("Insured") meets all of the Conditions for Coverage described in the Issue First(R) Binding Premium Receipt. Once all of the Conditions for Coverage are met and eligibility for Issue First(R) is confirmed, we will issue the Policy at the rate class applied for and mail it directly to You. Hartford will then complete full underwriting and you will receive a Policy Endorsement that reflects the final rate class, at which time you may accept the final approved rate class (additional premium may be necessary) or exercise your free look and receive a full refund of premiums. Issue First(R) is only available on new policies, and does not apply to face amount increases or decreases. There is no charge for this feature. CONDITIONS FOR COVERAGE Coverage will become effective under the Issue First(R) Binding Premium Receipt when each and every condition set forth below is satisfied, and the Binding Premium Receipt ("Receipt") is signed by the owner (and Insured, if different). 1. Answers "No" to each of the questions 1 through 8 on the Receipt; 2. All answers to each question are correct, complete and true; 3. The total death benefit amount as applied for in the application together with the total death benefit amount under any other policies applied for or in-force with Us or any affiliate company on the life of the Primary Insured, is less than $2,000,000; ($1,000,000) for Proposed Insureds age 66 or older on his/her birthday nearest the date this receipt is signed; 4. A standard long form application and illustration have been completed as of the same date the Receipt and signed; 5. The applied for Policy is not an "employer-owned life insurance contract" under Internal Revenue Code Section 101(j); 6. We receive no less than the first modal premium for the mode selected on the Application. If death of the Insured occurs while the Binding Premium Receipt is in effect, we will pay the death benefit to the designated beneficiary according to Policy provisions (deaths occurring during the first two Policy years are subject to routine contestability reviews). LIMITATIONS OF COVERAGE UNDER THE BINDING PREMIUM RECEIPT 1. The Binding Premium Receipt provides coverage only for the Primary Insured. It does not provide coverage for any other proposed Insureds, including, but not limited to, other proposed Insureds under term insurance riders and child riders; 2. For survivorship policies, the Binding Premium Receipt only provides coverage upon the death of the last surviving insured; 3. The Binding Premium Receipt does not provide coverage if a Proposed Insured is age 71 or older on his/her birthday nearest the date the Receipt is signed; 4. The Binding Premium Receipt provides coverage in the event of death of the Primary Insured. It does not provide any coverage for other benefits which may be applied for, including but not limited to, accelerated death benefits, disability income benefits, or accidental death benefits; 5. There is no coverage under the Binding Premium Receipt if the Primary Insured dies by suicide. In such event, Our liability will be limited to a refund of the total premium paid for the Policy; and 6. Material misrepresentations or fraud in the answers to the questions in the Receipt or in the Application or if We determine that insufficient insurable interest exists in the life of the insured based on Our underwriting guidelines, will invalidate the Receipt and may be the basis for denial of benefits under, or rescission of, the Receipt and the applied for Policy. In this event, Our liability will be limited to a refund of the total premium paid for the Policy. BENEFITS WILL NOT BE PAID BOTH UNDER THE BINDING PREMIUM RECEIPT AND UNDER THE APPLIED FOR POLICY. IF BENEFITS ARE PAYABLE UNDER THIS BINDING PREMIUM RECEIPT, THEN NO BENEFIT RELATING TO THE DEATH OF THE PRIMARY INSURED WILL BE PAYABLE UNDER THE APPLIED FOR POLICY. WHEN THE BINDING PREMIUM RECEIPT TERMINATES If the Binding Premium Receipt becomes effective, coverage under the Receipt will terminate on the earliest of the following to occur: 1. the date the Policy takes effect, in which case Your initial premium payment will be applied to the Policy as of the policy's effective date; 2. the date of death of the covered Primary Insured, in which case We will pay the death benefit to the beneficiary designated in the Application; 3. the date We mail a notice of termination of this Receipt to the Proposed Policyowner at the address set forth in the Application; 4. the date We receive Your written request to terminate coverage under this Receipt; or 5. 14 days after the date this Receipt is signed by you. In the case of 3, 4, and 5 above, Our liability will be limited to a refund of the total premium paid for the Policy. On the Date of Issue of the Policy, coverage under the Binding Premium Receipt will terminate. In addition, our underwriting 25 ------------------------------------------------------------------------------- review of the Insured has not yet been completed by Us and any Riders for other benefits applied for on the Application for Life Insurance ("Application") and not shown in the Additional Benefits and Riders section of the Policy have not yet been issued by Us. FINAL UNDERWRITING DETERMINATION Upon completion of Our underwriting review, if We have not terminated Your Policy, We will issue a Policy Endorsement reflecting the Insured's final Insurance Class. The Policy Owner is charged for coverage based on the final underwriting determination starting from the date coverage began. The Policy Endorsement will reflect any other changes to the Policy that are required based on our Final Underwriting Determination, including but not limited to, Cost of Insurance and other Policy charges, Initial Face Amount, Death Benefit Option, and any No Lapse Guarantee Premium. The Policy Endorsement will also include any other changes in coverage from that applied for on the Application as requested by You, such as changes in Planned Premium, Initial Face Amount, or Death Benefit Option. In addition, any applied-for Riders approved by Us and not shown in the Additional Benefits and Riders section of the Policy will be issued by Us at this time. Additional premium may be required upon delivery of the Policy Endorsement. OTHER POLICY TRANSACTIONS Policy Loans, Withdrawals or any option to continue the Policy as reduced paid up will not be available during Our underwriting review until the date We receive in Good Order Your acceptance of the Policy Endorsement described above and all other necessary delivery requirements. The variable investment options become available at end of the free look period. POLICY TERMINATION The Policy will terminate on the earliest of the following events: 1. 120 days after the Policy's Date of Issue if a required and requested medical exam, lab test, application interview, medical report, or any other requested underwriting requirement, has not been received by Us; 2. the date We mail You a Policy termination notice due to Our determination that insufficient insurable interest exists in the life of the Insured; 3. the date the Right To Examine Policy provision is exercised by You; 4. Your surrender of the Policy; 5. the end of the Policy Grace Period when premiums sufficient to keep the Policy from terminating are not paid; 6. forty-five days after We send to You the Policy Endorsement described in this Amendment if we have not received Your signed acceptance of such Endorsement; or 7. the date the Insured dies. In the case of Policy Termination as described in 1, 2 and 6 above, Our liability will be limited to a refund of the total premiums paid for the Policy. In the case of Policy Termination as described in 3 above, Our liability will be limited as described in the Right to Examine Policy provision on Page 1 of the Policy Amendment. No insurance producer or other company representative may waive or modify the answer to any question in the Application or modify the terms or conditions of this Receipt. OTHER POLICY PROVISIONS INCONTESTABILITY -- We cannot contest the Policy after it has been in force, during the Insured's lifetime, for two years from its Date of Issue, except for non-payment of premium. Any increase in the Face Amount for which evidence of insurability was obtained, will be incontestable only after the increase has been in force, during the Insured's lifetime, for two years from the effective date of the increase. The Policy may not be contested for more than two years after the reinstatement date. Any contest We make after the Policy is reinstated will be limited to material misrepresentations in the evidence of insurability provided to Us in the request for reinstatement. However, the provision will not affect Our right to contest any statement in the original application or a different reinstatement request which was made during the Insured's lifetime from the Date of Issue of the Policy or a subsequent reinstatement date. SUICIDE EXCLUSION -- If, within two years from the Date of Issue, the Insured dies by suicide, while sane or insane, Our liability will be limited to the premiums paid less Indebtness and less any withdrawals. If, within two years from the effective date of any increase in the Face Amount for which evidence of insurability was obtained, the Insured dies by suicide, while sane or insane, Our liability with respect to such increase, will be limited to the Cost of Insurance for the increase. POLICY LIMITATIONS ALLOCATIONS TO SUB-ACCOUNTS AND THE FIXED ACCOUNT -- You may allocate amounts to a maximum of twenty (20) investment choices including the Sub-Accounts and Fixed Account. TRANSFERS OF ACCOUNT VALUE -- You may transfer amounts among the Fixed Account and the Sub-Accounts. We reserve the right to charge a transfer fee of up to $25 per transfer in excess of one transfer per calendar month. You may request transfers in writing or by calling us at 1-800-231-5453. Transfers by telephone may also be made by your authorized agent of record. Telephone transfers may not be permitted in some states. We will not be responsible for losses that result from acting upon telephone requests reasonably believed to be genuine. We will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. The procedures we follow for transactions initiated by telephone include requiring callers to provide certain identifying information. All transfer instructions communicated to us by telephone are tape recorded. 26 ------------------------------------------------------------------------------- CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER? You may make transfers between Sub-Accounts 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 Account Value among the underlying Funds available in your Policy. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order at our Designated Address. 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 Policy 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 Policy Owners allocate 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 Underlying Fund we would need to sell to satisfy all Policy Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or Premium Payments allocated to that Sub-Account and determine how many shares of that Underlying Fund we would need to buy to satisfy all Policy Owners' "transfer-in" requests. In addition, many of the underlying Funds that are available as investment options in our variable life policies are also available as investment options in variable annuity contracts, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and Policy Owners in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Underlying 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 many of the purchases of that particular Underlying Fund for many of the products we offer. We then "net" these trades by offsetting purchases against redemptions. Netting trades has no impact on the price you pay for or receive upon the purchase or sale of an investment option. This means that we sometimes reallocate shares of an Underlying Fund rather than buy new shares or sell shares of the Underlying Fund. For example, if we combine all transfer-out (redemption) requests and Surrenders of a stock Fund Sub-Account with all other sales of that Underlying Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Policy Owners and the owners of other products offered by us, want to transfer-in (purchase) an amount equal to $300,000 of that same Underlying 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. ARE THERE ANY CHARGES FOR TRANSFERS AMONG SUB-ACCOUNTS? Under the Policy, we have the right to assess an Administrative Transfer Fee of up to $25 per transfer after the first transfer you make in any month. We are currently not assessing Administrative Transfer Fees. 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 limit each Policy Owner to one Sub-Account transfer request each Valuation 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 Account Value more than once a Valuation Day. For Example: - If the only transfer you make on a day is a transfer of $10,000 from one Sub-Account into another Sub-Account, it would count as one Sub-Account transfer. - If, however, on a single day you transfer $10,000 out of one Sub-Account into five other Sub-Accounts (dividing the $10,000 among the five other Sub-Accounts however you chose), that day's transfer activity would count as one Sub-Account transfer. - Likewise, if on a single day you transferred $10,000 out of one Sub-Account into ten other Sub-Accounts (dividing the $10,000 among the ten other Sub-Account however you chose), that day's transfer activity would count as one Sub-Account transfer. - Conversely, if you have $10,000 in Account Value distribution among 10 different Sub-Accounts and you request to transfer the Account Value in all those Sub-Accounts into one Sub-Account, that would also count as one Sub-Account transfer. - However, you cannot transfer the same Account Value more than once in one day. That means if you have $10,000 in a Money Market Fund Sub-Account and you transfer all $10,000 into a Stock Fund Sub-Account, on that same day you could not then transfer the $10,000 out of the Stock Fund Sub-Account into another Sub-Account. SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH POLICY YEAR (THE "TRANSFER RULE") BY U.S. MAIL, VOICE RESPONSE UNIT, INTERNET, TELEPHONE, SAME DAY MAIL OR COURIER SERVICE. 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 27 ------------------------------------------------------------------------------- Unit, Internet, same day mail service 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 may 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 an Underlying Fund merger, substitution 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 Policy if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Policy if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Underlying Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of an Underlying Fund. Even if you do not engage in market timing, certain restrictions may be imposed on you, as discussed below: UNDERLYING FUND TRADING POLICIES Generally, You are subject to Underlying Fund trading policies, if any. We are obligated to provide, at the underlying Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist underlying Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading Policy. In certain instances, we have agreed to assist an Underlying Fund, to help monitor compliance with that Fund's trading Policy. We are obligated to follow each underlying 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 an Underlying Fund or other funds within that fund complex. We are not authorized to grant exceptions to an underlying Fund's trading Policy. Please refer to each underlying 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, Underlying 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 as money market funds and any Underlying 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 an Underlying Fund treats as a single investor. - A Fund can decide to exempt categories of Policy Owners whose Policies 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, loans, 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 Policy; or (iv) as a result of payments such as loan repayments, scheduled Premium Payments, scheduled withdrawals or surrenders, retirement plan Premium Payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading activities. For instance, - Since we net all the purchases and redemptions for a particular Underlying 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 underlying Funds may be attractive to market timers. We can not provide assurances that we will be capable of addressing possible abuses in a timely manner. - Our policies apply only to individuals and entities that own or are Policy Owners under this Policy. However, the underlying Funds that make up the Sub-Accounts of this Policy are available for use with many different variable life insurance policies, variable annuity products and funding agreements, and they 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 28 ------------------------------------------------------------------------------- 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 an Underlying Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Underlying Fund performance and, as a result, the performance of your Policy. This may also lower the Death Benefit paid to your Beneficiary. Separate Account investors could be prevented from purchasing Underlying Fund shares if we reach an impasse on the execution of an underlying Fund's trading instructions. In other words, an Underlying Fund complex could refuse to allow new purchases of shares by all our variable product investors if the Fund and The Hartford can not 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 Policy Owner to provide the information. If the Policy Owner does not provide the information, we may be directed by the Fund to restrict the Policy Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Policy will also be precluded from further purchases of Fund shares. LIMITATIONS ON TRANSFERS FROM THE FIXED ACCOUNT -- Except for transfers made under the Dollar Cost Averaging Program or transfers made as a result of a Policy loan, any transfers from the Fixed Account must occur during the 30-day period following each Policy anniversary, and, the amount transferred from the Fixed Account in any Policy year may not exceed the greater of $1,000 or 25% of the accumulated value in the Fixed Account on the transfer date. As a result of these restrictions, it can take several years to transfer amounts from the Fixed Account to the Sub-Accounts. For example, it may take 16 years to move $100,000 from the Fixed Account (assuming no growth on the account or Policy charges):
BEGINNING FIXED ACCOUNT AMOUNT ENDING VALUE TRANSFERRED BALANCE YEAR ($) ($) ($) -------------------------------------------------------------------------------- 1 100,000 25,000 75,000 2 75,000 18,750 56,250 3 56,250 14,063 42,188 4 42,188 10,547 31,641 5 31,641 7,910 23,730 6 23,730 5,933 17,798 7 17,798 4,449 13,348 8 13,348 3,337 10,011 9 10,011 2,503 7,508 10 7,508 1,877 5,631 11 5,631 1,408 4,224 12 4,224 1,056 3,168 13 3,168 1,000 2,168 14 2,168 1,000 1,168 15 1,168 1,000 168 16 168 168 0
In addition, if you choose to participate in an Asset Allocation Program after you have allocated money to the Fixed Account, the entire value in the Fixed Account will not be immediately eligible for the Asset Allocation Program. DEFERRAL OF PAYMENTS -- State law allows us to defer payment of Cash Surrender Values, withdrawals and loan amounts which are not attributable to the Sub-Accounts for up to six months from the date of the request. These laws were enacted many years ago to help insurance companies in the event of a liquidity crisis. If we defer payment for more than 30 days, we will pay you interest. For policies issued in New York, if we defer payment for more than 10 days, we will pay you interest. CHANGES TO CONTRACT OR SEPARATE ACCOUNT MODIFICATION OF POLICY AND CHANGE IN OPERATION OF THE SEPARATE ACCOUNT -- The only way the Policy may be modified is by written agreement signed by our President, or one of our Vice Presidents, Secretaries or Assistance Secretaries. At our election and subject to any necessary vote by persons having the right to give instructions on the voting of Fund shares held by the Sub-Accounts, the Separate Account may be operated as a management company under the Investment Company Act of 1940 (the Act) or any form permitted by law, may be deregistered under the Act in the event registration is no longer required, or may be combined with one or more Separate Accounts. Upon notice to policy owners and subject to any required regulatory approvals, we may make certain modifications to the 29 ------------------------------------------------------------------------------- Policy that are necessary to operate the Separate Account in any form permitted under the Act or in any form permitted by law, including: (1) the transfer of value in any Sub-Account to another Sub-Account or to one or more other separate accounts; (2) add, combine, or eliminate Sub-Accounts in the Separate Account or combine the Separate Account with another separate account; (3) substitute for the units held by any Sub-Account the units of another Sub-Account or another investment company or any other investment permitted by law; (4) make any changes required to comply with the requirements of any Fund, including, but not limited to, the imposition of a redemption charge or other fee by a Fund; or (5) make any other modifications to the Policy that, in Our judgment, are necessary or appropriate to ensure that it continues to qualify as life insurance under the applicable section(s) of the Internal Revenue Code, or any other applicable law, regulation or interpretation. SUBSTITUTION OF FUNDS -- We reserve the right to substitute the shares of any other registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account provided that the substitution has been approved by the Securities and Exchange Commission. SEPARATE ACCOUNT TAXES -- Currently, no charge is made to the Separate Account for federal, state and local taxes that may be allocable to the Separate Account. A change in the applicable federal, state or local tax laws which impose tax on Hartford and/or the Separate Account may result in a charge against the Policy in the future. Charges for other taxes, if any, allocable to the Separate Account may also be made. OTHER BENEFITS ENHANCED RATE DOLLAR COST AVERAGING (EDCA) PROGRAM At times, we may offer an Enhanced Rate DCA Program where you can earn a fixed rate of interest on initial premiums (including 1035 premiums) allocated to a segment of the Fixed Account over a period of 6 Months. Under the 6 Month Program, the initial premium payment (including premiums received in conjunction with a 1035 exchange) will earn a fixed rate (the rate will not change) for 6 months. The 6 month period begins on the monthly activity date after We receive the initial premium and after the free look period has expired. During the 6 month period, you must transfer these amounts into your selected "EDCA Target Investment Options" (excluding the Fixed Account option). You will select your EDCA Target Investment Options when you enroll in the program. The EDCA Target Investment Options may be the same as your premium allocation instructions. The interest earned under an Enhanced Rate DCA Program may be different from the interest earned on value allocated to the Fixed Account option. The interest rate under the Enhanced Rate DCA Program may also vary depending on when you purchased your Policy and/or enrolled in the program. You may elect to terminate your participation in the Enhanced Rate DCA Program at any time by notifying Us. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the EDCA Target Investment Options unless your notify us with alternative allocation instructions. Please consult your registered representative to determine which programs are currently available and to obtain the program enrollment documents that contain additional information about the program. We may discontinue offering the Enhanced Rate DCA Program at anytime. DOLLAR COST AVERAGING PROGRAM -- You may elect to allocate your Net Premiums among the Sub-Accounts and the Fixed Account pursuant to the Dollar Cost Averaging (DCA) program. The DCA program allows you to regularly transfer an amount you select from the Fixed Account or any Sub-Account into a different Sub-Account. Amounts will be transferred monthly to the other investment choices in accordance with your allocation instructions. The dollar amount will be allocated to the investment choices that you specify, in the proportions that you specify. If, on any transfer date, your Account Value allocated to the Dollar Cost Averaging program is less than the amount you have elected to transfer, your DCA program will terminate. You may cancel your DCA election by notice in writing or by calling us at 1-800-231-5453. We reserve the right to change or discontinue the DCA program. The main objective of a DCA program is to minimize the impact of short-term price fluctuations. The DCA program allows you to take advantage of market fluctuations. Since the same dollar amount is transferred to your selected investment choices at set intervals, the DCA program allows you to purchase more accumulation units when prices are low and fewer accumulation units when prices are high. Therefore, a lower average cost per accumulation unit may be achieved over the long term. However, it is important to understand that the DCA program does not assure a profit or protect against investment loss. STATIC ASSET ALLOCATION MODELS This feature allows you to select your portfolio of Funds based on your risk tolerance, time horizon and investment objectives. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Policy ("model portfolios"). These model portfolios 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. We make available educational information and materials (e.g., pie charts, graphs, or case studies) that can help you select a model portfolio, but we do not recommend models or otherwise provide advice as to what model portfolio may be appropriate for you. You choose how much of your Account Value you want to invest in this program. You can also combine this program with the Dollar Cost Averaging Program (subject to restrictions). Your investments under the program will be rebalanced at the specified frequency (quarterly, semi-annual or annual) you choose to reflect the model portfolio's original percentages, thereby eliminating imbalances resulting from market 30 ------------------------------------------------------------------------------- movements and/or partial Surrenders. We have no discretionary authority or control over your investment decisions. These model portfolios are based on then available Funds and do not include the Fixed Account. You may participate in only one model portfolio at a time. You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the model portfolios, and we will not reallocate your Account Value based on those updates. Information on updated model portfolios may be obtained by contacting your Registered Representative. Investment alternatives other than these model portfolios are available that may enable you to invest you Account Value with similar risk and return characteristics. When considering a model portfolio for your individual situation, you should consider your other assets, income and investments in addition to this Policy. ASSET REBALANCING -- Asset Rebalancing is another type of asset allocation program in which you customize your Sub-Accounts to meet your investment needs. You select the Sub-Accounts and the percentages you want allocated to each Sub-Account. Based on the frequency you select, your model will automatically rebalance to the original percentages chosen. You can only participate in one model at a time. The Fixed Account is not an available investment choice under an asset rebalancing program. IMPACT OF FUND CHANGES ON DCA PROGRAM, ASSET ALLOCATION PROGRAM AND ASSET REBALANCING PROGRAM -- Certain Fund changes may impact these programs. If a Fund (merging Fund) contained in one of these programs merges into another Fund (surviving Fund) and we do not receive alternative instructions from you, we will automatically replace the merging fund with the surviving fund for each of the programs. If a Fund contained in one of these programs is liquidated, unless other instructions are received, we will automatically move the Policy value of the liquidated fund to the current money market fund for each of these programs. OPTIONAL SUPPLEMENTAL BENEFITS -- The optional supplemental benefits discussed below are among the options that may be included in a Policy by rider, subject to the restrictions and limitations set forth in the rider. The cost for any optional rider you select depends on the issue age, sex, and risk class of the person insured under the Policy and the amount of benefit provided by the rider. The maximum cost for the rider will be stated in your Policy on the Policy specifications pages. LIFEACCESS ACCELERATED BENEFIT RIDER -- In the event both Insureds become Chronically Ill and are likely to need services for the remainder of their lives, we will pay an accelerated death benefit to the owner up to 100% of the Death Benefit and any term amount. Benefits are payable ONLY when both Insureds are Chronically Ill at the same time, as certified by a Licensed Health Care Practitioner. Benefits are also payable when the Last Surviving Insured has been certified as being Chronically Ill by a Licensed Health Care Practitioner and meet all the requirements. At your request, the accelerated benefit will be paid in monthly payments or on an annual lump sum basis subject to certain limitations and satisfaction of eligibility requirements, including the Written Certification. The certification must also state that both insureds are in need of services under a plan of care and that such services are likely to be needed for the rest of the insured's lives. THERE MAY BE ADVERSE TAX CONSEQUENCES IF YOU RECEIVE THE RIDER'S ACCELERATED DEATH BENEFIT. PLEASE REFER TO THE SECTION OF YOUR PROSPECTUS, SPECIAL CONSIDERATIONS REGARDING THE LIFEACCESS ACCELERATED BENEFIT RIDER FOR MORE DETAILS. Insured will mean each insured as shown in the Policy specifications. After the death of one of the insureds shown in the Policy specifications, insured will mean the Last Surviving Insured. Chronically Ill means an Insured has been certified by a Licensed Health Care Practitioner as the following: 1. being unable to perform (without Substantial Assistance from another individual) at least two Activities for Daily Living ("ADLs") for a period of at least 90 days due to a loss of functional capacity; or 2. requiring substantial supervision from another individual to protect such individual from threats to health and safety due to a severe Cognitive Impairment; AND 3. needing services pursuant to a Licensed Health Care Practitioner's Plan of Care as set forth in Written Certification or Re-certification. Activities for Daily Living refer to basic human functional abilities which measure the Insured's ability for self care and to live independently without substantial assistance from another individual. These include bathing, continence, dressing, eating, toileting and transferring. We may require the Insureds to be re-examined at Our expense, by a licensed Health Care Provider of Our choosing prior to or during a Benefit Period to ensure that the Insureds are Chronically Ill. We will NOT provide an Accelerated Benefit when either Insureds' or the Last Surviving Insured's Chronic Illness is a result of any one of the events listed below: - attempted suicide or intentional self-inflicted injury while sane or insane, - any act or incident of insurrection or war, declared or undeclared, - the Insured's participation in, or attempting to participate in, a felony, riot or insurrection, - alcoholism or drug addiction, or - if either Insured's Licensed Health Care Practitioner resides outside of the United States. ANNUAL LUMP SUM OPTION You may elect to receive Your Monthly Benefit Amount as an annual lump sum prior to the start of each Benefit Period. The amount of the annual lump sum payment will equal the present value of the Monthly Benefit Amount payable for each month in 31 ------------------------------------------------------------------------------- the twelve-month period following (a) the date the first monthly benefit payment would otherwise be payable; or (b) the date of each subsequent Benefit Period. Each Monthly Benefit Amount payable will be discounted by a monthly rate, such rate derived from an annual interest rate, never to exceed the greater of (a) the current yield on ninety-day treasury bills; or (b) the current maximum statutory adjustable Policy loan interest rate. Such discount will apply prior to any pro-rata adjustment to the Monthly Benefit Amount payable for loan repayments. Only one annual lump sum payment will be made in any one twelve-month period. CONDITIONS FOR ELIGIBILITY OF BENEFIT PAYMENTS You are eligible to receive an Accelerated Benefit if the Policy and Rider are in force when all of the following requirements are met: 1. We receive Your request, In Writing, for an Accelerated Benefit; 2. We receive from You Written Certification or Written Re-Certification by a Licensed Health Care Practitioner that the Insured is a Chronically Ill individual; 3. We complete, at Our discretion and expense, a personal interview with, and an assessment of, the Insured, including examination or tests by a Licensed Health Care Provider of Our choice; and We receive copies of any relevant medical records from a health care provider involved in the Insured's care; 4. We receive consent, In Writing, of any assignee of record named under the Policy or any irrevocable beneficiary named under the Policy; 5. You fulfill requirements, if any, regarding limitations on the availability of certain Sub-Accounts while receiving benefit payments; and 6. the Insured is living at the time all of the above requirements are met. WHEN BENEFIT PAYMENTS END We will continue to pay Accelerated Benefits under this Rider until the first of the following occur: 1. while both insureds are living, when either Insured no longer meets any one of the conditions for eligibility for benefit payments, or, following the death of one of the Insureds, when the Last Surviving Insured no longer meets any one of the conditions for eligibility for benefit payments, 2. we are notified to discontinue Accelerated Benefit payments, 3. if any events listed under the Rider Termination occur. RIDER TERMINATION. This Rider will terminate on the first of the following dates: - the date We receive Your request, In Writing, to terminate it, - the date You make a Withdrawal under the Policy during a Benefit Period, - the date the Policy terminates, - the date We receive notification, In Writing, of the death of the Last Surviving Insured, - the date the Lifetime Benefit Amount is exhausted, or - the date on which all additional benefits provided by rider are deemed to have terminated according to the terms of any Termination and Maturity Date provision, Continuation Beyond the Insured's Age 100 provision, or any other like provision of the Policy to which this rider is attached, unless You are receiving benefit payments under this Rider. - For Hartford Life Insurance Company policies, the date We approve a request, In Writing, from You to accelerate the Death Benefit for reason of terminal illness of the Insured as may be provided under an accelerated death benefit rider attached to the Policy, IN ADDITION, AS A CONDITION OF ELIGIBILITY FOR BENEFITS UNDER THE RIDER, WE MAY IMPOSE RESTRICTIONS OR LIMITATIONS ON THE AVAILABILITY OF CERTAIN INVESTMENT OPTIONS. WE WILL PROVIDE YOU PRIOR WRITTEN NOTICE OF ANY SUCH RESTRICTIONS OR LIMITATIONS AND YOU MAY TERMINATE THIS RIDER AT ANYTIME. THIS RIDER IS ONLY AVAILABLE AT POLICY ISSUANCE AND THERE IS A CHARGE FOR THIS RIDER. IMPACT OF RIDER BENEFITS ON POLICY AND RIDER Accelerating the Death Benefit under this Rider will impact the benefits and values under the Policy and Rider as described below. After each benefit payment, the Lifetime Benefit Amount in effect immediately prior to such payment will be reduced by each Monthly Benefit Amount payable prior to any pro-rata reduction for loan repayments. In addition, each benefit payment will reduce the values and any no lapse guarantee premium in effect at the time of such payment when such values are multiplied by the following Reduction Ratio: Reduction Ratio = 1 - (A / B) Where: A = is the monthly benefit payment, and B = is the Eligible Amount immediately prior to a benefit payment. The Policy's current values that are reduced by each benefit payment based on the Reduction Ratio are: Face Amount Amount of any term Insurance rider on the Insured Account Value 32 ------------------------------------------------------------------------------- Surrender Charges Indebtedness Monthly No Lapse Guarantee Premium Cumulative No Lapse Guarantee Premium Cumulative Premiums (paid to date) On variable life Policies, We will reduce amounts in the Fixed Account and each Sub-Account based on the proportion of the Account Value in the Fixed Account and each Sub-Account to the amount accelerated. ACCELERATED DEATH BENEFIT RIDER FOR TERMINAL ILLNESS (FOR HARTFORD LIFE INSURANCE COMPANY POLICIES ONLY) -- In the event the Specified Insureds have a Diminished Life Expectancy of 12 months (24 months in some states) or less, You may request in writing, that we pay a single sum accelerated death benefit to You, subject to certain limitations and proof of eligibility. This accelerated payment of the death benefit can be any amount between $2,500 and $500,000, not to exceed the Benefit Percentage times the Eligible Amount. The sum of the Benefit you may request under this and any other policies issued by us on the life of an Insured may not exceed $500,000. Each request for payment must be accompanied by Proof of Diminished Life Expectancy. While both the Specified Insureds are living, benefits are payable ONLY when both Insureds have a Diminished Life Expectancy at the same time. After the death of one of the insured, benefits are also payable when the Last Surviving Insured has a Diminished Life Expectancy. IN EITHER EVENT, ONLY ONE ACCELERATED BENEFIT PAYMENT WILL BE MADE. The maximum charge for this rider is $300 (one time charge when rider exercised). Specified Insured will mean each Insured as shown in the Policy specification. After the death of one of the Specified Insureds shown in the Policy specifications, Specified Insured will mean the Last Surviving Insured. Your option to accelerate benefits under this Rider will be suspended while the death benefit is being so accelerated in accordance with any other accelerated death benefit rider that may be attached to the Policy. Any Policy benefit that is not payable in a single sum or that is payable due to accidental bodily injury or death is not subject to this Rider or to the calculation of the Benefit. Your option to accelerate benefits under this Rider will continue during any nonforfeiture, reduced paid-up or extended term period. We will waive the cost of insurance and expense charges applicable to the Specified Insured's accelerated benefit. This accelerated payment of the death benefit is subject to the rights of any assignee of record or of any irrevocable beneficiary. They must consent, In Writing, before We will pay the Benefit. The requested portion of the Eligible Amount will be subject to the following adjustments: 1. A 12-month discount, based on the Discount Rate, will apply to the requested portion of the Eligible Amount. This discount reflects the early payment of the proceeds under Your Policy. 2. If, on the date We approve Your request, there is a Policy loan outstanding and the acceleration relates to insurance on the life of the Insured under the base Policy, a reduction to the requested portion of the Eligible Amount will apply. This reduction serves to repay the Policy loan. 3. A deduction will be made for the administrative charge if We approve Your request. The Benefit payable to You will be equal to the requested portion of the Eligible Amount as may be reduced by the maximums and limitations of this Rider minus 1, 2 and 3 above. Rather than having Your Benefit reduced by 3 above, You may elect to pay this amount directly to Us. We reserve the right to obtain an independent medical examination and We retain the right to make final determination regarding eligibility for benefits. POLICY LIEN Accelerated death benefit payments made under this Rider are an advance of the Specified Insured's death benefit. We will establish a lien against that Specified Insured's death benefits if We pay benefits under this Rider. Upon payment of any accelerated death benefit, access to the portion of the Policy's cash value attributable to the Specified Insured is restricted to the excess of that cash value over the sum of any outstanding Indebtedness, applicable Surrender Charge and this lien. The amount of the lien will be equal to all benefits paid under this Rider. The lien will be removed once We pay the death benefit or on the Policy Adjustment Date. If You lapse or surrender the Policy before the Policy Adjustment Date, Your cash value will be reduced by the amount of the lien which applies to the cash value. We will charge interest on the lien. Interest will accrue from the date of the accelerated payment to the earlier of the date the Policy terminates or the Policy Adjustment Date. We will add accrued interest to the lien at the time of Policy adjustment. The rate of interest charged will be equal to the Discount Rate. POLICY ADJUSTMENT On the Policy Adjustment Date, We will adjust the Policy in order to satisfy the lien created by the accelerated death benefit payment. We will adjust the death benefit of the Specified Insured. The adjusted death benefit will be the death benefit before adjustment, less the amount of Policy lien, including interest created by the accelerated payment. Any Cash Value, Policy Value or Surrender Charge will be reduced in the same proportion that the Death Benefit was reduced. These reductions will be made on the Policy Adjustment Date. If the Specified Insured is the Base Policy Insured and the lien equals 100% of the Death Benefit, the Policy will terminate, and any riders attached to the Policy that provide insurance on the life of any other person will be administered according to the rider provisions regarding the death of the Base Policy 33 ------------------------------------------------------------------------------- Insured. If the Specified Insured is an additional person insured by a rider on the base Policy and the lien equals 100% of the Face Amount of the rider, the rider coverage applicable to the Specified Insured will terminate. EXCLUSIONS This Rider does not provide accelerated death benefits if the Specified Insured or his/her Physician reside outside the United States of America. RIDER TERMINATION This Rider will terminate at earliest of the following: 1. when We receive Your request, in Writing, to cancel it; 2. when the Policy terminates; 3. on the Policy Adjustment Date. LAST SURVIVOR EXCHANGE OPTION RIDER -- We will exchange your Policy for two individual policies on the life of each of the persons insured under the Policy. This benefit is subject to the conditions stated in the rider and may be exercised only in the event of divorce, business dissolution or certain changes in the federal tax laws. There is no charge for this rider. ESTATE PROTECTION RIDER -- This rider provides additional insurance protection for the first four Policy years. There is a charge for the rider and it may only be purchased at issue. The rider may be cancelled at anytime. There are no charges for the rider after it has been cancelled or terminated. OVERLOAN PROTECTION RIDER -- This rider gives you the option to continue your Policy at a reduced death benefit with no further Monthly Deduction Amounts in the event your Policy is in danger of default or termination due to excessive Indebtedness. Indebtedness can exceed the Face Amount where a Policy Owner takes out several Policy loans or a large Policy loan and does not pay back the loan or loan interest. Since loan interest will continue to accrue while the Policy Loan is outstanding, overtime Indebtedness can eventually exceed the Face Amount. Subject to the terms and limitations described in the rider, the rider guarantees the Policy will not go into default or terminate due to excessive Indebtedness. The Overloan Protection Rider can also prevent the Policy from lapsing which could result in a taxable event where the Policy Owner would be deemed to have received income under the Policy upon Policy lapse. The Overloan Protection Rider may be elected if: (a) Indebtedness exceeds the Face Amount, or amounts at least equal to all premiums paid have been withdrawn; (A loan is not considered a withdrawal for purposes of requirement (a).) (b) the Policy has been inforce at least 15 Policy Years; (c) the younger Insured has attained age 75 (or would have, if deceased) and (d) Indebtedness does not exceed 99.5% (92.5% including the impact of the maximum 7% transaction charge) of the Account Value after deduction of the transaction charges as of the rider election effective date (when Indebtedness exceeds 90.0% of the Account Value (excluding the impact of the transaction charge) we will send you notification). After electing the Overloan Protection Rider: (a) A maximum transaction charge of 7% will be deducted from the Account Value (the Death Benefit is reduced before the charge is taken); (b) the Death Benefit Option will be Option A (Level Option), subject to the minimum death benefit provision; (c) if Indebtedness does not exceed the Face Amount, the Face Amount will be decreased to 100.5% of the Account Value; (d) all other Riders will be terminated; (E) ANY ACCOUNT VALUE IN THE SEPARATE ACCOUNT WILL BE TRANSFERRED TO THE FIXED ACCOUNT; (f) no Monthly Deductions will be taken; (g) no further transfers will be allowed; (h) no additional premium payments will be accepted; (i) interest charged on Indebtedness will continue to accrue; (j) loan repayments will be accepted; and (k) the termination due to excessive Indebtedness provision in the Policy will be suspended. There is a risk that the Internal Revenue Service could assert that the Policy has been effectively terminated when you exercise the Overloan Protection Rider and that the outstanding loan balance should be treated as a distribution. Depending on the circumstances, all or part of such deemed distribution may be taxable as income. In addition, there is uncertainty about whether Indebtnedess should be treated as the deemed cash surrender value for purposes of Section 7702 of the Internal Revenue Code. Currently, we do not treat Indebtedness as the cash surrender value for purposes of Section 7702. You should consult a tax advisor before exercising the Overloan Protection Rider. Here is a hypothetical example to help you understand how the Overloan Protection Rider works: Assumptions: Face Amount: $500,000, Account Value: $200,000, Indebtedness: $182,000 If a surviving Insured female, nonsmoker, Age 85 exercises the Overloan Protection Rider, the transaction charge would be $14,000 and the Face Amount would be reduced to $186,930. This rider is only available at Policy issuance. GUARANTEED MINIMUM ACCUMULATION BENEFIT RIDER ("GMAB") -- This rider, subject to the conditions described in the rider, guarantees that Your Account Value on the last day of the GMAB Period (Benefit Date), will be at least equal to the sum of the total gross Premiums (as adjusted for withdrawals and face decreases) received by us (Benefit Amount). The Benefit Date is typically the last day of your No-Lapse Guarantee Period. If the Account Value on the Benefit Date is less than the Benefit Amount as calculated on that date, the Account Value will be increased by an amount equal to the difference between the Account Value and the Benefit Amount . The amount by which the Account Value is increased will be allocated to the Sub-Account(s) shown in your Policy (typically the Money Market Sub-Account) on the Valuation Day immediately following the Benefit Date and will be subject to market fluctuation. The ultimate value of this amount will be based on the accumulation unit values next calculated after the amount has been allocated to your Policy. However, if we 34 ------------------------------------------------------------------------------- receive a Good Order request to surrender the Policy as of the Benefit Date, your cash surrender value will be increased by the difference between the Account Value and Benefit Amount (as adjusted for withdrawals, and face amount decreases) as of the Benefit Date. The rider has no cash value. The CUMULATIVE RIDER PREMIUM is the premium required to maintain the Rider. On the first Monthly Activity Date following the Policy Date, the Cumulative Rider Premium is the Monthly Rider Premium that will be shown in your Policy Specifications Page. On each Monthly Activity Date thereafter, the Cumulative Rider Premium is (a) the Cumulative Rider Premium on the previous Monthly Activity Date; plus (b) the current Monthly Rider Premium. A Withdrawal will result in a recalculation (reduction) of the future Cumulative Rider Premium. Policy fees and charges have no impact on the Cumulative Rider Premium. Please see the section entitled "Additional information about how withdrawals and face amount reductions will impact the benefits of the GMAB and the GMDB Riders" for more information. The MONTHLY RIDER PREMIUM is the monthly premium required to maintain the Rider that will be shown in your Policy Specifications Page. The rider is generally only available at Policy issue as long as each insured is either: a) between the issue ages of 20 to 60 and a standard or better non-nicotine underwriting class or b) between the issue ages of 20 to 55 and a standard or better nicotine underwriting class with the initial face amount is between $100,000 and $5,000,000. - There is a charge for this Rider. The charge will be automatically deducted on each Monthly Activity Date from the Account Value as part of the Monthly Deduction Amount. The charge will continue to be taken until the Rider is terminated. - There is a Cumulative Rider Premium required to maintain the rider. We will perform an annual test on each Policy Anniversary to determine if the required Cumulative Rider Premium has been received by Us. We will provide you notification if your rider fails this test and the amount of premium required to prevent the rider from terminating. In any Policy Year, we may limit Premium payments to no greater than 200% of the annualized Monthly Rider Premium. Any excess Premium will be refunded to you. - Withdrawals (does not include Policy Loans or Policy fees and charges) made will reduce the Benefit Amount proportionately based on the Account Value at the time of the Withdrawal. Decreases in Face Amount will also reduce the Benefit Amount proportionately based on the current Face Amount at the time of the decrease and will result in a new Monthly Rider Premium. See below for additional information about how withdrawals and face amount decreases impact the Benefit Amount. - At anytime on or after the Rider Effective Date, we may limit the Subaccounts in which You may allocate all or a portion of Your Account Value (Subaccount Restrictions). For example, We may require that You allocate such amounts in accordance with an asset allocation model or a fund-of-funds Subaccount. We will provide you notice of the Subaccounts Restrictions and of any change in the Subaccount Restrictions. Any transfers required to be made to comply with the Subaccount Restrictions will not be used in determining the number of transfers allowed under the Policy. You may terminate the GMAB Rider at anytime. - The Rider will continue until the earlier of: when the Policy terminates, when We receive a request to cancel it; the Benefit Date; the end of the 30-day period after we notify you of the minimum Premium amount required to maintain this Rider and it is not received by Us; the date We approve a request from You to increase the Face Amount; or the date we approve a request to accelerate the Death Benefit. (We offer two riders that provide the ability to accelerate the death benefit in the event the insured becomes "terminally ill" or "chronically ill," the Accelerated Death Benefit Rider for Terminal Illness and the LifeAccess Accelerated Benefit Rider, respectively.) - The Rider may not be reinstated, except in the event the Policy terminates and is subsequently reinstated during the GMAB Guarantee Period. If the rider is reinstated, the Cumulative Rider Premium will be restored, except that it will not be increased during periods of time that the Policy was not in force. Rider fees will not be due for periods of time that the Policy was not in force. All other rider benefits and rights will be restored. - Prior to the Benefit Date, the Rider does not have any direct impact on Policy values or benefits. The following hypothetical example is provided to help you understand how the GMAB rider works: Assumptions: Policy issued on January 5, 2010 insuring a female preferred non-nicotine age 45 and a male preferred non-nicotine age 40 Policy Face Amount: $500,000 Benefit Date: January 5, 2030 Cumulative Required Premium: $402 monthly or $96,480 as a single payment On January 5, 2030 (Benefit Date), total gross premiums paid equals $96,480 and the Account Value (as calculated as of the end of that day) equals $65,000. There have been no withdrawals, loans or Face Amount decreases. The Benefit Amount $31,480 (total premiums paid -- Account Value on Benefit Date) is deposited into the Money Market Account under the Policy on the Valuation Day following the Benefit Date. GUARANTEED PAID-UP DEATH BENEFIT RIDER ("GMDB") -- This rider, subject to the conditions described in the rider, gives You the option to continue Your Policy as a Paid-Up Life 35 ------------------------------------------------------------------------------- Insurance Policy (Paid-Up Policy) at the end of the Rider Guarantee Period (Benefit Date). A Paid-Up Policy is a Policy that does not require any additional premium to be paid to support the death benefit. The Benefit Date is shown in the Additional Benefits and Riders section of the Policy Specifications and is typically the last day of your No-Lapse Guarantee Period. The Benefit Amount will be a Paid-Up Policy that will have a Death Benefit at least equal to the greater of: - Gross premiums paid, including 1035 premium, minus rider benefit reductions due to withdrawals and face amount decreases, or - the maximum amount of insurance that the Account Value, less Indebtedness, would provide assuming an annual interest rate of 5%, the Guaranteed Cost of Insurance charges shown in your Policy specifications page and no other expenses. The CUMULATIVE RIDER PREMIUM is the premium required to maintain the Rider. On the first Monthly Activity Date following the Policy Date, the Cumulative Rider Premium is the Monthly Rider Premium that will be shown in your Policy Specifications Page. On each Monthly Activity Date thereafter, the Cumulative Rider Premium is (a) the Cumulative Rider Premium on the previous Monthly Activity Date; plus (b) the current Monthly Rider Premium. The MONTHLY RIDER PREMIUM is the monthly premium required to maintain the Rider that will be shown in your Policy Specifications Page. The rider is generally only available at Policy issue as long as each insured is either: a) between the issue ages of 20 to 60 and a standard or better non-nicotine underwriting class or b) between the issue ages of 20 to 55 and a standard or better nicotine underwriting class with the initial face amount is between $100,000 and $10,000,000. - There is a charge for this Rider. The charge will be automatically deducted on each Monthly Activity Date from the Account Value as part of the Monthly Deduction Amount. The charge will continue to be taken until the Rider is terminated. - There is a Cumulative Rider Premium required to maintain the rider. We will perform an annual test on each Policy Anniversary to determine if the required Cumulative Rider Premium has been received by Us. We will provide you notification if your rider fails this test and the amount of premium required to prevent the rider from terminating. - Withdrawals made will reduce the Benefit Amount proportionately based on the Account Value at the time of the Withdrawal. Decreases in Face Amount will also reduce the Benefit Amount proportionately based on the current Face Amount at the time of the decrease and will result in a new Monthly Rider Premium. A Withdrawal will result in a recalculation (reduction) of the future Cumulative Rider Premium. Policy charges are not considered withdrawals for purposes of the Rider. See below for additional information about how withdrawals and face amount decreases impact the Benefit Amount. - At anytime on or after the Rider Effective Date, we may limit the Subaccounts in which You may allocate all or a portion of Your Account Value (Subaccount Restrictions). For example, We may require that You allocate such amounts in accordance with an asset allocation model or a fund-of-funds Subaccount. We will provide you notice of the Subaccounts Restrictions and of any change in the Subaccount Restrictions. Any transfers required to be made to comply with the Subaccount Restrictions will not be used in determining the number of transfers allowed under the Policy. You may terminate the GMDB Rider at anytime. - The Rider will continue until the earlier of: when the Policy terminates, when We receive a request to cancel it; the Benefit Date; the end of the 30-day period after we notify you of the minimum Premium amount required to maintain this Rider and it is not received by Us; the date We approve a request from You, to increase the Face Amount; or the date we approve a request to accelerate the Death Benefit. (We offer two riders that provide the ability to accelerate the death benefit in the event the insured becomes "terminally ill" or "chronically ill," the Accelerated Death Benefit Rider for Terminal Illness and the LifeAccess Accelerated Benefit Rider, respectively.) - The Rider may not be reinstated, except in the event the Policy terminates and is subsequently reinstated during the Rider Guarantee Period. If the rider is reinstated, the Cumulative Rider Premium will be restored, except that it will not be increased during periods of time that the Policy was not in force. Rider fees will not be due for periods of time that the Policy was not in force. All other rider benefits and rights will be restored. - We will notify You at least 60 days prior to the Benefit Date of Your option to continue the Policy as a Paid-Up Policy. We must receive Your request to exercise this option within such 60-day period. Upon Our receipt of Your request to exercise this option, We will continue the Policy as a Paid-Up Policy effective as of the Benefit Date. In the absence of any instructions from You to exercise the Rider Benefit, the Policy will continue with no modifications to its terms and conditions and this Rider will terminate on the Benefit Date, except as described in the next bullet. In addition, this Rider, and any other Riders attached to the Policy, will terminate. We will notify You if this occurs. - If, on the Benefit Date, the Policy is being kept inforce by the No Lapse Guarantee provision, We will automatically continue the Policy as a Paid-Up Policy with a Death Benefit equal to the Benefit Amount as calculated on the Benefit Date as described above. - The Death Benefit of the Paid-Up Policy will be at least equal to the sum of the total Premiums received by Us as of the Benefit Date, adjusted by Indebtedness and any Withdrawals 36 ------------------------------------------------------------------------------- or Decreases in Face Amounts made under the Policy as of that date, or an amount calculated using the Account Value, minus Indebtedness, as a net single premium as of the Benefit Date at the then Attained Age of the Insured based on 5% interest, if greater. - Subsequent cash values of the Paid-Up Policy upon surrender will be based on the same mortality table used for the Policy to which this rider is attached as shown in the Policy Specifications and 5% interest. No loans or withdrawals will be allowed under the Paid-Up Policy. In addition, this Rider, and any other Riders attached to the Policy, will terminate. - Prior to exercising the Rider, the Rider does not have any direct impact on Policy values or benefits. The following hypothetical example is provided to help you understand how the GMDB Rider works: Policy issued on January 5, 2010 insuring a female preferred non-nicotine age 45 and a male preferred non-nicotine age 40 Policy Face Amount: $500,000 Benefit Date: January 5, 2030 Cumulative Required Premium $117.50 monthly or $28,200 as a single payment On January 5, 2030 (Benefit Date), total gross premiums paid equals $28,200 and the Account Value (as calculated as of the end of that day) equals $15,000. There have been no withdrawals, loans or Face Amount decreases. If the rider is exercised, the Paid-Up Policy will have a Death Benefit of $48,323 because this amount is the greater of (i) gross premiums paid minus rider benefit reductions from withdrawals and face amount decreases ($28,200) and (ii) A death benefit based on a Net Single Premium equal to Account Value minus Indebtedness of (ii) $48,323 . ADDITIONAL INFORMATION ABOUT HOW WITHDRAWALS AND FACE AMOUNT REDUCTIONS WILL IMPACT THE BENEFITS OF THE GMAB AND THE GMDB RIDERS As discussed above, withdrawals and face reductions will reduce each rider's benefit and required premium while charges will continue. At the time of a withdrawal transaction, the rider benefit reduction and premium reduction are calculated as follows: Withdrawals for the GMAB and GDB Riders RIDERBENEFITREDUCTION = [ Gross Withdrawal amount / (Account Value - Indebtedness) ] x Benefit Amount, rounded to the nearest penny, where Account Value and Indebtedness are measured prior to the withdrawal, and the Benefit Amount is measured after all increases to benefit amount have been applied for that day. REQUIREDPREMIUMREDUCTION = ( Decrease Amount / TotalFace ) x Premium requirement, rounded to the nearest penny, where TotalFace is measured prior to the decrease, and the Premium requirement is the annual premium requirement before the decrease. TotalFace is the total face amount in force for the insureds, including initial face amount and increases. Face Amount Reductions for the GMAB and GMDB Riders RIDERBENEFITREDUCTION = ( Decrease Amount / TotalFace ) x Benefit Amount, rounded to the nearest penny, where TotalFace is measured prior to the decrease, and the Benefit Amount is measured before any increases to benefit amount have been applied for that day. TotalFace is the total face amount in force for the insureds, including initial face amount and increases. REQUIREDPREMIUMREDUCTION = ( Decrease Amount / TotalFace ) x Premium requirement, rounded to the nearest penny, where TotalFace is measured prior to the decrease, and the Premium requirement is the annual premium requirement before the decrease. TotalFace is the total face amount in force for the insureds, including initial face amount and increases. Here is an example of how a face decrease and a withdrawal transaction would reduce the Benefit Amount under the GMAB and required premium for a hypothetical 45 year old female (preferred non-nicotine risk class) with an initial face amount of $1,000,000 with death benefit option A and the following assumptions: - GMAB is selected, with an annual premium requirement of 15,312 (1,276.00 monthly). - Paid 15,320 annually for 20 years - Decrease transaction: year 3, month 6 / decrease = 200,000 - Withdrawal transaction: year 4, month 6 / withdrawal = 10,000 Face Decrease in year 3, month 6 Benefit Reduction = 200,000 / 1,000,000 x 45,960 = 9,192.00 New Benefit = 45,960 - 9,192 = 36,768 Required Premium Reduction = 200,000 / 1,000,000 x 1,276.00 = 255.20 New Required Premium Reduction. = 1,276.00 - 255.20 = 1,020.80 Withdrawal in year 4, month 6 Benefit Reduction = 10,000 / 54,732.35 x 52,088.00 = 9,516.86 New Benefit = 52,088.00 - 9,516.86 = 42,571.14 Required Premium Reduction = 10,000 / 800,000 x 1,020.80 = 12.76 New Required Premium. = 1,020.80 - 12.76 = 1,008.04 Riders may not be available in all states. POLICY SETTLEMENT OPTIONS Proceeds from your Policy may be paid in a lump sum or may be applied to one of the available settlement options listed in your Policy. At the time proceeds are payable, the Beneficiary can select the method of payment. However, on or about March 1, 2010 the Policy Owner will have the option of preselecting a designated settlement option ("Designated Settlement Option"). After the Policy Owner designates a settlement option for a beneficiary, the beneficiary will not be able to choose a settlement option. 37 ------------------------------------------------------------------------------- SAFE HAVEN PROGRAM OPTION If the Death Benefit payment is $10,000 or greater, the Beneficiary may elect to have their death proceeds paid through our Safe Haven Program ("Safe Haven Program"). Under the Safe Haven Program, the proceeds remain in Our General Account and the Beneficiary will receive a draft book. Proceeds are guaranteed by the claims paying ability of the Company; however, it is not a bank account and is not insured by Federal Deposit Insurance Corporation (FDIC). The Beneficiary can write one draft for the total amount of the payment, or keep the money in the General Account and write drafts as needed. We will credit interest at a rate determined by us. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit Proceeds to the General Account. Any interest paid to the Beneficiary (Accountholder) will be taxable to the Beneficiary (Accountholder) in the tax year that it is credited. We may not offer the Safe Haven Account in all states and we reserve the right to discontinue offering it at any time. Although there are no direct charges for the Safe Haven Program, Hartford earns investment income from the proceeds under the program. The investment income earned is likely more than the amount of interest we credit to the Beneficiary (Accountholder) and Hartford may make a profit from the difference. The minimum amount that may be applied under the following settlement options is $5,000, subject to our then current rules. Once you select a settlement option, it is irrevocable and you may not change the settlement option for a lump sum. The following payment options are available to you or your beneficiary. Your beneficiary may choose a settlement option instead of taking the Death Benefit amount in a lump sum. FIRST OPTION -- INTEREST INCOME We pay interest on the amount you have applied to this option. The interest we pay will be determined by us in our sole discretion, although we will not pay you less than the minimum amount required by your state. You may request these payments to be made monthly, quarterly, semi-annually or annually. If you elect this option you may request the remaining amount of the Death Benefit at any time. SECOND OPTION -- INCOME OF FIXED AMOUNT We pay equal payments (chosen by the beneficiary) of the total amount applied to this option along with interest equal to at least the minimum required by your state until that total amount is exhausted. You may request these payments to be made monthly, quarterly, semi-annually or annually. The final payment will be for the remaining balance. THIRD OPTION -- PAYMENTS FOR A FIXED PERIOD We make monthly payments for the number of years selected, which may be from one to 30 years. This option provides for guaranteed dollar amounts of monthly payments for each $1,000 applied under this settlement option. Other arrangements for income payments may be added or otherwise agreed upon. BENEFITS WHEN THE YOUNGER INSURED REACHES AGE 120 On the Policy Anniversary after the younger Insured reaches age 120 the following will occur: - We will stop assessing all monthly Policy charges; - The Death Benefit Option will become level; - The Face Amount will be set equal to the Death Benefit; - Any indebtedness will continue to accrue interest; - You may not make any additional premium payments; - You may make loan repayments; - You may not take any withdrawals; - You may not take any new loans; - The Policy may terminate due to excessive indebtedness CLASS OF PURCHASERS REDUCED CHARGES FOR ELIGIBLE GROUPS -- Certain charges and deductions described above may be reduced for policies issued in connection with a specific plan, group, or program ("Eligible Group") in accordance with our rules in effect as of the date the application for a Policy is approved. An Eligible Group must satisfy certain criteria such as size, expected number of Policy holders, or present or anticipated levels of aggregate premiums, administrative expenses or commissions. We may modify, from time to time on a uniform basis, both the amount of the reductions and the criteria for eligibility. Reductions in charges will not be unfairly discriminatory against any person, including the affected Policy holders invested in the Separate Account. HOW POLICIES ARE SOLD We have entered into a distribution agreement with our affiliate, Hartford Equity Sales Company, Inc., ("HESCO"), under which HESCO serves as principal underwriter for the policies which are offered on a continuous basis. HESCO is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the FINRA. The principal business address of HESCO is the same as ours. HESCO has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the policies. We pay compensation to HESCO for sales of the policies by Financial Intermediaries. Polices will be sold by individuals who have been appointed by us as insurance agents and who are registered representative of Financial Intermediaries ("Registered Representative"). We list below types of arrangements that help to incentivize sales people to sell our products. These types of arrangements could be viewed as creating conflicts of interest. Financial Intermediaries receive commissions as described below. 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 38 ------------------------------------------------------------------------------- Representative according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive compensation that is based on the type of Policy or optional benefits sold. HARTFORD LIFE INSURANCE COMPANY POLICIES -- We pay commissions that vary with the sales agreements and are based on "target premiums" that we determine. "Target premium" is a hypothetical premium that is used only to calculate commissions. It varies with the death benefit option you choose and the issue age, gender and underwriting class of the insured. During the first Policy Year, the most common commission we pay is 45% of the premium up to the target premium. The maximum commission that we pay to for premium paid up to the target permium in the First Policy Year is 50%. The most common commission for the amount in excess of the Target Premium in the first Policy Year is 2.50% up to a maximum of 3.90%. In renewal years, the maximum commission rate is 22% until the cumulative premiums, since Policy inception, exceed the target premium for Policy Year 1. There is also an Expense Reimbursement Allowance paid during the first Policy Year. The most common Expense Reimbursement Allowance in the first year is 45% of Premium up to a maximum of 54%. In Policy Years 2 and later, the most common schedule allows for a commission of 2% of premiums paid on the Target Premium up to a maximum of 22% and a commission of 2% on premiums above the Target Premium up to a maximum of 2%. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POLICIES -- We pay commissions that vary with the selling agreements and are based on "Target Premiums" that we determine. "Target premium" is a hypothetical premium that is used only to calculate commissions. It varies with the death benefit option you choose and the issue age, gender and underwriting class of the insured. During the first Policy Year, the most common commission we pay is 85% of the premium up to the target premium. The maximum commission that we pay to for premium paid up to the target premium in the First Policy Year is 120%. During the first Policy Year the most common commission we pay for premium in excess of the target premium is 2.50%. The maximum commission that we pay for premium paid in excess of the target premium is 4.97%. The first year commission rate will apply to premiums in renewal years until the cumulative premiums received exceed the target premium. In Policy Years 2 and later, the most common commission we pay is 2% of premiums paid on the target premium. The maximum is 5%. Your Registered Representative typically receives a portion of the compensation paid to his or her Financial Intermediary in connection with the Policy, depending on the particular arrangements between your Registered Representative and their Financial Intermediary. We are not involved in determining your Registered Representative's compensation. A Registered Representative may be required to return all or a portion of the commissions paid if the Policy terminates prior to the policy's thirteenth month-a-versary. Check with your Registered Representative to verify whether your account is a brokerage account 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 by both 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 additional payments to amongst other things encourage the sale of this Policy. 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. 39 -------------------------------------------------------------------------------
ADDITIONAL PAYMENT TYPE WHAT PAYMENT IS USED FOR -------------------------------------------------------------------------------------------------------------------------------- Asset-based We pay certain Financial Intermediaries and wholesalers based on the achievement of certain sales or Commissions assets under management targets. Marketing Expense We pay marketing allowances to Financial Intermediaries to help pay or reimburse sales marketing and Allowances operational expenses associated with the policies. Gifts and We (or our affiliates) provide any or all of the following: (1) occasional meals and entertainment; (2) Entertainment occasional tickets to sporting events; and (3) nominal gifts (not to exceed $100 annually). Promotional Payments We (or our affiliates) may pay for: (a) Access: such as one-on-one wholesaler visits; (b) Support: such as hardware and software, operational and systems integration, sales and service desk training, joint marketing campaigns, client or prospect seminar sponsorships, broker-dealer event advertising/ participation, sponsorship of sales contests and/or promotions in which participants receive prizes such as travel awards, merchandise and recognition; and/or sponsorship of due diligence meetings; educational, sales or training seminars, conferences and programs; and, (c) Miscellaneous: such as expense allowances and reimbursements; override payments and bonuses; and/or marketing support fees (or allowances) for providing assistance in promoting the sale of our variable products. Marketing Efforts We pay for special marketing and distribution benefits such as: inclusion of our products on Financial Intermediary's "preferred list"; participation in or visibility at national and regional conferences; access to Registered Representatives; links to our website from the Financial Intermediary websites; and articles in Financial Intermediary publications highlighting our products and services.
For the year ended December 31, 2012, Hartford and its affiliates paid approximately $3,700,000 in Additional Payments to Financial Intermediaries in conjunction with the promotion and support of individual life policies. In addition, for the year ended December 31, 2012, Hartford, HESCO and their affiliate, Hartford Life and Annuity Insurance Company, paid $5,400,000, in Additional Payments to an affiliated Financial Intermediary, Woodbury Financial Services, Inc. (an indirect wholly-owned subsidiary of Hartford). As of December 31, 2012, we have entered into arrangements to make Additional Payments to the following Financial Intermediaries: 1st Global Capital Corporation, A F Crissie & Co. Ltd, AIA Insurance Agents Inc., A-Advantage Insurance Service Inc., AIA Insurance Agency Ltd, AIM Insurance, AXA Network LLC, Accurate Insurance Inc., Adirondack Trading Group LLC, Adkins Insurance Solutions LLC, Adler Belmont Dye Insurance Services Inc., Advance Insurance Agency, Advanced Advisor Group LLC, Advanced Insurance Resources, Agency Two Insurance Marketing Group, All American Insurance Inc., All Nebraska Insurance, AllPro Insurance Agency LLC, Allabout Insurance, Allegheny Investments Ltd, Allen Financial Advisors, Alliance Insurance Services Inc., Allstate Financial Services LLC, American Business & Professional Program, American Financial & Auto Service, American Health Insurance Inc., American Portfolios Financial Services, Americu Services, Ameriprise Financial Services Inc., Ameritas Investment Corp., Amtmann & Associates, Anderson Insurance Associates LLC, Anderson and Green Insurance, Andrew Garrett Inc., Armada Advisors Inc., Arvest Asset Management, Associated Insurance Brokers Inc., Associated Services Insurance Inc., Associates of Clifton Park, Association & Society, Atchison Insurance Agency Inc., Auerbach & Gussin Insurance, Austin Reilley & Doud Insurance Services, Axa Advisors LLC, Axios Advisory Group Ltd, B & K Associates Inc., B & M Financial Systems Inc., BC Ziegler and Company, BB&T Insurance Services Inc., BBVA Compass Insurance Agency Inc., BC Insurance LLC, BK Insurance Group LLC, BPU Investment Group Inc., Bamboo Financial LLC, Bancwest Investment Services Inc., Bank Of America, Battles Insurance Agency Inc., Beaconsfield Financial Services, Bearence Management Group LLC, Beaumont & Stork Inc., Beckett Taylor Insurance LLC, BenTrust Financial, Beneficial Services Inc., Benefits By Design Inc., Benefits Plus Inc., Benjamin F Edwards & Co. Inc., Berkfield & Co. Ltd, Berthel Fisher & Co Financial Services, Best Insurance Brokerage LLC, Betty Davis Insurance Agency LLC, Blake Barnes Insurance Services, Blakeslee & Blakeslee, Boca Benefits Consulting Group, Boda Financial Group Inc., Bomford Couch & Wilson, Bosc Inc., Brase Insurance Agency Inc., Brasher Insurance Group, BrokersXpress LLC, Brown & Brown of Florida Inc., Brown Brown & Gomberg, Brown-Hiller-Clark & Associates, Brownlie Braden Parrish & Rei, Bryanmark Financial Group Inc., Burgess Demarco & Flick Insurance, Burnley Wilson Associates, Burns Brooks & Mcneil, Burt Moss & Assoc Inc., Business Financial Group LLC, Byron Udell & Associates Inc., CT Lowndes & Company, CBIZ Insurance Services Inc., CCO Investment Services Corp., CES Insurance Agency Inc., CFP Inc., CIA Insurance Agency Inc., CIG Securities Inc., CLA USA Inc., CMS National Services LLC, CP Smith Enterprises Inc., CPS Insurance Services, CSC Insurance Professionals Inc., CT Solutions Ltd, Cadaret Grant & Co. Inc., Calderwood Financial Strategies, Cambridge Financial Services Inc., Caminiti Insurance Group LLC, Cantella & Co Inc., Capital Advisors, Capital Analysts Inc., Capital Financial Services Inc., Capital Guardian LLC, Capital Investment Group Inc. Capital One Agency LLC, Capital One Investment Services Corp., Capital Strategies Group Inc., Capital Synergy Partners, Carlisle Fields & Co LLC, Carter Terry & Company Inc., Cary Street Partners LLC, Cassedy Insurance Agency Inc., Cbiz Special Risk Insurance Services Inc., Centaurus Financial Inc., Center Street Securities Inc., Central FL Wealth Mgmt Inc., Central Ridge Insurers LLC, Central Trust Co., Central 40 ------------------------------------------------------------------------------- Washington Insurance, Century Securities Assoc Inc., Certus NW Inc., CFPLLC LLC, Chap Arnold Insurance Agency Inc., Charles James Cayias Insurance, Charles L Crane Agency, Chase Investment Services, Citigroup Global Markets Inc., Citizens Bank & Trust, Clarity Wealth Development, Clarke & Sampson Inc., Clay Paul Insurance Agency Inc., Coaching Financial Concepts Inc., Coburn & Meredith Inc., Coda Insurance Group LLC, Colonial Insurance Agency Inc., Comerica Securities Inc., Commerce Brokerage Services Inc., Commercial Insurance Brokers LLC, Commonwealth Financial Network, Community Brokers Insurance Group, Community Insurance Agency, Comp Consulting Companies LLC, Compass Financial & Insurance Services Inc., Comprehensive Asset Management Services, Consolidated Life Producers, Consumer Insurance Advocates Inc., Contessa Insurance, Copeland Agency LLC, Cornerstone Financial Group, Costanza Agency Inc., Costello Insurance Agency Inc., Crest Insurance Group LLC, Cross Limited Partnership, Crown Capital Securities, Crump Life Insurance Services Inc., Cuna Brokerage Service, Cuso Financial Services, Cynsam Inc., DL Downs Inc., D Lasman Insurance Services Inc., DML Jr. Inc., DA Davidson & Co Inc., DH Hill Securities LLP, DMA Insurance Services Inc., DSA Risk Management LLC, Daniel & Henry CO, Daniel Inc., David Insurance Agency Inc., David Lerner Associates Inc., Davis Insurance Agency Inc., Davis Life Insurance Agency, Delta Trust Investments Inc., Dennis J Gilbert Inc., Dewitt Insurance Agency, Dinser Financial Group, Disbennett Financial Services LLC, Dobbs & Brinkman Inc., Domler Fletcher Insurance Agency LLC, Donahue Thomas P & Associates LLC, Donna Frazier LLC, Donnelly Steen & Co., Dorsey & Company Inc., EJ Berriz & Assoc Insurance Service Inc., EDI Financial, Inc., ELS & Associates Inc., Eamon Walsh Inc., Earl G Chesson Inc., Eastern Financial of WV, Eckenrode Financial Group, Edelman Wealth Management Group, Edward D Jones & Co., Edward Watkins & Associates, Ehlert Financial Group Inc., Eichlitz Dennis Wray & Westheimer Agency, Elite One Insurance Services, Employers Benefit Group LLC, Equity Services Inc., Essex National Securities Inc., Etoms Inc., Exclusive Marketing Org. Inc., Executive Insurance Agecy of OH, F & I Insurance Service, FSC Securities Corp., Falconsure Inc., Farris Insurance, Fenstra Insurance, Fiducia Financial & Insurance Services Inc., Fifth Third Securities Inc., Financial Architects, Financial Independence Group Inc., Financial Network Investment Corp., Financial Planning Consultants, Finns JM & J Insurance Agency, Fintegra LLC, First Allied Securities, First American Insurance, First Brokerage America LLC, First Choice Insurance Services Inc., First Dakota Inc., First Financial Group Inc., First Heartland Capital Inc., First Heartland Corp., First Investors Corporation, First South Financial Services, First Southeast Investment Services, First Tennessee Brokerage, First Western Securities Inc., Fitts Agency Inc., Forest Financial Group Inc., Foresters Equity Services Inc., Forney Financial Solutions LLC, Fortune Insurance Group LLC, Founders Financial Securities, LLC, Fowler Insurance Agency Inc., Freeman Financial Services Inc., Freundt & Associates Insurance Services, Frost Brokerage Services Inc., Fulcrum Securities Inc., Futurecare Financial Group Inc., GBS Insurance and Financial Services, GFS Inc., GSTLG Advisors LLC, Gallagher Benefit Services Inc., Geneos Wealth Management, Inc., Genworth Financial Securities Corp., Gerald S Jamgochian LLC, Gibson Insurance, LLC, Gilroy Kernan & Gilroy, Girard Securities Inc., Glenn Harris & Associates, Global Insurance Agency Inc., Golden Circle Insurance Agency, Great Nation Investment Corp., Gruber & Assoc Ltd, H & H Insurance Agency Inc., H Beck Inc., H C & C Inc., HD Vest Investment Services., HSBC Securities USA Inc., Hadel Financial Advisors Inc., Halo Group LLC, Hanasab Insurance Services Inc., Hancock Insurance Agency, Harrison Insurance & Financials Ltd, Harvest Capital LLC, Hawkins Insurance Services Inc., Hazlett Burt & Watson, Healthplan Services Inc., Hecht & Hecht L&H Insurance Agency Inc., Hendrickson Insurance Services Inc., Hester Heitel & Associates, High and Associates Inc., Hightower Securities, LLC, Hoffman Insurance Agency Inc., Hoover & Assoc Financial Services Inc., Hornor Townsend Kent Inc., Howard W Phillips & Co., Hub Int'l Midwest Limited, Huntington Investment Co., IBN Financial Services Inc., IFA Benefits LLC, ILG First Meridian LLC, ING Financial Partners Inc., INS Group, IWC Benefit Insurance Services Corporation, Idaho Financial Group Inc., Independent Agents Inc., Infinex Investments Inc., Innovative Wealth Strategies, Ins. Benefits Network LLC, Ins Center Inc., Ins Guys Insurance Services Inc., Ins Smith Agency LLC, Insurance Land Insurance Service, Insurance Pro Agencies, Insurance Shop LLC, Integrated Insurance Solutions, Intervest International Equities Corp., Invest Financial Corp., Investment Centers Of America, Investment Planners Inc., Investment Professionals Inc., Investors Capital Corp., J J B Hilliard W L Lyons LLC, J M Barry & Assoc LLC, J W Cole Financial Inc., J.P. Perry Insurance, JMJ Consulting Inc., Jackson Dieken and Associates Agency Inc., Jackson Financial, James E Campbell Jr. Inc., James F Hurley Insurance Agency Corp., Jamieson Capital LLC, Jesan Financial Group, Jesse Trevino Insurance Agency, Jim Morrison Financial Services Inc., John C Eichler & Associates, Johnson & Strachan & Corp., Jonathan Hind Financial Group, Joshua Holdings Agency Corp., KPLL Private Wealth Inc., Kansas City Insurance Agency, Keister & Keister Agency Inc., Kerxton Insurance Agency Inc., Key Investment Services LLC, Keybanc Capital Markets Inc., Keycorp Insurance Agency USA Inc., Kiefer Financial Group, Kirnco Insurance Group, Koefod Insurance Agency, Kollas Inc., Kovack Securities Inc., LDS Wealth Advisors LTD, LM Kohn & Company, LPL Financial Corporation, Laginess Insurance Agency Inc., Lambent Risk Management Services Inc., Landolt Securities Inc., Landwehr Insurance Services Inc., Laredo Insurance Agency Inc., Larry Gustafson & Assoc LLC, Larry Murphy Insurance Agency, Lasalle St. Securities LLC, Lecain Family Insurance & Financial, Lee & Associates, Inc., Legacy Insurance Group LLC, Legend Equities Corp., Leigh Baldwin & Co. LLC, Lesko Securities Inc., Liberty Bank, Liberty Benefits Group LLC, Liberty Partners Financial Services Inc., Life & Legacy Group LLC, Life Brokerage Network LLC, Lifemark Securities Corp., Ligouri & Associates, Lincoln Financial Advisors, Lindsey Financial & Insurance Services, Linsco Private Ledger Insurance, Linton and Associates LLC, Lockton Companies LLC, Loesel Schaaf Insurance Agency, Louis Blosch Agency LLC, Luhn Mccain 41 ------------------------------------------------------------------------------- Insurance Agency, M & M Insurance Group Inc., M & T Securities Inc., M D Sutton Insurance Agency Inc., M Holdings Securities, Inc., M&T Bank National Association, MML Investors Services Inc., MRM Assurance Services Inc., MSF Insurance Group Inc., MWA Financial Services Inc., Madison Insurance of Virginia LLC, Maguire Financial Advisors LLC, Mariner Insurance Resources LLC, Mark J Napolin & Associates, Inc., Martin Insurance Group LLC, Masterplan Consulting, Mavco Insurance Agency Inc., McLeod Insurance Inc., McNair & Associates, Mcgee Financial Solutions LLC, Mcgregor Insurance Group LLC, Mclaughlin Ryder Investments, Melcher & Prescott Agency, MerCap Securities LLC, Merrill Lynch & Co., Metlife Securities Inc., Michigan Securities, Inc., Mid Atlantic Securities Inc., Middendorf Insurance Association Inc., Midland Insurance Services Inc., Mobile Assurance Services LLC, Monaghan Tilghman & Hoyle, Monarch Insurance Services Inc., Money Concepts Capital Corp., Monroe & Monroe Insurance, Moors & Cabot Inc., Moreton Insurance of Idaho Inc., Morgan Keegan & Co Inc., MorganStanley SmithBarney LLC, Mound Agency Of Ohio Inc., Multi-Financial Securities Corporation, Multiple Financial Services Inc., Murray & Murray Insurance Agency Inc., Mutual Insurance Assoc Inc., Mutual of Omaha Investor Services Inc., Mutual Trust Company, NBC Securities Inc., NFP Securities Inc., NIA Securities LLC, NWM Financial Services Inc., NY Long Term Care Brokers Ltd, National Insurance Brokerage, National Planning Corp., National Securities Corp., New England Financial Services Inc., New West Insurance LLC, New World Financial & Insurance Services, New York Life Insurance Co. Inc., Newton Consulting LLC, Next Financial Group Inc., Northrup Corporation, Northwest Financial Exchange Inc., Northwestern Mutual Investment Services, Nuttall & Assoc. Insurance Agency Inc., Ollis & Co Inc., Omega Financial Group Ltd, One Resource Group Corp., Oneamerica Securities Inc., Oppenheimer & Co., Inc., P & C Insurance Services Inc., PFG Holding Inc., PJ Robb Variable Corp., PKA Financial Group Inc., PSI Insurance Agency LLC, Pachki Inc., Pacific West Securities Inc., Pack Insurance Consultants Inc., Packerland Brokerage Services Inc., Paradise Valley Wealth Management Inc., Park Avenue Securities, LLC, Partners Insurance Agency Inc., Partners Wealth Management Inc., Payne Financial Group, Inc., Pegasus Financial Group Inc., Peoples Securities Inc., Perfetto Chester Agency Inc., Philip R Warne Insurance Agency Inc., Pine Avenue Partners LLC, Pino Insurance Agency LLC, Planning Corp of America, Platinum Wealth Management Group, Pond Insurance Agency LTD, Power Group Company LLC, Pratt Kutzke Associates LLP, Premier Brokerage Services Inc., Prime Capital Services Inc., Primevest Financial Services Inc., Princor Financial Services Corp., Prior Lake State Agency, Proequities Inc., Prospera Financial Services, Pruco Securities LLC, Purshe Kaplan Sterling Investments, Pyramid Insurance Centre Ltd, Questar Capital Corp., R & R Group Insurance Services, RC Knox & Company Inc., R D Marketing Group Inc., R S Krizek, R Seelaus & Co. Inc., R&M Smith Financial Partners Inc., RBC Capital Markets Corp., RMIN Holding Corp. Inc., RSC Financial Products LLC, Rackley Insurance Agency Inc., Rampart Financial Services Inc., Raymond James Financial Services, Redel Insurance Agency Inc., Renaissance Benefit Advisors, Retirement Planners & Tax Consultants, Retirement Advisory Group, Richard B Ryon Insurance, Richards Seeley Agency, Ridgeway & Conger, Inc., River Falls Insurance Center, River Valley Insurance Group, RiverStone Insurance Agency, Riverstone Wealth Management Inc., Robert Hensley & Associates LLC, Robert L Bubb & Co. Inc., Robert W Baird & Co. Inc., Roy H Reeve Agency Inc., Royal Alliance Associates, Royal Securities Co., S & T Insurance Group LLC, SWS Financial Services, SAL Financial Services, SBS Insurance Agency of FL Inc. (AK), SII Investments Inc., SWBC Insurance Services Inc., Sagepoint Financial Inc., Salem Advisory Group LLC, Sargent Inc., Sbhu Life Agency Inc., Schneider Agency Inc., Schroeder Insurance, Securian Financial Services Inc., Securities America Inc., Shana Insurance Services Corp., Shepard and Walton Life Insurance Agency Inc., Sheridan Road Insurance LLC, Sierra Insurance Marketing LLC, Sigma Financial Corp., Signator Investors Inc., Signature Securities Group, Sims & Renner Insurance LLC, Ska-Life Agency Inc., Small Business Insurance Agency Insurance, Smith Brothers Insurance, Song Hong & Assoc Agency, South Valley Wealth Management, Southwest Securities, Inc., Spengler Stewart Agency, Spire Securities, LLC, Steamboat Insurance Group, Steck Cooper & Co., Stephens Inc., Sterling Benefits Group, LLC, Sterne Agee & Leach, Stifel Nicolaus & Co. Inc., Strand Atkinson Williams & York Inc., Strategic Benefits, Stuckey Insurance Agency, Summit Financial Group, SunTrust Investment Services, Sunset Financial Services Inc., Swan Financial Services, Symetra Investment Services, TA Cummings Jr. Co. Inc., THG Insurance Agency Inc., The Annuity Depot Agency Ltd, The Chesson Company Inc., The Friedman Company, The Investment Center Inc., The Leaders Group Inc., The Mahoney Group, The Nash Agency, Inc., The ON Equity Sales Company, The Orthon Group Inc., The Reilly Co. LLC, The Robinson Group Inc., The Wadsworth Group, The Weisman Group, Third Financial Inc., Thomas Brady & Associates Insurance, Thomas Fierst Insurance Agency, Thorbahn & Associates Insurance Agency, Tim Johnson & Associates Inc., TimeCapital Securities Corp., Tis Insurance Services Inc., Total Coverage Insurance Services LLC, Total Insurance Services, Tower Square Securities Inc., Transamerica Financial Advisors Inc., Transworld Financial Group Inc., Treiber Agency Group LLC, Tremblay Financial, Triad Advisors Inc., Tricor Financial Services, Trustfirst, Trustmont Financial Group Inc., Twfg Insurance Services Inc., US Bancorp Insurance Services, USA Financial Services Inc., USCA Securities LLC, Ulster Insurance Services Inc., UnionBanc Investment Services, United Equity Insurance LLC, United Planners Financial Services, United Security Agency Inc., United Valley Insurance Services Inc., Universal Lines Insurance Services, University Agency Inc., Uvest Financial Services Group Inc., VSR Financial Service Investment, Valmark Securities Inc., Vaughan Insurance Group Inc., Viable Ventures Inc., Vincent L Braband Insurance Inc., WD Barry LP, WS Insurance Services LLC, Wachovia Insurance Agency Inc., Waddell & Reed Inc., Wagner Financial Services, Walker Bros Insurance Inc., Walker Financial LLC, Wall Street Financial Group, Wallace Insurance Services Inc., Walnut Street Securities Inc., Ward Brokerage Assoc LLC, 42 ------------------------------------------------------------------------------- WatchTower Insurance Agency, Waterford Investor Services Inc., Wayne Hummer Investments LLC, Wealth Innovations LLC, Wealthvest Marketing Inc., Weaver Bros Insurance Associates, Wedbush Morgan Securities Inc., Weekes & Callaway Inc., Wells Fargo Insurance Inc., Wesbanco Securities Inc., Western Inter Securities Inc., Western Rivers Corp., Westmark Financial Services Inc., Wheeler Insurance Agency LLC, White-Hill Insurance Services Inc., Wholehan Marketing Assoc., Inc., Wickline Insurance Associates, Widener Insurance Agency Inc., Wiklund & Bond Financial Services Inc., Wilcox Jones & McGrath Inc., Wilde Wealth Management Inc., William Knight Insurance Agency Inc., Windsor Insurance Associates, Inc., Winslow Evans & Crocker Inc., Wiseman & Assoc. Financial Services Ltd, Woodbury Financial Services Inc., Woodlands Securities Corp., World Choice Securities Inc., World Equity Group Inc., Wunderlich Securities Inc., Yoder Insurance Agency & Financial, Zinn & Mahoney Insurance Group Inc., Zweidinger & Assoc Ltd. PREMIUMS APPLICATION FOR A POLICY -- To purchase a Policy you must submit an application to us. Within limits, you may choose the initial Face Amount. Policies generally will be issued only on the lives of insureds between the ages of 20 and 85 who supply evidence of insurability satisfactory to us. Acceptance is subject to our underwriting rules and we reserve the right to reject an application for any reason. No change in the terms or conditions of a Policy will be made without your consent. The minimum initial premium is the amount required to keep the Policy in force for one month, but not less than $50. Your Policy will be effective on the Policy date only after we receive all outstanding delivery requirements and the initial premium payment. The Policy date is the date used to determine all future cyclical transactions on the Policy, such as Monthly Activity Date and Policy years. PREMIUM PAYMENT FLEXIBILITY -- You have flexibility as to when and in what amounts you pay premiums. Prior to Policy issue, you can choose a planned premium, within a range we determined, based on the Face Amount and the insured's sex (except where unisex rates apply), issue age and risk classification. We will send you premium notices for planned premium. Such notices may be sent on an annual, semi-annual or quarterly basis. You may also have premium payments automatically deducted monthly from your checking account. When we receive scheduled or regular premium payments from you through pre-authorized transactions such as, checking deduction (ACH), payroll deduction or through a government allocation arrangement, a summary of these transactions will appear on your annual statement and you will not receive a confirmation statement after each transaction. The planned premium and payment mode you select are shown on your policy's specifications page. You may change the planned premium at any time, subject to our minimum amount rules then in effect. After the first premium has been paid, your subsequent premium payments are flexible. The actual amount and frequency of payment will affect the Account Value and could affect the amount and duration of insurance provided by the Policy. Your Policy may lapse if the value of your Policy becomes insufficient to cover the Monthly Deduction Amounts. In such case you may be required to pay additional premiums in order to prevent the Policy from terminating. For details see, "Lapse and Reinstatement." You may pay additional premiums at any time prior to the scheduled maturity date, subject to the following limitations: - The minimum premium that we will accept is $50 or the amount required to keep the Policy in force. - We reserve the right to require evidence of insurability for any premium payment that results in an increase in the death benefit greater than the amount of the premium. - Any premium payment in excess of $1,000,000 is subject to our approval. In some cases, applying a subsequent premium payment in a Policy year could result in your Policy becoming a modified endowment contract (MEC) (See Federal Tax Considerations section for additional information on MEC policies). If we receive a subsequent premium payment that would cause the Policy to become a MEC, we will follow these procedures: - If the premium is received more than 20 calendar days prior to the Policy Anniversary Date or if it is greater than your planned premium, we will apply the premium to the Policy. We will notify you in writing that your Policy has become a MEC and provide you with the opportunity to correct the MEC status as specified in the notice. You have 2 weeks from the date of the notice to respond. - If we receive the premium within 20 calendar days prior to the Policy anniversary date and it is less than or equal to the planned premium, the premium payment will be considered not in good order. We will hold the payment without interest and credit it to the Policy on the Policy anniversary date. If the Policy anniversary date is not a Valuation Date, the payment will then be credited on the next Valuation Date following the Policy anniversary. The owner will be notified of our action after the premium payment has been credited. These procedures may not apply if there has been a material change to your Policy that impacts the 7-pay limit or 7-pay period because the start of the 7-pay year may no longer coincide with your Policy anniversary. In some cases, applying a subsequent premium payment in a Policy year could cause your Policy to fail the definition of life insurance. If we receive a subsequent premium payment that would cause the Policy to fail the definition of life insurance, the 43 ------------------------------------------------------------------------------- premium payment will be considered not in good order and we will follow these procedures: - If the premium is received more than 20 calendar days prior to the Policy Anniversary Date or if it is greater than your planned premium, we will return the excess premium payment to you and await further instructions. - If we receive the premium within 20 calendar days prior to the Policy anniversary date and it is less than or equal to the planned premium, we will hold the payment without interest and credit the premium payment on the Policy anniversary date. If the Policy anniversary date is not a Valuation Date, the payment will then be credited on the next Valuation Date following the Policy. The owner will be notified of our action after the premium payment has been credited. ALLOCATION OF PREMIUM PAYMENTS INITIAL NET PREMIUM -- During the application process, you choose how you want to allocate your initial Net Premium among the Sub-Accounts and the Fixed Account on the premium allocation form. Any Premium we receive prior to the issuance of the Policy will be held in a non-interest bearing suspense account. With respect to any initial premium payment received before the contract date and any premium payment that is not in good order, we may temporarily hold the Premium in a suspense account and we may earn interest on such amount. You will not be credited interest during that period. The monies held in the suspense account may be subject to claims of our general creditors. The premium payment will not be reduced nor increased due to market fluctuations during that period. After the Policy is issued and upon commencement of the Free-Look Period, any initial Net Premium and any additional Net Premium received by Us prior to the end of the Free Look period will be applied to the Hartford Money Market HLS Fund Sub-Account as of the later of: (a) the Policy Date; and (b) the date We receive the Premium. Upon expiration of the Free-Look Period, we will automatically allocate the Policy value from the Hartford Money Market HLS Fund Sub-Account to the Fixed Account (if applicable) and the Sub-Accounts in accordance with your premium allocation instructions. (For policies issued by Harford Life Insurance Company, if your Policy was issued as a result of a replacement, we will automatically move the Policy value from the Hartford Money Market HLS Fund Sub-Account to the Fixed Account (if applicable) and the Sub- Accounts in accordance with your premium allocation instructions 10 days after the Policy was issued, not at the end of the Free Look Period). SUBSEQUENT NET PREMIUMS -- You may send subsequent Premiums and allocation instructions in accordance with our then current administrative offices. If you make a subsequent Premium payment and do not provide us with allocation instructions, we will allocate the Net Premium among the Sub-Accounts and Fixed Account (if applicable) in accordance with your most recent premium allocation instructions. Any allocation instructions will be effective upon receipt by Us in good order and will apply only to Premium payments received on or after that date. Subsequent Premium payments will be applied to the Policy based on the next computed accumulation unit values after we receive a good order request at our Designated Address described below. Net Premiums allocated to the Fixed Account will be credited to your Policy when we receive them. You may not exceed twenty (20) investment choices at any given time and the percentage you allocate to each Sub-Account and/or the Fixed Account must be in whole percentages. HOW TO SEND PREMIUM PAYMENTS: MAIL You should send premium payments to the following lockbox address: The Prudential Insurance Company of America, as administrator for The Hartford PO Box 64273 St. Paul, MN 55164-0273 or To our Individual Life Operations Center at: The Prudential Insurance Company of America, as administrator for The Hartford 500 Bielenberg Drive Woodbury, MN 55125 WIRE You may also arrange to pay your premium payments by wire. To wire payments call 1-800-231-5453 or email LifeService@Hartfordlife.com. Mailed premium payments not sent to either of the addresses stated above will be considered not in good order. We will reroute the payment and apply it on the Valuation Date when it is received at the correct location and is determined to be in good order. You can also arrange to make premium payments by wire transfers. You will receive several different types of notifications as to what your current premium allocation is. Each transaction confirmation received after we receive a premium payment will show how a Net Premium has been allocated. Additionally, each quarterly statement summarizes the current premium allocation in effect for your Policy. If your most recent premium allocation instructions include a Fund (merging Fund) that has been merged into another Fund (surviving Fund) and we do not receive alternative instructions, we will allocate the premium among the Sub-Accounts and the Fixed Account based on your most recent allocation instructions, except that we will apply the premium that would have been allocated to the merging Fund to the surviving Fund. If your most recent premium allocation instructions include a Fund that has been liquidated, generally, unless we receive alternative instructions, we will allocate the premium to the Money Market Fund. ACCUMULATION UNITS -- Net Premiums allocated to the Sub-Accounts are used to credit accumulation units to such Sub-Accounts. 44 ------------------------------------------------------------------------------- The number of accumulation units in each Sub-Account to be credited to a Policy (including the initial allocation to the Hartford Money Market Sub-Account) and the amount to be credited to the Fixed Account will be determined, first, by multiplying the Net Premium by the appropriate allocation percentage in order to determine the portion of Net Premiums or transferred Account Value to be invested in the Fixed Account or the Sub-Account. Each portion of the Net Premium or transferred Account Value to be invested in a Sub-Account is then divided by the accumulation unit value in a particular Sub-Account next computed following its receipt. The resulting figure is the number of accumulation units to be credited to each Sub-Account. ACCUMULATION UNIT VALUES -- The accumulation unit value for each Sub-Account will vary to reflect the investment experience of the applicable Fund and will be determined on each Valuation Day by multiplying the accumulation unit value of the particular Sub-Account on the preceding Valuation Day by the net investment factor for that Sub-Account for the Valuation Period then ended. The net investment factor for each of the Sub-Accounts is equal to the net asset value per share of the corresponding Fund at the end of the Valuation Period (plus the per share amount of any dividend or capital gain distributions by that Fund in the Valuation Period then ended) divided by the net asset value per share of the corresponding Fund at the beginning of the Valuation Period. All valuations in connection with a Policy, (i.e, with respect to determining Account Value, in connection with Policy loans, or in calculation of death benefits, or with respect to determining the number of accumulation units to be credited to a Policy with each premium payment other than the initial premium payment) will be made on the date the request or payment is received by us in good order at the Individual Life Operations Center, provided such date is a Valuation Day; otherwise such determination will be made on the next succeeding date which is a Valuation Day. Requests for Sub-Account transfers or premium payments received on any Valuation Day in good order after the close of the NYSE or a non-Valuation Day will be invested on the next Valuation Day. ACCOUNT VALUES -- Each Policy will have an Account Value. There is no minimum guaranteed Account Value. The Account Value of a Policy changes on a daily basis and will be computed on each Valuation Day. The Account Value will vary to reflect the investment experience of the Sub-Accounts, the interest credited to the Fixed Account and the Loan Account, and the Monthly Deduction Amounts, Net Premiums paid, and any withdrawals taken. A policy's Account Value is related to the net asset value of the Funds associated with the Sub-Accounts, if any, to which Net Premiums on the Policy have been allocated. The Account Value in the Sub-Accounts on any Valuation Day is calculated by, first, multiplying the number of accumulation units in each Sub-Account as of the Valuation Day by the then current value of the accumulation units in that Sub-Account and then totaling the result for all of the Sub-Accounts. A policy's Account Value equals the policy's value in all of the Sub-Accounts, the Fixed Account, and the Loan Account. A policy's Cash Value is equal to the Account Value less any applicable surrender charges. A policy's Cash Surrender Value, which is the net amount available upon surrender of the Policy, is the Cash Value less any Indebtedness. See "Accumulation Unit Values," above. We will pay death proceeds, Cash Surrender Values, withdrawals, and loan amounts allocable to the Sub-Accounts within seven calendar days after we receive all the information needed to process the payment, unless the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the Securities and Commission, Commission declares that an emergency exists or the Commission by order permits the postponement of payment to protect Policy Owners. DEATH BENEFITS AND POLICY VALUES DEATH BENEFIT -- Your Policy provides for the payment of the death proceeds to the named beneficiary upon receipt of due proof of the death of the last surviving insured. Your Policy will be effective on the Policy Date only after we receive all outstanding delivery requirements and the initial premium payment. You must notify us in writing as soon as possible after the death of either insured. The death proceeds payable to the beneficiary equal the death benefit less any Indebtedness and less any due and unpaid Monthly Deduction Amount occurring during a grace period. The death benefit depends on the death benefit option you select and the minimum death benefit provision. DEATH BENEFIT OPTIONS -- You have four death benefit options available. Options A, B and C are available when you purchase your Policy. Option D is not available when you purchase your Policy, however, you may change from Option B to Option D. - OPTION A (LEVEL OPTION) Under this option, the death benefit is the current Face Amount. Of the available options, Option A provides the lowest amount of Death Benefit protection and also costs the Policy Owner the least since cost of insurance charges are applied to the Amount at Risk and the Amount at Risk is the lowest with Option A. Option A should be considered when a Policy Owner wants a certain level of life insurance protection. - OPTION B (RETURN OF ACCOUNT VALUE OPTION) Under this option, the death benefit is the current Face Amount, plus the Account Value on the date we receive due proof of the insured's death. Policy owners who would like to put large amounts of premium into the Policy with the potential of increasing their death benefit might consider Option B. The 45 ------------------------------------------------------------------------------- annual premium payable with respect to section 7702 of the IRC is highest under the Option B death benefit option. - OPTION C (RETURN OF PREMIUM OPTION) Under this option, the death benefit is the current Face Amount, plus the sum of the premiums paid less withdrawals. This death benefit option is subject to an overall maximum, which is currently the Face Amount plus $5 million. However, an overall maximum of the Face Amount plus $10 million may be available subject to underwriting approval and will be shown in your Policy. Policy owners may consider this option if the Policy is part of a split dollar arrangement where one beneficiary may be entitled to the face amount and another to the premiums paid. - OPTION D (DECREASING OPTION) Option D is only available by switching from Option B to Option D. Under this option, the death benefit is the current Face Amount, plus the lesser of: - the Account Value on the date we receive due proof of the last surviving insured's death; or - the Account Value on the date of the change from death benefit Option B (Return of Account Value) to Option D (Decreasing Option), reduced by any withdrawals. Policy Owners may consider switching to this option from Option B if they would like to potentially minimize their Amount at Risk (and therefore potentially minimize their cost of insurance charges) through potential increases in Account Value without having to provide evidence of insurability which would be required when changing to Option A from Option B. DEATH BENEFIT OPTION CHANGES -- You may change your death benefit option by notifying us in writing. Any change will become effective on the Monthly Activity Date following the date we receive your requests. If the last surviving insured dies before the Monthly Activity Date after we receive your request, we will pay the death benefit as if you had never changed your death benefit option. The following changes are allowed without evidence of insurability: - You may change Option A (Level Option) to Option B (Return of Account Value Option). If you do, the Face Amount will become that amount available as a death benefit immediately prior to the option change, decreased by the then current Account Value. - You may change from Option B (Return of Account Value Option) to Option D (Decreasing Option). The Option D death benefit is the current Face Amount increased by the lesser of: - The Account Value on the date we receive due proof of death of the last surviving insured; or - The Account Value on the date you changed the death benefit option from Option B (Return of Account Value) to Option D (Decreasing Option), reduced by any withdrawals. - You may change Option C (Return of Premium Option) to Option A (Level Option). If you do, the Face Amount will become that amount available as a death benefit immediately prior to the option change. In addition, you may change from Option B (Return of Account Value Option) to Option A (Level Option). However, if this change would result in a Face Amount that exceeds our guidelines and limitations that may be in effect, you must provide evidence of insurability satisfactory to us. If you do, the Face Amount will become the Face Amount immediately prior to the option change increased by the Account Value on the date of the option change. You should consult a tax adviser regarding the possible adverse tax consequences resulting from a change in your death benefit option. MINIMUM DEATH BENEFIT -- The Policy must satisfy a death benefit compliance test to qualify as life insurance under section 7702 of the Internal Revenue Code. The test effectively requires that the death benefit always be equal to or greater than the Account Value multiplied by a certain percentage. Your Policy has a minimum death benefit. We will automatically increase the death benefit so that it will never be less than the Account Value multiplied by the minimum death benefit percentage for the then current year. This percentage varies according to the Policy year and each insured's issue age, sex (where unisex rates are not used) and insurance class. This percentage will never be less than 100% or greater than 1400%. The specified percentage applicable to you is listed on the specifications page of your Policy. EXAMPLES OF MINIMUM DEATH BENEFIT:
A B -------------------------------------------------------------------------------- Face Amount $100,000 $100,000 Account Value 46,500 34,000 Specified Percentage 250% 250% Death Benefit Option Level Level
In Example A, the death benefit equals $116,250, i.e., the greater of $100,000 (the Face Amount) or $116,250 (the Account Value at the date of death of $46,500, multiplied by the specified percentage of 250%). This amount, less any outstanding Indebtedness, constitutes the death proceeds payable to the beneficiary. In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the specified percentage of 250%). VALID DEATH CLAIMS -- The Company will pay the death proceeds (death benefit less indebtedness) to the beneficiary normally within seven days after proof of death of the insured is received by us, at the Individual Life Operations Center, and the Company has: 1) verified the validity of the claim; 2) received all required beneficiary forms and information; 3) completed all investigations of the claim; and 4) determined all other information has been received and is in good order. 46 ------------------------------------------------------------------------------- UNSCHEDULED INCREASES AND DECREASES IN FACE AMOUNT -- At any time after the first Policy year, you may request in writing to change the Face Amount. The minimum amount by which the Face Amount can be increased or decreased is based on our rules then in effect. We reserve the right to limit the number of increases or decreases made under a Policy to no more than one in any 12 month period. All requests to increase the Face Amount must be applied for on a new application and accompanied by your Policy. All requests will be subject to evidence of insurability satisfactory to us. Any increase approved by us will be effective on the Monthly Activity Date shown on the new Policy specifications page, provided that the Monthly Deduction Amount for the first month after the effective date of the increase is made. Each unscheduled increase in Face Amount is subject to an increase fee of 1/12 of $1 per $1,000 of each increase per month for the first twelve months from the effective date of each increase. This amount will not be less than 1/12 of $500 but not greater than 1/12 of $3,000. A decrease in the Face Amount will be effective on the Monthly Activity Date following the date we receive your request in writing. The remaining Face Amount must not be less than that specified in our minimum rules then in effect. CHARGES AND POLICY VALUES -- Your Policy values decrease due to the deduction of Policy charges. Policy values may increase or decrease depending on investment performance; investment expenses and fees reduce the investment performance of the Sub-Accounts. Fluctuations in your account value may have an effect on your death benefit. If your Policy lapses, the Policy terminates and no death benefit will be paid. MAKING WITHDRAWALS FROM YOUR POLICY SURRENDER -- Provided your Policy has a Cash Surrender Value, you may surrender your Policy to us. In such case you may be subject to a surrender charge, see "Surrender Charge." We will pay you the Cash Surrender Value. Our liability under the Policy will cease as of the date we receive your request in writing, or the date you request your surrender, (our current administration rules allow a Policy Owner to designate a future surrender date, no more than ten calendar days from the date we receive the request) whichever is later. WITHDRAWALS -- One withdrawal is allowed per calendar month. You may request a withdrawal in writing. The minimum withdrawal allowed is $500. The maximum partial withdrawal is the Cash Surrender Value, minus $1000. If the death benefit option then in effect is Option A or Option C, the Face Amount will be reduced by reduction of Account Value as a result of the withdrawal. Unless specified, the withdrawal will be deducted on a pro rata basis from the Fixed Account and the Sub-Accounts. You may be assessed a charge of up to $10 for each withdrawal. We will normally pay You the amount of the Withdrawal or Cash Surrender Value, less any taxes and applicable charges, within seven calendar days of Our receipt of a good order request. We may, however, delay payment of amounts from the Sub-Accounts if the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the Commission, the Commission declares that an emergency exists or the Commission by order permits the postponement of payment to protect Policy Owners. In addition, we may delay payment of proceeds that are not attributable to the Sub-Accounts for up to six months for the date of Our receipt of a good order request. LOANS AVAILABILITY OF LOANS -- At any time while the Policy is in force and has a Cash Surrender Value, You may obtain a loan from Us. We will hold the Policy as sole security for repayment of any such loans taken. We may defer granting a loan, for the period permitted by law but not more than six months, unless the loan is to be used to pay premiums on any policies You have with Us. The minimum loan amount that we will allow is $500. In Tennessee there is no minimum. When you take a loan, an amount equal to the loan is transferred from your investment choices to the Loan Account as collateral. Unless you specify otherwise, all loan amounts will be transferred on a pro rata basis from the Fixed Account and each of the Sub-Accounts to the Loan Account. If total Indebtedness equals or exceeds the Cash Value on any Monthly Activity Date, the Policy will then go into default. See "Lapse and Reinstatement." LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while your Policy is in force and either of the insureds' is alive. The amount of your Policy loan repayment will be deducted from the Loan Account. It will be allocated among the Fixed Account and Sub-Accounts in the same percentage as premiums are allocated. All loan repayments must be clearly marked as such. Any payment not clearly marked as a loan repayment will be considered to be a premium payment. EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, will have a permanent effect on your Account Value and Death Benefit. This effect occurs because the investment results of each Sub-Account will apply only to the amount 47 ------------------------------------------------------------------------------- remaining in such Sub-Accounts. In addition, the rate of interest credited to the Fixed Account will usually be different than the rate credited to the Loan Account. The longer a loan is outstanding, the greater the effect on your Account Value is likely to be. Therefore, it is generally advisable to use any Premium Payments made to the Policy while a loan is outstanding to repay the loan. Such effect could be favorable or unfavorable. If the Fixed Account and the Sub-Accounts earn more than the annual interest rate for funds held in the Loan Account, your Account Value will not increase as rapidly as it would have had no loan been made. If the Fixed Account and the Sub-Accounts earn less than the Loan Account, then your Account Value will be greater than it would have been had no loan been made. Additionally, if not repaid, the aggregate amount of the outstanding Indebtedness will reduce the death proceeds and the Cash Surrender Value otherwise payable. EFFECT OF LOANS ON NO LAPSE GUARANTEE -- The No Lapse Guarantee will not protect the Policy from lapsing if there is Policy Indebtedness. Therefore, you should carefully consider the impact of taking Policy loans during the No Lapse Guarantee Period. CREDITED INTEREST -- Any amounts in the Loan Account will be credited with interest at an annual rate of 3.0%. INTEREST CHARGED ON INDEBTEDNESS -- Interest will accrue daily on the Indebtedness at the Policy loan rate. Because the interest charged on Indebtedness may exceed the rate credited to the Loan Account, the Indebtedness may grow faster than the Loan Account. If this happens, additional collateral will be transferred to the Loan Account. The additional collateral equals the difference between the Indebtedness and the value of the Loan Account. The additional collateral, if any, will be transferred on each Monthly Activity Date from the Fixed Account and the Sub-Accounts to the Loan Account on a pro rata basis. POLICY LOAN RATES -- The table below shows the maximum interest rates we will charge on your Indebtedness.
CURRENT GUARANTEED LOAN RATE LOAN RATE POLICY YEAR CHARGED CHARGED -------------------------------------------------------------------------------- 1-10 5.00% 5.00% 11+ 3.00% 4.00%
LAPSE AND REINSTATEMENT POLICY DEFAULT AND LAPSE -- Your Policy will be in default on any Monthly Activity Date on which either: - The Account Value is not sufficient to cover the Monthly Deduction Amount and the No Lapse Guarantee is not available; or - The Indebtedness exceeds the Cash Value. If the Policy goes into default, we will send you a lapse notice warning you that the Policy is in danger of terminating. That lapse notice will tell you the minimum premium required to keep the Policy from terminating. The minimum premium will be no greater than an amount that results in a Cash Surrender Value equal to the three Monthly Deduction Amounts as of the date your Policy goes into default. That notice will be mailed both to you, and any assignee, on the first day the Policy goes into default, at your last known address. GRACE PERIOD -- We will keep your Policy inforce for the 61 day period following the date your Policy goes into default. We call that period the Policy Grace Period. However, if we have not received the required premiums (specified in your lapse notice) by the end of the Policy Grace Period, the Policy will terminate. If the last surviving insured dies during the Grace Period, we will pay the death benefit reduced by any money you owe us, such as outstanding loans, loan interest or unpaid charges. NO-LAPSE GUARANTEE -- If available, the No-Lapse Guarantee prevents your Policy from lapsing even if there is insufficient Policy value to cover the Policy charges unless there is Indebtedness. There is not a separate charge for the No-Lapse Guarantee, however, the No-Lapse Guarantee is only available if: - At least one of the insureds is insurable and age 75 or younger on the Policy Date; - The No-Lapse Guarantee Period has not expired; and - On each Monthly Activity Date during the No-Lapse Guarantee Period, the cumulative premiums paid into the Policy, less Indebtedness and less withdrawals, equal or exceed the Cumulative No-Lapse Guarantee Premium. - There is no Indebtedness. The No-Lapse Guarantee is based on the issue age of the younger insured, unless the insured is uninsurable, then we will base the period on the older insured. It is available for all issue ages with a minimum No-Lapse Guarantee Period of 5 years. Starting on the effective date of your Policy, the length of the No-Lapse Guarantee Period is: - 20 years for issue ages up to age 55; or - For issue ages 56-69, the period is the number of years resulting from subtracting the issue age from the number 75; or - 5 years for issue ages 70 and above. 48 ------------------------------------------------------------------------------- The Cumulative No-Lapse Guarantee Premium is the premium required to maintain the No-Lapse Guarantee. On the Policy Date, the Cumulative No-Lapse Guarantee Premium is the Monthly No-Lapse Guarantee Premium shown in your Policy. On each Monthly Activity Date thereafter, the Cumulative No-Lapse Premium is: - The Cumulative No-Lapse Guarantee Premium on the previous Monthly Activity Date; plus - The current Monthly No-Lapse Guarantee Premium. While the No-Lapse Guarantee is available, we guarantee that your Policy will not lapse and your Death Benefit will be at least equal to the Face Amount. If the last surviving insured dies while the No-Lapse Guarantee is available, we will pay the death proceeds. If there is any increase or decrease in the Face Amount, or any change in rider coverage or a change in insurance class, a new monthly No-Lapse Guarantee Premium will be calculated. We will send you a notice of the new monthly No-Lapse Guarantee Premium, which will be used in calculating the Cumulative No-Lapse Guarantee Premium in subsequent months. REINSTATEMENT -- Unless the Policy has been surrendered for its Cash Surrender Value, the Policy may be reinstated prior to the anniversary following the younger insured's 120th birthday, provided: - the insureds alive at the end of the grace period are also alive on the date of reinstatement; - You make your request in writing within three years (5 years in some states) from the date the Policy lapsed; - You submit to us satisfactory evidence of insurability; - any Policy Indebtedness is repaid or carried over to the reinstated Policy; and - You pay sufficient premium to (1) cover all Monthly Deduction Amounts that are due and unpaid during the Grace Period and (2) keep your Policy in force for three months after the date of reinstatement. If the Policy lapse occurs because the Account Value is not sufficient to cover the Monthly Deduction Amount, then the Account Value on the reinstatement date equals: - The Cash Value on the date of Policy termination; plus - Net Premiums attributable to premiums paid at the time of Policy reinstatement; minus - The Monthly Deduction Amounts that were due and unpaid during the Grace Period. If the Policy lapse occurs because the Indebtedness exceeds the Cash Value, then the Account Value on the reinstatement date equals: - The Cash Value on the date of Policy termination; plus - Net Premiums attributable to premiums paid at the time of Policy reinstatement; minus - The Monthly Deduction Amounts that were due and unpaid during the Grace Period; plus - The Surrender Charge at the time of reinstatement. This means that upon Reinstatement, the Account Value of the reinstated Policy is reduced to reflect the Monthly Deduction Amounts that were due and unpaid during the Grace Period. The Surrender Charge, if any, that will be assessed upon the surrender of any reinstated Policy, will be calculated based on the Policy duration from the original Policy Date and as though the Policy had never lapsed. FEDERAL TAX CONSIDERATIONS 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 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 "Life Insurance Purchases by Nonresident Aliens and Foreign Entities," regarding life insurance purchases by non-U.S. Persons. 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 a life insurance 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. Although this discussion addresses some of the tax consequences if you use the Contract in various arrangements, 49 ------------------------------------------------------------------------------- including tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements or other employee benefits arrangements, the discussion is by no means 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 requirements or falls within a potentially adverse and/or broad tax definition or tax classification (e.g., for a deferred compensation or split-dollar arrangement). 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 federal, as well as the state and local, tax laws and regulations may require the Company to report certain transactions with respect to your contract (such as an exchange of or a distribution from the contract) to the Internal Revenue Service and state and local tax authorities, and generally to provide you with a copy of what was reported. This copy is not intended to supplant your own records. It is your responsibility to ensure that what you report to the Internal Revenue Service and other relevant taxing authorities on your income tax returns is accurate based on your books and record. You should review whatever is reported to the taxing authorities by the Company against your own records, and in consultation with your own tax advisor, and should notify the Company if you find any discrepancies in case corrections have to be made. 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. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT The Separate Account is taxed as a part of Hartford which is taxed as a life insurance company under Subchapter L of 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 realized capital gains on the assets of the Separate Account (the underlying Funds) are reinvested and are taken into account in determining the value of the Accumulation Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves based on the Policy. 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 policies. Hartford 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 Hartford is the owner of the assets from which the tax benefits are derived. INCOME TAXATION OF POLICY BENEFITS -- GENERALLY For federal income tax purposes, the Policies should be treated as life insurance contracts under Section 7702 of the Code. The death benefit under a life insurance contract is generally excluded from the gross income of the beneficiary. However, there are exceptions to this general rule. Also, a life insurance Policy Owner is generally not taxed on increments in the contract value prior to a receipt of some amount from the Policy, e.g., upon a partial or full surrender. Section 7702 imposes certain limits on the amounts of the premiums paid and cash value accumulations in a Policy, in order for it to remain tax-qualified as a life insurance contract. We intend to monitor premium and cash value levels to assure compliance with the Section 7702 requirements. Although we believe that the Last Survivor Policies are in compliance with Section 7702 of the Code, the manner in which Section 7702 should be applied to certain features of a joint survivorship life insurance contract is not directly addressed by Section 7702. In the absence of final regulations or other guidance issued under Section 7702, there is necessarily some uncertainty whether a last survivor life insurance Policy will meet the Section 7702 definition of a life insurance contract. At the time We issue the Policy, You must irrevocably elect one of the following tests to qualify the Policy as life insurance under section 7702 of the Code: (a) the cash value accumulation test; or (b) the guideline premium and cash value corridor test. Under the cash value accumulation test, a Policy's Death Benefit must be large enough to ensure that the Policy's Account Value is never larger than the net single premium that is needed to fund future benefits under the Policy. The net single premium under the Policy varies according to the age(s), sex(es) and underwriting class(s) of the insured(s) and is calculated in accordance with section 7702 and used to determine the minimum death benefit percentages stated in the Policy. The guideline premium and cash value corridor test is made up of two components, each of which must be satisfied in order to qualify as life insurance under section 7702. Under the guideline premium portion of the test, the total premiums you pay cannot exceed your Policy's guideline premium limit. The guideline premium limit is the greater of the guideline single premium or the sum of the guideline level premiums to date. Under the cash value corridor portion of the test, the Policy's Death Benefit may not be less than the Policy Account Value multiplied by the minimum death benefit percentages set forth in section 7702 (and stated in the Policy). 50 ------------------------------------------------------------------------------- There is some uncertainty as to the proper determination of the premium limits for purposes of section 7702 and 7702A in the case of policies involving substandard risks. We believe our method of addressing substandard risks is reasonable, but the IRS could take a contrary view. Accordingly, there is a risk that the IRS could contend that certain policies involving substandard risks fail to meet the definition of life insurance in section 7702 or should be considered modified endowment contracts. We also believe that any loan received under a Policy will be treated as indebtedness of the Policy Owner, and that no part of any loan under a Policy will constitute income to the Policy Owner unless the Policy is a modified endowment contract. There is a risk that the IRS could contend that certain preferred Policy loans might not be loans for tax purposes. Instead, the IRS could treat these loans as distributions from the Policy. If so, such amounts might be currently taxable. A surrender or assignment of the Policy may have tax consequences depending upon the circumstances. Policy owners should consult a qualified tax adviser concerning the effect of such transactions. During the first fifteen Policy years, an "income first" rule generally applies to distributions of cash required to be made under Code Section 7702 because of a reduction in benefits under the Policy. FOR POLICIES WITH THE LAST SURVIVOR EXCHANGE OPTION RIDER ONLY: The Last Survivor Exchange Option Rider permits, under limited circumstances, a Policy to be split into two individual policies on the life of each of the insureds. A Policy split may have adverse tax consequences. It is unclear whether a Policy split will be treated as a nontaxable exchange or transfer under the Code. Unless a Policy split is so treated, among other things, the split or transfer will result in the recognition of taxable income on the gain in the Policy. In addition, it is unclear whether, in all circumstances, the individual policies that result from a Policy split would be treated as life insurance policies under Section 7702 of the Code or would be classified as modified endowment contracts. The Policy Owner should consult a qualified tax adviser regarding the possible adverse tax consequences of a Policy split. FOR POLICIES WITH THE MATURITY DATE EXTENSION RIDER ONLY: The Maturity Date Extension Rider allows a Policy Owner to extend the maturity date to the date of the death of the last surviving insured. If the maturity date of the Policy is extended by rider, we believe the Policy will continue to be treated as a life insurance contract for federal income tax purposes after the scheduled maturity date. However, due to the lack of specific guidance on this issue, the result is not certain. If the Policy is not treated as a life insurance contract for federal income tax purposes after the scheduled maturity date, among other things, the death proceeds may be taxable to the recipient. The Policy Owner should consult a qualified tax adviser regarding the possible adverse tax consequences resulting from an extension of the scheduled maturity date. DIVERSIFICATION REQUIREMENTS The Code requires that each subaccount of the Separate Account supporting your Policy be adequately diversified. Code Section 817(h) provides that a variable life insurance contract will not be treated as a life insurance contract for any period during which the investments made by the separate account or Underlying Fund are not adequately diversified. If a contract is not treated as a life insurance contract, the Policy Owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of a 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 Policy Owner must agree to make adjustments orpay 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, Hartford obtained a private ruling letter ("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. Hartford and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT In order for a variable life insurance contract to qualify for income tax deferral, assets in the separate account supporting 51 ------------------------------------------------------------------------------- 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, in regulations or revenue rulings 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, indicates that amplified by Rev. Rul. 2007-7 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 and 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 Underlying Fund assets. The ruling does not specify the number of fund options, if any, that might prevent a variable contract owner from receiving favorable tax treatment. As a result, 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. DISTRIBUTIONS OTHER THAN DEATH BENEFITS Under existing provisions of the Code, increases in a policy owner's contract value are generally not taxable to the Policy Owner unless amounts are received (or are deemed to be received) under the Policy prior to the insured's death. If there is a total withdrawal from the Policy, then the surrender value will be includable in the policy owner's income to the extent that the amount received exceeds the policy's "basis" or "investment in the contract." (If there is any debt at the time of a total withdrawal, then such debt will be treated as an amount distributed to the Policy Owner.) The "investment in the contract" is the aggregate amount of premium payments and other consideration paid for the Policy, less the aggregate amount received under the Policy previously to the extent such amounts received were excludable from gross income. Whether partial withdrawals (or loans or other amounts deemed to be received) from the Policy constitute income to the Policy Owner depends, in part, upon whether the Policy is considered a modified endowment contract for federal income tax purposes, as described below. MODIFIED ENDOWMENT CONTRACTS Code Section 7702A applies an additional limit on premiums paid, the "seven-pay" test, to life insurance contracts. The seven-pay test provides that premiums cannot be paid at a rate more rapidly than that allowed by the payment of seven annual premiums using specified computational rules described in Section 7702A(c). A modified endowment contract ("MEC") is a life insurance Policy that satisfies the Section 7702 definition of a life insurance contract and either (i) fails the seven-pay test of Section 7702A or (ii) is exchanged for a MEC. A Policy fails the seven-pay test if the accumulated amount paid into the Policy at any time during the first seven Policy years (or during any later seven-year test period) exceeds the sum of the net level premiums that would have been paid up to that point if the Policy provided for paid-up future benefits after the payment of seven level annual premiums. Computational rules for the seven-pay test are described in Section 7702A(c). A new seven-pay test and seven-year test period may be applied each time that a Policy undergoes a material change, which includes an increase in the Face Amount. In addition, where the death benefit is payable only upon the death of a surviving insured individual, if there is a reduction in benefits under the Policy at any time, the seven-pay test is applied retroactively as if the Policy always had the reduced benefit level from the date of issue. Any reduction in benefits attributable to the nonpayment of premiums will not be taken into account for purposes of the seven-pay test if the benefits are reinstated within 90 days after the reduction. A Policy that is classified as a MEC is eligible for certain aspects of the beneficial tax treatment accorded to life insurance. That is, the death benefit is generally excluded from income tax and increments in contract value are not subject to current income tax (prior to an actual or deemed receipt of some amount). However, if the contract is classified as a MEC, then withdrawals and other amounts received or deemed received from the contract will be treated first as withdrawals of income and then as a tax-free recovery of premium payments or other basis. Thus, withdrawals will be includable in income to the extent the contract value exceeds the unrecovered basis. Also, the income portion of any amount received or deemed received prior to age 59 1/2 is subject to an additional 10% 52 ------------------------------------------------------------------------------- penalty tax, with certain exceptions. The amount of any loan (including unpaid interest thereon) under the contract will be treated as an amount received from the contract for income tax and additional 10% penalty tax purposes. In addition, if the Policy Owner assigns or pledges any portion of the value of a contract (or agrees to assign or pledge any portion), then such portion will be treated as an amount received from the contract for tax purposes. The policy owner's basis in the contract is increased by the amount includable in income with respect to such assignment, pledge or loan, though it is not affected by any other aspect of the assignment, pledge or loan (including its release or repayment). All MEC policies that are issued in the same calendar year to the same Policy Owner by the same insurer (or its affiliates) are treated as one MEC Policy for the purpose of determining the taxable portion of any loan or other amount received or deemed received that is subject to ordinary income tax or the 10% penalty tax. The adverse income tax (and 10% penalty tax) treatment of loans or other amounts received or deemed received from a MEC affects not only those amounts received or deemed received after the date on which a Policy first becomes a MEC, but also those amounts received or deemed received in anticipation of the Policy becoming a MEC. Amounts received or deemed received during the 2 years prior to such initial MEC date are automatically treated as amounts received in anticipation of MEC status. Before assigning, pledging, or requesting a loan or other amount to be received under a Policy that is a MEC, a Policy Owner should consult a qualified tax adviser. We have instituted procedures to monitor whether a Policy may become classified as a MEC. ESTATE AND GENERATION SKIPPING TRANSFER TAXES ESTATE TAX -- GENERALLY When the last surviving insured dies, the death proceeds will generally be includable in the policy owner's estate for purposes of federal estate tax if the last surviving insured owned the Policy. If the Policy Owner was not the last surviving insured, the fair market value of the Policy would be included in the policy owner's estate upon the policy owner's death. The Policy would not be includable in the last surviving insured's estate if he or she neither retained incidents of ownership at death nor had given up ownership within three years before death. GENERATION SKIPPING TRANSFER TAX -- GENERALLY Under certain circumstances, the Code may impose a "generation skipping transfer tax" when all or part of a life insurance Policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the owner. Regulations issued under the Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS. FEDERAL INCOME TAX WITHHOLDING AND REPORTING You must affirmatively elect that no taxes be withheld from a pre-death distribution. Otherwise, the taxable portion of any amounts you receive will be subject to withholding. You are not permitted to elect out of withholding if you do not provide a social security number or other taxpayer identification number. You may be subject to penalties under the estimated tax payment rules if your withholding and estimated tax payments are insufficient to cover the tax due. EMPLOYER-OWNED LIFE INSURANCE, NON-INDIVIDUAL OWNERS AND BUSINESS BENEFICIARIES OF POLICIES Effective for all "employer-owned life insurance contracts" issued after August 17, 2006, Section 101(j) provides that death benefits from an "employer-owned life insurance contract" are subject to federal income tax in excess of premiums and other amounts paid, unless certain notice and consent requirements are satisfied and an exception under Section 101(j) applies. An "employer-owned life insurance contract" is defined as a life insurance contract which -- (i) is owned by a person engaged in a trade or business ("policyholder") under which the policyholder (or a related person) is directly or indirectly a beneficiary under the contract, and (ii) covers the life of an insured who is an employee with respect to the trade or business of the policyholder. For these purposes, the term "employee" means all employees, including officers and highly compensated employees, as well as directors. Notice and consent is generally satisfied if, before the contract is issued, the employee -- - is notified in writing that the policyholder intends to insure the employee's life and the maximum face amount for which the employee could be insured at the time the contract was issued, - provides written consent to being insured under the contract and that such coverage may continue after the insured terminates employment, and - is informed in writing that the policyholder (or a related party) will be a beneficiary of any proceeds payable upon the death of the employee. If the notice and consent requirements are met, the death benefit of an employer-owned life insurance contract will not be taxable if an exception under Section 101(j) applies. Section 101(j) provides exceptions based on the insured's status (e.g., a director or certain highly compensated employees or an insured who was an employee at any time within the 12-month period before the insured's death) with respect to the policyholder, as well as exceptions for death benefit amounts paid to certain of the insured's heirs (e.g., the insured's estate 53 ------------------------------------------------------------------------------- or any individual who is the designated beneficiary of the insured under the contract (other than the policyholder)). Section 6039I imposes annual reporting and recordkeeping requirements on employers that own one or more employer-owned life insurance contracts. If a Policy is owned or held by a corporation, trust or other non-natural person, this could jeopardize some (or all) of such entity's interest deduction under Code Section 264, even where such entity's indebtedness is in no way connected to the Policy. In addition, under Section 264(f)(5), if a business (other than a sole proprietorship) is directly or indirectly a beneficiary of a Policy, this Policy could be treated as held by the business for purposes of the Section 264(f) entity-holder rules. Increases in the Investment Value of a contract may be considered in the determination of the corporate alternative minimum tax ("AMT") income. Death benefit proceeds in excess of AMT basis may be included in the computation of AMT income. Prior to purchasing a life insurance contract, a trade or business should consult with a qualified tax advisor. LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN ENTITIES The discussion above provides general information regarding U.S. federal income tax consequences to life insurance purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and withholding on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies and required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or 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. Prior to purchasing a life insurance contract, nonresident aliens and foreign entities should consult with a qualified tax advisor. SPECIAL RULES FOR PENSION AND PROFIT-SHARING PLANS If a life insurance contract is purchased by a trust or other entity that forms part of a pension or profit-sharing plan qualified under Section 401(a) of the Internal Revenue Code ("Qualified Plan") for the benefit of participants covered under the plan, the federal and state income and estate tax treatment of such policies will be somewhat different from that described this section. The purchase may also affect the qualified nature of the plan. The plan participant of a Qualified Plan must recognize the economic benefit of the insurance protection as income each year. The amount of economic benefit is measured by an IRS Table (currently Table 2001) or by a one-year term product of the insurer that meets specific IRS parameters outlined in IRS Notice 2002-8. The death benefit under a life insurance contract is generally excluded from the gross income of the beneficiary. When life insurance is purchased within a Qualified Plan, the amount that is received income tax free is the difference between the face amount and the cash surrender value, but only to the extent that the participant has properly recognized into income the appropriate amount of economic benefit. A Qualified Plan is subject to the so called "incidental benefit rules." A Qualified Plan is permitted to hold life insurance, so long as the life insurance coverage is "incidental" to the primary purpose of the plan and the plan document permits the purchase of life insurance. Life insurance coverage is considered "incidental" if less than 50 percent of the contributions can be used to purchase whole life insurance. Generally, for term, universal or variable life insurance, no more than 25 percent of such contributions may be used. The "incidental benefit" rules may also be satisfied if the death benefit does not exceed 100 times the participant's anticipated monthly normal retirement benefit. If the Qualified Plan does not comply with the incidental benefit rules, it may be subject to adverse tax consequences. In April 2005, the Treasury Department and the IRS issued Rev. Proc. 2005-25 which discusses the valuation of life insurance policies within the context of Qualified Plans and Sections 83 and 79 of the Internal Revenue Code. In August of 2005, the Treasury Department issued final regulations clarifying that a life insurance Policy transferred out of a Qualified Plan must be taxed at its full fair market value. The preamble to the final regulations states that taxpayers may rely on the safe harbor method for computing full fair market value discussed in Rev. Proc. 2005-25. Transfers may adversely affect the qualified plan if certain conditions are not met. Distributions from Qualified Plans are generally subject to ordinary income tax, and if taken prior to age 59 1/2, a 10% federal tax penalty may apply to amounts distributed from the Qualified Plan. Also, distributions from a Qualified Plan generally are subject to federal income tax withholding requirements. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974 as amended ("ERISA"). Purchasers of life insurance in a Qualified Plan should consult a qualified tax advisor to ensure that they comply with these complex rules and understand the federal and state income and estate tax treatment of such policies. 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 54 ------------------------------------------------------------------------------- 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. RESTRICTIONS ON FINANCIAL TRANSACTIONS Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to block a policy owner's ability to make certain transactions and thereby we may refuse to accept any request for transfers, withdrawals, surrenders, or death benefits, until the instructions are received from the appropriate regulator. We may also be required to provide additional information about you and your Policy to government regulators. ILLUSTRATIONS OF POLICY BENEFITS In order to help you understand how your Policy values would vary over time under different sets of assumptions, we will provide you with certain illustrations upon request. These illustrations will be based on the age and insurance risk characteristics of the insured and will also be based on the stated amount of insurance, death benefit option, premium payment pattern and hypothetical rates of return that you request. You can request for such personalized illustrations at anytime from your registered representative. We have included an example of an illustration as Appendix A to this prospectus. FINANCIAL INFORMATION We have included the financial statements for the Company and the Separate Account for the year ended December 31, 2012 in the Statement of Additional Information (SAI). To receive a copy of the SAI free of charge, call your registered representative or write to us at: The Hartford P.O. Box 2999 Hartford, CT 06104-2999 55 ------------------------------------------------------------------------------- GLOSSARY OF SPECIAL TERMS 1035 PREMIUM: Premium received as a result of an exchange of an existing insurance Policy for a new insurance Policy that qualifies for favorable tax treatment under section 1035 of the Internal Revenue Code. 1933 ACT: Refers to the Securities Act of 1933, as amended. 1940 ACT: Refers to the Investment Company Act of 1940, as amended. AMOUNT AT RISK: an amount equal to the Death Benefit minus the Account Value. ACCOUNT VALUE: the total of all amounts in the Fixed Account, Loan Account and Sub-Accounts. APPLICATION: A form or set of forms that must be completed and signed by the prospective Owner and each Insured before We can issue a Policy. BENEFICIARY: The person or persons designated in the Application or the most recent Beneficiary designation in our files, to whom insurance proceeds are paid. BENEFIT NET AMOUNT AT RISK: the Benefit amount at risk equals the Policy death benefit plus any joint term insurance amount multiplied by the LifeAccess Specified Percentage minus the Policy Account Value. BENEFIT PERCENTAGE: the percentage of the Eligible Amount used to calculate the Benefit. This percentage is selected by You when the Benefit is applied for and cannot be greater than 100%. The benefit percentage is set at issue. BENEFIT PERIOD: a period of time not to exceed twelve consecutive months. Such Period begins on the later of: (a) the date We approve a request for an Accelerated Benefit, or (b) the date all Conditions for Eligibility of Benefit Payments have been satisfied, and ends on the earlier of: (c) the end of twelve consecutive months, or (d) the date benefit payments end as described under the When Benefit Payments End provision. BINDING PREMIUM RECEIPT: an interim agreement between the Primary Insured and the Company for immediate life insurance coverage. Under this receipt, the Company agrees to provide life insurance coverage provided the Primary Insured meets all of the Conditions for Coverage under Issue First(R). CASH SURRENDER VALUE: the Cash Value less all Indebtedness. CASH VALUE: the Account Value less any applicable Surrender Charges. COGNITIVE IMPAIRMENT: the deterioration or loss of the Insured's intellectual capacity which is confirmed by a Licensed Health Care Practitioner and measured by clinical evidence and standardized tests that reliably measure the Insured's impairment in: short or long term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness. COMPANY (ISSUING COMPANY): Either Hartford Life Insurance Company or Hartford Life and Annuity Insurance Company. The name of the company that issues your Policy appears on the Policy and is determined primarily by the state where you purchased the Policy. CUMULATIVE NO-LAPSE GUARANTEE PREMIUM: the premium required to maintain the No-Lapse Guarantee. On the Policy Date, the Cumulative No-Lapse Guarantee Premium is the Monthly No-Lapse Guarantee Premium shown in your Policy. On each Monthly Activity Date thereafter, the Cumulative No-Lapse Premium is: (a) the Cumulative No-Lapse Guarantee Premium on the previous Monthly Activity Date; plus (b) the current Monthly No-Lapse Guarantee Premium. DESIGNATED ADDRESS: Our address for receiving premium payments and other policyholder requests. The Designated Address for sending premium payments is The Prudential Insurance Company of America, as administrator for The Hartford, P.O. Box 64273, St. Paul, MN 55164-0273 or to our Individual Life Operations Center at The Prudential Insurance Company of America, as administrator for The Hartford, 500 Bielenberg Drive, Woodbury, MN 55125. The Designated Address for sending all other Policy holder transactions is to our Individual Life Operations Center at The Prudential Insurance Company of America, as administrator for The Hartford, 500 Bielenberg Drive, Woodbury, MN 55125. DIMINISHED LIFE EXPECTANCY: a Physician has certified that the Specified Insured has an illness or medical condition that is reasonably expected to result in the death of the Specified Insured within 12 months or less from the date of the certification. ELIGIBLE AMOUNT: is the current Face Amount of the Policy and any term insurance Rider covering the Specified Insured attached to the Policy that is not within two years of expiry. GOOD ORDER: means all necessary documents and forms are complete and in our possession. LICENSED HEALTH CARE PRACTITIONER: any physician (as defined in section 1861(r)(1) of the Social Security Act) and any registered professional nurse, licensed social worker or other individual who meets such requirements as may be prescribed by the Secretary of Treasury. The Licensed Health Care Practitioner: (1) must be acting within the scope of his or her license in the state of licensure when providing Written Certification or Written Re-Certification required by this Rider; and (2) may not be You, the Insured, or Your or the Insured's immediate family. LICENSED HEALTH CARE PRACTITIONERS THAT PROVIDE DIAGNOSIS AND TREATMENTS TO INSURED, MUST RESIDE INSIDE THE UNITED STATES. LIFETIME BENEFIT AMOUNT: the maximum amount that may be accelerated during the lifetime of the Insured and while the Rider remains in effect. The Lifetime Benefit Amount is equal to: (1) the Eligible Amount; times (2) the LifeAccess Specified 56 ------------------------------------------------------------------------------- Percentage. Where: (a) ELIGIBLE AMOUNT on the Policy Date equals the initial Face Amount plus any term insurance amount covering the Insured under the Policy; thereafter Eligible Amount equals current Death Benefit plus any term insurance amount covering the Insured under the Policy; and (b) LIFEACCESS SPECIFIED PERCENTAGE equals 100% of the Eligible Amount, unless You have elected Death Benefit Option A at the time of application for the LifeAccess Accelerated Death Benefit Rider, in which case You may select a percentage at that time, such percentage not to exceed 100% or result in a Lifetime Benefit Amount of less than Our minimum rules then in effect. The LifeAccess Specified Percentage is shown in the Additional Benefits and Rider section of the Policy Specifications and will remain fixed for the life of the Rider. Acceleration of benefits will reduce the Lifetime Benefit Amount in accordance with the Impact of Rider Benefits on Policy and Rider provision. In addition, transactions made under the Policy, such as Face Amount Increases and Decreases and Loans, will impact the Eligible Amount in the same manner that such transactions impact the Policy's Death Benefit. NO LAPSE GUARANTEE PREMIUM: the amount of monthly premium required to keep the No Lapse Guarantee available, as shown in the policy's specification page, and used to calculate the Cumulative No Lapse Guarantee Premium. FACE AMOUNT: an amount we use to determine the Death Benefit. On the Policy date, the Face Amount equals the initial Face Amount shown in your Policy. Thereafter, it may change under the terms of the Policy. FIXED ACCOUNT: part of our general account to which all or a portion of the Account Value may be allocated. FUNDS: the registered open-end management companies in which assets of the Separate Account may be invested. INDEBTEDNESS: all loans granted by Us using the Policy assigned to Us by you as sole security, plus any interest due or accrued minus any loan repayments. LOAN ACCOUNT: an account established for any amounts transferred from the Fixed Account and Sub-Accounts as a result of loans. The amounts in the Loan Account are credited with interest and are not subject to the investment experience of any Sub-Accounts. MODAL PREMIUM: subsequent premium payments paid to a Policy in a mode more frequent than annual payments, such as monthly or quarterly payments. MONTHLY ACTIVITY DATE: the Policy date and the same date in each succeeding month as the Policy date. However, whenever the Monthly Activity Date falls on a date other than a Valuation Day, the Monthly Activity Date will be deemed to be the next Valuation Day. NET PREMIUM: the amount of premium credited to Account Value. It is premium paid minus the sales load and premium tax charge. NO-LAPSE GUARANTEE: A Policy feature or rider that guarantees your Policy will not lapse regardless of Account Value as long as You meet the requirements of the guarantee. PHYSICIAN: a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the State in which he performs such function or action. For purposes of this definition, a "State" means each of the United States of America, the District of Columbia and the Commonwealth of Puerto Rico. The physician may not be the Specified Insured, a member of the Specified Insured's immediate family or the Owner of the Policy. PLAN OF CARE: a written plan for care designed especially for the Insured by a Licensed Health Care Practitioner specifying the Services needed by the Chronically Ill Insured. POLICY: A legal contract between the Owner and Hartford Life Insurance Company or Hartford Life and Annuity Insurance Company that provides a death benefit payable to the beneficiary upon death of the Insured in accordance with the Policy. POLICY OWNER: The Owner or entity named as such in the application whom has all the rights stated in this Policy while the Insured is living. PRIMARY INSURED: "Proposed Insured 1" named in the Application or "Proposed Insured 1" and "Proposed Insured 2" named in the Application for a survivorship Policy. PROOF OF DIMINISHED LIFE EXPECTANCY: You must supply Proof of Diminished Life Expectancy, without expense to Us, with each request for an accelerated payment of the death benefit. Proof must include, but is not limited to, a statement by a Physician attesting to the Specified Insured's life expectancy, and must be in Writing and satisfactory to Us. PRO RATA BASIS: an allocation method based on the proportion of the Account Value in the Fixed Account and each Sub-Account. SEPARATE ACCOUNT: an account which has been established by us to separate the assets funding the variable benefits for the class of contracts to which the Policy belongs from our other assets. SUB-ACCOUNT: a subdivision of the Separate Account. SUBSTANTIAL ASSISTANCE: stand-by or hands-on assistance from another person without which the Insured receiving such assistance would be unable to perform the Activity for Daily Living. Stand-by assistance means the presence of another person within arm's reach of the Insured that is necessary to prevent, by physical intervention, injury to the Insured while he/she is performing the Activity for Daily Living. Hands-on assistance means the direct physical assistance of another person. SURRENDER CHARGE: a charge that may be assessed if you surrender the Policy for its cash surrender value. UNDERLYING FUNDS -- The mutual funds that the Sub-Accounts invest in. The Underlying Funds are offered exclusively as investment choices in variable insurance products issued by life 57 ------------------------------------------------------------------------------- insurance companies. They are not offered or made available directly to the public. These portfolios may contain different investments than the similarly named mutual funds offered by the money manager; therefore, investment results may differ. Fund holdings and investment strategies are subject to change. Investments in some funds may involve certain risks and may not be appropriate for all investors. VALUATION DAY: the date on which a Sub-Account is valued. This occurs every day the New York Stock Exchange is open for trading. WE, US, OUR: Either Hartford Life Insurance Company or Hartford Life and Annuity Insurance Company. WRITTEN CERTIFICATION: written documentation obtained by You, at Your or the Insured's expense, from a Licensed Health Care Practitioner certifying that the Insured is Chronically Ill as defined herein and specifying that Services are likely to be needed for the rest of the Insured's Life. Such Written Certification must have been made within the 12-month period preceding the date of each request for an Accelerated Benefit. WRITTEN RE-CERTIFICATION: Written Certification that We will require from You at least annually prior to the start of each Benefit Period following the initial Benefit Period in order for You to be eligible for an Accelerated Benefit payment in such subsequent Benefit Period, provided all other Conditions for Eligibility for Benefit Payments are met. Such Written Re-Certification must have been made within the 12-month period preceding the date of each request for an Accelerated Benefit. YOU, YOUR: the owner of the Policy. 58 ------------------------------------------------------------------------------- APPENDIX A -- HYPOTHETICAL ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH SURRENDER VALUES The tables illustrate the way policies will perform based on assumptions about returns and the insured's characteristics. The illustrations show how the death benefit, cash surrender value and account value will vary over time, assuming hypothetical gross rates of return, 0%, 6% and 12%. The illustrations are based on the assumptions stated above each illustration and assume no rider benefits or allocations to the Fixed Account. The illustrations show the Option A (Level) death benefit option. Policy values would be higher or lower from the illustrated amounts in certain circumstances. For example, illustrated amounts would be different where actual gross rates of return averaged 0%, 6% and 12%, but: (i) the rates of return varied above and below these averages during the period, (ii) premiums were paid in other amounts or at other than annual intervals, or (iii) account values were allocated differently among the Sub-accounts. The Policy values would also differ if a Policy loan or withdrawal were made. The death benefits, cash surrender values and account values shown in the tables reflect: (i) deductions from premiums for the sales charge and state and federal premium tax charge and (ii) monthly deduction for per thousand charges, mortality and expense risk charges and cost of insurance charges. The amounts shown for the death benefits, account values and cash surrender values as of the end of each Policy Year take into account an arithmetic average of Underlying Fund fees. The gross annual investment return rates of 0%, 6% and 12% on the Fund's assets are equal to net annual investment return rates (net of the Underlying Fund charges) of -0.845%, 5.155%, and 11.155%, respectively. The Company, through its agent, will provide you a personalized illustration based upon the proposed Insured's age, sex, underwriting classification, the specified insurance benefits, and the premium requested. The illustration will show the weighted average Fund expenses, arithmetic average Fund expenses and/or the actual Fund expenses depending on what you request. An explanation of how the Fund expenses are calculated will appear on the illustration. The hypothetical gross annual investment return assumed in such an illustration would not exceed 12%. 59 ------------------------------------------------------------------------------- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE HARTFORD LEADERS VUL JOINT LEGACY II DEATH BENEFIT OPTION: LEVEL $3,569,000 FACE AMOUNT ISSUE AGE: 53 MALE STANDARD NON-NICOTINE, 53 FEMALE STANDARD NON-NICOTINE $54,000 PLANNED PREMIUM (BASED ON CURRENT, NON GUARANTEED CHARGES)
TOTAL PREMIUMS WITH 5% DEATH BENEFIT YEAR INTEREST 0% 6% 12% ------------------------------------------------------------------------ 1 $56,700 $3,569,000 $3,569,000 $3,569,000 2 $116,235 $3,569,000 $3,569,000 $3,569,000 3 $178,747 $3,569,000 $3,569,000 $3,569,000 4 $244,384 $3,569,000 $3,569,000 $3,569,000 5 $313,303 $3,569,000 $3,569,000 $3,569,000 6 $385,668 $3,569,000 $3,569,000 $3,569,000 7 $461,652 $3,569,000 $3,569,000 $3,569,000 8 $541,434 $3,569,000 $3,569,000 $3,569,000 9 $625,206 $3,569,000 $3,569,000 $3,569,000 10 $713,167 $3,569,000 $3,569,000 $3,569,000 15 $1,223,505 $3,569,000 $3,569,000 $3,687,043 20 $1,874,840 $3,569,000 $3,569,000 $5,737,313 25 $2,706,127 $3,569,000 $3,583,130 $8,818,157 30 $3,767,083 $3,569,000 $4,363,693 $13,323,280 35 $5,121,161 $3,569,000 $5,181,843 $19,840,243 40 $6,849,347 $3,569,000 $6,035,429 $29,209,616 45 $9,054,999 $0 $6,900,059 $42,473,900 50 $11,870,031 $0 $8,310,792 $65,465,180 55 $15,462,805 $0 $10,869,585 $110,263,037 60 $20,048,197 $0 $14,222,932 $186,777,601 65 $25,900,447 $0 $18,518,658 $316,138,708 66 $27,252,170 $0 $19,513,002 $351,205,017 67 $28,671,478 $0 $20,557,839 $390,154,510 ACCOUNT VALUE YEAR 0% 6% 12% ---------- ------------------------------------------------- 1 $41,687 $44,416 $47,149 2 $82,685 $90,743 $99,136 3 $122,979 $139,040 $156,433 4 $162,599 $189,411 $219,610 5 $201,572 $241,965 $289,292 6 $240,139 $297,034 $366,395 7 $278,057 $354,473 $451,424 8 $322,290 $421,565 $552,599 9 $365,757 $491,525 $664,162 10 $408,451 $564,465 $787,172 15 $616,388 $988,821 $1,638,308 20 $802,056 $1,513,482 $3,037,219 25 $979,966 $2,216,073 $5,453,801 30 $1,071,768 $3,078,314 $9,398,747 35 $880,230 $4,048,648 $15,501,463 40 $14,753 $5,099,324 $24,679,158 45 $0 $6,322,670 $38,919,731 50 $0 $8,228,507 $64,817,010 55 $0 $10,761,965 $109,171,323 60 $0 $14,082,111 $184,928,318 65 $0 $18,335,305 $313,008,622 66 $0 $19,319,804 $347,727,740 67 $0 $20,354,296 $386,291,594 CASH SURRENDER VALUE YEAR 0% 6% 12% ---------- ------------------------------------------------- 1 $3,608 $6,337 $9,070 2 $44,606 $52,664 $61,056 3 $84,900 $100,961 $118,354 4 $124,520 $151,332 $181,531 5 $165,608 $206,001 $253,328 6 $206,291 $263,186 $332,547 7 $246,324 $322,740 $419,691 8 $292,673 $391,948 $522,982 9 $338,255 $464,024 $636,660 10 $408,451 $564,465 $787,172 15 $616,388 $988,821 $1,638,308 20 $802,056 $1,513,482 $3,037,219 25 $979,966 $2,216,073 $5,453,801 30 $1,071,768 $3,078,314 $9,398,747 35 $880,230 $4,048,648 $15,501,463 40 $14,753 $5,099,324 $24,679,158 45 $0 $6,322,670 $38,919,731 50 $0 $8,228,507 $64,817,010 55 $0 $10,761,965 $109,171,323 60 $0 $14,082,111 $184,928,318 65 $0 $18,335,305 $313,008,622 66 $0 $19,319,804 $347,727,740 67 $0 $20,354,296 $386,291,594
These hypothetical rates of return are illustrative only and should not be considered a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors. The Account Values and Cash Surrender Values will be different from those shown if the actual rates of return averaged 0%, 6%, or 12% over a period of years but fluctuated above or below the average for individual contract years. No representation can be made that these rates of return can be achieved for any one year or sustained over a period of time. 60 ------------------------------------------------------------------------------- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE HARTFORD LEADERS VUL JOINT LEGACY II DEATH BENEFIT OPTION: LEVEL $3,569,000 FACE AMOUNT ISSUE AGE: 53 MALE STANDARD NON-NICOTINE, 53 FEMALE STANDARD NON-NICOTINE $54,000 PLANNED PREMIUM (BASED ON GUARANTEED CHARGES)
TOTAL PREMIUMS WITH 5% DEATH BENEFIT YEAR INTEREST 0% 6% 12% ------------------------------------------------------------------------ 1 $56,700 $3,569,000 $3,569,000 $3,569,000 2 $116,235 $3,569,000 $3,569,000 $3,569,000 3 $178,747 $3,569,000 $3,569,000 $3,569,000 4 $244,384 $3,569,000 $3,569,000 $3,569,000 5 $313,303 $3,569,000 $3,569,000 $3,569,000 6 $385,668 $3,569,000 $3,569,000 $3,569,000 7 $461,652 $3,569,000 $3,569,000 $3,569,000 8 $541,434 $3,569,000 $3,569,000 $3,569,000 9 $625,206 $3,569,000 $3,569,000 $3,569,000 10 $713,167 $3,569,000 $3,569,000 $3,569,000 15 $1,223,505 $3,569,000 $3,569,000 $3,620,975 20 $1,874,840 $3,569,000 $3,569,000 $5,522,767 25 $2,706,127 $3,569,000 $3,569,000 $8,217,741 30 $3,767,083 $3,569,000 $3,756,241 $11,826,571 35 $5,121,161 $0 $4,262,651 $16,685,815 40 $6,849,347 $0 $4,746,826 $23,267,656 45 $9,054,999 $0 $5,241,763 $32,363,747 50 $11,870,031 $0 $6,305,172 $49,373,287 55 $15,462,805 $0 $8,228,173 $82,395,099 60 $20,048,197 $0 $10,562,998 $136,145,521 65 $25,900,447 $0 $13,356,963 $222,689,463 66 $27,252,170 $0 $13,972,924 $245,384,545 67 $28,671,478 $0 $14,608,570 $270,270,244 ACCOUNT VALUE YEAR 0% 6% 12% ---------- ------------------------------------------------- 1 $41,687 $44,416 $47,149 2 $82,685 $90,743 $99,136 3 $122,979 $139,040 $156,433 4 $162,567 $189,378 $219,576 5 $201,428 $241,815 $289,137 6 $239,784 $296,661 $366,005 7 $277,348 $353,720 $450,628 8 $321,032 $420,216 $551,161 9 $363,695 $489,297 $661,770 10 $405,226 $560,958 $783,395 15 $594,907 $963,724 $1,608,951 20 $728,365 $1,428,978 $2,923,643 25 $769,039 $1,999,973 $5,082,459 30 $549,793 $2,649,795 $8,342,911 35 $0 $3,330,469 $13,036,864 40 $0 $4,010,586 $19,658,805 45 $0 $4,803,138 $29,655,584 50 $0 $6,242,744 $48,884,443 55 $0 $8,146,706 $81,579,306 60 $0 $10,458,414 $134,797,545 65 $0 $13,224,716 $220,484,617 66 $0 $13,834,578 $242,954,995 67 $0 $14,463,931 $267,594,301 CASH SURRENDER VALUE YEAR 0% 6% 12% ---------- ------------------------------------------------- 1 $3,608 $6,337 $9,070 2 $44,606 $52,664 $61,056 3 $84,900 $100,961 $118,354 4 $124,487 $151,299 $181,497 5 $165,464 $205,852 $253,174 6 $205,936 $262,813 $332,157 7 $245,615 $321,987 $418,895 8 $291,415 $390,599 $521,543 9 $336,193 $461,795 $634,268 10 $405,226 $560,958 $783,395 15 $594,907 $963,724 $1,608,951 20 $728,365 $1,428,978 $2,923,643 25 $769,039 $1,999,973 $5,082,459 30 $549,793 $2,649,795 $8,342,911 35 $0 $3,330,469 $13,036,864 40 $0 $4,010,586 $19,658,805 45 $0 $4,803,138 $29,655,584 50 $0 $6,242,744 $48,884,443 55 $0 $8,146,706 $81,579,306 60 $0 $10,458,414 $134,797,545 65 $0 $13,224,716 $220,484,617 66 $0 $13,834,578 $242,954,995 67 $0 $14,463,931 $267,594,301
These hypothetical rates of return are illustrative only and should not be considered a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors. The Account Values and Cash Surrender Values will be different from those shown if the actual rates of return averaged 0%, 6%, or 12% over a period of years but fluctuated above or below the average for individual contract years. No representation can be made that these rates of return can be achieved for any one year or sustained over a period of time. 61 ------------------------------------------------------------------------------- HARTFORD LIFE INSURANCE COMPANY FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE HARTFORD LEADERS VUL JOINT LEGACY II DEATH BENEFIT OPTION: LEVEL $4,188,000 FACE AMOUNT ISSUE AGE: 53 MALE STANDARD NON-NICOTINE, 53 FEMALE STANDARD NON-NICOTINE $63,000 PLANNED PREMIUM (BASED ON CURRENT, NON GUARANTEED CHARGES)
TOTAL PREMIUMS WITH 5% DEATH BENEFIT YEAR INTEREST 0% 6% 12% ------------------------------------------------------------------------ 1 $66,150 $4,188,000 $4,188,000 $4,188,000 2 $135,608 $4,188,000 $4,188,000 $4,188,000 3 $208,538 $4,188,000 $4,188,000 $4,188,000 4 $285,115 $4,188,000 $4,188,000 $4,188,000 5 $365,521 $4,188,000 $4,188,000 $4,188,000 6 $449,947 $4,188,000 $4,188,000 $4,188,000 7 $538,594 $4,188,000 $4,188,000 $4,188,000 8 $631,674 $4,188,000 $4,188,000 $4,188,000 9 $729,407 $4,188,000 $4,188,000 $4,188,000 10 $832,028 $4,188,000 $4,188,000 $4,188,000 15 $1,427,422 $4,188,000 $4,188,000 $4,304,685 20 $2,187,313 $4,188,000 $4,188,000 $6,698,111 25 $3,157,148 $4,188,000 $4,188,000 $10,294,650 30 $4,394,930 $4,188,000 $5,092,803 $15,553,906 35 $5,974,688 $4,188,000 $6,047,642 $23,161,795 40 $7,990,905 $4,188,000 $7,043,839 $34,099,594 45 $10,564,165 $0 $8,052,925 $49,584,316 50 $13,848,370 $0 $9,699,355 $76,424,363 55 $18,039,940 $0 $12,685,662 $128,721,466 60 $23,389,563 $0 $16,599,274 $218,044,716 65 $30,217,188 $0 $21,612,715 $369,061,121 66 $31,794,198 $0 $22,773,190 $409,997,597 67 $33,450,058 $0 $23,992,595 $455,467,310 ACCOUNT VALUE YEAR 0% 6% 12% --------- ----------------------------------------------- 1 $48,698 $51,883 $55,074 2 $96,589 $105,998 $115,797 3 $143,659 $162,414 $182,725 4 $189,940 $221,253 $256,519 5 $235,466 $282,640 $337,911 6 $280,478 $346,925 $427,930 7 $324,732 $413,976 $527,201 8 $376,349 $492,287 $645,313 9 $427,072 $573,945 $775,551 10 $476,894 $659,080 $919,153 15 $719,527 $1,154,375 $1,912,752 20 $936,101 $1,766,663 $3,545,847 25 $1,143,417 $2,586,370 $6,366,973 30 $1,249,479 $3,592,656 $10,972,315 35 $1,021,966 $4,725,109 $18,096,639 40 $317 $5,951,328 $28,810,693 45 $0 $7,379,065 $45,435,155 50 $0 $9,603,322 $75,667,686 55 $0 $12,560,061 $127,446,996 60 $0 $16,434,925 $215,885,857 65 $0 $21,398,727 $365,407,050 66 $0 $22,547,713 $405,938,215 67 $0 $23,755,044 $450,957,733 CASH SURRENDER VALUE YEAR 0% 6% 12% --------- ------------------------------------------------- 1 $4,083 $7,269 $10,459 2 $51,975 $61,384 $71,183 3 $99,044 $117,800 $138,110 4 $145,326 $176,638 $211,905 5 $193,330 $240,504 $295,775 6 $240,820 $307,268 $388,272 7 $287,553 $376,797 $490,022 8 $341,649 $457,586 $610,613 9 $394,851 $541,724 $743,329 10 $476,894 $659,080 $919,153 15 $719,527 $1,154,375 $1,912,752 20 $936,101 $1,766,663 $3,545,847 25 $1,143,417 $2,586,370 $6,366,973 30 $1,249,479 $3,592,656 $10,972,315 35 $1,021,966 $4,725,109 $18,096,639 40 $317 $5,951,328 $28,810,693 45 $0 $7,379,065 $45,435,155 50 $0 $9,603,322 $75,667,686 55 $0 $12,560,061 $127,446,996 60 $0 $16,434,925 $215,885,857 65 $0 $21,398,727 $365,407,050 66 $0 $22,547,713 $405,938,215 67 $0 $23,755,044 $450,957,733
These hypothetical rates of return are illustrative only and should not be considered a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors. The Account Values and Cash Surrender Values will be different from those shown if the actual rates of return averaged 0%, 6%, or 12% over a period of years but fluctuated above or below the average for individual contract years. No representation can be made that these rates of return can be achieved for any one year or sustained over a period of time. 62 ------------------------------------------------------------------------------- HARTFORD LIFE INSURANCE COMPANY FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE HARTFORD LEADERS VUL JOINT LEGACY II DEATH BENEFIT OPTION: LEVEL $4,188,000 FACE AMOUNT ISSUE AGE: 53 MALE STANDARD NON-NICOTINE, 53 FEMALE STANDARD NON-NICOTINE $63,000 PLANNED PREMIUM (BASED ON GUARANTEED CHARGES)
TOTAL PREMIUMS WITH 5% DEATH BENEFIT YEAR INTEREST 0% 6% 12% ------------------------------------------------------------------------ 1 $66,150 $4,188,000 $4,188,000 $4,188,000 2 $135,608 $4,188,000 $4,188,000 $4,188,000 3 $208,538 $4,188,000 $4,188,000 $4,188,000 4 $285,115 $4,188,000 $4,188,000 $4,188,000 5 $365,521 $4,188,000 $4,188,000 $4,188,000 6 $449,947 $4,188,000 $4,188,000 $4,188,000 7 $538,594 $4,188,000 $4,188,000 $4,188,000 8 $631,674 $4,188,000 $4,188,000 $4,188,000 9 $729,407 $4,188,000 $4,188,000 $4,188,000 10 $832,028 $4,188,000 $4,188,000 $4,188,000 15 $1,427,422 $4,188,000 $4,188,000 $4,246,859 20 $2,187,313 $4,188,000 $4,188,000 $6,504,744 25 $3,157,148 $4,188,000 $4,188,000 $9,673,075 30 $4,394,930 $4,188,000 $4,414,710 $13,916,340 35 $5,974,688 $0 $5,007,043 $19,630,250 40 $7,990,905 $0 $5,573,384 $27,370,020 45 $10,564,165 $0 $6,152,437 $38,066,641 50 $13,848,370 $0 $7,398,673 $58,070,333 55 $18,039,940 $0 $9,653,341 $96,905,770 60 $23,389,563 $0 $12,390,808 $160,119,126 65 $30,217,188 $0 $15,666,531 $261,899,356 66 $31,794,198 $0 $16,388,692 $288,589,959 67 $33,450,058 $0 $17,133,930 $317,856,842 ACCOUNT VALUE YEAR 0% 6% 12% --------- ----------------------------------------------- 1 $48,698 $51,883 $55,074 2 $96,589 $105,998 $115,797 3 $143,659 $162,414 $182,725 4 $189,902 $221,214 $256,479 5 $235,297 $282,465 $337,730 6 $280,061 $346,487 $427,471 7 $323,899 $413,091 $526,265 8 $374,872 $490,702 $643,624 9 $424,652 $571,328 $772,742 10 $473,107 $654,962 $914,716 15 $697,305 $1,129,994 $1,887,058 20 $856,374 $1,681,876 $3,443,482 25 $902,528 $2,351,840 $5,982,546 30 $643,558 $3,114,304 $9,817,114 35 $0 $3,912,074 $15,337,393 40 $0 $4,708,943 $23,124,886 45 $0 $5,637,608 $34,881,266 50 $0 $7,325,419 $57,495,379 55 $0 $9,557,763 $95,946,307 60 $0 $12,268,127 $158,533,788 65 $0 $15,511,417 $259,306,294 66 $0 $16,226,428 $285,732,633 67 $0 $16,964,287 $314,709,745 CASH SURRENDER VALUE YEAR 0% 6% 12% --------- ------------------------------------------------- 1 $4,083 $7,269 $10,459 2 $51,975 $61,384 $71,183 3 $99,044 $117,800 $138,110 4 $145,288 $176,599 $211,865 5 $193,162 $240,329 $295,594 6 $240,403 $306,830 $387,814 7 $286,720 $375,913 $489,087 8 $340,172 $456,002 $608,924 9 $392,430 $539,107 $740,520 10 $473,107 $654,962 $914,716 15 $697,305 $1,129,994 $1,887,058 20 $856,374 $1,681,876 $3,443,482 25 $902,528 $2,351,840 $5,982,546 30 $643,558 $3,114,304 $9,817,114 35 $0 $3,912,074 $15,337,393 40 $0 $4,708,943 $23,124,886 45 $0 $5,637,608 $34,881,266 50 $0 $7,325,419 $57,495,379 55 $0 $9,557,763 $95,946,307 60 $0 $12,268,127 $158,533,788 65 $0 $15,511,417 $259,306,294 66 $0 $16,226,428 $285,732,633 67 $0 $16,964,287 $314,709,745
These hypothetical rates of return are illustrative only and should not be considered a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors. The Account Values and Cash Surrender Values will be different from those shown if the actual rates of return averaged 0%, 6%, or 12% over a period of years but fluctuated above or below the average for individual contract years. No representation can be made that these rates of return can be achieved for any one year or sustained over a period of time. 63 ------------------------------------------------------------------------------- WHERE YOU CAN FIND MORE INFORMATION We provide information about our financial strength in reports filed with the SEC and state insurance departments. For example, we file 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 website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department. 811-07271 811-07273 PART B HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION (PART B) HARTFORD LEADERS VUL JOINT LEGACY II (SERIES II) SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 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, call us at 1-800-231-5453. DATE OF PROSPECTUS: MAY 1, 2013 DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 1, 2013 2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- GENERAL INFORMATION AND HISTORY 3 SERVICES 3 EXPERTS 3 DISTRIBUTION OF THE POLICIES 3 ADDITIONAL INFORMATION ABOUT CHARGES 4 PERFORMANCE DATA 4 FINANCIAL STATEMENTS 5
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3 ------------------------------------------------------------------------------- GENERAL INFORMATION AND HISTORY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("HARTFORD") -- Hartford Life and Annuity Insurance Company is a stock life insurance company engaged in the business of writing life insurance and annuities, both individual and group, in all states of the United States, the District of Columbia and Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity Insurance Company. We were originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial Services Group, Inc., one of the largest financial service providers in the United States. Hartford Life and Annuity Insurance Company is controlled by Hartford Life Insurance Company, which is controlled by Hartford Life & Accident Insurance Company, which is controlled by Hartford Life Inc., which is controlled by Hartford Accident & Indemnity Company, which is controlled by Hartford Fire Insurance Company, which is controlled by Nutmeg Insurance Company, which is controlled by The Hartford Financial Services Group, Inc. Each of these companies is engaged in the business of insurance and financial services. On January 2, 2013, Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company (collectively, "Hartford") entered into agreements with The Prudential Insurance Company of America ("Prudential") under which Prudential will reinsure the obligations of Hartford under the variable life insurance policies and provide administration for the policies. Prudential is a New Jersey domiciled life insurance company with offices located in Newark, New Jersey. Prudential's mailing address is 213 Washington Street, Newark, NJ 07102. Prudential is ultimately controlled by Prudential Financial, Inc. SEPARATE ACCOUNT VL II was established as a separate account under Connecticut law on September 30, 1994. The Separate Account is classified as a unit investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940. SERVICES SAFEKEEPING OF ASSETS -- Title to the assets of the Separate Account is held by Hartford. The assets are kept physically segregated and are held separate and apart from Hartford's general corporate assets. Records are maintained of all purchases and redemptions of Fund shares held in each of the Sub-Accounts. EXPERTS The statutory-basis financial statements of Hartford Life and Annuity Insurance Company (the "Company") as of December 31, 2012 and 2011, and for each of the three years in the period ended December 31, 2012 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report dated April 10, 2013 (which report expresses an unmodified opinion in accordance with accounting practices prescribed and permitted by the Insurance Department of the State of Connecticut), and the statements of assets and liabilities of Hartford Life and Annuity Insurance Company Separate Account VL II as of December 31, 2012, and the related statements of operations for each of the periods presented in the year then ended, the statements of changes in net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated March 28, 2013, which reports are both included in the Statement of Additional Information which is part of the registration statement. 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. DISTRIBUTION OF THE POLICIES Hartford Equity Sales Company, Inc. ("HESCO") serves as principal underwriter for the policies and offers the policies on a continuous basis. HESCO is controlled by Hartford and is located at the same address as Hartford. HESCO 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 Financial Industry Regulatory Authority ("FINRA"). Hartford currently pays HESCO underwriting commissions for its role as Principal Underwriter of all policies offered through this Separate Account. For the past three years, the aggregate dollar amount of underwriting commissions paid to HESCO in its role as Principal Underwriter has been: 2012: $36,841,317; 2011: $38,930,999; and 2010: $13,691,277. HESCO did not retain any of these underwriting commissions. 4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ------------------------------------------------------------------------------- HESCO enters into sales agreements with registered broker-dealers, financial institutions and other parties ("Financial Intermediaries"). The policies are sold by salespersons who represent Hartford as insurance agents and who are financial professionals ("Sales Representatives") of HESCO or certain other registered broker-dealers who have entered into sales agreements with HESCO. Financial Intermediaries are compensated according to a schedule in the sales agreement and are subject to any rules or regulations that apply to variable life insurance compensation. This compensation is usually paid from sales charges described in the Prospectus. The compensation generally consists of commissions and may involve other types of payments that are described more fully in the prospectus. ADDITIONAL INFORMATION ABOUT CHARGES SALES LOAD -- The front-end load under the policies may be used to cover expenses related to the sale and distribution of the policies. Refer to prospectus for applicable sales load. REDUCED CHARGES FOR ELIGIBLE GROUPS -- Certain charges and deductions described above may be reduced for policies issued in connection with a specific plan, group, or program ("Eligible Group") in accordance with our rules in effect as of the date the application for a policy is approved. An Eligible Group must satisfy certain criteria such as size, expected number of policy holders, or present or anticipated levels of aggregate premiums, administrative expenses or commissions. We may modify, from time to time on a uniform basis, both the amount of the reductions and the criteria for eligibility. Reductions in charges will not be unfairly discriminatory against any person, including the affected policy holders invested in the Separate Account. UNDERWRITING PROCEDURES -- To purchase a policy you must submit an application to us. Within limits, you may choose the initial Face Amount. Policies generally will be issued only on the lives of insureds between the ages of 20 and 85 who supply evidence of insurability satisfactory to us. Acceptance is subject to our underwriting rules and we reserve the right to reject an application for any reason. No change in the terms or conditions of a policy will be made without your consent. Cost of insurance rates will be determined on each policy anniversary based on our future expectations of such factors as mortality, expenses, interest, persistency and taxes. For preferred and standard risks, the cost of insurance rate will not exceed those based on the 2001 Commissioners' Standard Ordinary Mortality Table (ANB), Male or Female, Unismoke Table, age nearest birthday (unisex rates may be required in some states). A table of guaranteed cost of insurance rates per $1,000 will be included in your policy, however, we reserve the right to use rates less than those shown in the table. Special risk classes are used when mortality experience in excess of the standard risk classes is expected. These substandard risks will be charged a higher cost of insurance rate that will not exceed rates based on a multiple of 2001 Commissioners' Standard Ordinary Mortality Table (ANB), Male or Female, Unismoke Table, age nearest birthday (unisex rates may be required in some states) plus any flat extra amount assessed. The multiple will be based on the insured's substandard rating. INCREASES IN FACE AMOUNT -- At any time after the first policy year, you may request in writing to change the Face Amount. The minimum amount by which the Face Amount can be increased is based on our rules then in effect. We reserve the right to limit the number of increases or decreases made under a policy to no more than one in any 12 month period. All requests to increase the Face Amount must be applied for on a new application and accompanied by your policy. All requests will be subject to evidence of insurability satisfactory to us. Any increase approved by us will be effective on the Monthly Activity Date shown on the new policy specifications page, provided that the Monthly Deduction Amount for the first month after the effective date of the increase is made. Each unscheduled increase in Face Amount is subject to an increase fee of 1/12 of $1 per $1,000 of each increase per month for the first twelve months from the effective date of each increase. This amount will not be less than 1/12 of $500 but not greater than 1/12 of $3,000. PERFORMANCE DATA Hartford may advertise the performance history of the underlying Funds of the policy. Performance history is based on the Funds' past performance only and is no indication of future performance. The performance history of the underlying Funds includes deductions for the total fund operating expenses of the Funds. The performance information does not include any charges or fees that are deducted from your policy. These are charges and fees such as the surrender charge, unamortized tax charge, cost of insurance charge, mortality and expense risk charge, tax expense charge, annual maintenance fee, and the administrative charge. Some of these charges vary depending on your age, gender, face amount, underwriting class, premiums, policy duration, and account value. All of these policy charges will have a significant impact on your policy's account value and overall performance. If these charges and fees were reflected in the performance data, performance would be lower. To see the impact of these charges and fees on your policy's performance, HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5 ------------------------------------------------------------------------------- you should obtain a personalized illustration based on historical Fund performance from your financial adviser. Performance history of the underlying Funds is measured by comparing the value of the Fund at the beginning of the period to the value of the Fund at the end of the period. Performance is usually calculated for periods of one month, three months, year-to-date, one year, three years, five years, ten years, and since the inception date of the Fund if the Fund has existed for more than ten years. ADDITIONAL FINANCIAL STATEMENT INFORMATION The financial statements of the Company and the Separate Account for year ended December 31, 2012 follow this page of the SAI. The financial statements of the Company only bear on the Company's ability to meet its obligations under the Contracts and should not be considered as bearing on the investment performance of the Separate Account. The financial statements of the Separate Account present the investment performance of the Separate Account. You can also access the information for Hartford Life and Annuity Insurance Company at www.hartfordinvestor.com. Requests for copies can also be directed to The Hartford, P.O. Box 2999, Hartford, Connecticut 06104-2999. Report of Independent Registered Public Accounting Firm THE CONTRACT OWNERS OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT VL II AND THE BOARD OF DIRECTORS OF HARTFORD LIFE AND ANNUITY 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 and Annuity Insurance Company Separate Account VL II (the "Account") as of December 31, 2012, and the related statements of operations for each of the periods presented in the year then ended, the statements of changes in net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended. These financial statements and financial highlights are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights 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 and financial highlights 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, 2012, by correspondence with the fund managers; where replies were not received from the fund managers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the individual Sub-Accounts disclosed in Note 1 constituting the Hartford Life and Annuity Insurance Company Separate Account VL II as of December 31, 2012, the results of their operations for each of the periods presented in the year then ended, the changes in their net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Hartford, Connecticut March 28, 2013 SA-1 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2012 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL SMALL/MID CAP STRATEGY PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 60,851 524,094 300,467 ========== ========== ========== Cost $654,899 $9,301,951 $4,465,860 ========== ========== ========== Market value $730,826 $6,729,371 $5,282,213 Due from Sponsor Company 69 7,056 7,052 Receivable from fund shares sold -- -- -- Other assets -- 1 -- ---------- ---------- ---------- Total assets 730,895 6,736,428 5,289,265 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 69 7,056 7,052 Other liabilities 1 -- 1 ---------- ---------- ---------- Total liabilities 70 7,056 7,053 ---------- ---------- ---------- NET ASSETS: For contract liabilities $730,825 $6,729,372 $5,282,212 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 65,123 859,338 360,757 Minimum unit fair value #* $11.222162 $7.830881 $14.642002 Maximum unit fair value #* $11.222162 $7.830881 $14.642002 Contract liability $730,825 $6,729,372 $5,282,212 ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO GROWTH PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------------------- ASSETS: Investments: Number of shares 1,761 77,144 ========= ========== Cost $15,674 $1,482,628 ========= ========== Market value $18,563 $1,308,366 Due from Sponsor Company -- 3,891 Receivable from fund shares sold -- -- Other assets -- 1 --------- ---------- Total assets 18,563 1,312,258 --------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- 3,891 Other liabilities -- -- --------- ---------- Total liabilities -- 3,891 --------- ---------- NET ASSETS: For contract liabilities $18,563 $1,308,367 ========= ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,910 144,012 Minimum unit fair value #* $9.717865 $9.085135 Maximum unit fair value #* $9.717865 $9.085135 Contract liability $18,563 $1,308,367
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-2 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. CORE HIGH INTERNATIONAL EQUITY FUND YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 50,690 2,871 321,357 ========== ========== ========== Cost $1,253,994 $15,065 $8,116,444 ========== ========== ========== Market value $1,527,782 $16,108 $9,650,334 Due from Sponsor Company 159 -- 9,537 Receivable from fund shares sold -- -- -- Other assets -- -- 1 ---------- ---------- ---------- Total assets 1,527,941 16,108 9,659,872 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 159 -- 9,537 Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 159 -- 9,537 ---------- ---------- ---------- NET ASSETS: For contract liabilities $1,527,782 $16,108 $9,650,335 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 87,159 1,397 903,449 Minimum unit fair value #* $17.528629 $11.528309 $10.681661 Maximum unit fair value #* $17.528629 $11.528309 $10.681661 Contract liability $1,527,782 $16,108 $9,650,335 INVESCO V.I. INVESCO V.I. MID CAP CORE SMALL CAP EQUITY FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 480,303 321,390 ========== ========== Cost $5,989,596 $5,050,942 ========== ========== Market value $6,104,657 $6,006,783 Due from Sponsor Company 3,559 11,814 Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 6,108,216 6,018,597 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 3,559 11,814 Other liabilities 1 -- ---------- ---------- Total liabilities 3,560 11,814 ---------- ---------- NET ASSETS: For contract liabilities $6,104,656 $6,006,783 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 325,371 384,884 Minimum unit fair value #* $18.762126 $15.606747 Maximum unit fair value #* $18.762126 $15.606747 Contract liability $6,104,656 $6,006,783
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-3 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. BALANCED RISK INVESCO V.I. GLOBAL ALLOCATION DIVERSIFIED REAL ESTATE FUND FUND DIVIDEND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 38,511 270,727 2,953 ========== ========== ========== Cost $510,522 $3,143,167 $44,594 ========== ========== ========== Market value $595,760 $3,424,697 $48,073 Due from Sponsor Company 954 13 -- Receivable from fund shares sold -- -- -- Other assets -- -- -- ---------- ---------- ---------- Total assets 596,714 3,424,710 48,073 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 954 13 -- Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 954 13 -- ---------- ---------- ---------- NET ASSETS: For contract liabilities $595,760 $3,424,697 $48,073 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 35,213 278,203 4,147 Minimum unit fair value #* $16.918723 $12.310062 $11.592516 Maximum unit fair value #* $16.918723 $12.310062 $11.592516 Contract liability $595,760 $3,424,697 $48,073 ALLIANCEBERNSTEIN VPS AMERICAN FUNDS REAL ESTATE GLOBAL INVESTMENT PORTFOLIO BOND FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------- ASSETS: Investments: Number of shares 64,515 172,171 ========== ========== Cost $776,888 $1,965,813 ========== ========== Market value $792,240 $2,112,544 Due from Sponsor Company 443 10,017 Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 792,683 2,122,561 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 443 10,017 Other liabilities -- -- ---------- ---------- Total liabilities 443 10,017 ---------- ---------- NET ASSETS: For contract liabilities $792,240 $2,112,544 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 35,515 165,647 Minimum unit fair value #* $22.307313 $12.753310 Maximum unit fair value #* $22.307313 $12.753310 Contract liability $792,240 $2,112,544
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. (1) Formerly Invesco V.I. Dividend Growth Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-4 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET INCOME AND INCOME FUND ALLOCATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 387,617 1,822,039 1,972,193 ========== =========== =========== Cost $3,227,997 $30,038,154 $18,982,145 ========== =========== =========== Market value $4,085,478 $33,361,544 $19,662,760 Due from Sponsor Company 4,709 42,428 23,914 Receivable from fund shares sold -- -- -- Other assets 1 -- 1 ---------- ----------- ----------- Total assets 4,090,188 33,403,972 19,686,675 ---------- ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 4,709 42,428 23,914 Other liabilities -- -- -- ---------- ----------- ----------- Total liabilities 4,709 42,428 23,914 ---------- ----------- ----------- NET ASSETS: For contract liabilities $4,085,479 $33,361,544 $19,662,761 ========== =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 380,925 1,804,331 1,167,431 Minimum unit fair value #* $10.725138 $18.489702 $16.842764 Maximum unit fair value #* $10.725138 $18.489702 $16.842764 Contract liability $4,085,479 $33,361,544 $19,662,761 AMERICAN FUNDS AMERICAN FUNDS GLOBAL BOND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- ASSETS: Investments: Number of shares 3,194,912 947,568 =========== =========== Cost $34,377,265 $16,033,343 =========== =========== Market value $35,687,165 $22,210,995 Due from Sponsor Company 43,736 14,847 Receivable from fund shares sold -- -- Other assets -- -- ----------- ----------- Total assets 35,730,901 22,225,842 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 43,736 14,847 Other liabilities -- 2 ----------- ----------- Total liabilities 43,736 14,849 ----------- ----------- NET ASSETS: For contract liabilities $35,687,165 $22,210,993 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 2,397,552 11,818,582 Minimum unit fair value #* $14.884837 $1.879328 Maximum unit fair value #* $14.884837 $1.879328 Contract liability $35,687,165 $22,210,993
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-5 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,399,177 1,833,056 2,320,538 =========== =========== =========== Cost $69,134,179 $61,607,382 $39,223,245 =========== =========== =========== Market value $84,580,260 $70,096,065 $40,887,874 Due from Sponsor Company 55,604 49,373 24,410 Receivable from fund shares sold -- -- -- Other assets 14 -- -- ----------- ----------- ----------- Total assets 84,635,878 70,145,438 40,912,284 ----------- ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 55,604 49,373 24,410 Other liabilities -- 13 -- ----------- ----------- ----------- Total liabilities 55,604 49,386 24,410 ----------- ----------- ----------- NET ASSETS: For contract liabilities $84,580,274 $70,096,052 $40,887,874 =========== =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 60,936,133 43,591,478 1,746,728 Minimum unit fair value #* $1.386229 $1.607139 $20.539236 Maximum unit fair value #* $17.429019 $15.646393 $23.413424 Contract liability $84,580,274 $70,096,052 $40,887,874 AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL NEW WORLD FUND CAPITALIZATION FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------- ASSETS: Investments: Number of shares 726,091 753,006 =========== =========== Cost $12,527,468 $11,606,659 =========== =========== Market value $16,518,577 $14,954,689 Due from Sponsor Company 14,246 10,936 Receivable from fund shares sold -- -- Other assets 1 -- ----------- ----------- Total assets 16,532,824 14,965,625 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 14,246 10,936 Other liabilities -- -- ----------- ----------- Total liabilities 14,246 10,936 ----------- ----------- NET ASSETS: For contract liabilities $16,518,578 $14,954,689 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 513,039 6,908,135 Minimum unit fair value #* $32.197536 $2.164794 Maximum unit fair value #* $32.197536 $2.164794 Contract liability $16,518,578 $14,954,689
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-6 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP ASSET MANAGER EQUITY-INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 44,867 797,849 6,351 ========= =========== ========== Cost $780,549 $17,310,850 $232,379 ========= =========== ========== Market value $680,633 $15,890,261 $264,447 Due from Sponsor Company -- 8,649 35 Receivable from fund shares sold -- -- -- Other assets -- -- -- --------- ----------- ---------- Total assets 680,633 15,898,910 264,482 --------- ----------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased -- 8,649 35 Other liabilities 1 1 -- --------- ----------- ---------- Total liabilities 1 8,650 35 --------- ----------- ---------- NET ASSETS: For contract liabilities $680,632 $15,890,260 $264,447 ========= =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 224,897 4,412,318 24,630 Minimum unit fair value #* $3.026411 $3.409746 $10.736965 Maximum unit fair value #* $3.026411 $12.688792 $10.736965 Contract liability $680,632 $15,890,260 $264,447 FIDELITY VIP FIDELITY VIP CONTRAFUND OVERSEAS PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 679,245 25,204 =========== ========= Cost $17,066,579 $492,676 =========== ========= Market value $17,660,380 $405,539 Due from Sponsor Company 36,086 -- Receivable from fund shares sold -- -- Other assets -- -- ----------- --------- Total assets 17,696,466 405,539 ----------- --------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 36,086 -- Other liabilities -- -- ----------- --------- Total liabilities 36,086 -- ----------- --------- NET ASSETS: For contract liabilities $17,660,380 $405,539 =========== ========= DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,233,164 169,244 Minimum unit fair value #* $14.321191 $2.396177 Maximum unit fair value #* $14.321191 $2.396177 Contract liability $17,660,380 $405,539
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-7 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 526,991 4,888 13,133 =========== ========== ========== Cost $15,020,430 $26,532 $88,764 =========== ========== ========== Market value $15,799,202 $54,652 $129,094 Due from Sponsor Company 16,137 -- -- Receivable from fund shares sold -- -- -- Other assets -- -- -- ----------- ---------- ---------- Total assets 15,815,339 54,652 129,094 ----------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 16,137 -- -- Other liabilities 1 -- -- ----------- ---------- ---------- Total liabilities 16,138 -- -- ----------- ---------- ---------- NET ASSETS: For contract liabilities $15,799,201 $54,652 $129,094 =========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,034,275 4,405 10,475 Minimum unit fair value #* $15.275636 $12.406724 $12.324435 Maximum unit fair value #* $15.275636 $12.406724 $12.324435 Contract liability $15,799,201 $54,652 $129,094 FIDELITY VIP FIDELITY VIP FREEDOM 2010 FREEDOM 2020 PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 45,901 72,876 ========== ========== Cost $441,741 $697,235 ========== ========== Market value $509,497 $813,298 Due from Sponsor Company -- -- Receivable from fund shares sold -- -- Other assets -- 1 ---------- ---------- Total assets 509,497 813,299 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- -- Other liabilities -- -- ---------- ---------- Total liabilities -- -- ---------- ---------- NET ASSETS: For contract liabilities $509,497 $813,299 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 42,085 69,122 Minimum unit fair value #* $12.106372 $11.766118 Maximum unit fair value #* $12.106372 $11.766118 Contract liability $509,497 $813,299
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-8 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FIDELITY VIP FIDELITY VIP RISING FREEDOM 2030 STRATEGIC INCOME DIVIDENDS PORTFOLIO PORTFOLIO SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 104,294 60,677 64,229 ========== ========== ========== Cost $1,020,733 $703,383 $1,235,545 ========== ========== ========== Market value $1,129,501 $710,523 $1,389,913 Due from Sponsor Company 613 1,074 -- Receivable from fund shares sold -- -- 2,178 Other assets -- -- -- ---------- ---------- ---------- Total assets 1,130,114 711,597 1,392,091 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- 2,178 Payable for fund shares purchased 613 1,074 -- Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 613 1,074 2,178 ---------- ---------- ---------- NET ASSETS: For contract liabilities $1,129,501 $710,523 $1,389,913 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 98,969 51,056 86,916 Minimum unit fair value #* $11.412628 $13.916517 $15.991465 Maximum unit fair value #* $11.412628 $13.916517 $15.991465 Contract liability $1,129,501 $710,523 $1,389,913 FRANKLIN FRANKLIN SMALL-MID CAP INCOME GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- ASSETS: Investments: Number of shares 1,274,845 60,712 =========== ========== Cost $19,138,098 $1,118,109 =========== ========== Market value $19,211,918 $1,277,375 Due from Sponsor Company 2,003 -- Receivable from fund shares sold -- 275 Other assets -- -- ----------- ---------- Total assets 19,213,921 1,277,650 ----------- ---------- LIABILITIES: Due to Sponsor Company -- 275 Payable for fund shares purchased 2,003 -- Other liabilities 1 -- ----------- ---------- Total liabilities 2,004 275 ----------- ---------- NET ASSETS: For contract liabilities $19,211,917 $1,277,375 =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,305,430 100,553 Minimum unit fair value #* $14.716926 $12.626194 Maximum unit fair value #* $14.716926 $15.603124 Contract liability $19,211,917 $1,277,375
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-9 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN SMALL CAP STRATEGIC TEMPLETON VIP VALUE INCOME MUTUAL SHARES SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 586,508 1,180,739 1,393,368 =========== =========== =========== Cost $7,962,059 $14,232,771 $22,048,800 =========== =========== =========== Market value $10,692,031 $15,550,327 $23,993,792 Due from Sponsor Company 14,996 11,879 23,731 Receivable from fund shares sold -- -- -- Other assets -- -- -- ----------- ----------- ----------- Total assets 10,707,027 15,562,206 24,017,523 ----------- ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 14,996 11,879 23,731 Other liabilities 1 -- -- ----------- ----------- ----------- Total liabilities 14,997 11,879 23,731 ----------- ----------- ----------- NET ASSETS: For contract liabilities $10,692,030 $15,550,327 $23,993,792 =========== =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 452,210 1,076,348 1,387,934 Minimum unit fair value #* $23.643948 $14.439420 $16.413690 Maximum unit fair value #* $23.643948 $23.362530 $17.290820 Contract liability $10,692,030 $15,550,327 $23,993,792 TEMPLETON DEVELOPING TEMPLETON MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 212,755 324,955 ========== ========== Cost $2,028,411 $4,294,445 ========== ========== Market value $2,250,952 $4,669,595 Due from Sponsor Company 19 5,086 Receivable from fund shares sold -- -- Other assets -- 1 ---------- ---------- Total assets 2,250,971 4,674,682 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 19 5,086 Other liabilities -- -- ---------- ---------- Total liabilities 19 5,086 ---------- ---------- NET ASSETS: For contract liabilities $2,250,952 $4,669,596 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 223,842 458,288 Minimum unit fair value #* $10.055992 $10.189225 Maximum unit fair value #* $10.055992 $10.189225 Contract liability $2,250,952 $4,669,596
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-10 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN TEMPLETON MUTUAL FLEX CAP GROWTH GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 417,668 692,059 37,607 ========== =========== ========== Cost $4,661,219 $13,849,860 $404,865 ========== =========== ========== Market value $4,999,484 $13,965,743 $496,793 Due from Sponsor Company 7,677 6,619 -- Receivable from fund shares sold -- -- 2,251 Other assets -- -- -- ---------- ----------- ---------- Total assets 5,007,161 13,972,362 499,044 ---------- ----------- ---------- LIABILITIES: Due to Sponsor Company -- -- 2,251 Payable for fund shares purchased 7,677 6,619 -- Other liabilities -- -- -- ---------- ----------- ---------- Total liabilities 7,677 6,619 2,251 ---------- ----------- ---------- NET ASSETS: For contract liabilities $4,999,484 $13,965,743 $496,793 ========== =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 455,243 1,005,141 42,153 Minimum unit fair value #* $10.934682 $13.894317 $11.785548 Maximum unit fair value #* $15.006920 $13.894317 $11.785548 Contract liability $4,999,484 $13,965,743 $496,793 TEMPLETON HARTFORD GLOBAL BOND BALANCED SECURITIES FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (2) -------------------------------------- -------------------------------------------- ASSETS: Investments: Number of shares 1,170,588 1,871,695 =========== =========== Cost $20,967,875 $46,903,909 =========== =========== Market value $22,791,345 $39,363,260 Due from Sponsor Company 9,109 12,381 Receivable from fund shares sold -- -- Other assets -- 1 ----------- ----------- Total assets 22,800,454 39,375,642 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 9,109 12,381 Other liabilities 1 -- ----------- ----------- Total liabilities 9,110 12,381 ----------- ----------- NET ASSETS: For contract liabilities $22,791,344 $39,363,261 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,258,267 10,135,364 Minimum unit fair value #* $18.113279 $3.883754 Maximum unit fair value #* $18.113279 $3.883754 Contract liability $22,791,344 $39,363,261
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. (2) Formerly Hartford Advisers HLS Fund. Change effective June 29, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-11 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD TOTAL CAPITAL DIVIDEND RETURN BOND APPRECIATION AND GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of shares 6,912,501 2,389,266 2,815,671 =========== ============ =========== Cost $77,487,639 $114,112,805 $54,831,163 =========== ============ =========== Market value $82,908,460 $103,631,560 $60,428,671 Due from Sponsor Company 92,178 82,192 78,032 Receivable from fund shares sold -- -- -- Other assets 18 -- 1 ----------- ------------ ----------- Total assets 83,000,656 103,713,752 60,506,704 ----------- ------------ ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 92,178 82,192 78,032 Other liabilities -- 2 -- ----------- ------------ ----------- Total liabilities 92,178 82,194 78,032 ----------- ------------ ----------- NET ASSETS: For contract liabilities $82,908,478 $103,631,558 $60,428,672 =========== ============ =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 25,514,776 13,949,424 12,500,860 Minimum unit fair value #* $3.249430 $7.429092 $4.833961 Maximum unit fair value #* $3.249430 $7.429092 $4.833961 Contract liability $82,908,478 $103,631,558 $60,428,672 HARTFORD HARTFORD GLOBAL RESEARCH GLOBAL GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- ASSETS: Investments: Number of shares 16,827 38,303 ========== ========= Cost $153,824 $591,211 ========== ========= Market value $177,622 $632,125 Due from Sponsor Company -- -- Receivable from fund shares sold -- -- Other assets -- 1 ---------- --------- Total assets 177,622 632,126 ---------- --------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- -- Other liabilities -- -- ---------- --------- Total liabilities -- -- ---------- --------- NET ASSETS: For contract liabilities $177,622 $632,126 ========== ========= DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 16,314 499,664 Minimum unit fair value #* $10.795248 $1.265101 Maximum unit fair value #* $11.038466 $1.265101 Contract liability $177,622 $632,126
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-12 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED HARTFORD GROWTH EQUITY GROWTH OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,350,808 111,752 585,350 =========== ========== =========== Cost $15,713,808 $1,261,695 $13,437,813 =========== ========== =========== Market value $18,429,223 $1,445,273 $17,500,308 Due from Sponsor Company 16,223 3,605 14,871 Receivable from fund shares sold -- -- -- Other assets -- -- -- ----------- ---------- ----------- Total assets 18,445,446 1,448,878 17,515,179 ----------- ---------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 16,223 3,605 14,871 Other liabilities -- 1 -- ----------- ---------- ----------- Total liabilities 16,223 3,606 14,871 ----------- ---------- ----------- NET ASSETS: For contract liabilities $18,429,223 $1,445,272 $17,500,308 =========== ========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 10,363,283 125,695 764,984 Minimum unit fair value #* $1.778319 $11.498214 $22.876709 Maximum unit fair value #* $1.778319 $11.498214 $22.876709 Contract liability $18,429,223 $1,445,272 $17,500,308 HARTFORD HARTFORD HIGH YIELD INDEX HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- ASSETS: Investments: Number of shares 815,703 1,463,446 =========== =========== Cost $7,075,151 $51,106,839 =========== =========== Market value $7,412,489 $43,450,991 Due from Sponsor Company 14,636 8,106 Receivable from fund shares sold -- -- Other assets -- -- ----------- ----------- Total assets 7,427,125 43,459,097 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 14,636 8,106 Other liabilities 1 4 ----------- ----------- Total liabilities 14,637 8,110 ----------- ----------- NET ASSETS: For contract liabilities $7,412,488 $43,450,987 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 458,364 10,239,161 Minimum unit fair value #* $16.171602 $4.243608 Maximum unit fair value #* $16.171602 $4.243608 Contract liability $7,412,488 $43,450,987
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-13 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD INTERNATIONAL SMALL/MID CAP HARTFORD OPPORTUNITIES EQUITY MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,646,272 48,894 1,089,755 =========== ========== =========== Cost $20,888,486 $387,899 $22,798,894 =========== ========== =========== Market value $20,791,907 $435,176 $30,682,075 Due from Sponsor Company 53,108 -- 12,512 Receivable from fund shares sold -- -- -- Other assets 3 -- 3 ----------- ---------- ----------- Total assets 20,845,018 435,176 30,694,590 ----------- ---------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 53,108 -- 12,512 Other liabilities -- -- -- ----------- ---------- ----------- Total liabilities 53,108 -- 12,512 ----------- ---------- ----------- NET ASSETS: For contract liabilities $20,791,910 $435,176 $30,682,078 =========== ========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 6,070,748 35,127 6,367,169 Minimum unit fair value #* $3.424934 $12.388639 $4.818794 Maximum unit fair value #* $3.424934 $12.388639 $4.818794 Contract liability $20,791,910 $435,176 $30,682,078 HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- --------------------------------------------- ASSETS: Investments: Number of shares 547,091 48,804,441 ========== ============= Cost $6,933,028 $48,804,441 ========== ============= Market value $6,375,622 $48,804,441 Due from Sponsor Company 3,026 -- Receivable from fund shares sold -- 9,902 Other assets -- -- ---------- ------------- Total assets 6,378,648 48,814,343 ---------- ------------- LIABILITIES: Due to Sponsor Company -- 9,902 Payable for fund shares purchased 3,026 -- Other liabilities -- -- ---------- ------------- Total liabilities 3,026 9,902 ---------- ------------- NET ASSETS: For contract liabilities $6,375,622 $48,804,441 ========== ============= DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 267,591 27,164,300 Minimum unit fair value #* $23.826006 $1.796639 Maximum unit fair value #* $23.826006 $1.796639 Contract liability $6,375,622 $48,804,441
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-14 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 826,953 6,795 874,924 =========== ========== =========== Cost $11,817,139 $129,100 $52,254,094 =========== ========== =========== Market value $16,321,923 $172,884 $39,135,200 Due from Sponsor Company 3,621 -- 23,995 Receivable from fund shares sold -- -- -- Other assets -- -- -- ----------- ---------- ----------- Total assets 16,325,544 172,884 39,159,195 ----------- ---------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 3,621 -- 23,995 Other liabilities 2 -- -- ----------- ---------- ----------- Total liabilities 3,623 -- 23,995 ----------- ---------- ----------- NET ASSETS: For contract liabilities $16,321,921 $172,884 $39,135,200 =========== ========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 6,018,287 11,238 9,190,090 Minimum unit fair value #* $2.712054 $15.383653 $4.258413 Maximum unit fair value #* $2.712054 $15.383653 $4.258413 Contract liability $16,321,921 $172,884 $39,135,200 HARTFORD U.S. GOVERNMENT HARTFORD SECURITIES VALUE HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- ASSETS: Investments: Number of shares 715,231 1,355,450 =========== =========== Cost $7,673,049 $13,840,641 =========== =========== Market value $7,692,166 $16,071,492 Due from Sponsor Company 11,422 3,349 Receivable from fund shares sold -- -- Other assets -- -- ----------- ----------- Total assets 7,703,588 16,074,841 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 11,422 3,349 Other liabilities -- -- ----------- ----------- Total liabilities 11,422 3,349 ----------- ----------- NET ASSETS: For contract liabilities $7,692,166 $16,071,492 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 664,634 1,271,862 Minimum unit fair value #* $11.348975 $11.733842 Maximum unit fair value #* $11.619278 $13.043194 Contract liability $7,692,166 $16,071,492
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-15 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT CALIBRATED LORD ABBETT FUNDAMENTAL DIVIDEND BOND-DEBENTURE EQUITY FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT (3) SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 21,102 134,089 622,245 ========== ========== ========== Cost $363,703 $1,827,428 $6,660,730 ========== ========== ========== Market value $371,614 $1,906,744 $7,603,834 Due from Sponsor Company 26 960 4,348 Receivable from fund shares sold -- -- -- Other assets -- -- 1 ---------- ---------- ---------- Total assets 371,640 1,907,704 7,608,183 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 26 960 4,348 Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 26 960 4,348 ---------- ---------- ---------- NET ASSETS: For contract liabilities $371,614 $1,906,744 $7,603,835 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 29,799 136,854 508,872 Minimum unit fair value #* $12.470624 $13.932710 $14.942519 Maximum unit fair value #* $12.470624 $13.932710 $14.942519 Contract liability $371,614 $1,906,744 $7,603,835 LORD ABBETT GROWTH AND INCOME MFS GROWTH FUND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 91,777 16,432 ========== ========== Cost $2,282,937 $419,963 ========== ========== Market value $2,256,797 $473,744 Due from Sponsor Company -- 18,232 Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 2,256,797 491,976 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- 18,232 Other liabilities -- -- ---------- ---------- Total liabilities -- 18,232 ---------- ---------- NET ASSETS: For contract liabilities $2,256,797 $473,744 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 191,997 37,094 Minimum unit fair value #* $11.754355 $12.771368 Maximum unit fair value #* $11.754355 $12.771368 Contract liability $2,256,797 $473,744
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. (3) Formerly Lord Abbett Capital Structure Fund. Change effective September 27, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-16 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
MFS INVESTORS MFS NEW MFS TOTAL TRUST SERIES DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 26,729 100,627 518,791 ========== ========== =========== Cost $464,051 $1,481,464 $10,461,814 ========== ========== =========== Market value $612,893 $1,581,853 $10,401,763 Due from Sponsor Company -- -- 2,786 Receivable from fund shares sold -- -- -- Other assets -- 1 -- ---------- ---------- ----------- Total assets 612,893 1,581,854 10,404,549 ---------- ---------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased -- -- 2,786 Other liabilities -- -- -- ---------- ---------- ----------- Total liabilities -- -- 2,786 ---------- ---------- ----------- NET ASSETS: For contract liabilities $612,893 $1,581,854 $10,401,763 ========== ========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 42,830 68,326 632,195 Minimum unit fair value #* $14.309842 $23.151428 $16.393811 Maximum unit fair value #* $14.309842 $23.151428 $16.453635 Contract liability $612,893 $1,581,854 $10,401,763 MFS VALUE MFS RESEARCH SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- ASSETS: Investments: Number of shares 1,118,409 1,502,365 =========== =========== Cost $12,653,206 $19,215,771 =========== =========== Market value $16,105,083 $20,266,903 Due from Sponsor Company 33,355 30,323 Receivable from fund shares sold -- -- Other assets -- -- ----------- ----------- Total assets 16,138,438 20,297,226 ----------- ----------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 33,355 30,323 Other liabilities 1 -- ----------- ----------- Total liabilities 33,356 30,323 ----------- ----------- NET ASSETS: For contract liabilities $16,105,082 $20,266,903 =========== =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,377,434 1,462,414 Minimum unit fair value #* $11.692087 $13.858526 Maximum unit fair value #* $11.692087 $13.858526 Contract liability $16,105,082 $20,266,903
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-17 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. UIF CORE PLUS UIF EMERGING EQUITY AND FIXED INCOME MARKETS DEBT INCOME FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,538 27,869 3,231 ========== ========== ========== Cost $22,682 $307,681 $27,428 ========== ========== ========== Market value $23,144 $296,532 $30,761 Due from Sponsor Company -- -- -- Receivable from fund shares sold -- -- -- Other assets -- -- -- ---------- ---------- ---------- Total assets 23,144 296,532 30,761 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities -- -- -- ---------- ---------- ---------- NET ASSETS: For contract liabilities $23,144 $296,532 $30,761 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 2,126 18,196 1,043 Minimum unit fair value #* $10.883573 $16.296895 $29.499996 Maximum unit fair value #* $10.883573 $16.296895 $29.499996 Contract liability $23,144 $296,532 $30,761 UIF EMERGING UIF MID CAP MARKETS EQUITY GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 2,456 176,262 ========== ========== Cost $34,437 $1,382,576 ========== ========== Market value $36,909 $1,875,427 Due from Sponsor Company -- 371 Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 36,909 1,875,798 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- 371 Other liabilities -- -- ---------- ---------- Total liabilities -- 371 ---------- ---------- NET ASSETS: For contract liabilities $36,909 $1,875,427 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 1,112 151,402 Minimum unit fair value #* $33.176459 $12.387060 Maximum unit fair value #* $33.176459 $12.387060 Contract liability $36,909 $1,875,427
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-18 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. MORGAN STANLEY -- MORGAN STANLEY -- AMERICAN FOCUS GROWTH FLEXIBLE INCOME VALUE FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT (4) SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 208,525 1,030 3,396 ========== ========== ========== Cost $3,355,417 $15,676 $23,722 ========== ========== ========== Market value $3,089,180 $23,552 $21,634 Due from Sponsor Company 3,307 -- -- Receivable from fund shares sold -- -- -- Other assets 1 -- -- ---------- ---------- ---------- Total assets 3,092,488 23,552 21,634 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 3,307 -- -- Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 3,307 -- -- ---------- ---------- ---------- NET ASSETS: For contract liabilities $3,089,181 $23,552 $21,634 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 240,201 1,472 1,221 Minimum unit fair value #* $12.648529 $15.999787 $17.716626 Maximum unit fair value #* $19.989368 $15.999787 $17.716626 Contract liability $3,089,181 $23,552 $21,634 MORGAN STANLEY -- INVESCO V.I. MONEY MARKET EQUALLY-WEIGHTED PORTFOLIO S&P 500 FUND SUB-ACCOUNT SUB-ACCOUNT (5) -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 140,334 1,987 ========== ========== Cost $140,334 $37,644 ========== ========== Market value $140,334 $35,711 Due from Sponsor Company -- -- Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 140,334 35,711 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased -- -- Other liabilities -- -- ---------- ---------- Total liabilities -- -- ---------- ---------- NET ASSETS: For contract liabilities $140,334 $35,711 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 12,056 1,835 Minimum unit fair value #* $11.640282 $19.457806 Maximum unit fair value #* $11.640282 $19.457806 Contract liability $140,334 $35,711
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. (4) Formerly Invesco Van Kampen V.I. Mid Cap Value Fund. Change effective July 15, 2012. (5) Formerly Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-19 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
OPPENHEIMER CAPITAL OPPENHEIMER OPPENHEIMER APPRECIATION GLOBAL SECURITIES MAIN STREET FUND/VA FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 67,088 61,807 38,043 ========== ========== ========== Cost $2,607,888 $1,925,735 $771,570 ========== ========== ========== Market value $2,996,133 $1,993,275 $904,674 Due from Sponsor Company 6,501 655 1,496 Receivable from fund shares sold -- -- -- Other assets -- -- -- ---------- ---------- ---------- Total assets 3,002,634 1,993,930 906,170 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 6,501 655 1,496 Other liabilities 1 -- 1 ---------- ---------- ---------- Total liabilities 6,502 655 1,497 ---------- ---------- ---------- NET ASSETS: For contract liabilities $2,996,132 $1,993,275 $904,673 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 244,537 140,430 69,049 Minimum unit fair value #* $12.252275 $14.194061 $13.101818 Maximum unit fair value #* $12.252275 $14.194061 $13.101818 Contract liability $2,996,132 $1,993,275 $904,673 OPPENHEIMER MAIN STREET OPPENHEIMER SMALL- & MID-CAP VALUE FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 117,906 4,104 ========== ========== Cost $1,445,357 $35,308 ========== ========== Market value $2,353,408 $44,450 Due from Sponsor Company 480 322 Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 2,353,888 44,772 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 480 322 Other liabilities -- -- ---------- ---------- Total liabilities 480 322 ---------- ---------- NET ASSETS: For contract liabilities $2,353,408 $44,450 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 177,910 4,174 Minimum unit fair value #* $13.228057 $10.650191 Maximum unit fair value #* $13.228057 $10.650191 Contract liability $2,353,408 $44,450
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-20 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET GLOBAL INCOME FUND ALLOCATION FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,007,018 31,598 301,166 ========== ========== ========== Cost $7,407,740 $554,705 $5,896,194 ========== ========== ========== Market value $7,304,434 $506,144 $3,628,784 Due from Sponsor Company 1,019 -- -- Receivable from fund shares sold -- -- -- Other assets -- -- -- ---------- ---------- ---------- Total assets 7,305,453 506,144 3,628,784 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 1,019 -- -- Other liabilities 1 -- -- ---------- ---------- ---------- Total liabilities 1,020 -- -- ---------- ---------- ---------- NET ASSETS: For contract liabilities $7,304,433 $506,144 $3,628,784 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 438,445 16,800 124,238 Minimum unit fair value #* $13.593368 $12.348492 $17.157542 Maximum unit fair value #* $28.400397 $35.209669 $29.391653 Contract liability $7,304,433 $506,144 $3,628,784 PUTNAM VT PUTNAM VT GROWTH AND GLOBAL HEALTH INCOME FUND CARE FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- ASSETS: Investments: Number of shares 669,606 49,393 =========== ========== Cost $17,087,896 $504,025 =========== ========== Market value $12,058,542 $647,543 Due from Sponsor Company 3,063 -- Receivable from fund shares sold -- -- Other assets -- -- ----------- ---------- Total assets 12,061,605 647,543 ----------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 3,063 -- Other liabilities -- -- ----------- ---------- Total liabilities 3,063 -- ----------- ---------- NET ASSETS: For contract liabilities $12,058,542 $647,543 =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 337,852 34,460 Minimum unit fair value #* $14.962585 $18.791048 Maximum unit fair value #* $36.716590 $18.791048 Contract liability $12,058,542 $647,543
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-21 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT HIGH PUTNAM VT INTERNATIONAL YIELD FUND INCOME FUND VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 1,448,661 636,261 215,329 =========== ========== ========== Cost $11,594,058 $7,860,387 $2,778,857 =========== ========== ========== Market value $10,257,915 $7,774,336 $2,021,442 Due from Sponsor Company 1,964 7,901 -- Receivable from fund shares sold -- -- -- Other assets -- -- -- ----------- ---------- ---------- Total assets 10,259,879 7,782,237 2,021,442 ----------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 1,964 7,901 -- Other liabilities -- -- -- ----------- ---------- ---------- Total liabilities 1,964 7,901 -- ----------- ---------- ---------- NET ASSETS: For contract liabilities $10,257,915 $7,774,336 $2,021,442 =========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 294,984 282,837 120,707 Minimum unit fair value #* $21.165414 $16.678880 $8.440439 Maximum unit fair value #* $39.207905 $32.470755 $17.192665 Contract liability $10,257,915 $7,774,336 $2,021,442 PUTNAM VT PUTNAM VT INTERNATIONAL INTERNATIONAL EQUITY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- ASSETS: Investments: Number of shares 777,755 16,076 =========== ========== Cost $12,165,029 $229,698 =========== ========== Market value $8,903,291 $266,217 Due from Sponsor Company 918 -- Receivable from fund shares sold -- -- Other assets -- -- ----------- ---------- Total assets 8,904,209 266,217 ----------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 918 -- Other liabilities 1 -- ----------- ---------- Total liabilities 919 -- ----------- ---------- NET ASSETS: For contract liabilities $8,903,290 $266,217 =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 518,388 15,243 Minimum unit fair value #* $16.633499 $17.464541 Maximum unit fair value #* $17.234398 $17.464541 Contract liability $8,903,290 $266,217
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-22 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT MONEY MULTI-CAP INVESTORS FUND MARKET FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 31,664 50,102 324,081 ========== ========= =========== Cost $369,204 $50,102 $10,743,639 ========== ========= =========== Market value $366,912 $50,102 $7,395,076 Due from Sponsor Company -- -- 8,281 Receivable from fund shares sold -- -- -- Other assets -- -- -- ---------- --------- ----------- Total assets 366,912 50,102 7,403,357 ---------- --------- ----------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased -- -- 8,281 Other liabilities -- -- -- ---------- --------- ----------- Total liabilities -- -- 8,281 ---------- --------- ----------- NET ASSETS: For contract liabilities $366,912 $50,102 $7,395,076 ========== ========= =========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 29,252 27,786 267,450 Minimum unit fair value #* $12.397161 $1.803151 $17.208979 Maximum unit fair value #* $15.348719 $1.803151 $28.168997 Contract liability $366,912 $50,102 $7,395,076 PUTNAM VT PUTNAM VT SMALL CAP GEORGE PUTNAM VALUE FUND BALANCED FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 84,490 27,890 ========== ========== Cost $1,551,320 $283,563 ========== ========== Market value $1,291,856 $223,116 Due from Sponsor Company 935 -- Receivable from fund shares sold -- -- Other assets -- -- ---------- ---------- Total assets 1,292,791 223,116 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 935 -- Other liabilities 1 -- ---------- ---------- Total liabilities 936 -- ---------- ---------- NET ASSETS: For contract liabilities $1,291,855 $223,116 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 111,503 14,342 Minimum unit fair value #* $11.585811 $15.557336 Maximum unit fair value #* $11.585811 $15.557336 Contract liability $1,291,855 $223,116
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-23 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT GLOBAL PUTNAM VT CAPITAL UTILITIES FUND VOYAGER FUND OPPORTUNITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 28,367 327,542 78,035 ========== =========== ========== Cost $473,858 $16,208,118 $1,201,935 ========== =========== ========== Market value $344,666 $11,943,285 $1,368,741 Due from Sponsor Company -- 13,211 -- Receivable from fund shares sold -- -- -- Other assets -- 1 -- ---------- ----------- ---------- Total assets 344,666 11,956,497 1,368,741 ---------- ----------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased -- 13,211 -- Other liabilities -- -- -- ---------- ----------- ---------- Total liabilities -- 13,211 -- ---------- ----------- ---------- NET ASSETS: For contract liabilities $344,666 $11,943,286 $1,368,741 ========== =========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 11,825 332,042 63,915 Minimum unit fair value #* $29.147195 $16.202644 $21.414988 Maximum unit fair value #* $29.147195 $40.405692 $21.414988 Contract liability $344,666 $11,943,286 $1,368,741 INVESCO PUTNAM VT VAN KAMPEN V.I. EQUITY GROWTH AND INCOME FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ ASSETS: Investments: Number of shares 205,609 75,747 ========== ========== Cost $2,562,727 $1,184,991 ========== ========== Market value $3,236,262 $1,517,210 Due from Sponsor Company 1,791 57 Receivable from fund shares sold -- -- Other assets -- 1 ---------- ---------- Total assets 3,238,053 1,517,268 ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- Payable for fund shares purchased 1,791 57 Other liabilities -- -- ---------- ---------- Total liabilities 1,791 57 ---------- ---------- NET ASSETS: For contract liabilities $3,236,262 $1,517,211 ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 164,820 125,686 Minimum unit fair value #* $19.095633 $11.475741 Maximum unit fair value #* $19.759287 $16.368126 Contract liability $3,236,262 $1,517,211
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-24 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO INVESCO INVESCO VAN KAMPEN V.I. VAN KAMPEN V.I. VAN KAMPEN V.I. AMERICAN MID CAP COMSTOCK FUND FRANCHISE FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (6)(7)(8) SUB-ACCOUNT (6)(9) -------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of shares 473,887 72,516 463,365 ========== ========== ========== Cost $6,201,686 $2,687,793 $1,843,237 ========== ========== ========== Market value $6,264,789 $2,630,875 $1,816,392 Due from Sponsor Company 5,422 3,851 2,801 Receivable from fund shares sold -- -- -- Other assets -- 1 -- ---------- ---------- ---------- Total assets 6,270,211 2,634,727 1,819,193 ---------- ---------- ---------- LIABILITIES: Due to Sponsor Company -- -- -- Payable for fund shares purchased 5,422 3,851 2,801 Other liabilities -- -- -- ---------- ---------- ---------- Total liabilities 5,422 3,851 2,801 ---------- ---------- ---------- NET ASSETS: For contract liabilities $6,264,789 $2,630,876 $1,816,392 ========== ========== ========== DEFERRED CONTRACTS IN THE ACCUMULATION PERIOD: Units owned by participants # 479,565 263,595 181,733 Minimum unit fair value #* $13.063471 $9.980752 $9.994841 Maximum unit fair value #* $13.063471 $9.980752 $9.994841 Contract liability $6,264,789 $2,630,876 $1,816,392
# Rounded units/unit fair values * For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows. (6) Funded as of April 27, 2012. (7) Effective April 27, 2012 Invesco V.I. Capital Appreciation Fund merged with Invesco Van Kampen V.I. Capital Growth Fund. (8) Formerly Invesco Van Kampen V.I. Capital Growth Fund. Change effective April 30, 2012. (9) Effective April 27, 2012 Invesco V.I. Capital Development Fund merged with Invesco Van Kampen V.I. Mid Cap Growth Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-25 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL SMALL/MID CAP STRATEGY PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $12,907 $89,772 $13,854 ------- --------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 6,785 (388,778) 52,447 Net realized gain on distributions -- -- 153,244 Net unrealized appreciation (depreciation) of investments during the year 57,847 1,161,920 580,605 ------- --------- -------- Net gain (loss) on investments 64,632 773,142 786,296 ------- --------- -------- Net increase (decrease) in net assets resulting from operations $77,539 $862,914 $800,150 ======= ========= ======== ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO GROWTH PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------------- INVESTMENT INCOME: Dividends $298 $19,459 ------ -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 388 (71,789) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,518 243,155 ------ -------- Net gain (loss) on investments 1,906 171,366 ------ -------- Net increase (decrease) in net assets resulting from operations $2,204 $190,825 ====== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-26 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. CORE HIGH INTERNATIONAL EQUITY FUND YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $14,502 $759 $131,297 -------- ------ ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 63,184 13 75,645 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 123,417 1,512 1,058,068 -------- ------ ---------- Net gain (loss) on investments 186,601 1,525 1,133,713 -------- ------ ---------- Net increase (decrease) in net assets resulting from operations $201,103 $2,284 $1,265,010 ======== ====== ========== INVESCO V.I. INVESCO V.I. MID CAP CORE SMALL CAP EQUITY FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------- -------------------------------------- INVESTMENT INCOME: Dividends $3,968 $ -- -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (8,953) 46,956 Net realized gain on distributions 51,580 -- Net unrealized appreciation (depreciation) of investments during the year 565,065 664,022 -------- -------- Net gain (loss) on investments 607,692 710,978 -------- -------- Net increase (decrease) in net assets resulting from operations $611,660 $710,978 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-27 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. BALANCED RISK INVESCO V.I. GLOBAL ALLOCATION DIVERSIFIED REAL ESTATE FUND FUND DIVIDEND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) ------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $2,772 $26,040 $816 -------- -------- ------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 4,044 23,605 21 Net realized gain on distributions -- 11,493 -- Net unrealized appreciation (depreciation) of investments during the year 103,114 190,005 6,231 -------- -------- ------ Net gain (loss) on investments 107,158 225,103 6,252 -------- -------- ------ Net increase (decrease) in net assets resulting from operations $109,930 $251,143 $7,068 ======== ======== ====== ALLIANCEBERNSTEIN VPS AMERICAN FUNDS REAL ESTATE GLOBAL INVESTMENT PORTFOLIO BOND FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------- INVESTMENT INCOME: Dividends $5,095 $43,400 -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 2,389 8,797 Net realized gain on distributions 70,121 17,870 Net unrealized appreciation (depreciation) of investments during the year 27,058 48,017 -------- -------- Net gain (loss) on investments 99,568 74,684 -------- -------- Net increase (decrease) in net assets resulting from operations $104,663 $118,084 ======== ========
(1) Formerly Invesco V.I. Dividend Growth Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-28 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET INCOME AND INCOME FUND ALLOCATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $97,747 $621,966 $387,593 -------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 38,891 214,115 11,056 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 463,579 3,922,393 1,984,243 -------- ---------- ---------- Net gain (loss) on investments 502,470 4,136,508 1,995,299 -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations $600,217 $4,758,474 $2,382,892 ======== ========== ========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL BOND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ INVESTMENT INCOME: Dividends $885,013 $189,554 ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 136,117 380,607 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 836,795 3,552,569 ---------- ---------- Net gain (loss) on investments 972,912 3,933,176 ---------- ---------- Net increase (decrease) in net assets resulting from operations $1,857,925 $4,122,730 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-29 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $655,693 $1,101,596 $580,527 ----------- ------------ ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,073,150 365,820 (44,697) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 11,670,615 9,148,071 5,803,994 ----------- ------------ ---------- Net gain (loss) on investments 12,743,765 9,513,891 5,759,297 ----------- ------------ ---------- Net increase (decrease) in net assets resulting from operations $13,399,458 $10,615,487 $6,339,824 =========== ============ ========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL NEW WORLD FUND CAPITALIZATION FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- INVESTMENT INCOME: Dividends $165,163 $191,617 ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 466,656 308,028 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,975,654 1,875,014 ---------- ---------- Net gain (loss) on investments 2,442,310 2,183,042 ---------- ---------- Net increase (decrease) in net assets resulting from operations $2,607,473 $2,374,659 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-30 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP ASSET MANAGER EQUITY-INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $10,419 $478,707 $944 -------- ---------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (21,982) (155,572) 1,943 Net realized gain on distributions 4,989 967,381 -- Net unrealized appreciation (depreciation) of investments during the year 90,508 1,107,647 28,701 -------- ---------- ------- Net gain (loss) on investments 73,515 1,919,456 30,644 -------- ---------- ------- Net increase (decrease) in net assets resulting from operations $83,934 $2,398,163 $31,588 ======== ========== ======= FIDELITY VIP FIDELITY VIP CONTRAFUND OVERSEAS PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT --------------------------- --------------------------------------- INVESTMENT INCOME: Dividends $195,193 $7,610 ---------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (18,942) (9,977) Net realized gain on distributions -- 1,310 Net unrealized appreciation (depreciation) of investments during the year 2,285,277 74,383 ---------- ------- Net gain (loss) on investments 2,266,335 65,716 ---------- ------- Net increase (decrease) in net assets resulting from operations $2,461,528 $73,326 ========== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-31 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $60,666 $190 $613 ---------- ------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 147,016 11,054 4,765 Net realized gain on distributions 1,257,794 -- -- Net unrealized appreciation (depreciation) of investments during the year 500,607 1,922 13,449 ---------- ------- ------- Net gain (loss) on investments 1,905,417 12,976 18,214 ---------- ------- ------- Net increase (decrease) in net assets resulting from operations $1,966,083 $13,166 $18,827 ========== ======= ======= FIDELITY VIP FIDELITY VIP FREEDOM 2010 FREEDOM 2020 PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT --------------------------- ------------------------------------ INVESTMENT INCOME: Dividends $8,328 $14,608 ------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 12,550 25,360 Net realized gain on distributions 7,241 9,036 Net unrealized appreciation (depreciation) of investments during the year 25,109 42,096 ------- ------- Net gain (loss) on investments 44,900 76,492 ------- ------- Net increase (decrease) in net assets resulting from operations $53,228 $91,100 ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-32 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FIDELITY VIP FIDELITY VIP RISING FREEDOM 2030 STRATEGIC INCOME DIVIDENDS PORTFOLIO PORTFOLIO SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $21,037 $23,065 $18,042 -------- ------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 4,802 1,478 7,887 Net realized gain on distributions 9,035 7,366 -- Net unrealized appreciation (depreciation) of investments during the year 92,114 21,005 95,339 -------- ------- -------- Net gain (loss) on investments 105,951 29,849 103,226 -------- ------- -------- Net increase (decrease) in net assets resulting from operations $126,988 $52,914 $121,268 ======== ======= ======== FRANKLIN FRANKLIN SMALL-MID CAP INCOME GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------- ------------------------------------ INVESTMENT INCOME: Dividends $1,142,039 $ -- ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (44,815) 44,709 Net realized gain on distributions -- 98,512 Net unrealized appreciation (depreciation) of investments during the year 1,023,916 (15,563) ---------- -------- Net gain (loss) on investments 979,101 127,658 ---------- -------- Net increase (decrease) in net assets resulting from operations $2,121,140 $127,658 ========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-33 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN SMALL CAP STRATEGIC TEMPLETON VIP VALUE INCOME MUTUAL SHARES SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $77,958 $1,059,196 $468,022 ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 328,226 179,193 54,815 Net realized gain on distributions -- 17,274 -- Net unrealized appreciation (depreciation) of investments during the year 1,326,664 603,215 2,426,350 ---------- ---------- ---------- Net gain (loss) on investments 1,654,890 799,682 2,481,165 ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations $1,732,848 $1,858,878 $2,949,187 ========== ========== ========== TEMPLETON DEVELOPING TEMPLETON MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------- INVESTMENT INCOME: Dividends $32,627 $119,887 -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 8,783 7,919 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 213,252 592,126 -------- -------- Net gain (loss) on investments 222,035 600,045 -------- -------- Net increase (decrease) in net assets resulting from operations $254,662 $719,932 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-34 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN TEMPLETON MUTUAL FLEX CAP GROWTH GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $90,309 $353,059 $ -- -------- ------------ ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (9,813) 11,729 15,386 Net realized gain on distributions -- 712,732 -- Net unrealized appreciation (depreciation) of investments during the year 807,072 575,613 26,983 -------- ------------ ------- Net gain (loss) on investments 797,259 1,300,074 42,369 -------- ------------ ------- Net increase (decrease) in net assets resulting from operations $887,568 $1,653,133 $42,369 ======== ============ ======= TEMPLETON HARTFORD GLOBAL BOND BALANCED SECURITIES FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (2) -------------------------------------- ---------------------------------------------- INVESTMENT INCOME: Dividends $1,336,586 $1,153,354 ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 195,262 (720,791) Net realized gain on distributions 33,555 -- Net unrealized appreciation (depreciation) of investments during the year 1,389,573 3,857,366 ------------ ------------ Net gain (loss) on investments 1,618,390 3,136,575 ------------ ------------ Net increase (decrease) in net assets resulting from operations $2,954,976 $4,289,929 ============ ============
(2) Formerly Hartford Advisers HLS Fund. Change effective June 29, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-35 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD TOTAL CAPITAL DIVIDEND RETURN BOND APPRECIATION AND GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $3,282,470 $1,502,463 $1,387,720 ---------- ----------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 275,383 (1,333,654) 348,905 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,193,526 16,334,384 5,640,106 ---------- ----------- ---------- Net gain (loss) on investments 2,468,909 15,000,730 5,989,011 ---------- ----------- ---------- Net increase (decrease) in net assets resulting from operations $5,751,379 $16,503,193 $7,376,731 ========== =========== ========== HARTFORD HARTFORD GLOBAL RESEARCH GLOBAL GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------- ----------------------------------- INVESTMENT INCOME: Dividends $1,898 $3,175 -------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,278 13,285 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 20,630 132,550 -------- --------- Net gain (loss) on investments 21,908 145,835 -------- --------- Net increase (decrease) in net assets resulting from operations $23,806 $149,010 ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-36 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED HARTFORD GROWTH EQUITY GROWTH OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $286,644 $ -- $ -- ---------- --------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 131,692 8,397 274,490 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,268,027 195,781 3,426,954 ---------- --------- ---------- Net gain (loss) on investments 2,399,719 204,178 3,701,444 ---------- --------- ---------- Net increase (decrease) in net assets resulting from operations $2,686,363 $204,178 $3,701,444 ========== ========= ========== HARTFORD HARTFORD HIGH YIELD INDEX HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------ -------------------------------------- INVESTMENT INCOME: Dividends $551,358 $862,799 --------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 62,350 (1,173,931) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 203,018 6,417,935 --------- ----------- Net gain (loss) on investments 265,368 5,244,004 --------- ----------- Net increase (decrease) in net assets resulting from operations $816,726 $6,106,803 ========= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-37 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD INTERNATIONAL SMALL/MID CAP HARTFORD OPPORTUNITIES EQUITY MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $382,766 $2,488 $248,082 ---------- ------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (193,860) 6,076 620,627 Net realized gain on distributions -- 56,179 -- Net unrealized appreciation (depreciation) of investments during the year 3,440,059 (4,986) 4,362,556 ---------- ------- ---------- Net gain (loss) on investments 3,246,199 57,269 4,983,183 ---------- ------- ---------- Net increase (decrease) in net assets resulting from operations $3,628,965 $59,757 $5,231,265 ========== ======= ========== HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------- ------------------------------------- INVESTMENT INCOME: Dividends $73,294 $ -- ---------- ----- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (207,831) -- Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,473,101 -- ---------- ----- Net gain (loss) on investments 1,265,270 -- ---------- ----- Net increase (decrease) in net assets resulting from operations $1,338,564 $ -- ========== =====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-38 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $826,913 ---------- ------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 602,680 4,358 (1,313,131) Net realized gain on distributions 1,009 -- -- Net unrealized appreciation (depreciation) of investments during the year 1,717,956 20,122 5,656,081 ---------- ------- ---------- Net gain (loss) on investments 2,321,645 24,480 4,342,950 ---------- ------- ---------- Net increase (decrease) in net assets resulting from operations $2,321,645 $24,480 $5,169,863 ========== ======= ========== HARTFORD U.S. GOVERNMENT HARTFORD SECURITIES VALUE HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ INVESTMENT INCOME: Dividends $213,674 $363,885 -------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 26,484 442,157 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 33,455 1,725,457 -------- ---------- Net gain (loss) on investments 59,939 2,167,614 -------- ---------- Net increase (decrease) in net assets resulting from operations $273,613 $2,531,499 ======== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-39 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT CALIBRATED LORD ABBETT FUNDAMENTAL DIVIDEND BOND-DEBENTURE EQUITY FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT (3) SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $1,996 $57,362 $445,521 ------- -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (629) 26,650 193,256 Net realized gain on distributions 5,569 -- 99,573 Net unrealized appreciation (depreciation) of investments during the year 20,131 159,292 106,905 ------- -------- -------- Net gain (loss) on investments 25,071 185,942 399,734 ------- -------- -------- Net increase (decrease) in net assets resulting from operations $27,067 $243,304 $845,255 ======= ======== ======== LORD ABBETT GROWTH AND INCOME MFS GROWTH FUND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------- INVESTMENT INCOME: Dividends $21,916 $ -- -------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (18,129) 6,058 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 244,612 33,429 -------- ------- Net gain (loss) on investments 226,483 39,487 -------- ------- Net increase (decrease) in net assets resulting from operations $248,399 $39,487 ======== =======
(3) Formerly Lord Abbett Capital Structure Fund. Change effective September 27, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-40 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
MFS INVESTORS MFS NEW MFS TOTAL TRUST SERIES DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $5,805 $ -- $276,119 -------- -------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 48,354 43,688 (25,670) Net realized gain on distributions -- 153,579 -- Net unrealized appreciation (depreciation) of investments during the year 48,590 113,660 776,821 -------- -------- ---------- Net gain (loss) on investments 96,944 310,927 751,151 -------- -------- ---------- Net increase (decrease) in net assets resulting from operations $102,749 $310,927 $1,027,270 ======== ======== ========== MFS VALUE MFS RESEARCH SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ INVESTMENT INCOME: Dividends $246,478 $504,614 ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 191,469 55,809 Net realized gain on distributions 114,260 120,713 Net unrealized appreciation (depreciation) of investments during the year 1,649,526 580,288 ---------- ---------- Net gain (loss) on investments 1,955,255 756,810 ---------- ---------- Net increase (decrease) in net assets resulting from operations $2,201,733 $1,261,424 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-41 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. UIF CORE PLUS UIF EMERGING EQUITY AND FIXED INCOME MARKETS DEBT INCOME FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $393 $12,940 $826 ------- -------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions -- (519) 62 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,016 13,064 3,897 ------- -------- ------- Net gain (loss) on investments 2,016 12,545 3,959 ------- -------- ------- Net increase (decrease) in net assets resulting from operations $2,409 $25,485 $4,785 ======= ======== ======= UIF EMERGING UIF MID CAP MARKETS EQUITY GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------- ----------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- ------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (24) 119,380 Net realized gain on distributions -- 237,403 Net unrealized appreciation (depreciation) of investments during the year 6,226 (209,431) ------- ---------- Net gain (loss) on investments 6,202 147,352 ------- ---------- Net increase (decrease) in net assets resulting from operations $6,202 $147,352 ======= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-42 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. MORGAN STANLEY -- MORGAN STANLEY -- AMERICAN FOCUS GROWTH FLEXIBLE INCOME VALUE FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT (4) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $19,123 $ -- $1,163 -------- ------ ------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (70,719) 420 (147) Net realized gain on distributions -- 708 -- Net unrealized appreciation (depreciation) of investments during the year 511,764 1,649 1,310 -------- ------ ------ Net gain (loss) on investments 441,045 2,777 1,163 -------- ------ ------ Net increase (decrease) in net assets resulting from operations $460,168 $2,777 $2,326 ======== ====== ====== MORGAN STANLEY -- INVESCO V.I. MONEY MARKET EQUALLY-WEIGHTED PORTFOLIO S&P 500 FUND SUB-ACCOUNT SUB-ACCOUNT (5) -------------------------------------- ------------------------------------------- INVESTMENT INCOME: Dividends $18 $508 --- ------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions -- (9) Net realized gain on distributions -- 4,722 Net unrealized appreciation (depreciation) of investments during the year -- (244) --- ------ Net gain (loss) on investments -- 4,469 --- ------ Net increase (decrease) in net assets resulting from operations $18 $4,977 === ======
(4) Formerly Invesco Van Kampen V.I. Mid Cap Value Fund. Change effective July 15, 2012. (5) Formerly Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-43 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
OPPENHEIMER CAPITAL OPPENHEIMER OPPENHEIMER APPRECIATION GLOBAL SECURITIES MAIN STREET FUND/VA FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $11,650 $37,467 $6,102 --------- --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 42,987 (28,882) 26,534 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 324,430 365,799 100,071 --------- --------- --------- Net gain (loss) on investments 367,417 336,917 126,605 --------- --------- --------- Net increase (decrease) in net assets resulting from operations $379,067 $374,384 $132,707 ========= ========= ========= OPPENHEIMER MAIN STREET OPPENHEIMER SMALL- & MID-CAP VALUE FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT ------------------------------------ ---------------------------------- INVESTMENT INCOME: Dividends $7,192 $698 --------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 183,574 3,315 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 171,215 382 --------- ------- Net gain (loss) on investments 354,789 3,697 --------- ------- Net increase (decrease) in net assets resulting from operations $361,981 $4,395 ========= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-44 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET GLOBAL INCOME FUND ALLOCATION FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $415,692 $4,722 $59,249 -------- ------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 9,807 (1,521) (331,241) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 389,222 62,461 866,193 -------- ------- --------- Net gain (loss) on investments 399,029 60,940 534,952 -------- ------- --------- Net increase (decrease) in net assets resulting from operations $814,721 $65,662 $594,201 ======== ======= ========= PUTNAM VT PUTNAM VT GROWTH AND GLOBAL HEALTH INCOME FUND CARE FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------- INVESTMENT INCOME: Dividends $219,587 $9,427 ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (455,041) 9,765 Net realized gain on distributions -- 50,480 Net unrealized appreciation (depreciation) of investments during the year 2,196,548 54,769 ---------- -------- Net gain (loss) on investments 1,741,507 115,014 ---------- -------- Net increase (decrease) in net assets resulting from operations $1,961,094 $124,441 ========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-45 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT HIGH PUTNAM VT INTERNATIONAL YIELD FUND INCOME FUND VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $782,655 $397,304 $60,471 ---------- --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (365,481) (56,794) (50,125) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,083,165 457,309 358,949 ---------- --------- --------- Net gain (loss) on investments 717,684 400,515 308,824 ---------- --------- --------- Net increase (decrease) in net assets resulting from operations $1,500,339 $797,819 $369,295 ========== ========= ========= PUTNAM VT PUTNAM VT INTERNATIONAL INTERNATIONAL EQUITY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------- ------------------------------------ INVESTMENT INCOME: Dividends $202,682 $4,964 ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (498,120) 3,575 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,971,447 43,626 ---------- -------- Net gain (loss) on investments 1,473,327 47,201 ---------- -------- Net increase (decrease) in net assets resulting from operations $1,676,009 $52,165 ========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-46 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT MONEY MULTI-CAP INVESTORS FUND MARKET FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $5,263 $4 $35,938 ------- --- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (630) -- (296,253) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 48,805 -- 1,386,976 ------- --- ---------- Net gain (loss) on investments 48,175 -- 1,090,723 ------- --- ---------- Net increase (decrease) in net assets resulting from operations $53,438 $4 $1,126,661 ======= === ========== PUTNAM VT PUTNAM VT SMALL CAP GEORGE PUTNAM VALUE FUND BALANCED FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------ --------------------------------------- INVESTMENT INCOME: Dividends $5,876 $4,757 -------- ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (76,290) (3,457) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 271,036 24,689 -------- ------- Net gain (loss) on investments 194,746 21,232 -------- ------- Net increase (decrease) in net assets resulting from operations $200,622 $25,989 ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-47 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT GLOBAL PUTNAM VT CAPITAL UTILITIES FUND VOYAGER FUND OPPORTUNITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $13,872 $46,265 $5,361 --------- ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (9,831) (617,489) 55,478 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 14,526 2,163,134 109,508 --------- ---------- -------- Net gain (loss) on investments 4,695 1,545,645 164,986 --------- ---------- -------- Net increase (decrease) in net assets resulting from operations $18,567 $1,591,910 $170,347 ========= ========== ======== INVESCO PUTNAM VT VAN KAMPEN V.I. EQUITY GROWTH AND INCOME FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------- INVESTMENT INCOME: Dividends $63,628 $19,234 -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 71,542 28,333 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 383,423 144,848 -------- -------- Net gain (loss) on investments 454,965 173,181 -------- -------- Net increase (decrease) in net assets resulting from operations $518,593 $192,415 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-48 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO INVESCO INVESCO VAN KAMPEN V.I. VAN KAMPEN V.I. VAN KAMPEN V.I. AMERICAN MID CAP COMSTOCK FUND FRANCHISE FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (6)(7)(8) SUB-ACCOUNT (6)(9) ----------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $89,231 $ -- $ -- ---------- -------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (39,055) 113,467 (595,762) Net realized gain on distributions -- -- 554 Net unrealized appreciation (depreciation) of investments during the year 976,962 180,730 807,226 ---------- -------- --------- Net gain (loss) on investments 937,907 294,197 212,018 ---------- -------- --------- Net increase (decrease) in net assets resulting from operations $1,027,138 $294,197 $212,018 ========== ======== =========
(6) Funded as of April 27, 2012. (7) Effective April 27, 2012 Invesco V.I. Capital Appreciation Fund merged with Invesco Van Kampen V.I. Capital Growth Fund. (8) Formerly Invesco Van Kampen V.I. Capital Growth Fund. Change effective April 30, 2012. (9) Effective April 27, 2012 Invesco V.I. Capital Development Fund merged with Invesco Van Kampen V.I. Mid Cap Growth Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-49 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL SMALL/MID CAP STRATEGY PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $12,907 $89,772 $13,854 Net realized gain (loss) on security transactions 6,785 (388,778) 52,447 Net realized gain on distributions -- -- 153,244 Net unrealized appreciation (depreciation) of investments during the year 57,847 1,161,920 580,605 -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 77,539 862,914 800,150 -------- ---------- ---------- UNIT TRANSACTIONS: Purchases 160,959 785,860 716,396 Net transfers 78,608 (82,607) 169,440 Surrenders for benefit payments and fees -- (232,291) (146,059) Other transactions 14 (382) 69 Death benefits -- (27,508) (10,188) Net loan activity (24,930) (21,873) (19,027) Cost of insurance and other fees (71,622) (480,926) (447,301) -------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 143,029 (59,727) 263,330 -------- ---------- ---------- Net increase (decrease) in net assets 220,568 803,187 1,063,480 NET ASSETS: Beginning of year 510,257 5,926,185 4,218,732 -------- ---------- ---------- End of year $730,825 $6,729,372 $5,282,212 ======== ========== ========== ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO GROWTH PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------------------- OPERATIONS: Net investment income (loss) $298 $19,459 Net realized gain (loss) on security transactions 388 (71,789) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,518 243,155 ------- ---------- Net increase (decrease) in net assets resulting from operations 2,204 190,825 ------- ---------- UNIT TRANSACTIONS: Purchases 4,791 148,757 Net transfers 3,472 (232,783) Surrenders for benefit payments and fees -- (15,786) Other transactions 1 141 Death benefits -- -- Net loan activity -- (55) Cost of insurance and other fees (3,471) (93,807) ------- ---------- Net increase (decrease) in net assets resulting from unit transactions 4,793 (193,533) ------- ---------- Net increase (decrease) in net assets 6,997 (2,708) NET ASSETS: Beginning of year 11,566 1,311,075 ------- ---------- End of year $18,563 $1,308,367 ======= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-50 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. CORE HIGH INTERNATIONAL EQUITY FUND YIELD FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $14,502 $759 $131,297 Net realized gain (loss) on security transactions 63,184 13 75,645 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 123,417 1,512 1,058,068 ---------- ------- ---------- Net increase (decrease) in net assets resulting from operations 201,103 2,284 1,265,010 ---------- ------- ---------- UNIT TRANSACTIONS: Purchases 179,952 1,034 1,409,023 Net transfers (201,801) -- 196,846 Surrenders for benefit payments and fees (73,854) -- (171,307) Other transactions (35) -- 259 Death benefits -- -- (8,376) Net loan activity (14) -- (26,330) Cost of insurance and other fees (99,264) (377) (880,307) ---------- ------- ---------- Net increase (decrease) in net assets resulting from unit transactions (195,016) 657 519,808 ---------- ------- ---------- Net increase (decrease) in net assets 6,087 2,941 1,784,818 NET ASSETS: Beginning of year 1,521,695 13,167 7,865,517 ---------- ------- ---------- End of year $1,527,782 $16,108 $9,650,335 ========== ======= ========== INVESCO V.I. INVESCO V.I. MID CAP CORE SMALL CAP EQUITY FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $3,968 $ -- Net realized gain (loss) on security transactions (8,953) 46,956 Net realized gain on distributions 51,580 -- Net unrealized appreciation (depreciation) of investments during the year 565,065 664,022 ---------- ---------- Net increase (decrease) in net assets resulting from operations 611,660 710,978 ---------- ---------- UNIT TRANSACTIONS: Purchases 502,042 908,242 Net transfers 214,662 272,822 Surrenders for benefit payments and fees (428,619) (136,556) Other transactions 60 (210) Death benefits (12,067) (13,152) Net loan activity 3,986 (73,339) Cost of insurance and other fees (338,497) (497,908) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (58,433) 459,899 ---------- ---------- Net increase (decrease) in net assets 553,227 1,170,877 NET ASSETS: Beginning of year 5,551,429 4,835,906 ---------- ---------- End of year $6,104,656 $6,006,783 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-51 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. BALANCED RISK INVESCO V.I. GLOBAL ALLOCATION DIVERSIFIED REAL ESTATE FUND FUND DIVIDEND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $2,772 $26,040 $816 Net realized gain (loss) on security transactions 4,044 23,605 21 Net realized gain on distributions -- 11,493 -- Net unrealized appreciation (depreciation) of investments during the year 103,114 190,005 6,231 --------- ----------- -------- Net increase (decrease) in net assets resulting from operations 109,930 251,143 7,068 --------- ----------- -------- UNIT TRANSACTIONS: Purchases 144,627 594,265 5,634 Net transfers 66,381 1,533,576 -- Surrenders for benefit payments and fees -- (8,310) -- Other transactions (22) (39) -- Death benefits -- (8,072) -- Net loan activity (1,831) (987) -- Cost of insurance and other fees (60,115) (363,685) (2,043) --------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions 149,040 1,746,748 3,591 --------- ----------- -------- Net increase (decrease) in net assets 258,970 1,997,891 10,659 NET ASSETS: Beginning of year 336,790 1,426,806 37,414 --------- ----------- -------- End of year $595,760 $3,424,697 $48,073 ========= =========== ======== ALLIANCEBERNSTEIN VPS AMERICAN FUNDS REAL ESTATE GLOBAL INVESTMENT PORTFOLIO BOND FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------- OPERATIONS: Net investment income (loss) $5,095 $43,400 Net realized gain (loss) on security transactions 2,389 8,797 Net realized gain on distributions 70,121 17,870 Net unrealized appreciation (depreciation) of investments during the year 27,058 48,017 --------- ----------- Net increase (decrease) in net assets resulting from operations 104,663 118,084 --------- ----------- UNIT TRANSACTIONS: Purchases 166,523 315,763 Net transfers 184,779 115,347 Surrenders for benefit payments and fees (11,124) (43,692) Other transactions 61 523 Death benefits -- -- Net loan activity (4,370) (803) Cost of insurance and other fees (77,578) (231,150) --------- ----------- Net increase (decrease) in net assets resulting from unit transactions 258,291 155,988 --------- ----------- Net increase (decrease) in net assets 362,954 274,072 NET ASSETS: Beginning of year 429,286 1,838,472 --------- ----------- End of year $792,240 $2,112,544 ========= ===========
(1) Formerly Invesco V.I. Dividend Growth Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-52 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET INCOME AND INCOME FUND ALLOCATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $97,747 $621,966 $387,593 Net realized gain (loss) on security transactions 38,891 214,115 11,056 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 463,579 3,922,393 1,984,243 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 600,217 4,758,474 2,382,892 ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 680,220 2,942,984 1,769,409 Net transfers 89,626 (597,091) 479,662 Surrenders for benefit payments and fees (89,554) (1,045,183) (796,956) Other transactions 1,666 954 28 Death benefits -- (25,668) (65,219) Net loan activity (15,103) (71,695) (5,443) Cost of insurance and other fees (474,101) (2,178,110) (1,258,677) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 192,754 (973,809) 122,804 ----------- ----------- ----------- Net increase (decrease) in net assets 792,971 3,784,665 2,505,696 NET ASSETS: Beginning of year 3,292,508 29,576,879 17,157,065 ----------- ----------- ----------- End of year $4,085,479 $33,361,544 $19,662,761 =========== =========== =========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL BOND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $885,013 $189,554 Net realized gain (loss) on security transactions 136,117 380,607 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 836,795 3,552,569 ----------- ----------- Net increase (decrease) in net assets resulting from operations 1,857,925 4,122,730 ----------- ----------- UNIT TRANSACTIONS: Purchases 4,054,113 1,829,903 Net transfers (685,217) (581,392) Surrenders for benefit payments and fees (1,496,602) (723,413) Other transactions 108 (917) Death benefits (184,144) (2,474) Net loan activity (72,301) 8,521 Cost of insurance and other fees (2,904,934) (1,172,053) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (1,288,977) (641,825) ----------- ----------- Net increase (decrease) in net assets 568,948 3,480,905 NET ASSETS: Beginning of year 35,118,217 18,730,088 ----------- ----------- End of year $35,687,165 $22,210,993 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-53 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $655,693 $1,101,596 $580,527 Net realized gain (loss) on security transactions 1,073,150 365,820 (44,697) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 11,670,615 9,148,071 5,803,994 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 13,399,458 10,615,487 6,339,824 ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 7,676,343 5,275,187 4,506,086 Net transfers (3,300,265) (1,144,226) (805,679) Surrenders for benefit payments and fees (3,387,791) (2,000,833) (1,284,324) Other transactions 1,342 1,117 7,838 Death benefits (128,799) (142,279) (42,460) Net loan activity (144,353) (117,636) (74,639) Cost of insurance and other fees (5,906,921) (4,183,647) (2,985,598) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (5,190,444) (2,312,317) (678,776) ----------- ----------- ----------- Net increase (decrease) in net assets 8,209,014 8,303,170 5,661,048 NET ASSETS: Beginning of year 76,371,260 61,792,882 35,226,826 ----------- ----------- ----------- End of year $84,580,274 $70,096,052 $40,887,874 =========== =========== =========== AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL NEW WORLD FUND CAPITALIZATION FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------- OPERATIONS: Net investment income (loss) $165,163 $191,617 Net realized gain (loss) on security transactions 466,656 308,028 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,975,654 1,875,014 ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,607,473 2,374,659 ----------- ----------- UNIT TRANSACTIONS: Purchases 1,441,449 1,301,919 Net transfers (191,387) (751,197) Surrenders for benefit payments and fees (1,109,248) (372,906) Other transactions (127) 336 Death benefits (58,324) (20,677) Net loan activity (21,429) (29,390) Cost of insurance and other fees (972,610) (944,121) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (911,676) (816,036) ----------- ----------- Net increase (decrease) in net assets 1,695,797 1,558,623 NET ASSETS: Beginning of year 14,822,781 13,396,066 ----------- ----------- End of year $16,518,578 $14,954,689 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-54 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP ASSET MANAGER EQUITY-INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $10,419 $478,707 $944 Net realized gain (loss) on security transactions (21,982) (155,572) 1,943 Net realized gain on distributions 4,989 967,381 -- Net unrealized appreciation (depreciation) of investments during the year 90,508 1,107,647 28,701 --------- ----------- -------- Net increase (decrease) in net assets resulting from operations 83,934 2,398,163 31,588 --------- ----------- -------- UNIT TRANSACTIONS: Purchases -- 1,008,685 18,048 Net transfers (26,281) (259,067) 10,337 Surrenders for benefit payments and fees (17,339) (342,682) -- Other transactions (11) (406) 2 Death benefits -- (49,972) -- Net loan activity -- (43,648) -- Cost of insurance and other fees (79,201) (789,096) (20,067) --------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (122,832) (476,186) 8,320 --------- ----------- -------- Net increase (decrease) in net assets (38,898) 1,921,977 39,908 NET ASSETS: Beginning of year 719,530 13,968,283 224,539 --------- ----------- -------- End of year $680,632 $15,890,260 $264,447 ========= =========== ======== FIDELITY VIP FIDELITY VIP CONTRAFUND OVERSEAS PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $195,193 $7,610 Net realized gain (loss) on security transactions (18,942) (9,977) Net realized gain on distributions -- 1,310 Net unrealized appreciation (depreciation) of investments during the year 2,285,277 74,383 ----------- -------- Net increase (decrease) in net assets resulting from operations 2,461,528 73,326 ----------- -------- UNIT TRANSACTIONS: Purchases 2,129,590 -- Net transfers (31,583) -- Surrenders for benefit payments and fees (441,202) (19,919) Other transactions 3,000 -- Death benefits (95,830) -- Net loan activity (89,592) -- Cost of insurance and other fees (1,609,096) (14,666) ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (134,713) (34,585) ----------- -------- Net increase (decrease) in net assets 2,326,815 38,741 NET ASSETS: Beginning of year 15,333,565 366,798 ----------- -------- End of year $17,660,380 $405,539 =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-55 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL MID CAP VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $60,666 $190 $613 Net realized gain (loss) on security transactions 147,016 11,054 4,765 Net realized gain on distributions 1,257,794 -- -- Net unrealized appreciation (depreciation) of investments during the year 500,607 1,922 13,449 ----------- --------- --------- Net increase (decrease) in net assets resulting from operations 1,966,083 13,166 18,827 ----------- --------- --------- UNIT TRANSACTIONS: Purchases 2,225,306 8,546 21,910 Net transfers 260,621 (617) 16,991 Surrenders for benefit payments and fees (556,744) (10,732) -- Other transactions (351) (1) 3 Death benefits (33,805) -- -- Net loan activity 31,115 -- (162) Cost of insurance and other fees (1,473,027) (11,392) (10,426) ----------- --------- --------- Net increase (decrease) in net assets resulting from unit transactions 453,115 (14,196) 28,316 ----------- --------- --------- Net increase (decrease) in net assets 2,419,198 (1,030) 47,143 NET ASSETS: Beginning of year 13,380,003 55,682 81,951 ----------- --------- --------- End of year $15,799,201 $54,652 $129,094 =========== ========= ========= FIDELITY VIP FIDELITY VIP FREEDOM 2010 FREEDOM 2020 PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------- ------------------------------------ OPERATIONS: Net investment income (loss) $8,328 $14,608 Net realized gain (loss) on security transactions 12,550 25,360 Net realized gain on distributions 7,241 9,036 Net unrealized appreciation (depreciation) of investments during the year 25,109 42,096 --------- --------- Net increase (decrease) in net assets resulting from operations 53,228 91,100 --------- --------- UNIT TRANSACTIONS: Purchases 39,409 191,984 Net transfers (10,772) 6,654 Surrenders for benefit payments and fees (50,326) (9,441) Other transactions 2 66 Death benefits -- -- Net loan activity -- (79) Cost of insurance and other fees (20,442) (68,925) --------- --------- Net increase (decrease) in net assets resulting from unit transactions (42,129) 120,259 --------- --------- Net increase (decrease) in net assets 11,099 211,359 NET ASSETS: Beginning of year 498,398 601,940 --------- --------- End of year $509,497 $813,299 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-56 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FIDELITY VIP FIDELITY VIP RISING FREEDOM 2030 STRATEGIC INCOME DIVIDENDS PORTFOLIO PORTFOLIO SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $21,037 $23,065 $18,042 Net realized gain (loss) on security transactions 4,802 1,478 7,887 Net realized gain on distributions 9,035 7,366 -- Net unrealized appreciation (depreciation) of investments during the year 92,114 21,005 95,339 ---------- --------- ---------- Net increase (decrease) in net assets resulting from operations 126,988 52,914 121,268 ---------- --------- ---------- UNIT TRANSACTIONS: Purchases 258,381 208,141 266,311 Net transfers 163,829 278,185 537,524 Surrenders for benefit payments and fees -- (1,064) (19,482) Other transactions 24 -- 143 Death benefits -- -- -- Net loan activity (17) (3,237) (1,285) Cost of insurance and other fees (127,974) (183,750) (183,157) ---------- --------- ---------- Net increase (decrease) in net assets resulting from unit transactions 294,243 298,275 600,054 ---------- --------- ---------- Net increase (decrease) in net assets 421,231 351,189 721,322 NET ASSETS: Beginning of year 708,270 359,334 668,591 ---------- --------- ---------- End of year $1,129,501 $710,523 $1,389,913 ========== ========= ========== FRANKLIN FRANKLIN SMALL-MID CAP INCOME GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $1,142,039 $ -- Net realized gain (loss) on security transactions (44,815) 44,709 Net realized gain on distributions -- 98,512 Net unrealized appreciation (depreciation) of investments during the year 1,023,916 (15,563) ----------- ---------- Net increase (decrease) in net assets resulting from operations 2,121,140 127,658 ----------- ---------- UNIT TRANSACTIONS: Purchases 2,266,698 297,503 Net transfers 185,140 (172,993) Surrenders for benefit payments and fees (347,916) (28,169) Other transactions (84) (7) Death benefits (35,431) (4) Net loan activity (85,669) (120) Cost of insurance and other fees (1,646,497) (159,495) ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions 336,241 (63,285) ----------- ---------- Net increase (decrease) in net assets 2,457,381 64,373 NET ASSETS: Beginning of year 16,754,536 1,213,002 ----------- ---------- End of year $19,211,917 $1,277,375 =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-57 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN SMALL CAP STRATEGIC TEMPLETON VIP VALUE INCOME MUTUAL SHARES SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $77,958 $1,059,196 $468,022 Net realized gain (loss) on security transactions 328,226 179,193 54,815 Net realized gain on distributions -- 17,274 -- Net unrealized appreciation (depreciation) of investments during the year 1,326,664 603,215 2,426,350 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 1,732,848 1,858,878 2,949,187 ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 1,227,212 2,176,715 3,377,499 Net transfers (858,571) 40,788 (2,035) Surrenders for benefit payments and fees (407,709) (948,017) (618,124) Other transactions (461) 332 (74) Death benefits (11,703) (48,780) (69,556) Net loan activity (21,290) (77,071) 17,803 Cost of insurance and other fees (797,303) (1,486,243) (2,179,095) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (869,825) (342,276) 526,418 ----------- ----------- ----------- Net increase (decrease) in net assets 863,023 1,516,602 3,475,605 NET ASSETS: Beginning of year 9,829,007 14,033,725 20,518,187 ----------- ----------- ----------- End of year $10,692,030 $15,550,327 $23,993,792 =========== =========== =========== TEMPLETON DEVELOPING TEMPLETON MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $32,627 $119,887 Net realized gain (loss) on security transactions 8,783 7,919 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 213,252 592,126 ---------- ---------- Net increase (decrease) in net assets resulting from operations 254,662 719,932 ---------- ---------- UNIT TRANSACTIONS: Purchases 407,430 779,588 Net transfers 211,728 496,470 Surrenders for benefit payments and fees (41,526) (136,822) Other transactions 41 (47) Death benefits -- (3,504) Net loan activity (10,604) (62,880) Cost of insurance and other fees (270,194) (488,676) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 296,875 584,129 ---------- ---------- Net increase (decrease) in net assets 551,537 1,304,061 NET ASSETS: Beginning of year 1,699,415 3,365,535 ---------- ---------- End of year $2,250,952 $4,669,596 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-58 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
FRANKLIN TEMPLETON MUTUAL FLEX CAP GROWTH GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $90,309 $353,059 $ -- Net realized gain (loss) on security transactions (9,813) 11,729 15,386 Net realized gain on distributions -- 712,732 -- Net unrealized appreciation (depreciation) of investments during the year 807,072 575,613 26,983 ---------- ----------- -------- Net increase (decrease) in net assets resulting from operations 887,568 1,653,133 42,369 ---------- ----------- -------- UNIT TRANSACTIONS: Purchases 820,645 1,414,742 82,547 Net transfers (14,609) 206,037 (8,723) Surrenders for benefit payments and fees (182,131) (632,763) (3,528) Other transactions (93) 1,835 -- Death benefits (13,024) (33,952) -- Net loan activity (6,732) (69,884) (4,927) Cost of insurance and other fees (539,401) (872,316) (50,796) ---------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions 64,655 13,699 14,573 ---------- ----------- -------- Net increase (decrease) in net assets 952,223 1,666,832 56,942 NET ASSETS: Beginning of year 4,047,261 12,298,911 439,851 ---------- ----------- -------- End of year $4,999,484 $13,965,743 $496,793 ========== =========== ======== TEMPLETON HARTFORD GLOBAL BOND BALANCED SECURITIES FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (2) -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $1,336,586 $1,153,354 Net realized gain (loss) on security transactions 195,262 (720,791) Net realized gain on distributions 33,555 -- Net unrealized appreciation (depreciation) of investments during the year 1,389,573 3,857,366 ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,954,976 4,289,929 ----------- ----------- UNIT TRANSACTIONS: Purchases 2,701,233 2,457,177 Net transfers 845,372 (193,093) Surrenders for benefit payments and fees (698,171) (808,354) Other transactions (633) (1,004) Death benefits (51,369) (83,720) Net loan activity (66,445) (97,996) Cost of insurance and other fees (2,015,446) (2,157,054) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 714,541 (884,044) ----------- ----------- Net increase (decrease) in net assets 3,669,517 3,405,885 NET ASSETS: Beginning of year 19,121,827 35,957,376 ----------- ----------- End of year $22,791,344 $39,363,261 =========== ===========
(2) Formerly Hartford Advisers HLS Fund. Change effective June 29, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-59 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD TOTAL CAPITAL DIVIDEND RETURN BOND APPRECIATION AND GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $3,282,470 $1,502,463 $1,387,720 Net realized gain (loss) on security transactions 275,383 (1,333,654) 348,905 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,193,526 16,334,384 5,640,106 ----------- ------------ ----------- Net increase (decrease) in net assets resulting from operations 5,751,379 16,503,193 7,376,731 ----------- ------------ ----------- UNIT TRANSACTIONS: Purchases 8,426,079 9,267,416 5,201,926 Net transfers 2,667,330 (2,760,402) (20,277) Surrenders for benefit payments and fees (2,045,527) (3,016,803) (2,032,161) Other transactions (460) 7,304 (508) Death benefits (184,339) (176,384) (211,903) Net loan activity (121,443) (342,467) (36,789) Cost of insurance and other fees (6,223,904) (7,053,318) (3,893,532) ----------- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions 2,517,736 (4,074,654) (993,244) ----------- ------------ ----------- Net increase (decrease) in net assets 8,269,115 12,428,539 6,383,487 NET ASSETS: Beginning of year 74,639,363 91,203,019 54,045,185 ----------- ------------ ----------- End of year $82,908,478 $103,631,558 $60,428,672 =========== ============ =========== HARTFORD HARTFORD GLOBAL RESEARCH GLOBAL GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $1,898 $3,175 Net realized gain (loss) on security transactions 1,278 13,285 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 20,630 132,550 --------- ---------- Net increase (decrease) in net assets resulting from operations 23,806 149,010 --------- ---------- UNIT TRANSACTIONS: Purchases 24,002 29,603 Net transfers 28,282 50,604 Surrenders for benefit payments and fees -- (156,894) Other transactions 1 3 Death benefits (242) -- Net loan activity (4) (83,319) Cost of insurance and other fees (17,137) (62,496) --------- ---------- Net increase (decrease) in net assets resulting from unit transactions 34,902 (222,499) --------- ---------- Net increase (decrease) in net assets 58,708 (73,489) NET ASSETS: Beginning of year 118,914 705,615 --------- ---------- End of year $177,622 $632,126 ========= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-60 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED HARTFORD GROWTH EQUITY GROWTH OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $286,644 $ -- $ -- Net realized gain (loss) on security transactions 131,692 8,397 274,490 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,268,027 195,781 3,426,954 ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations 2,686,363 204,178 3,701,444 ----------- ---------- ----------- UNIT TRANSACTIONS: Purchases 2,650,651 248,616 2,696,949 Net transfers 503,281 101,348 (220,034) Surrenders for benefit payments and fees (541,495) (28,581) (496,854) Other transactions (1,139) 7 (64) Death benefits (75,550) (692) (12,888) Net loan activity (122,009) (931) (80,784) Cost of insurance and other fees (1,700,987) (149,334) (1,699,876) ----------- ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 712,752 170,433 186,449 ----------- ---------- ----------- Net increase (decrease) in net assets 3,399,115 374,611 3,887,893 NET ASSETS: Beginning of year 15,030,108 1,070,661 13,612,415 ----------- ---------- ----------- End of year $18,429,223 $1,445,272 $17,500,308 =========== ========== =========== HARTFORD HARTFORD HIGH YIELD INDEX HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $551,358 $862,799 Net realized gain (loss) on security transactions 62,350 (1,173,931) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 203,018 6,417,935 ---------- ----------- Net increase (decrease) in net assets resulting from operations 816,726 6,106,803 ---------- ----------- UNIT TRANSACTIONS: Purchases 1,188,278 1,964,055 Net transfers 1,531,212 (1,269,675) Surrenders for benefit payments and fees (286,000) (986,600) Other transactions 391 (462) Death benefits (5,245) (98,965) Net loan activity (101,598) 907 Cost of insurance and other fees (734,004) (1,917,354) ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 1,593,034 (2,308,094) ---------- ----------- Net increase (decrease) in net assets 2,409,760 3,798,709 NET ASSETS: Beginning of year 5,002,728 39,652,278 ---------- ----------- End of year $7,412,488 $43,450,987 ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-61 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD INTERNATIONAL SMALL/MID CAP HARTFORD OPPORTUNITIES EQUITY MIDCAP HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $382,766 $2,488 $248,082 Net realized gain (loss) on security transactions (193,860) 6,076 620,627 Net realized gain on distributions -- 56,179 -- Net unrealized appreciation (depreciation) of investments during the year 3,440,059 (4,986) 4,362,556 ----------- --------- ----------- Net increase (decrease) in net assets resulting from operations 3,628,965 59,757 5,231,265 ----------- --------- ----------- UNIT TRANSACTIONS: Purchases 1,647,775 43,107 1,118,641 Net transfers (937,847) 4,779 (969,931) Surrenders for benefit payments and fees (735,779) (2,347) (1,186,346) Other transactions (1,581) 1 (1,154) Death benefits (51,806) -- (88,747) Net loan activity 94,063 (236) (1,117) Cost of insurance and other fees (1,139,379) (38,092) (973,586) ----------- --------- ----------- Net increase (decrease) in net assets resulting from unit transactions (1,124,554) 7,212 (2,102,240) ----------- --------- ----------- Net increase (decrease) in net assets 2,504,411 66,969 3,129,025 NET ASSETS: Beginning of year 18,287,499 368,207 27,553,053 ----------- --------- ----------- End of year $20,791,910 $435,176 $30,682,078 =========== ========= =========== HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $73,294 $ -- Net realized gain (loss) on security transactions (207,831) -- Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,473,101 -- ---------- ------------ Net increase (decrease) in net assets resulting from operations 1,338,564 -- ---------- ------------ UNIT TRANSACTIONS: Purchases 263,757 22,317,500 Net transfers (283,432) 2,981,947 Surrenders for benefit payments and fees (185,314) (19,232,684) Other transactions 3,048 -- Death benefits (3,948) (99,081) Net loan activity (15,495) (2,559,995) Cost of insurance and other fees (242,503) (4,512,023) ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions (463,887) (1,104,336) ---------- ------------ Net increase (decrease) in net assets 874,677 (1,104,336) NET ASSETS: Beginning of year 5,500,945 49,908,777 ---------- ------------ End of year $6,375,622 $48,804,441 ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-62 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD SMALL COMPANY SMALLCAP GROWTH STOCK HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $ -- $826,913 Net realized gain (loss) on security transactions 602,680 4,358 (1,313,131) Net realized gain on distributions 1,009 -- -- Net unrealized appreciation (depreciation) of investments during the year 1,717,956 20,122 5,656,081 ----------- --------- ----------- Net increase (decrease) in net assets resulting from operations 2,321,645 24,480 5,169,863 ----------- --------- ----------- UNIT TRANSACTIONS: Purchases 719,764 27,389 2,348,973 Net transfers (718,636) 786 (1,092,760) Surrenders for benefit payments and fees (504,017) (938) (1,479,892) Other transactions (260) 1 (2,224) Death benefits (26,147) -- (168,733) Net loan activity (19,536) (668) (90,422) Cost of insurance and other fees (672,675) (15,975) (1,990,438) ----------- --------- ----------- Net increase (decrease) in net assets resulting from unit transactions (1,221,507) 10,595 (2,475,496) ----------- --------- ----------- Net increase (decrease) in net assets 1,100,138 35,075 2,694,367 NET ASSETS: Beginning of year 15,221,783 137,809 36,440,833 ----------- --------- ----------- End of year $16,321,921 $172,884 $39,135,200 =========== ========= =========== HARTFORD U.S. GOVERNMENT HARTFORD SECURITIES VALUE HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $213,674 $363,885 Net realized gain (loss) on security transactions 26,484 442,157 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 33,455 1,725,457 ---------- ----------- Net increase (decrease) in net assets resulting from operations 273,613 2,531,499 ---------- ----------- UNIT TRANSACTIONS: Purchases 643,916 1,462,798 Net transfers (299,666) (1,168,062) Surrenders for benefit payments and fees (421,858) (1,014,732) Other transactions (644) 273 Death benefits (23,378) (23,397) Net loan activity 33,652 (120,633) Cost of insurance and other fees (505,600) (1,119,563) ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions (573,578) (1,983,316) ---------- ----------- Net increase (decrease) in net assets (299,965) 548,183 NET ASSETS: Beginning of year 7,992,131 15,523,309 ---------- ----------- End of year $7,692,166 $16,071,492 ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-63 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT CALIBRATED LORD ABBETT FUNDAMENTAL DIVIDEND BOND-DEBENTURE EQUITY FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT (3) SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,996 $57,362 $445,521 Net realized gain (loss) on security transactions (629) 26,650 193,256 Net realized gain on distributions 5,569 -- 99,573 Net unrealized appreciation (depreciation) of investments during the year 20,131 159,292 106,905 --------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 27,067 243,304 845,255 --------- ---------- ---------- UNIT TRANSACTIONS: Purchases 106,775 224,986 762,835 Net transfers 48,936 (267,584) 836,033 Surrenders for benefit payments and fees (299) (124,900) (748,424) Other transactions 85 (29) 618 Death benefits -- -- (11,777) Net loan activity (14) 934 (22,187) Cost of insurance and other fees (49,283) (148,217) (585,537) --------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 106,200 (314,810) 231,561 --------- ---------- ---------- Net increase (decrease) in net assets 133,267 (71,506) 1,076,816 NET ASSETS: Beginning of year 238,347 1,978,250 6,527,019 --------- ---------- ---------- End of year $371,614 $1,906,744 $7,603,835 ========= ========== ========== LORD ABBETT GROWTH AND INCOME MFS GROWTH FUND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $21,916 $ -- Net realized gain (loss) on security transactions (18,129) 6,058 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 244,612 33,429 ---------- --------- Net increase (decrease) in net assets resulting from operations 248,399 39,487 ---------- --------- UNIT TRANSACTIONS: Purchases 265,827 119,008 Net transfers 92,383 202,026 Surrenders for benefit payments and fees (230,499) (38) Other transactions (28) 8 Death benefits -- -- Net loan activity (8,904) (221) Cost of insurance and other fees (214,336) (50,279) ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (95,557) 270,504 ---------- --------- Net increase (decrease) in net assets 152,842 309,991 NET ASSETS: Beginning of year 2,103,955 163,753 ---------- --------- End of year $2,256,797 $473,744 ========== =========
(3) Formerly Lord Abbett Capital Structure Fund. Change effective September 27, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-64 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
MFS INVESTORS MFS NEW MFS TOTAL TRUST SERIES DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $5,805 $ -- $276,119 Net realized gain (loss) on security transactions 48,354 43,688 (25,670) Net realized gain on distributions -- 153,579 -- Net unrealized appreciation (depreciation) of investments during the year 48,590 113,660 776,821 -------- ---------- ----------- Net increase (decrease) in net assets resulting from operations 102,749 310,927 1,027,270 -------- ---------- ----------- UNIT TRANSACTIONS: Purchases 59,492 75,418 1,098,214 Net transfers 32,484 (360,876) 407,921 Surrenders for benefit payments and fees (627) (110,801) (267,719) Other transactions (13) 1,272 314 Death benefits -- -- (3,606) Net loan activity 65 71,754 (438) Cost of insurance and other fees (74,606) (83,300) (758,414) -------- ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 16,795 (406,533) 476,272 -------- ---------- ----------- Net increase (decrease) in net assets 119,544 (95,606) 1,503,542 NET ASSETS: Beginning of year 493,349 1,677,460 8,898,221 -------- ---------- ----------- End of year $612,893 $1,581,854 $10,401,763 ======== ========== =========== MFS VALUE MFS RESEARCH SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $246,478 $504,614 Net realized gain (loss) on security transactions 191,469 55,809 Net realized gain on distributions 114,260 120,713 Net unrealized appreciation (depreciation) of investments during the year 1,649,526 580,288 ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,201,733 1,261,424 ----------- ----------- UNIT TRANSACTIONS: Purchases 2,773,348 2,730,280 Net transfers 65,818 2,937,776 Surrenders for benefit payments and fees (389,441) (395,742) Other transactions 207 (1,170) Death benefits (19,545) (24,095) Net loan activity (51,484) (5,433) Cost of insurance and other fees (1,679,430) (1,737,496) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 699,473 3,504,120 ----------- ----------- Net increase (decrease) in net assets 2,901,206 4,765,544 NET ASSETS: Beginning of year 13,203,876 15,501,359 ----------- ----------- End of year $16,105,082 $20,266,903 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-65 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. UIF CORE PLUS UIF EMERGING EQUITY AND FIXED INCOME MARKETS DEBT INCOME FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $393 $12,940 $826 Net realized gain (loss) on security transactions -- (519) 62 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,016 13,064 3,897 ------- -------- ------- Net increase (decrease) in net assets resulting from operations 2,409 25,485 4,785 ------- -------- ------- UNIT TRANSACTIONS: Purchases 2,714 9,576 -- Net transfers -- -- -- Surrenders for benefit payments and fees -- -- -- Other transactions -- -- -- Death benefits -- -- -- Net loan activity -- -- -- Cost of insurance and other fees (772) (11,738) (1,227) ------- -------- ------- Net increase (decrease) in net assets resulting from unit transactions 1,942 (2,162) (1,227) ------- -------- ------- Net increase (decrease) in net assets 4,351 23,323 3,558 NET ASSETS: Beginning of year 18,793 273,209 27,203 ------- -------- ------- End of year $23,144 $296,532 $30,761 ======= ======== ======= UIF EMERGING UIF MID CAP MARKETS EQUITY GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------- ----------------------------------- OPERATIONS: Net investment income (loss) $ -- $ -- Net realized gain (loss) on security transactions (24) 119,380 Net realized gain on distributions -- 237,403 Net unrealized appreciation (depreciation) of investments during the year 6,226 (209,431) ------- ---------- Net increase (decrease) in net assets resulting from operations 6,202 147,352 ------- ---------- UNIT TRANSACTIONS: Purchases 446 220,990 Net transfers -- (21,057) Surrenders for benefit payments and fees -- (133,348) Other transactions -- (611) Death benefits -- (1,040) Net loan activity -- (8,492) Cost of insurance and other fees (1,313) (176,575) ------- ---------- Net increase (decrease) in net assets resulting from unit transactions (867) (120,133) ------- ---------- Net increase (decrease) in net assets 5,335 27,219 NET ASSETS: Beginning of year 31,574 1,848,208 ------- ---------- End of year $36,909 $1,875,427 ======= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-66 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. MORGAN STANLEY -- MORGAN STANLEY -- AMERICAN FOCUS GROWTH FLEXIBLE INCOME VALUE FUND PORTFOLIO PORTFOLIO SUB-ACCOUNT (4) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $19,123 $ -- $1,163 Net realized gain (loss) on security transactions (70,719) 420 (147) Net realized gain on distributions -- 708 -- Net unrealized appreciation (depreciation) of investments during the year 511,764 1,649 1,310 ---------- ------- ------- Net increase (decrease) in net assets resulting from operations 460,168 2,777 2,326 ---------- ------- ------- UNIT TRANSACTIONS: Purchases 233,682 2,417 2,417 Net transfers (68,665) -- -- Surrenders for benefit payments and fees (111,788) -- -- Other transactions (252) -- -- Death benefits (7,842) -- -- Net loan activity (526) -- -- Cost of insurance and other fees (145,844) (1,182) (1,049) ---------- ------- ------- Net increase (decrease) in net assets resulting from unit transactions (101,235) 1,235 1,368 ---------- ------- ------- Net increase (decrease) in net assets 358,933 4,012 3,694 NET ASSETS: Beginning of year 2,730,248 19,540 17,940 ---------- ------- ------- End of year $3,089,181 $23,552 $21,634 ========== ======= ======= MORGAN STANLEY -- INVESCO V.I. MONEY MARKET EQUALLY-WEIGHTED PORTFOLIO S&P 500 FUND SUB-ACCOUNT SUB-ACCOUNT (5) -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $18 $508 Net realized gain (loss) on security transactions -- (9) Net realized gain on distributions -- 4,722 Net unrealized appreciation (depreciation) of investments during the year -- (244) -------- ------- Net increase (decrease) in net assets resulting from operations 18 4,977 -------- ------- UNIT TRANSACTIONS: Purchases 2,661 3,751 Net transfers -- -- Surrenders for benefit payments and fees -- -- Other transactions -- -- Death benefits -- -- Net loan activity -- -- Cost of insurance and other fees (7,846) (2,153) -------- ------- Net increase (decrease) in net assets resulting from unit transactions (5,185) 1,598 -------- ------- Net increase (decrease) in net assets (5,167) 6,575 NET ASSETS: Beginning of year 145,501 29,136 -------- ------- End of year $140,334 $35,711 ======== =======
(4) Formerly Invesco Van Kampen V.I. Mid Cap Value Fund. Change effective July 15, 2012. (5) Formerly Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund. Change effective April 30, 2012. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-67 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
OPPENHEIMER CAPITAL OPPENHEIMER OPPENHEIMER APPRECIATION GLOBAL SECURITIES MAIN STREET FUND/VA FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $11,650 $37,467 $6,102 Net realized gain (loss) on security transactions 42,987 (28,882) 26,534 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 324,430 365,799 100,071 ---------- ---------- --------- Net increase (decrease) in net assets resulting from operations 379,067 374,384 132,707 ---------- ---------- --------- UNIT TRANSACTIONS: Purchases 222,316 196,888 83,975 Net transfers (168,646) (262,245) (15,625) Surrenders for benefit payments and fees (70,999) (135,019) (63,308) Other transactions (4) 58 (2) Death benefits -- -- -- Net loan activity -- (1,635) (216) Cost of insurance and other fees (155,093) (129,585) (54,138) ---------- ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (172,426) (331,538) (49,314) ---------- ---------- --------- Net increase (decrease) in net assets 206,641 42,846 83,393 NET ASSETS: Beginning of year 2,789,491 1,950,429 821,280 ---------- ---------- --------- End of year $2,996,132 $1,993,275 $904,673 ========== ========== ========= OPPENHEIMER MAIN STREET OPPENHEIMER SMALL- & MID-CAP VALUE FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- --------------------------------------- OPERATIONS: Net investment income (loss) $7,192 $698 Net realized gain (loss) on security transactions 183,574 3,315 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 171,215 382 ---------- ------- Net increase (decrease) in net assets resulting from operations 361,981 4,395 ---------- ------- UNIT TRANSACTIONS: Purchases 309,864 7,647 Net transfers (7,723) (3,597) Surrenders for benefit payments and fees (48,309) -- Other transactions 131 2 Death benefits (2,164) -- Net loan activity (12,613) -- Cost of insurance and other fees (224,864) (4,345) ---------- ------- Net increase (decrease) in net assets resulting from unit transactions 14,322 (293) ---------- ------- Net increase (decrease) in net assets 376,303 4,102 NET ASSETS: Beginning of year 1,977,105 40,348 ---------- ------- End of year $2,353,408 $44,450 ========== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-68 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET GLOBAL INCOME FUND ALLOCATION FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $415,692 $4,722 $59,249 Net realized gain (loss) on security transactions 9,807 (1,521) (331,241) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 389,222 62,461 866,193 ---------- --------- ---------- Net increase (decrease) in net assets resulting from operations 814,721 65,662 594,201 ---------- --------- ---------- UNIT TRANSACTIONS: Purchases 601,920 2,605 423,045 Net transfers (134,448) -- (133,194) Surrenders for benefit payments and fees (644,995) (2,813) (85,920) Other transactions (125) -- (3) Death benefits (6,915) -- -- Net loan activity 24,036 -- 111 Cost of insurance and other fees (579,805) (18,864) (110,475) ---------- --------- ---------- Net increase (decrease) in net assets resulting from unit transactions (740,332) (19,072) 93,564 ---------- --------- ---------- Net increase (decrease) in net assets 74,389 46,590 687,765 NET ASSETS: Beginning of year 7,230,044 459,554 2,941,019 ---------- --------- ---------- End of year $7,304,433 $506,144 $3,628,784 ========== ========= ========== PUTNAM VT PUTNAM VT GROWTH AND GLOBAL HEALTH INCOME FUND CARE FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $219,587 $9,427 Net realized gain (loss) on security transactions (455,041) 9,765 Net realized gain on distributions -- 50,480 Net unrealized appreciation (depreciation) of investments during the year 2,196,548 54,769 ----------- -------- Net increase (decrease) in net assets resulting from operations 1,961,094 124,441 ----------- -------- UNIT TRANSACTIONS: Purchases 820,658 -- Net transfers (102,609) (22,294) Surrenders for benefit payments and fees (321,863) (13,732) Other transactions (1,509) (2) Death benefits (104,652) (226) Net loan activity (11,054) -- Cost of insurance and other fees (540,558) (19,877) ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (261,587) (56,131) ----------- -------- Net increase (decrease) in net assets 1,699,507 68,310 NET ASSETS: Beginning of year 10,359,035 579,233 ----------- -------- End of year $12,058,542 $647,543 =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-69 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT HIGH PUTNAM VT INTERNATIONAL YIELD FUND INCOME FUND VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $782,655 $397,304 $60,471 Net realized gain (loss) on security transactions (365,481) (56,794) (50,125) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,083,165 457,309 358,949 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 1,500,339 797,819 369,295 ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 373,373 352,557 6,693 Net transfers (462,184) 19,125 (17,749) Surrenders for benefit payments and fees (381,730) (354,971) (18,247) Other transactions (108) 196 (22) Death benefits (29,781) (40,320) -- Net loan activity 16 (9,011) (1,186) Cost of insurance and other fees (421,200) (311,078) (59,778) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (921,614) (343,502) (90,289) ----------- ----------- ----------- Net increase (decrease) in net assets 578,725 454,317 279,006 NET ASSETS: Beginning of year 9,679,190 7,320,019 1,742,436 ----------- ----------- ----------- End of year $10,257,915 $7,774,336 $2,021,442 =========== =========== =========== PUTNAM VT PUTNAM VT INTERNATIONAL INTERNATIONAL EQUITY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $202,682 $4,964 Net realized gain (loss) on security transactions (498,120) 3,575 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,971,447 43,626 ----------- -------- Net increase (decrease) in net assets resulting from operations 1,676,009 52,165 ----------- -------- UNIT TRANSACTIONS: Purchases 452,940 -- Net transfers (409,716) (41,783) Surrenders for benefit payments and fees (217,330) -- Other transactions 225 -- Death benefits (28,575) -- Net loan activity (11,384) -- Cost of insurance and other fees (337,241) (6,938) ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (551,081) (48,721) ----------- -------- Net increase (decrease) in net assets 1,124,928 3,444 NET ASSETS: Beginning of year 7,778,362 262,773 ----------- -------- End of year $8,903,290 $266,217 =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-70 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT MONEY MULTI-CAP INVESTORS FUND MARKET FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $5,263 $4 $35,938 Net realized gain (loss) on security transactions (630) -- (296,253) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 48,805 -- 1,386,976 --------- -------- ---------- Net increase (decrease) in net assets resulting from operations 53,438 4 1,126,661 --------- -------- ---------- UNIT TRANSACTIONS: Purchases 8,063 -- 386,672 Net transfers 7,899 -- (275,683) Surrenders for benefit payments and fees (2,151) (434) (133,880) Other transactions (1) (3) 42 Death benefits -- -- (48,704) Net loan activity -- -- (60,506) Cost of insurance and other fees (16,531) (2,516) (261,472) --------- -------- ---------- Net increase (decrease) in net assets resulting from unit transactions (2,721) (2,953) (393,531) --------- -------- ---------- Net increase (decrease) in net assets 50,717 (2,949) 733,130 NET ASSETS: Beginning of year 316,195 53,051 6,661,946 --------- -------- ---------- End of year $366,912 $50,102 $7,395,076 ========= ======== ========== PUTNAM VT PUTNAM VT SMALL CAP GEORGE PUTNAM VALUE FUND BALANCED FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $5,876 $4,757 Net realized gain (loss) on security transactions (76,290) (3,457) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 271,036 24,689 ---------- --------- Net increase (decrease) in net assets resulting from operations 200,622 25,989 ---------- --------- UNIT TRANSACTIONS: Purchases 142,836 -- Net transfers 1,416 -- Surrenders for benefit payments and fees (135,314) -- Other transactions (69) -- Death benefits (9,308) -- Net loan activity 245 (941) Cost of insurance and other fees (85,076) (9,528) ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (85,270) (10,469) ---------- --------- Net increase (decrease) in net assets 115,352 15,520 NET ASSETS: Beginning of year 1,176,503 207,596 ---------- --------- End of year $1,291,855 $223,116 ========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-71 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT GLOBAL PUTNAM VT CAPITAL UTILITIES FUND VOYAGER FUND OPPORTUNITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $13,872 $46,265 $5,361 Net realized gain (loss) on security transactions (9,831) (617,489) 55,478 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 14,526 2,163,134 109,508 --------- ----------- ---------- Net increase (decrease) in net assets resulting from operations 18,567 1,591,910 170,347 --------- ----------- ---------- UNIT TRANSACTIONS: Purchases -- 831,634 193,610 Net transfers (7,202) (703,963) (10,019) Surrenders for benefit payments and fees -- (394,885) (46,350) Other transactions -- (2,487) (588) Death benefits -- (64,733) (2,998) Net loan activity -- 156,923 32,411 Cost of insurance and other fees (18,641) (677,777) (163,729) --------- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions (25,843) (855,288) 2,337 --------- ----------- ---------- Net increase (decrease) in net assets (7,276) 736,622 172,684 NET ASSETS: Beginning of year 351,942 11,206,664 1,196,057 --------- ----------- ---------- End of year $344,666 $11,943,286 $1,368,741 ========= =========== ========== INVESCO PUTNAM VT VAN KAMPEN V.I. EQUITY GROWTH AND INCOME FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $63,628 $19,234 Net realized gain (loss) on security transactions 71,542 28,333 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 383,423 144,848 ---------- ---------- Net increase (decrease) in net assets resulting from operations 518,593 192,415 ---------- ---------- UNIT TRANSACTIONS: Purchases 434,232 223,502 Net transfers (120,172) (13,670) Surrenders for benefit payments and fees (59,023) (60,172) Other transactions 5 (10) Death benefits -- (2,074) Net loan activity (2,891) (40) Cost of insurance and other fees (229,436) (171,098) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 22,715 (23,562) ---------- ---------- Net increase (decrease) in net assets 541,308 168,853 NET ASSETS: Beginning of year 2,694,954 1,348,358 ---------- ---------- End of year $3,236,262 $1,517,211 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-72 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEAR ENDED DECEMBER 31, 2012 -------------------------------------------------------------------------------
INVESCO INVESCO INVESCO VAN KAMPEN V.I. VAN KAMPEN V.I. VAN KAMPEN V.I. AMERICAN MID CAP COMSTOCK FUND FRANCHISE FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT (6)(7)(8) SUB-ACCOUNT (6)(9) ---------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $89,231 $ -- $ -- Net realized gain (loss) on security transactions (39,055) 113,467 (595,762) Net realized gain on distributions -- -- 554 Net unrealized appreciation (depreciation) of investments during the year 976,962 180,730 807,226 ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 1,027,138 294,197 212,018 ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases 451,689 151,311 100,475 Net transfers (395,475) 82,582 1,841 Surrenders for benefit payments and fees (101,009) (106,671) (118,279) Other transactions 110 (1) 1 Death benefits -- -- -- Net loan activity -- (3,370) (74,201) Cost of insurance and other fees (317,945) (92,379) (69,792) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (362,630) 31,472 (159,955) ---------- ---------- ---------- Net increase (decrease) in net assets 664,508 325,669 52,063 NET ASSETS: Beginning of year 5,600,281 2,305,207 1,764,329 ---------- ---------- ---------- End of year $6,264,789 $2,630,876 $1,816,392 ========== ========== ==========
(6) Funded as of April 27, 2012. (7) Effective April 27, 2012 Invesco V.I. Capital Appreciation Fund merged with Invesco Van Kampen V.I. Capital Growth Fund. (8) Formerly Invesco Van Kampen V.I. Capital Growth Fund. Change effective April 30, 2012. (9) Effective April 27, 2012 Invesco V.I. Capital Development Fund merged with Invesco Van Kampen V.I. Mid Cap Growth Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-73 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL SMALL/MID CAP STRATEGY PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $12,481 $262,316 $12,332 Net realized gain (loss) on security transactions (317) 2,086 162,992 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (27,013) (1,601,473) (550,926) -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (14,849) (1,337,071) (375,602) -------- ---------- ---------- UNIT TRANSACTIONS: Purchases 69,907 910,363 629,562 Net transfers 12,526 416,781 (1,139,217) Surrenders for benefit payments and fees (493) (132,123) (202,330) Other transactions (4) 1,718 4,494 Death benefits -- (15,651) (7,930) Net loan activity (73) (44,988) (9,328) Cost of insurance and other fees (63,490) (533,473) (395,704) -------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 18,373 602,627 (1,120,453) -------- ---------- ---------- Net increase (decrease) in net assets 3,524 (734,444) (1,496,055) NET ASSETS: Beginning of year 506,733 6,660,629 5,714,787 -------- ---------- ---------- End of year $510,257 $5,926,185 $4,218,732 ======== ========== ========== ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO GROWTH PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ---------------------------------------------------- OPERATIONS: Net investment income (loss) $144 $46,566 Net realized gain (loss) on security transactions (47) (34,772) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (612) (296,542) ------- --------- Net increase (decrease) in net assets resulting from operations (515) (284,748) ------- --------- UNIT TRANSACTIONS: Purchases 2,697 188,450 Net transfers 19 (109,480) Surrenders for benefit payments and fees (1) (42,667) Other transactions -- (415) Death benefits -- -- Net loan activity -- (3,890) Cost of insurance and other fees (2,748) (111,093) ------- --------- Net increase (decrease) in net assets resulting from unit transactions (33) (79,095) ------- --------- Net increase (decrease) in net assets (548) (363,843) NET ASSETS: Beginning of year 12,114 1,674,918 ------- --------- End of year $11,566 $1,311,075 ======= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-74 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. CAPITAL CORE HIGH APPRECIATION FUND EQUITY FUND YIELD FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)(B) ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $3,772 $8,245 $1,431 Net realized gain (loss) on security transactions (3,647) 133,063 (1,381) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (197,284) (93,093) 129 ---------- ---------- ------- Net increase (decrease) in net assets resulting from operations (197,159) 48,215 179 ---------- ---------- ------- UNIT TRANSACTIONS: Purchases 193,741 103,956 1,034 Net transfers 53,800 156,323 -- Surrenders for benefit payments and fees (31,880) (147) (2) Other transactions 17 (2,659) -- Death benefits (17,036) -- -- Net loan activity (17) (155) -- Cost of insurance and other fees (105,456) (63,460) (470) ---------- ---------- ------- Net increase (decrease) in net assets resulting from unit transactions 93,169 193,858 562 ---------- ---------- ------- Net increase (decrease) in net assets (103,990) 242,073 741 NET ASSETS: Beginning of year 2,409,197 1,279,622 12,426 ---------- ---------- ------- End of year $2,305,207 $1,521,695 $13,167 ========== ========== ======= INVESCO V.I. INVESCO V.I. INTERNATIONAL MID CAP CORE GROWTH FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $113,509 $18,085 Net realized gain (loss) on security transactions (1,124) (7,000) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (684,930) (451,853) ---------- ---------- Net increase (decrease) in net assets resulting from operations (572,545) (440,768) ---------- ---------- UNIT TRANSACTIONS: Purchases 1,222,157 434,958 Net transfers 1,484,148 2,007,524 Surrenders for benefit payments and fees (164,797) (269,152) Other transactions 152 (714) Death benefits (7,520) -- Net loan activity (14,619) 2,610 Cost of insurance and other fees (761,179) (329,053) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 1,758,342 1,846,173 ---------- ---------- Net increase (decrease) in net assets 1,185,797 1,405,405 NET ASSETS: Beginning of year 6,679,720 4,146,024 ---------- ---------- End of year $7,865,517 $5,551,429 ========== ==========
(a) Funded as of April 29, 2011. (b) Effective April 29, 2011 Invesco Van Kampen V.I. High Yield Fund merged with Invesco V.I. High Yield Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-75 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. GLOBAL SMALL CAP CAPITAL REAL ESTATE EQUITY FUND DEVELOPMENT FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $ -- $12,093 Net realized gain (loss) on security transactions (1,331) 55,472 (79) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (85,670) (167,597) (32,365) ----------- ----------- -------- Net increase (decrease) in net assets resulting from operations (87,001) (112,125) (20,351) ----------- ----------- -------- UNIT TRANSACTIONS: Purchases 658,149 129,562 74,655 Net transfers 2,280,499 94,804 180,348 Surrenders for benefit payments and fees (115,831) (23,417) (62) Other transactions (459) 10 40 Death benefits (648) (12,319) -- Net loan activity (9,910) -- -- Cost of insurance and other fees (373,181) (82,204) (38,017) ----------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions 2,438,619 106,436 216,964 ----------- ----------- -------- Net increase (decrease) in net assets 2,351,618 (5,689) 196,613 NET ASSETS: Beginning of year 2,484,288 1,770,018 140,177 ----------- ----------- -------- End of year $4,835,906 $1,764,329 $336,790 =========== =========== ======== INVESCO V.I. BALANCED RISK INVESCO V.I. ALLOCATION DIVIDEND FUND GROWTH FUND SUB-ACCOUNT (A)(C) SUB-ACCOUNT (A)(D) -------------------------------------- ---------------------------------------------- OPERATIONS: Net investment income (loss) $33,081 $664 Net realized gain (loss) on security transactions (24,260) 3,210 Net realized gain on distributions 110,879 -- Net unrealized appreciation (depreciation) of investments during the year (20,436) (3,801) ----------- ------- Net increase (decrease) in net assets resulting from operations 99,264 73 ----------- ------- UNIT TRANSACTIONS: Purchases 438,021 5,131 Net transfers 194,513 -- Surrenders for benefit payments and fees -- -- Other transactions 6 -- Death benefits -- -- Net loan activity (22) -- Cost of insurance and other fees (280,602) (1,843) ----------- ------- Net increase (decrease) in net assets resulting from unit transactions 351,916 3,288 ----------- ------- Net increase (decrease) in net assets 451,180 3,361 NET ASSETS: Beginning of year 975,626 34,053 ----------- ------- End of year $1,426,806 $37,414 =========== =======
(a) Funded as of April 29, 2011. (c) Effective April 29, 2011 Invesco V.I. Global Multi-Asset Fund merged with Invesco V.I. Balanced Risk Allocation Fund. (d) Effective April 29, 2011 Invesco V.I. Select Dimensions Dividend Growth Fund merged with Invesco V.I. Dividend Growth Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-76 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
AMERICAN FUNDS ALLIANCEBERNSTEIN VPS AMERICAN FUNDS CAPITAL WORLD REAL ESTATE GLOBAL GROWTH & INVESTMENT PORTFOLIO BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $3,995 $50,569 $90,307 Net realized gain (loss) on security transactions (461) 544 (823) Net realized gain on distributions 36,006 9,352 -- Net unrealized appreciation (depreciation) of investments during the year (18,288) 13,167 (252,824) -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 21,252 73,632 (163,340) -------- ---------- ---------- UNIT TRANSACTIONS: Purchases 66,591 262,132 586,176 Net transfers 278,299 160,011 431,909 Surrenders for benefit payments and fees -- (9,515) (48,261) Other transactions 5 99 136 Death benefits -- -- -- Net loan activity (3,272) (1,989) 4,824 Cost of insurance and other fees (38,924) (220,552) (407,864) -------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 302,699 190,186 566,920 -------- ---------- ---------- Net increase (decrease) in net assets 323,951 263,818 403,580 NET ASSETS: Beginning of year 105,335 1,574,654 2,888,928 -------- ---------- ---------- End of year $429,286 $1,838,472 $3,292,508 ======== ========== ========== AMERICAN FUNDS AMERICAN FUNDS BLUE CHIP ASSET INCOME AND ALLOCATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------------ OPERATIONS: Net investment income (loss) $567,888 $306,597 Net realized gain (loss) on security transactions (25,036) 22,263 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (159,912) (462,102) ------------- ------------- Net increase (decrease) in net assets resulting from operations 382,940 (133,242) ------------- ------------- UNIT TRANSACTIONS: Purchases 3,026,755 1,802,105 Net transfers (486,806) (59,582) Surrenders for benefit payments and fees (991,710) (526,104) Other transactions 745 4,219 Death benefits (63,176) (253,012) Net loan activity (41,662) (33,616) Cost of insurance and other fees (2,079,014) (1,245,433) ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (634,868) (311,423) ------------- ------------- Net increase (decrease) in net assets (251,928) (444,665) NET ASSETS: Beginning of year 29,828,807 17,601,730 ------------- ------------- End of year $29,576,879 $17,157,065 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-77 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS BOND FUND GROWTH FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,042,426 $268,179 $502,497 Net realized gain (loss) on security transactions 7,196 51,711 611,528 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 929,431 (2,109,599) (4,529,284) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 1,979,053 (1,789,709) (3,415,259) ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 3,993,872 1,859,639 8,009,187 Net transfers 2,780,219 (1,135,524) (1,127,029) Surrenders for benefit payments and fees (1,679,056) (719,201) (3,654,391) Other transactions 33 (616) 13,247 Death benefits (22,317) (47,072) (219,459) Net loan activity (36,784) (112,822) (366,682) Cost of insurance and other fees (2,872,622) (1,239,138) (5,973,068) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 2,163,345 (1,394,734) (3,318,195) ----------- ----------- ----------- Net increase (decrease) in net assets 4,142,398 (3,184,443) (6,733,454) NET ASSETS: Beginning of year 30,975,819 21,914,531 83,104,714 ----------- ----------- ----------- End of year $35,118,217 $18,730,088 $76,371,260 =========== =========== =========== AMERICAN FUNDS AMERICAN FUNDS GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------------ OPERATIONS: Net investment income (loss) $1,000,401 $696,804 Net realized gain (loss) on security transactions (9,705) (3,222) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (2,106,901) (6,215,655) ----------- ----------- Net increase (decrease) in net assets resulting from operations (1,116,205) (5,522,073) ----------- ----------- UNIT TRANSACTIONS: Purchases 5,789,589 4,414,665 Net transfers (984,841) 1,792,484 Surrenders for benefit payments and fees (2,993,658) (1,447,877) Other transactions 7,331 2,774 Death benefits (335,061) (23,697) Net loan activity (230,503) (58,661) Cost of insurance and other fees (4,343,810) (2,909,363) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (3,090,953) 1,770,325 ----------- ----------- Net increase (decrease) in net assets (4,207,158) (3,751,748) NET ASSETS: Beginning of year 66,000,040 38,978,574 ----------- ----------- End of year $61,792,882 $35,226,826 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-78 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
AMERICAN FUNDS FIDELITY VIP AMERICAN FUNDS GLOBAL SMALL ASSET MANAGER NEW WORLD FUND CAPITALIZATION FUND PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $280,164 $203,048 $15,007 Net realized gain (loss) on security transactions 2,759 84,537 (83,883) Net realized gain on distributions -- -- 3,767 Net unrealized appreciation (depreciation) of investments during the year (2,689,564) (3,406,010) 45,015 ----------- ----------- --------- Net increase (decrease) in net assets resulting from operations (2,406,641) (3,118,425) (20,094) ----------- ----------- --------- UNIT TRANSACTIONS: Purchases 1,493,046 1,367,596 -- Net transfers (371,578) (305,521) (303,708) Surrenders for benefit payments and fees (331,268) (403,525) (15,310) Other transactions (4,559) 2,599 (1) Death benefits (47,651) (148) -- Net loan activity (36,553) (122,546) -- Cost of insurance and other fees (989,989) (991,356) (72,330) ----------- ----------- --------- Net increase (decrease) in net assets resulting from unit transactions (288,552) (452,901) (391,349) ----------- ----------- --------- Net increase (decrease) in net assets (2,695,193) (3,571,326) (411,443) NET ASSETS: Beginning of year 17,517,974 16,967,392 1,130,973 ----------- ----------- --------- End of year $14,822,781 $13,396,066 $719,530 =========== =========== ========= FIDELITY VIP FIDELITY VIP EQUITY-INCOME GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $365,776 $300 Net realized gain (loss) on security transactions (33,599) (452) Net realized gain on distributions -- 476 Net unrealized appreciation (depreciation) of investments during the year (167,271) (12,029) ----------- -------- Net increase (decrease) in net assets resulting from operations 164,906 (11,705) ----------- -------- UNIT TRANSACTIONS: Purchases 945,578 15,629 Net transfers (705,359) 177,206 Surrenders for benefit payments and fees (824,584) (3,816) Other transactions 1,865 1 Death benefits (13,288) -- Net loan activity (119,522) -- Cost of insurance and other fees (792,941) (18,232) ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (1,508,251) 170,788 ----------- -------- Net increase (decrease) in net assets (1,343,345) 159,083 NET ASSETS: Beginning of year 15,311,628 65,456 ----------- -------- End of year $13,968,283 $224,539 =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-79 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP CONTRAFUND OVERSEAS MID CAP PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $127,058 $6,095 $3,254 Net realized gain (loss) on security transactions 170,676 (4,197) 995 Net realized gain on distributions -- 880 25,565 Net unrealized appreciation (depreciation) of investments during the year (674,494) (80,226) (1,631,723) ----------- --------- ----------- Net increase (decrease) in net assets resulting from operations (376,760) (77,448) (1,601,909) ----------- --------- ----------- UNIT TRANSACTIONS: Purchases 1,875,196 -- 2,103,131 Net transfers (741,872) (2,270) 1,287,657 Surrenders for benefit payments and fees (319,783) (27,771) (600,810) Other transactions 3,153 -- 594 Death benefits (23,007) -- (1,370) Net loan activity (16,641) (2,939) (76,965) Cost of insurance and other fees (1,405,867) (16,188) (1,311,338) ----------- --------- ----------- Net increase (decrease) in net assets resulting from unit transactions (628,821) (49,168) 1,400,899 ----------- --------- ----------- Net increase (decrease) in net assets (1,005,581) (126,616) (201,010) NET ASSETS: Beginning of year 16,339,146 493,414 13,581,013 ----------- --------- ----------- End of year $15,333,565 $366,798 $13,380,003 =========== ========= =========== FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL VALUE STRATEGIES APPRECIATION PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ----------------------------------------- OPERATIONS: Net investment income (loss) $455 $ -- Net realized gain (loss) on security transactions 2,973 (75) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (8,373) (3,018) -------- ------- Net increase (decrease) in net assets resulting from operations (4,945) (3,093) -------- ------- UNIT TRANSACTIONS: Purchases 15,616 20,402 Net transfers (12,300) 430 Surrenders for benefit payments and fees (2,975) (1) Other transactions (1) -- Death benefits -- -- Net loan activity -- -- Cost of insurance and other fees (13,901) (8,740) -------- ------- Net increase (decrease) in net assets resulting from unit transactions (13,561) 12,091 -------- ------- Net increase (decrease) in net assets (18,506) 8,998 NET ASSETS: Beginning of year 74,188 72,953 -------- ------- End of year $55,682 $81,951 ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-80 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP FREEDOM 2010 FREEDOM 2020 FREEDOM 2030 PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $9,484 $12,075 $13,747 Net realized gain (loss) on security transactions (4,706) 1,692 898 Net realized gain on distributions 2,559 2,311 2,148 Net unrealized appreciation (depreciation) of investments during the year (18,266) (22,239) (39,664) -------- -------- -------- Net increase (decrease) in net assets resulting from operations (10,929) (6,161) (22,871) -------- -------- -------- UNIT TRANSACTIONS: Purchases 39,823 166,126 187,440 Net transfers 114,570 (43,629) 261,827 Surrenders for benefit payments and fees (13,207) (2,519) -- Other transactions -- (3,158) 1 Death benefits -- -- -- Net loan activity -- (68) (15) Cost of insurance and other fees (34,173) (53,002) (99,699) -------- -------- -------- Net increase (decrease) in net assets resulting from unit transactions 107,013 63,750 349,554 -------- -------- -------- Net increase (decrease) in net assets 96,084 57,589 326,683 NET ASSETS: Beginning of year 402,314 544,351 381,587 -------- -------- -------- End of year $498,398 $601,940 $708,270 ======== ======== ======== FRANKLIN FIDELITY VIP RISING STRATEGIC INCOME DIVIDENDS PORTFOLIO SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------- ------------------------------------ OPERATIONS: Net investment income (loss) $14,172 $7,144 Net realized gain (loss) on security transactions (4) (83) Net realized gain on distributions 6,372 -- Net unrealized appreciation (depreciation) of investments during the year (10,882) 26,126 -------- -------- Net increase (decrease) in net assets resulting from operations 9,658 33,187 -------- -------- UNIT TRANSACTIONS: Purchases 72,650 137,817 Net transfers 221,710 231,307 Surrenders for benefit payments and fees (875) (101) Other transactions 11 137 Death benefits -- -- Net loan activity (623) (4,212) Cost of insurance and other fees (45,689) (81,925) -------- -------- Net increase (decrease) in net assets resulting from unit transactions 247,184 283,023 -------- -------- Net increase (decrease) in net assets 256,842 316,210 NET ASSETS: Beginning of year 102,492 352,381 -------- -------- End of year $359,334 $668,591 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-81 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FRANKLIN SMALL-MID CAP SMALL CAP INCOME GROWTH VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $910,698 $ -- $67,512 Net realized gain (loss) on security transactions (7,408) 2,699 10,676 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (567,680) (28,539) (432,670) ----------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 335,610 (25,840) (354,482) ----------- ---------- ---------- UNIT TRANSACTIONS: Purchases 2,064,550 245,609 1,121,131 Net transfers 1,417,010 318,671 360,673 Surrenders for benefit payments and fees (589,871) (6,468) (270,729) Other transactions 540 737 517 Death benefits (11,032) -- (19,090) Net loan activity (50,169) (3,613) (111,298) Cost of insurance and other fees (1,505,586) (125,895) (746,493) ----------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 1,325,442 429,041 334,711 ----------- ---------- ---------- Net increase (decrease) in net assets 1,661,052 403,201 (19,771) NET ASSETS: Beginning of year 15,093,484 809,801 9,848,778 ----------- ---------- ---------- End of year $16,754,536 $1,213,002 $9,829,007 =========== ========== ========== FRANKLIN STRATEGIC INCOME MUTUAL SHARES SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $844,866 $487,055 Net realized gain (loss) on security transactions (5,188) (9,288) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (485,710) (724,532) ----------- ----------- Net increase (decrease) in net assets resulting from operations 353,968 (246,765) ----------- ----------- UNIT TRANSACTIONS: Purchases 2,140,298 3,011,578 Net transfers 451,869 1,354,783 Surrenders for benefit payments and fees (348,507) (732,012) Other transactions 140 2,352 Death benefits (16,625) (98,337) Net loan activity (41,253) (113,299) Cost of insurance and other fees (1,354,021) (1,975,606) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 831,901 1,449,459 ----------- ----------- Net increase (decrease) in net assets 1,185,869 1,202,694 NET ASSETS: Beginning of year 12,847,856 19,315,493 ----------- ----------- End of year $14,033,725 $20,518,187 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-82 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
TEMPLETON DEVELOPING TEMPLETON TEMPLETON MARKETS FOREIGN GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $18,772 $49,393 $54,320 Net realized gain (loss) on security transactions 459 (6,781) 837 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (283,751) (423,291) (358,982) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (264,520) (380,679) (303,825) ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases 306,408 547,308 698,284 Net transfers 568,855 1,455,754 396,356 Surrenders for benefit payments and fees (24,249) (78,287) (204,113) Other transactions 416 190 2,883 Death benefits (119) (994) -- Net loan activity 6,621 (4,201) 213 Cost of insurance and other fees (225,974) (356,169) (485,349) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 631,958 1,563,601 408,274 ---------- ---------- ---------- Net increase (decrease) in net assets 367,438 1,182,922 104,449 NET ASSETS: Beginning of year 1,331,977 2,182,613 3,942,812 ---------- ---------- ---------- End of year $1,699,415 $3,365,535 $4,047,261 ========== ========== ========== FRANKLIN MUTUAL FLEX CAP GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------- --------------------------------------- OPERATIONS: Net investment income (loss) $270,795 $ -- Net realized gain (loss) on security transactions 362 (2,260) Net realized gain on distributions 266,397 -- Net unrealized appreciation (depreciation) of investments during the year (913,453) (19,164) ----------- -------- Net increase (decrease) in net assets resulting from operations (375,899) (21,424) ----------- -------- UNIT TRANSACTIONS: Purchases 1,376,671 73,600 Net transfers 1,214,618 48,744 Surrenders for benefit payments and fees (286,276) -- Other transactions 2,023 -- Death benefits (57,050) -- Net loan activity (65,701) (1,209) Cost of insurance and other fees (817,120) (41,982) ----------- -------- Net increase (decrease) in net assets resulting from unit transactions 1,367,165 79,153 ----------- -------- Net increase (decrease) in net assets 991,266 57,729 NET ASSETS: Beginning of year 11,307,645 382,122 ----------- -------- End of year $12,298,911 $439,851 =========== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-83 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
HARTFORD TEMPLETON HARTFORD TOTAL GLOBAL BOND ADVISERS RETURN BOND SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $1,013,111 $615,858 $150,989 Net realized gain (loss) on security transactions (1,203) (223,427) 73,583 Net realized gain on distributions 117,816 -- -- Net unrealized appreciation (depreciation) of investments during the year (1,353,591) 341,570 4,531,543 ----------- ------------ ----------- Net increase (decrease) in net assets resulting from operations (223,867) 734,001 4,756,115 ----------- ------------ ----------- UNIT TRANSACTIONS: Purchases 2,517,829 2,965,190 7,869,939 Net transfers 2,076,771 (1,366,621) 2,759,793 Surrenders for benefit payments and fees (621,583) (2,200,111) (3,419,008) Other transactions 2,393 435 (8,037) Death benefits (180,287) (135,827) (314,220) Net loan activity (6,261) (173,082) (219,476) Cost of insurance and other fees (1,663,193) (2,297,466) (5,754,666) ----------- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions 2,125,669 (3,207,482) 914,325 ----------- ------------ ----------- Net increase (decrease) in net assets 1,901,802 (2,473,481) 5,670,440 NET ASSETS: Beginning of year 17,220,025 38,430,857 68,968,923 ----------- ------------ ----------- End of year $19,121,827 $35,957,376 $74,639,363 =========== ============ =========== HARTFORD HARTFORD CAPITAL DIVIDEND APPRECIATION AND GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $798,725 $1,141,466 Net realized gain (loss) on security transactions 1,188,080 36,563 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (13,739,397) (418,518) ----------- ----------- Net increase (decrease) in net assets resulting from operations (11,752,592) 759,511 ----------- ----------- UNIT TRANSACTIONS: Purchases 9,100,588 5,142,397 Net transfers 186,844 421,900 Surrenders for benefit payments and fees (4,993,605) (1,936,385) Other transactions 8,056 (168) Death benefits (629,437) (218,415) Net loan activity (547,951) (152,032) Cost of insurance and other fees (7,037,538) (3,746,231) ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (3,913,043) (488,934) ----------- ----------- Net increase (decrease) in net assets (15,665,635) 270,577 NET ASSETS: Beginning of year 106,868,654 53,774,608 ----------- ----------- End of year $91,203,019 $54,045,185 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-84 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD DISCIPLINED GLOBAL RESEARCH GLOBAL GROWTH EQUITY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $17 $293 $181,816 Net realized gain (loss) on security transactions 4,317 (1,445) 2,423 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (14,316) (94,608) (19,294) -------- -------- ----------- Net increase (decrease) in net assets resulting from operations (9,982) (95,760) 164,945 -------- -------- ----------- UNIT TRANSACTIONS: Purchases 15,555 37,340 2,219,630 Net transfers 1,351 454,069 1,543,032 Surrenders for benefit payments and fees -- (970) (402,043) Other transactions (20) -- 2,159 Death benefits -- -- (15,879) Net loan activity (358) -- (52,229) Cost of insurance and other fees (11,786) (43,539) (1,433,367) -------- -------- ----------- Net increase (decrease) in net assets resulting from unit transactions 4,742 446,900 1,861,303 -------- -------- ----------- Net increase (decrease) in net assets (5,240) 351,140 2,026,248 NET ASSETS: Beginning of year 124,154 354,475 13,003,860 -------- -------- ----------- End of year $118,914 $705,615 $15,030,108 ======== ======== =========== HARTFORD HARTFORD GROWTH GROWTH OPPORTUNITIES HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $1,834 $ -- Net realized gain (loss) on security transactions (687) 76,025 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (123,166) (1,311,688) ---------- ----------- Net increase (decrease) in net assets resulting from operations (122,019) (1,235,663) ---------- ----------- UNIT TRANSACTIONS: Purchases 227,789 2,342,946 Net transfers 491,348 (495,610) Surrenders for benefit payments and fees (11,912) (382,742) Other transactions (251) 1,507 Death benefits (98) (13,137) Net loan activity (12) (82,018) Cost of insurance and other fees (130,587) (1,473,258) ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 576,277 (102,312) ---------- ----------- Net increase (decrease) in net assets 454,258 (1,337,975) NET ASSETS: Beginning of year 616,403 14,950,390 ---------- ----------- End of year $1,070,661 $13,612,415 ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-85 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD INTERNATIONAL HIGH YIELD INDEX OPPORTUNITIES HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $372,972 $700,408 $9,691 Net realized gain (loss) on security transactions (2,079) 265,885 36,844 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (188,727) (149,366) (3,094,638) ---------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 182,166 816,927 (3,048,103) ---------- ----------- ----------- UNIT TRANSACTIONS: Purchases 776,710 2,097,836 1,543,847 Net transfers 1,464,630 (3,037,554) (304,660) Surrenders for benefit payments and fees (161,913) (1,348,526) (1,665,972) Other transactions 261 (617) 1,054 Death benefits (1,049) (30,618) (46,433) Net loan activity (9,582) (172,443) (27,554) Cost of insurance and other fees (507,510) (1,765,760) (1,163,538) ---------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 1,561,547 (4,257,682) (1,663,256) ---------- ----------- ----------- Net increase (decrease) in net assets 1,743,713 (3,440,755) (4,711,359) NET ASSETS: Beginning of year 3,259,015 43,093,033 22,998,858 ---------- ----------- ----------- End of year $5,002,728 $39,652,278 $18,287,499 ========== =========== =========== HARTFORD SMALL/MID CAP HARTFORD EQUITY MIDCAP HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $216,505 Net realized gain (loss) on security transactions 2,122 167,192 Net realized gain on distributions 28,888 -- Net unrealized appreciation (depreciation) of investments during the year (40,076) (2,837,471) -------- ------------- Net increase (decrease) in net assets resulting from operations (9,066) (2,453,774) -------- ------------- UNIT TRANSACTIONS: Purchases 49,726 1,347,529 Net transfers 90,579 (1,752,818) Surrenders for benefit payments and fees (1,528) (1,492,296) Other transactions 2 3,804 Death benefits -- (103,133) Net loan activity (18) (161,909) Cost of insurance and other fees (39,033) (1,160,143) -------- ------------- Net increase (decrease) in net assets resulting from unit transactions 99,728 (3,318,966) -------- ------------- Net increase (decrease) in net assets 90,662 (5,772,740) NET ASSETS: Beginning of year 277,545 33,325,793 -------- ------------- End of year $368,207 $27,553,053 ======== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-86 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD MIDCAP VALUE MONEY MARKET SMALL COMPANY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $620 $ -- $ -- Net realized gain (loss) on security transactions (80,162) -- 237,153 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (435,351) -- (749,082) ---------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (514,893) -- (511,929) ---------- ----------- ----------- UNIT TRANSACTIONS: Purchases 308,274 51,030,355 754,338 Net transfers (276,117) (23,199,649) (960,446) Surrenders for benefit payments and fees (235,872) (24,239,019) (1,173,525) Other transactions (3,148) (470) 3,129 Death benefits (12,271) (127,479) (37,694) Net loan activity 7,555 (419,440) (42,207) Cost of insurance and other fees (249,381) (5,403,418) (727,567) ---------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions (460,960) (2,359,120) (2,183,972) ---------- ----------- ----------- Net increase (decrease) in net assets (975,853) (2,359,120) (2,695,901) NET ASSETS: Beginning of year 6,476,798 52,267,897 17,917,684 ---------- ----------- ----------- End of year $5,500,945 $49,908,777 $15,221,783 ========== =========== =========== HARTFORD HARTFORD SMALLCAP GROWTH STOCK HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $525,187 Net realized gain (loss) on security transactions 600 (74,277) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (3,883) (826,770) -------- ----------- Net increase (decrease) in net assets resulting from operations (3,283) (375,860) -------- ----------- UNIT TRANSACTIONS: Purchases 25,937 2,492,812 Net transfers 51,357 (2,143,969) Surrenders for benefit payments and fees -- (1,525,171) Other transactions -- 4,890 Death benefits -- (289,411) Net loan activity -- (125,227) Cost of insurance and other fees (12,756) (1,974,656) -------- ----------- Net increase (decrease) in net assets resulting from unit transactions 64,538 (3,560,732) -------- ----------- Net increase (decrease) in net assets 61,255 (3,936,592) NET ASSETS: Beginning of year 76,554 40,377,425 -------- ----------- End of year $137,809 $36,440,833 ======== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-87 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
HARTFORD U.S. GOVERNMENT HARTFORD LORD ABBETT SECURITIES VALUE FUNDAMENTAL HLS FUND HLS FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $197,138 $280,658 $481 Net realized gain (loss) on security transactions (17,120) 37,513 (164) Net realized gain on distributions -- -- 7,821 Net unrealized appreciation (depreciation) of investments during the year 158,304 (680,390) (14,631) ---------- ----------- -------- Net increase (decrease) in net assets resulting from operations 338,322 (362,219) (6,493) ---------- ----------- -------- UNIT TRANSACTIONS: Purchases 615,486 1,664,305 42,624 Net transfers 753,787 (1,379,841) 192,505 Surrenders for benefit payments and fees (502,559) (650,752) (60) Other transactions 28 (1,527) (20) Death benefits (8,300) (15,843) -- Net loan activity (30) (74,219) -- Cost of insurance and other fees (495,836) (1,316,553) (22,710) ---------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions 362,576 (1,774,430) 212,339 ---------- ----------- -------- Net increase (decrease) in net assets 700,898 (2,136,649) 205,846 NET ASSETS: Beginning of year 7,291,233 17,659,958 32,501 ---------- ----------- -------- End of year $7,992,131 $15,523,309 $238,347 ========== =========== ======== LORD ABBETT LORD ABBETT CAPITAL BOND-DEBENTURE STRUCTURE FUND FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $56,303 $372,355 Net realized gain (loss) on security transactions (2,644) 8,069 Net realized gain on distributions -- 46,494 Net unrealized appreciation (depreciation) of investments during the year (51,748) (148,042) ---------- ---------- Net increase (decrease) in net assets resulting from operations 1,911 278,876 ---------- ---------- UNIT TRANSACTIONS: Purchases 237,675 727,340 Net transfers 17,190 (95,077) Surrenders for benefit payments and fees (222) (278,861) Other transactions 6 (184) Death benefits -- (1,192) Net loan activity 1,693 (20,686) Cost of insurance and other fees (154,089) (544,222) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 102,253 (212,882) ---------- ---------- Net increase (decrease) in net assets 104,164 65,994 NET ASSETS: Beginning of year 1,874,086 6,461,025 ---------- ---------- End of year $1,978,250 $6,527,019 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-88 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
LORD ABBETT GROWTH AND MFS GROWTH MFS INVESTORS INCOME FUND SERIES TRUST SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $16,371 $130 $4,572 Net realized gain (loss) on security transactions (1,000) 607 4,692 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (143,670) 2,104 (20,064) ----------- -------- -------- Net increase (decrease) in net assets resulting from operations (128,299) 2,841 (10,800) ----------- -------- -------- UNIT TRANSACTIONS: Purchases 262,608 33,716 45,913 Net transfers 273,427 82,684 64,091 Surrenders for benefit payments and fees (62,839) (2) (35,743) Other transactions 1,904 22 (40) Death benefits (118) -- -- Net loan activity 937 -- (8) Cost of insurance and other fees (202,764) (19,441) (61,578) ----------- -------- -------- Net increase (decrease) in net assets resulting from unit transactions 273,155 96,979 12,635 ----------- -------- -------- Net increase (decrease) in net assets 144,856 99,820 1,835 NET ASSETS: Beginning of year 1,959,099 63,933 491,514 ----------- -------- -------- End of year $2,103,955 $163,753 $493,349 =========== ======== ======== MFS NEW MFS TOTAL DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT -------------------------------- -------------------------------------- OPERATIONS: Net investment income (loss) $ -- $227,260 Net realized gain (loss) on security transactions (1,076) 38,961 Net realized gain on distributions 240,500 -- Net unrealized appreciation (depreciation) of investments during the year (449,952) (101,603) ---------- ---------- Net increase (decrease) in net assets resulting from operations (210,528) 164,618 ---------- ---------- UNIT TRANSACTIONS: Purchases 93,958 1,064,512 Net transfers (60,226) 165,196 Surrenders for benefit payments and fees (211,348) (798,520) Other transactions 1,111 746 Death benefits -- (34,529) Net loan activity (3,268) (3,636) Cost of insurance and other fees (86,599) (703,156) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (266,372) (309,387) ---------- ---------- Net increase (decrease) in net assets (476,900) (144,769) NET ASSETS: Beginning of year 2,154,360 9,042,990 ---------- ---------- End of year $1,677,460 $8,898,221 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-89 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. MFS VALUE MFS RESEARCH EQUITY AND SERIES BOND SERIES INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)(E) ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $185,495 $347,948 $414 Net realized gain (loss) on security transactions 496 469 51 Net realized gain on distributions 50,172 149,780 13 Net unrealized appreciation (depreciation) of investments during the year (258,315) 324,766 (883) ----------- ----------- ------- Net increase (decrease) in net assets resulting from operations (22,152) 822,963 (405) ----------- ----------- ------- UNIT TRANSACTIONS: Purchases 2,341,644 1,992,275 2,715 Net transfers 1,536,856 6,433,902 -- Surrenders for benefit payments and fees (380,972) (438,121) -- Other transactions 1,538 35 -- Death benefits (18,815) (27,712) -- Net loan activity (65,435) (10,231) -- Cost of insurance and other fees (1,402,550) (1,263,698) (745) ----------- ----------- ------- Net increase (decrease) in net assets resulting from unit transactions 2,012,266 6,686,450 1,970 ----------- ----------- ------- Net increase (decrease) in net assets 1,990,114 7,509,413 1,565 NET ASSETS: Beginning of year 11,213,762 7,991,946 17,228 ----------- ----------- ------- End of year $13,203,876 $15,501,359 $18,793 =========== =========== ======= UIF CORE PLUS UIF EMERGING FIXED INCOME MARKETS DEBT PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------- OPERATIONS: Net investment income (loss) $9,622 $964 Net realized gain (loss) on security transactions 103 (13) Net realized gain on distributions -- 300 Net unrealized appreciation (depreciation) of investments during the year 4,775 578 -------- ------- Net increase (decrease) in net assets resulting from operations 14,500 1,829 -------- ------- UNIT TRANSACTIONS: Purchases 10,506 -- Net transfers -- -- Surrenders for benefit payments and fees -- -- Other transactions -- -- Death benefits -- -- Net loan activity -- -- Cost of insurance and other fees (11,988) (1,181) -------- ------- Net increase (decrease) in net assets resulting from unit transactions (1,482) (1,181) -------- ------- Net increase (decrease) in net assets 13,018 648 NET ASSETS: Beginning of year 260,191 26,555 -------- ------- End of year $273,209 $27,203 ======== =======
(a) Funded as of April 29, 2011. (e) Effective April 29, 2011 Invesco V.I. Select Dimensions Balanced Fund merged with Invesco Van Kampen V.I. Equity and Income Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-90 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO UIF EMERGING UIF MID CAP VAN KAMPEN V.I. MARKETS EQUITY GROWTH MID CAP PORTFOLIO PORTFOLIO VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $150 $4,921 $18,526 Net realized gain (loss) on security transactions (38) (20,400) 46,657 Net realized gain on distributions -- 829 -- Net unrealized appreciation (depreciation) of investments during the year (7,190) (152,441) (65,786) ------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (7,078) (167,091) (603) ------- ---------- ---------- UNIT TRANSACTIONS: Purchases 448 250,962 271,428 Net transfers -- 239,255 (180,065) Surrenders for benefit payments and fees -- (60,519) (62,336) Other transactions -- 101 (48) Death benefits -- (1,775) (13,920) Net loan activity -- (3,049) (834) Cost of insurance and other fees (1,441) (193,963) (164,213) ------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (993) 231,012 (149,988) ------- ---------- ---------- Net increase (decrease) in net assets (8,071) 63,921 (150,591) NET ASSETS: Beginning of year 39,645 1,784,287 2,880,839 ------- ---------- ---------- End of year $31,574 $1,848,208 $2,730,248 ======= ========== ========== MORGAN STANLEY -- MORGAN STANLEY -- MID CAP FOCUS GROWTH GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (F)(G) -------------------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $ -- Net realized gain (loss) on security transactions 138 747 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (1,434) -- ------- ------- Net increase (decrease) in net assets resulting from operations (1,296) 747 ------- ------- UNIT TRANSACTIONS: Purchases 2,417 1,225 Net transfers -- (1,901) Surrenders for benefit payments and fees -- (1) Other transactions -- -- Death benefits -- -- Net loan activity -- -- Cost of insurance and other fees (1,140) (70) ------- ------- Net increase (decrease) in net assets resulting from unit transactions 1,277 (747) ------- ------- Net increase (decrease) in net assets (19) -- NET ASSETS: Beginning of year 19,559 -- ------- ------- End of year $19,540 $ -- ======= =======
(f) Funded as of February 22, 2011. (g) Not funded as of December 31, 2011. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-91 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO V.I. SELECT MORGAN STANLEY -- MORGAN STANLEY -- DIMENSIONS FLEXIBLE INCOME MONEY MARKET EQUALLY-WEIGHTED PORTFOLIO PORTFOLIO S&P 500 FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $983 $18 $462 Net realized gain (loss) on security transactions 732 -- 578 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (531) -- (835) -------- -------- ------- Net increase (decrease) in net assets resulting from operations 1,184 18 205 -------- -------- ------- UNIT TRANSACTIONS: Purchases 2,417 6,381 5,604 Net transfers -- 11,540 (2,721) Surrenders for benefit payments and fees (15,984) (67,377) -- Other transactions -- (1) (1) Death benefits -- -- -- Net loan activity -- -- -- Cost of insurance and other fees (1,247) (9,679) (2,365) -------- -------- ------- Net increase (decrease) in net assets resulting from unit transactions (14,814) (59,136) 517 -------- -------- ------- Net increase (decrease) in net assets (13,630) (59,118) 722 NET ASSETS: Beginning of year 31,570 204,619 28,414 -------- -------- ------- End of year $17,940 $145,501 $29,136 ======== ======== ======= OPPENHEIMER CAPITAL OPPENHEIMER APPRECIATION GLOBAL SECURITIES FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT -------------------------------------- ------------------------------------------ OPERATIONS: Net investment income (loss) $3,114 $22,900 Net realized gain (loss) on security transactions 7,239 (4,070) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (48,541) (205,283) ---------- ---------- Net increase (decrease) in net assets resulting from operations (38,188) (186,453) ---------- ---------- UNIT TRANSACTIONS: Purchases 276,661 204,191 Net transfers (97,692) 30,855 Surrenders for benefit payments and fees (47,557) (225,696) Other transactions (11) (8) Death benefits (18,642) -- Net loan activity -- (8,258) Cost of insurance and other fees (161,639) (157,984) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (48,880) (156,900) ---------- ---------- Net increase (decrease) in net assets (87,068) (343,353) NET ASSETS: Beginning of year 2,876,559 2,293,782 ---------- ---------- End of year $2,789,491 $1,950,429 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-92 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER MAIN STREET OPPENHEIMER MAIN STREET SMALL- & MID-CAP VALUE FUND/VA FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT (H) SUB-ACCOUNT ------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $4,360 $7,496 $397 Net realized gain (loss) on security transactions 2,103 35,341 434 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (6,052) (76,585) (2,858) -------- ---------- ------- Net increase (decrease) in net assets resulting from operations 411 (33,748) (2,027) -------- ---------- ------- UNIT TRANSACTIONS: Purchases 98,913 341,131 3,533 Net transfers 14,525 (68,628) 9 Surrenders for benefit payments and fees (856) (33,823) (2,794) Other transactions 886 148 -- Death benefits -- (663) -- Net loan activity (544) (8,732) -- Cost of insurance and other fees (52,801) (234,086) (4,432) -------- ---------- ------- Net increase (decrease) in net assets resulting from unit transactions 60,123 (4,653) (3,684) -------- ---------- ------- Net increase (decrease) in net assets 60,534 (38,401) (5,711) NET ASSETS: Beginning of year 760,746 2,015,506 46,059 -------- ---------- ------- End of year $821,280 $1,977,105 $40,348 ======== ========== ======= PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------ ------------------------------------ OPERATIONS: Net investment income (loss) $731,580 $23,221 Net realized gain (loss) on security transactions (141) (4,335) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (955,269) (19,205) ---------- -------- Net increase (decrease) in net assets resulting from operations (223,830) (319) ---------- -------- UNIT TRANSACTIONS: Purchases 720,405 3,312 Net transfers (246,913) -- Surrenders for benefit payments and fees (72,962) (35,906) Other transactions (109) -- Death benefits (6,993) -- Net loan activity (28,630) -- Cost of insurance and other fees (616,661) (17,468) ---------- -------- Net increase (decrease) in net assets resulting from unit transactions (251,863) (50,062) ---------- -------- Net increase (decrease) in net assets (475,693) (50,381) NET ASSETS: Beginning of year 7,705,737 509,935 ---------- -------- End of year $7,230,044 $459,554 ========== ========
(h) Formerly Oppenheimer Main Street Small Cap Fund/VA. Change effective April 29, 2011. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-93 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT GLOBAL GROWTH AND GLOBAL HEALTH EQUITY FUND INCOME FUND CARE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $75,212 $170,764 $6,782 Net realized gain (loss) on security transactions (257,553) (487,891) 1,814 Net realized gain on distributions -- -- 16,267 Net unrealized appreciation (depreciation) of investments during the year 27,659 (184,266) (29,227) ---------- ----------- -------- Net increase (decrease) in net assets resulting from operations (154,682) (501,393) (4,364) ---------- ----------- -------- UNIT TRANSACTIONS: Purchases 219,941 668,337 -- Net transfers (190,645) (375,666) (7,201) Surrenders for benefit payments and fees (93,219) (527,077) (6,730) Other transactions (151) (88) (1) Death benefits -- (53,048) -- Net loan activity (51,062) (98,910) -- Cost of insurance and other fees (106,507) (559,959) (18,371) ---------- ----------- -------- Net increase (decrease) in net assets resulting from unit transactions (221,643) (946,411) (32,303) ---------- ----------- -------- Net increase (decrease) in net assets (376,325) (1,447,804) (36,667) NET ASSETS: Beginning of year 3,317,344 11,806,839 615,900 ---------- ----------- -------- End of year $2,941,019 $10,359,035 $579,233 ========== =========== ======== PUTNAM VT HIGH PUTNAM VT YIELD FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------ -------------------------------------- OPERATIONS: Net investment income (loss) $771,651 $625,867 Net realized gain (loss) on security transactions 21,335 13,388 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (608,257) (279,470) ---------- ---------- Net increase (decrease) in net assets resulting from operations 184,729 359,785 ---------- ---------- UNIT TRANSACTIONS: Purchases 410,215 375,927 Net transfers (231,476) (188,072) Surrenders for benefit payments and fees (352,780) (257,721) Other transactions 16 (4) Death benefits -- (4,917) Net loan activity (1,998) (15,094) Cost of insurance and other fees (449,947) (333,734) ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (625,970) (423,615) ---------- ---------- Net increase (decrease) in net assets (441,241) (63,830) NET ASSETS: Beginning of year 10,120,431 7,383,849 ---------- ---------- End of year $9,679,190 $7,320,019 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-94 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT INTERNATIONAL INTERNATIONAL INTERNATIONAL VALUE FUND EQUITY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $56,480 $331,751 $9,510 Net realized gain (loss) on security transactions (42,815) (66,221) (9,409) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (293,289) (1,830,101) (61,468) ---------- ---------- --------- Net increase (decrease) in net assets resulting from operations (279,624) (1,564,571) (61,367) ---------- ---------- --------- UNIT TRANSACTIONS: Purchases 8,944 538,014 -- Net transfers (26,352) (796,694) (27,014) Surrenders for benefit payments and fees (14,878) (287,227) (24,867) Other transactions 23 244 -- Death benefits -- (6,955) -- Net loan activity -- (46,416) -- Cost of insurance and other fees (62,195) (376,500) (8,305) ---------- ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (94,458) (975,534) (60,186) ---------- ---------- --------- Net increase (decrease) in net assets (374,082) (2,540,105) (121,553) NET ASSETS: Beginning of year 2,116,518 10,318,467 384,326 ---------- ---------- --------- End of year $1,742,436 $7,778,362 $262,773 ========== ========== ========= PUTNAM VT PUTNAM VT MONEY INVESTORS FUND MARKET FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------------- --------------------------------- OPERATIONS: Net investment income (loss) $4,416 $7 Net realized gain (loss) on security transactions (3,468) -- Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (35) -- -------- ------- Net increase (decrease) in net assets resulting from operations 913 7 -------- ------- UNIT TRANSACTIONS: Purchases 2,282 -- Net transfers (5,652) -- Surrenders for benefit payments and fees (1,342) (3,997) Other transactions (3) (3) Death benefits -- -- Net loan activity -- -- Cost of insurance and other fees (12,272) (5,259) -------- ------- Net increase (decrease) in net assets resulting from unit transactions (16,987) (9,259) -------- ------- Net increase (decrease) in net assets (16,074) (9,252) NET ASSETS: Beginning of year 332,269 62,303 -------- ------- End of year $316,195 $53,051 ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-95 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT MULTI-CAP SMALL CAP GEORGE PUTNAM GROWTH FUND VALUE FUND BALANCED FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $28,871 $6,091 $4,997 Net realized gain (loss) on security transactions 80,095 14,542 (4,649) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (436,443) (76,460) 5,857 ---------- ---------- -------- Net increase (decrease) in net assets resulting from operations (327,477) (55,827) 6,205 ---------- ---------- -------- UNIT TRANSACTIONS: Purchases 454,433 154,342 -- Net transfers (660,400) (82,723) (5,042) Surrenders for benefit payments and fees (144,777) (19,519) (4,700) Other transactions 1,707 (6) -- Death benefits (38,394) -- -- Net loan activity (8,823) (4,440) -- Cost of insurance and other fees (244,927) (90,217) (9,716) ---------- ---------- -------- Net increase (decrease) in net assets resulting from unit transactions (641,181) (42,563) (19,458) ---------- ---------- -------- Net increase (decrease) in net assets (968,658) (98,390) (13,253) NET ASSETS: Beginning of year 7,630,604 1,274,893 220,849 ---------- ---------- -------- End of year $6,661,946 $1,176,503 $207,596 ========== ========== ======== PUTNAM VT GLOBAL PUTNAM VT UTILITIES FUND VOYAGER FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------- ------------------------------------- OPERATIONS: Net investment income (loss) $16,215 $37,206 Net realized gain (loss) on security transactions (23,062) (1,325,573) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year (14,762) (1,122,458) -------- ----------- Net increase (decrease) in net assets resulting from operations (21,609) (2,410,825) -------- ----------- UNIT TRANSACTIONS: Purchases -- 821,801 Net transfers -- (844,905) Surrenders for benefit payments and fees (50,128) (1,078,620) Other transactions -- 1,638 Death benefits -- (103,924) Net loan activity -- (6,603) Cost of insurance and other fees (21,488) (669,094) -------- ----------- Net increase (decrease) in net assets resulting from unit transactions (71,616) (1,879,707) -------- ----------- Net increase (decrease) in net assets (93,225) (4,290,532) NET ASSETS: Beginning of year 445,167 15,497,196 -------- ----------- End of year $351,942 $11,206,664 ======== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-96 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEAR ENDED DECEMBER 31, 2011 -------------------------------------------------------------------------------
INVESCO PUTNAM VT PUTNAM VT VAN KAMPEN V.I. INVESCO CAPITAL EQUITY GROWTH AND VAN KAMPEN V.I. OPPORTUNITIES FUND INCOME FUND INCOME FUND COMSTOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,051 $36,753 $14,596 $75,698 Net realized gain (loss) on security transactions 25,559 11,098 954 5,955 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (103,596) 17,362 (54,650) (193,224) ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (75,986) 65,213 (39,100) (111,571) ---------- ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases 141,585 310,600 237,516 570,408 Net transfers (287,691) 810,005 157,344 (116,859) Surrenders for benefit payments and fees (11,735) (25,219) (35,963) (110,052) Other transactions (1) (99) 47 2,724 Death benefits -- -- (388) (18,492) Net loan activity (781) (18,991) (742) (1,927) Cost of insurance and other fees (166,514) (180,582) (171,312) (342,584) ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (325,137) 895,714 186,502 (16,782) ---------- ---------- ---------- ---------- Net increase (decrease) in net assets (401,123) 960,927 147,402 (128,353) NET ASSETS: Beginning of year 1,597,180 1,734,027 1,200,956 5,728,634 ---------- ---------- ---------- ---------- End of year $1,196,057 $2,694,954 $1,348,358 $5,600,281 ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-97 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS ------------------------------------------------------------------------------- 1. ORGANIZATION: Separate Account VL II (the "Account") is a separate investment account established by Hartford Life and Annuity Insurance Company (the "Sponsor 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 Sponsor Company and the Account are subject to supervision and regulation by the Department of Insurance of the State of Connecticut and the SEC. The contract owners of the Sponsor Company direct their deposits into various investment options (the "Sub-Accounts") within the Account. The Account is comprised of the following 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, Invesco V.I. Core Equity Fund, Invesco V.I. High Yield Fund, Invesco V.I. International Growth Fund, Invesco V.I. Mid Cap Core Equity Fund, Invesco V.I. Small Cap Equity Fund, Invesco V.I. Global Real Estate Fund, Invesco V.I. Balanced Risk Allocation Fund, Invesco V.I. Diversified Dividend Fund (formerly Invesco V.I. Dividend Growth Fund), AllianceBernstein VPS Real Estate Investment Portfolio, 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, Fidelity VIP Asset Manager Portfolio, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP Contrafund Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP Mid Cap Portfolio, Fidelity VIP Value Strategies Portfolio, Fidelity VIP Dynamic Capital Appreciation Portfolio, Fidelity VIP Freedom 2010 Portfolio, Fidelity VIP Freedom 2020 Portfolio, Fidelity VIP Freedom 2030 Portfolio, Fidelity VIP Strategic Income Portfolio, Franklin Rising Dividends Securities Fund, Franklin Income Securities Fund, Franklin Small-Mid Cap Growth Securities Fund, Franklin Small Cap Value Securities Fund, Franklin Strategic Income Securities Fund, Franklin Templeton VIP Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund, Templeton Foreign Securities Fund, Templeton Growth Securities Fund, Mutual Global Discovery Securities Fund, Franklin Flex Cap Growth Securities Fund, Templeton Global Bond Securities Fund, Hartford Balanced HLS Fund (formerly Hartford Advisers HLS Fund), Hartford Total Return Bond HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford Global Research 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 Opportunities HLS Fund, Hartford Small/Mid Cap Equity HLS Fund, Hartford MidCap HLS Fund, Hartford MidCap Value HLS Fund, Hartford Money Market 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, Lord Abbett Fundamental Equity Fund, Lord Abbett Calibrated Dividend Growth Fund (formerly Lord Abbett Capital Structure Fund), Lord Abbett Bond-Debenture Fund, Lord Abbett Growth and Income Fund, MFS Growth Series, MFS Investors Trust Series, MFS New Discovery Series, MFS Total Return Series, MFS Value Series, MFS Research Bond Series, Invesco Van Kampen V.I. Equity and Income Fund, UIF Core Plus Fixed Income Portfolio, UIF Emerging Markets Debt Portfolio, UIF Emerging Markets Equity Portfolio, UIF Mid Cap Growth Portfolio, Invesco Van Kampen V.I. American Value Fund (formerly Invesco Van Kampen V.I. Mid Cap Value Fund), Morgan Stanley -- Focus Growth Portfolio, Morgan Stanley -- Flexible Income Portfolio, Morgan Stanley -- Money Market Portfolio, Invesco V.I. Equally-Weighted S&P 500 Fund (formerly Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund), Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund/VA, Oppenheimer Main Street Small- & Mid-Cap Fund/VA, Oppenheimer Value Fund/VA, Putnam VT Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT Global Equity Fund, Putnam VT Growth and Income Fund, Putnam VT Global Health Care Fund, Putnam VT High Yield Fund, Putnam VT Income Fund, Putnam VT International Value Fund, Putnam VT International Equity Fund, Putnam VT International Growth Fund, Putnam VT Investors Fund, Putnam VT Money Market Fund, Putnam VT Multi-Cap Growth Fund, Putnam VT Small Cap Value Fund, Putnam VT George Putnam Balanced Fund, Putnam VT Global Utilities Fund, Putnam VT Voyager Fund, Putnam VT Capital Opportunities Fund, Putnam VT Equity Income Fund, Invesco Van Kampen V.I. Growth and Income Fund, Invesco Van Kampen V.I. Comstock Fund, Invesco Van Kampen V.I. American Franchise Fund (merged with Invesco V.I. Capital Appreciation Fund)(formerly Invesco Van Kampen V.I. Capital Growth SA-98 ------------------------------------------------------------------------------- Fund), and Invesco Van Kampen V.I. Mid Cap Growth Fund (merged with Invesco V.I. Capital Development Fund). The Sub-Accounts are invested in mutual funds (the "Funds") of the same name. Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from the Sponsor Company's other assets and liabilities and are not chargeable with liabilities arising out of any other business the Sponsor Company may conduct. 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 (U.S. GAAP): 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 average cost method. Dividend income is either accrued daily or as of the ex-dividend date based upon the fund. Net realized gain on distributions income is accrued as of the ex-dividend date. Net realized gain on distributions income represents those dividends from the Funds, which are characterized as capital gains under tax regulations. b) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values calculated at the close of the business day. c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and are taxed with, the total operations of the Sponsor Company, which is taxed as an insurance company under the Internal Revenue Code (IRC). Under the current provisions of the IRC, the Sponsor Company does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited to the contract owners. Based on this, no charge is being made currently to the Account for federal income taxes. The Sponsor Company will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts. d) 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 as of the date of the financial statements and the reported amounts of income and expenses during the period. The most significant estimate contained within the financial statements are the fair value measurements. e) MORTALITY RISK -- The mortality risk is fully borne by the Sponsor Company and may result in additional amounts being transferred into the Account by the Sponsor Company to cover shorter longevity of contract owners than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Sponsor Company. f) FAIR VALUE MEASUREMENTS -- The Sub-Accounts' investments are carried at fair value in the Account's financial statements. The investments in shares of the Funds are valued at the December 31, 2012 closing net asset value as determined by the appropriate Fund manager. For financial instruments that are carried at fair value, a hierarchy is used to place the instruments into three broad levels (Levels 1, 2 and 3) by prioritizing the inputs in the valuation techniques used to measure fair value. Level 1: Observable inputs that reflect unadjusted 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 unadjusted quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 2 investments include those that are model priced by vendors using observable inputs. Level 3: Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Because Level 3 fair values, by their nature, contain unobservable market inputs, considerable judgment is used to determine the 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. In certain cases, the inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2012, the Sub-Accounts invest in mutual funds which are carried at fair value and represent Level 1 investments under the fair value hierarchy levels. There were no Level 2 or Level 3 SA-99 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) ------------------------------------------------------------------------------- investments in the Sub-Accounts. The Account's policy is to recognize transfers of securities among the levels at the beginning of the reporting period. There were no transfers among the levels for the year ended December 31, 2012. g) ACCOUNTING FOR UNCERTAIN TAX POSITIONS -- Management evaluates whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required at December 31, 2012. The 2007 through 2012 tax years generally remain subject to examination by U.S. federal and most state tax authorities. 3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES: Each Sub-account is charged certain fees, according to contract terms, as follows: a) COST OF INSURANCE -- In accordance with terms of the contracts, the Sponsor Company makes deductions for costs of insurance charges (COI), which relate to the death benefit component of the contract. The COI is calculated based on several factors including age, gender, risk class, timing of premium payments, investment performance of the Sub-Account, the death benefit amount, fees and charges assessed and outstanding policy loans. Because a contract's account value and death benefit may vary from month to month, the cost of insurance charge may also vary. These charges are deducted through redemption of units from applicable contract owners' accounts and are included on the accompanying statements of changes in net assets. b) MORTALITY AND EXPENSE RISK CHARGES -- The Sponsor Company, as an issuer of variable life contracts, assesses mortality and expense risk charges for which it receives a maximum annual fee of 0.80% of the Sub-Account's average daily net assets. These expenses are deducted through the redemption of units from applicable contract owners' accounts and are reflected in cost of insurance and other fees on the accompanying statements of changes in net assets. c) ADMINISTRATIVE CHARGES -- The Sponsor Company provides administrative services to the Account and charges the Account a fee based upon the face amount of the policy at the policy issue date for these services. These charges are deducted through a redemption of units from applicable contract owners' accounts and are reflected in surrenders for benefit payments and fees on the accompanying statements of changes in net assets. d) RIDER CHARGES -- The Sponsor Company will charge an expense for various Rider charges, which are deducted through a redemption of units from applicable contract owners' accounts and are included in surrenders for benefit payments and fees in the accompanying statements of changes in net assets. For further detail regarding specific product rider charges, please refer to Note 6, Financial Highlights. e) ISSUE CHARGES -- The Sponsor Company may make deductions to cover issue expenses at a maximum rate of $20, plus $0.05 per $1,000 of the initial face amount. These charges are deducted through a redemption of units from applicable contract owners' accounts and are reflected in cost of insurance and other fees in 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, 2012 were as follows:
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio $242,406 $86,469 AllianceBernstein VPS International Value Portfolio 802,010 771,967 AllianceBernstein VPS Small/Mid Cap Value Portfolio 850,522 420,093 AllianceBernstein VPS Value Portfolio 7,968 2,877 AllianceBernstein VPS International Growth Portfolio 173,826 347,901 Invesco V.I. Core Equity Fund 222,164 402,678 Invesco V.I. High Yield Fund 1,788 372 Invesco V.I. International Growth Fund 1,265,989 614,883 Invesco V.I. Mid Cap Core Equity Fund 763,691 766,575 Invesco V.I. Small Cap Equity Fund 827,972 368,074 Invesco V.I. Global Real Estate Fund 205,566 53,753
SA-100 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Invesco V.I. Balanced Risk Allocation Fund $2,072,273 $287,992 Invesco V.I. Diversified Dividend Fund* 5,694 1,287 AllianceBernstein VPS Real Estate Investment Portfolio 400,651 67,144 American Funds Global Bond Fund 336,809 119,551 American Funds Global Growth and Income Fund 507,691 217,191 American Funds Asset Allocation Fund 2,678,712 3,030,554 American Funds Blue Chip Income and Growth Fund 2,258,161 1,747,766 American Funds Bond Fund 2,974,477 3,378,442 American Funds Global Growth Fund 1,298,890 1,751,154 American Funds Growth Fund 2,810,011 7,344,728 American Funds Growth-Income Fund 3,411,856 4,622,519 American Funds International Fund 2,988,070 3,086,319 American Funds New World Fund 1,539,463 2,285,976 American Funds Global Small Capitalization Fund 1,068,456 1,692,875 Fidelity VIP Asset Manager Portfolio 15,409 122,832 Fidelity VIP Equity-Income Portfolio 2,936,730 1,966,824 Fidelity VIP Growth Portfolio 27,829 18,566 Fidelity VIP Contrafund Portfolio 2,210,535 2,150,054 Fidelity VIP Overseas Portfolio 8,919 34,584 Fidelity VIP Mid Cap Portfolio 3,270,907 1,499,332 Fidelity VIP Value Strategies Portfolio 7,395 21,401 Fidelity VIP Dynamic Capital Appreciation Portfolio 42,314 13,385 Fidelity VIP Freedom 2010 Portfolio 85,975 112,536 Fidelity VIP Freedom 2020 Portfolio 309,658 165,756 Fidelity VIP Freedom 2030 Portfolio 377,188 52,873 Fidelity VIP Strategic Income Portfolio 449,760 121,054 Franklin Rising Dividends Securities Fund 716,807 98,711 Franklin Income Securities Fund 3,193,142 1,714,861 Franklin Small-Mid Cap Growth Securities Fund 383,258 348,031 Franklin Small Cap Value Securities Fund 935,112 1,726,978 Franklin Strategic Income Securities Fund 3,104,573 2,370,379 Franklin Templeton VIP Mutual Shares Securities Fund 2,405,555 1,411,115 Templeton Developing Markets Securities Fund 524,602 195,099 Templeton Foreign Securities Fund 1,089,516 385,502 Templeton Growth Securities Fund 704,946 549,982 Mutual Global Discovery Securities Fund 2,319,969 1,240,478 Franklin Flex Cap Growth Securities Fund 90,205 75,631 Templeton Global Bond Securities Fund 5,150,846 3,066,162 Hartford Balanced HLS Fund* 3,503,286 3,233,967 Hartford Total Return Bond HLS Fund 9,941,072 4,140,901 Hartford Capital Appreciation HLS Fund 5,924,141 8,496,327 Hartford Dividend and Growth HLS Fund 4,632,807 4,238,346 Hartford Global Research HLS Fund 61,846 25,046 Hartford Global Growth HLS Fund 226,034 445,360 Hartford Disciplined Equity HLS Fund 2,001,122 1,001,719 Hartford Growth HLS Fund 257,342 86,907 Hartford Growth Opportunities HLS Fund 1,554,881 1,368,431 Hartford High Yield HLS Fund 3,244,135 1,099,743 Hartford Index HLS Fund 3,977,960 5,423,262
SA-101 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Hartford International Opportunities HLS Fund $1,593,040 $2,334,831 Hartford Small/Mid Cap Equity HLS Fund 108,595 42,716 Hartford MidCap HLS Fund 933,823 2,787,982 Hartford MidCap Value HLS Fund 721,727 1,112,322 Hartford Money Market HLS Fund 29,750,480 30,854,816 Hartford Small Company HLS Fund 1,140,690 2,361,191 Hartford SmallCap Growth HLS Fund 29,024 18,430 Hartford Stock HLS Fund 1,996,795 3,645,371 Hartford U.S. Government Securities HLS Fund 2,477,460 2,837,364 Hartford Value HLS Fund 2,005,799 3,625,229 Lord Abbett Fundamental Equity Fund 162,539 48,775 Lord Abbett Calibrated Dividend Growth Fund* 299,081 556,529 Lord Abbett Bond-Debenture Fund 2,080,713 1,304,059 Lord Abbett Growth and Income Fund 287,894 361,537 MFS Growth Series 312,018 41,514 MFS Investors Trust Series 219,876 197,277 MFS New Discovery Series 555,511 808,466 MFS Total Return Series 1,657,359 904,967 MFS Value Series 2,017,310 957,097 MFS Research Bond Series 5,343,224 1,213,775 Invesco Van Kampen V.I. Equity and Income Fund 2,335 -- UIF Core Plus Fixed Income Portfolio 20,983 10,204 UIF Emerging Markets Debt Portfolio 826 1,227 UIF Emerging Markets Equity Portfolio 447 1,314 UIF Mid Cap Growth Portfolio 532,594 415,324 Invesco Van Kampen V.I. American Value Fund* 364,810 446,923 Morgan Stanley -- Focus Growth Portfolio 3,124 1,180 Morgan Stanley -- Flexible Income Portfolio 3,579 1,047 Morgan Stanley -- Money Market Portfolio 2,092 7,259 Invesco V.I. Equally-Weighted S&P 500 Fund* 8,982 2,154 Oppenheimer Capital Appreciation Fund/VA 226,567 387,342 Oppenheimer Global Securities Fund/VA 205,782 499,854 Oppenheimer Main Street Fund/VA 200,944 244,155 Oppenheimer Main Street Small- & Mid-Cap Fund/VA 504,705 483,190 Oppenheimer Value Fund/VA 22,519 22,115 Putnam VT Diversified Income Fund 991,207 1,315,845 Putnam VT Global Asset Allocation Fund 6,981 21,331 Putnam VT Global Equity Fund 548,216 395,403 Putnam VT Growth and Income Fund 774,288 816,288 Putnam VT Global Health Care Fund 59,907 56,131 Putnam VT High Yield Fund 1,746,951 1,885,911 Putnam VT Income Fund 1,457,068 1,403,266 Putnam VT International Value Fund 70,417 100,235 Putnam VT International Equity Fund 649,996 998,396 Putnam VT International Growth Fund 4,964 48,721 Putnam VT Investors Fund 18,395 15,854 Putnam VT Money Market Fund 5 2,955 Putnam VT Multi-Cap Growth Fund 424,742 782,335 Putnam VT Small Cap Value Fund 191,001 270,394
SA-102 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Putnam VT George Putnam Balanced Fund $4,758 $10,469 Putnam VT Global Utilities Fund 13,872 25,843 Putnam VT Voyager Fund 808,332 1,617,356 Putnam VT Capital Opportunities Fund 542,684 534,987 Putnam VT Equity Income Fund 591,891 505,546 Invesco Van Kampen V.I. Growth and Income Fund 128,150 132,479 Invesco Van Kampen V.I. Comstock Fund 392,635 666,034 Invesco Van Kampen V.I. American Franchise Fund* 2,875,739 2,844,268 Invesco Van Kampen V.I. Mid Cap Growth Fund* 2,002,626 2,162,027
* See Note 1 for additional information related to this Sub-Account. 5. CHANGES IN UNITS OUTSTANDING: The changes in units outstanding for the year ended December 31, 2012 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio 21,697 8,124 13,573 AllianceBernstein VPS International Value Portfolio 101,416 106,266 (4,850) AllianceBernstein VPS Small/Mid Cap Value Portfolio 50,282 30,865 19,417 AllianceBernstein VPS Value Portfolio 848 313 535 AllianceBernstein VPS International Growth Portfolio 18,256 40,541 (22,285) Invesco V.I. Core Equity Fund 12,423 24,127 (11,704) Invesco V.I. High Yield Fund 94 35 59 Invesco V.I. International Growth Fund 114,228 61,507 52,721 Invesco V.I. Mid Cap Core Equity Fund 39,390 42,319 (2,929) Invesco V.I. Small Cap Equity Fund 56,677 24,705 31,972 Invesco V.I. Global Real Estate Fund 13,241 3,532 9,709 Invesco V.I. Balanced Risk Allocation Fund 173,749 24,181 149,568 Invesco V.I. Diversified Dividend Fund* 447 120 327 AllianceBernstein VPS Real Estate Investment Portfolio 15,506 3,244 12,262 American Funds Global Bond Fund 22,162 9,599 12,563 American Funds Global Growth and Income Fund 41,763 21,724 20,039 American Funds Asset Allocation Fund 118,221 172,524 (54,303) American Funds Blue Chip Income and Growth Fund 116,337 108,987 7,350 American Funds Bond Fund 143,206 231,762 (88,556) American Funds Global Growth Fund 636,859 1,033,244 (396,385) American Funds Growth Fund 1,648,442 5,587,524 (3,939,082) American Funds Growth-Income Fund 1,510,704 3,067,395 (1,556,691) American Funds International Fund 113,685 141,295 (27,610) American Funds New World Fund 46,337 75,713 (29,376) American Funds Global Small Capitalization Fund 433,324 838,219 (404,895) Fidelity VIP Asset Manager Portfolio -- 42,528 (42,528) Fidelity VIP Equity-Income Portfolio 377,273 535,631 (158,358) Fidelity VIP Growth Portfolio 2,492 1,787 705 Fidelity VIP Contrafund Portfolio 148,234 158,574 (10,340) Fidelity VIP Overseas Portfolio -- 15,581 (15,581) Fidelity VIP Mid Cap Portfolio 133,686 102,870 30,816 Fidelity VIP Value Strategies Portfolio 628 1,926 (1,298) Fidelity VIP Dynamic Capital Appreciation Portfolio 3,488 1,142 2,346
SA-103 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Fidelity VIP Freedom 2010 Portfolio 6,081 9,933 (3,852) Fidelity VIP Freedom 2020 Portfolio 25,827 14,551 11,276 Fidelity VIP Freedom 2030 Portfolio 32,355 4,868 27,487 Fidelity VIP Strategic Income Portfolio 31,700 9,107 22,593 Franklin Rising Dividends Securities Fund 46,649 6,543 40,106 Franklin Income Securities Fund 147,716 124,782 22,934 Franklin Small-Mid Cap Growth Securities Fund 22,779 28,141 (5,362) Franklin Small Cap Value Securities Fund 40,611 80,549 (39,938) Franklin Strategic Income Securities Fund 148,607 171,121 (22,514) Franklin Templeton VIP Mutual Shares Securities Fund 118,963 86,961 32,002 Templeton Developing Markets Securities Fund 52,979 20,783 32,196 Templeton Foreign Securities Fund 108,383 40,622 67,761 Templeton Growth Securities Fund 64,417 55,303 9,114 Mutual Global Discovery Securities Fund 95,915 94,191 1,724 Franklin Flex Cap Growth Securities Fund 7,722 6,348 1,374 Templeton Global Bond Securities Fund 224,533 180,995 43,538 Hartford Balanced HLS Fund* 633,507 869,582 (236,075) Hartford Total Return Bond HLS Fund 2,127,469 1,314,014 813,455 Hartford Capital Appreciation HLS Fund 634,966 1,213,333 (578,367) Hartford Dividend and Growth HLS Fund 709,880 909,021 (199,141) Hartford Global Research HLS Fund 5,946 2,558 3,388 Hartford Global Growth HLS Fund 181,254 369,893 (188,639) Hartford Disciplined Equity HLS Fund 1,011,998 589,742 422,256 Hartford Growth HLS Fund 23,331 7,901 15,430 Hartford Growth Opportunities HLS Fund 73,199 63,065 10,134 Hartford High Yield HLS Fund 177,857 73,118 104,739 Hartford Index HLS Fund 771,943 1,337,153 (565,210) Hartford International Opportunities HLS Fund 395,131 742,223 (347,092) Hartford Small/Mid Cap Equity HLS Fund 4,370 3,682 688 Hartford MidCap HLS Fund 151,612 613,860 (462,248) Hartford MidCap Value HLS Fund 30,000 50,898 (20,898) Hartford Money Market HLS Fund 16,985,740 17,600,408 (614,668) Hartford Small Company HLS Fund 431,420 903,568 (472,148) Hartford SmallCap Growth HLS Fund 1,965 1,243 722 Hartford Stock HLS Fund 284,490 882,674 (598,184) Hartford U.S. Government Securities HLS Fund 198,458 249,427 (50,969) Hartford Value HLS Fund 141,425 308,175 (166,750) Lord Abbett Fundamental Equity Fund 12,810 4,146 8,664 Lord Abbett Calibrated Dividend Growth Fund* 18,186 41,003 (22,817) Lord Abbett Bond-Debenture Fund 107,518 90,201 17,317 Lord Abbett Growth and Income Fund 23,528 32,161 (8,633) MFS Growth Series 25,393 3,350 22,043 MFS Investors Trust Series 16,112 14,371 1,741 MFS New Discovery Series 18,447 37,956 (19,509) MFS Total Return Series 87,482 56,975 30,507 MFS Value Series 149,670 85,169 64,501 MFS Research Bond Series 353,005 91,354 261,651 Invesco Van Kampen V.I. Equity and Income Fund 185 -- 185 UIF Core Plus Fixed Income Portfolio 500 651 (151)
SA-104 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- UIF Emerging Markets Debt Portfolio -- 45 (45) UIF Emerging Markets Equity Portfolio 13 43 (30) UIF Mid Cap Growth Portfolio 24,089 34,559 (10,470) Invesco Van Kampen V.I. American Value Fund* 28,871 37,263 (8,392) Morgan Stanley -- Focus Growth Portfolio 158 76 82 Morgan Stanley -- Flexible Income Portfolio 141 62 79 Morgan Stanley -- Money Market Portfolio 179 624 (445) Invesco V.I. Equally-Weighted S&P 500 Fund* 204 118 86 Oppenheimer Capital Appreciation Fund/VA 18,014 32,581 (14,567) Oppenheimer Global Securities Fund/VA 13,121 38,891 (25,770) Oppenheimer Main Street Fund/VA 15,624 19,670 (4,046) Oppenheimer Main Street Small- & Mid-Cap Fund/VA 40,942 38,905 2,037 Oppenheimer Value Fund/VA 2,137 2,247 (110) Putnam VT Diversified Income Fund 44,141 92,241 (48,100) Putnam VT Global Asset Allocation Fund 192 967 (775) Putnam VT Global Equity Fund 17,548 14,679 2,869 Putnam VT Growth and Income Fund 16,625 25,619 (8,994) Putnam VT Global Health Care Fund -- 3,322 (3,322) Putnam VT High Yield Fund 29,992 62,441 (32,449) Putnam VT Income Fund 39,406 53,729 (14,323) Putnam VT International Value Fund 1,259 6,870 (5,611) Putnam VT International Equity Fund 28,853 63,661 (34,808) Putnam VT International Growth Fund -- 2,998 (2,998) Putnam VT Investors Fund 876 1,316 (440) Putnam VT Money Market Fund -- 1,637 (1,637) Putnam VT Multi-Cap Growth Fund 16,552 32,546 (15,994) Putnam VT Small Cap Value Fund 16,903 24,704 (7,801) Putnam VT George Putnam Balanced Fund -- 707 (707) Putnam VT Global Utilities Fund -- 895 (895) Putnam VT Voyager Fund 27,812 48,682 (20,870) Putnam VT Capital Opportunities Fund 25,969 25,930 39 Putnam VT Equity Income Fund 28,734 27,851 883 Invesco Van Kampen V.I. Growth and Income Fund 9,804 11,821 (2,017) Invesco Van Kampen V.I. Comstock Fund 24,877 55,139 (30,262) Invesco Van Kampen V.I. American Franchise Fund* 282,072 265,250 16,822 Invesco Van Kampen V.I. Mid Cap Growth Fund* 197,147 174,763 22,384
* See Note 1 for additional information related to this Sub-Account. The changes in units outstanding for the year ended December 31, 2011 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio 12,266 10,346 1,920 AllianceBernstein VPS International Value Portfolio 122,168 40,481 81,687 AllianceBernstein VPS Small/Mid Cap Value Portfolio 72,936 154,119 (81,183) AllianceBernstein VPS Value Portfolio 257 268 (11) AllianceBernstein VPS International Growth Portfolio 33,410 45,475 (12,065) Invesco V.I. Capital Appreciation Fund 27,162 17,894 9,268
SA-105 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Invesco V.I. Core Equity Fund 66,141 50,361 15,780 Invesco V.I. High Yield Fund 1,371 707 664 Invesco V.I. International Growth Fund 246,162 69,207 176,955 Invesco V.I. Mid Cap Core Equity Fund 127,265 28,515 98,750 Invesco V.I. Small Cap Equity Fund 202,806 29,875 172,931 Invesco V.I. Capital Development Fund 37,352 26,421 10,931 Invesco V.I. Global Real Estate Fund 17,468 1,888 15,580 Invesco V.I. Balanced Risk Allocation Fund 147,201 79,550 67,651 Invesco V.I. Dividend Growth Fund 3,956 3,152 804 AllianceBernstein VPS Real Estate Investment Portfolio 19,710 2,662 17,048 American Funds Global Bond Fund 35,035 19,018 16,017 American Funds Capital World Growth & Income Fund 71,034 11,434 59,600 American Funds Asset Allocation Fund 138,613 178,738 (40,125) American Funds Blue Chip Income and Growth Fund 96,164 115,496 (19,332) American Funds Bond Fund 421,033 261,610 159,423 American Funds Global Growth Fund 809,466 1,616,299 (806,833) American Funds Growth Fund 4,480,276 7,161,325 (2,681,049) American Funds Growth-Income Fund 2,522,325 4,694,498 (2,172,173) American Funds International Fund 202,942 117,763 85,179 American Funds New World Fund 77,020 86,241 (9,221) American Funds Global Small Capitalization Fund 610,842 787,245 (176,403) Fidelity VIP Asset Manager Portfolio -- 142,156 (142,156) Fidelity VIP Equity-Income Portfolio 277,637 719,745 (442,108) Fidelity VIP Growth Portfolio 20,769 3,816 16,953 Fidelity VIP Contrafund Portfolio 208,565 253,227 (44,662) Fidelity VIP Overseas Portfolio -- 21,128 (21,128) Fidelity VIP Mid Cap Portfolio 204,376 108,919 95,457 Fidelity VIP Value Strategies Portfolio 1,082 2,290 (1,208) Fidelity VIP Dynamic Capital Appreciation Portfolio 1,890 797 1,093 Fidelity VIP Freedom 2010 Portfolio 20,474 11,459 9,015 Fidelity VIP Freedom 2020 Portfolio 21,442 15,258 6,184 Fidelity VIP Freedom 2030 Portfolio 47,061 13,001 34,060 Fidelity VIP Strategic Income Portfolio 21,813 1,830 19,983 Franklin Rising Dividends Securities Fund 23,416 2,757 20,659 Franklin Income Securities Fund 191,256 91,651 99,605 Franklin Small-Mid Cap Growth Securities Fund 50,774 11,980 38,794 Franklin Small Cap Value Securities Fund 71,324 53,772 17,552 Franklin Strategic Income Securities Fund 199,318 134,369 64,949 Mutual Shares Securities Fund 185,919 93,140 92,779 Templeton Developing Markets Securities Fund 77,954 12,978 64,976 Templeton Foreign Securities Fund 186,670 22,475 164,195 Templeton Growth Securities Fund 87,808 45,772 42,036 Mutual Global Discovery Securities Fund 209,123 100,951 108,172 Franklin Flex Cap Growth Securities Fund 12,005 4,951 7,054 Templeton Global Bond Securities Fund 294,437 164,097 130,340 Hartford Advisers HLS Fund 429,188 1,348,367 (919,179) Hartford Total Return Bond HLS Fund 2,895,976 2,615,106 280,870 Hartford Capital Appreciation HLS Fund 1,054,989 1,608,877 (553,888) Hartford Dividend and Growth HLS Fund 876,964 979,880 (102,916)
SA-106 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Hartford Global Research HLS Fund 4,433 3,748 685 Hartford Global Growth HLS Fund 463,194 72,653 390,541 Hartford Disciplined Equity HLS Fund 1,659,925 418,977 1,240,948 Hartford Growth HLS Fund 61,086 8,621 52,465 Hartford Growth Opportunities HLS Fund 153,081 153,719 (638) Hartford High Yield HLS Fund 165,600 53,158 112,442 Hartford Index HLS Fund 473,549 1,623,745 (1,150,196) Hartford International Opportunities HLS Fund 660,053 1,185,826 (525,773) Hartford Small/Mid Cap Equity HLS Fund 11,172 2,398 8,774 Hartford MidCap HLS Fund 164,288 941,287 (776,999) Hartford MidCap Value HLS Fund 23,614 45,723 (22,109) Hartford Money Market HLS Fund 21,922,021 23,235,095 (1,313,074) Hartford Small Company HLS Fund 480,801 1,373,527 (892,726) Hartford SmallCap Growth HLS Fund 5,693 1,102 4,591 Hartford Stock HLS Fund 291,712 1,230,515 (938,803) Hartford U.S. Government Securities HLS Fund 206,204 174,759 31,445 Hartford Value HLS Fund 118,849 287,657 (168,808) Lord Abbett Fundamental Equity Fund 20,895 2,513 18,382 Lord Abbett Capital Structure Fund 19,155 11,041 8,114 Lord Abbett Bond-Debenture Fund 88,543 104,897 (16,354) Lord Abbett Growth and Income Fund 41,675 16,503 25,172 MFS Growth Series 10,752 1,558 9,194 MFS Investors Trust Series 8,094 7,049 1,045 MFS New Discovery Series 41,179 54,568 (13,389) MFS Total Return Series 73,516 94,138 (20,622) MFS Value Series 277,033 75,773 201,260 MFS Research Bond Series 666,723 126,794 539,929 Invesco Van Kampen V.I. Equity and Income Fund 1,984 1,222 762 UIF Core Plus Fixed Income Portfolio 698 811 (113) UIF Emerging Markets Debt Portfolio -- 49 (49) UIF Emerging Markets Equity Portfolio 16 46 (30) UIF Mid Cap Growth Portfolio 54,739 37,928 16,811 Invesco Van Kampen V.I. Mid Cap Value Fund 48,382 64,412 (16,030) Morgan Stanley -- Focus Growth Portfolio 156 74 82 Morgan Stanley -- Mid Cap Growth Portfolio 365 365 -- Morgan Stanley -- Flexible Income Portfolio 158 1,109 (951) Morgan Stanley -- Money Market Portfolio 6,432 11,513 (5,081) Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund 1,121 1,067 54 Oppenheimer Capital Appreciation Fund/VA 30,331 34,747 (4,416) Oppenheimer Global Securities Fund/VA 26,279 38,871 (12,592) Oppenheimer Main Street Fund/VA 12,696 7,096 5,600 Oppenheimer Main Street Small- & Mid-Cap Fund/VA 29,110 28,254 856 Oppenheimer Value Fund/VA 296 683 (387) Putnam VT Diversified Income Fund 43,151 58,478 (15,327) Putnam VT Global Asset Allocation Fund 264 1,884 (1,620) Putnam VT Global Equity Fund 11,683 20,552 (8,869) Putnam VT Growth and Income Fund 13,403 43,247 (29,844) Putnam VT Global Health Care Fund -- 2,033 (2,033) Putnam VT High Yield Fund 27,837 52,853 (25,016)
SA-107 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Putnam VT Income Fund 31,144 50,216 (19,072) Putnam VT International Value Fund 1,087 7,426 (6,339) Putnam VT International Equity Fund 38,465 96,212 (57,747) Putnam VT International Growth Fund -- 3,730 (3,730) Putnam VT Investors Fund 221 1,869 (1,648) Putnam VT Money Market Fund -- 5,133 (5,133) Putnam VT Multi-Cap Growth Fund 17,777 42,147 (24,370) Putnam VT Small Cap Value Fund 12,350 16,218 (3,868) Putnam VT George Putnam Balanced Fund 10 1,431 (1,421) Putnam VT Global Utilities Fund -- 2,535 (2,535) Putnam VT Voyager Fund 55,113 86,989 (31,876) Putnam VT Capital Opportunities Fund 19,880 36,094 (16,214) Putnam VT Equity Income Fund 69,826 13,950 55,876 Invesco Van Kampen V.I. Growth and Income Fund 26,331 8,779 17,552 Invesco Van Kampen V.I. Comstock Fund 37,002 37,695 (693)
SA-108 ------------------------------------------------------------------------------- 6. FINANCIAL HIGHLIGHTS: The following is a summary of units, unit fair values, net assets, expense ratios, investment income ratios, and total return ratios representing the lowest and highest contract charges for each of the periods presented within each Sub-Account that had outstanding units as of and for the period ended December 31, 2012. The unit value range presented below represents the unit values of the highest and lowest contract charges, therefore a specific Sub-Account unit value may be outside of the range presented in this table. Financial highlights for net assets allocated to Sub-Accounts that have merged during the period, if applicable, have been shown for the surviving fund.
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2012 65,123 $11.222162 to $11.222162 $730,825 2011 51,550 9.898234 to 9.898234 510,257 2010 49,630 10.210277 to 10.210277 506,733 2009 31,021 9.257151 to 9.257151 287,165 2008 12,637 7.481734 to 7.481734 94,544 ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2012 859,338 7.830881 to 7.830881 6,729,372 2011 864,188 6.857519 to 6.857519 5,926,185 2010 782,501 8.511980 to 8.511980 6,660,629 2009 757,738 8.161134 to 8.161134 6,184,003 2008 645,465 6.074134 to 6.074134 3,920,642 ALLIANCEBERNSTEIN VPS SMALL/MID CAP VALUE PORTFOLIO 2012 360,757 14.642002 to 14.642002 5,282,212 2011 341,340 12.359340 to 12.359340 4,218,732 2010 422,523 13.525397 to 13.525397 5,714,787 2009 273,631 10.684549 to 10.684549 2,923,626 2008 216,734 7.489616 to 7.489616 1,623,257 ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2012 1,910 9.717865 to 9.717865 18,563 2011 1,375 8.410751 to 8.410751 11,566 2010 1,386 8.740814 to 8.740814 12,114 2009 792 7.844980 to 7.844980 6,210 2008 248 6.481456 to 6.481456 1,607 ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2012 144,012 9.085135 to 9.085135 1,308,367 2011 166,297 7.883945 to 7.883945 1,311,075 2010 178,362 9.390573 to 9.390573 1,674,918 2009 172,442 8.339156 to 8.339156 1,438,025 2008 123,863 5.989175 to 5.989175 741,838 INVESCO V.I. CORE EQUITY FUND 2012 87,159 17.528629 to 17.528629 1,527,782 2011 98,863 15.391910 to 15.391910 1,521,695 2010 83,083 15.401643 to 15.401643 1,279,622 2009 80,060 14.058334 to 14.058334 1,125,506 2008 163,573 10.957579 to 10.957579 1,792,368 INVESCO V.I. HIGH YIELD FUND 2012 1,397 11.528309 to 11.528309 16,108 2011 1,338 9.838689 to 9.838689 13,167 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2012 -- to -- 2.05% to 2.05% 13.38% to 13.38% 2011 -- to -- 2.35% to 2.35% (3.06)% to (3.06)% 2010 -- to -- 2.36% to 2.36% 10.30% to 10.30% 2009 -- to -- 0.79% to 0.79% 24.45% to 24.45% 2008 -- to -- 3.93% to 3.93% (25.18)% to (25.18)% ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2012 -- to -- 1.43% to 1.43% 14.19% to 14.19% 2011 -- to -- 4.05% to 4.05% (19.44)% to (19.44)% 2010 -- to -- 2.78% to 2.78% 4.30% to 4.30% 2009 -- to -- 1.20% to 1.20% 34.36% to 34.36% 2008 -- to -- 0.86% to 0.86% (53.28)% to (53.28)% ALLIANCEBERNSTEIN VPS SMALL/MID CAP VALUE PORTFOLIO 2012 -- to -- 0.29% to 0.29% 18.47% to 18.47% 2011 -- to -- 0.26% to 0.26% (8.62)% to (8.62)% 2010 -- to -- 0.26% to 0.26% 26.59% to 26.59% 2009 -- to -- 0.75% to 0.75% 42.66% to 42.66% 2008 -- to -- 0.42% to 0.42% (35.75)% to (35.75)% ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2012 -- to -- 1.79% to 1.79% 15.54% to 15.54% 2011 -- to -- 1.19% to 1.19% (3.78)% to (3.78)% 2010 -- to -- 1.34% to 1.34% 11.42% to 11.42% 2009 -- to -- 2.49% to 2.49% 21.04% to 21.04% 2008 -- to -- -- to -- (35.19)% to (35.19)% ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2012 -- to -- 1.47% to 1.47% 15.24% to 15.24% 2011 -- to -- 2.83% to 2.83% (16.04)% to (16.04)% 2010 -- to -- 1.85% to 1.85% 12.61% to 12.61% 2009 -- to -- 4.55% to 4.55% 39.24% to 39.24% 2008 -- to -- -- to -- (48.96)% to (48.96)% INVESCO V.I. CORE EQUITY FUND 2012 -- to -- 0.92% to 0.92% 13.88% to 13.88% 2011 -- to -- 0.72% to 0.72% (0.06)% to (0.06)% 2010 -- to -- 0.99% to 0.99% 9.56% to 9.56% 2009 -- to -- 1.16% to 1.16% 28.30% to 28.30% 2008 -- to -- 12.90% to 12.90% (30.14)% to (30.14)% INVESCO V.I. HIGH YIELD FUND 2012 -- to -- 5.23% to 5.23% 17.17% to 17.17% 2011 -- to -- -- to -- (1.61)% to (1.61)%
SA-109 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- INVESCO V.I. INTERNATIONAL GROWTH FUND 2012 903,449 $10.681661 to $10.681661 $9,650,335 2011 850,728 9.245632 to 9.245632 7,865,517 2010 673,773 9.913898 to 9.913898 6,679,720 2009 409,780 8.784056 to 8.784056 3,599,534 2008 89,500 6.495072 to 6.495072 581,307 INVESCO V.I. MID CAP CORE EQUITY FUND 2012 325,371 18.762126 to 18.762126 6,104,656 2011 328,300 16.909642 to 16.909642 5,551,429 2010 229,550 18.061560 to 18.061560 4,146,024 2009 227,728 15.827870 to 15.827870 3,604,451 2008 228,373 12.155426 to 12.155426 2,775,974 INVESCO V.I. SMALL CAP EQUITY FUND 2012 384,884 15.606747 to 15.606747 6,006,783 2011 352,912 13.702870 to 13.702870 4,835,906 2010 179,981 13.803070 to 13.803070 2,484,288 2009 89,879 10.738505 to 10.738505 965,161 2008 64,756 8.853684 to 8.853684 573,329 INVESCO V.I. GLOBAL REAL ESTATE FUND 2012 35,213 16.918723 to 16.918723 595,760 2011 25,504 13.205405 to 13.205405 336,790 2010 9,924 14.124702 to 14.124702 140,177 2009 1,041 12.019804 to 12.019804 12,510 INVESCO V.I. BALANCED RISK ALLOCATION FUND 2012 278,203 12.310062 to 12.310062 3,424,697 2011 128,635 11.091880 to 11.091880 1,426,806 INVESCO V.I. DIVERSIFIED DIVIDEND FUND+ 2012 4,147 11.592516 to 11.592516 48,073 2011 3,820 9.793528 to 9.793528 37,414 ALLIANCEBERNSTEIN VPS REAL ESTATE INVESTMENT PORTFOLIO 2012 35,515 22.307313 to 22.307313 792,240 2011 23,253 18.461559 to 18.461559 429,286 2010 6,205 16.976140 to 16.976140 105,335 2009 45 13.467967 to 13.467967 604 AMERICAN FUNDS GLOBAL BOND FUND 2012 165,647 12.753310 to 12.753310 2,112,544 2011 153,084 12.009540 to 12.009540 1,838,472 2010 137,067 11.488176 to 11.488176 1,574,654 2009 86,628 10.917046 to 10.917046 945,719 2008 27,660 9.952373 to 9.952373 275,278 AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2012 380,925 10.725138 to 10.725138 4,085,479 2011 360,886 9.123412 to 9.123412 3,292,508 2010 301,286 9.588656 to 9.588656 2,888,928 2009 234,854 8.577912 to 8.577912 2,014,558 2008 79,156 6.139312 to 6.139312 485,963 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ INVESCO V.I. INTERNATIONAL GROWTH FUND 2012 -- to -- 1.50% to 1.50% 15.53% to 15.53% 2011 -- to -- 1.47% to 1.47% (6.74)% to (6.74)% 2010 -- to -- 2.58% to 2.58% 12.86% to 12.86% 2009 -- to -- 2.46% to 2.46% 35.24% to 35.24% 2008 -- to -- 2.47% to 2.47% (35.05)% to (35.05)% INVESCO V.I. MID CAP CORE EQUITY FUND 2012 -- to -- 0.07% to 0.07% 10.96% to 10.96% 2011 -- to -- 0.32% to 0.32% (6.38)% to (6.38)% 2010 -- to -- 0.57% to 0.57% 14.11% to 14.11% 2009 -- to -- 1.42% to 1.42% 30.21% to 30.21% 2008 -- to -- 1.62% to 1.62% (28.52)% to (28.52)% INVESCO V.I. SMALL CAP EQUITY FUND 2012 -- to -- -- to -- 13.89% to 13.89% 2011 -- to -- -- to -- (0.73)% to (0.73)% 2010 -- to -- -- to -- 28.54% to 28.54% 2009 -- to -- 0.23% to 0.23% 21.29% to 21.29% 2008 -- to -- -- to -- (31.31)% to (31.31)% INVESCO V.I. GLOBAL REAL ESTATE FUND 2012 -- to -- 0.61% to 0.61% 28.12% to 28.12% 2011 -- to -- 4.42% to 4.42% (6.51)% to (6.51)% 2010 -- to -- 7.36% to 7.36% 17.51% to 17.51% 2009 -- to -- -- to -- 20.20% to 20.20% INVESCO V.I. BALANCED RISK ALLOCATION FUND 2012 -- to -- 1.04% to 1.04% 10.98% to 10.98% 2011 -- to -- -- to -- 10.92% to 10.92% INVESCO V.I. DIVERSIFIED DIVIDEND FUND+ 2012 -- to -- 1.91% to 1.91% 18.37% to 18.37% 2011 -- to -- -- to -- (2.06)% to (2.06)% ALLIANCEBERNSTEIN VPS REAL ESTATE INVESTMENT PORTFOLIO 2012 -- to -- 0.87% to 0.87% 20.83% to 20.83% 2011 -- to -- 1.33% to 1.33% 8.75% to 8.75% 2010 -- to -- 0.14% to 0.14% 26.05% to 26.05% 2009 -- to -- -- to -- 34.68% to 34.68% AMERICAN FUNDS GLOBAL BOND FUND 2012 -- to -- 2.17% to 2.17% 6.19% to 6.19% 2011 -- to -- 2.90% to 2.90% 4.54% to 4.54% 2010 -- to -- 3.34% to 3.34% 5.23% to 5.23% 2009 -- to -- 1.83% to 1.83% 9.69% to 9.69% 2008 -- to -- 15.28% to 15.28% (0.48)% to (0.48)% AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2012 -- to -- 2.63% to 2.63% 17.56% to 17.56% 2011 -- to -- 2.85% to 2.85% (4.85)% to (4.85)% 2010 -- to -- 2.82% to 2.82% 11.78% to 11.78% 2009 -- to -- 3.08% to 3.08% 39.72% to 39.72% 2008 -- to -- 10.73% to 10.73% (38.61)% to (38.61)%
SA-110 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS ASSET ALLOCATION FUND 2012 1,804,331 $18.489702 to $18.489702 $33,361,544 2011 1,858,634 15.913238 to 15.913238 29,576,879 2010 1,898,759 15.709635 to 15.709635 29,828,807 2009 2,011,260 13.963461 to 13.963461 28,084,144 2008 2,160,890 11.262300 to 11.262300 24,336,595 AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2012 1,167,431 16.842764 to 16.842764 19,662,761 2011 1,160,081 14.789539 to 14.789539 17,157,065 2010 1,179,413 14.924145 to 14.924145 17,601,730 2009 1,050,526 13.286460 to 13.286460 13,957,778 2008 984,243 10.382553 to 10.382553 10,218,954 AMERICAN FUNDS BOND FUND 2012 2,397,552 14.884837 to 14.884837 35,687,165 2011 2,486,108 14.125783 to 14.125783 35,118,217 2010 2,326,685 13.313285 to 13.313285 30,975,819 2009 2,265,663 12.507300 to 12.507300 28,337,321 2008 1,874,922 11.107228 to 11.107228 20,825,185 AMERICAN FUNDS GLOBAL GROWTH FUND 2012 11,818,582 1.879328 to 1.879328 22,210,993 2011 12,214,967 1.533372 to 1.533372 18,730,088 2010 13,021,800 1.682911 to 1.682911 21,914,531 2009 12,990,891 1.506019 to 1.506019 19,564,529 2008 15,007,918 1.058316 to 1.058316 15,883,119 AMERICAN FUNDS GROWTH FUND 2012 60,936,133 1.386229 to 17.429019 84,580,274 2011 64,875,215 1.175863 to 14.784060 76,371,260 2010 67,556,264 1.228397 to 15.444590 83,104,714 2009 67,370,598 1.035048 to 13.013625 69,823,670 2008 67,911,355 0.742443 to 9.334667 50,480,136 AMERICAN FUNDS GROWTH-INCOME FUND 2012 43,591,478 1.607139 to 15.646393 70,096,052 2011 45,148,169 1.367989 to 13.318124 61,792,882 2010 47,320,342 1.393495 to 13.566369 66,000,040 2009 48,585,458 1.250601 to 12.175221 60,809,683 2008 50,697,847 0.952901 to 9.276999 48,347,193 AMERICAN FUNDS INTERNATIONAL FUND 2012 1,746,728 20.539236 to 23.413424 40,887,874 2011 1,774,338 17.419907 to 19.857580 35,226,826 2010 1,689,159 20.247105 to 23.080421 38,978,574 2009 1,634,207 18.881474 to 21.523685 35,167,138 2008 1,594,926 13.197152 to 15.043908 23,989,307 AMERICAN FUNDS NEW WORLD FUND 2012 513,039 32.197536 to 32.197536 16,518,578 2011 542,415 27.327395 to 27.327395 14,822,781 2010 551,636 31.756414 to 31.756414 17,517,974 2009 514,664 26.941235 to 26.941235 13,865,690 2008 454,333 18.002579 to 18.002579 8,179,160 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ AMERICAN FUNDS ASSET ALLOCATION FUND 2012 -- to -- 1.92% to 1.92% 16.19% to 16.19% 2011 -- to -- 1.89% to 1.89% 1.30% to 1.30% 2010 -- to -- 1.98% to 1.98% 12.51% to 12.51% 2009 -- to -- 2.37% to 2.37% 23.98% to 23.98% 2008 -- to -- 2.70% to 2.70% (29.51)% to (29.51)% AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2012 -- to -- 2.05% to 2.05% 13.88% to 13.88% 2011 -- to -- 1.76% to 1.76% (0.90)% to (0.90)% 2010 -- to -- 1.84% to 1.84% 12.33% to 12.33% 2009 -- to -- 2.20% to 2.20% 27.97% to 27.97% 2008 -- to -- 2.15% to 2.15% (36.51)% to (36.51)% AMERICAN FUNDS BOND FUND 2012 -- to -- 2.49% to 2.49% 5.37% to 5.37% 2011 -- to -- 3.13% to 3.13% 6.10% to 6.10% 2010 -- to -- 3.08% to 3.08% 6.44% to 6.44% 2009 -- to -- 3.34% to 3.34% 12.61% to 12.61% 2008 -- to -- 5.95% to 5.95% (9.35)% to (9.35)% AMERICAN FUNDS GLOBAL GROWTH FUND 2012 -- to -- 0.93% to 0.93% 22.56% to 22.56% 2011 -- to -- 1.29% to 1.29% (8.89)% to (8.89)% 2010 -- to -- 1.52% to 1.52% 11.75% to 11.75% 2009 -- to -- 1.39% to 1.39% 42.30% to 42.30% 2008 -- to -- 1.97% to 1.97% (38.39)% to (38.39)% AMERICAN FUNDS GROWTH FUND 2012 -- to -- 0.80% to 0.83% 17.89% to 17.89% 2011 -- to -- 0.61% to 0.62% (4.28)% to (4.28)% 2010 -- to -- 0.74% to 0.76% 18.68% to 18.68% 2009 -- to -- 0.67% to 0.68% 39.41% to 39.41% 2008 -- to -- 0.87% to 0.89% (43.97)% to (43.97)% AMERICAN FUNDS GROWTH-INCOME FUND 2012 -- to -- 1.65% to 1.72% 17.48% to 17.48% 2011 -- to -- 1.29% to 1.55% (1.83)% to (1.83)% 2010 -- to -- 1.50% to 1.56% 11.43% to 11.43% 2009 -- to -- 1.52% to 1.62% 31.24% to 31.24% 2008 -- to -- 1.81% to 1.84% (37.85)% to (37.85)% AMERICAN FUNDS INTERNATIONAL FUND 2012 -- to -- 1.51% to 1.62% 17.91% to 17.91% 2011 -- to -- 1.82% to 1.87% (13.96)% to (13.96)% 2010 -- to -- 2.09% to 2.15% 7.23% to 7.23% 2009 -- to -- 1.58% to 1.67% 43.07% to 43.07% 2008 -- to -- 2.00% to 2.20% (42.12)% to (42.12)% AMERICAN FUNDS NEW WORLD FUND 2012 -- to -- 1.03% to 1.03% 17.82% to 17.82% 2011 -- to -- 1.70% to 1.70% (13.95)% to (13.95)% 2010 -- to -- 1.64% to 1.64% 17.87% to 17.87% 2009 -- to -- 1.64% to 1.64% 49.65% to 49.65% 2008 -- to -- 1.60% to 1.60% (42.37)% to (42.37)%
SA-111 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2012 6,908,135 $2.164794 to $2.164794 $14,954,689 2011 7,313,030 1.831808 to 1.831808 13,396,066 2010 7,489,433 2.265511 to 2.265511 16,967,392 2009 7,332,818 1.850714 to 1.850714 13,570,949 2008 7,312,344 1.147402 to 12.386047 8,392,315 FIDELITY VIP ASSET MANAGER PORTFOLIO 2012 224,897 3.026411 to 3.026411 680,632 2011 267,425 2.690584 to 2.690584 719,530 2010 409,581 2.761290 to 2.761290 1,130,973 2009 590,199 2.416579 to 2.416579 1,426,263 2008 722,176 1.871681 to 1.871681 1,351,682 FIDELITY VIP EQUITY-INCOME PORTFOLIO 2012 4,412,318 3.409746 to 12.688792 15,890,260 2011 4,570,676 2.906674 to 10.840042 13,968,283 2010 5,012,784 2.878704 to 10.769489 15,311,628 2009 5,443,005 2.499987 to 9.371563 14,391,248 2008 6,099,579 1.919982 to 7.215315 12,082,632 FIDELITY VIP GROWTH PORTFOLIO 2012 24,630 10.736965 to 10.736965 264,447 2011 23,925 9.385277 to 9.385277 224,539 2010 6,972 9.388340 to 9.388340 65,456 2009 7,278 7.579744 to 7.579744 55,168 2008 3,095 5.923299 to 5.923299 18,329 FIDELITY VIP CONTRAFUND PORTFOLIO 2012 1,233,164 14.321191 to 14.321191 17,660,380 2011 1,243,504 12.330930 to 12.330930 15,333,565 2010 1,288,166 12.684040 to 12.684040 16,339,146 2009 1,203,398 10.847941 to 10.847941 13,054,387 2008 882,231 8.007735 to 8.007735 7,064,671 FIDELITY VIP OVERSEAS PORTFOLIO 2012 169,244 2.396177 to 2.396177 405,539 2011 184,825 1.984568 to 1.984568 366,798 2010 205,953 2.395759 to 2.395759 493,414 2009 231,673 2.118000 to 2.118000 490,684 2008 307,660 1.673907 to 1.673907 514,995 FIDELITY VIP MID CAP PORTFOLIO 2012 1,034,275 15.275636 to 15.275636 15,799,201 2011 1,003,459 13.333878 to 13.333878 13,380,003 2010 908,002 14.957023 to 14.957023 13,581,013 2009 747,492 11.633336 to 11.633336 8,695,828 2008 549,168 8.324310 to 8.324310 4,571,445 FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2012 4,405 12.406724 to 12.406724 54,652 2011 5,703 9.764119 to 9.764119 55,682 2010 6,911 10.734145 to 10.734145 74,188 2009 10,348 8.496440 to 8.496440 87,922 2008 263 5.406483 to 5.406483 1,419 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2012 -- to -- 1.34% to 1.34% 18.18% to 18.18% 2011 -- to -- 1.31% to 1.31% (19.14)% to (19.14)% 2010 -- to -- 1.74% to 1.74% 22.41% to 22.41% 2009 -- to -- 0.29% to 0.29% 61.30% to 61.30% 2008 -- to -- -- to -- (53.52)% to (53.52)% FIDELITY VIP ASSET MANAGER PORTFOLIO 2012 -- to -- 1.48% to 1.48% 12.48% to 12.48% 2011 -- to -- 1.53% to 1.53% (2.56)% to (2.56)% 2010 -- to -- 1.41% to 1.41% 14.26% to 14.26% 2009 -- to -- 2.30% to 2.30% 29.11% to 29.11% 2008 -- to -- 2.52% to 2.52% (28.72)% to (28.72)% FIDELITY VIP EQUITY-INCOME PORTFOLIO 2012 -- to -- 2.89% to 3.17% 17.05% to 17.31% 2011 -- to -- 1.90% to 2.48% 0.66% to 0.97% 2010 -- to -- 1.65% to 1.82% 14.92% to 15.15% 2009 -- to -- 2.22% to 2.25% 29.88% to 30.21% 2008 -- to -- 2.55% to 2.66% (42.81)% to (42.65)% FIDELITY VIP GROWTH PORTFOLIO 2012 -- to -- 0.37% to 0.37% 14.40% to 14.40% 2011 -- to -- 0.16% to 0.16% (0.03)% to (0.03)% 2010 -- to -- 0.03% to 0.03% 23.86% to 23.86% 2009 -- to -- 0.26% to 0.26% 27.97% to 27.97% 2008 -- to -- 2.85% to 2.85% (40.77)% to (40.77)% FIDELITY VIP CONTRAFUND PORTFOLIO 2012 -- to -- 1.15% to 1.15% 16.14% to 16.14% 2011 -- to -- 0.82% to 0.82% (2.78)% to (2.78)% 2010 -- to -- 1.06% to 1.06% 16.93% to 16.93% 2009 -- to -- 1.31% to 1.31% 35.47% to 35.47% 2008 -- to -- 0.94% to 0.94% (42.69)% to (42.69)% FIDELITY VIP OVERSEAS PORTFOLIO 2012 -- to -- 1.94% to 1.94% 20.74% to 20.74% 2011 -- to -- 1.34% to 1.34% (17.16)% to (17.16)% 2010 -- to -- 1.40% to 1.40% 13.11% to 13.11% 2009 -- to -- 2.10% to 2.10% 26.53% to 26.53% 2008 -- to -- 2.43% to 2.43% (43.81)% to (43.81)% FIDELITY VIP MID CAP PORTFOLIO 2012 -- to -- 0.41% to 0.41% 14.56% to 14.56% 2011 -- to -- 0.02% to 0.02% (10.85)% to (10.85)% 2010 -- to -- 0.14% to 0.14% 28.57% to 28.57% 2009 -- to -- 0.50% to 0.50% 39.75% to 39.75% 2008 -- to -- 0.26% to 0.26% (39.61)% to (39.61)% FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2012 -- to -- 0.35% to 0.35% 27.06% to 27.06% 2011 -- to -- 0.69% to 0.69% (9.04)% to (9.04)% 2010 -- to -- 0.28% to 0.28% 26.34% to 26.34% 2009 -- to -- 0.69% to 0.69% 57.15% to 57.15% 2008 -- to -- 15.62% to 15.62% (45.94)% to (45.94)%
SA-112 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2012 10,475 $12.324435 to $12.324435 $129,094 2011 8,129 10.081559 to 10.081559 81,951 2010 7,036 10.368529 to 10.368529 72,953 2009 7,167 8.787986 to 8.787986 62,987 2008 3,846 6.471799 to 6.471799 24,888 FIDELITY VIP FREEDOM 2010 PORTFOLIO 2012 42,085 12.106372 to 12.106372 509,497 2011 45,937 10.849651 to 10.849651 498,398 2010 36,922 10.896238 to 10.896238 402,314 2009 23,336 9.681661 to 9.681661 225,930 2008 2,225 7.810650 to 7.810650 17,377 FIDELITY VIP FREEDOM 2020 PORTFOLIO 2012 69,122 11.766118 to 11.766118 813,299 2011 57,846 10.405993 to 10.405993 601,940 2010 51,662 10.536819 to 10.536819 544,351 2009 30,142 9.216289 to 9.216289 277,797 2008 11,607 7.169550 to 7.169550 83,211 FIDELITY VIP FREEDOM 2030 PORTFOLIO 2012 98,969 11.412628 to 11.412628 1,129,501 2011 71,482 9.908391 to 9.908391 708,270 2010 37,422 10.196865 to 10.196865 381,587 2009 19,128 8.798777 to 8.798777 168,304 2008 5,190 6.707483 to 6.707483 34,809 FIDELITY VIP STRATEGIC INCOME PORTFOLIO 2012 51,056 13.916517 to 13.916517 710,523 2011 28,463 12.624600 to 12.624600 359,334 2010 8,480 12.086384 to 12.086384 102,492 2009 117 11.064938 to 11.064938 1,299 FRANKLIN RISING DIVIDENDS SECURITIES FUND 2012 86,916 15.991465 to 15.991465 1,389,913 2011 46,810 14.282970 to 14.282970 668,591 2010 26,151 13.474687 to 13.474687 352,381 2009 1,721 11.169012 to 11.169012 19,226 FRANKLIN INCOME SECURITIES FUND 2012 1,305,430 14.716926 to 14.716926 19,211,917 2011 1,282,496 13.064004 to 13.064004 16,754,536 2010 1,182,891 12.759824 to 12.759824 15,093,484 2009 1,088,558 11.324722 to 11.324722 12,327,615 2008 944,659 8.351913 to 8.351913 7,889,708 FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2012 100,553 12.626194 to 15.603124 1,277,375 2011 105,915 11.390200 to 14.075721 1,213,002 2010 67,121 11.968326 to 14.790154 809,801 2009 28,518 9.377872 to 11.588939 272,099 2008 9,395 6.531711 to 8.071731 67,562 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2012 -- to -- 0.58% to 0.58% 22.25% to 22.25% 2011 -- to -- -- to -- (2.77)% to (2.77)% 2010 -- to -- 0.21% to 0.21% 17.99% to 17.99% 2009 -- to -- 0.02% to 0.02% 35.79% to 35.79% 2008 -- to -- 4.56% to 4.56% (35.28)% to (35.28)% FIDELITY VIP FREEDOM 2010 PORTFOLIO 2012 -- to -- 1.66% to 1.66% 11.58% to 11.58% 2011 -- to -- 1.85% to 1.85% (0.43)% to (0.43)% 2010 -- to -- 2.93% to 2.93% 12.55% to 12.55% 2009 -- to -- 5.25% to 5.25% 23.96% to 23.96% 2008 -- to -- 3.86% to 3.86% (21.89)% to (21.89)% FIDELITY VIP FREEDOM 2020 PORTFOLIO 2012 -- to -- 1.95% to 1.95% 13.07% to 13.07% 2011 -- to -- 2.38% to 2.38% (1.24)% to (1.24)% 2010 -- to -- 2.93% to 2.93% 14.33% to 14.33% 2009 -- to -- 3.43% to 3.43% 28.55% to 28.55% 2008 -- to -- 35.36% to 35.36% (28.31)% to (28.31)% FIDELITY VIP FREEDOM 2030 PORTFOLIO 2012 -- to -- 2.25% to 2.25% 15.18% to 15.18% 2011 -- to -- 2.57% to 2.57% (2.83)% to (2.83)% 2010 -- to -- 2.51% to 2.51% 15.89% to 15.89% 2009 -- to -- 2.97% to 2.97% 31.18% to 31.18% 2008 -- to -- 12.00% to 12.00% (32.93)% to (32.93)% FIDELITY VIP STRATEGIC INCOME PORTFOLIO 2012 -- to -- 3.96% to 3.96% 10.23% to 10.23% 2011 -- to -- 7.15% to 7.15% 4.45% to 4.45% 2010 -- to -- 8.80% to 8.80% 9.23% to 9.23% 2009 -- to -- 7.13% to 7.13% 10.65% to 10.65% FRANKLIN RISING DIVIDENDS SECURITIES FUND 2012 -- to -- 1.61% to 1.61% 11.96% to 11.96% 2011 -- to -- 1.45% to 1.45% 6.00% to 6.00% 2010 -- to -- 1.47% to 1.47% 20.64% to 20.64% 2009 -- to -- -- to -- 11.69% to 11.69% FRANKLIN INCOME SECURITIES FUND 2012 -- to -- 6.37% to 6.37% 12.65% to 12.65% 2011 -- to -- 5.67% to 5.67% 2.38% to 2.38% 2010 -- to -- 6.59% to 6.59% 12.67% to 12.67% 2009 -- to -- 7.92% to 7.92% 35.59% to 35.59% 2008 -- to -- 5.22% to 5.22% (29.66)% to (29.66)% FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2012 -- to -- -- to -- 10.85% to 10.85% 2011 -- to -- -- to -- (4.83)% to (4.83)% 2010 -- to -- -- to -- 27.62% to 27.62% 2009 -- to -- -- to -- 43.57% to 43.58% 2008 -- to -- -- to -- (42.50)% to (34.68)%
SA-113 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- FRANKLIN SMALL CAP VALUE SECURITIES FUND 2012 452,210 $23.643948 to $23.643948 $10,692,030 2011 492,148 19.971648 to 19.971648 9,829,007 2010 474,596 20.751900 to 20.751900 9,848,778 2009 476,577 16.184436 to 16.184436 7,713,126 2008 411,590 12.530774 to 12.530774 5,157,547 FRANKLIN STRATEGIC INCOME SECURITIES FUND 2012 1,076,348 14.439420 to 23.362530 15,550,327 2011 1,098,862 12.764539 to 20.652652 14,033,725 2010 1,033,913 12.419716 to 20.094753 12,847,856 2009 726,917 11.167863 to 18.069298 8,124,200 2008 230,975 8.855462 to 14.327896 2,051,447 FRANKLIN TEMPLETON VIP MUTUAL SHARES SECURITIES FUND 2012 1,387,934 16.413690 to 17.290820 23,993,792 2011 1,355,932 14.367250 to 15.135026 20,518,187 2010 1,263,153 14.518503 to 15.294362 19,315,493 2009 1,216,996 13.056884 to 13.754639 16,736,369 2008 891,653 10.358674 to 10.912235 9,727,935 TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2012 223,842 10.055992 to 10.055992 2,250,952 2011 191,646 8.867469 to 8.867469 1,699,415 2010 126,670 10.515299 to 10.515299 1,331,977 2009 56,650 8.924175 to 8.924175 505,551 2008 10,912 5.148877 to 5.148877 56,182 TEMPLETON FOREIGN SECURITIES FUND 2012 458,288 10.189225 to 10.189225 4,669,596 2011 390,527 8.617940 to 8.617940 3,365,535 2010 226,332 9.643395 to 9.643395 2,182,613 2009 88,305 8.895624 to 8.895624 785,530 2008 4,770 6.491152 to 6.491152 30,964 TEMPLETON GROWTH SECURITIES FUND 2012 455,243 10.934682 to 15.006920 4,999,484 2011 446,129 9.031951 to 12.395589 4,047,261 2010 404,093 9.709116 to 13.324951 3,942,812 2009 343,789 9.040690 to 12.407578 3,125,922 2008 226,786 6.895852 to 9.463986 1,577,199 MUTUAL GLOBAL DISCOVERY SECURITIES FUND 2012 1,005,141 13.894317 to 13.894317 13,965,743 2011 1,003,417 12.257024 to 12.257024 12,298,911 2010 895,245 12.630777 to 12.630777 11,307,645 2009 644,780 11.281734 to 11.281734 7,274,241 2008 480,606 9.148724 to 9.148724 4,396,929 FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2012 42,153 11.785548 to 11.785548 496,793 2011 40,779 10.786324 to 10.786324 439,851 2010 33,725 11.330548 to 11.330548 382,122 2009 28,673 9.751412 to 9.751412 279,602 2008 852 7.333637 to 7.333637 6,248 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ FRANKLIN SMALL CAP VALUE SECURITIES FUND 2012 -- to -- 0.77% to 0.77% 18.39% to 18.39% 2011 -- to -- 0.69% to 0.69% (3.76)% to (3.76)% 2010 -- to -- 0.77% to 0.77% 28.22% to 28.22% 2009 -- to -- 1.69% to 1.69% 29.16% to 29.16% 2008 -- to -- 1.12% to 1.12% (33.02)% to (33.02)% FRANKLIN STRATEGIC INCOME SECURITIES FUND 2012 -- to -- 6.95% to 7.03% 13.12% to 13.12% 2011 -- to -- 5.30% to 6.13% 2.78% to 2.78% 2010 -- to -- 4.73% to 4.87% 11.21% to 11.21% 2009 -- to -- 7.43% to 8.50% 26.11% to 26.11% 2008 -- to -- 0.07% to 7.26% (11.45)% to (11.03)% FRANKLIN TEMPLETON VIP MUTUAL SHARES SECURITIES FUND 2012 -- to -- 2.08% to 2.09% 14.24% to 14.24% 2011 -- to -- 2.38% to 2.41% (1.04)% to (1.04)% 2010 -- to -- 1.57% to 1.60% 11.19% to 11.19% 2009 -- to -- 1.97% to 2.03% 26.05% to 26.05% 2008 -- to -- 3.06% to 3.10% (37.11)% to (37.11)% TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2012 -- to -- 1.65% to 1.65% 13.40% to 13.40% 2011 -- to -- 1.20% to 1.20% (15.67)% to (15.67)% 2010 -- to -- 1.86% to 1.86% 17.83% to 17.83% 2009 -- to -- 2.44% to 2.44% 73.32% to 73.32% 2008 -- to -- -- to -- (48.51)% to (48.51)% TEMPLETON FOREIGN SECURITIES FUND 2012 -- to -- 2.96% to 2.96% 18.23% to 18.23% 2011 -- to -- 1.66% to 1.66% (10.63)% to (10.63)% 2010 -- to -- 1.91% to 1.91% 8.41% to 8.41% 2009 -- to -- 0.71% to 0.71% 37.04% to 37.04% 2008 -- to -- -- to -- (35.09)% to (35.09)% TEMPLETON GROWTH SECURITIES FUND 2012 -- to -- 2.02% to 2.03% 21.07% to 21.07% 2011 -- to -- 1.32% to 1.33% (6.97)% to (6.97)% 2010 -- to -- 1.33% to 1.39% 7.39% to 7.39% 2009 -- to -- 3.07% to 3.13% 31.10% to 31.10% 2008 -- to -- 1.71% to 1.76% (42.32)% to (42.32)% MUTUAL GLOBAL DISCOVERY SECURITIES FUND 2012 -- to -- 2.66% to 2.66% 13.36% to 13.36% 2011 -- to -- 2.19% to 2.19% (2.96)% to (2.96)% 2010 -- to -- 1.33% to 1.33% 11.96% to 11.96% 2009 -- to -- 1.25% to 1.25% 23.32% to 23.32% 2008 -- to -- 2.43% to 2.43% (28.46)% to (28.46)% FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2012 -- to -- -- to -- 9.26% to 9.26% 2011 -- to -- -- to -- (4.80)% to (4.80)% 2010 -- to -- -- to -- 16.19% to 16.19% 2009 -- to -- -- to -- 32.97% to 32.97% 2008 -- to -- -- to -- (26.66)% to (26.66)%
SA-114 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- TEMPLETON GLOBAL BOND SECURITIES FUND 2012 1,258,267 $18.113279 to $18.113279 $22,791,344 2011 1,214,729 15.741644 to 15.741644 19,121,827 2010 1,084,389 15.879928 to 15.879928 17,220,025 2009 654,376 13.875288 to 13.875288 9,079,662 2008 327,347 11.691131 to 11.691131 3,827,060 HARTFORD BALANCED HLS FUND+ 2012 10,135,364 3.883754 to 3.883754 39,363,261 2011 10,371,439 3.466961 to 3.466961 35,957,376 2010 11,290,618 3.403787 to 3.403787 38,430,857 2009 12,630,913 3.035419 to 3.035419 38,340,113 2008 13,958,077 2.329770 to 2.329770 32,519,107 HARTFORD TOTAL RETURN BOND HLS FUND 2012 25,514,776 3.249430 to 3.249430 82,908,478 2011 24,701,321 3.021675 to 3.021675 74,639,363 2010 24,420,451 2.824228 to 2.824228 68,968,923 2009 22,271,271 2.626884 to 2.626884 58,504,045 2008 20,180,164 2.284046 to 2.284046 46,092,422 HARTFORD CAPITAL APPRECIATION HLS FUND 2012 13,949,424 7.429092 to 7.429092 103,631,558 2011 14,527,791 6.277831 to 6.277831 91,203,019 2010 15,081,679 7.085992 to 7.085992 106,868,654 2009 15,350,105 6.082370 to 6.082370 93,365,021 2008 15,384,133 4.175508 to 4.175508 64,236,570 HARTFORD DIVIDEND AND GROWTH HLS FUND 2012 12,500,860 4.833961 to 4.833961 60,428,672 2011 12,700,001 4.255526 to 4.255526 54,045,185 2010 12,802,917 4.200184 to 4.200184 53,774,608 2009 13,064,381 3.710229 to 3.710229 48,471,846 2008 12,865,016 2.975883 to 2.975883 38,284,781 HARTFORD GLOBAL RESEARCH HLS FUND 2012 16,314 10.795248 to 11.038466 177,622 2011 12,926 9.118201 to 9.323636 118,914 2010 12,241 10.051239 to 10.277704 124,154 2009 18,082 8.664032 to 8.859237 157,084 2008 11,462 6.096042 to 6.233399 70,121 HARTFORD GLOBAL GROWTH HLS FUND 2012 499,664 1.265101 to 1.265101 632,126 2011 688,303 1.025151 to 1.025151 705,615 2010 297,762 1.190460 to 1.190460 354,475 2009 285,662 1.041982 to 1.041982 297,654 2008 369,651 0.768187 to 0.768187 283,961 HARTFORD DISCIPLINED EQUITY HLS FUND 2012 10,363,283 1.778319 to 1.778319 18,429,223 2011 9,941,027 1.511927 to 1.511927 15,030,108 2010 8,700,079 1.494683 to 1.494683 13,003,860 2009 7,391,091 1.310608 to 1.310608 9,686,823 2008 5,639,389 1.043087 to 1.043087 5,882,374 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ TEMPLETON GLOBAL BOND SECURITIES FUND 2012 -- to -- 6.31% to 6.31% 15.07% to 15.07% 2011 -- to -- 5.53% to 5.53% (0.87)% to (0.87)% 2010 -- to -- 1.42% to 1.42% 14.45% to 14.45% 2009 -- to -- 2.16% to 2.16% 18.68% to 18.68% 2008 -- to -- 3.51% to 3.51% 6.21% to 6.21% HARTFORD BALANCED HLS FUND+ 2012 -- to -- 3.01% to 3.01% 12.02% to 12.02% 2011 -- to -- 1.65% to 1.65% 1.86% to 1.86% 2010 -- to -- 1.42% to 1.42% 12.14% to 12.14% 2009 -- to -- 2.27% to 2.27% 30.29% to 30.29% 2008 -- to -- 3.12% to 3.12% (31.64)% to (31.64)% HARTFORD TOTAL RETURN BOND HLS FUND 2012 -- to -- 4.13% to 4.13% 7.54% to 7.54% 2011 -- to -- 0.21% to 0.21% 6.99% to 6.99% 2010 -- to -- 4.39% to 4.39% 7.51% to 7.51% 2009 -- to -- 4.06% to 4.06% 15.01% to 15.01% 2008 -- to -- 6.93% to 6.93% (7.63)% to (7.63)% HARTFORD CAPITAL APPRECIATION HLS FUND 2012 -- to -- 1.52% to 1.52% 18.34% to 18.34% 2011 -- to -- 0.79% to 0.79% (11.41)% to (11.41)% 2010 -- to -- 0.78% to 0.78% 16.50% to 16.50% 2009 -- to -- 0.96% to 0.96% 45.67% to 45.67% 2008 -- to -- 1.88% to 1.88% (45.59)% to (45.59)% HARTFORD DIVIDEND AND GROWTH HLS FUND 2012 -- to -- 2.36% to 2.36% 13.59% to 13.59% 2011 -- to -- 2.11% to 2.11% 1.32% to 1.32% 2010 -- to -- 1.97% to 1.97% 13.21% to 13.21% 2009 -- to -- 2.36% to 2.36% 24.68% to 24.68% 2008 -- to -- 2.41% to 2.41% (32.43)% to (32.43)% HARTFORD GLOBAL RESEARCH HLS FUND 2012 -- to -- 1.23% to 1.25% 18.39% to 18.39% 2011 -- to -- 0.02% to 0.02% (9.28)% to (9.28)% 2010 -- to -- 0.96% to 1.42% 16.01% to 16.01% 2009 -- to -- 1.15% to 1.74% 42.13% to 42.13% 2008 -- to -- 1.21% to 7.19% (39.04)% to (37.67)% HARTFORD GLOBAL GROWTH HLS FUND 2012 -- to -- 0.49% to 0.49% 23.41% to 23.41% 2011 -- to -- 0.05% to 0.05% (13.89)% to (13.89)% 2010 -- to -- 0.29% to 0.29% 14.25% to 14.25% 2009 -- to -- 0.62% to 0.62% 35.64% to 35.64% 2008 -- to -- 0.74% to 0.74% (52.46)% to (52.46)% HARTFORD DISCIPLINED EQUITY HLS FUND 2012 -- to -- 1.67% to 1.67% 17.62% to 17.62% 2011 -- to -- 1.27% to 1.27% 1.15% to 1.15% 2010 -- to -- 1.46% to 1.46% 14.05% to 14.05% 2009 -- to -- 1.77% to 1.77% 25.65% to 25.65% 2008 -- to -- 1.32% to 1.32% (37.27)% to (37.27)%
SA-115 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- HARTFORD GROWTH HLS FUND 2012 125,695 $11.498214 to $11.498214 $1,445,272 2011 110,265 9.709898 to 9.709898 1,070,661 2010 57,800 10.664475 to 10.664475 616,403 2009 20,401 8.934077 to 8.934077 182,262 2008 4,751 6.655178 to 6.655178 31,617 HARTFORD GROWTH OPPORTUNITIES HLS FUND 2012 764,984 22.876709 to 22.876709 17,500,308 2011 754,850 18.033268 to 18.033268 13,612,415 2010 755,488 19.789063 to 19.789063 14,950,390 2009 583,067 16.832526 to 16.832526 9,814,496 2008 500,646 12.987431 to 12.987431 6,502,104 HARTFORD HIGH YIELD HLS FUND 2012 458,364 16.171602 to 16.171602 7,412,488 2011 353,625 14.147003 to 14.147003 5,002,728 2010 241,183 13.512623 to 13.512623 3,259,015 2009 66,328 11.633875 to 11.633875 771,646 2008 14,113 7.732285 to 7.732285 109,128 HARTFORD INDEX HLS FUND 2012 10,239,161 4.243608 to 4.243608 43,450,987 2011 10,804,371 3.670022 to 3.670022 39,652,278 2010 11,954,567 3.604734 to 3.604734 43,093,033 2009 12,865,463 3.141833 to 3.141833 40,421,135 2008 13,639,473 2.490602 to 2.490602 33,970,499 HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 2012 6,070,748 3.424934 to 3.424934 20,791,910 2011 6,417,840 2.849479 to 2.849479 18,287,499 2010 6,943,613 3.312232 to 3.312232 22,998,858 2009 5,931,486 2.893130 to 2.893130 17,160,558 2008 6,265,299 2.167800 to 2.167800 13,581,916 HARTFORD SMALL/MID CAP EQUITY HLS FUND 2012 35,127 12.388639 to 12.388639 435,176 2011 34,439 10.691625 to 10.691625 368,207 2010 25,665 10.814342 to 10.814342 277,545 2009 25,300 8.594351 to 8.594351 217,435 2008 6,836 5.812147 to 5.812147 39,730 HARTFORD MIDCAP HLS FUND 2012 6,367,169 4.818794 to 4.818794 30,682,078 2011 6,829,417 4.034466 to 4.034466 27,553,053 2010 7,606,416 4.381274 to 4.381274 33,325,793 2009 8,587,829 3.549140 to 3.549140 30,479,406 2008 9,999,343 2.710162 to 2.710162 27,099,839 HARTFORD MIDCAP VALUE HLS FUND 2012 267,591 23.826006 to 23.826006 6,375,622 2011 288,489 19.068102 to 19.068102 5,500,945 2010 310,598 20.852684 to 20.852684 6,476,798 2009 337,658 16.726572 to 16.726572 5,647,867 2008 396,745 11.600671 to 11.600671 4,602,507 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ HARTFORD GROWTH HLS FUND 2012 -- to -- -- to -- 18.42% to 18.42% 2011 -- to -- 0.18% to 0.18% (8.95)% to (8.95)% 2010 -- to -- 0.03% to 0.03% 19.37% to 19.37% 2009 -- to -- 0.75% to 0.75% 34.24% to 34.24% 2008 -- to -- 1.17% to 1.17% (33.45)% to (33.45)% HARTFORD GROWTH OPPORTUNITIES HLS FUND 2012 -- to -- -- to -- 26.86% to 26.86% 2011 -- to -- -- to -- (8.87)% to (8.87)% 2010 -- to -- 0.02% to 0.02% 17.56% to 17.56% 2009 -- to -- 0.56% to 0.56% 29.61% to 29.61% 2008 -- to -- 0.61% to 0.61% (45.66)% to (45.66)% HARTFORD HIGH YIELD HLS FUND 2012 -- to -- 8.67% to 8.67% 14.31% to 14.31% 2011 -- to -- 8.95% to 8.95% 4.69% to 4.69% 2010 -- to -- 0.77% to 0.77% 16.15% to 16.15% 2009 -- to -- 18.53% to 18.53% 50.46% to 50.46% 2008 -- to -- 8.22% to 8.22% (22.68)% to (22.68)% HARTFORD INDEX HLS FUND 2012 -- to -- 2.01% to 2.01% 15.63% to 15.63% 2011 -- to -- 1.70% to 1.70% 1.81% to 1.81% 2010 -- to -- 1.72% to 1.72% 14.73% to 14.73% 2009 -- to -- 2.06% to 2.06% 26.15% to 26.15% 2008 -- to -- 2.15% to 2.15% (37.11)% to (37.11)% HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 2012 -- to -- 1.93% to 1.93% 20.20% to 20.20% 2011 -- to -- 0.05% to 0.05% (13.97)% to (13.97)% 2010 -- to -- 1.32% to 1.32% 14.49% to 14.49% 2009 -- to -- 2.02% to 2.02% 33.46% to 33.46% 2008 -- to -- 2.32% to 2.32% (42.25)% to (42.25)% HARTFORD SMALL/MID CAP EQUITY HLS FUND 2012 -- to -- 0.60% to 0.60% 15.87% to 15.87% 2011 -- to -- -- to -- (1.13)% to (1.13)% 2010 -- to -- 0.75% to 0.75% 25.83% to 25.83% 2009 -- to -- 0.51% to 0.51% 47.87% to 47.87% 2008 -- to -- 2.11% to 2.11% (41.88)% to (41.88)% HARTFORD MIDCAP HLS FUND 2012 -- to -- 0.82% to 0.82% 19.44% to 19.44% 2011 -- to -- 0.68% to 0.68% (7.92)% to (7.92)% 2010 -- to -- 0.24% to 0.24% 23.45% to 23.45% 2009 -- to -- 0.54% to 0.54% 30.96% to 30.96% 2008 -- to -- 0.52% to 0.52% (35.32)% to (35.32)% HARTFORD MIDCAP VALUE HLS FUND 2012 -- to -- 1.20% to 1.20% 24.95% to 24.95% 2011 -- to -- 0.01% to 0.01% (8.56)% to (8.56)% 2010 -- to -- 0.60% to 0.60% 24.67% to 24.67% 2009 -- to -- 0.83% to 0.83% 44.19% to 44.19% 2008 -- to -- 0.79% to 0.79% (40.21)% to (40.21)%
SA-116 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- HARTFORD MONEY MARKET HLS FUND 2012 27,164,300 $1.796639 to $1.796639 $48,804,441 2011 27,778,968 1.796639 to 1.796639 49,908,777 2010 29,092,042 1.796639 to 1.796639 52,267,897 2009 35,727,066 1.796639 to 1.796639 64,188,641 2008 38,331,448 1.795505 to 1.795505 68,824,307 HARTFORD SMALL COMPANY HLS FUND 2012 6,018,287 2.712054 to 2.712054 16,321,921 2011 6,490,435 2.345264 to 2.345264 15,221,783 2010 7,383,161 2.426831 to 2.426831 17,917,684 2009 8,166,669 1.955060 to 1.955060 15,966,329 2008 9,046,082 1.512167 to 1.512167 13,679,186 HARTFORD SMALLCAP GROWTH HLS FUND 2012 11,238 15.383653 to 15.383653 172,884 2011 10,516 13.104093 to 13.104093 137,809 2010 5,925 12.920333 to 12.920333 76,554 2009 4,159 9.461521 to 9.461521 39,354 2008 836 6.988318 to 6.988318 5,840 HARTFORD STOCK HLS FUND 2012 9,190,090 4.258413 to 4.258413 39,135,200 2011 9,788,274 3.722907 to 3.722907 36,440,833 2010 10,727,077 3.764066 to 3.764066 40,377,425 2009 12,044,576 3.278812 to 3.278812 39,491,899 2008 13,416,175 2.316588 to 2.316588 31,079,750 HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2012 664,634 11.348975 to 11.619278 7,692,166 2011 715,603 10.944490 to 11.205160 7,992,131 2010 684,158 10.435767 to 10.684330 7,291,233 2009 713,427 10.054446 to 10.293920 7,330,988 2008 748,212 9.725726 to 9.957373 7,443,472 HARTFORD VALUE HLS FUND 2012 1,271,862 11.733842 to 13.043194 16,071,492 2011 1,438,612 10.030081 to 11.149316 15,523,309 2010 1,607,420 10.230173 to 11.371742 17,659,958 2009 5,103 8.921502 to 8.921502 45,524 2008 274 7.173269 to 7.173269 1,959 LORD ABBETT FUNDAMENTAL EQUITY FUND 2012 29,799 12.470624 to 12.470624 371,614 2011 21,135 11.277301 to 11.277301 238,347 2010 2,753 11.807344 to 11.807344 32,501 LORD ABBETT CALIBRATED DIVIDEND GROWTH FUND+ 2012 136,854 13.932710 to 13.932710 1,906,744 2011 159,671 12.389564 to 12.389564 1,978,250 2010 151,557 12.365526 to 12.365526 1,874,086 2009 157,032 10.774410 to 10.774410 1,691,924 2008 123,449 8.730699 to 8.730699 1,077,796 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ HARTFORD MONEY MARKET HLS FUND 2012 -- to -- -- to -- -- to -- 2011 -- to -- -- to -- -- to -- 2010 -- to -- -- to -- -- to -- 2009 -- to -- 0.06% to 0.06% 0.06% to 0.06% 2008 -- to -- 2.01% to 2.01% 2.14% to 2.14% HARTFORD SMALL COMPANY HLS FUND 2012 -- to -- -- to -- 15.64% to 15.64% 2011 -- to -- -- to -- (3.36)% to (3.36)% 2010 -- to -- -- to -- 24.13% to 24.13% 2009 -- to -- 0.01% to 0.01% 29.29% to 29.29% 2008 -- to -- 0.11% to 0.11% (40.60)% to (40.60)% HARTFORD SMALLCAP GROWTH HLS FUND 2012 -- to -- -- to -- 17.40% to 17.40% 2011 -- to -- -- to -- 1.42% to 1.42% 2010 -- to -- -- to -- 36.56% to 36.56% 2009 -- to -- 0.10% to 0.10% 35.39% to 35.39% 2008 -- to -- 1.22% to 1.22% (30.12)% to (30.12)% HARTFORD STOCK HLS FUND 2012 -- to -- 2.11% to 2.11% 14.38% to 14.38% 2011 -- to -- 1.36% to 1.36% (1.09)% to (1.09)% 2010 -- to -- 1.16% to 1.16% 14.80% to 14.80% 2009 -- to -- 1.58% to 1.58% 41.54% to 41.54% 2008 -- to -- 2.09% to 2.09% (43.13)% to (43.13)% HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2012 -- to -- 2.81% to 2.84% 3.70% to 3.70% 2011 -- to -- 2.70% to 2.99% 4.87% to 4.87% 2010 -- to -- 4.29% to 4.51% 3.79% to 3.79% 2009 -- to -- 0.03% to 0.03% 3.38% to 3.38% 2008 -- to -- 8.14% to 20.96% (2.74)% to (0.43)% HARTFORD VALUE HLS FUND 2012 -- to -- 2.19% to 2.29% 16.99% to 16.99% 2011 -- to -- 1.54% to 1.71% (1.96)% to (1.96)% 2010 -- to -- 1.22% to 1.62% 8.66% to 14.67% 2009 -- to -- 3.97% to 3.97% 24.37% to 24.37% 2008 -- to -- 13.77% to 13.77% (28.27)% to (28.27)% LORD ABBETT FUNDAMENTAL EQUITY FUND 2012 -- to -- 0.65% to 0.65% 10.58% to 10.58% 2011 -- to -- 0.38% to 0.38% (4.49)% to (4.49)% 2010 -- to -- 0.87% to 0.87% 11.95% to 11.95% LORD ABBETT CALIBRATED DIVIDEND GROWTH FUND+ 2012 -- to -- 2.84% to 2.84% 12.46% to 12.46% 2011 -- to -- 2.90% to 2.90% 0.19% to 0.19% 2010 -- to -- 2.99% to 2.99% 14.77% to 14.77% 2009 -- to -- 3.73% to 3.73% 23.41% to 23.41% 2008 -- to -- 4.15% to 4.15% (26.19)% to (26.19)%
SA-117 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- LORD ABBETT BOND-DEBENTURE FUND 2012 508,872 $14.942519 to $14.942519 $7,603,835 2011 491,555 13.278309 to 13.278309 6,527,019 2010 507,909 12.720824 to 12.720824 6,461,025 2009 494,993 11.326127 to 11.326127 5,606,353 2008 174,589 8.432890 to 8.432890 1,472,287 LORD ABBETT GROWTH AND INCOME FUND 2012 191,997 11.754355 to 11.754355 2,256,797 2011 200,630 10.486745 to 10.486745 2,103,955 2010 175,458 11.165635 to 11.165635 1,959,099 2009 154,841 9.509797 to 9.509797 1,472,502 2008 139,183 7.998229 to 7.998229 1,113,217 MFS GROWTH SERIES 2012 37,094 12.771368 to 12.771368 473,744 2011 15,051 10.879807 to 10.879807 163,753 2010 5,857 10.915241 to 10.915241 63,933 2009 4,160 9.463785 to 9.463785 39,372 2008 394 6.874012 to 6.874012 2,708 MFS INVESTORS TRUST SERIES 2012 42,830 14.309842 to 14.309842 612,893 2011 41,089 12.006715 to 12.006715 493,349 2010 40,044 12.274423 to 12.274423 491,514 2009 37,834 11.048366 to 11.048366 417,998 2008 10,217 8.706510 to 8.706510 88,952 MFS NEW DISCOVERY SERIES 2012 68,326 23.151428 to 23.151428 1,581,854 2011 87,835 19.097956 to 19.097956 1,677,460 2010 101,224 21.283072 to 21.283072 2,154,360 2009 63,537 15.610690 to 15.610690 991,857 2008 42,336 9.566346 to 9.566346 404,998 MFS TOTAL RETURN SERIES 2012 632,195 16.393811 to 16.453635 10,401,763 2011 601,688 14.735199 to 14.788967 8,898,221 2010 622,310 14.478699 to 14.531519 9,042,990 2009 619,880 13.170904 to 13.218935 8,194,055 2008 667,624 11.159050 to 11.199735 7,477,139 MFS VALUE SERIES 2012 1,377,434 11.692087 to 11.692087 16,105,082 2011 1,312,933 10.056780 to 10.056780 13,203,876 2010 1,111,673 10.087285 to 10.087285 11,213,762 2009 783,281 9.044166 to 9.044166 7,084,121 2008 197,827 7.370068 to 7.370068 1,457,996 MFS RESEARCH BOND SERIES 2012 1,462,414 13.858526 to 13.858526 20,266,903 2011 1,200,763 12.909590 to 12.909590 15,501,359 2010 660,834 12.093730 to 12.093730 7,991,946 2009 150,401 11.253639 to 11.253639 1,692,553 2008 516 9.688264 to 9.688264 4,995 INVESCO VAN KAMPEN V.I. EQUITY AND INCOME FUND 2012 2,126 10.883573 to 10.883573 23,144 2011 1,941 9.683919 to 9.683919 18,793 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ LORD ABBETT BOND-DEBENTURE FUND 2012 -- to -- 6.15% to 6.15% 12.53% to 12.53% 2011 -- to -- 5.95% to 5.95% 4.38% to 4.38% 2010 -- to -- 6.61% to 6.61% 12.31% to 12.31% 2009 -- to -- 7.64% to 7.64% 34.31% to 34.31% 2008 -- to -- 49.13% to 49.13% (15.67)% to (15.67)% LORD ABBETT GROWTH AND INCOME FUND 2012 -- to -- 0.99% to 0.99% 12.09% to 12.09% 2011 -- to -- 0.80% to 0.80% (6.08)% to (6.08)% 2010 -- to -- 0.61% to 0.61% 17.41% to 17.41% 2009 -- to -- 1.06% to 1.06% 18.90% to 18.90% 2008 -- to -- 1.80% to 1.80% (36.42)% to (36.42)% MFS GROWTH SERIES 2012 -- to -- -- to -- 17.39% to 17.39% 2011 -- to -- 0.15% to 0.15% (0.32)% to (0.32)% 2010 -- to -- 0.11% to 0.11% 15.34% to 15.34% 2009 -- to -- 0.27% to 0.27% 37.68% to 37.68% 2008 -- to -- -- to -- (31.26)% to (31.26)% MFS INVESTORS TRUST SERIES 2012 -- to -- 1.00% to 1.00% 19.18% to 19.18% 2011 -- to -- 0.93% to 0.93% (2.18)% to (2.18)% 2010 -- to -- 1.14% to 1.14% 11.10% to 11.10% 2009 -- to -- 2.06% to 2.06% 26.90% to 26.90% 2008 -- to -- 0.59% to 0.59% (33.08)% to (33.08)% MFS NEW DISCOVERY SERIES 2012 -- to -- -- to -- 21.22% to 21.22% 2011 -- to -- -- to -- (10.27)% to (10.27)% 2010 -- to -- -- to -- 36.34% to 36.34% 2009 -- to -- -- to -- 63.18% to 63.18% 2008 -- to -- -- to -- (39.33)% to (39.33)% MFS TOTAL RETURN SERIES 2012 -- to -- 2.78% to 2.80% 11.26% to 11.26% 2011 -- to -- 2.59% to 2.65% 1.77% to 1.77% 2010 -- to -- 2.70% to 2.83% 9.93% to 9.93% 2009 -- to -- 2.90% to 3.80% 18.03% to 18.03% 2008 -- to -- 3.12% to 3.29% (22.13)% to (22.13)% MFS VALUE SERIES 2012 -- to -- 1.64% to 1.64% 16.26% to 16.26% 2011 -- to -- 1.51% to 1.51% (0.30)% to (0.30)% 2010 -- to -- 1.36% to 1.36% 11.53% to 11.53% 2009 -- to -- 0.98% to 0.98% 22.72% to 22.72% 2008 -- to -- -- to -- (26.30)% to (26.30)% MFS RESEARCH BOND SERIES 2012 -- to -- 2.80% to 2.80% 7.35% to 7.35% 2011 -- to -- 2.78% to 2.78% 6.75% to 6.75% 2010 -- to -- 2.19% to 2.19% 7.47% to 7.47% 2009 -- to -- 0.69% to 0.69% 16.16% to 16.16% 2008 -- to -- -- to -- (3.12)% to (3.12)% INVESCO VAN KAMPEN V.I. EQUITY AND INCOME FUND 2012 -- to -- 1.86% to 1.86% 12.39% to 12.39% 2011 -- to -- 0.28% to 0.28% (3.16)% to (3.16)%
SA-118 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- UIF CORE PLUS FIXED INCOME PORTFOLIO 2012 18,196 $16.296895 to $16.296895 $296,532 2011 18,347 14.891137 to 14.891137 273,209 2010 18,460 14.095146 to 14.095146 260,191 2009 18,366 13.155253 to 13.155253 241,605 2008 18,592 11.998109 to 11.998109 223,069 UIF EMERGING MARKETS DEBT PORTFOLIO 2012 1,043 29.499996 to 29.499996 30,761 2011 1,088 25.008273 to 25.008273 27,203 2010 1,137 23.365085 to 23.365085 26,555 UIF EMERGING MARKETS EQUITY PORTFOLIO 2012 1,112 33.176459 to 33.176459 36,909 2011 1,142 27.658089 to 27.658089 31,574 2010 1,172 33.818953 to 33.818953 39,645 2009 327 28.413712 to 28.413712 9,301 2008 323 16.729367 to 16.729367 5,411 UIF MID CAP GROWTH PORTFOLIO 2012 151,402 12.387060 to 12.387060 1,875,427 2011 161,872 11.417730 to 11.417730 1,848,208 2010 145,061 12.300233 to 12.300233 1,784,287 2009 206,939 9.299431 to 9.299431 1,924,419 2008 33,357 5.909437 to 5.909437 197,124 INVESCO VAN KAMPEN V.I. AMERICAN VALUE FUND+ 2012 240,201 12.648529 to 19.989368 3,089,181 2011 248,593 10.803724 to 17.040299 2,730,248 2010 264,623 10.715150 to 16.884603 2,880,839 2009 381,894 8.769934 to 13.812635 3,386,622 2008 294,328 6.302084 to 9.922402 1,886,894 MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2012 1,472 15.999787 to 15.999787 23,552 2011 1,390 14.055446 to 14.055446 19,540 2010 1,308 14.947855 to 14.947855 19,559 2009 1,190 11.763572 to 11.763572 13,995 2008 4,143 6.862078 to 6.862078 28,427 MORGAN STANLEY --FLEXIBLE INCOME PORTFOLIO 2012 1,221 17.716626 to 17.716626 21,634 2011 1,142 15.713452 to 15.713452 17,940 2010 2,093 15.079958 to 15.079958 31,570 2009 1,875 13.854448 to 13.854448 25,973 2008 1,609 11.598378 to 11.598378 18,661 MORGAN STANLEY -- MONEY MARKET PORTFOLIO 2012 12,056 11.640282 to 11.640282 140,334 2011 12,501 11.638859 to 11.638859 145,501 2010 17,582 11.637715 to 11.637715 204,619 2009 22,260 11.636568 to 11.636568 259,029 2008 11,403 11.634953 to 11.634953 132,676 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ UIF CORE PLUS FIXED INCOME PORTFOLIO 2012 -- to -- 4.54% to 4.54% 9.44% to 9.44% 2011 -- to -- 3.62% to 3.62% 5.65% to 5.65% 2010 -- to -- 5.77% to 5.77% 7.15% to 7.15% 2009 -- to -- 8.49% to 8.49% 9.64% to 9.64% 2008 -- to -- 4.65% to 4.65% (10.21)% to (10.21)% UIF EMERGING MARKETS DEBT PORTFOLIO 2012 -- to -- 2.85% to 2.85% 17.96% to 17.96% 2011 -- to -- 3.58% to 3.58% 7.03% to 7.03% 2010 -- to -- -- to -- 9.75% to 9.75% UIF EMERGING MARKETS EQUITY PORTFOLIO 2012 -- to -- -- to -- 19.95% to 19.95% 2011 -- to -- 0.41% to 0.41% (18.22)% to (18.22)% 2010 -- to -- 0.41% to 0.41% 19.02% to 19.02% 2009 -- to -- -- to -- 69.84% to 69.84% 2008 -- to -- -- to -- (56.62)% to (56.62)% UIF MID CAP GROWTH PORTFOLIO 2012 -- to -- -- to -- 8.49% to 8.49% 2011 -- to -- 0.25% to 0.25% (7.17)% to (7.17)% 2010 -- to -- -- to -- 32.27% to 32.27% 2009 -- to -- -- to -- 57.37% to 57.37% 2008 -- to -- 0.03% to 0.03% (40.91)% to (40.91)% INVESCO VAN KAMPEN V.I. AMERICAN VALUE FUND+ 2012 -- to -- 0.65% to 0.72% 17.08% to 17.31% 2011 -- to -- 0.63% to 0.71% 0.83% to 0.92% 2010 -- to -- 0.87% to 0.91% 22.18% to 22.24% 2009 -- to -- 1.20% to 1.35% 39.16% to 39.21% 2008 -- to -- 0.77% to 0.86% (41.42)% to (41.29)% MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2012 -- to -- -- to -- 13.83% to 13.83% 2011 -- to -- -- to -- (5.97)% to (5.97)% 2010 -- to -- -- to -- 27.07% to 27.07% 2009 -- to -- -- to -- 71.43% to 71.43% 2008 -- to -- 0.07% to 0.07% (51.57)% to (51.57)% MORGAN STANLEY --FLEXIBLE INCOME PORTFOLIO 2012 -- to -- 5.94% to 5.94% 12.75% to 12.75% 2011 -- to -- 4.07% to 4.07% 4.20% to 4.20% 2010 -- to -- 5.95% to 5.95% 8.85% to 8.85% 2009 -- to -- 6.88% to 6.88% 19.45% to 19.45% 2008 -- to -- 1.99% to 1.99% (21.89)% to (21.89)% MORGAN STANLEY -- MONEY MARKET PORTFOLIO 2012 -- to -- 0.01% to 0.01% 0.01% to 0.01% 2011 -- to -- 0.01% to 0.01% 0.01% to 0.01% 2010 -- to -- 0.01% to 0.01% 0.01% to 0.01% 2009 -- to -- 0.01% to 0.01% 0.01% to 0.01% 2008 -- to -- 2.20% to 2.20% 2.13% to 2.13%
SA-119 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- INVESCO V.I. EQUALLY- WEIGHTED S&P 500 FUND+ 2012 1,835 $19.457806 to $19.457806 $35,711 2011 1,749 16.656599 to 16.656599 29,136 2010 1,695 16.766857 to 16.766857 28,414 2009 1,605 13.835357 to 13.835357 22,205 2008 1,640 9.555260 to 9.555260 15,674 OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2012 244,537 12.252275 to 12.252275 2,996,132 2011 259,104 10.765893 to 10.765893 2,789,491 2010 263,520 10.915899 to 10.915899 2,876,559 2009 255,998 10.001462 to 10.001462 2,560,352 2008 279,007 6.938164 to 6.938164 1,935,796 OPPENHEIMER GLOBAL SECURITIES FUND/VA 2012 140,430 14.194061 to 14.194061 1,993,275 2011 166,200 11.735440 to 11.735440 1,950,429 2010 178,792 12.829306 to 12.829306 2,293,782 2009 149,236 11.088193 to 11.088193 1,654,761 2008 146,018 7.956807 to 7.956807 1,161,834 OPPENHEIMER MAIN STREET FUND/VA 2012 69,049 13.101818 to 13.101818 904,673 2011 73,095 11.235715 to 11.235715 821,280 2010 67,495 11.271167 to 11.271167 760,746 2009 58,751 9.731208 to 9.731208 571,716 2008 37,143 7.602822 to 7.602822 282,392 OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND/ VA 2012 177,910 13.228057 to 13.228057 2,353,408 2011 175,873 11.241671 to 11.241671 1,977,105 2010 175,017 11.516057 to 11.516057 2,015,506 2009 193,945 9.358432 to 9.358432 1,815,024 2008 64,389 6.836775 to 6.836775 440,215 OPPENHEIMER VALUE FUND/ VA 2012 4,174 10.650191 to 10.650191 44,450 2011 4,284 9.417715 to 9.417715 40,348 2010 4,671 9.859710 to 9.859710 46,059 2009 4,867 8.588256 to 8.588256 41,797 2008 2,026 6.411714 to 6.411714 12,991 PUTNAM VT DIVERSIFIED INCOME FUND 2012 438,445 13.593368 to 28.400397 7,304,433 2011 486,545 12.188642 to 25.400730 7,230,044 2010 501,872 12.587405 to 26.192973 7,705,737 2009 496,410 11.171885 to 23.175409 6,822,824 2008 237,501 7.191250 to 14.968756 2,604,194 PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2012 16,800 12.348492 to 35.209669 506,144 2011 17,575 10.813222 to 30.751053 459,554 2010 19,195 10.858668 to 30.806593 509,935 2009 25,290 9.467980 to 26.783076 613,161 2008 26,333 7.002683 to 19.786145 496,280 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ INVESCO V.I. EQUALLY- WEIGHTED S&P 500 FUND+ 2012 -- to -- 1.53% to 1.53% 16.82% to 16.82% 2011 -- to -- 1.43% to 1.43% (0.66)% to (0.66)% 2010 -- to -- 1.26% to 1.26% 21.19% to 21.19% 2009 -- to -- 2.29% to 2.29% 44.79% to 44.79% 2008 -- to -- 1.76% to 1.76% (40.19)% to (40.19)% OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2012 -- to -- 0.39% to 0.39% 13.81% to 13.81% 2011 -- to -- 0.11% to 0.11% (1.37)% to (1.37)% 2010 -- to -- -- to -- 9.14% to 9.14% 2009 -- to -- 0.01% to 0.01% 44.15% to 44.15% 2008 -- to -- -- to -- (45.66)% to (45.66)% OPPENHEIMER GLOBAL SECURITIES FUND/VA 2012 -- to -- 1.91% to 1.91% 20.95% to 20.95% 2011 -- to -- 1.04% to 1.04% (8.53)% to (8.53)% 2010 -- to -- 1.14% to 1.14% 15.70% to 15.70% 2009 -- to -- 1.85% to 1.85% 39.36% to 39.36% 2008 -- to -- 1.21% to 1.21% (40.33)% to (40.33)% OPPENHEIMER MAIN STREET FUND/VA 2012 -- to -- 0.67% to 0.67% 16.61% to 16.61% 2011 -- to -- 0.57% to 0.57% (0.31)% to (0.31)% 2010 -- to -- 0.84% to 0.84% 15.83% to 15.83% 2009 -- to -- 1.34% to 1.34% 28.00% to 28.00% 2008 -- to -- 1.13% to 1.13% (38.63)% to (38.63)% OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND/ VA 2012 -- to -- 0.32% to 0.32% 17.67% to 17.67% 2011 -- to -- 0.38% to 0.38% (2.38)% to (2.38)% 2010 -- to -- 0.41% to 0.41% 23.06% to 23.06% 2009 -- to -- 0.37% to 0.37% 36.88% to 36.88% 2008 -- to -- -- to -- (31.63)% to (31.63)% OPPENHEIMER VALUE FUND/ VA 2012 -- to -- 1.41% to 1.41% 13.09% to 13.09% 2011 -- to -- 0.89% to 0.89% (4.48)% to (4.48)% 2010 -- to -- 0.90% to 0.90% 14.81% to 14.81% 2009 -- to -- 0.74% to 0.74% 32.57% to 32.57% 2008 -- to -- -- to -- (35.88)% to (35.88)% PUTNAM VT DIVERSIFIED INCOME FUND 2012 -- to -- 5.53% to 5.74% 11.52% to 11.81% 2011 -- to -- 9.59% to 9.86% (3.17)% to (3.02)% 2010 -- to -- 13.81% to 14.11% 12.67% to 13.02% 2009 -- to -- 5.01% to 7.17% 54.83% to 55.35% 2008 -- to -- 6.23% to 6.23% (31.00)% to (28.09)% PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2012 -- to -- 0.73% to 0.99% 14.20% to 14.50% 2011 -- to -- 4.32% to 4.66% (0.42)% to (0.18)% 2010 -- to -- 5.51% to 5.61% 14.69% to 15.02% 2009 -- to -- 4.64% to 6.32% 35.21% to 35.36% 2008 -- to -- 4.24% to 4.24% (33.16)% to (29.97)%
SA-120 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- PUTNAM VT GLOBAL EQUITY FUND 2012 124,238 $17.157542 to $29.391653 $3,628,784 2011 121,369 14.276598 to 24.381165 2,941,019 2010 130,238 15.020302 to 25.604302 3,317,344 2009 142,860 13.675389 to 23.229823 3,298,384 2008 165,079 10.521629 to 17.847130 2,914,237 PUTNAM VT GROWTH AND INCOME FUND 2012 337,852 14.962585 to 36.716590 12,058,542 2011 346,846 12.559145 to 30.742591 10,359,035 2010 376,690 13.170377 to 32.170965 11,806,839 2009 407,397 11.514849 to 28.044583 11,157,606 2008 467,168 8.870392 to 21.545827 9,891,491 PUTNAM VT GLOBAL HEALTH CARE FUND 2012 34,460 18.791048 to 18.791048 647,543 2011 37,782 15.330913 to 15.330913 579,233 2010 39,815 15.468968 to 15.468968 615,900 2009 42,991 15.065962 to 15.065962 647,702 2008 51,634 11.913774 to 11.913774 615,151 PUTNAM VT HIGH YIELD FUND 2012 294,984 21.165414 to 39.207905 10,257,915 2011 327,433 18.244699 to 33.700697 9,679,190 2010 352,449 17.930173 to 33.089518 10,120,431 2009 426,337 15.722517 to 28.889334 10,803,942 2008 459,786 10.468992 to 19.219456 7,965,008 PUTNAM VT INCOME FUND 2012 282,837 16.678880 to 32.470755 7,774,336 2011 297,160 15.060896 to 29.236133 7,320,019 2010 316,232 14.343729 to 27.802373 7,383,849 2009 361,230 13.055246 to 25.224094 7,615,262 2008 378,915 8.902167 to 17.133269 5,373,979 PUTNAM VT INTERNATIONAL VALUE FUND 2012 120,707 8.440439 to 17.192665 2,021,442 2011 126,318 6.935285 to 14.115362 1,742,436 2010 132,657 8.043728 to 16.321304 2,116,518 2009 138,712 7.508868 to 15.194392 2,065,213 2008 172,338 5.950420 to 12.021934 2,054,387 PUTNAM VT INTERNATIONAL EQUITY FUND 2012 518,388 16.633499 to 17.234398 8,903,290 2011 553,196 13.643423 to 14.102062 7,778,362 2010 610,943 16.424598 to 16.931002 10,318,467 2009 692,923 14.928049 to 15.354658 10,616,250 2008 868,970 11.236998 to 11.977464 10,656,688 PUTNAM VT INTERNATIONAL GROWTH FUND 2012 15,243 17.464541 to 17.464541 266,217 2011 18,241 14.405383 to 14.405383 262,773 2010 21,971 17.492096 to 17.492096 384,326 2009 26,829 15.550584 to 15.550584 417,207 2008 34,546 11.206894 to 11.206894 387,151 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ PUTNAM VT GLOBAL EQUITY FUND 2012 -- to -- 1.65% to 1.84% 20.18% to 20.55% 2011 -- to -- 1.96% to 2.24% (4.95)% to (4.78)% 2010 -- to -- 2.42% to 2.47% 9.84% to 10.22% 2009 -- to -- 0.17% to 0.17% 29.97% to 30.16% 2008 -- to -- 2.11% to 2.85% (45.35)% to (45.24)% PUTNAM VT GROWTH AND INCOME FUND 2012 -- to -- 1.67% to 1.96% 19.14% to 19.43% 2011 -- to -- 1.21% to 1.52% (4.64)% to (4.44)% 2010 -- to -- 1.52% to 1.76% 14.38% to 14.71% 2009 -- to -- 2.48% to 3.14% 29.81% to 30.16% 2008 -- to -- 2.28% to 2.58% (38.70)% to (38.57)% PUTNAM VT GLOBAL HEALTH CARE FUND 2012 -- to -- 1.53% to 1.53% 22.57% to 22.57% 2011 -- to -- 1.10% to 1.10% (0.89)% to (0.89)% 2010 -- to -- 2.15% to 2.15% 2.68% to 2.68% 2009 -- to -- -- to -- 26.46% to 26.46% 2008 -- to -- -- to -- (16.90)% to (16.90)% PUTNAM VT HIGH YIELD FUND 2012 -- to -- 7.81% to 8.12% 16.01% to 16.34% 2011 -- to -- 7.65% to 7.79% 1.75% to 1.85% 2010 -- to -- 7.27% to 7.75% 14.04% to 14.54% 2009 -- to -- 9.45% to 10.27% 50.18% to 50.31% 2008 -- to -- 8.88% to 9.85% (26.07)% to (26.01)% PUTNAM VT INCOME FUND 2012 -- to -- 5.02% to 5.22% 10.74% to 11.06% 2011 -- to -- 8.56% to 8.68% 5.00% to 5.16% 2010 -- to -- 11.08% to 11.66% 9.87% to 10.22% 2009 -- to -- 5.58% to 6.22% 46.65% to 47.22% 2008 -- to -- 6.45% to 7.43% (23.93)% to (23.78)% PUTNAM VT INTERNATIONAL VALUE FUND 2012 -- to -- 2.87% to 3.25% 21.70% to 21.80% 2011 -- to -- 2.55% to 2.79% (13.78)% to (13.52)% 2010 -- to -- 3.21% to 3.50% 7.12% to 7.42% 2009 -- to -- -- to -- 26.19% to 26.39% 2008 -- to -- 2.22% to 2.22% (45.85)% to (40.50)% PUTNAM VT INTERNATIONAL EQUITY FUND 2012 -- to -- 2.21% to 2.44% 21.92% to 22.21% 2011 -- to -- 3.24% to 3.58% (16.93)% to (16.71)% 2010 -- to -- 3.64% to 3.84% 10.03% to 10.27% 2009 -- to -- -- to -- 24.63% to 25.00% 2008 -- to -- 2.07% to 2.07% (43.95)% to (43.84)% PUTNAM VT INTERNATIONAL GROWTH FUND 2012 -- to -- 1.81% to 1.81% 21.24% to 21.24% 2011 -- to -- 2.70% to 2.70% (17.65)% to (17.65)% 2010 -- to -- 3.20% to 3.20% 12.49% to 12.49% 2009 -- to -- 1.94% to 1.94% 38.76% to 38.76% 2008 -- to -- 1.92% to 1.92% (42.37)% to (42.37)%
SA-121 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- PUTNAM VT INVESTORS FUND 2012 29,252 $12.397161 to $15.348719 $366,912 2011 29,692 10.590309 to 13.137712 316,195 2010 31,340 10.560103 to 13.132090 332,269 2009 43,509 9.243957 to 11.527606 402,228 2008 56,014 7.046749 to 7.046749 394,718 PUTNAM VT MONEY MARKET FUND 2012 27,786 1.803151 to 1.803151 50,102 2011 29,423 1.803089 to 1.803089 53,051 2010 34,556 1.802966 to 1.802966 62,303 2009 39,307 1.802303 to 1.802303 70,843 2008 44,313 1.796082 to 1.796082 79,589 PUTNAM VT MULTI-CAP GROWTH FUND 2012 267,450 17.208979 to 28.168997 7,395,076 2011 283,444 14.738812 to 24.058223 6,661,946 2010 307,814 15.528059 to 25.291913 7,630,604 2009 297,952 12.988059 to 21.099132 6,151,912 2008 322,463 9.829288 to 15.925954 5,038,310 PUTNAM VT SMALL CAP VALUE FUND 2012 111,503 11.585811 to 11.585811 1,291,855 2011 119,304 9.861349 to 9.861349 1,176,503 2010 123,172 10.350514 to 10.350514 1,274,893 2009 155,230 8.215811 to 8.215811 1,275,340 2008 128,307 6.246201 to 6.246201 801,429 PUTNAM VT GEORGE PUTNAM BALANCED FUND 2012 14,342 15.557336 to 15.557336 223,116 2011 15,049 13.795090 to 13.795090 207,596 2010 16,470 13.409259 to 13.409259 220,849 2009 20,292 12.059130 to 12.059130 244,699 2008 25,728 9.580101 to 9.580101 246,476 PUTNAM VT GLOBAL UTILITIES FUND 2012 11,825 29.147195 to 29.147195 344,666 2011 12,720 27.667582 to 27.667582 351,942 2010 15,255 29.182239 to 29.182239 445,167 2009 18,293 28.580962 to 28.580962 522,843 2008 22,240 26.547468 to 26.547468 590,405 PUTNAM VT VOYAGER FUND 2012 332,042 16.202644 to 40.405692 11,943,286 2011 352,912 14.184465 to 35.287020 11,206,664 2010 384,788 17.266105 to 42.844173 15,497,196 2009 402,057 14.293431 to 35.386121 13,691,059 2008 453,810 8.721088 to 21.538000 9,420,094 PUTNAM VT CAPITAL OPPORTUNITIES FUND 2012 63,915 21.414988 to 21.414988 1,368,741 2011 63,876 18.724634 to 18.724634 1,196,057 2010 80,090 19.942323 to 19.942323 1,597,180 2009 76,256 15.395267 to 15.395267 1,173,989 2008 83,552 10.572218 to 10.572218 883,334 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ PUTNAM VT INVESTORS FUND 2012 -- to -- 1.04% to 1.53% 16.83% to 17.06% 2011 -- to -- 1.00% to 1.35% 0.04% to 0.29% 2010 -- to -- 0.06% to 1.56% 13.92% to 14.24% 2009 -- to -- 1.58% to 1.58% 15.28% to 31.18% 2008 -- to -- 0.55% to 0.55% (39.44)% to (39.44)% PUTNAM VT MONEY MARKET FUND 2012 -- to -- 0.01% to 0.01% -- to -- 2011 -- to -- 0.01% to 0.01% 0.01% to 0.01% 2010 -- to -- 0.04% to 0.04% 0.04% to 0.04% 2009 -- to -- 0.36% to 0.36% 0.35% to 0.35% 2008 -- to -- 2.80% to 2.80% 2.83% to 2.83% PUTNAM VT MULTI-CAP GROWTH FUND 2012 -- to -- 0.26% to 0.50% 16.76% to 17.09% 2011 -- to -- 0.25% to 0.40% (5.08)% to (4.88)% 2010 -- to -- 0.34% to 0.57% 19.56% to 19.87% 2009 -- to -- 0.36% to 0.68% 32.14% to 32.48% 2008 -- to -- 0.31% to 0.31% (38.75)% to (38.62)% PUTNAM VT SMALL CAP VALUE FUND 2012 -- to -- 0.45% to 0.45% 17.49% to 17.49% 2011 -- to -- 0.49% to 0.49% (4.73)% to (4.73)% 2010 -- to -- 0.30% to 0.30% 25.98% to 25.98% 2009 -- to -- 1.33% to 1.33% 31.53% to 31.53% 2008 -- to -- 1.45% to 1.45% (39.36)% to (39.36)% PUTNAM VT GEORGE PUTNAM BALANCED FUND 2012 -- to -- 2.18% to 2.18% 12.77% to 12.77% 2011 -- to -- 2.33% to 2.33% 2.88% to 2.88% 2010 -- to -- 5.46% to 5.46% 11.20% to 11.20% 2009 -- to -- 5.05% to 5.05% 25.88% to 25.88% 2008 -- to -- 5.41% to 5.41% (40.47)% to (40.47)% PUTNAM VT GLOBAL UTILITIES FUND 2012 -- to -- 3.95% to 3.95% 5.35% to 5.35% 2011 -- to -- 3.91% to 3.91% (5.19)% to (5.19)% 2010 -- to -- 4.19% to 4.19% 2.10% to 2.10% 2009 -- to -- 4.63% to 4.63% 7.66% to 7.66% 2008 -- to -- 2.61% to 2.61% (30.33)% to (30.33)% PUTNAM VT VOYAGER FUND 2012 -- to -- 0.32% to 0.39% 14.23% to 14.51% 2011 -- to -- 0.29% to 0.29% (17.85)% to (17.64)% 2010 -- to -- 1.07% to 1.46% 20.80% to 21.08% 2009 -- to -- 0.71% to 1.13% 63.90% to 64.30% 2008 -- to -- 0.29% to 0.29% (37.03)% to (36.87)% PUTNAM VT CAPITAL OPPORTUNITIES FUND 2012 -- to -- 0.39% to 0.39% 14.37% to 14.37% 2011 -- to -- 0.14% to 0.14% (6.11)% to (6.11)% 2010 -- to -- 0.25% to 0.25% 29.54% to 29.54% 2009 -- to -- 0.61% to 0.61% 45.62% to 45.62% 2008 -- to -- 0.47% to 0.47% (35.18)% to (35.18)%
SA-122 -------------------------------------------------------------------------------
UNIT FAIR VALUE SUB-ACCOUNT UNITS # LOWEST TO HIGHEST # NET ASSETS ------------------------------------------------------------------------------------------------------------- PUTNAM VT EQUITY INCOME FUND 2012 164,820 $19.095633 to $19.759287 $3,236,262 2011 163,937 15.963640 to 16.562094 2,694,954 2010 108,061 15.639461 to 16.249834 1,734,027 2009 135,616 13.861395 to 14.430719 1,932,199 2008 80,477 11.322627 to 11.322627 911,210 INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND 2012 125,686 11.475741 to 16.368126 1,517,211 2011 127,703 10.035800 to 14.314318 1,348,358 2010 110,151 10.267992 to 14.645491 1,200,956 2009 101,329 9.152221 to 13.054030 989,746 2008 46,277 7.374331 to 10.518188 401,090 INVESCO VAN KAMPEN V.I. COMSTOCK FUND 2012 479,565 13.063471 to 13.063471 6,264,789 2011 509,827 10.984671 to 10.984671 5,600,281 2010 510,520 11.221180 to 11.221180 5,728,634 2009 531,692 9.698918 to 9.698918 5,156,833 2008 518,655 7.553239 to 7.553239 3,917,527 INVESCO VAN KAMPEN V.I. AMERICAN FRANCHISE FUND+ 2012 263,595 9.980752 to 9.980752 2,630,876 INVESCO VAN KAMPEN V.I. MID CAP GROWTH FUND+ 2012 181,733 9.994841 to 9.994841 1,816,392 INVESTMENT EXPENSE INCOME TOTAL RETURN RATIO LOWEST TO RATIO LOWEST TO RATIO LOWEST TO SUB-ACCOUNT HIGHEST* HIGHEST** HIGHEST*** ----------------------------- ------------------------------------------------------------------------------------------ PUTNAM VT EQUITY INCOME FUND 2012 -- to -- 2.13% to 2.45% 19.30% to 19.62% 2011 -- to -- 1.54% to 2.05% 1.92% to 2.07% 2010 -- to -- 2.17% to 2.29% 12.61% to 12.83% 2009 -- to -- 0.95% to 1.78% 27.45% to 38.61% 2008 -- to -- 1.96% to 1.96% (31.14)% to (31.14)% INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND 2012 -- to -- 1.31% to 1.32% 14.35% to 14.35% 2011 -- to -- 1.05% to 1.12% (2.26)% to (2.26)% 2010 -- to -- 0.10% to 0.10% 12.19% to 12.19% 2009 -- to -- 3.53% to 3.75% 24.11% to 24.11% 2008 -- to -- 1.85% to 1.85% (32.21)% to (26.26)% INVESCO VAN KAMPEN V.I. COMSTOCK FUND 2012 -- to -- 1.49% to 1.49% 18.92% to 18.92% 2011 -- to -- 1.33% to 1.33% (2.11)% to (2.11)% 2010 -- to -- 0.13% to 0.13% 15.70% to 15.70% 2009 -- to -- 4.33% to 4.33% 28.41% to 28.41% 2008 -- to -- 2.23% to 2.23% (35.80)% to (35.80)% INVESCO VAN KAMPEN V.I. AMERICAN FRANCHISE FUND+ 2012 -- to -- -- to -- (0.19)% to (0.19)% INVESCO VAN KAMPEN V.I. MID CAP GROWTH FUND+ 2012 -- to -- -- to -- (0.05)% to (0.05)%
* 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. Where the expense ratio is the same for each unit value, it is presented in both the lowest and highest columns. ** 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-Account invests. Where the investment income ratio is the same for each unit value, it is presented in both the lowest and highest columns. *** 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 units/unit fair values. Where only one unit value exists, it is presented in both the lowest and highest columns. + See Note 1 for additional information related to this Sub-Account.
RIDERS: The Sponsor Company will make certain deductions for various Rider charges: Estate Protection Rider (per $1,000 of the net amount at risk) $0.2496 - $185.76 Last Survivor Yearly Renewable Term Insurance Rider (per $1,000 of the net amount at risk) $0.0012 - $27.894 Single Life Yearly Renewable Term Life Insurance Rider (per $1,000 of the net amount at risk) $1.01 - $179.44 Deduction Amount Waiver Rider (of the monthly deduction amount) 6.90% - 34.50% Waiver of Specified Amount Disability Benefit Rider (per $1 of specified amount) $0.040 - $0.107 Accidental Death Benefit Rider (per $1,000 of the net amount at risk) $0.083 - $0.18 Term Insurance Rider (per $1,000 of the net amount at risk) $0.0076 - $9.7142 SA-123 SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED) ------------------------------------------------------------------------------- Child Insurance Rider (per $1,000 of coverage) $0.50 LifeAccess Accelerated Benefit Rider (per $1,000 of the benefit net amount at risk) $0.003408 - $0.548525 Accelerated Death Benefit Rider $300.00 (when benefit is exercised) Guaranteed Minimum Accumulation Benefit Rider Annual % of separate account value 0.90% Guaranteed Paid-Up death Benefit Rider Annual % of separate account value 0.75% Disability Access Rider -- Monthly Charge (per $100 of monthly benefit) $0.766 - $6.701 Disability Access Rider -- First Year Monthly Rider Issue Fee $10.00 (Monthly for the first twelve Monthly Activity Dates following the Rider Issue Date) These charges can be assessed as a reduction in unit values or a redemption of units from applicable contract owners' accounts as specified in the product prospectus. 7. SUBSEQUENT EVENTS: On September 27, 2012, Hartford Financial Services Group, the ultimate parent of the Sponsor Company, announced it had entered into a definitive agreement to sell its Individual Life insurance business to Prudential Financial, Inc. ("Prudential"). The sale, which is structured as a reinsurance transaction, closed on January 2, 2013. As part of the agreement, the Sponsor Company will continue to sell life insurance products and riders during a transition period, and Prudential will assume all expenses and risk for in force business through a reinsurance agreement. Management has evaluated events subsequent to December 31, 2012 and through the financial statement issuance date of March 28, 2013, noting there are no additional subsequent events requiring adjustment or disclosure in the financial statements. SA-124 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS -- STATUTORY-BASIS As of December 31, 2012 and 2011, and for the Years Ended December 31, 2012, 2011 and 2010 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY TABLE OF CONTENTS
PAGE: ---------------------------------------------------------------------------------- Independent Auditors' Report F-2 Financial Statements -- Statutory-Basis: Admitted Assets, Liabilities and Capital and Surplus F-3 Statements of Operations F-4 Statements of Changes in Capital and Surplus F-5 Statements of Cash Flows F-6 Notes to Financial Statements F7-41
F-1 [DELOITTE LOGO] DELOITTE & TOUCHE LLP CityPlaceI, 32ndFloor 185 Asylum Street Hartford,CT 06103-3402 USA Tel:+1 860 725 3000 Fax:+1860 725 3500 www.deloitte.com
INDEPENDENT AUDITORS' REPORT To the Board of Directors of Hartford Life and Annuity Insurance Company Hartford, Connecticut We have audited the accompanying statutory-basis financial statements of Hartford Life and Annuity Insurance Company (the "Company"), which comprise the statutory-basis statements of admitted assets, liabilities, and capital and surplus as of December 31, 2012 and 2011, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flows each of the three years in the period ended December 31, 2012, and the related notes to the statutory-basis financial statements. Management's Responsibility for the Statutory-Basis Financial Statements Management is responsible for the preparation and fair presentation of these statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by the Insurance Department of the State of Connecticut. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these statutory-basis financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statutory-basis financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statutory-basis financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the statutory-basis financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the statutory-basis financial statements in order to design 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statutory-basis financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America As described in Note 2 to the statutory-basis financial statements, the statutory-basis financial statements are prepared by the Company using the accounting practices prescribed or permitted by the Insurance Department of the State of Connecticut, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Insurance Department of the State of Connecticut. The effects on the statutory-basis financial statements of the variances between the statutory-basis of accounting described in Note 2 to the statutory-basis financial statements and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on Accounting Principles Generally Accepted in the United States of America In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America paragraph, the statutory-basis financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2012 and 2011, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2012. Opinion on Statutory Basis of Accounting In our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in accordance with the accounting practices prescribed or permitted by the Insurance Department of the State of Connecticut as described in Note 2 to the statutory-basis financial statements. /s/ Deloitte & Touche LLP April 10, 2013 F-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS (STATUTORY-BASIS)
AS OF DECEMBER 31, 2012 2011 -------------------------------------------------------------------------------- ADMITTED ASSETS Bonds $13,760,107,102 $11,394,354,135 Common and preferred stocks 833,792,149 1,017,063,560 Mortgage loans on real estate 907,375,838 660,905,198 Real estate 24,674,594 25,506,912 Contract loans 375,218,562 370,655,282 Cash and short-term investments 2,012,782,902 3,179,543,702 Derivatives 673,239,577 1,602,784,576 Other invested assets 279,355,350 251,264,156 ------------------- ------------------- TOTAL CASH AND INVESTED ASSETS 18,866,546,074 18,502,077,521 ------------------- ------------------- Investment income due and accrued 200,098,931 167,669,384 Amounts recoverable for reinsurance 226,878,415 82,357,163 Federal income tax recoverable -- 66,466,241 Deferred tax asset 394,723,616 529,817,226 Receivables from parent, subsidiaries and affiliates 13,512,043 19,756,182 Other assets 157,051,791 134,763,018 Separate Account assets 45,851,885,131 48,255,070,982 ------------------- ------------------- TOTAL ADMITTED ASSETS $65,710,696,001 $67,757,977,717 ------------------- ------------------- LIABILITIES Aggregate reserves for future benefits $9,208,744,094 $11,213,317,982 Liability for deposit-type contracts 1,543,283,228 65,824,777 Policy and contract claim liabilities 74,111,929 48,092,766 Asset valuation reserve 162,571,194 179,493,239 Interest maintenance reserve 88,321,743 60,883,805 Payables to parent, subsidiaries and affiliates 35,894,640 23,109,160 Accrued expense allowances and other amounts due from Separate Accounts (670,087,726) (884,460,194) Funds held under reinsurance treaties with unauthorized reinsurers 2,981,569,933 2,552,745,907 Payable for investment repurchase program 1,614,859,275 -- Collateral on derivatives 467,830,775 1,488,105,981 Other liabilities 1,325,497,396 824,354,242 Separate Account liabilities 45,851,885,131 48,255,070,982 ------------------- ------------------- TOTAL LIABILITIES 62,684,481,612 63,826,538,647 ------------------- ------------------- CAPITAL AND SURPLUS Common stock -- par value $1,250 per share, 3,000 shares authorized, 2,000 shares issued and outstanding 2,500,000 2,500,000 Aggregate write-ins for other than special surplus funds 169,606,804 174,887,393 Gross paid-in and contributed surplus 2,771,903,231 2,893,378,493 Aggregate write-ins for special surplus funds -- 176,605,742 Unassigned surplus 82,204,354 684,067,442 ------------------- ------------------- TOTAL CAPITAL AND SURPLUS 3,026,214,389 3,931,439,070 ------------------- ------------------- TOTAL LIABILITIES AND CAPITAL AND SURPLUS $65,710,696,001 $67,757,977,717 ------------------- -------------------
SEE NOTES TO FINANCIAL STATEMENTS. F-3 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS (STATUTORY-BASIS)
FOR THE YEARS ENDED DECEMBER 31, 2012 2011 2010 --------------------------------------------------------------------------------------------------------------------------------- REVENUES Premiums and annuity considerations $1,288,798,535 $1,401,142,759 $1,110,039,826 Net investment income 687,977,036 637,017,383 651,852,402 Commissions and expense allowances on reinsurance 49,989,787 34,051,212 90,333,930 ceded Reserve adjustments on reinsurance ceded (8,032,092,137) (7,279,328,984) (6,345,615,060) Fee income 1,206,201,964 1,366,934,784 1,452,299,854 Other revenues 22,453,259 13,413,968 26,435,811 ------------------ ------------------ ------------------ TOTAL REVENUES (4,776,671,556) (3,826,768,878) (3,014,653,237) ------------------ ------------------ ------------------ BENEFITS AND EXPENSES Death and annuity benefits 759,877,305 703,019,683 696,946,177 Disability and other benefits 8,161,076 9,127,886 9,295,233 Surrenders and other fund withdrawals 305,668,254 331,833,655 283,345,881 Commissions and expense allowances 468,295,588 523,282,542 509,398,932 (Decrease) increase in aggregate reserves for life (378,937,282) 2,416,785,246 648,536,025 and accident and health policies General insurance expenses 354,659,954 308,877,214 367,574,662 Net transfers from Separate Accounts (7,601,449,859) (7,446,610,318) (6,144,421,221) Modified coinsurance adjustment on reinsurance (292,387,321) (201,842,919) (236,815,941) assumed Other expenses 125,643,377 230,507,595 148,320,783 ------------------ ------------------ ------------------ TOTAL BENEFITS AND EXPENSES (6,250,468,908) (3,125,019,416) (3,717,819,469) ------------------ ------------------ ------------------ NET GAIN (LOSS) FROM OPERATIONS BEFORE FEDERAL INCOME 1,473,797,352 (701,749,462) 703,166,232 TAX EXPENSE (BENEFIT) Federal income tax expense (benefit) 323,855,226 115,068,345 (65,495,355) ------------------ ------------------ ------------------ NET GAIN (LOSS) FROM OPERATIONS 1,149,942,126 (816,817,807) 768,661,587 ------------------ ------------------ ------------------ Net realized capital losses, after tax (438,565,374) (41,037,858) (688,717,817) ------------------ ------------------ ------------------ NET INCOME (LOSS) $711,376,752 $(857,855,665) $79,943,770 ------------------ ------------------ ------------------
SEE NOTES TO FINANCIAL STATEMENTS. F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (STATUTORY-BASIS)
FOR THE YEARS ENDED DECEMBER 31, 2012 2011 2010 --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK -- PAR VALUE $1,250 PER SHARE, 3,000 SHARES AUTHORIZED, 2,000 SHARES ISSUED AND OUTSTANDING Balance, beginning and end of year $2,500,000 $2,500,000 $2,500,000 ----------------- ----------------- ----------------- GROSS PAID-IN AND CONTRIBUTED SURPLUS Balance, beginning of year 2,893,378,493 2,890,696,495 2,889,208,215 Capital (return) contribution (121,475,262) 2,681,998 1,488,280 ----------------- ----------------- ----------------- BALANCE, END OF YEAR 2,771,903,231 2,893,378,493 2,890,696,495 ----------------- ----------------- ----------------- AGGREGATE WRITE-INS FOR OTHER THAN SPECIAL SURPLUS FUNDS Balance, beginning of year 174,887,393 182,105,606 189,963,147 Amortization of gain on inforce reinsurance (5,280,589) (7,218,213) (7,857,541) ----------------- ----------------- ----------------- BALANCE, END OF YEAR 169,606,804 174,887,393 182,105,606 ----------------- ----------------- ----------------- AGGREGATE WRITE-INS FOR SPECIAL SURPLUS FUNDS Balance, beginning of year 176,605,742 181,471,058 266,358,000 Change in additional admitted deferred tax asset (176,605,742) (4,865,316) (84,886,942) ----------------- ----------------- ----------------- BALANCE, END OF YEAR -- 176,605,742 181,471,058 ----------------- ----------------- ----------------- UNASSIGNED FUNDS Balance, beginning of year 684,067,442 805,765,945 737,571,154 Net income (loss) 711,376,752 (857,855,665) 79,943,770 Change in net unrealized capital (losses) gains on (106,980,222) 352,961,532 (342,230,129) common stocks and other invested assets Change in net unrealized foreign exchange capital (823,914,426) 265,927,783 151,724,446 (losses) gains Change in net deferred income tax 72,756,668 499,609,022 47,041,083 Change in asset valuation reserve 16,922,045 (162,934,104) 9,004,550 Change in nonadmitted assets (648,630,747) (219,410,471) 211,752,886 Cumulative effect of change in accounting principles 176,605,742 -- -- Change in liability for reinsurance in unauthorized 1,100 3,400 4,736,976 companies Dividends to stockholder -- -- (72,000,000) Correction of prior year error -- -- (21,778,791) ----------------- ----------------- ----------------- BALANCE, END OF YEAR 82,204,354 684,067,442 805,765,945 ----------------- ----------------- ----------------- CAPITAL AND SURPLUS BALANCE, END OF YEAR $3,026,214,389 $3,931,439,070 $4,062,539,104 ----------------- ----------------- -----------------
SEE NOTES TO FINANCIAL STATEMENTS. F-5 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CASH FLOWS (STATUTORY-BASIS)
FOR THE YEARS ENDED DECEMBER 31, 2012 2011 2010 --------------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Premiums and annuity considerations $1,289,285,920 $1,399,332,372 $1,167,274,877 Net investment income 702,155,801 613,946,357 763,045,855 Reserve adjustments on reinsurance (8,032,092,137) (7,279,328,984) (6,345,615,060) Miscellaneous income 1,261,070,634 1,409,156,457 1,553,382,340 ----------------- ----------------- ----------------- Total income (4,779,579,782) (3,856,893,798) (2,861,911,988) ----------------- ----------------- ----------------- Benefits paid 861,678,272 1,061,260,232 549,412,033 Federal income tax (recoveries) payments (75,830,891) (115,479,588) 363,856,309 Net transfers from Separate Accounts (7,815,822,328) (7,863,768,436) (6,455,732,342) Other expenses 1,837,953,351 64,878,126 327,668,851 ----------------- ----------------- ----------------- Total benefits and expenses (5,192,021,596) (6,853,109,666) (5,214,795,149) ----------------- ----------------- ----------------- NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 412,441,814 2,996,215,868 2,352,883,161 ----------------- ----------------- ----------------- INVESTING ACTIVITIES PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID Bonds 6,156,517,642 5,209,426,005 5,961,461,765 Common and preferred stocks 199,580,266 53,875,698 133,591,230 Mortgage loans 69,995,071 34,571,199 82,742,398 Derivatives and other 33,818,042 251,024,069 600,107,338 ----------------- ----------------- ----------------- Total investment proceeds 6,459,911,021 5,548,896,971 6,777,902,731 ----------------- ----------------- ----------------- COST OF INVESTMENTS ACQUIRED Bonds 8,537,855,101 6,908,483,885 6,988,480,966 Common and preferred stocks 15,489,335 146,121,947 51,045,814 Mortgage loans 316,475,000 256,825,000 33,125,000 Real estate 236,398 -- 106,600 Derivatives and other 1,207,268,735 119,866,202 1,755,491,882 ----------------- ----------------- ----------------- Total investments acquired 10,077,324,569 7,431,297,034 8,828,250,262 ----------------- ----------------- ----------------- Net increase in contract loans 4,563,280 6,146,082 11,680,007 ----------------- ----------------- ----------------- NET CASH USED FOR INVESTING ACTIVITIES (3,621,976,828) (1,888,546,145) (2,062,027,538) ----------------- ----------------- ----------------- FINANCING AND MISCELLANEOUS ACTIVITIES Dividends to stockholder -- -- (72,000,000) Funds held under reinsurance treaties with unauthorized reinsurers 428,824,026 552,976,734 (154,549,016) Collateral received on investment repurchase program 1,614,859,275 -- -- Net other cash used (909,087) (54,575,550) (73,312,602) ----------------- ----------------- ----------------- NET CASH PROVIDED BY (USED FOR) FINANCING AND MISCELLANEOUS ACTIVITIES 2,042,774,214 498,401,184 (299,861,618) ----------------- ----------------- ----------------- Net (decrease) increase in cash and short-term investments (1,166,760,800) 1,606,070,907 (9,005,995) CASH AND SHORT-TERM INVESTMENTS, beginning of year 3,179,543,702 1,573,472,795 1,582,478,790 ----------------- ----------------- ----------------- CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $2,012,782,902 $3,179,543,702 $1,573,472,795 ----------------- ----------------- ----------------- Note: Supplemental disclosures of cash flow information for non-cash transactions: Capital contribution from parent to settle intercompany balances related to stock compensation 5,189,550 2,681,998 1,488,280 Capital contribution to subsidiary to settle intercompany balances related to stock compensation 2,721,550 1,736,296 -- Shares of subsidiary Hartford Life, Ltd. contributed to subsidiary Hartford Life International, Ltd. -- -- 29,472,142
SEE NOTES TO FINANCIAL STATEMENTS. F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2012 AND 2011 AND 2010 -------------------------------------------------------------------------------- 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Hartford Life and Annuity Insurance Company ("HLAI" or the "Company") is a wholly-owned subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly owned by The Hartford Financial Services Group, Inc. ("The Hartford"). On September 29, 2010, the Company contributed Hartford Life Ltd., a wholly-owned subsidiary based in Bermuda, to Hartford Life International, Ltd., also a wholly-owned subsidiary, in order to align all of the Company's foreign subsidiaries under one foreign holding company. On March 21, 2012, the Company's ultimate parent, The Hartford, announced that it had decided to focus on its property and casualty, group benefits and mutual funds businesses. As a result, The Hartford ceased selling its individual annuity products in the second quarter of 2012. In addition, The Hartford sold its individual life, retirement plans and Woodbury Financial Services businesses. See Notes 14 and 15. The Company offers a complete line of fixed and variable annuities, universal and traditional individual life insurance and benefit products such as disability insurance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying statutory-basis financial statements of HLAI have been prepared in conformity with statutory accounting practices prescribed or permitted by the State of Connecticut Department of Insurance ("the Department"). The Department recognizes only statutory accounting practices prescribed or permitted by the State of Connecticut for determining and reporting the financial condition and results of operations of an insurance company and for determining solvency under the State of Connecticut Insurance Law. The National Association of Insurance Commissioners' Accounting Practices and Procedures Manual ("NAIC SAP") has been adopted as a component of prescribed practices by the State of Connecticut. A difference prescribed by Connecticut state law allows the Company to receive a reinsurance reserve credit for a reinsurance treaty that provides for a limited right of unilateral cancellation by the reinsurer. Even if the Company did not obtain reinsurance reserve credit for this reinsurance treaty, the Company's risk-based capital would not have triggered a regulatory event. A reconciliation of the Company's net income and capital and surplus between NAIC SAP and practices prescribed by the Department is shown below for the years ended December 31:
2012 2011 2010 --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS), STATE OF CONNECTICUT BASIS $711,376,752 $(857,855,665) $79,943,770 State prescribed practice: Reinsurance reserve credit (as described above) (88,280,194) 161,739,538 (3,086,978) ----------------- ------------------ ----------------- (88,280,194) 161,739,538 (3,086,978) NET INCOME (LOSS), NAIC SAP $ 799,656,946 $ (1,019,595,203) $ 83,030,748 ----------------- ------------------ ----------------- Statutory capital and surplus, State of Connecticut Basis $3,026,214,389 $3,931,439,071 $4,062,539,104 State prescribed practice: Less: Reinsurance reserve credit (as described above) 307,774,786 396,054,980 234,315,442 ----------------- ------------------ ----------------- 307,774,786 396,054,980 234,315,442 STATUTORY CAPITAL AND SURPLUS, NAIC SAP $ 2,718,439,603 $ 3,535,384,091 $ 3,828,223,662 ----------------- ------------------ -----------------
The Company does not follow any other prescribed or permitted statutory accounting practices that have a material effect on statutory surplus, statutory net income or risk-based capital. The preparation of financial statements in conformity with NAIC SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The most significant estimates include those used in determining the liability for aggregate reserves for life, accident and health, and fixed and variable annuity policies; evaluation of other-than-temporary impairments; valuation of derivatives; and contingencies relating to corporate litigation and regulatory matters. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the statutory-basis financial statements. Although some variability is inherent in these estimates, management believes the amounts provided are adequate. F-7 Approximately $1.5 billion of policyholder reserves on annuities assumed from Hartford Life Insurance K.K., a Japan based affiliate, that were previously recorded within Aggregate reserves for future benefits have been reclassified to Liability for deposit-type contracts in the current period at the direction of the Department. Prior periods have not been reclassified. Certain other reclassifications have been made to prior year financial information to conform to the current year presentation. Accounting practices and procedures as prescribed or permitted by the Department are different in certain material respects from accounting principles generally accepted in the United States of America ("GAAP"). The more significant differences are: (1) for statutory purposes, policy acquisition costs (commissions, underwriting and selling expenses, etc.) and sales inducements are charged to expense when incurred rather than capitalized and amortized for GAAP purposes; (2) recognition of premium revenues, which for statutory purposes are generally recorded as collected or when due during the premium paying period of the contract and which for GAAP purposes, for universal life policies and investment products, generally only consist of charges assessed to policy account balances for cost of insurance, policy administration and surrenders. For GAAP, when policy charges received relate to coverage or services to be provided in the future, the charges are recognized as revenue on a pro-rata basis over the expected life and gross profit stream of the policy. Also, for GAAP purposes, premiums for traditional life insurance policies are recognized as revenues when they are due from policyholders; (3) development of liabilities for future policy benefits, which for statutory purposes predominantly use interest rate and mortality assumptions prescribed by the National Association of Insurance Commissioners ("NAIC"), which may vary considerably from interest and mortality assumptions used under GAAP. Additionally for GAAP, reserves for guaranteed minimum death benefits ("GMDB") 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, and, reserves for guaranteed withdrawal benefits are considered embedded derivatives and reported at fair value; (4) exclusion of certain assets designated as nonadmitted assets from the Statements of Admitted Assets, Liabilities and Capital and Surplus for statutory purposes by directly charging surplus; (5) the calculation of the postretirement benefits obligation which, for statutory accounting, excludes non-vested employees whereas GAAP liabilities include a provision for such employees; statutory and GAAP accounting permit either immediate recognition of the liability or straight-line amortization of the liability over a period not to exceed 20 years. For GAAP, The Hartford's obligation was immediately recognized. For statutory accounting, the remaining obligation is expected to be recognized ratably over the next 4 years; (6) establishment of a formula reserve for realized and unrealized losses due to default and equity risk associated with certain invested assets (Asset Valuation Reserve ("AVR")) for statutory purposes; as well as the deferral and amortization of realized gains and losses, caused by changes in interest rates during the period the asset is held, into income over the original life to maturity of the asset sold (Interest Maintenance Reserve ("IMR")) for statutory purposes; whereas on a GAAP basis, no such formula reserve is required and realized gains and losses are recognized in the period the asset is sold; (7) the reporting of reserves and benefits, net of reinsurance ceded for statutory purposes; whereas on a GAAP basis, reserves are reported gross of reinsurance with reserve credits presented as recoverable assets; (8) for statutory purposes, investments in unaffiliated bonds, other than loan-backed and structured securities, rated in NAIC classes 1 through 5 are carried at amortized cost, and unaffiliated bonds, other than loan-backed and structured securities, rated in NAIC class 6 are carried at the lower of amortized cost or fair value. Loan-backed bonds and structured securities are carried at either amortized cost or the lower of amortized cost or fair value in accordance with the provisions of Statement of Statutory Accounting Principles ("SSAP") No. 43 -- Revised (Loan-backed and Structured Securities). GAAP requires that fixed maturities and loan-backed and structured securities be classified as "held-to-maturity," "available-for-sale" or "trading," based on the Company's intentions with respect to the ultimate disposition of the security and its ability to affect those intentions. The Company's bonds and loan-backed securities were classified on a GAAP basis as "available-for-sale" and accordingly, these investments and common stocks were reflected at fair value with the corresponding impact included as a separate component of Stockholder's Equity; (9) for statutory purposes, Separate Account liabilities are calculated using prescribed actuarial methodologies, which approximate the market value of Separate Account assets, less applicable surrender charges. The Separate Account surplus generated by these reserving methods is recorded as an amount due to or from Separate Accounts on the Statements of Admitted Assets, Liabilities and Capital and Surplus, with changes reflected in the Statements of Operations. On a GAAP basis, Separate Account assets and liabilities must meet specific conditions to qualify as a Separate Account asset or liability. Amounts reported for Separate Account assets and liabilities are based upon the fair value of the underlying assets; F-8 (10) the consolidation of financial statements for GAAP reporting, whereas statutory accounting requires standalone financial statements with earnings of subsidiaries reflected as changes in unrealized gains or losses in surplus; (11) deferred income taxes, which provide for statutory/tax temporary differences, are subject to limitation and are charged directly to surplus, whereas, GAAP would include GAAP/tax temporary differences recognized as a component of net income; (12) comprehensive income and its components are not presented in the statutory-basis financial statements; (13) for statutory purposes derivative instruments that qualify for hedging, replication, or income generation are accounted for in a manner consistent with the hedged item, cash instrument and covered asset, respectively, which is typically amortized cost. Derivative instruments held for other investment and risk management activities, which do not receive hedge accounting treatment, receive fair value accounting for statutory purposes and are recorded at fair value with corresponding changes in value reported in unrealized gains and losses within surplus. For GAAP, derivative instruments are recorded at fair value with changes in value reported in earnings, with the exception of cash flow hedges and net investment hedges of a foreign operation, which are carried at fair value with changes in value reported as a separate component of Stockholder's Equity. In addition, statutory accounting does not record the hedge ineffectiveness on qualified hedge positions, whereas, GAAP records the hedge ineffectiveness in earnings; and (14) embedded derivatives for statutory accounting are not bifurcated from the host contract, whereas, GAAP accounting requires the embedded derivative to be bifurcated from the host instrument, accounted for and reported separately. AGGREGATE RESERVES FOR LIFE AND ACCIDENT AND HEALTH POLICIES AND CONTRACTS AND LIABILITY FOR DEPOSIT-TYPE CONTRACTS Aggregate reserves for payment of future life, health and annuity benefits are computed in accordance with applicable actuarial standards. Reserves for life insurance policies are generally based on the 1941, 1958, 1980 and 2001 Commissioner's Standard Ordinary Mortality Tables and various valuation rates ranging from 2.25% to 6.00%. Accumulation and on-benefit annuity reserves are based principally on individual and group annuity tables at various rates ranging from 2.50% to 9.50% and using the Commissioner's Annuity Reserve Valuation Method ("CARVM"). Accident and health reserves are established using a two year preliminary term method and morbidity tables based primarily on Company experience. For non-interest sensitive ordinary life plans, the Company waives deduction of deferred fractional premiums upon death of insured. Return of the unearned portion of the final premium is governed by the terms of the contract. The Company does not have any forms for which the cash values are in excess of the legally computed reserve. Extra premiums are charged for substandard lives, in addition to the regular gross premiums for the true age. Mean reserves for traditional insurance products are determined by computing the regular mean reserve for the plan at the true age, and adding one-half (1/2) of the extra premium charge for the year. For plans with explicit mortality charges, mean reserves are based on appropriate multiples of standard rates of mortality. As of December 31, 2012 and 2011, the Company had $15,553,422,110 and $17,416,612,680, respectively, of insurance in force for which the gross premiums are less than the net premiums according to the standard valuation set by the State of Connecticut. Reserves to cover the above insurance at December 31, 2012 and 2011 totaled $64,681,219 and $74,633,381, respectively. The Company has established Separate Accounts to segregate the assets and liabilities of certain life insurance, pension and annuity contracts that must be segregated from the Company's General Account assets under the terms of its contracts. The assets consist primarily of marketable securities and are reported at fair value. Premiums, benefits and expenses relating to these contracts are reported in the Statements of Operations. F-9 An analysis of annuity actuarial reserves and deposit fund liabilities by withdrawal characteristics for the General Account and Separate Accounts as of December 31, 2012 is presented below:
SEPARATE ACCOUNTS SEPARATE GENERAL WITH ACCOUNTS ACCOUNT GUARANTEES NONGUARANTEED TOTAL % OF TOTAL --------------------------------------------------------------------------------------------------------------------------------- A. Subject to discretionary withdrawal 1. With fair value adjustment $1,504,858,853 $ -- $ -- $1,504,858,853 3.28% 2. At book value less current surrender charge of 5% or more 179,906,297 -- -- 179,906,297 0.39% 3. At fair value -- -- 41,311,170,020 41,311,170,020 89.94% --------------- ---- --------------- --------------- ------ 4. Total with adjustment or at fair value 1,684,765,150 -- 41,311,170,020 42,995,935,170 93.61% 5. At book value without adjustment (minimal or no charge or adjustment) 2,445,873,881 -- -- 2,445,873,881 5.32% B. Not subject to discretionary withdrawal 360,640,185 -- 130,875,400 491,515,585 1.07% --------------- ---- --------------- --------------- ------ C. Total (gross) 4,491,279,216 -- 41,442,045,420 45,933,324,636 100.00% D. Reinsurance ceded 212,088,582 -- -- 212,088,582 --------------- ---- --------------- --------------- ------ E. Total (net) $4,279,190,634 $ -- $41,442,045,420 $45,721,236,054 --------------- ---- --------------- --------------- ------ Reconciliation of total annuity actuarial reserves and deposit fund liabilities: F. Life and Accident & Health Annual Statement: 1. Exhibit 5, Annuities Section, Total (net) $2,732,473,849 2. Exhibit 5, Supplementary Contract Section, Total (net) 3,433,555 3. Exhibit 7, Deposit-Type Contracts Section, Total (net) 1,543,283,230 --------------- 4. Subtotal 4,279,190,634 Separate Account Annual Statement: 5. Exhibit 3, Annuities Section, Total (net) 41,442,045,420 6. Exhibit 3, Supplemental Contract Section, Total (net) -- 7. Policyholder dividend and coupon accumulations -- 8. Policyholder premiums -- 9. Guaranteed interest contracts -- 10. Exhibit 4, Deposit-Type Contracts Section, Total (net) -- --------------- 11. Subtotal 41,442,045,420 --------------- 12. Combined total $45,721,236,054 ---------------
INVESTMENTS Investments in unaffiliated bonds, other than loan-backed and structured securities, rated in NAIC classes 1-5 are carried at amortized cost and unaffiliated bonds rated in NAIC class 6 are carried at the lower of amortized cost or fair value. Short-term investments include all investments whose maturities, at the time of acquisition, are one year or less and are stated at amortized cost. Unaffiliated common stocks are carried at fair value. Investments in stocks of uncombined subsidiaries, controlled and affiliated ("SCA") companies are based on the net worth of the subsidiary in accordance with SSAP No. 97 (Investment in Subsidiary, Controlled, and Affiliated Entities, a replacement of SSAP No. 88). The Company's investment value in a foreign insurance subsidiary is affected by adjusting GAAP annuity account value reserves using VA CARVM. Methodology is consistent with domestic accumulation annuity reserves. The change in the carrying value is recorded as a change in net unrealized capital gains (losses), a component of unassigned surplus. Unaffiliated preferred stocks are carried at cost, lower of cost or amortized cost, or fair value depending on the assigned credit rating and whether the preferred stock is redeemable or non-redeemable. Mortgage loans on real estate are stated at the outstanding principal balance, less any allowances for credit losses. Loan-backed bonds and structured securities are carried at either amortized cost or the lower of amortized cost or fair value in accordance with the provisions of SSAP No. 43 -- Revised. Significant changes in estimated cash flows from the original purchase assumptions are accounted for using the prospective method, except for highly rated fixed rate securities, which use the retrospective method. The Company has ownership interests in joint ventures, investment partnerships and limited liability companies. The Company carries these interests based upon audited financial statements in accordance with SSAP No. 48 (Joint Ventures, Partnerships and Limited Liability Companies). Contract loans are carried at outstanding balance, which approximates fair value. 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 fixed rate securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future repayments using the retrospective method; however, if these investments are impaired, any yield adjustments are made using the prospective method. The Company has not elected under SSAP No. 43 -- Revised to use the book value as of January 1, 1994 as the cost for applying the retrospective adjustment method to securities purchased prior to that date. Investment income on variable rate and interest only securities is determined using the prospective method. Prepayment fees on bonds and mortgage loans on real estate are recorded in net investment income when earned. Dividends are recorded as earned on the ex-dividend date. For partnership investments, income is earned when cash F-10 distributions of income are received. For impaired debt securities, the Company accretes the new cost basis to the estimated future cash flows over the expected remaining life of the security by prospectively adjusting the security's yield. Due and accrued investment income amounts over 90 days past due are nonadmitted. There was no investment income due and accrued excluded from surplus at December 31, 2012 and 2011. Net realized gains and losses from investment sales represent the difference between the sales proceeds and the lower of cost of the investment sold, determined on a specific identification basis. Net realized capital gains and losses also result from termination or settlement of derivative contracts that do not qualify, or are not designated, as a hedge for accounting purposes. Impairments are recognized within net realized capital losses when investment losses in value are deemed other-than-temporary. Foreign currency transaction gains and losses are also recognized within net realized capital gains and losses. The AVR is designed to provide a standardized reserving process for realized and unrealized losses due to default and equity risks associated with invested assets. The AVR balances were $162,571,194 and $179,493,239 as of December 31, 2012 and 2011, respectively. Additionally, the IMR captures net realized capital gains and losses, net of applicable income taxes, resulting from changes in interest rates and amortizes these gains or losses into income over the life of the bond, preferred stock or mortgage loan sold. The IMR balances as of December 31, 2012 and 2011 were $88,321,737, and $60,883,805, respectively. The net capital gains captured in the IMR, net of taxes, in 2012, 2011, and 2010 were $44,533,696, $22,055,099 and $67,929,917, respectively. The amount of income amortized from the IMR net of taxes in 2012, 2011, and 2010 included in the Company's Statements of Operations, was $17,095,758, $4,967,011 and $15,097,035, respectively. Realized capital gains and losses, net of taxes, not included in the IMR are reported in the Statements of Operations. The Company's accounting policy requires that a decline in the value of a bond or equity security below its cost or amortized cost basis be assessed to determine if the decline is other-than-temporary. In addition, for securities expected to be sold, an other-than-temporary impairment ("OTTI") charge is recognized if the Company does not expect the fair value of a security to recover to its cost or amortized cost basis prior to the expected date of sale. The impaired value of the other-than-temporarily impaired investment becomes its new cost basis. The Company has a security monitoring process overseen by a committee of investment and accounting professionals that identifies securities that, due to certain characteristics, as described below, are subjected to an enhanced analysis on a quarterly basis. Securities that are in an unrealized loss position are reviewed at least quarterly to determine if an OTTI is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether a decline in value for securities not subject to SSAP No. 43 -- Revised is other-than-temporary include: (a) the length of time and the extent to which the fair value has been less than cost or amortized cost, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, and (c) whether the debtor is current on contractually obligated payments. Once an impairment charge has been recorded, the Company continues to review the other-than-temporarily impaired securities for further OTTIs on an ongoing basis. For securities that are not subject to SSAP No. 43 -- Revised, if the decline in value of a bond or equity security is 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. For certain securitized financial assets with contractual cash flows (including asset-backed securities), SSAP No. 43 -- Revised requires the Company to periodically update its best estimate of cash flows over the life of the security. If management determines that its best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment are less than its amortized cost, then an OTTI charge is recognized equal to the difference between the amortized cost and the Company's best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment. The Company's best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment becomes its new cost basis. 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. As a result, actual results may differ from estimates. Projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. In addition, if the Company does not have the intent and ability to hold a security subject to the provisions of SSAP No. 43 - - Revised until the recovery of value, the security is written down to fair value. Net realized capital losses resulting from write-downs for OTTIs on corporate and asset-backed bonds were $21,190,901, $9,684,957 and $16,191,903 for the years ended December 31, 2012, 2011 and 2010, respectively. Net realized capital losses resulting from write-downs for OTTIs on equities were $33,439, $245,204 and $0 for the years ended December 31, 2012, 2011 and 2010, respectively. F-11 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 all amounts due according to the contractual terms of the loan agreement. For mortgage loans on real estate that are determined to be impaired, a valuation allowance is established for the difference between the carrying amount and the Company's share of the fair value of the collateral. Additionally, a loss contingency valuation allowance is established for estimated probable credit losses on certain homogenous groups of loans. Changes in valuation allowances are recorded in net unrealized capital gains and losses. Interest income on an impaired loan is accrued to the extent it is deemed collectable and the loan continues to perform under its original or restructured terms. Interest income on defaulted loans is recognized when received. As of December 31, 2012, 2011 and 2010, the Company had impaired mortgage loans on real estate with related allowances for credit losses of $565,263, $682,306 and $2,561,000, respectively. The Company may at any time use derivative instruments, including swaps, caps, floors, options, futures and forwards. On the date the derivative contract is entered into, the Company designates the derivative as hedging (fair value, cash flow, or net investment in a foreign operation), replication, income generation, or held for other investment and/or risk management activities, which primarily involves managing asset or liability related risks which do not qualify for hedge accounting under SSAP No. 86 (Accounting for Derivative Instruments and Hedging, Income Generation, and Replication (Synthetic Asset) Transactions). The Company's derivative transactions are permitted uses of derivatives under the derivative use plan required by the Department. Derivatives used in hedging relationships are accounted for in a manner consistent with the item hedged. Typically, cost paid or consideration received at inception of a contract is reported on the balance sheet as a derivative asset or liability, respectively. Periodic cash flows and accruals are recorded in a manner consistent with the hedged item. Upon termination of the derivative, any gain or loss is recognized as a derivative capital gain or loss. Derivatives used in replication relationships are accounted for in a manner consistent with the cash instrument and the replicated asset. Typically, cost paid or consideration received at inception of the contract is recorded on the balance sheet as a derivative asset or liability, respectively. Periodic cash flows and accruals of income/expense are recorded as a component of derivative net investment income. Upon termination of the derivative, any gain or loss is recognized as a derivative capital gain or loss. Derivatives used in income generation relationships are accounted for in a manner consistent with the associated covered asset. Typically, consideration received at inception of the contract is recorded on the balance sheet as a derivative liability. Upon termination, any remaining derivative liability, along with any disposition payments are recorded to derivative capital gain or loss. Derivatives held for other investment and/or risk management activities receive fair value accounting. The derivatives are carried on the balance sheet at fair value and the changes in fair value are recorded in derivative unrealized gains and losses. Periodic cash flows and accruals of income/expense are recorded as a component of derivative net investment income. ADOPTION OF ACCOUNTING STANDARDS Effective January 1, 2012, the Company adopted SSAP No. 101 (Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10). The effect of the adoption of SSAP No. 101 on the Company's admitted assets, net income and surplus was not material. As a result of the adoption, during the first quarter of 2012, the Company reclassified $177 million between special surplus funds and unassigned surplus representing the additional admitted deferred tax asset that had been calculated under the provisions of SSAP No. 10R (Income Taxes -- Revised, A Temporary Replacement of SSAP No. 10) and which is no longer required to be presented as special surplus funds. FUTURE ADOPTION OF ACCOUNTING STANDARDS Offsetting of Financial Assets and Liabilities: In December 2012, the Statutory Accounting Principles Working Group ("SAPWG") of the National Association of Insurance Commissioners ("NAIC") adopted revisions to the following SSAPs: SSAP No. 64, Offsetting and Netting of Assets and Liabilities; SSAP No. 86, Accounting for Derivative Instruments and Hedging Activities; and SSAP No. 103 Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The effect of these revisions, effective for financial statements issued beginning January 1, 2013, will allow offsetting of financial assets and liabilities in only certain limited circumstances and will therefore disallow netting derivatives under master netting agreements and similar arrangements under repurchase and reverse repurchase agreements. The Company will adopt these changes effective January 1, 2013, and as a result both Derivative assets and Derivative liabilities will be increased in the first quarter 2013 statutory financial statements by approximately $793 million, from balances as of December 31, 2012. F-12 ------------------------------------------------------------------------------- 3. INVESTMENTS For the years ended December 31, (A) COMPONENTS OF NET INVESTMENT INCOME
2012 2011 2010 --------------------------------------------------------------------------------------- Interest income from bonds and short-term investments $575,468,717 $509,808,728 $469,730,083 Interest income from contract loans 22,174,261 22,747,522 20,359,950 Interest income from mortgage loans on real estate 41,558,591 30,291,082 27,188,650 Interest and dividends from other investments 64,491,175 86,751,995 150,668,061 Gross investment income 703,692,744 649,599,327 667,946,744 Less: investment expenses 15,715,708 12,581,944 16,094,342 ------------ ------------ ------------ NET INVESTMENT INCOME $687,977,036 $637,017,383 $651,852,402 ------------ ------------ ------------
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS
2012 2011 2010 ------------------------------------------------------------------------------------------------------ Gross unrealized capital gains $1,362,269,460 $1,023,591,266 $442,646,698 Gross unrealized capital losses (66,702,724) (161,289,941) (195,775,301) Net unrealized capital gains 1,295,566,736 862,301,325 246,871,397 Balance, beginning of year 862,301,325 246,871,397 (141,761,000) ------------ ------------ ------------ CHANGE IN NET UNREALIZED CAPITAL GAINS ON BONDS AND SHORT-TERM INVESTMENTS $433,265,411 $615,429,928 $388,632,397 ------------ ------------ ------------
(C) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON AND PREFERRED STOCKS
2012 2011 2010 ------------------------------------------------------------------------------------------------------ Gross unrealized capital gains $720,924 $4,123,643 $2,105,046 Gross unrealized capital losses (209,618,658) (174,273,946) (337,772,932) Net unrealized capital losses (208,897,734) (170,150,303) (335,667,886) Balance, beginning of year (170,150,303) (335,667,886) (17,158,000) ------------ ------------ ------------ CHANGE IN NET UNREALIZED CAPITAL (LOSSES) $(38,747,431) $165,517,583 $(318,509,886) GAINS ON COMMON AND PREFERRED STOCKS ------------ ------------ ------------
(D) COMPONENTS OF NET REALIZED CAPITAL LOSSES
2012 2011 2010 ------------------------------------------------------------------------------------------------------ Bonds and short-term investments $(22,131,292) $56,145,379 $57,288,750 Common stocks -- unaffiliated 1,259,413 144,514 10,124 Common stocks -- affiliated 36,605,566 -- -- Preferred stocks -- unaffiliated -- (245,204) -- Mortgage loans on real estate (126,000) -- (43,549,377) Derivatives (392,397,711) (77,242,753) (614,797,438) Other invested assets 8,941,445 12,472,692 5,232,690 Net realized capital losses (367,848,579) (8,725,372) (595,815,251) Capital gains tax expense 26,183,099 10,257,387 24,972,649 Net realized capital losses, after tax (394,031,678) (18,982,759) (620,787,900) Less: amounts transferred to IMR 44,533,696 22,055,099 67,929,917 ------------ ------------ ------------ NET REALIZED CAPITAL LOSSES, AFTER TAX $(438,565,374) $(41,037,858) $(688,717,817) ------------ ------------ ------------
For the years ended December 31, 2012, 2011 and 2010, sales of unaffiliated bonds and short-term investments resulted in proceeds of $6,348,001,597, $6,028,566,737 and $6,758,918,000, gross realized capital gains of $122,902,196, $103,207,903 and $113,537,000, and gross realized capital losses of $47,294,722, $46,490,884 and $40,731,000 respectively, before transfers to the IMR. For the years ended December 31, 2012, 2011 and 2010, sales of unaffiliated common and preferred stocks resulted in proceeds of $68,765,398, $875,698 and $10,124, gross realized capital gains of $4,275,703, $152,187 and $10,124, and gross realized capital losses of $2,982,847, $7,673 and $0, respectively. F-13 (E) INVESTMENTS -- DERIVATIVE INSTRUMENTS OVERVIEW The Company utilizes a variety of derivative instruments, including swaps, swaptions, 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 defaults, price or foreign currency exchange rate risk or volatility; to manage liquidity; to control transaction costs; or to enter into income generation or replication transactions. On the date the derivative contract is entered into, the Company designates the derivative as hedging (fair value, cash flow, or net investment in a foreign operation), income generation, replication, or held for other investment and/or risk management activities, which primarily involves managing asset or liability related risks which do not qualify for hedge accounting under SSAP No. 86. The Company's derivative transactions are used in strategies permitted under the derivative use plan required by the Department. Interest rate swaps and index swaps involve the periodic exchange of payments with other parties, at specified intervals, calculated using agreed upon rates or indices and notional principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value. Credit default swaps entitle one party to receive a periodic fee in exchange for an obligation to compensate the other party should a credit event occur on the part of the referenced issuer. Interest rate cap and floor contracts entitle the purchaser to receive from the issuer at specified dates, the amount, if any, by which a specified market rate exceeds the cap strike rate or falls below the floor strike rate, applied to a notional principal amount. A premium payment is made by the purchaser of the contract at its inception, and no principal payments are exchanged. Forward contracts are customized commitments that specify a rate of interest or currency exchange rate to be paid or received on an obligation beginning on a future start date and are typically settled in cash. Financial futures are standardized commitments to either purchase or sell designated financial instruments at a future date for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities or cash, and changes in the futures' contract values are settled daily in cash. Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date. Swaption contracts grant the purchaser, for a premium payment, the right to enter into an interest rate swap with the issuer on a specified future date. Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be a periodic exchange of payments at specified intervals calculated using the agreed upon rates and exchanged principal amounts. STRATEGIES The notional value, fair value, and carrying value of derivative instruments used during the year are disclosed in the table presented below. During the years 2012 and 2011, the Company did not transact in or hold any positions related to net investment hedges in a foreign operation or income generation transactions. The notional amounts of derivative contracts represent the basis upon which pay or receive amounts are calculated and are not reflective of credit risk. The fair value of derivative instruments are based upon widely accepted pricing valuation models which utilize independent third-party data as inputs or independent broker quotations. As of December 31, 2012 and 2011, the average fair value for derivatives held for other investment and/or risk management activities was $879,622,080 and $994,929,586, respectively. The Company did not have any material unrealized gains or losses during the reporting period representing the component of the derivative instruments gain or loss from derivatives that no longer qualify for hedge accounting. F-14
AS OF DECEMBER 31, 2012 AS OF DECEMBER 31, 2011 NOTIONAL FAIR CARRYING NOTIONAL FAIR CARRYING (AMOUNTS IN THOUSANDS) VALUE VALUE VALUE VALUE VALUE VALUE --------------------------------------------------------------------------------------------------------------------------------- DERIVATIVE TYPE BY STRATEGY Cash flow hedges Interest rate swaps $100,000 $2,419 $ -- $360,000 $24,656 $ -- Foreign currency swaps 20,082 (589) (2,098) 56,751 12,986 6,971 Japan 3Win foreign currency swaps 1,553,624 (127,149) -- 1,775,646 183,792 -- Fair value hedges Interest rate swaps 27,999 (50) -- 109,945 (763) -- Replication transactions Credit default swaps 252,500 4,076 2,608 26,900 (279) (255) Other investment and/or Risk Management activities Interest rate caps 54,077 -- -- 54,077 5 5 Credit default swaps 144,490 (1,060) (1,060) 274,555 3,715 3,715 Credit default swaps -- offsetting 519,972 (2,764) (2,764) 574,372 (5,047) (5,047) Foreign currency swaps 50,000 (9,072) (9,072) 50,000 (7,205) (7,205) U.S. GMWB hedging derivatives 13,280,533 508,651 508,651 11,173,683 729,864 729,864 Equity index options 45,458 2,270 2,270 13,790 569 569 Interest rate swaps 20,000 4,034 4,034 460,645 (86) (86) Interest rate swaps -- offsetting 260,010 (15,767) (15,767) 225,000 (16,422) (16,422) U.S. macro hedge program 7,442,223 285,785 285,785 6,819,099 356,561 356,561 International program hedging instruments 22,450,857 (167,597) (167,597) 17,044,723 497,931 497,931 ----------- --------- --------- ----------- ---------- ---------- TOTAL $46,221,825 $483,187 $604,990 $39,019,186 $1,780,277 $1,566,601 ----------- --------- --------- ----------- ---------- ----------
CASH FLOW HEDGES INTEREST RATE SWAPS: Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed maturity investments to fixed rates. Forward starting swap agreements are used to hedge the interest rate exposure of anticipated future purchases of fixed maturity securities. As of December 31, 2012 the Company did not hold cash flow qualifying forward starting swap agreements. For the year ended December 31, 2012, the Company reported a gain of $4,520,509 classified in unrealized gains and losses related to cash flow hedges that have been discontinued because it was no longer probable that the original forecasted transactions would occur by the end of the originally specified time period. 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. FOREIGN CURRENCY SWAPS: Japan 3Win foreign currency swaps are primarily used to hedge the foreign currency exposure related to certain guaranteed minimum income benefit ("GMIB") fixed liability payments reinsured from a related party. FAIR VALUE HEDGES INTEREST RATE SWAPS: Interest rate swaps are used to hedge the changes in fair value of certain fixed rate maturity investments due to changes in LIBOR. REPLICATION TRANSACTIONS CREDIT DEFAULT SWAPS: The Company periodically enters into credit default swaps as part of replication transactions by pairing with highly rated, fixed-income securities in order to reproduce the investment characteristics of otherwise permissible investments. OTHER INVESTMENT AND/OR RISK MANAGEMENT ACTIVITIES The table below presents realized capital gains and (losses) on derivative instruments used for other investment and/or risk management activities.
REALIZED GAINS (LOSSES) FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED (AMOUNTS IN THOUSANDS) DECEMBER 31, 2012 DECEMBER 31, 2011 DECEMBER 31, 2010 --------------------------------------------------------------------------------------------------------------------------------- BY STRATEGY Credit default swaps $2,904 $738 $1,329 Credit default swaps -- offsetting (1,314) (265) (4) Foreign currency swaps 12,448 -- (993) U.S. GMWB hedging derivatives (242,461) (162,431) (144,744) Equity index options 48 (66) -- Interest rate swaps and futures 9,294 112 5,772 Interest rate swaps -- offsetting (596) -- 5,822 U.S. macro hedge program (92,869) (276,125) (342,821) International program hedging (104,440) 326,758 (171,159) instruments ----------- ----------- ----------- TOTAL $(416,986) $(111,279) $(646,798) ----------- ----------- -----------
F-15 INTEREST RATE CAPS: The Company is exposed to policyholder surrenders during a rising interest rate environment. Interest rate cap contracts are used to mitigate the Company's loss in a rising interest rate environment. The increase in yield from the cap contracts in a rising interest rate environment may be used to raise credited rates, thereby increasing the Company's competitiveness and reducing the policyholder's incentive to surrender. CREDIT DEFAULT SWAPS: The Company enters into swap agreements in which the Company reduces or assumes credit exposure from an individual entity, referenced index or asset pool. In addition, the Company may enter into credit default swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value of the original swap. FOREIGN CURRENCY SWAPS: The Company enters into foreign currency swaps to hedge the foreign currency exposures in certain of its foreign fixed maturity investments. GUARANTEED MINIMUM WITHDRAWAL BENEFIT ("GMWB") HEDGING DERIVATIVES: The Company enters into interest rate, S&P 500 and NASDAQ index futures contracts and S&P 500 put and call options, as well as interest rate, S&P, equity volatility, dividend, and total return Europe, Australasia, and Far East ("EAFE") swap contracts to hedge exposure to the volatility associated with a portion of the GMWB liabilities which are not reinsured. The Company has also entered into a customized swap contract to hedge certain risk components for the remaining term of certain blocks of non-reinsured GMWB riders. EQUITY INDEX OPTIONS: The Company enters into equity index options to economically hedge the equity risk associated with various equity indexed products. INTEREST RATE SWAPS AND FUTURES: The Company enters into interest rate swaps and futures to manage duration between assets and liabilities. In addition, the Company enters into interest rates swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value in the original swap. U.S. MACRO HEDGE PROGRAM: The Company purchases equity options and futures to economically hedge the statutory reserve impact of equity risk arising primarily from GMDB and GMWB obligations against a decline in the equity markets. INTERNATIONAL PROGRAM HEDGING INSTRUMENTS: The Company utilizes equity futures, options and swaps, currency forwards and options to partially hedge against declines in equity markets or changes in foreign currency exchange rates and the resulting statutory surplus and capital impact primarily arising from GMDB, GMIB and GMWB obligations issued in Japan and reinsured by the Company. CREDIT RISK ASSUMED THROUGH CREDIT DERIVATIVES The Company enters into credit default swaps that assume credit risk from a referenced index or asset pool in order to synthetically replicate investment transactions. In addition, the Company may enter into credit default swaps that assume credit risk to terminate existing credit default swaps that reduce credit risk, thereby offsetting the changes in value of the original swap. The Company will receive a periodic payment 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 a 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 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 may be divided into tranches that possess different credit ratings. The following tables present the notional amount, fair value, carrying value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amount, fair value and carrying value for credit derivatives in which the Company is assuming credit risk as of December 31: AS OF DECEMBER 31, 2012
NOTIONAL FAIR CARRYING (AMOUNTS IN THOUSANDS) AMOUNT (2) VALUE VALUE --------------------------------------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $340,953 $4,280 $2,796 Below investment grade risk exposure 14,313 (188) (188) Basket credit default swaps (4) Investment grade risk exposure 190,059 1,104 1,119 Investment grade risk exposure 70,000 (2,835) (2,835) Credit linked notes Investment grade risk exposure 50,000 45,040 49,920 -------- ------- ------- TOTAL $665,325 $47,401 $50,812 -------- ------- ------- UNDERLYING REFERENCED CREDIT OBLIGATION(S) (1) WEIGHTED AVERAGE AVERAGE YEARS TO CREDIT (AMOUNTS IN THOUSANDS) MATURITY TYPE RATING -------------------------------------- -------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure 4 years Corporate A+ Credit/ Foreign Gov. Corporate Below investment grade risk exposure 1 year Credit B+ Basket credit default swaps (4) Corporate Investment grade risk exposure 4 years Credit BBB+ Investment grade risk exposure 4 years CMBS Credit A+ Credit linked notes Corporate Investment grade risk exposure 4 years Credit BBB- ------- --------------- ----- TOTAL ------- --------------- ----- OFFSETTING OFFSETTING OFFSETTING NOTIONAL FAIR CARRYING (AMOUNTS IN THOUSANDS) AMOUNT (3) VALUE (3) VALUE (3) -------------------------------------- ------------------------------------------------------ CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $94,053 $(2,340) $(2,340) Below investment grade risk exposure 14,313 (452) (452) Basket credit default swaps (4) Investment grade risk exposure 78,276 (875) (875) Investment grade risk exposure 70,000 2,835 2,835 Credit linked notes Investment grade risk exposure -- -- -- -------- ------ ------ TOTAL $256,642 $(832) $(832) -------- ------ ------
F-16 AS OF DECEMBER 31, 2011
NOTIONAL FAIR CARRYING (AMOUNTS IN THOUSANDS) AMOUNT (2) VALUE VALUE ----------------------------------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $148,153 $(2,394) $(2,370) Below investment grade risk exposure 14,313 (36) (36) Basket credit default swaps (4) Investment grade risk exposure 209,543 (2,110) (2,110) Investment grade risk exposure 70,000 (6,374) (6,374) Credit linked notes Investment grade risk exposure 50,000 39,875 49,900 -------- ------- ------- TOTAL $492,009 $28,961 $39,010 -------- ------- ------- UNDERLYING REFERENCED CREDIT OBLIGATION(S) (1) WEIGHTED AVERAGE YEARS TO AVERAGE (AMOUNTS IN THOUSANDS) MATURITY TYPE CREDIT RATING -------------------------------------- ------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure 2 years Corporate A- Credit/ Foreign Gov. Below investment grade risk exposure 2 years Corporate BB+ Credit Basket credit default swaps (4) Investment grade risk exposure 5 years Corporate BBB+ Credit Investment grade risk exposure 7 years CMBS Credit A+ Credit linked notes Investment grade risk exposure 6 years Corporate BB+ Credit -------- --------------- -------- TOTAL -------- --------------- -------- OFFSETTING OFFSETTING OFFSETTING NOTIONAL FAIR CARRYING (AMOUNTS IN THOUSANDS) AMOUNT (3) VALUE (3) VALUE (3) -------------------------------------- ---------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $121,253 $(1,644) $(1,644) Below investment grade risk exposure 14,313 (1,252) (1,252) Basket credit default swaps (4) Investment grade risk exposure 78,781 929 929 Investment grade risk exposure 70,000 6,374 6,374 Credit linked notes Investment grade risk exposure -- -- -- ------------ --------- --------- TOTAL $284,347 $4,407 $4,407 ------------ --------- ---------
(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. (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 $260,059 and $279,543 as of December 31, 2012 and 2011, respectively, 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. CREDIT RISK The Company's derivative counterparty exposure policy establishes market-based credit limits, favors long-term financial stability and creditworthiness of the counterparty and typically requires credit enhancement/credit risk reducing agreements. The Company minimizes the credit risk in derivative instruments by entering into transactions with high quality counterparties rated A or better, which are monitored and evaluated by the Company's risk management team and reviewed by senior management. The Company has developed credit exposure thresholds which are based upon counterparty ratings. Credit exposures are measured using the market value of the derivatives, resulting in amounts owed to the Company by its counterparties or potential payment obligations from the Company to its counterparties. Credit exposures are generally quantified daily based on the prior business day's market value 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. In accordance with industry standards and the contractual agreements, collateral is typically settled on the next business day. The Company has exposure to credit risk for amounts below the exposure thresholds which are uncollateralized, as well as for market fluctuations that may occur between contractual settlement periods of collateral movements. Counterparty exposure thresholds are developed for each of the counterparties based upon their ratings. The maximum uncollateralized threshold for a derivative counterparty is $10,000,000. 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 all derivative contracts, other than exchange traded contracts and certain currency forward contracts, 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. For the year ended December 31, 2012 the Company has recovered gains of $1,837,102 on derivative instruments from re-negotiating losses incurred in 2008 due to counterparty default related to the bankruptcy of Lehman Brothers Holdings, Inc. For the years ended December 31, 2012, 2011, and 2010 the Company had no losses on derivative instruments due to counterparty nonperformance. (F) 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. As of December 31, 2012 and 2011, the Company is not exposed to any credit concentration risk of a single issuer, excluding U.S. government and certain U.S. government agencies, wholly-owned subsidiaries, and a short-term investment pool greater than 10% of the Company's capital and surplus. F-17 (G) BONDS, SHORT-TERM INVESTMENTS, COMMON STOCK AND PREFERRED STOCKS
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS DECEMBER 31, 2012 U.S. government and government agencies and authorities: -- Guaranteed and sponsored -- excluding asset-backed $1,701,238,189 $113,882,510 $(11,282,937) $1,803,837,762 -- Guaranteed and sponsored -- asset-backed 2,269,303,170 65,613,690 (740,169) 2,334,176,691 States, municipalities and political subdivisions 541,077,559 83,135,680 (20,027) 624,193,212 International governments 425,402,388 20,370,687 (9,328) 445,763,747 All other corporate -- excluding asset-backed 6,361,023,917 892,122,605 (2,845,895) 7,250,300,627 All other corporate -- asset-backed 1,258,505,776 85,716,013 (49,217,597) 1,295,004,192 Hybrid securities 47,181,632 3,906,596 (2,586,771) 48,501,457 Short-term investments 1,218,426,755 -- -- 1,218,426,755 Affiliated bond 1,156,374,471 97,521,679 -- 1,253,896,150 ---------------- --------------- ------------ ---------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $14,978,533,857 $1,362,269,460 $(66,702,724) $16,274,100,593 ---------------- --------------- ------------ ----------------
GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS DECEMBER 31, 2012 Common stocks -- unaffiliated $102,656,234 $720,924 $(4,963,989) $98,413,169 Common stocks -- affiliated 931,351,749 -- (204,239,309) 727,112,440 ----------------- ----------- ---------------- --------------- TOTAL COMMON STOCKS $1,034,007,983 $720,924 $(209,203,298) $825,525,609 ----------------- ----------- ---------------- ---------------
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS DECEMBER 31, 2012 Preferred stocks -- unaffiliated $8,266,540 $ -- $(415,361) $7,851,179 ------------- ---- ------------ ------------- TOTAL PREFERRED STOCKS $8,266,540 $ -- $(415,361) $7,851,179 ------------- ---- ------------ -------------
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE ----------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS DECEMBER 31, 2011 U.S. government and government agencies and authorities: -- Guaranteed and sponsored -- $755,130,295 $104,729,396 $(1,048,670) $858,811,021 excluding asset-backed -- Guaranteed and sponsored -- 1,186,617,224 44,551,484 (66,086) 1,231,102,622 asset-backed States, municipalities and political 413,682,584 43,804,332 (954,164) 456,532,752 subdivisions International governments 107,425,052 9,605,312 (393,067) 116,637,297 All other corporate -- excluding 6,131,755,165 687,886,439 (28,337,748) 6,791,303,856 asset-backed All other corporate -- asset-backed 1,436,711,752 64,964,862 (107,770,233) 1,393,906,381 Hybrid securities 66,811,576 44,045 (22,719,973) 44,135,648 Short-term investments 2,395,806,381 -- -- 2,395,806,381 Affiliated bond 1,296,220,489 68,005,396 -- 1,364,225,885 ----------------- ---------------- ---------------- ----------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $13,790,160,518 $1,023,591,266 $(161,289,941) $14,652,461,843 ----------------- ---------------- ---------------- -----------------
GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS DECEMBER 31, 2011 Common stocks -- unaffiliated $152,370,800 $3,456,202 $(9,800,861) $146,026,141 Common stocks -- affiliated 1,025,139,835 667,441 (163,216,084) 862,591,192 ----------------- ------------- ---------------- ----------------- TOTAL COMMON STOCKS $1,177,510,635 $4,123,643 $(173,016,945) $1,008,617,333 ----------------- ------------- ---------------- -----------------
F-18
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS DECEMBER 31, 2011 Preferred stocks -- unaffiliated $8,446,226 $ -- $(1,257,001) $7,189,225 ------------- ---- ------------- ------------- TOTAL PREFERRED STOCKS $8,446,226 $ -- $(1,257,001) $7,189,225 ------------- ---- ------------- -------------
The statement value and estimated fair value of bonds and short-term investments at December 31, 2012 by expected maturity year are shown below. Expected maturities may differ from contractual maturities due to call or prepayment provisions. Asset-backed securities, including mortgage-backed securities and collateralized mortgage obligations, are distributed to maturity year based on the Company's estimate of the rate of future prepayments of principal over the remaining lives of the securities. These estimates are developed using prepayment speeds provided in broker consensus data. Such estimates are derived from prepayment speeds experienced at the interest rate levels projected for the applicable underlying collateral. Actual prepayment experience may vary from these estimates.
STATEMENT ESTIMATED VALUE FAIR VALUE -------------------------------------------------------------------------------- MATURITY Due in one year or less $1,825,114,648 $1,840,353,897 Due after one year through five years 3,500,123,823 3,659,567,243 Due after five years through ten years 4,525,043,655 4,871,237,647 Due after ten years 5,128,251,731 5,902,941,806 ------------------ ----------------- TOTAL $14,978,533,857 $16,274,100,593 ------------------ -----------------
At December 31, 2012 and 2011, securities with a statement value of $3,951,872 and $3,849,385, respectively, were on deposit with government agencies as required by law in various jurisdictions in which the Company conducts business. (H) MORTGAGE LOANS ON REAL ESTATE The maximum and minimum lending rates for the Company's new mortgage loans on real estate were 4.30% and 3.00% and 5.20% and 3.44% for loans during 2012 and 2011, respectively. During 2012 and 2011, the Company did not reduce interest rates on any outstanding mortgage loans on real estate. For loans held as of December 31, 2012 and 2011, the highest loan to value percentage of any one loan at the time of loan origination, exclusive of insured, guaranteed, purchase money mortgages or construction loans was 78.02% and 75.47%, respectively. There were no taxes, assessments or amounts advanced and not included in the mortgage loan total. As of December 31, 2012 and 2011, the Company did not hold mortgages with interest more than 180 days past due. As of December 31, 2012 and 2011, there were impaired loans with a related allowance for credit losses of $565,263 and $682,306 with interest income recognized during the period the loans were impaired of $5,330,564 and $4,961,927, respectively. (I) RESTRUCTURED DEBT IN WHICH THE COMPANY IS A CREDITOR The Company had no investments in restructured loans as of December 31, 2012, 2011 and 2010. (J) REPURCHASE AGREEMENTS, DOLLAR ROLL AGREEMENTS AND COLLATERAL ARRANGEMENTS In 2012, the Company entered into repurchase agreement and dollar roll transactions to earn incremental income and additional liquidity. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. A dollar roll is a type of repurchase transaction where a mortgage backed security is sold with an agreement to repurchase substantially the same security at a specified time in the future. These transactions are generally short-term in nature, and therefore, the carrying amounts of these instruments approximate fair value. As part of the repurchase agreement and dollar roll transactions, the Company transfers U.S. government and government agency securities and receives cash. For the repurchase agreements, the Company obtains collateral in an amount equal to at least 95% of the fair value of the securities transferred, and the agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary. The cash received from the repurchase program is typically invested in short-term investments or bonds. The Company accounts for the repurchase agreement and dollar roll transactions as collateralized borrowings. The securities transferred under repurchase agreement and dollar roll transactions are included in bonds, with the obligation to repurchase those securities recorded in other liabilities in the Statements of Admitted Assets, Liabilities and Capital and Surplus. The fair value of the securities transferred was $1,622,327,938, with a corresponding agreement to repurchase $1,614,859,275 as of December 31, 2012. The aggregate fair value of the securities acquired from the use of the collateral was $1,621,236,227 as of December 31, 2012. The Company also enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2012 and 2011, collateral pledged of $110,458,232 and $369,461,123, respectively, was included in bonds, on the Statements of Admitted Assets, Liabilities and Capital and Surplus. F-19 As of December 31, 2012 and 2011, the Company had accepted collateral relating to the derivative instruments consisting of cash, U.S. government and U.S. government agency securities with a statement value of $645,472,822 and $1,708,566,498, respectively. At December 31, 2012 and 2011, cash collateral of $483,734,283 and $1,488,105,981, respectively, was invested and recorded in the Statements of Admitted Assets, Liabilities and Capital and Surplus in bonds and cash and short-term investments with a corresponding amount recorded in collateral on derivatives. The fair value of the cash collateral invested in cash and short-term investments was $483,734,283 and $1,488,105,981 as of December 31, 2012 and 2011, respectively. The Company is only permitted by contract to sell or repledge the noncash collateral in the event of a default by the counterparty and none of the collateral has been sold or repledged at December 31, 2012 and 2011. As of December 31, 2012 and 2011, all collateral accepted was held in separate custodial accounts. (K) SECURITY UNREALIZED LOSS AGING The Company has a security monitoring process overseen by a committee of investment and accounting professionals that, on a quarterly basis, identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For further discussion regarding the Company's OTTI policy, see Note 2. 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, 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, 2012 and 2011. The following table presents cost or statement value, fair value, and unrealized losses for the Company's bonds and equity securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2012:
LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------------------------------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & sponsored $223,652 $212,369 $(11,283) -- guaranteed & sponsored -- asset-backed 249,828 249,091 (737) States, municipalities & political subdivisions 1,055 1,035 (20) International governments 528 518 (10) All other corporate including international 287,700 285,851 (1,849) All other corporate -- asset-backed 51,133 45,653 (5,480) Hybrid securities -- -- -- -------- -------- -------- TOTAL FIXED MATURITIES 813,896 794,517 (19,379) Common stock -- unaffiliated 60,000 56,280 (3,720) Common stock -- affiliated -- -- -- Preferred stock -- unaffiliated -- -- -- -------- -------- -------- TOTAL STOCKS 60,000 56,280 (3,720) -------- -------- -------- TOTAL SECURITIES $873,896 $850,797 $(23,099) -------- -------- -------- 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------- ----------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & sponsored $ -- $ -- $ -- -- guaranteed & sponsored -- asset-backed 78 75 (3) States, municipalities & political subdivisions -- -- -- International governments -- -- -- All other corporate including international 47,003 46,006 (997) All other corporate -- asset-backed 499,760 456,023 (43,737) Hybrid securities 26,057 23,470 (2,587) --------- --------- -------- TOTAL FIXED MATURITIES 572,898 525,574 (47,324) Common stock -- unaffiliated 11,397 10,153 (1,244) Common stock -- affiliated 931,352 727,113 (204,239) Preferred stock -- unaffiliated 8,044 7,629 (415) --------- --------- -------- TOTAL STOCKS 950,793 744,895 (205,898) --------- --------- -------- TOTAL SECURITIES $1,523,691 $1,270,469 $(253,222) --------- --------- -------- TOTAL AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------- ------------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & sponsored $223,652 $212,369 $(11,283) -- guaranteed & sponsored -- asset-backed 249,906 249,166 (740) States, municipalities & political subdivisions 1,055 1,035 (20) International governments 528 518 (10) All other corporate including international 334,703 331,857 (2,846) All other corporate -- asset-backed 550,893 501,676 (49,217) Hybrid securities 26,057 23,470 (2,587) ---------- ---------- -------- TOTAL FIXED MATURITIES 1,386,794 1,320,091 (66,703) Common stock -- unaffiliated 71,397 66,433 (4,964) Common stock -- affiliated 931,352 727,113 (204,239) Preferred stock -- unaffiliated 8,044 7,629 (415) ---------- ---------- -------- TOTAL STOCKS 1,010,793 801,175 (209,618) ---------- ---------- -------- TOTAL SECURITIES $2,397,587 $2,121,266 $(276,321) ---------- ---------- --------
The following discussion refers to the data presented in the table above, excluding affiliated bond and common stock. The Company holds 100% of the common stock of a foreign insurance subsidiary which is stated at GAAP carrying value adjusted for certain nonadmitted items and other adjustments for NAIC SAP rules if applicable. The Company does not have any current plans to dispose of this investment. As of December 31, 2012, fixed maturities, comprised of approximately 175 securities, accounted for approximately 93% of the Company's total unrealized loss amount. The securities were primarily related to commercial mortgage-backed securities ("CMBS"), collateralized debt obligations ("CDOs"), and U.S. government securities which have experienced price deterioration. As of December 31, 2012, 84% of securities in an unrealized loss position were depressed less than 20% of amortized cost. The decline in unrealized losses during 2012 was primarily attributable to credit spread tightening and a decline in interest rates. The Company does not have an intention to sell the securities outlined above and has the intent and ability to hold these securities until values recover. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2012. Most of the securities depressed for twelve months or more relate to structured securities with exposure to commercial and residential real estate, as well as certain floating rate corporate securities or those securities with greater than 10 years to maturity, concentrated in the financial services sector. Current market spreads continue to be significantly wider for structured securities with exposure to commercial and residential real estate, as compared to spreads at the security's respective purchase date, largely due to the economic and market uncertainties regarding future performance of commercial and residential real estate. In addition, the majority of securities have a floating-rate coupon referenced to a market index where rates have declined substantially. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined above. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2012. F-20 The following table presents amortized cost, fair value, and unrealized losses for the Company's bond and equity securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2011:
LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------------------------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & $125,903 $124,854 $(1,049) sponsored -- guaranteed & sponsored -- asset-backed 36,541 36,477 (64) States, municipalities 74,804 74,119 (685) & political subdivisions International 315 315 -- governments All other corporate 649,737 625,937 (23,800) including international All other corporate -- 369,249 341,134 (28,115) asset-backed Hybrid securities 2,257 2,200 (57) ---------- ---------- -------- TOTAL FIXED MATURITIES 1,258,806 1,205,036 (53,770) Common stock -- 62,886 53,088 (9,798) unaffiliated Common stock -- -- -- -- affiliated Preferred stock -- -- -- -- unaffiliated ---------- ---------- -------- TOTAL STOCKS 62,886 53,088 (9,798) ---------- ---------- -------- TOTAL SECURITIES $1,321,692 $1,258,124 $(63,568) ---------- ---------- -------- 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------- ------------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & $ -- $ -- $ -- sponsored -- guaranteed & sponsored -- asset-backed 126 124 (2) States, municipalities 10,000 9,731 (269) & political subdivisions International 5,000 4,607 (393) governments All other corporate 78,131 73,593 (4,538) including international All other corporate -- 429,162 349,507 (79,655) asset-backed Hybrid securities 61,557 38,894 (22,663) ---------- ---------- -------- TOTAL FIXED MATURITIES 583,976 476,456 (107,520) Common stock -- 3 -- (3) unaffiliated Common stock -- 931,352 768,136 (163,216) affiliated Preferred stock -- 8,248 6,991 (1,257) unaffiliated ---------- ---------- -------- TOTAL STOCKS 939,603 775,127 (164,476) ---------- ---------- -------- TOTAL SECURITIES $1,523,579 $1,251,583 $(271,996) ---------- ---------- -------- TOTAL AMORTIZED FAIR UNREALIZED (AMOUNTS IN THOUSANDS) COST VALUE LOSSES ---------------------- ------------------------------------------------- U.S. gov't and gov't agencies & authorities -- guaranteed & $125,903 $124,854 $(1,049) sponsored -- guaranteed & sponsored -- asset-backed 36,667 36,601 (66) States, municipalities 84,804 83,850 (954) & political subdivisions International 5,315 4,922 (393) governments All other corporate 727,868 699,530 (28,338) including international All other corporate -- 798,411 690,641 (107,770) asset-backed Hybrid securities 63,814 41,094 (22,720) ---------- ---------- -------- TOTAL FIXED MATURITIES 1,842,782 1,681,492 (161,290) Common stock -- 62,889 53,088 (9,801) unaffiliated Common stock -- 931,352 768,136 (163,216) affiliated Preferred stock -- 8,248 6,991 (1,257) unaffiliated ---------- ---------- -------- TOTAL STOCKS 1,002,489 828,215 (174,274) ---------- ---------- -------- TOTAL SECURITIES $2,845,271 $2,509,707 $(335,564) ---------- ---------- --------
The following discussion refers to the data presented in the table above, excluding affiliated bond and common stock. The Company holds 100% of the common stock of a foreign insurance subsidiary which is stated at GAAP carrying value adjusted for certain nonadmitted items and other adjustments for NAIC SAP rules if applicable. The Company does not have any current plans to dispose of this investment. As of December 31, 2011, fixed maturities, comprised of approximately 480 securities, accounted for approximately 94% of the Company's total unrealized loss amount. The securities were primarily related to commercial mortgage-backed securities ("CMBS"), and corporate securities primarily within the financial services and industrial sector which have experienced significant price deterioration. As of December 31, 2011, 86% of securities in an unrealized loss position were depressed less than 20% of amortized cost. The decline in unrealized losses during 2011 was primarily attributable to declines in interest rates and, to a lesser extent, credit spread tightening. The Company does not have an intention to sell the securities outlined above and has the intent and ability to hold these securities until values recover. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2011. Most of the securities depressed for twelve months or more relate to structured securities with exposure to commercial and residential real estate, as well as certain floating rate corporate securities or those securities with greater than 10 years to maturity, concentrated in the financial services sector. Current market spreads continue to be significantly wider for structured securities with exposure to commercial and residential real estate, as compared to spreads at the security's respective purchase date, largely due to the economic and market uncertainties regarding future performance of commercial and residential real estate. In addition, the majority of securities have a floating-rate coupon referenced to a market index where rates have declined substantially. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined above. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2011. (L) LOAN-BACKED AND STRUCTURED SECURITIES OTTIS For the year ended December 31, 2012, the Company recognized losses for OTTIs on loan-backed and structured securities of $48,850 due to the intent to sell impaired securities. These securities had an amortized cost prior to recognition of the OTTI and a fair value of $2,985,511 and $2,936,661, respectively. No OTTI was recognized due to an inability or lack of intent to retain an investment in a security for a period of time sufficient to recover the amortized cost basis. F-21 The following table summarizes OTTI for loan-backed securities held as of December 31, 2012, recorded because the present value of estimated cash flows expected to be collected was less than the amortized cost of the securities:
2 BOOK/ADJ CARRYING VALUE 3 AMORTIZED PRESENT VALUE COST BEFORE OF 1 CURRENT PERIOD PROJECTED CUSIP OTTI CASH FLOWS ------------------------------------------------------------------------- 00503N AB 7 $7,535,388 $1,959,990 05947U HT 8 3,987,817 3,981,363 059497 BW 6 9,725,618 9,468,201 059500 BK 3 324,723 301,919 07383F YN 2 1,426,119 1,353,732 07388N AX 4 8,656,256 6,740,942 15188R AB 8 985,186 77,012 173067 AJ 8 685,067 541,014 22540V V3 3 2,653,742 2,644,326 22541N VA 4 2,380,022 2,338,979 22545X BB 8 508,624 368,740 36158Y BE 8 309,993 306,870 361849 N6 5 1,365,928 690,902 46625M CY 3 644,072 572,350 46625M KQ 1 1,741,503 1,562,570 46625Y JP 9 787,944 729,302 46625Y WE 9 3,076,000 2,571,757 55312Y BD 3 2,224,569 1,767,229 75970J AU 0 10,731 9,123 92978T BU 4 1,892,277 1,301,900 93364L AD 0 7,945,532 5,903,490 75970J AU 0 7,970 344 00503N AB 7 1,693,311 1,186,748 00503N AB 7 1,050,813 497,908 22541N NJ 4 5,519,877 4,981,232 00503N AB 7 339,385 (1) 46625M CY 3 131,678 112,628 83611Y AD 4 2,291,525 2,256,378 22540V V3 3 744,763 707,340 36158Y BE 8 44,757 25,424 46625M CY 3 81,434 46,372 46625M KQ 1 530,791 475,970 07383F MR 6 132,490 127,782 22540V V3 3 302,095 212,829 46625M PS 2 1,058,378 914,896 61746W HJ 2 368,434 260,421 38500X AC 6 213,094 51,334 05947U HT 8 291,112 39,845 07383F MR 6 49,165 7,321 173067 AJ 8 224,795 162,576 79548C DK 9 158,872 26,374 TOTAL 7 DATE OF 5 6 FINANCIAL 4 AMORTIZED FAIR STATEMENT RECOGNIZED COST AFTER VALUE AT WHERE OTTI OTTI TIME OF OTTI REPORTED ---------- ------------------------------------------------------------------------- 00503N $(5,575,398) $1,959,990 $607,018 9/30/2009 05947U (6,454) 3,981,363 3,980,969 9/30/2009 059497 (257,417) 9,468,201 8,381,882 9/30/2009 059500 (22,804) 301,919 279,440 9/30/2009 07383F (72,387) 1,353,732 1,587,169 9/30/2009 07388N (1,915,314) 6,740,942 6,301,194 9/30/2009 15188R (908,174) 77,012 251,926 9/30/2009 173067 (144,053) 541,014 766,378 9/30/2009 22540V (9,416) 2,644,326 2,502,017 9/30/2009 22541N (41,043) 2,338,979 2,347,354 9/30/2009 22545X (139,884) 368,740 339,617 9/30/2009 36158Y (3,123) 306,870 288,672 9/30/2009 361849 (675,026) 690,902 946,149 9/30/2009 46625M (71,722) 572,350 526,565 9/30/2009 46625M (178,933) 1,562,570 1,521,277 9/30/2009 46625Y (58,642) 729,302 741,670 9/30/2009 46625Y (504,243) 2,571,757 3,146,164 9/30/2009 55312Y (457,340) 1,767,229 1,494,736 9/30/2009 75970J (1,608) 9,123 1,859 9/30/2009 92978T (590,377) 1,301,900 1,439,999 9/30/2009 93364L (2,042,042) 5,903,490 2,400,000 9/30/2009 75970J (7,626) 344 169 12/31/2009 00503N (506,563) 1,186,748 364,211 3/31/2010 00503N (552,905) 497,908 333,860 6/30/2010 22541N (538,645) 4,981,232 4,846,253 6/30/2010 00503N (339,386) (1) -- 9/30/2010 46625M (19,050) 112,628 45,254 3/31/2011 83611Y (35,147) 2,256,378 1,591,947 3/31/2011 22540V (37,423) 707,340 434,108 6/30/2011 36158Y (19,333) 25,424 21,738 6/30/2011 46625M (35,062) 46,372 27,758 6/30/2011 46625M (54,821) 475,970 401,846 6/30/2011 07383F (4,708) 127,782 70,900 12/31/2011 22540V (89,266) 212,829 53,423 12/31/2011 46625M (143,482) 914,896 779,975 12/31/2011 61746W (108,013) 260,421 344,430 12/31/2011 38500X (161,760) 51,334 560,040 6/30/2012 05947U (251,267) 39,845 31,173 12/31/2012 07383F (41,844) 7,321 271 12/31/2012 173067 (62,219) 162,576 330,003 12/31/2012 79548C (132,498) 26,374 21 12/31/2012 --------------- ------------ ------------ ------------ $(16,816,418) --------------- ------------ ------------ ------------
F-22 4. FAIR VALUE MEASUREMENTS Certain of the following financial instruments are carried at fair value in the Company's Financial Statements: bonds and stocks, derivatives, and Separate Account assets. The following section applies the fair value hierarchy and disclosure requirements for the Company's financial instruments that are carried at fair value. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels (Level 1, 2 or 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 open- ended mutual funds reported in General and Separate Account invested assets. 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 bonds and preferred stocks, including those reported in Separate Account assets, are model priced by vendors using observable inputs and are classified within Level 2. 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, and complex derivative securities. Because Level 3 fair values, by their nature, contain one or more significant unobservable inputs as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the Company's best estimate of amounts that could be realized in a current market exchange absent actual market exchanges. 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. Transfers of securities among the levels occur at the beginning of the reporting period. Transfers between Level 1 and Level 2 were not material for the period ended December 31, 2012 and 2011. 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 Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. The Company's bonds included in Level 3 are classified as such because these securities are primarily priced by independent brokers and/or within illiquid markets. F-23 These disclosures provide information as to the extent to which the Company uses fair value to measure financial instruments and information about the inputs used to value those financial instruments to allow users to assess the relative reliability of the measurements. The following tables present assets and (liabilities) carried at fair value by hierarchy level as of:
DECEMBER 31, 2012 QUOTED PRICES IN ACTIVE MARKETS SIGNIFICANT SIGNIFICANT FOR IDENTICAL OBSERVABLE UNOBSERVABLE ASSETS INPUTS INPUTS (AMOUNTS IN THOUSANDS) (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL --------------------------------------------------------------------------------------------------------------------------------- Assets accounted for at fair value All other corporate -- asset-backed $ -- $12 $2,418 $2,430 Common stocks 98,409 -- 4 98,413 -------------- ---------- ----------- -------------- TOTAL BONDS AND STOCKS 98,409 12 2,422 100,843 Derivative assets Credit derivatives -- (2,669) 1,519 (1,150) Equity derivatives -- -- 1,800 1,800 Foreign exchange derivatives -- (11,171) -- (11,171) Interest rate derivatives -- 26,228 -- 26,228 GMWB hedging instruments -- 98,244 341,565 439,809 US macro hedge program -- -- 333,449 333,449 International program hedging instruments -- (75,753) (39,973) (115,726) -------------- ---------- ----------- -------------- TOTAL DERIVATIVE ASSETS -- 34,879 638,360 673,239 Separate Account assets (1) 45,821,181 -- -- 45,821,181 -------------- ---------- ----------- -------------- TOTAL ASSETS ACCOUNTED FOR AT FAIR VALUE $45,919,590 $34,891 $640,782 $46,595,263 -------------- ---------- ----------- -------------- Liabilities accounted for at fair value Derivative liabilities Credit derivatives $ -- $1,452 $(1,519) $(67) Equity derivatives -- -- 470 470 Interest rate derivatives -- (37,960) -- (37,960) GMWB hedging instruments -- 891 67,951 68,842 US macro hedge program -- -- (47,664) (47,664) International program hedging instruments -- (31,419) (20,452) (51,871) -------------- ---------- ----------- -------------- TOTAL LIABILITIES ACCOUNTED FOR AT FAIR VALUE $ -- $(67,036) $(1,214) $(68,250) -------------- ---------- ----------- --------------
(1) Excludes approximately $30.7 million of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100 (Fair Value Measurements). F-24
DECEMBER 31, 2011 QUOTED PRICES IN ACTIVE MARKETS SIGNIFICANT FOR IDENTICAL SIGNIFICANT UNOBSERVABLE ASSETS OBSERVABLE INPUTS INPUTS (AMOUNTS IN THOUSANDS) (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL --------------------------------------------------------------------------------------------------------------------------------- Assets accounted for at fair value All other corporate -- asset-backed $ -- $ -- $2,468 $2,468 Common stocks 146,956 -- 4 146,960 -------------- ----------- ------------- -------------- TOTAL BONDS AND STOCKS 146,956 -- 2,472 149,428 Derivative assets Credit derivatives -- (1,075) (512) (1,587) Equity derivatives -- -- 569 569 Foreign exchange derivatives -- (234) -- (234) Interest rate derivatives -- 19,676 5 19,681 GMWB hedging instruments -- 43,792 686,072 729,864 US macro hedge program -- -- 356,561 356,561 International program hedging instruments -- 518,083 (20,152) 497,931 -------------- ----------- ------------- -------------- TOTAL DERIVATIVE ASSETS -- 580,242 1,022,543 1,602,785 Separate Account assets (1) 48,234,930 -- -- 48,234,930 -------------- ----------- ------------- -------------- TOTAL ASSETS ACCOUNTED FOR AT FAIR VALUE $48,381,886 $580,242 $1,025,015 $49,987,143 -------------- ----------- ------------- -------------- Liabilities accounted for at fair value Derivative liabilities Interest rate derivatives $ -- $(36,184) $ -- $(36,184) -------------- ----------- ------------- -------------- TOTAL LIABILITIES ACCOUNTED FOR AT FAIR VALUE $ -- $(36,184) $ -- $(36,184) -------------- ----------- ------------- --------------
(1) Excludes approximately $20.1 million of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100. DETERMINATION OF FAIR VALUES The valuation methodologies used to determine the fair values of assets and liabilities under the "exit price" notion, reflect market-participant objectives and are based on the application of the fair value hierarchy that prioritizes relevant 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 and where prices represent reasonable estimates of fair values. The Company also determines fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, 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 tables. The fair valuation process is monitored by the Valuation Committee, which is a cross-functional group of senior management within Hartford Investment Management Company ("HIMCO") that meets at least quarterly. The Valuation Committee is co-chaired by the Heads of Investment Operations and Accounting and has representation from various investment sector professionals, accounting, operations, legal, compliance and risk management. The purpose of the committee is to oversee the pricing policy and procedures by ensuring objective and reliable valuation practices and pricing of financial instruments, as well as addressing fair valuation issues and approving changes to valuation methodologies and pricing sources. There is also a Fair Value Working Group ("Working Group") which includes the Heads of Investment Operations and Accounting, as well as other investment, operations, accounting and risk management professionals that meet monthly to review market data trends, pricing statistics and results, and any proposed pricing methodology changes described in more detail in the following paragraphs. F-25 BONDS AND STOCKS The fair values of bonds and stocks in an active and orderly market (e.g. not distressed or forced liquidation) are 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. Based on the typical trading volumes and the lack of quoted market prices for bonds, third-party pricing services will normally derive the security prices from recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recently reported trades, the third-party pricing services and independent 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 certain asset-backed securities 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 are 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 private placement securities for which the Company is unable to obtain a price from a third-party pricing service by discounting the expected future cash flows from the security by a developed market discount rate utilizing current credit spreads. Credit spreads are developed each month using market based data for public securities adjusted for credit spread differentials between public and private securities which are obtained from a survey of multiple private placement brokers. The appropriate credit spreads determined through this survey approach are based upon the issuer's financial strength and term to maturity, utilizing an independent public security index and trade information and adjusting for the non-public nature of the securities. The Working Group performs ongoing analysis of 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. As a part of this analysis, the Working Group considers trading volume, new issuance activity and other factors to determine whether the market activity is significantly different than normal activity in an active market, and if so, whether transactions may not be orderly considering the weight of available evidence. If the available evidence indicates that pricing is based upon transactions that are stale or not orderly, the Working Group places little, if any, weight on the transaction price and will estimate fair value utilizing an internal pricing model. In addition, the Working Group ensures that 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 Working Group determines that there is a more appropriate fair value based upon the available market data, the price received from the third-party is adjusted accordingly and approved by the Valuation Committee. The Company's internal pricing model utilizes the Company's best estimate of expected future cash flows discounted at a rate of return that a market participant would require. The significant inputs to the model include, but are not limited to, current market inputs, such as credit loss assumptions, estimated prepayment speeds and market risk premiums. The Company conducts other specific activities to monitor controls around pricing. Daily analyses identify price changes over 3-5%, sale trade prices that differ over 3% from the prior day's price and purchase trade prices that differ more than 3% from the current day's price. Weekly analyses identify prices that differ more than 5% from published bond prices of a corporate bond index. Monthly analyses identify price changes over 3%, prices that have not changed and missing prices. There is also a second source validation on most sectors, where available, for a review of any outlying prices. Analyses are conducted by a dedicated pricing unit that follows up with trading and investment sector professionals and challenges prices with vendors when the estimated assumptions used differs from what the Company feels a market participant would use. Any changes from the identified pricing source are verified by further confirmation of assumptions used. In addition, the controls surrounding methodologies used by the third-parties are verified using a report of an independent accountant provided by the third-parties or, if unavailable, through on-site walk- throughs. Examples of other procedures performed include, but are not limited to, initial and ongoing review of third-party pricing services' methodologies, review of pricing statistics and trends and back testing recent trades. For a sample of structured securities, a comparison of the vendor's assumptions to our internal econometric models is also performed; any differences are challenged in accordance with the process described above. 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 fair value hierarchy level based upon trading activity and the observability of market inputs. 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 F-26 transparency in the process that 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 with observable market data. DERIVATIVE INSTRUMENTS Derivative instruments are fair valued using pricing valuation models that utilize independent market data inputs, quoted market prices for exchange-traded derivatives, or independent broker quotations. As of December 31, 2012 and 2011, 99% of derivatives, based upon notional values, were priced by valuation models or quoted market prices. The remaining derivatives were priced by broker quotations. The Company performs various controls on derivative valuations which include both quantitative and qualitative analyses. Analyses are conducted by a dedicated derivative pricing team that works directly with investment sector professionals to analyze impacts of changes in the market environment and investigate variances. There are monthly analyses to identify market value changes greater than pre-defined thresholds, stale prices, missing prices and zero prices. Also on a monthly basis, a second source validation, typically to broker quotations, is performed for certain of the more complex derivatives, as well as for all new deals during the month. A model validation review is performed on any new models, which typically includes detailed documentation and validation to a second source. The model validation documentation and results of validation are presented to the Valuation Committee for approval. There is a monthly control to review changes in pricing sources to ensure that new models are not moved to production until formally approved. 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. VALUATION TECHNIQUES AND INPUTS FOR INVESTMENTS Generally, the Company determines the estimated fair values of its bonds and stocks using the market approach. The income approach is used for securities priced using a pricing matrix, as well as for derivative instruments. For Level 1 investments, valuations are based on observable inputs that reflect quoted prices for identical assets in active markets that the Company has the ability to access at the measurement date. For most of the Company's debt securities, the following inputs are typically used in the Company's pricing methods: reported trades, benchmark yields, bids and/or estimated cash flows. Inputs also include issuer spreads, which may consider credit default swaps. Derivative instruments are valued using mid-market inputs that are predominantly observable in the market. A description of additional inputs used in the Company's Level 2 and Level 3 measurements are listed below: Level 2 The fair values of most of the Company's Level 2 investments are determined by management after considering prices received from third-party pricing services. These investments include most bonds and preferred stocks. Asset-backed securities -- Primary inputs include monthly payment information, collateral performance, which varies by vintage year and includes delinquency rates, collateral valuation loss severity rates, collateral refinancing assumptions, credit default swap indices and, for ABS and RMBS, estimated prepayment rates. Credit derivatives -- Primary inputs include the swap yield curve and credit default swap curves. Foreign exchange derivatives -- Primary inputs include the swap yield curve, currency spot and forward rates, and cross currency basis curves. Interest rate derivatives -- Primary input is the swap yield curve. Level 3 Most of the Company's securities classified as Level 3 include less liquid securities such as lower quality ABS, CMBS, commercial real estate ("CRE") CDOs and RMBS primarily backed by below- prime loans. Securities included in level 3 are primarily valued based on broker prices or broker spreads, without adjustments. Primary inputs for non-broker priced investments, including structured securities, are consistent with the typical inputs used in Level 2 measurements noted above, but are Level 3 due to their less liquid markets. Additionally, certain long-dated securities are priced based on third-party pricing services, including bank loans and below investment grade private placement securities. Primary inputs for these long-dated securities are consistent with the typical inputs used in Level 1 and Level 2 measurements noted above, but include benchmark interest rate or credit spread assumptions that are not observable in the marketplace. Also included in Level 3 are certain derivative instruments that either have significant unobservable inputs or are valued based on broker quotations. Significant inputs for these derivative contracts primarily include the typical inputs used in the Level 1 and Level 2 measurements noted above, but also may include the following: Credit derivatives -- Significant unobservable inputs may include credit correlation and swap yield curve and credit curve extrapolation beyond observable limits. F-27 Equity derivatives -- Significant unobservable inputs may include equity volatility. Interest rate contracts -- Significant unobservable inputs may include swap yield curve extrapolation beyond observable limits and interest rate volatility. SEPARATE ACCOUNT ASSETS Separate Account assets are primarily invested in mutual funds but also have investments in bonds and stocks. Separate Account investments are valued in the same manner, and using the same pricing sources and inputs, as the bonds and stocks held in the General Account of the Company. SIGNIFICANT UNOBSERVABLE INPUTS FOR LEVEL 3 ASSETS MEASURED AT FAIR VALUES The following tables present information about significant unobservable inputs used in Level 3 assets measured at fair value.
DECEMBER 31, 2012 PREDOMINANT SIGNIFICANT VALUATION UNOBSERVABLE (AMOUNTS IN THOUSANDS) FAIR VALUE METHOD INPUT MINIMUM (1) ------------------------------------------------------------------------------------------------ ASSETS ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS CMBS $1,918 Discounted Spread 1,267bps cash flows (encompasses prepayment, default risk and loss severity) RMBS 500 Discounted Spread 568bps cash flows Constant 2% prepayment rate Constant default 10% rate Loss severity 95% DECEMBER 31, 2012 IMPACT OF WEIGHTED INCREASE IN INPUT (AMOUNTS IN THOUSANDS) MAXIMUM (1) AVERAGE (2) ON FAIR VALUE (3) ---------------------- --------------------------------------------------- ASSETS ACCOUNTED FOR AT FAIR VALUE ON A RECURRING BASIS CMBS 1,267bps 1,267bps Decrease RMBS 642bps 616bps Decrease 2% 2% Decrease 24% 19% Decrease 100% 97% Decrease
(1) Basis points (bps). (2) The weighted average is determined based on the fair value of the securities. (3) The impact of a decrease in input would have the opposite impact to the fair value as that presented in the table above.
DECEMBER 31, 2012 PREDOMINANT SIGNIFICANT IMPACT OF VALUATION UNOBSERVABLE INCREASE IN INPUT (AMOUNTS IN THOUSANDS) FAIR VALUE METHOD INPUT MINIMUM MAXIMUM ON FAIR VALUE (1) -------------------------------------------------------------------------------------------------------------------------------- FREE STANDING DERIVATIVES U.S. GMWB hedging instruments Equity options $276,922 Option model Equity 10% 31% Increase volatility Customized swaps 132,594 Discounted cash Equity 10% 10% Increase flows volatility U.S. Macro hedge program Equity options 285,785 Option model Equity 24% 43% Increase volatility International program hedging Equity options (60,425) Option model Equity 26% 28% Increase volatility
(1) The impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions. Securities and derivatives for which the Company bases fair value on broker quotations predominately include ABS, CDOs and certain credit derivatives. Due to the lack of transparency in the process brokers use to develop prices for these investments, the Company does not have access to the significant unobservable inputs brokers use to price these securities and derivatives. The Company believes however, the types of inputs brokers may use would likely be similar to those used to price securities and derivatives for which inputs are available to the Company, and therefore may include, but not be limited to, loss severity rates, constant prepayment rates, constant default rates and credit spreads. Therefore, similar to non broker priced securities and derivatives, generally, increases in these inputs would cause fair values to decrease. For the year ended December 31, 2012, no significant adjustments were made to broker prices received by the Company. F-28 ASSETS AND LIABILITIES MEASURED AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) The tables below provides a roll-forward of financial instruments measured at fair value using significant unobservable inputs (Level 3) for the years ended December 31, 2012 and 2011:
FAIR VALUE TRANSFERS TRANSFERS AS OF INTO OUT OF (AMOUNTS IN THOUSANDS) JAN. 1, 2012 LEVEL 3 (2) LEVEL 3 (2) --------------------------------------------------------------------------------------------- Assets All other corporate $ -- $ -- $ -- All other corporate -- asset-backed 2,468 355 (581) All other -- asset-backed -- -- -- Preferred stocks -- -- -- Common stocks 4 -- -- ---------- ----- ------- TOTAL BONDS AND STOCKS $2,472 $355 $(581) ---------- ----- ------- Derivatives Credit derivatives $(512) $ -- $(20) Equity derivatives 569 -- -- Interest rate derivatives 5 -- -- GMWB hedging instruments 686,072 -- 21,718 US macro hedge program 356,561 -- -- International program hedging (20,152) -- 7,755 ---------- ----- ------- TOTAL DERIVATIVES (3) $1,022,543 $ -- $29,453 ---------- ----- ------- TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: NET (AMOUNTS IN THOUSANDS) INCOME (1) SURPLUS PURCHASES -------------------------------------- --------------------------------------------------------- Assets All other corporate $ -- $ -- $ -- All other corporate -- asset-backed 95 256 -- All other -- asset-backed -- -- -- Preferred stocks -- -- -- Common stocks -- -- -- --------- ----- --------- TOTAL BONDS AND STOCKS $ 95 $256 $ -- --------- ----- --------- Derivatives Credit derivatives $1,881 $ -- $ -- Equity derivatives 120 -- 2,042 Interest rate derivatives (5) -- -- GMWB hedging instruments (341,264) -- 55,490 US macro hedge program (322,425) -- 251,649 International program hedging (89,472) -- (33,801) --------- ----- --------- TOTAL DERIVATIVES (3) $(751,165) $ -- $275,380 --------- ----- --------- FAIR VALUE AS OF (AMOUNTS IN THOUSANDS) SALES SETTLEMENTS DEC. 31, 2012 -------------------------------------- --------------------------------------------------- Assets All other corporate $ -- $ -- $ -- All other corporate -- asset-backed (134) (41) 2,418 All other -- asset-backed -- -- -- Preferred stocks -- -- -- Common stocks -- -- 4 ----- -------- --------- TOTAL BONDS AND STOCKS $(134) $(41) $2,422 ----- -------- --------- Derivatives Credit derivatives $ -- $(1,349) $ -- Equity derivatives -- (461) 2,270 Interest rate derivatives -- -- -- GMWB hedging instruments -- (12,500) 409,516 US macro hedge program -- -- 285,785 International program hedging -- 75,246 (60,424) ----- -------- --------- TOTAL DERIVATIVES (3) $ -- $60,936 $637,147 ----- -------- ---------
(1) All amounts in this column are reported in net realized capital gains (losses). All amounts are before income taxes. (2) Transfers in and/or (out) of Level 3 are primarily attributable to changes in the availability of market observable information and changes to the bond and stock carrying value based on the lower of cost and market requirement. (3) Derivative instruments are reported in this table on a net basis for asset/(liability) positions.
FAIR VALUE TRANSFERS TRANSFERS AS OF INTO OUT OF (AMOUNTS IN THOUSANDS) JAN. 1, 2011 LEVEL 3 (2) LEVEL 3 (2) -------------------------------------------------------------------------------------------------- Assets All other corporate $ -- $ -- $ -- All other corporate -- asset-backed 644 7,050 (18,160) All other -- asset-backed -- 21,466 (21,466) Preferred stocks -- 233 -- Common stocks 4 -- -- --------- ------- -------- TOTAL BONDS AND STOCKS $648 $28,749 $(39,626) --------- ------- -------- Derivatives Credit derivatives $1,201 $ -- $ -- Equity derivatives -- -- -- Interest rate derivatives 85 -- -- GMWB hedging instruments 502,834 -- -- US macro hedge program 203,468 -- -- International program hedging 4,543 -- -- --------- ------- -------- TOTAL DERIVATIVES (3) $712,131 $ -- $ -- --------- ------- -------- TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: NET (AMOUNTS IN THOUSANDS) INCOME (1) SURPLUS PURCHASES -------------------------------------- ---------------------------------------------------- Assets All other corporate $(12) $14 $ -- All other corporate -- asset-backed (35) (1,472) 14,500 All other -- asset-backed -- -- -- Preferred stocks (241) 8 -- Common stocks -- -- -- ----- --------- --------- TOTAL BONDS AND STOCKS $(288) $(1,450) $14,500 ----- --------- --------- Derivatives Credit derivatives $ -- $475 $(945) Equity derivatives -- (114) 683 Interest rate derivatives -- (80) -- GMWB hedging instruments -- 179,416 22,530 US macro hedge program -- (128,357) 346,500 International program hedging -- (2,917) (21,778) ----- --------- --------- TOTAL DERIVATIVES (3) $ -- $48,423 $346,990 ----- --------- --------- FAIR VALUE AS OF (AMOUNTS IN THOUSANDS) SALES SETTLEMENTS DEC. 31, 2011 -------------------------------------- ------------------------------------------------------- Assets All other corporate $(2) $ -- $ -- All other corporate -- asset-backed -- (59) 2,468 All other -- asset-backed -- -- -- Preferred stocks -- -- -- Common stocks -- -- 4 --- -------- ---------- TOTAL BONDS AND STOCKS $(2) $(59) $2,472 --- -------- ---------- Derivatives Credit derivatives $ $(1,243) $(512) -- Equity derivatives -- -- 569 Interest rate derivatives -- -- 5 GMWB hedging instruments -- (18,708) 686,072 US macro hedge program -- (65,050) 356,561 International program hedging -- -- (20,152) --- -------- ---------- TOTAL DERIVATIVES (3) $ $(85,001) $1,022,543 -- --- -------- ----------
(1) All amounts in this column are reported in net realized capital gains (losses). All amounts are before income taxes. (2) Transfers in and/or (out) of Level 3 are primarily attributable to changes in the availability of market observable information and changes to the bond and stock carrying value based on the lower of cost or market requirement. (3) Derivative instruments are reported in this table on a net basis for asset/(liability) positions. F-29 FAIR VALUES OF FINANCIAL INSTRUMENTS The tables below reflect the fair values and admitted values of all admitted assets and liabilities that are financial instruments excluding those accounted for under the equity method (subsidiaries, joint ventures and ventures). The fair values are also categorized into the three-level fair value hierarchy.
DECEMBER 31, 2012 AGGREGATE FAIR (AMOUNTS IN THOUSANDS) VALUE ADMITTED VALUE (LEVEL 1) ------------------------------------------------------------------------------------------------------------------- TYPE OF FINANCIAL INSTRUMENT Assets Bonds and short-term investments -- unaffiliated $15,020,205 $13,822,160 $160,139 Bonds -- affiliated 1,253,896 1,156,374 -- Preferred stocks -- unaffiliated 7,851 8,267 -- Common stocks -- unaffiliated 98,413 98,413 98,409 Mortgage loans on real estate 931,986 907,376 -- Derivative related assets 551,444 673,240 -- Contract loans 443,179 375,219 -- Surplus debentures 18,221 15,708 -- Separate Account assets (1) 45,821,181 45,821,181 45,821,181 ------------ ------------ ------------ TOTAL ASSETS $64,146,376 $62,877,938 $46,079,729 ------------ ------------ ------------ Liabilities Liability for deposit-type contracts $(1,543,283) $(1,543,283) $ -- Derivative related liabilities (68,256) (68,250) -- Separate Account liabilities (45,821,181) (45,821,181) (45,821,181) ------------ ------------ ------------ TOTAL LIABILITIES $(47,432,720) $(47,432,714) $(45,821,181) ------------ ------------ ------------ DECEMBER 31, 2012 NOT PRACTICABLE (AMOUNTS IN THOUSANDS) (LEVEL 2) (LEVEL 3) (CARRYING VALUE) -------------------------------------- ------------------------------------------------------- TYPE OF FINANCIAL INSTRUMENT Assets Bonds and short-term investments -- unaffiliated $14,478,232 $381,834 $ -- Bonds -- affiliated -- 1,253,896 -- Preferred stocks -- unaffiliated 7,629 222 -- Common stocks -- unaffiliated -- 4 -- Mortgage loans on real estate -- 931,986 -- Derivative related assets (86,916) 638,360 -- Contract loans -- 443,179 -- Surplus debentures 18,221 -- -- Separate Account assets (1) -- -- -- ----------- ----------- ----- TOTAL ASSETS $14,417,166 $3,649,481 $ -- ----------- ----------- ----- Liabilities Liability for deposit-type contracts $ -- $(1,543,283) $ -- Derivative related liabilities (67,042) (1,214) -- Separate Account liabilities -- -- -- ----------- ----------- ----- TOTAL LIABILITIES $(67,042) $(1,544,497) $ -- ----------- ----------- -----
(1) Excludes approximately $30.7 million, at December 31, 2012, of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100.
DECEMBER 31, 2011 AGGREGATE FAIR (AMOUNTS IN THOUSANDS) VALUE ADMITTED VALUE (LEVEL 1) ------------------------------------------------------------------------------------------------------------------- TYPE OF FINANCIAL INSTRUMENT Assets Bonds and short-term investments -- unaffiliated $13,288,236 $12,493,941 $120,301 Bonds -- affiliated 1,364,226 1,296,220 -- Preferred stocks -- unaffiliated 7,189 8,446 -- Common stocks -- unaffiliated 146,026 146,026 146,022 Mortgage loans on real estate 687,446 660,905 -- Derivative related assets 1,816,460 1,602,785 -- Contract loans 442,771 370,655 -- Surplus debentures 3,140 3,121 -- Separate Account assets (1) 48,234,930 48,234,930 48,234,930 ------------ ------------ ------------ TOTAL ASSETS $65,990,424 $64,817,029 $48,501,253 ------------ ------------ ------------ Liabilities Liability for deposit-type contracts $(65,825) $(65,825) $ -- Derivative related liabilities (36,184) (36,184) -- Separate Account liabilities (48,234,930) (48,234,930) (48,234,930) ------------ ------------ ------------ TOTAL LIABILITIES $(48,336,939) $(48,336,939) $(48,234,930) ------------ ------------ ------------ DECEMBER 31, 2011 NOT PRACTICABLE (AMOUNTS IN THOUSANDS) (LEVEL 2) (LEVEL 3) (CARRYING VALUE) -------------------------------------- ------------------------------------------------------ TYPE OF FINANCIAL INSTRUMENT Assets Bonds and short-term investments -- unaffiliated $12,666,026 $501,909 $ -- Bonds -- affiliated -- 1,364,226 -- Preferred stocks -- unaffiliated 6,991 198 -- Common stocks -- unaffiliated -- 4 -- Mortgage loans on real estate -- 687,446 -- Derivative related assets 793,917 1,022,543 -- Contract loans -- 442,771 -- Surplus debentures 3,140 -- -- Separate Account assets (1) -- -- -- ----------- ---------- ----- TOTAL ASSETS $13,470,074 $4,019,097 $ -- ----------- ---------- ----- Liabilities Liability for deposit-type contracts $ -- $(65,825) $ -- Derivative related liabilities (36,184) -- -- Separate Account liabilities -- -- -- ----------- ---------- ----- TOTAL LIABILITIES $(36,184) $(65,825) $ -- ----------- ---------- -----
(1) Excludes approximately $20.1 million, at December 31, 2011, of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100. The valuation methodologies used to determine the fair values of bonds, stocks and derivatives are described in the above Fair Value Measurements section of this note. The amortized cost of short-term investments approximates fair value. Fair values for mortgage loans on real estate were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans. The carrying amounts of the liability for deposit-type contracts and Separate Account liabilities approximate their fair values. Fair values for contract loans were estimated using discounted cash flow calculations and current interest rates. At December 31, 2012 and 2011, the Company had no investments where it was not practicable to estimate fair value. F-30 5. INCOME TAXES A. The components of the net deferred tax asset/(deferred tax liability) ("DTA"/"(DTL)") at period end and the change in those components are as follows:
2012 ORDINARY CAPITAL TOTAL ------------------------------------------------------------------------------------------- 1 (a) Gross DTA $1,991,996,696 $73,968,061 $2,065,964,757 (b) Statutory valuation allowance adjustments -- -- -- (c) Adjusted gross DTA 1,991,996,696 73,968,061 2,065,964,757 (d) Deferred tax assets nonadmitted 1,100,066,331 47,098,013 1,147,164,344 (e) Subtotal net admitted deferred tax assets 891,930,365 26,870,048 918,800,413 (f) Deferred tax liabilities 511,264,849 12,811,948 524,076,797 ---------------- ------------- ---------------- (g) Net admitted deferred tax asset/(net deferred tax liability) $380,665,516 $14,058,100 $394,723,616 ---------------- ------------- ----------------
2012 ORDINARY CAPITAL TOTAL ------------------------------------------------------------------------------------------------ 2 Admission Calculation Components SSAP No. 101 : (a) Federal income taxes paid in prior years recoverable by C/B $ -- $ -- $ -- (b) Adjusted gross DTA expected to be realized 380,665,516 14,058,100 394,723,616 (1) DTA's expected to be realized after the balance sheet date 1,116,409,900 14,058,100 1,130,468,000 (2) DTA's allowed per limitation threshold XXX XXX 394,723,616 (c) DTA's offset against DTLs 511,264,849 12,811,948 524,076,797 ---------------- ------------- ---------------- (d) DTA's admitted as a result of application of SSAP No. 101 $891,930,365 $26,870,048 $918,800,413 ---------------- ------------- ---------------- 3 (a) Ratio % used to determine recovery period and threshold limitation 1,822% (b) Adjusted capital and surplus used to determine 2(b) thresholds 2,631,490,773
2012 ORDINARY CAPITAL TOTAL PERCENT PERCENT PERCENT ----------------------------------------------------------------------------------------- 4 Impact of Tax Planning Strategies: (a) Adjusted gross DTAs (% of total adjusted gross DTAs) 0% 0% 0% (b) Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) 0% 0% 0% (c) Do the tax planning strategies include the use of reinsurance? Yes No X
2011 ORDINARY CAPITAL TOTAL -------------------------------------------------------------------------------------------- 1 (a) Gross DTA $1,573,302,985 $177,028,688 $1,750,331,673 (b) Statutory valuation allowance adjustments -- -- -- (c) Adjusted gross DTA 1,573,302,985 177,028,688 1,750,331,673 (d) Deferred tax assets nonadmitted 326,583,260 171,377,688 497,960,948 (e) Subtotal net admitted deferred tax assets 1,246,719,725 5,651,000 1,252,370,725 (f) Deferred tax liabilities 722,553,499 -- 722,553,499 ---------------- -------------- ---------------- (g) Net admitted deferred tax asset/(net deferred tax liability) $524,166,226 $5,651,000 $529,817,226 ---------------- -------------- ----------------
XXX represents not applicable amounts.
2011 ORDINARY CAPITAL TOTAL ----------------------------------------------------------------------------------------------- 2 Admission Calculation Components SSAP No. 101 : (a) Federal income taxes paid in prior years recoverable by C/B $ -- $ -- $ -- (b) Adjusted gross DTA expected to be realized 524,166,226 5,651,000 529,817,226 (1) DTA's expected to be realized after the balance sheet date 739,232,000 5,651,000 744,883,000 (2) DTA's allowed per limitation threshold XXX XXX 529,817,226 (c) DTA's offset against DTLs 722,553,499 -- 722,553,499 ---------------- ------------ ---------------- (d) DTA's admitted as a result of application of SSAP No. 101 $1,246,719,725 $5,651,000 $1,252,370,725 ---------------- ------------ ---------------- 3 (a) Ratio % used to determine recovery period and threshold limitation 1,917% (b) Adjusted capital and surplus used to determine 2(b) thresholds 3,898,065,927
F-31
2011 ORDINARY CAPITAL TOTAL PERCENT PERCENT PERCENT ------------------------------------------------------------------------------------------ 4 Impact of Tax Planning Strategies: (a) Adjusted gross DTAs (% of total adjusted gross DTAs) 0% 0% 0% (b) Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) 18% 1% 19% (c) Do the tax planning strategies include the use of reinsurance? Yes No X
CHANGE DURING 2012 ORDINARY CAPITAL TOTAL ---------------------------------------------------------------------------------------------------------- 1 (a) Gross DTA $418,693,711 $(103,060,627) $315,633,084 (b) Statutory valuation allowance adjustments -- -- -- (c) Adjusted gross DTA 418,693,711 (103,060,627) 315,633,084 (d) Deferred tax assets nonadmitted 773,483,071 (124,279,675) 649,203,396 (e) Subtotal net admitted deferred tax assets (354,789,360) 21,219,048 (333,570,312) (f) Deferred tax liabilities (211,288,650) 12,811,948 (198,476,702) --------------- --------------- --------------- (g) Net admitted deferred tax asset/(net deferred tax liability) $(143,500,710) $8,407,100 $(135,093,610) --------------- --------------- ---------------
CHANGE DURING 2012 ORDINARY CAPITAL TOTAL ---------------------------------------------------------------------------------------------------------- 2 Admission Calculation Components SSAP No. 101 : (a) Federal income taxes paid in prior years recoverable by C/B $ -- $ -- $ -- (b) Adjusted gross DTA expected to be realized (143,500,710) 8,407,100 (135,093,610) (1) DTA's expected to be realized after the balance sheet date 377,177,900 8,407,100 385,585,000 (2) DTA's allowed per limitation threshold XXX XXX (135,093,610) (c) DTA's offset against DTLs (211,288,650) 12,811,948 (198,476,702) ----------------- ------------- --------------- (d) DTA's admitted as a result of application of SSAP No. 101 $(354,789,360) $21,219,048 $(333,570,312) ----------------- ------------- --------------- 3 (a) Ratio % used to determine recovery period and threshold limitation -95% (b) Adjusted capital and surplus used to determine 2(b) threshold (1,266,575,154)
CHANGE DURING 2012 ORDINARY CAPITAL TOTAL PERCENT PERCENT PERCENT ---------------------------------------------------------------------------------------------------- 4 Impact of Tax Planning Strategies: (a) Adjusted gross DTAs (% of total adjusted gross DTAs) 0% 0% 0% (b) Net admitted adjusted gross DTAs (% of total net admitted adjusted gross DTAs) % % %
B. DTLs are not recognized for the following amounts: Not applicable C. 1. The components of current income tax expense are as follows:
2012 2011 CHANGE ---------------------------------------------------------------------------------------- (a) Federal $323,810,575 $115,054,696 $208,755,879 (b) Foreign 44,651 13,649 31,002 -------------- -------------- -------------- (c) Subtotal 323,855,226 115,068,345 208,786,881 (d) Federal income tax on net capital gains 26,183,099 10,257,387 15,925,712 (e) Utilization of capital loss carry-forwards -- -- -- (f) Other -- -- -- -------------- -------------- -------------- (g) Federal and foreign income taxes incurred $350,038,325 $125,325,732 $224,712,593 -------------- -------------- --------------
F-32 2. The main components of the period end deferred tax amounts and the change in those components are as follows:
2012 2011 CHANGE ---------------------------------------------------------------------------------------------------- DTA: ORDINARY Reserves $805,988,168 $817,813,096 $(11,824,928) Tax deferred acquisition costs 253,002,416 266,456,659 (13,454,243) Employee benefits 11,447,285 5,054,636 6,392,649 Bonds and other investments 666,125,537 281,153,876 384,971,661 NOL/Min tax credit/Foreign tax credits 242,327,721 190,524,387 51,803,334 Other 13,105,569 12,300,331 805,238 ---------------- ----------------- ---------------- Subtotal: DTA Ordinary 1,991,996,696 1,573,302,985 418,693,711 Ordinary Statutory Valuation Allowance -- -- -- ---------------- ----------------- ---------------- Total adjusted gross ordinary DTA 1,991,996,696 1,573,302,985 418,693,711 Nonadmitted ordinary DTA 1,100,066,331 326,583,260 773,483,071 ---------------- ----------------- ---------------- Admitted ordinary DTA 891,930,365 1,246,719,725 (354,789,360) ---------------- ----------------- ---------------- DTA: CAPITAL Bonds and other investments 73,968,061 177,028,688 (103,060,627) ---------------- ----------------- ---------------- Subtotal: DTA Capital 73,968,061 177,028,688 (103,060,627) Capital Statutory Valuation Allowance -- -- -- ---------------- ----------------- ---------------- Total adjusted gross capital DTA 73,968,061 177,028,688 (103,060,627) Nonadmitted capital DTA 47,098,013 171,377,688 (124,279,675) ---------------- ----------------- ---------------- Admitted capital DTA 26,870,048 5,651,000 21,219,048 ---------------- ----------------- ---------------- TOTAL ADMITTED DTA $918,800,413 $1,252,370,725 $(333,570,312) ---------------- ----------------- ---------------- DTL: ORDINARY Bonds and other investments $345,583,220 $534,665,193 $(189,081,973) Deferred and uncollected 25,872,755 24,610,814 1,261,941 Reserves 131,595,482 154,167,836 (22,572,354) Other 8,213,392 9,109,656 (896,264) ---------------- ----------------- ---------------- Gross DTL Ordinary 511,264,849 722,553,499 (211,288,650) ---------------- ----------------- ---------------- DTL: CAPITAL Investment related 12,811,948 -- 12,811,948 Other -- -- -- ---------------- ----------------- ---------------- Gross DTL Capital 12,811,948 -- 12,811,948 ---------------- ----------------- ---------------- TOTAL DTL $524,076,797 $722,553,499 $(198,476,702) ---------------- ----------------- ---------------- NET ADJUSTED DTA/(DTL) $394,723,616 $529,817,226 $(135,093,610) ---------------- ----------------- ---------------- Adjust for the change in deferred tax on (443,824,011) unrealized gains/losses Adjust for the stock compensation 2,470,893 transfer Adjust for the change in nonadmitted 649,203,396 deferred tax Other Adjustments -- ---------------- Adjusted change in net deferred Income $72,756,668 Tax ----------------
D. Reconciliation of federal income tax rate to actual effective rate: The sum of the income tax incurred and the change in the DTA/DTL is different from the result obtained by applying the statutory federal income tax rate to the pretax income. The significant items causing this difference are as follows:
% OF PRE-TAX 2012 INCOME 2011 TAX EFFECT $1,061,415,077 TAX EFFECT ------------------------------------------------------------------------------------------------ Statutory tax -- 35% $371,495,277 35.00% $(256,385,476) Tax preferred investments (89,000,000) -8.39% (91,500,000) Affiliated dividends (12,600,000) -1.19% (25,714,500) Valuation Allowance -- 0.00% -- All other 7,386,380 0.70% (683,314) ------------ ----- ------------- TOTAL STATUTORY INCOME TAX $277,281,657 26.12% $(374,283,290) ------------ ----- ------------- Federal and foreign income taxes incurred $350,038,325 32.98% $125,325,732 Change in net deferred income taxes (72,756,668) -6.86% (499,609,022) ------------ ----- ------------- TOTAL STATUTORY INCOME TAX $277,281,657 26.12% $(374,283,290) ------------ ----- ------------- % OF PRE-TAX % OF PRE-TAX INCOME 2010 INCOME $(732,529,932) TAX EFFECT $39,421,066 -------------------------------------- ------------------------------------------------------- Statutory tax -- 35% 35.00% $13,797,373 35.00% Tax preferred investments 12.49% (92,800,000) -235.41% Affiliated dividends 3.51% (49,000,000) -124.30% Valuation Allowance 0.00% 18,491,508 46.91% All other 0.09% 21,947,331 55.68% ------ ------------ -------- TOTAL STATUTORY INCOME TAX 51.09% $(87,563,788) -222.12% ------ ------------ -------- Federal and foreign income taxes incurred -17.11% $(40,522,705) -102.79% Change in net deferred income taxes 68.20% (47,041,083) -119.33% ------ ------------ -------- TOTAL STATUTORY INCOME TAX 51.09% $(87,563,788) -222.12% ------ ------------ --------
F-33 E. 1. At December 31, 2012, the Company had $83,580,308 of net operating loss carryforward and $45,533,890 of foreign tax credit carryforward. 2. The amount of federal income taxes incurred in the current year and each preceding year that will be available for recoupment in the event of future net losses are: 2012 $ -- 2011 $ -- 2010 $ -- 3. The aggregate amounts of deposits reported as admitted assets under Section 6603 of the IRS Code was $0 as of December 31, 2012. F. 1. The Company's federal income tax return is consolidated within The Hartford's consolidated federal income tax return. The consolidated federal income tax return includes the following entities: The Hartford Financial Services Group, Inc. (Parent) Hartford Underwriters General Agency, Inc. Hartford Holdings, Inc. Hartford of Texas General Agency, Inc. Nutmeg Insurance Company Nutmeg Insurance Agency, Inc. Heritage Holdings, Inc. Hartford Lloyd's Corporation Hartford Fire Insurance Company 1st AgChoice, Inc. Hartford Accident and Indemnity Company ClaimPlace, Inc. Hartford Casualty Insurance Company Access CoverageCorp, Inc. Hartford Underwriters Insurance Company Access CoverageCorp Technologies, Inc. Twin City Fire Insurance Company Hartford Casualty General Agency, Inc. Pacific Insurance Company, Limited Hartford Fire General Agency, Inc. Trumbull Insurance Company Hartford Strategic Investments LLC Hartford Insurance Company of Illinois Hartford Life, Inc. Hartford Insurance Company of the Midwest Hartford Life and Accident Insurance Company Hartford Insurance Company of the Southeast Hartford Life International Ltd. Hartford Lloyd's Insurance Company Hartford Equity Sales Company, Inc. Property & Casualty Insurance Co. of Hartford Hartford-Comprehensive Employee Benefit Service Co. Sentinel Insurance Company, Ltd. Hartford Securities Distribution Company, Inc. First State Insurance Company The Evergreen Group, Incorporated New England Insurance Company Hartford Administrative Services Company New England Reinsurance Corporation Woodbury Financial Services, Inc. Fencourt Reinsurance Company, Ltd. Hartford Life, Ltd. Heritage Reinsurance Co., Ltd. Hartford Life Insurance Company New Ocean Insurance Co., Ltd. Hartford Life and Annuity Insurance Company Hartford Investment Management Co. Hartford International Life Reassurance Corp. HRA Brokerage Services. Inc. American Maturity Life Insurance Company Ersatz Corporation Champlain Life Reinsurance Company Hartford Integrated Technologies, Inc. White River Life Reinsurance Company Business Management Group, Inc. Hartford Fund Management Group, Inc.
2. Federal Income Tax Allocation The Company is included in the consolidated federal income tax return of The Hartford and its includable subsidiaries. Estimated tax payments are made quarterly, at which time intercompany tax settlements are made. In the subsequent year, additional settlements are made on the unextended due date of the return and at the time that the return is filed. The method of allocation among affiliates of the Company is subject to written agreement approved by the Board of Directors and based upon separate return calculations with current credit for net losses to the extent the losses provide a benefit in the consolidated tax return. 6. REINSURANCE The amount of reinsurance recoverables from and payables to affiliated and unaffiliated reinsurers were $23,783,887 and $538,948,935 respectively, as of December 31, 2012 and $27,899,817 and $200,232,730 respectively, as of December 31, 2011. F-34 The effect of reinsurance as of and for the years ended December 31 is summarized as follows:
Direct Assumed Ceded Net --------------------------------------------------------------------------------------------------------------------------------- 2012 Aggregate reserves for future benefits $13,136,569,365 $1,141,074,169 $(5,068,899,440) $9,208,744,094 Liability for deposit-type contracts 57,593,210 1,485,690,018 -- 1,543,283,228 Policy and contract claim liabilities 114,807,788 13,382,743 (54,078,602) 74,111,929 Premium and annuity considerations 2,380,044,324 311,741,821 (1,402,987,610) 1,288,798,535 Death, annuity, disability and other benefits 660,013,086 421,351,995 (313,326,701) 768,038,380 Surrenders and other fund withdrawals 8,896,799,930 238,908,549 (8,830,040,225) 305,668,254
Direct Assumed Ceded Net --------------------------------------------------------------------------------------------------------------------------------- 2011 Aggregate reserves for future benefits $10,948,992,648 $5,217,901,345 $(4,953,576,011) $11,213,317,982 Policy and contract claim liabilities 77,162,981 9,362,396 (38,432,611) 48,092,766 Premium and annuity considerations 2,478,347,638 327,157,421 (1,404,362,300) 1,401,142,759 Death, annuity, disability and other benefits 541,731,135 421,610,418 (251,193,984) 712,147,569 Surrenders and other fund withdrawals 8,945,267,166 260,269,537 (8,873,703,048) 331,833,655
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2010 Aggregate reserves for future benefits $9,741,574,542 $3,144,059,280 $(4,095,902,315) $8,789,731,507 Policy and contract claim liabilities 54,934,084 10,325,147 (23,615,797) 41,643,434 Premium and annuity considerations 2,667,556,144 652,323,718 (2,209,840,036) 1,110,039,826 Death, annuity, disability and other benefits 487,561,170 390,966,382 (172,286,142) 706,241,410 Surrenders and other fund withdrawals 8,302,516,938 209,026,355 (8,228,197,412) 283,345,881
A. EXTERNAL REINSURANCE The Company cedes insurance to unaffiliated insurers in order to limit its maximum losses. Such agreements do not relieve the Company from its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company reduces this risk by evaluating the financial condition of reinsurers and monitoring for possible concentrations of credit risk. As of December 31, 2012, the Company has two reinsurance-related concentrations of credit risk greater than 10% of the Company's capital and surplus. These concentrations, which are actively monitored, have reserve credits totaling $596 million and $483 million for Transamerica Life Insurance Company and Connecticut General Life Insurance Company, respectively. The Company has a reinsurance agreement under which the reinsurer has a limited right to unilaterally cancel the reinsurance for reasons other than for nonpayment of premium or other similar credits. The estimated amount of aggregate reduction in the Company's surplus of this limited right to unilaterally cancel this reinsurance agreement by the reinsurer for which cancellation results in a net obligation of the Company to the reinsurer, and for which such obligation is not presently accrued is $307,774,786 in 2012, a decrease of $88,280,194 from the 2011 balance of $396,054,980. The total amount of reinsurance credits taken for this agreement was $473,499,670 in 2012, a decrease of $135,815,684 from the 2011 balance of $609,315,354. B. REINSURANCE ASSUMED FROM AFFILIATES The Company has reinsurance agreements with Hartford Life Insurance K.K. ("HLIKK"), a Japan based affiliate and a wholly- owned subsidiary of The Hartford. Under these agreements, HLIKK ceded 100% of its covered risks to the Company. The following list describes the reinsurance agreements with HLIKK: - The Company assumes GMDB on covered contracts that have an associated GMIB rider in force on or after July 31, 2006, and GMIB riders issued on or after April 1, 2005. In connection with this reinsurance agreement, the Company collected premiums of $172,316,300, $179,915,572 and $160,823,000 for the years ended December 31, 2012, 2011 and 2010, respectively. - The Company assumes in-force and prospective "3Win" annuities which bundle guaranteed minimum accumulation benefits ("GMAB"), GMIB and GMDB risks issued on or after February 5, 2007. As a result of capital markets underperformance, 97% of contracts, a total of $3.1 billion, triggered during 2008 and of this amount, $2.0 billion elected the GMIB payout annuity, while the remainder elected a lump-sum payout. The Company received the additional considerations, net of the first annuity payout, and is paying the associated benefits to HLIKK over the payout period. As a result, in 2009 the Company entered into a funding agreement with HLIC in the amount of $1,468,809,904 for the F-35 purpose of funding these payments. The funding agreement calls for scheduled annual payouts on October 31 with interest at 5.16% through 2019. In connection with this reinsurance agreement, the Company collected premiums of $826,283, $859,383 and $824,000 for the years ended December 31, 2012, 2011 and 2010, respectively. - The Company assumes certain in-force and prospective GMIB and GMDB riders issued on or after February 1, 2008. In connection with this reinsurance agreement, the Company collected premiums of $3,294,187, $3,559,447 and $3,413,000 for the years ended December 31, 2012, 2011 and 2010, respectively. - The Company assumes certain in-force and prospective GMDB riders issued on or after April 1, 2005. In connection with this reinsurance agreement, the Company collected premiums of $2,817,698, $3,044,045 and $2,952,000 for the years ended December 31, 2012, 2011 and 2010, respectively. The Company has a modified coinsurance ("Modco") reinsurance agreement with Hartford Life Limited ("HLL"), an affiliated wholly-owned subsidiary of Hartford Life International, Ltd. The Company assumes 100% of the risks associated with GMDB and GMWB riders written by and in-force with HLL as of November 1, 2010. In connection with this agreement as of December 31, 2012 and 2011, the Company recorded a net (payable)/receivable of $(1,490,759) and $35,984,078, respectively, and collected premiums of $9,541,634, $10,370,089, and $344,271,000 for the years ended December 31, 2012, 2011 and 2010, respectively. C. REINSURANCE CEDED TO AFFILIATES The Company has a Modco and coinsurance with funds withheld reinsurance agreement ("WRR Agreement") with White River Life Reinsurance Company ("WRR"), an affiliated captive insurance company unauthorized in the State of Connecticut. The Company cedes to WRR variable annuity contracts, associated riders, and payout annuities written by the Company; annuity contracts and associated riders assumed by the Company under unaffiliated reinsurance agreements; GMAB, GMIB riders and GMDB risks assumed by the Company from HLIKK; and, as of November 1, 2010, GMDB and GMWB riders assumed by the Company from HLL. Under Modco, the assets and liabilities, and under coinsurance with funds withheld, the assets, associated with the reinsured business will remain on the balance sheet of the Company in segregated portfolios, and WRR will receive the economic risks and rewards related to the reinsured business through Modco and funds withheld adjustments. In connection with the WRR Agreement as of December 31, 2012 and 2011, the Company recorded a receivable of $172,250,508 and $0 within Amounts recoverable for reinsurance on the Statements of Admitted Assets, Liabilities and Capital and Surplus; a payable of $527,400,013 and $221,498,890, respectively, reported within Other liabilities ; Funds held under reinsurance treaties with unauthorized reinsurers of $212,088,584 and $189,281,081, respectively; and paid premiums of $719,723,726, $885,985,397, and $1,558,884,000, for the years ended December 31, 2012, 2011, and 2010, respectively. Effective November 1, 2007, the Company entered into a Modco and coinsurance with funds withheld reinsurance agreement with Champlain Life Reinsurance Company ("Champlain Life"), an affiliated captive insurance company unauthorized in the State of Connecticut. Champlain Life uses a third-party letter of credit to back a certain portion of its statutory reserves, and this letter of credit has been assigned to the Company in order to provide collateral for the Company to take reinsurance credit under this agreement. The increase in surplus, net of federal income tax, resulting from the reinsurance agreement on the effective date was $194,430,212. This surplus benefit will be amortized into income on a net of tax basis as earnings emerge from the business reinsured, resulting in a net $0 future impact to surplus. The Company reported paid premiums of $200,281,441, $209,973,214 and $348,509,000 for the years ended December 31, 2012, 2011 and 2010, respectively. See Note 16. On December 31, 2012, The Hartford completed the sale of its U.S. individual annuity new business capabilities to Forethought Financial Group. Effective May 1, 2012, all new U.S. annuity policies sold by the Company are reinsured to Forethought Life Insurance Company. The Company will cease the sale of such annuity policies and the reinsurance agreement will terminate as to new business in the second quarter of 2013. The reinsurance agreement has no impact on in-force policies issued on or before April 27, 2012 and the impact of this transaction was not material to the Company's results of operations, financial position or liquidity. Because of this transaction, the Company will cease ceding new business to WRR. F-36 7. PREMIUM AND ANNUITY CONSIDERATIONS (DEFERRED AND UNCOLLECTED) The following table presents premiums and annuity considerations (deferred and uncollected) as of December 31:
2012 2011 Gross Net of Loading Gross Net of Loading ---------------------------------------------------------------------------------------------------------------------------- TYPE Ordinary new business $1,616,249 $1,988,768 $3,057,394 $3,574,806 Ordinary renewal 17,869,947 21,931,463 16,480,250 13,986,006 Group life 49,363 32,976 54,208 35,800 ------------- ------------- ------------- ------------- TOTAL $19,535,559 $23,953,207 $19,591,852 $17,596,612 ------------- ------------- ------------- -------------
8. RELATED PARTY TRANSACTIONS Transactions between the Company and its affiliates, relate principally to tax settlements, reinsurance, insurance coverages, rental and service fees, capital contributions, returns of capital and payments of dividends. Investment management fees were charged by HIMCO and are a component of net investment income. Substantially all general insurance expenses related to the Company, including rent and benefit plan expenses, are initially paid by affiliate Hartford Fire Insurance Company. Direct expenses are allocated 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. At December 31, 2012 and 2011, the Company reported $13,512,043 and $19,756,182, respectively, as receivables from and $35,894,640 and $23,109,160, respectively, as payables to parent, subsidiaries, and affiliates. The terms of the written settlement agreements require that these amounts be settled generally within 30 days. Related party transactions may not be indicative of the costs that would have been incurred on a stand-alone basis. For additional information, see Notes 5, 6, 9 and 12. 9. RETIREMENT PLANS, OTHER POSTRETIREMENT BENEFIT PLANS AND POSTEMPLOYMENT BENEFITS The Hartford maintains The Hartford Retirement Plan for U.S. Employees, a U.S. qualified defined benefit pension plan (the "Plan") that covers substantially all employees of the Company. The Hartford also maintains non-qualified pension plans to accrue retirement benefits in excess of Internal Revenue Code limitations. These plans shall be collectively referred to as the "Pension Plans". Effective December 31, 2012, the Hartford amended the Plan to freeze participation and benefit accruals. As a result, employees will not accrue further benefits under the cash balance formula of the plan, although interest will continue to accrue to existing account balances. Compensation earned by employees up to December 31, 2012 will be used for purposes of calculating benefits under the Plan but there will be no future benefit accruals after that date. Participants as of December 31, 2012 will continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work. The freeze also applies to The Hartford Excess Pension Plan II, The Hartford's non-qualified excess benefit plan for certain highly compensated employees, effective December 31, 2012. The Hartford announced these changes in April 2012. For the years ended December 31, 2012, 2011 and 2010, the Company incurred expenses related to the Pension Plans of $22,147,339, $18,704,662 and $15,265,680, respectively, related to the allocation of the net periodic benefit cost, benefit payments and funding to the Pension Plans. The Hartford also provides certain health care and life insurance benefits for eligible retired employees of the Company. The Hartford's contribution for health care benefits will depend upon the retiree's date of retirement and years of service. In addition, the plan has a defined dollar cap for certain retirees which limits average company contributions. The Hartford has prefunded a portion of the health care obligations through a trust fund where such prefunding can be accomplished on a tax effective basis. Effective January 1, 2002, company-subsidized retiree medical, retiree dental and retiree life insurance benefits were eliminated for employees with original hire dates with the Company on or after January 1, 2002. As of December 31, 2012, the Hartford's other postretirement medical, dental and life insurance coverage plans were amended to no longer provide subsidized coverage for current employees who retire on or after January 1, 2014. The Hartford announced these changes in April 2012. For the years ended December 31, 2012, 2011 and 2010, the Company incurred expense related to the other postretirement benefit plans of $664,015, $1,383,478 and $1,567,512, respectively. Substantially all employees of the Company are eligible to participate in The Hartford 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 base salary, by The Hartford. In addition, The Hartford allocates a percentage of F-37 base salary to the Hartford Investment and Savings Plan for eligible employees. In 2012, employees whose prior year earnings were less than $110,000 received a contribution of 1.5% of base salary and employees whose prior year earnings were more than $110,000 received a contribution of 0.5% of base salary. The expenses allocated to the Company for the years ended December 31, 2012, 2011 and 2010 were $4,731,580, $4,883,327 and $5,756,026, respectively. Effective January 1, 2013, the Hartford will increase benefits under The Hartford Investment and Savings Plan, its defined contribution 401(k) savings plan, and The Hartford Excess Savings Plan. The Hartford's contributions will be increased to include a non-elective contribution of 2% of eligible compensation and a dollar-for-dollar matching contribution of up to 6% of eligible compensation contributed by the employee each pay period. Eligible compensation will be expanded to include overtime and bonuses but will be limited to a total of $1,000,000 annually. The Company participates in postemployment plans sponsored by Hartford Fire Insurance Company. These plans provide for medical and salary continuance benefits for employees on long-term disability. For the years ended December 31, 2012, 2011, and 2010, the Company was allocated expenses under these plans of $591,375, $664,382, and $712,102, respectively. In addition, expenses for the Company under this plan were $125,785, $32,433 and ($395,700) for the years ended December 31, 2012, 2011 and 2010, respectively, resulting from valuation adjustments. 10. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS DIVIDEND RESTRICTIONS The maximum amount of dividends which can be paid to shareholders by Connecticut domiciled insurance companies, without prior approval of the Connecticut Insurance Commissioner (the "Commissioner"), is generally restricted to the greater of 10% of surplus as of the preceding December 31st or the net gain from operations after dividends to policyholders, federal income taxes and before realized capital gains or (losses) for the previous year. In addition, if any dividend exceeds the insurer's earned surplus, it requires the prior approval of the Commissioner. Dividends are paid as determined by the Board of Directors in accordance with state statutes and regulations, and are not cumulative. In 2012, 2011, and 2010, ordinary dividends of $0, $0 and $72,000,000, respectively, were paid. With respect to dividends to its parent HLIC, the Company's dividend limitation under the holding company laws of Connecticut is $82,204,354 in 2013. UNASSIGNED FUNDS The portion of unassigned funds reduced by each item below at December 31, was as follows:
2012 2011 -------------------------------------------------------------------------- Unrealized capital losses, net of tax $934,084,695 $201,370,652 Nonadmitted asset values 1,168,207,992 519,577,245 Asset valuation reserve 162,571,194 179,493,239 Provision for reinsurance -- 1,100
11. SEPARATE ACCOUNTS The Company maintained Separate Account assets totaling $45,851,885,131 and $48,255,070,982 as of December 31, 2012 and 2011, respectively. The Company utilizes Separate Accounts to record and account for assets and liabilities for particular lines of business. For the current reporting year, the Company recorded assets and liabilities for individual variable annuities, variable life and variable universal life product lines into Separate Accounts. The Separate Account classifications are supported by state statute and are in accordance with the domiciliary state procedures for approving items within the Separate Accounts. Separate Account assets are segregated from other investments and reported at fair value. Some assets are considered legally insulated whereas others are not legally insulated from the General Account. As of December 31, 2012 and 2011, the Company's Separate Account statement included legally insulated assets of $45,851,885,131 and $48,255,070,982, respectively. Separate Account liabilities are determined in accordance with prescribed actuarial methodologies, which approximate the market value less applicable surrender charges. The resulting surplus is recorded in the General Account Statements of Operations as a component of Net transfers from Separate Accounts. The Company's Separate Accounts are non-guaranteed, wherein the policyholder assumes substantially all the investment risks and rewards. Investment income (including investment gains and losses) and interest credited to policyholders on Separate Account assets are not separately reflected in the Statements of Operations. Separate Account fees, net of minimum guarantees, were $971,069,837, $1,095,419,763 and $1,172,978,000 for the years ended December 31, 2012, 2011 and 2010, respectively, and are recorded as a component of fee income on the Company's Statements of Operations. F-38 An analysis of the Separate Accounts as of December 31, 2012 is as follows:
NONINDEXED GUARANTEED NONINDEXED LESS THAN GUARANTEED NONGUARANTEED OR EQUAL MORE THAN SEPARATE INDEXED TO 4% 4% ACCOUNTS TOTAL --------------------------------------------------------------------------------------------------------------------------------- Premium considerations or deposits for $ -- $ -- $ -- $905,791,935 $905,791,935 the year ended 2012: ---- ---- ---- ----------------- ----------------- Reserves @ year-end: For accounts with assets at: Fair value -- -- -- 45,201,230,236 45,201,230,236 Amortized cost -- -- -- -- -- ---- ---- ---- ----------------- ----------------- TOTAL RESERVES -- -- -- 45,201,230,236 45,201,230,236 ---- ---- ---- ----------------- ----------------- By withdrawal characteristics: Subject to discretionary withdrawal -- -- -- -- -- With fair value adjustment -- -- -- -- -- At book value without fair value -- -- -- -- -- adjustment and with surrender charge of 5% or more At fair value -- -- -- 45,070,354,835 45,070,354,835 At book value without fair value -- -- -- -- -- adjustment and with surrender charge of less than 5% ---- ---- ---- ----------------- ----------------- SUBTOTAL -- -- -- 45,070,354,835 45,070,354,835 Not subject to discretionary -- -- -- 130,875,401 130,875,401 withdrawal ---- ---- ---- ----------------- ----------------- TOTAL $ -- $ -- $ -- $ 45,201,230,236 $ 45,201,230,236 ---- ---- ---- ----------------- -----------------
Below is the reconciliation of Net transfers from Separate Accounts as of December 31,
2012 2011 2010 --------------------------------------------------------------------------------------------------------------------------------- Transfer to Separate Accounts $905,791,935 $866,204,030 $1,066,846,000 Transfer from Separate Accounts 8,502,888,504 8,302,354,037 7,208,445,000 ----------------- ----------------- ----------------- Net transfer from Separate Accounts (7,597,096,569) (7,436,150,007) (6,141,599,000) Internal exchanges and other Separate Account activity (4,353,290) (10,460,311) (2,822,000) ----------------- ----------------- ----------------- Transfer from Separate Accounts on the Statements of $(7,601,449,859) $(7,446,610,318) $(6,144,421,000) Operations ----------------- ----------------- -----------------
12. COMMITMENTS AND CONTINGENT LIABILITIES (A) LITIGATION The Company is or may become involved in various legal actions, some of which assert claims for substantial amounts. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses and costs of defense, will not be material to the financial condition of the Company. (B) GUARANTY FUNDS 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. F-39 Under insurance guaranty fund laws in each state, the District of Columbia and Puerto Rico, insurers licensed to do business can be assessed by state insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. Part of the assessments paid by the Company pursuant to these laws may be used as credits for a portion of the associated premium taxes. The Company paid guaranty fund assessments of approximately $41,397 (which includes refunds received), $777,869 and $166,851 in 2012, 2011 and 2010 respectively, of which $202,259, $694,413 and $34,365 in 2012, 2011 and 2010 respectively, increased the creditable amount against premium taxes. The Company has a guaranty fund receivable of $3,635,667 and $3,433,408 as of December 31, 2012 and 2011, respectively. (C) LEASES As discussed in Note 8, transactions with The Hartford include rental facilities and equipment. Rent paid by the Company to The Hartford for its share of space occupied and equipment used by The Hartford's life insurance companies was $7,635,952, $8,039,174 and $6,941,575 in 2012, 2011 and 2010, respectively. Future minimum rental commitments are as follows: 2013 $4,807,155 2014 3,331,208 2015 2,612,822 2016 1,943,629 2017 1,202,669 ------------- Total $13,897,483 -------------
The principal executive office of the Company, together with its parent and other life insurance affiliates, is located in Simsbury, Connecticut. In the first quarter of 2010, the Company's indirect parent, Hartford Life and Accident Insurance Company, purchased its headquarters property for $46 million. (D) TAX MATTERS The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years prior to 2007. The audit of the years 2007-2009 commenced during 2010 and is expected to conclude by the end of 2013, with no material impact on the consolidated financial condition or results of operations. The 2010-2011 audit commenced in the fourth quarter of 2012 and is expected to conclude by the end of 2014. 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 Company's unrecognized tax benefits are settled with the parent consistent with the terms of the tax sharing agreement described above. The Separate Account dividend received deduction ("DRD") is estimated for the current year using information from the most recent return, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds, amounts of short-term capital gains at the mutual fund level and the Company's taxable income before the DRD. The Company recorded benefits of $83,835,300, $119,417,997 and $88,631,465 related to the Separate Account DRD for the years ended December 31, 2012, 2011 and 2010, respectively. These amounts included benefits (charges) related to prior years' tax returns of $(5,164,700), $938,384 and $(4,168,534) in 2012, 2011 and 2010, respectively. The Company receives a foreign tax credit for foreign taxes paid including payments from its Separate Account assets. This credit reduces the Company's U.S. tax liability. The Separate Account foreign tax credit 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 foreign tax credit can vary from the estimates due to actual foreign tax credits passed through from the mutual funds. The Company recorded benefits of $6,614,650, $6,751,856, and $2,396,560 related to Separate Account foreign tax credit in the years ended December 31, 2012, 2011 and 2010, respectively. (E) FUNDING OBLIGATIONS At December 31, 2012, the Company had outstanding commitments totaling $2,189,520 of which $2,189,520 is committed to fund limited partnership investments, which may be called by the partnership during the commitment period (on average 2 to 4 years) to fund working capital needs or to purchase new investments. Once the commitment period expires, the Company is under no obligation to fund the remaining unfunded commitment but may elect to do so. F-40 13. CORRECTION OF ERRORS In 2010, the Company reviewed its approach with regard to the calculation of the deferred premium asset ("DPA"), utilizing guidance provided by New York Circular No. 11 (2010). As a result of this review, the Company determined that it had overstated the DPA as a result of using statutory net valuation premium for policies with a deficiency reserve where gross premium should have been used as a basis for establishing the DPA as guided by SSAP No. 51 (Life Contracts). This method was the outcome of a 1997 State of Connecticut audit. The Company also had not reflected ceded DPA amounts nor established an asset for prepaid reinsurance amounts as guided in SSAP No. 61 (Life, Deposit-Type and Accident and Health Reinsurance). The Company recorded an adjustment to "Capital and Surplus" of $(7,208,000) in 2010 representing the cumulative effect of this change in calculation and accounting for the DPA. The adjustment to "Capital and Surplus" was recorded in "Unassigned Funds" as follows: $14,571,000 in "Change in nonadmitted assets" and $(21,779,000) in "Correction of prior year error." The change in calculation and accounting decreased net income by approximately $0 and $1,973,000, for 2011 and 2010, respectively. The effect was immaterial to the Company's Assets, Liabilities and Capital and Surplus for the periods ending December 31, 2011 and 2010. 14. SALES OF AFFILIATES During the fourth quarter of 2010, the Company completed the sales of its indirect wholly-owned subsidiaries Hartford Investments Canada Corporation ("HICC") and Hartford Advantage Investment, Ltd. ("HAIL"). The Company received cash proceeds of $19,704,000 for the sale of HICC and $20,043,000 for the sale of HAIL. On November 30, 2012, the Company completed the sale of Woodbury Financial Services, Inc. ("Woodbury Financial Services", "WFS"), a wholly-owned subsidiary, to AIG Advisor Group, Inc. ("AIG Advisor Group"), a subsidiary of American International Group, Inc. The disposition resulted in a gain of $37 million before tax. 15. SUBSEQUENT EVENTS The Company has evaluated events subsequent to December 31, 2012, through April 10, 2013, the date the financial statements were available to be issued. The Company has not evaluated subsequent events after that date for presentation in these financial statements. On January 2, 2013, The Hartford completed the sale of its Individual Life insurance business to The Prudential Insurance Company of America ("Prudential"), a subsidiary of Prudential Financial, Inc. for consideration consisting primarily of a ceding commission of which $457 million, before tax, was allocated to the Company. The transaction resulted from The Hartford's strategic business realignment announced in March 2012. The sale was structured as a reinsurance transaction and is estimated to result in a before tax gain greater than $1.0 billion consisting of a reinsurance gain and investment-related gains, and an estimated increase to surplus greater than $1.0 billion, before tax. A reinsurance gain of approximately $600 million will be deferred and amortized over 20 years as earnings are estimated to emerge from the business reinsured. Upon closing, the Company reinsured $7.1 billion of policyholder liabilities and $3.8 billion of separate account liabilities under an indemnity reinsurance agreement. The Company also transferred invested assets (excluding cash) with a statement value of $5.1 billion to Prudential. These amounts are subject to change pending final determination of the net assets sold, transaction costs and other adjustments. The Company simultaneously recaptured the individual life insurance assumed by an affiliate, Champlain Life Reinsurance Company ("Champlain"). As a result, on January 2, 2013, the Company re-assumed all of the life reserves and claims payable totaling $3.0 billion from Champlain; Champlain returned the funds withheld totaling $2.8 billion to the Company; the Company paid a recapture fee of $347 million to Champlain; and, the Company ceded the recaptured reserves to Prudential. The amounts resulting from the transaction with Prudential disclosed above include the release of the Company's remaining deferred gain of $167 million, deferred at the inception of the reinsurance to Champlain, from restricted surplus. On February 5, 2013, the Company received permission from the Commissioner to pay an extraordinary dividend of $1,050,000,000 to its parent, HLIC. The Company paid this return of capital on February 22, 2013. F-41 PART C OTHER INFORMATION ITEM 26. EXHIBITS (a) Resolution of the Board of Directors of Hartford Life and Annuity Insurance Company ("Hartford") authorizing the establishment of the Separate Account.(1) (b) Not Applicable. (c) Principal Underwriting Agreement.(2) (d) Form of Flexible Premium Variable Life Insurance Policy.(4) (1) Estate Protection Rider(7) (2) Guaranteed Minimum Accumulation Benefit Rider(7) (3) Guaranteed Paid-Up Death Benefit Rider(7) (4) Last Survivor Exchange Option Rider(7) (5) LifeAccess Accelerated Benefit Rider(7) (6) Overloan Protection Rider(7) (e) Form of Application for Flexible Premium Variable Life Insurance Policies.(3) (f) Certificate of Incorporation of Hartford and Bylaws of Hartford.(6) (g) Reinsurance Contract. (1) Canada Life Assurance Company(7) (i) Amendment Nos. 5, 7, 8, and 9 (ii) Amendment Nos. 4 through 6 (2) Revois Reinsurance U.S. Inc.(7) (3) RGA Reinsurance Company(7) (i) Amendment (4) SCOR Global Life Americas Reinsurance Company (5) Swiss RE Life & Health America, Inc.(7) (i) Amendment Nos. 10 through 13 (6) Transamerica Financial Life Insurance Company(7) (i) Amendment Nos. 7 through 14 (7) The Prudential Insurance Company of America (h) Participation Agreements and Amendments. (1) AllianceBernstein Variable Products Series Fund, Inc.(7) (2) American Funds Insurance Series(7) (i) Amendment No. 6 (3) Fidelity Variable Insurance Products(7) (4) Franklin Templeton Variable Products Trust(7) (5) Hartford Series Fund, Inc. and Hartford Series Fund II, Inc.(7) (6) Invesco Variable Insurance Funds(7) (7) Lord Abbett Series Fund, Inc.(7) (8) MFS Variable Insurance Trust(7) (9) Putnam Variable Trust(7) (i) Guarantee Agreement, between Hartford Life and Accident Insurance Company and ITT Hartford Life and Annuity Insurance Company, its wholly owned subsidiary, dated as of August 20, 1993 and effective as of August 20, 1993.(5) (ii) Guarantee Agreement, between Hartford Life Insurance Company and ITT Hartford Life and Annuity Insurance Company, dated as of May 23, 1997.(5) (i) Administrative Services Agreements and Amendments. (1) Fidelity Variable Insurance Products(7) (2) Franklin Templeton(7) (3) Hartford Series Fund, Inc. and Hartford Series Fund II, Inc.(7) (4) Invesco Variable Insurance Funds(7) (5) Lord Abbett Series Fund, Inc.(7) (6) The Prudential Insurance Company of America (j) Not Applicable. (k) Opinion and Consent of Lisa M. Proch, Vice President and Assistant General Counsel. (l) Actuarial Opinion.(8) (m) Calculations.(8) (n) (1) Consent of Independent Registered Public Accounting Firm (2) Consent of Independent Auditors (3) Copy of Power of Attorney. (o) No financial statement will be omitted. (p) Not Applicable. (q) Memorandum describing transfer and redemption procedures.(8) ------------ (1) Incorporated by reference to Post-Effective Amendment No. 1 to the Registration Statement on Form S-6, File No. 33-89988, on May 1, 1996. (2) Incorporated by reference to Post-Effective Amendment No. 9 to the Registration Statement on Form N-6, File No. 333-148814, filed with the Securities and Exchange Commission on April 23, 2012. (3) Incorporated by reference to the Initial Filing of the Registration Statement on Form S-6, File No. 333-67373, on November 17, 1998. (4) Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form N-6, File No. 333-155092, filed with the Securities and Exchange Commission on May 5, 2009. (5) Incorporated by reference to Post-Effective Amendment No. 9, to the Registration Statement on Form N-4, File No. 333-148565, filed on May 3, 2010. (6) Incorporated by reference to Post-Effective Amendment No. 11 to the Registration Statement on Form N-6, File No. 333-148816, filed with the Securities and Exchange Commission on April 23, 2012. (7) Incorporated by reference to Post-Effective Amendment No. 8 to the Registration Statement on Form N-6, File No. 333-155092, filed with the Securities and Exchange Commission on April 23, 2012. (8) Incorporated by reference to Post-Effective Amendment No. 10 to the Registration Statement on Form N-6, File No. 333-148814, filed with the Securities and Exchange Commission on April 22, 2013. ITEM 27 OFFICERS AND DIRECTORS.
NAME POSITION WITH HARTFORD ------------------------------------------------------------------------------------------------------------------ Lydia M. Anderson (1) Vice President Thomas S. Barnes Vice President Beth A. Bombara (1) Chief Executive Officer, President, Chairman of the Board, Director* John B. Brady Actuary, Vice President David A. Bulin Vice President Thomas A. Campbell Actuary, Vice President Jennifer Centrone Vice President Michael R. Chesman (1) Senior Vice President Michael Concannon (1) Executive Vice President Ellen Conway Vice President Robert A. Cornell Actuary, Vice President Rochelle S. Cummings Vice President James Davey Executive Vice President George Eknaian Senior Vice President Mark A. Esposito (1) Senior Vice President Michael Fish Actuary, Vice President John W. Gallant Vice President Richard Guerrini Vice President Christopher J. Hanlon (1) Senior Vice President Stephen B. Harris (1) Vice President Michael R. Hazel Vice President, Controller Elizabeth Horvath Actuary, Vice President Penelope A. Hrib (2) Actuary, Vice President Charles E. Hunt (1) Vice President Donald C. Hunt (1) Assistant Secretary, Vice President Donna R. Jarvis Actuary, Vice President Kathleen E. Jorens (1) Assistant Treasurer, Vice President Michael Knipper (1) Senior Vice President Alan J. Kreczko (1) Executive Vice President, General Counsel William P. Meaney (1) Senior Vice President Thomas Moran (1) Director of Taxes, Senior Vice President Craig D. Morrow Appointed Actuary, Vice President Mark J. Niland (1) Senior Vice President, Director* Robert W. Paiano (1) Treasurer, Senior Vice President, Director* Brian Pedersen Vice President Colleen B. Pernerewski Vice President, Chief Compliance Officer of Individual Annuity, Chief Compliance Officer of Separate Accounts Glen-Roberts Pitruzzello (1) Vice President Robert E. Primmer Senior Vice President Sharon A. Ritchey Executive Vice President David C. Robinson (1) Senior Vice President Peter F. Sannizzaro Senior Vice President, Chief Accounting Officer, Chief Financial Officer Terence Shields (1) Assistant Vice President, Corporate Secretary Mark M. Socha (1) Vice President Jahn Marie Surette Senior Vice President and Chief Procurement Officer Martin A. Swanson Vice President Connie Tang (1) Actuary, Vice President Diane E. Tatelman Vice President Anthony Vidovich (1) Vice President James M. Yanosy (1) Senior Vice President
------------ Unless otherwise indicated, the principal business address of each of the above individuals is 200 Hopmeadow Street, Simsbury, CT 06089. * Denotes Board of Directors. (1) Address: One Hartford Plaza, Hartford, CT 06155 (2) Address: 100 Campus Drive, Florham Park, NJ 07932-1006 ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT Incorporated by reference to Post-Effective Amendment No. 10 to the Registration Statement, File No. 333-148814, filed on April 22, 2013. ITEM 29. 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 30. PRINCIPAL UNDERWRITERS (a) HESCO acts as principal underwriter for the following investment companies: Hartford Life Insurance Company - Separate Account VL I Hartford Life Insurance Company - Separate Account VL II Hartford Life Insurance Company - ICMG Secular Trust Separate Account Hartford Life Insurance Company - ICMG Registered Variable Life Separate Account A Hartford Life and Annuity Insurance Company - Separate Account VL I Hartford Life and Annuity Insurance Company - Separate Account VLI I Hartford Life and Annuity Insurance Company - ICMG Registered Variable Life Separate Account One (b) Directors and Officers of HESCO
POSITIONS AND OFFICES NAME WITH UNDERWRITER ------------------------------------------------------------------------------------------------------------ Diana Benken(1) Chief Financial Officer and Controller/FINOP Christopher S. Connor(4) AML Officer & Chief Compliance Officer Michael J. Fixer(2) Assistant Treasurer & Assistant Vice President Denise Gagnon(1) Privacy Officer Sarah J. Harding(2) Assistant Secretary Audrey E. Hayden(2) Assistant Secretary Michael R. Hazel(1) Assistant Vice President Kathleen E. Jorens(2) Vice President & Assistant Treasurer Robert W. Paiano(2) Senior Vice President, Treasurer Cathleen Shine(1) Secretary Diane E. Tatelman(2) Vice President/Corporate Tax Eamon J. Twomey(3) Vice President and Chief Operating Officer Jane Wolak(1) Director Melinda Zwecker(2) Assistant Vice President
------------ The principal business address of each of the above individuals are: (1) 200 Hopmeadow Street, Simsbury, CT 06089 (2) One Hartford Plaza, Hartford, CT 06155 (3) 1 Griffin Road North, Windsor, CT 06095 (4) 100 Matsonford Road, Radnor, PA 19087 ITEM 31. 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 the following: The Hartford 200 Hopmeadow Street, Simsbury, CT 06089 Hartford Equity Sales Company, Inc. 200 Hopmeadow Street, Simsbury, CT 06089 The Prudential Insurance Company of America 200 Hopmeadow Street, Simsbury, CT 06089 The Prudential Insurance Company of America 213 Washington Street, Newark, NJ 07102
ITEM 32. MANAGEMENT SERVICES On January 2, 2013, Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company (collectively, "Hartford") entered into agreements with The Prudential Insurance Company of America ("Prudential") under which Prudential will reinsure the obligations of Hartford under the variable life insurance policies and provide administration for the policies. ITEM 33. REPRESENTATION OF REASONABLENESS OF FEES Hartford hereby represents that the aggregate fees and charges under the Policy are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Hartford. 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 to 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 22nd day of April, 2013. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT VL II (Registrant) By: Beth A. Bombara* *By: /s/ Sun-Jin Moon ----------------------------------- ----------------------------------- Beth A. Bombara, Sun-Jin Moon President, Chief Executive Officer Attorney-in-Fact and Chairman of the Board, Director*
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (Depositor) By: Beth A. Bombara* ----------------------------------- Beth A. Bombara, President, Chief Executive Officer and Chairman of the Board, Director*
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons and in the capacities and on the dates indicated. Beth A. Bombara, President, Chief Executive Officer, Chairman of the Board, Director* Mark J. Niland, Senior Vice President, Director* *By: /s/ Sun-Jin Moon ----------------------------------- Robert W. Paiano, Senior Vice President, Treasurer, Sun-Jin Moon Director* Attorney-in-Fact Peter F. Sannizzaro, Senior Vice President, Chief Date: April 22, 2013 Accounting Officer, Chief Financial Officer*
333-155092 EXHIBIT INDEX (g) (1) Canada Life Assurance Co. (i) Amendment Nos. 5, 7, 8, and 9 (ii) Amendment Nos. 4 through 6 (3) RGA Reinsurance Co. (i) Amendment No. 10 (4) SCOR Global Life Americas Reinsurance Company (5) Swiss Re Life & Health America (i) Amendment Nos. 10 through 13 (6) Transamerica Financial Life Insurance Co. (i) Amendment Nos. 7 through 14 (7) The Prudential Insurance Company of America (h) Participation Agreements and Amendments (2) (i) American Funds Insurance Series -- Amendment No. 6 (i) (6) The Prudential Insurance Company of America (k) Opinion and consent of Lisa M. Proch, Vice President and Assistant General Counsel. (n) (1) Consent of Independent Registered Public Accounting Firm (n) (2) Consent of Independent Auditors (n) (3) Copy of Power of Attorney EX-99.(G)(1)(I) 2 a13-3080_1ex99dg1i.txt EX-99.(G)(1)(I) AMENDMENT 5 EFFECTIVE SEPTEMBER 1, 2010 TO THE AUTOMATIC MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR NON-EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to confirm the Reinsurer's coverage for policies issued under the Issue First policy issuance program. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Article III is hereby amended to include the following item 8: 8. The Ceding Company may issue policies on an Automatic Reinsurance basis through its Issue First policy issuance program. Issue First is a program under which a policy can be issued before the underwriting process has been completed. If policies issued under the Issue First program do not meet the requirements for Automatic Reinsurance set forth above, they will be deemed automatically reinsured as long they meet the additional requirements for Issue First that are documented in the Ceding Company's InfoBase data system. Changes to the Issue First program will be handled in accordance with Section XXII.L. 3. Policies under the Issue First Program that are deemed to be uninsurable based on medical evidence will be reinsured using the Reinsurance Premiums set out in Exhibit I. Exhibit I is deleted in its entirety and replaced with the attached revised Exhibit I. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin -------------------------------------- --------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Reinsurance Title: Senior Vice President Life Reinsurance Date: October 18, 2012 Date: October 24, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- --------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: 10-26-2012 Date: 10/31/12
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 2 EXHIBIT I REINSURANCE PREMIUM CALCULATION EFFECTIVE SEPTEMBER 1, 2010 FOR SINGLE LIFE PLANS OF INSURANCE REINSURANCE PREMIUM YEARLY RENEWABLE TERM (YRT) REINSURANCE PREMIUM Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 3 FOR SINGLE LIFE PLANS OF INSURANCE POLICIES UNDER THE ISSUE FIRST PROGRAM THAT ARE DEEMED TO BE UNINSURABLE BASED ON MEDICAL EVIDENCE The Ceding Company will determine a life expectancy for an insured who would otherwise be deemed uninsurable. Reinsurance Premiums will be calculated as per above based on the Standard Non-Nicotine or Standard Nicotine base YRT premium plus an extra premium to cover an actuarially equivalent mortality risk for this life expectancy. This extra premium may be in the form of a Substandard Table percentage and/or a Flat Extra Premium. ANNUAL FLAT EXTRA REINSURANCE PREMIUM The Annual Flat Extra Reinsurance Premium for each coverage equals {(i) x [ 1-(ii) ] x [(iii) / 1,000]}, where: (i) equals the applicable annual flat extra rate per 1,000, for the year of coverage, that the Ceding Company charges for the coverage; (ii) equals the Flat Extra Allowance Percentage, specified below; and (iii) equals the Reinsured Net Amount At Risk for such coverage, defined in Schedule B. FLAT EXTRA ALLOWANCE PERCENTAGE
DURATION OF FLAT EXTRA FIRST YEAR RENEWAL YEARS -------------------------------------------------------- Less than 5 years 5 years or longer
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 4 FOR LAST SURVIVOR PLANS OF INSURANCE REINSURANCE PREMIUM Reinsurance Premium shall be calculated each month for each risk reinsured as [(i) x (ii) / 1,000] / 12, where: (i) equals the result of the following steps: (ii) equals the Reinsured Net Amount at Risk for the coverage, defined in Schedule B. For the purposes of calculating Reinsurance Premium, the following will be considered separate coverages: base policy, increases in coverage, and reinsured riders. Reinsurance Premium for a single life rider attached to a last survivor policy shall be determined in accordance with the Reinsurance Premium calculations for single life plans of insurance. YRT REINSURANCE PREMIUM RATE PER 1,000* The YRT Reinsurance Premium Rate per 1,000 for each life for each coverage shall equal (i) x (ii) + (iii), but in no event more than 1,000, where: (i) equals the quantity [ (a) x (b) ], where: (a) equals the applicable rate from the tables of Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit III; and (b) equals the applicable percentage from the tables of YRT Reinsurance Rate Factors to be Applied to the Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit IV; (ii) equals the applicable Substandard Table Percentage, specified in Exhibit V, for the risk; and (iii) equals the Annual Flat Extra Reinsurance Premium per 1,000, as defined below. * For purposes of determining the YRT Reinsurance Premium Rate per 1,000, a life deemed uninsurable will be treated as Table P for 20 years with a $250 flat extra for 10 years. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 5 FOR LAST SURVIVOR PLANS OF INSURANCE ANNUAL FLAT EXTRA REINSURANCE PREMIUM PER 1,000 The Annual Flat Extra Reinsurance Premium per 1,000 for each coverage equals {(i) x [ 1 - (ii)]}, where: (i) equals the applicable annual flat extra rate per 1,000, for the year of coverage, that the Ceding Company charges for the coverage; and (ii) equals the Flat Extra Allowance Percentage, specified below. FLAT EXTRA ALLOWANCE PERCENTAGE
DURATION OF FLAT EXTRA FIRST YEAR RENEWAL YEARS -------------------------------------------------------- Less than 5 years 5 years or more
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between ILA and Canada Life Amendment 5 -- Effective 09/01/2010 6 AMENDMENT 7 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR NON-EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 ("EFFECTIVE DATE") BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer (collectively, the "Parties") agree that the Agreement was implemented using YRT Reinsurance Rate Factors ("Factors") which proved to be incorrect; and WHEREAS, the Parties agreed, in Amendment 1, to incorporate revised Factors in Exhibit IV "YRT Reinsurance Rate Factors" as of the Effective Date, with the revised Factors being implemented as follows: (a) For billing transactions appearing in the November 2010 reinsurance billing statement and thereafter, the Ceding Company had applied the revised Factors; and (b) For billing transactions reported to the Reinsurer prior to the November 2010 reinsurance billing statement, the Ceding Company paid the Reinsurer a one-time payment in the amount of to correct the discrepancy which resulted from the Ceding Company's application of the initial Factors; and WHEREAS, the Ceding Company did remit to the Reinsurer a one-time payment in the amount of to correct the discrepancy and such amount represented the aggregate amount of correction for the following agreements, all effective October 1, 2008: (a) Automatic Monthly Renewable Term Reinsurance for Non-Excess Risks between Hartford Life and Annuity Insurance Company and The Canada Life Assurance Company; (b) Automatic Monthly Renewable Term Reinsurance for Non-Excess Risks between Hartford Life Insurance Company and The Canada Life Assurance Company; (c) Automatic and Facultative Monthly Renewable Term Reinsurance Agreement for Excess Risks between Hartford Life and Annuity Insurance Company and The Canada Life Assurance Company; and Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 7 -- Effective 10/01/2008 1 (d) Automatic and Facultative Monthly Renewable Term Reinsurance Agreement for Excess Risks between Hartford Life Insurance Company and The Canada Life Assurance Company; and WHEREAS, notwithstanding the agreement of the Parties in Amendment 1 that the above-mentioned one-time payment would be the full and final settlement regarding this matter, the Parties now wish to recalculate all billing transactions from the Effective Date using the revised Factors; and WHEREAS, notwithstanding the agreement of the Parties in Amendment 1 that the Ceding Company would not alter its administrative systems, the Parties now agree that the Ceding Company shall alter its administrative systems to enable the recalculation of premium. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. The Reinsurer shall make a refund to the Ceding Company in the amount of representing the aggregate amount of correction. 3. The Ceding Company shall recalculate all billing transactions from the Effective Date and pay the Reinsurer accordingly. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. In witness of the foregoing, the Parties have, by their respective authorized officers, executed this Amendment in duplicate, each of which shall be deemed an original but both of which together shall constitute one and the same instrument, on the dates indicated below, with an effective date of October 1, 2008. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin -------------------------------------- --------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Reinsurance Title: Senior Vice President Life Reinsurance Date: Jun 15 2012 Date: 6/18/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis -------------------------------------- -------------------------------- Name: Paul Fischer, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Individual Life Product Management Date: 7-10-12 Date: July 10, 2012
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 7 -- Effective 10/01/2008 2 AMENDMENT 8 EFFECTIVE MARCH 1, 2012 TO THE AUTOMATIC MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR NON-EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to restate the definition of Working Reserve for the Reinsured Net Amount at Risk to reflect that it is the approximate value of the reserve net of other reinsurance arrangements held by the Ceding Company; and WHEREAS, the Ceding Company and the Reinsurer wish to acknowledge that Hartford Bicentennial UL Freedom and Hartford Bicentennial UL Joint Freedom II will now use NAR Type B only. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is hereby deleted in its entirety and replaced with the attached, revised Schedule A. 3. Schedule B is hereby deleted in its entirety and replaced with the attached, revised Schedule B. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin ---------------------------------------------- ---------------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Title: Senior Vice President Reinsurance Life Reinsurance Date: June 15 2012 Date: 6/18/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis ---------------------------------------------- ---------------------------------------------- Name: Paul Fisher, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Individual Life Product Management Date: 7-16-12 Date: July 16, 2012
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE MARCH 1, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Extraordinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Extraordinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life Extended Value 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** --------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** --------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 5 Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Disability Access Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 6 LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ----------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 7 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 8 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE MARCH 1, 2012 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B, not to exceed the Reinsurer's Maximum Automatic Participation Limit, as set forth in Exhibit II. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE TOTAL NET AMOUNT AT RISK (TOTNAR)* = For NAR TYPE A, Death Benefit minus the Account Value. For NAR TYPE B, Death Benefit minus the Working Reserve, where Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 9 For NAR TYPE C, Death Benefit. * In cases where the current Working Reserve is not available, the Ceding Company may estimate such amount using either a previously defined Working Reserve or the Account Value. STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER MINIMUM AUTOMATIC REINSURANCE CESSION: Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 8 -- Effective 03/01/2012 10 AMENDMENT 9 EFFECTIVE JULY 16, 2012 TO THE AUTOMATIC MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR NON-EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products will be added to the Agreement and the Effective Dates shown in Schedule A are the dates the products will become reinsured: - Hartford Frontier 2012 indexed UL, - Hartford Frontier 2012 Indexed UL Extended Value Option, - Hartford Leaders VUL Liberty 2012, and - Hartford Leaders VUL Liberty 2012 Extended Value Option NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin ---------------------------------------------- ---------------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Title: Senior Vice President Reinsurance Life Reinsurance Date: October 18, 2012 Date: October 24, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe ---------------------------------------------- ---------------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: 10-26-2012 Date: 10/31/12
Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE JULY 16, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life Extended Value 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 Extended Value Option 2001 CSO M/F Composite Ultimate ANB A 08/06/2012
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 3 SINGLE LIFE PLANS OF INSURANCE
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 5 Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 6 LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 7 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 8 Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool (Non-Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 9 -- Effective 07/16/2012 9 EX-99.(G)(1)(II) 3 a13-3080_1ex99dg1ii.txt EX-99.(G)(1)(II) AMENDMENT 4 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 ("EFFECTIVE DATE") BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer (collectively, the "Parties") agree that the Agreement was implemented using YRT Reinsurance Rate Factors ("Factors") which proved to be incorrect; and WHEREAS, the Parties agreed, in Amendment 1, to incorporate revised Factors in Exhibit IV "YRT Reinsurance Rate Factors" as of the Effective Date, with the revised Factors being implemented as follows: (a) For billing transactions appearing in the November 2010 reinsurance billing statement and thereafter, the Ceding Company had applied the revised Factors; and (b) For billing transactions reported to the Reinsurer prior to the November 2010 reinsurance billing statement, the Ceding Company paid the Reinsurer a one-time payment in the amount of (ILLEGIBLE) to correct the discrepancy which resulted from the Ceding Company's application of the initial Factors; and WHEREAS, the Ceding Company did remit to the Reinsurer a one-time payment in the amount of (ILLEGIBLE) to correct the discrepancy and such amount represented the aggregate amount of correction for the following agreements, all effective October 1, 2008: (a) Automatic Monthly Renewable Term Reinsurance for Non-Excess Risks between Hartford Life and Annuity Insurance Company and The Canada Life Assurance Company; (b) Automatic Monthly Renewable Term Reinsurance for Non-Excess Risks between Hartford Life Insurance Company and The Canada Life Assurance Company; (c) Automatic and Facultative Monthly Renewable Term Reinsurance Agreement for Excess Risks between Hartford Life and Annuity Insurance Company and The Canada Life Assurance Company; and Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 4 -- Effective 10/01/2008 1 (d) Automatic and Facultative Monthly Renewable Term Reinsurance Agreement for Excess Risks between Hartford Life Insurance Company and The Canada Life Assurance Company; and WHEREAS, notwithstanding the agreement of the Parties in Amendment 1 that the above-mentioned one-time payment would be the full and final settlement regarding this matter, the Parties now wish to recalculate all billing transactions from the Effective Date using the revised Factors; and WHEREAS, notwithstanding the agreement of the Parties in Amendment 1 that the Ceding Company would not alter its administrative systems, the Parties now agree that the Ceding Company shall alter its administrative systems to enable the recalculation of premium. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. The Reinsurer shall make a refund to the Ceding Company in the amount of representing the aggregate amount of correction. 3. The Ceding Company shall recalculate all billing transactions from the Effective Date and pay the Reinsurer accordingly. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. In witness of the foregoing, the Parties have, by their respective authorized officers, executed this Amendment in duplicate, each of which shall be deemed an original but both of which together shall constitute one and the same instrument, on the dates indicated below, with an effective date of October 1, 2008. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin -------------------------------------- -------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Title: Senior Vice President Reinsurance Life Reinsurance Date: June 15 2012 Date: 6/18/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis -------------------------------------- -------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Individual Life Product Management Date: 7-10-2012 Date: July 10, 2012
Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 4 -- Effective 10/01/2008 2 AMENDMENT 5 EFFECTIVE MARCH 1,2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to restate the definition of Working Reserve for the Reinsured Net Amount at Risk to reflect that it is the approximate value of the reserve net of other reinsurance arrangements held by the Ceding Company; and WHEREAS, the Ceding Company and the Reinsurer wish to acknowledge that Hartford Bicentennial UL Freedom and Hartford Bicentennial UL Joint Freedom II will now use NAR Type B only. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is hereby deleted in its entirety and replaced with the attached, revised Schedule A. 3. Schedule B is hereby deleted in its entirety and replaced with the attached, revised Schedule B. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin -------------------------------- ---------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin FSA, FCIA Title: Senior Vice-President Title: Senior Vice President Reinsurance Life Reinsurance Date: June 15 2012 Date: 6/18/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis ----------------------------------- ------------------------------------ Name: Paul Fischer, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Title: Vice President & Actuary Actuary Individual Life Product Management Date: 7-16-12 Date: July 16, 2012
Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE MARCH 1,2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ------------------------------------------------------------------------------------------------------------ Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Extended Value Option Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached.
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008
Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED) DATE** -------------------------------------------------------------------------------- Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 5 Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. Longevity Access Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 6 LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ----------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 II
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 7 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 8 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE MARCH 1,2012 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B, not to exceed the Reinsurer's Maximum Automatic Participation Limit, as set forth in Exhibit II. FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue) of the Total Net Amount at Risk for the risk. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE TOTAL NET AMOUNT AT RISK (TOTNAR)* = For NAR TYPE A, Death Benefit minus the Account Value. For NAR TYPE B, Death Benefit minus the Working Reserve, where Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 9 For NAR TYPE C, Death Benefit. * In cases where the current Working Reserve is not available, the Ceding Company may estimate such amount using either a previously defined Working Reserve or the Account Value. STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER REINSURER'S QUOTA SHARE PERCENTAGE FOR NAR3 (REINSQS3%) For risks reinsured under this Agreement where the death benefit has been reduced as a result of acceleration or withdrawal in accordance with Riders, the Ceding Company shall use commercially reasonable efforts to eliminate the impact of acceleration on the Reinsured Net Amount at Risk. NOTE: For ReinsQS2% and ReinsQS3%, round percentages to 2 decimal places. (This rounding may cause slight increases or decreases in the amounts allocated to each Party.) Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 10 MINIMUM AUTOMATIC REINSURANCE CESSION: MINIMUM FACULTATIVE REINSURANCE APPLICATION: LEAD REINSURER: Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 5 -- Effective 03/01/2012 11 AMENDMENT 6 EFFECTIVE JULY 16, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT FOR EXCESS RISKS EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND THE CANADA LIFE ASSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products will be added to the Agreement and the Effective Dates shown in Schedule A are the dates the products will become reinsured: - Hartford Frontier 2012 Indexed UL, - Hartford Frontier 2012 Indexed UL Extended Value Option, - Hartford Leaders VUL Liberty 2012, and - Hartford Leaders VUL Liberty 2012 Extended Value Option. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. THE CANADA LIFE ASSURANCE COMPANY By: /s/ John Occleshaw By: /s/ Jean-Francois Poulin -------------------------------------- --------------------------------------- Name: John Occleshaw, MA FIA Name: Jean-Francois Poulin, FSA, FCIA Title: Senior Vice-President Title: Senior Vice President Reinsurance Life Reinsurance Date: October 18, 2012 Date: October 24, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- --------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: 10-26-2012 Date: 10/31/12
Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE JULY 16, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ------------------------------------------------------------------------------------------------------------ Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Extended Value Option Hartford Frontier Indexed Universal 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Life Hartford Frontier Indexed Universal 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Life Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Extended Value Option Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Extended Value Option Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Extended Value Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 5 Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider: Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 6 LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 7 LAST SURVIOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ---------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 II
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 8 Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool (Excess Risks) -- Effective 10/01/2008 Between HLAIC and Canada Life Amendment 6 -- Effective 07/16/2012 9 EX-99.(G)(3)(I) 4 a13-3080_1ex99dg3i.txt EX-99.(G)(3)(I) (016) 10285-04-00 AMENDMENT 10 EFFECTIVE MARCH 8, 2005 TO THE AUTOMATIC AND FACULTATIVE YEARLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE MARCH 1, 2004 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND RGA REINSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer agrees to extend coverage for the policy listed below on a facultative basis, acknowledging the fact that said policy was issued on a Plan of Insurance not covered under the Agreement. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. The policy listed below shall be reinsured on a Facultative Reinsurance basis, under the terms of the Agreement.
INSURED POLICY NUMBER DATE OF BIRTH PLAN FACE AMT REINSURED AMT TABLE ---------------------------------------------------------------------------------------------------------
3. The reference above to a specific policy is for purposes of description only; such reference shall not create any relationship between the policyholder, beneficiary or insured of that policy and the Reinsurer, and such references shall not create any rights in any party other than the Ceding Company and the Reinsurer. LS Excess Treaty -- Effective 3/01/2004 Between HLAIC and RGA Amendment # 10 -- Effective 3/8/2005 1 (016) 10285-04-00 4. This Amendment represents an exception to the Agreement. The Reinsurer's acceptance should not be viewed as a precedent in the event future cases should arise as a result of similar circumstances. 5. Except as herein amended, all other terms and conditions of the Agreement shall remain unchanged. In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below, with an effective date of March 8, 2005. RGA REINSURANCE COMPANY By: /s/ Chris Noyes Attest: /s/ Julie A. Decker ---------------------------------------- ---------------------------------------- Name: Chris Noyes Name: Julie A. Decker Title: Vice President, Business Development Title: Vice President and Actuary Date: 6/11/12 Date: 6/11/2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis ---------------------------------------- ---------------------------------------- Name: Paul Fischer Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Date: June 18, 2012 Date: 6/25/2012
LS Excess Treaty -- Effective 3/01/2004 Between HLAIC and RGA Amendment # 10 -- Effective 3/8/2005 2 EX-99.(G)(4) 5 a13-3080_1ex99dg4.txt EX-99.(G)(4) AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (NAIC No. 71153) (FEIN 39-1052598) AND HARTFORD LIFE INSURANCE COMPANY (NAIC No. 88072) (FEIN 06-0974148) AND SCOR GLOBAL LIFE AMERICAS REINSURANCE COMPANY (NAIC No. 64688) (FEIN 75-6020048) EFFECTIVE DATE: NOVEMBER 1, 2012 ARTICLES I. The Agreement 3 II. Effective Date 3 III. Reinsurance Coverage 4 IV. Liability for Reinsurance 8 V. Underwriting Review 10 VI. Reinsurance Premiums 11 VII. Reinsurance Reporting 14 VIII. Credit for Reinsurance 14 IX. Errors 16 X. Policy Conversions, Other Changes, and Terminations 16 XI. Policy Reinstatement 20 XII. Claims 21 XIII. Extra-Contractual Obligations 24 XIV. DAC Tax Section 1.848-2(g)(8) Election 25 XV. Insolvency 26 XVI. Recapture of Reinsured Business 27 XVII. Offset 28 XVIII. Dispute Resolution 28 XIX. Arbitration 29 XX. Termination of this Agreement for New Business 30 XXI. Confidentiality 30 XXII. General Provisions 32 XXIII. Notices and Communications 36 Execution 37
SCHEDULES A. Plans of Insurance Covered Under this Agreement 38 B. Reinsurance Specifications 45 C. Foreign National Underwriting Program 48 D. Other Special Underwriting Programs 52
EXHIBITS I. Reinsurance Premium Calculation 54 II. Retention, Binding, and Total Pool Issue Limits 58 III. Annual Rates per $1,000 of Reinsured Net Amount at Risk 62 IV. YRT Reinsurance Rate Factors 83 V. Substandard Table Percentages 84 VI. Reinsurance Reports 85
ALL SCHEDULES AND EXHIBITS ATTACHED WILL BE CONSIDERED PART OF THIS REINSURANCE AGREEMENT. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 2 ARTICLE I THE AGREEMENT A. The Agreement and Parties to the Agreement This is a monthly renewable term agreement for indemnity life reinsurance (the "Agreement") solely between Hartford Life and Annuity Insurance Company and Hartford Life Insurance Company, Connecticut corporations (individually, "Ceding Company"), and SCOR Global Life Americas Reinsurance Company, a Delaware corporation ("Reinsurer"). The Ceding Company and the Reinsurer are each referred to individually as a "Party," and collectively as the "Parties," to this Agreement. This Agreement shall be binding upon the Ceding Company and the Reinsurer and their respective successors and assignees. The acceptance of risks under this Agreement will create no right or legal relationship between the Reinsurer and the insured, owner, beneficiary, or assignee of any insurance policy or other contract of the Ceding Company. B. Complete and Entire Agreement This Agreement, which includes all Schedules and Exhibits attached hereto and any amendments entered into hereafter, constitutes the entire agreement of the Parties pertaining to the transaction contemplated by this Agreement. This Agreement supersedes and replaces all oral and written agreements previously made or existing by and between the Parties or their representatives with regard to the transaction contemplated by this Agreement. This Agreement shall not be amended or modified except by written amendment, signed by duly authorized officers of each Party. Routine communications are those communications contemplated by this Agreement that are not intended to change any of its risk transfer characteristics. Such communications may include, but are not limited to, reinsurance reporting and premium administration, underwriting review, claim submission and review, participation in claim litigation and settlements, audit reviews, and the resolution of disputes by arbitration or court proceedings. These communications serve to clarify the obligations of the Parties under this Agreement and should not be construed as modifications of this Agreement. Any modifications of this Agreement shall be effected only by written amendment as provided for above. ARTICLE II EFFECTIVE DATE The Effective Date of this Agreement is November 1, 2012. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 3 ARTICLE III REINSURANCE COVERAGE Reinsurance under this Agreement will apply to those Plans of Insurance and Riders set forth in Schedule A. Such reinsurance shall be either on an automatic basis, subject to the requirements set forth in Section A below, on an automatic processing basis, subject to the requirements set forth in Section B below, or on a facultative basis, subject to the requirements set forth in Section C below. Notwithstanding the foregoing, reinsurance coverage on a facultative basis may also apply to plans of insurance not listed in Schedule A, with the agreement of the Reinsurer. The specifications for all reinsurance under this Agreement are provided in Schedule B. The term "Excess Risk," as used in this Agreement, shall mean a risk for which the amount to be written on a life by the Ceding Company, when added to any other amounts of risk for that life already in the Automatic Pool and any amounts not in the Automatic Pool that are retained by the Ceding Company or its affiliated companies, exceeds, either in whole or in part, the Total Allocation Limit for that life shown in Exhibit II. A. Automatic Reinsurance For each risk that meets the requirements for Automatic Reinsurance as set forth below, the Reinsurer will participate in a reinsurance pool whereby the Reinsurer will automatically reinsure a portion of the risk as indicated in Schedule B ("Automatic Pool"). The requirements for Automatic Reinsurance are as follows: 1. Each life, at the time of application, must satisfy one of the following requirements: a. have been a legal resident of the United States or Canada for at least six months; or b. be a citizen of the United States or Canada; or c. qualify for the Foreign National Underwriting Program as specified in Schedule C. 2. Each risk must be underwritten according to the Ceding Company's standard underwriting practices and guidelines, which have been provided to the Reinsurer, or one of the special underwriting programs described in Schedule C and Schedule D. Changes to such documents will be handled in accordance with Section XXII.M. If the Ceding Company would like to offer coverage at a risk class more favorable than the True Assessed Risk Class, the Ceding Company may: a. Reinsure the risk automatically under this Agreement with Reinsurance Premiums based on the True Assessed Risk Class; or b. Seek to reinsure the risk facultatively under this Agreement at rates more favorable than the True Assessed Risk Class; or c. Decide not to reinsure the risk under this Agreement. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 4 For purposes of this Agreement, "True Assessed Risk Class" shall mean the risk class assessed by the Ceding Company prior to any adjustments made as a result of the Ceding Company's Enhanced Standard or similar special underwriting program. 3. For any Excess Risk, if any risk on the life of a proposed insured was previously submitted by the Ceding Company on a facultative basis to the Reinsurer or to any other reinsurer, at least three (3) years must have elapsed since that previous risk was submitted facultatively, unless the original reason for submitting facultatively no longer applies. 4. The maximum issue age for each life is 85. For Last Survivor policies, the minimum issue age is 18, for all other policies, the minimum age is 0. 5. The mortality rating on each life does not exceed Table P. However, for Last Survivor policies, one life may be uninsurable if the other life does not exceed Table F. 6. For any Excess Risk, the total amount of risk on that life to be reinsured in the Automatic Pool and under any other individual life reinsurance agreement with any reinsurer does not exceed the Automatic Binding Limit for that life shown in Exhibit II. 7. For any Excess Risk, the total amount of risk on that life in force and applied for in all companies must not exceed the Jumbo Limit for that life shown in Exhibit II. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) Any amounts of risk being replaced by the Ceding Company may be deducted from this total amount of risk only under the following conditions: a. Existing permanent insurance is being replaced by the Ceding Company, with or without a Section 1035 exchange, and the Ceding Company has obtained a duly executed absolute assignment of the insurance being replaced; or b. Existing term insurance is being replaced by the Ceding Company, and the Ceding Company has obtained a duly executed absolute assignment of the insurance being replaced; or c. An internal replacement is being made, where the Ceding Company is replacing an in-force policy with a new policy of equal or greater death benefit. When the total amount in force and applied for, that is to be compared with the applicable Jumbo Limit, is reduced due to the above conditions, the Ceding Company assumes full responsibility to effect the cancellation of life insurance coverage under the replaced insurance concurrently with the commencement of coverage under the new policy. If the cancellation does not occur in a timely manner and the failure to cancel results in the new policy causing reinsurance coverage to exceed the applicable Jumbo Limit, then the Reinsurer may (when the Reinsurer becomes aware of the Jumbo Limit violation) decline reinsurance coverage on the new policy during the period of time while both policy coverages are in effect, by written notice to the Ceding Company. Once this notice has been given, the Reinsurer will have no liability for reinsurance coverage on the new policy while both policy coverages are in effect and shall refund to the Ceding Company all related Reinsurance Premiums for the new policy. However, if reinsurance coverage on the new policy is declined for this reason and the cancellation of life insurance coverage Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 5 under the replaced insurance is later effected, then, upon receipt of the Ceding Company's written notice to this effect, the Reinsurer will again become liable for reinsurance coverage on the new policy as of the effective date of cancellation of coverage under the replaced policy, and Reinsurance Premiums for the new policy will again be payable. 8. If all the other requirements for Automatic Reinsurance are met and the life is a player or coach on a team in the National Hockey League, the National Football League, the National Basketball Association or Major League Baseball, and: a. The risk is not an Excess Risk, then the Ceding Company shall notify the Reinsurer of this fact at the time of issue of the risk; or b. The risk is an Excess Risk, then, prior to ceding the risk automatically under this Agreement, the Ceding Company must confirm the Reinsurer's available capacity for that risk. The Ceding Company, by telephone call or electronic mail, shall: (1) notify the Reinsurer's Chief Underwriter, or designee, of the life's name, date of birth, sport and team affiliation, the total life insurance in force and to be placed on the life, and the amount of new reinsurance coverage required from the Reinsurer; and (2) confirm that an application for insurance on the life has been completed. The Reinsurer shall endeavor to inform the Ceding Company of its available capacity for the risk within two business days after such notification and confirmation. After the Reinsurer has advised the Ceding Company of the amount of its available capacity, the Ceding Company may then cede to the Reinsurer no more than that amount on an automatic basis under this Agreement. 9. The Ceding Company, or one of its affiliates, shall retain its share of each risk on a life, as described in this Agreement and in any other life reinsurance agreement applicable to risk on that life. However, the Ceding Company reserves the right to separately reinsure any amount of the retained risk on a life reinsured under this Agreement with these conditions: a. This right, as it pertains to such lives, applies only to groups of risks defined as cohorts of risks reinsured for at least five (5) years and issued either during a continuous period (such as one or more years) or under one or more Plans of Insurance shown in Schedule A, and does not apply to individual lives or to small, non-homogeneous groups of risks; b. The remaining amount of risk retained on that life by the Ceding Company, c. Any amounts of retention separately reinsured in this manner shall not reduce the amount of the Ceding Company's retention on that life for the purpose of any other terms of this Agreement. Notwithstanding the above, all policies issued under the Issue First program shall be deemed automatically reinsured. Issue First is a policy issuance program administered by the Ceding Company, under which a policy can be issued before the underwriting process has been completed. The Ceding Company shall provide notice to the Reinsurer of any material changes to the program. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 6 B. Automatic Processing If the requirements for Automatic Reinsurance are met for a life except for the requirement stated above in Section A.6, but the total amount of risk on that life to be reinsured in the Automatic Pool and under any other individual life reinsurance agreement with any reinsurer does not exceed the Automatic Processing Limit for that life shown in Exhibit II, then the Ceding Company may submit to the Lead Reinsurer (designated in Schedule B) all information relating to the insurability of that life. For Last Survivor policies where one life is deemed uninsurable, only the information for the other life needs to be submitted. The Lead Reinsurer shall review the submitted information to determine if the life should be reinsured by the Automatic Pool and, if so, on what basis. The Lead Reinsurer shall endeavor to provide the Ceding Company with a response within 72 hours of receipt of such information. Approval by the Lead Reinsurer shall be binding on all other current Automatic Pool reinsurers. This process shall be known as Automatic Processing and shall be subject to Exhibit II. Hereinafter, all references to Automatic Reinsurance, coverage automatically reinsured, and the Automatic Pool will include coverage reinsured through Automatic Processing. C. Facultative Reinsurance If the requirements for Automatic Reinsurance are not met and the Ceding Company applies for Facultative Reinsurance with the Reinsurer, or if the requirements for Automatic Reinsurance are met but the Ceding Company prefers to apply for Facultative Reinsurance with the Reinsurer, then the Ceding Company shall submit to the Reinsurer sufficient evidence agreed upon between the Ceding Company and the Reinsurer, relating to the insurability of each life submitted for Facultative Reinsurance. For Last Survivor policies where one life is deemed uninsurable, only the information for the other life needs to be submitted. The Reinsurer shall promptly notify the Ceding Company in writing of its declination to offer, its underwriting offer subject to additional requirements, or its final underwriting offer. The final underwriting offer will automatically expire upon the earliest of: (1) the date the policy application is withdrawn; (2) the expiration date specified in the final offer; (3) the date one hundred twenty (120) days after the date of the final offer; and (4) the date the final offer is accepted, provided such offer is accepted within the lifetime of the proposed insured(s). Once the Ceding Company has accepted the Reinsurer's final underwriting offer, then Facultative Reinsurance for the risk under this Agreement will become effective under this Agreement as described below in Article IV.C or Article IV.E, as applicable. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 7 ARTICLE IV LIABILITY FOR REINSURANCE A. The Reinsurer's liability for Automatic Reinsurance will begin simultaneously with the Ceding Company's liability, but in no event prior to the Reinsurance Effective Date. B. The Reinsurer's liability for any risk reported as reinsured on an automatic basis that did not meet the requirements for Automatic Reinsurance as specified in Article III shall be limited to a refund of any net Reinsurance Premiums paid under this Agreement with respect to such risk. Such refund shall be made without interest. C. The Reinsurer's liability under this Agreement for Facultative Reinsurance on a risk: 1. Shall be subject to the terms and conditions of the accepted final underwriting offer for that risk; and 2. Shall begin simultaneously with the Ceding Company's liability once: a. The Reinsurer has made a written final underwriting offer to the Ceding Company on its application for Facultative Reinsurance; and b. The Ceding Company has accepted the Reinsurer's final underwriting offer: (1) While life insurance coverage (if any) is in effect under the Ceding Company's Insurance Receipt, as provided below in Section E; or (2) Otherwise, by written acceptance provided to the Reinsurer. However, the Reinsurer reserves the right to rescind its liability under this Agreement for Facultative Reinsurance on such risk, by written notice to the Ceding Company, if the Ceding Company has not, within 240 days after the date of the final underwriting offer: 1. Reported the risk to the Reinsurer; or 2. Remitted the applicable first Reinsurance Premium for the risk. D. In no event shall reinsurance be in force and binding if the issuance and delivery of such insurance constituted the doing of business in a jurisdiction in which the Ceding Company knowingly was not properly licensed. E. The Reinsurer's liability for coverage under the Ceding Company's conditional receipt or temporary insurance agreement, whichever the Ceding Company uses (a copy of which has been provided to the Reinsurer and hereinafter called the "Insurance Receipt"), is limited to the amount the Reinsurer would reinsure under this Agreement on an Automatic Reinsurance basis, not to exceed the Insurance Receipt Limit for Basic TIA Coverage shown in Exhibit II, (whether the risk qualifies for Automatic Reinsurance or not) if the coverage under the policy applied for would have been approved and issued, as limited by the terms of the Insurance Receipt, provided: Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 8 1. The Ceding Company has followed its normal cash-with-application procedures for such coverage; and 2. The Ceding Company's original underwriting assessment for the risk was not a decline (if it was a decline, the Reinsurer would have no liability for such coverage except as described below in Paragraph 5); and 3. There is no coverage in effect on the life in the Automatic Pool through any other Insurance Receipt having an effective date preceding, or the same as, the effective date of such coverage; and 4. If such coverage is on a risk that also exceeds either the Automatic Binding Limit or the Jumbo Limit for the risk as shown in Exhibit II, then the Reinsurer's liability for such excess amount of coverage will be limited by the Reinsurer's available capacity; and 5. If the Ceding Company has accepted any final underwriting offer(s) for Facultative Reinsurance on the risk (whether such offer is made by the Reinsurer as described above in Section III.C. or by any other reinsurer(s)), then the Reinsurer's liability for such coverage under the Insurance Receipt will be equal to: a. The amount of coverage in effect under the terms of the Insurance Receipt; multiplied by b. The proportion equal to the amount of Facultative Reinsurance included in the Reinsurer's final underwriting offer that is accepted by the Ceding Company, divided by the total amount of the risk to be issued by the Ceding Company. In no event, however, will the Reinsurer have any liability under the Insurance Receipt once the Reinsurer has notified the Ceding Company in writing of its declination to offer Facultative Reinsurance coverage, as described above in Article III.C. The Reinsurer's liability for coverage under the Insurance Receipt shall terminate simultaneously with the termination of the Ceding Company's liability under the Insurance Receipt. F. The Reinsurer's liability for reinsurance on each risk will terminate when the Ceding Company's liability terminates, unless it terminates earlier as specified otherwise in this Agreement or later as a result of the full acceleration of the death benefit. G. The liability of each reinsurer in the Automatic Pool shall be separate and not joint with the other pool reinsurers. In no way will the liability of the Reinsurer be increased by reason of the inability of the Ceding Company to collect from any other reinsurers, whether specific or general, any amounts which may be due from them, whether such inability arises from insolvency of such other reinsurers or otherwise. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 9 ARTICLE V UNDERWRITING REVIEW A. Purpose of Underwriting Review For new business written by the Ceding Company that meets the requirements for Automatic Reinsurance, the Ceding Company intends to underwrite applications for such business as if the business were to be fully retained by the Ceding Company. Such business shall be underwritten according to the Ceding Company's standard underwriting practices and guidelines and as described in Schedules C and D, if applicable. The underwriting practices and professional judgment used by the Ceding Company in arriving at a risk assessment may not agree entirely with the underwriting practices customarily used by, or the professional judgment of, the Reinsurer under similar circumstances. It is the purpose of this review to: 1. Afford the Reinsurer a reasonable period of time to review the underwriting practices used, and risk assessments made, by the Ceding Company on automatically reinsured business; and 2. Settle on a risk assessment for a case that is mutually agreeable between the Parties and that shall be used to determine the Reinsurance Premiums for the risk from the beginning of the reinsurance liability under this Agreement for any such case reviewed by the Reinsurer within that period of time where the underwriting practices used or risk assessment made by the Ceding Company differ materially from the opinion of the Reinsurer. It is not the purpose of this review, nor is it within the authority of the Reinsurer under this Agreement, to deny reinsurance coverage on any automatically reinsured business written by the Ceding Company due to a difference of opinion over the risk assessment on a policy application. B. Underwriting Review Process 1. This review shall only be available to the Reinsurer during the first twenty-four (24) months following the effective date of any risk automatically reinsured under this Agreement. 2. For any risk reviewed during this period where the Reinsurer's opinion differs materially from that of the Ceding Company, the Parties shall work together in good faith to develop a mutually agreeable risk assessment to be used to calculate the Reinsurance Premiums for that risk from the beginning of the Reinsurer's liability for that risk under this Agreement. 3. For any risk reviewed during this period where the Parties cannot mutually agree on a risk assessment within a reasonable time period, the Parties shall submit the risk for dispute resolution under Article XVIII. 4. This review shall not be available and the Reinsurer may not challenge any risk Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 10 assessments made by the Ceding Company after this twenty-four (24) month period. However, nothing herein shall be construed to prevent Reinsurer from reviewing, at time of claim, all aspects of the underlying risk, including but not limited to financial and medical underwriting, for the purpose of confirming qualification of the risk for Automatic Reinsurance. C. Ceding Company's Responsibilities to the Reinsurer for Underwriting Review The Ceding Company shall provide to the Reinsurer all information in its possession, reasonably requested by the Reinsurer that was used in underwriting and assessing the risks for each qualifying case identified for review under this Article. This information to be provided to the Reinsurer may be transmitted using any medium agreed upon by the Parties; a valid copy of the information shall satisfy this purpose. This information shall be delivered to the Reinsurer within thirty (30) calendar days after the Ceding Company receives the request for the information, unless an alternative delivery period is agreed upon by the Parties. ARTICLE VI REINSURANCE PREMIUMS A. Computation Reinsurance Premiums under this Agreement shall be calculated as described in Exhibit I. B. Timing Reinsurance Premiums are payable each month of coverage for reinsured risks in force at the end of the preceding month. For newly reinsured risks with a reinsurance effective date during the current month, the Reinsurance Premium for the first month of coverage will be payable in the next following monthly statement. C. Extended Policy Maturity If the maturity date of a reinsured policy is extended in accordance with the policy, the death benefit under the policy will continue to be payable as provided in the policy, and the reinsurance under this Agreement will remain in effect on the same terms as before the policy's original maturity date. D. Unearned Reinsurance Premiums The Reinsurer will refund to the Ceding Company all unearned Reinsurance Premiums, less applicable allowances, arising from policy conversions, other changes, and terminations described in Article X. If termination is due to lapse, surrender or conversion, unearned Reinsurance Premium will be determined as of the effective date of termination. If termination is due to death, unearned Reinsurance Premium will be determined as of the date of death. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 11 E. Guaranteed Rates Although the Reinsurer anticipates continuing to accept Reinsurance Premium at the current rate level, the Reinsurer reserves the right to increase the YRT Reinsurance Rate Factors (described in Exhibit I) for any Plan of Insurance but in no event will the increased annual YRT Reinsurance Premium Rate, as defined in Exhibit I, for standard risks exceed the applicable annual rates in the Valuation Mortality Table specified in Schedule A for that Plan of Insurance. Such increased rates shall apply for policy years beginning during the fifth calendar year after the calendar year during which the Ceding Company receives written notice of the rate increase. The Reinsurer and the Ceding Company shall then endeavor in good faith to mutually agree on the amount of rate increase that shall apply to that specific Plan of Insurance. If the Parties cannot agree on the amount of such rate increase for a Plan of Insurance, then the Ceding Company reserves the right to recapture the risks associated with such Plans of Insurance without fee, as of the effective date of the rate increase. Written notice of such recapture shall be provided to the Reinsurer no later than thirty (30) days following the effective date of the rate increase. F. Payment of Reinsurance Premiums The Net Reinsurance Premium Balance payable each month equals the sum of the Reinsurance Premiums described above in Section A, minus the sum of any unearned Reinsurance Premiums described above in Section D. For any month, this net balance may be positive (greater than zero) or negative. Any positive Net Reinsurance Premium Balance for a month is payable to the Reinsurer. The Ceding Company shall forward this balance to the Reinsurer by its due date, which is thirty (30) days after the close of the calendar month. The absolute value of any negative Net Reinsurance Premium Balance for a month is payable to the Ceding Company. The Reinsurer shall forward this balance to the Ceding Company by its due date, which is thirty (30) days after the Ceding Company submits the statement for that month. G. Overpayment of Reinsurance Premiums If the Ceding Company overpays a Net Reinsurance Premium Balance and the Reinsurer accepts the overpayment, the Reinsurer's acceptance of the overpayment will not constitute or create an additional reinsurance liability, and it will not result in any additional reinsurance. Instead, the Reinsurer shall be liable to the Ceding Company for a credit in the amount of the overpayment without interest. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 12 H. Underpayment of Reinsurance Premiums If the Ceding Company fails to make a full payment of the Net Reinsurance Premium Balance, due to an Error defined in Article IX, the amount of reinsurance coverage provided by the Reinsurer on the risks related to such underpayment shall not be reduced. However, once the underpayment is discovered by one Party and the other Party is notified of the underpayment, the Ceding Company shall promptly pay to the Reinsurer the difference between the full payment amount and the amount actually paid. If payment of the full amount of the underpayment is not made to the Reinsurer within sixty (60) days after such discovery, the underpayment shall be treated as delinquent premium and be subject to the conditions listed below in Section I. The Reinsurer reserves the right to charge the Ceding Company interest on the amount of the underpayment, even if it becomes delinquent as described below in Section I. Such interest will accrue from the due date of the underpaid Net Reinsurance Premium Balance and be computed as described in Section XXII.P. I. Termination of Reinsurance for Nonpayment of Reinsurance Premiums If undisputed Reinsurance Premiums for one or more reinsured risks are delinquent, the Reinsurer has the right to terminate its reinsurance liability on those risks by giving the Ceding Company sixty (60) days advance written notice of termination. This notice shall list the risks and the amount of the delinquent Reinsurance Premium for each risk. If the delinquent Reinsurance Premiums have not been paid to the Reinsurer as of the end of such notice period, the Reinsurer's liability will terminate for the risks described in the termination notice at the end of such notice period. If the Reinsurer's liability on one or more of the Ceding Company's risks is terminated because of nonpayment of Reinsurance Premiums, the Ceding Company will continue to be liable to the Reinsurer after the termination for all unpaid Reinsurance Premiums earned up to the date of such termination. The Ceding Company shall not force termination under the provisions of this Section I solely to avoid the recapture requirements or to transfer the block of business reinsured to another reinsurer. J. Reinstatement of Reinsurance Terminated for Nonpayment of Reinsurance Premiums The Ceding Company may reinstate reinsurance on risks terminated in accordance with Section I within sixty (60) days after the effective date of termination by paying the unpaid Reinsurance Premiums for the risks in force prior to the termination. However, the Reinsurer will not be liable for any claim incurred between the date of termination and the date of reinstatement of the reinsurance coverage. The effective date of reinstatement will be the date the required unpaid Reinsurance Premiums are received by the Reinsurer. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 13 ARTICLE VII REINSURANCE REPORTING A. Accounting Statements and Other Reports Within thirty (30) days after the close of each calendar month the Ceding Company shall provide the Reinsurer an electronic accounting statement. The Ceding Company shall also provide the Reinsurer with additional reports as provided in Exhibit VI. For Automatic and Facultative Reinsurance becoming effective during the calendar month, the Ceding Company will notify the Reinsurer of such new reinsurance business in the succeeding monthly report. The Ceding Company may provide an estimated Net Amount at Risk for new reinsurance business in the first monthly report in which such business appears. In the event that the Ceding Company provides an estimated Net Amount at Risk, it shall provide an actual Net Amount at Risk in subsequent monthly reports. Additional reports reasonably requested by a Party will be provided by the other Party in a timely manner. B. Reporting Format and Medium The information to be provided by the Ceding Company in these monthly reports to the Reinsurer shall be in a format and be transmitted using a medium mutually agreeable to the Parties. As of the Effective Date of this Agreement, the information to be provided by the Ceding Company in these monthly reports to the Reinsurer shall be on a self-administered reporting basis as set out in Exhibit VI. ARTICLE VIII CREDIT FOR REINSURANCE A. Reinsurance Credit The Parties intend that the Ceding Company be entitled to take credit for the reinsurance ceded under this Agreement in its statutory financial statements filed in all jurisdictions in which the Ceding Company is licensed, accredited, or otherwise authorized to transact business ("Reinsurance Credit"). The Parties shall use best efforts to ensure that such entitlement shall become and remain available to the Ceding Company throughout the duration of this Agreement. The amount of the Reinsurance Credit shall be determined by the Ceding Company and shall include mortality risk reserves, unearned premium reserves, and reinsurance recoverables on paid and unpaid losses for the reinsurance ceded under this Agreement. Such amounts shall be calculated in accordance with applicable accounting and valuation laws, regulations and actuarial guidelines to which the Ceding Company is subject on each valuation date and shall take into account the terms of this Agreement. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 14 B. Security for Reinsurance Credit In the event the Ceding Company reasonably believes it will not be entitled to take Reinsurance Credit as a result of a change to the Reinsurer's licensing or accreditation, the Reinsurer shall establish and maintain the security, at its sole expense, that is needed to allow the Ceding Company to continue to take Reinsurance Credit and that meets all applicable laws and regulations regarding Reinsurance Credit. In the event the Ceding Company reasonably believes it will not be entitled to take Reinsurance Credit as a result of a regulatory change or interpretation outside of the Reinsurer's control, the Reinsurer shall establish and maintain the security that is needed to allow the Ceding Company to continue to take Reinsurance Credit and that meets all applicable laws and regulations regarding Reinsurance Credit. In this event, the expense of establishing and maintaining the security shall be shared equally by the Ceding Company and the Reinsurer. If such security is required in either event, the Reinsurer shall establish a trust or a letter of credit, satisfactory to the Ceding Company, in a form that meets all applicable standards of law and regulation to entitle the Ceding Company to claim such Reinsurance Credit. However, the Reinsurer may propose an alternative option under which Reinsurance Credit shall be allowed the Ceding Company, at the sole discretion and approval of the Ceding Company. The Parties shall amend this Agreement, in accordance with Section I.B, to reflect the establishment of such security or such approved alternative option so that the Ceding Company shall continue to be entitled to take such Reinsurance Credit. If the Reinsurer fails to provide the Ceding Company with such security or approved alternative option needed to continue to be entitled to take such Reinsurance Credit for the business covered under this Agreement, the Ceding Company may recapture the business covered under this Agreement, subject to the terms of Article XVI. In no event shall recapture be construed to be the exclusive remedy of the Ceding Company. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 15 ARTICLE IX ERRORS Errors, omissions, oversights, delays or misunderstandings in the administration of this Agreement (collectively, "Error") by either Party, shall not invalidate the reinsurance hereunder. As soon as reasonably possible after discovery, notice shall be provided, the Error shall be rectified and both Parties shall be restored, to the extent possible, to the position they would have occupied had the Error not occurred. However, if it is not reasonably possible to restore each Party to the position it would have occupied if not for the Error, the Parties will endeavor in good faith to promptly resolve the situation in a manner that is fair and reasonable, and most closely approximates the intent of the Parties as evidenced by this Agreement. ARTICLE X POLICY CONVERSIONS, OTHER CHANGES, AND TERMINATIONS A. Conversions A conversion is a policyholder's exercise of a contractual right to replace in-force coverage with a new permanent policy without evidence of insurability. Conversions from a policy reinsured under this Agreement will continue to be reinsured under this Agreement as follows: 1. The converted coverage under the new policy will be reinsured with the Reinsurer in the same proportion as was determined for the in-force coverage converted; and 2. Reinsurance Premiums for such converted coverage shall be calculated on a point-in-scale basis. If the new policy was converted under the Conversion Option Rider from either (a) two single life policies reinsured under this Agreement; or (b) one single life policy reinsured under this Agreement and one newly underwritten life, to a last survivor policy, Reinsurance Premiums for both lives shall be calculated on a point-in-scale basis. The Reinsurance Premiums for both lives shall be calculated using the tables of Annual Rates per $1,000 of Reinsured Net Amount at Risk and table of YRT Reinsurance Rate Factors applicable to the earliest original coverage in accordance with the procedures set out in Exhibit I. Conversions from a policy not reinsured under this Agreement shall not be reinsured under this Agreement. Notwithstanding the foregoing, face amount increases on conversions from term plans reinsured by the Reinsurer under another reinsurance agreement to plans of insurance covered under this Agreement shall be reinsured under this Agreement. The Reinsurer shall reinsure such increases using new-business rates. B. Increases and Decreases in Policy Face Amount 1. If the face amount of a policy reinsured under this Agreement increases and: a. The increase is subject to full underwriting, then the provisions of Article III shall apply to the increase in reinsurance, and Reinsurance Premiums for the increase shall be based on new-business rates; or Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 16 b. The increase is not subject to full underwriting, the Reinsurer will accept the increase, provided that: (1) If the policy was ceded automatically, the Ceding Company underwrote the full face amount (including all scheduled increases) in accordance with the terms of this Agreement (whether through Automatic Reinsurance or Automatic Processing); or (2) If the policy was ceded facultatively, the Ceding Company received approval from the Reinsurer for the full face amount (including all scheduled increases) at the time of facultative application. Reinsurance Premiums for increases not subject to full underwriting shall be calculated on a point-in-scale basis. c. For increases in accordance with B.1.b, the Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined for the increase at the time the increase goes into effect, as follows: (1) For increases in accordance with B.1.b (1), in accordance with Schedule B; or (2) For increases in accordance with B.1.b (2), the Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined by mutual agreement of the Parties. 2. If the face amount of a policy reinsured under this Agreement decreases and: a. If the face amount of a policy that was previously increased is subsequently decreased, the decrease will be applied first to the increase with the latest effective date, and then to the increase with the next earlier effective date, and so forth as necessary, until applying any remaining decrease to the initial face amount of the policy. b. The Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined at the time the decrease goes into effect, as follows: (1) For decreases under policies ceded automatically, in accordance with Schedule B; or (2) For decreases under policies ceded facultatively, the amount of the risk reinsured to the Reinsurer shall be reduced proportionately. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 17 C. Policy Exchanges and Other Changes A policy exchange is a new policy replacing an existing policy where the new policy is not fully underwritten. Exchanges from one single life policy reinsured under this Agreement to a different single life policy will be reinsured on a point-in-scale basis. Likewise, exchanges from one last survivor policy reinsured under this Agreement to a different last survivor policy will be reinsured on a point-in-scale basis. Exchanges from a last survivor policy reinsured under this Agreement with the Last Survivor Exchange Option Rider or Twenty-Four (24) Month Exchange Rider to two single life policies will be reinsured, if both risks under the Last Survivor policy were fully underwritten (and neither was deemed to be uninsurable) and the total face amount of the two new Single Life policies does not exceed the face amount of the Last Survivor policy. In this event, the new Single Life policies shall be reinsured on a point-in-scale basis at the applicable single life rates. For each new policy after the exchange, the insurance will continue to be reinsured by the Reinsurer in the same proportions as set at issue of the original coverage. If there is a contractual change in a policy reinsured under this Agreement that is not subject to full underwriting, other than the changes described above in Sections A and B, the insurance shall continue to be reinsured with the Reinsurer in the same proportions as the original coverage and Reinsurance Premiums for contractual changes shall be calculated on a point-in-scale basis. The Ceding Company shall notify the Reinsurer of any such changes in policies reinsured under this Agreement in its monthly reinsurance reports. Exchanges made from a policy not reinsured under this Agreement shall not be reinsured under this Agreement. D. Policy Terminations and Lapses If a policy reinsured under this Agreement terminates, the reinsurance for the risk will terminate as of the effective date of policy termination. Notwithstanding the foregoing, if a policy is deemed to have terminated as a result of full acceleration of the death benefit, the corresponding reinsurance on the policy will continue as specified in Section IV.F. If a policy reinsured under this Agreement lapses to extended term insurance under the terms of that policy, the corresponding reinsurance on the reinsured policy will continue on the same basis as the original reinsurance until the expiry of the extended term period. If a policy reinsured under this Agreement lapses to reduced paid-up insurance under the terms of that policy, the amount of the corresponding reinsurance on the reinsured policy will be reduced according to the terms of Section B.2. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 18 If the Ceding Company allows a policy reinsured under this Agreement to remain in force under its automatic premium loan provisions, the corresponding reinsurance on the reinsured policy will continue unchanged and in force as long as such provisions remain in effect, except as otherwise provided in this Agreement. E. Reduction in Retained Coverage on a Life If any portion of the aggregate amount of insurance retained by the Ceding Company or its affiliates on an individual life reduces or terminates, the Ceding Company or its affiliates will recalculate its retention on any remaining risk(s) in force on that life. The Ceding Company or its affiliates will not be required to retain an amount in excess of its retention limit for the age, mortality rating, and risk classification based on the applicable retention limit that was in effect at the time of issue for any risk. Unless provided for otherwise in the applicable reinsurance agreements, the Ceding Company or its affiliates will first recalculate the retention on the risk(s) having the same mortality rating as the terminated risk(s). Order of recalculation will secondarily be determined by effective date of the risk, oldest first. F. Multiple Reinsurers If reinsurance of a risk is shared by more than one reinsurer, the Reinsurer's percentage of any increased or reduced reinsurance will be the same as its initial percentage of the reinsurance for that risk unless specified otherwise in Schedule B or agreed upon by the Reinsurer. G. Mortality Rating Changes On Facultative Reinsurance, if the Ceding Company wishes to reduce the mortality rating or otherwise improve the risk class, such change shall be subject to the Reinsurer's approval. On Automatic Reinsurance, the Reinsurer shall accept this change if the change qualifies under the underwriting practices and guidelines described in the Ceding Company's standard practices and guidelines and Schedules C or D, as applicable. H. Rescission of Policy Coverage Prior to Death Claim If a misrepresentation, misstatement, or omission on an application results in the Ceding Company's rescission of coverage, the Reinsurer shall refund to the Ceding Company any Reinsurance Premiums it received on that coverage. This refund shall be in lieu of any and all other reinsurance benefits payable on that coverage under this Agreement. The Reinsurer shall also reimburse the Ceding Company for its proportionate share of any non-routine expenses incurred by the Ceding Company in connection with the rescission. Such non-routine expenses shall include the costs of investigations and of obtaining financial and medical reports; they would not include the compensation of salaried officers and employees of the Ceding Company. The Ceding Company shall promptly notify the Reinsurer in the event a rescission is challenged by legal action. The Ceding Company shall also furnish to the Reinsurer copies of all information related to such action. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 19 Recognizing the urgent nature of these communications, within eight (8) business days of receipt of such information, the Reinsurer shall notify the Ceding Company in writing of the Reinsurer's decision whether or not it shall participate in the defense of the rescission. If the Reinsurer does not respond to the Ceding Company within such eight (8) business day period, the Reinsurer will be deemed to have elected to participate in the defense of the rescission. If the Reinsurer elects or is deemed to have elected to participate in the defense of the rescission, the Reinsurer shall also reimburse the Ceding Company for its proportionate share of court costs and legal expenses incurred by the Ceding Company in connection with the defense of the rescission of coverage. If a rescission of policy coverage is reversed and the policy coverage is restored to in-force status, any related reinsurance coverage under this Agreement shall also be restored upon the Ceding Company's payment to the Reinsurer of all applicable Reinsurance Premiums. ARTICLE XI POLICY REINSTATEMENT If a policy reinsured under this Agreement lapses or terminates, and is later reinstated under the Ceding Company's terms and rules, the Reinsurer will reinstate the reinsurance as follows: A. Procedure to Reinstate Reinsurance If the policy being reinstated was reinsured on an automatic basis under this Agreement, or if the policy being reinstated was reinsured on a facultative basis under this Agreement and the reinstatement occurs less than ninety (90) days after the policy has lapsed or terminated, the reinsurance cession shall be automatically reinstated. If the policy being reinstated was reinsured on a facultative basis under this Agreement and the reinstatement occurs ninety (90) days or more after the policy has lapsed or terminated, copies of the application for reinstatement, any personal declaration or medical examination, and any other underwriting documents that the Ceding Company routinely requires (collectively, "Underwriting Information") shall be forwarded by the Ceding Company to the Reinsurer, together with the request for reinstatement of the reinsurance. The Reinsurer shall notify the Ceding Company promptly of its acceptance or declination of the request for reinstatement. The Reinsurer reserves the right to request any available Underwriting Information on any reinstatement. Reinsurance Premiums for a reinstated policy will be calculated on a point-in-scale basis. B. Cost to Reinstate Reinsurance Upon reinstatement of reinsurance under this Article, the Ceding Company shall pay the Reinsurer Reinsurance Premiums in the same manner as the Ceding Company received corresponding policy charges under the policy for the period of lapse. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 20 The Reinsurer reserves the right to charge the Ceding Company interest on such Reinsurance Premiums in accordance with Section XXII.P. C. Nonforfeiture Reinsurance Termination If the Ceding Company reinstates a policy that is reinsured while under an extended term or reduced paid-up nonforfeiture option, then reinsurance under such nonforfeiture option will terminate upon policy reinstatement. ARTICLE XII CLAIMS A. Liability for Claims The Ceding Company is responsible for the settlement of claims on policies reinsured under this Agreement. It is the Ceding Company's sole decision to determine whether a claim is payable under a policy. The Ceding Company shall operate in good faith and adjudicate claims on policies reinsured under this Agreement as if there were no reinsurance. All claim settlements on policies reinsured hereunder will be subject to the terms and conditions of the particular policy, the applicable statutory requirements, and the standard claim practices of the Ceding Company. The Ceding Company's decision to pay a claim, provided the Ceding Company has complied with the terms of this Agreement, shall be binding on the Reinsurer, and the Reinsurer shall be liable for its portion of the reinsurance on that risk, as described in Schedule B. B. Notification of Claims The Ceding Company shall promptly notify the Reinsurer when it is advised of a death claim on coverage reinsured under this Agreement. C. Claim Payment 1. Proofs If a death claim is made under a risk reinsured under this Agreement, the Ceding Company shall provide the Reinsurer with copies of proof(s) of death of the insured(s), proof of claim payment, and the claimant's statement (collectively "Proofs"). Copies of claim files, underwriting files and other documents relating to a claim payment under this Agreement shall be furnished to the Reinsurer upon written request. 2. Payment of Reinsurance Proceeds The Reinsurer shall pay the Ceding Company reinsurance proceeds on claims for which it is liable, on claims made under policies eligible for reinsurance under this Agreement. The due date for such payment is the date thirty (30) days after the date that the Reinsurer has received the Proofs and other information reasonably requested by the Reinsurer. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 21 The Reinsurer shall also reimburse the Ceding Company for its proportionate share of non-routine claims expenses (defined below in Section G) and any interest paid by the Ceding Company on such claims, such proportion based on the Reinsurer's proportionate share of the Total Net Amount at Risk of the coverage, as defined in Schedule B. Interest paid by the Ceding Company on such claims shall be in accordance with the policy provisions and applicable state requirements. Payment of reinsurance proceeds will be made to the Ceding Company in a single sum, regardless of the Ceding Company's mode of settlement with the payee under the policy. 3. Claim Balances in Default If the Reinsurer is delinquent by more than thirty (30) days on an undisputed amount due to the Ceding Company relating to a claim: a. The Ceding Company shall have the right to charge interest on delinquent amounts in accordance with Section XXII.P; b. The Ceding Company shall have the right to offset such amount, including any accrued interest charged by the Ceding Company, from any amount due the Reinsurer in accordance with Article XVII; and c. To the extent there is an insufficient balance from which to offset such amounts, the Ceding Company shall have the right to recapture the remaining reinsurance under this Agreement, as described in Article XVI, provided the Ceding Company has given the Reinsurer ninety (90) days advance written notice of its intent to recapture and the Reinsurer has failed to pay the net amount due, including any accrued interest charged by the Ceding Company, by the end of such notice period. In no event shall recapture be construed to be the exclusive remedy of the Ceding Company. D. Contested Claims 1. The Ceding Company shall promptly notify the Reinsurer of its intent to deny, reduce, compromise, contest, litigate, or assert defenses against (collectively, "Contest") a claim on a risk reinsured under this Agreement. The Ceding Company shall also furnish all information material to such action. Recognizing the urgent nature of these communications, within eight (8) business days of receipt of all such information (the "Contested Claim Review Period"), the Reinsurer shall notify the Ceding Company in writing of the Reinsurer's decision whether or not it shall participate in the Contest. If the Reinsurer does not respond to the Ceding Company within the Contested Claim Review Period, the Reinsurer will be deemed to have elected to participate in the Contest. 2. If the Reinsurer elects or is deemed to have elected to participate in the Contest, then: a. The Ceding Company will advise the Reinsurer of all significant developments, including notice of legal proceedings initiated in connection with the contested claim at reasonable intervals until the claim is resolved; Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 22 b. The Reinsurer shall pay its proportionate share of the settlement of the claim, such proportion based on the Reinsurer's proportionate share of the Total Net Amount at Risk of the coverage, as defined in Schedule B, and in accordance with Article XIII; and c. The Reinsurer shall also share in the non-routine claims expenses (defined below in Section G) and Extra-Contractual Obligations, as defined in Article XIII, associated with the Contest in the same proportion as stated above in Paragraph b. 3. If the Reinsurer declines to participate in the Contest of the claim, then: a. The Reinsurer shall release all of its liability under this Agreement for the claim by paying the Ceding Company the full amount of its reinsurance coverage under this Agreement for the claim as though there were no Contest and its proportionate share of non-routine claims expenses (defined below in Section G) incurred to the date on which the Reinsurer notifies the Ceding Company that it declines to be a party to the action, in the same proportion as stated above in Paragraph 2.b; and b. The Reinsurer shall not share in any subsequent increase or decrease in liability for the claim. 4. The Reinsurer will not recommend that the Ceding Company contest a claim. E. Misstatement of Age or Sex If the amount of insurance provided by the policy or policies reinsured under this Agreement is increased or decreased because of misstatement of age or sex that is established after the death of the insured (or the second death in the case of a last survivor policy), the Reinsurer will share with the Ceding Company in this increase or decrease of insurance in proportion to the Reinsurer's share of the Total Net Amount at Risk, as defined in Schedule B. The amount will be adjusted from the inception of the policy, and any difference in amounts due between the Parties under this Agreement will be settled without interest. The Reinsurer's proportionate share will be equal to share of the Total Net Amount at Risk of the increase or decrease, as defined in Schedule B. F. Return of Premium for Misrepresentations and Suicides 1. If a misrepresentation, misstatement, or omission on an application, or the death of an insured by suicide, results in the Ceding Company returning the policy premiums (or monthly deductions) to the policy owner rather than paying the death benefits under a risk reinsured under this Agreement, the Reinsurer shall refund to the Ceding Company all of the Reinsurance Premiums it received on that coverage without interest. This refund paid by the Reinsurer shall be in lieu of any and all other reinsurance benefits payable on that risk under this Agreement. 2. In addition, the Reinsurer shall pay its proportionate share of reasonable third-party investigation and legal expenses connected with the Ceding Company's decision to return the policy premiums (or monthly deductions) as described above in Section F.1. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 23 G. Claims Expenses 1. Routine Claims Expenses The Ceding Company shall pay routine expenses incurred in connection with settling claims. These expenses may include the compensation of agents and employees, and the expense of routine investigations. 2. Non-Routine Claims Expenses The Reinsurer will participate in non-routine claims expenses, defined as the expenses incurred by the Ceding Company in connection with the Contest, or potential Contest, of a claim. These non-routine claims expenses may include court costs and investigation, autopsy and legal expenses; they would not include the compensation of salaried officers and employees of the Ceding Company. However, if the Reinsurer declines to participate in the Contest of a claim as described above in Section D.3, the Reinsurer will not share in any non-routine expenses for the claim that are incurred after the date of the Reinsurer's release. 3. Claims expenses do not include expenses incurred by the Ceding Company as a result of a dispute or contest arising out of conflicting claims of entitlement to policy proceeds. ARTICLE XIII EXTRA-CONTRACTUAL OBLIGATIONS In no event will the Reinsurer have any liability for any Extra-Contractual Obligations that are awarded against the Ceding Company as a result of acts, omissions, or course of conduct committed solely by the Ceding Company with no involvement of the Reinsurer in connection with the business reinsured under this Agreement. The Reinsurer will, however, to the extent permitted by law, pay its share of Extra-Contractual Obligations awarded against the Ceding Company in connection with the business reinsured under this Agreement if the Reinsurer agreed in writing to the act or course of conduct of the Ceding Company that resulted in the assessment of such damages. For the purposes of this Agreement, "Extra-Contractual Obligations" shall mean any punitive, exemplary, compensatory, consequential or other damages paid or payable by the Ceding Company as a result of an action arising under, relating to, or in connection with a Contest. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 24 ARTICLE XIV DAC TAX SECTION 1.848-2(G)(8) ELECTION The Ceding Company and the Reinsurer jointly agree to the DAC Tax Election pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations (the "Treasury Regulations") issued under Section 848 of the Internal Revenue Code of 1986, as amended (the "Code"). As used in this Article, the terms "net positive consideration," "net consideration," "specified policy acquisition expenses," and "general deductions limitation" are defined by reference to Treasury Regulations Section 1.848-2(g)(8) and Code Section 848 as of the Effective Date. As part of this DAC Tax Election, both Parties agree: A. That the Party with the net positive consideration for this Agreement for each taxable year will capitalize specified policy acquisition expenses with respect to this Agreement without regard to the general deductions limitation of Code Section 848(c)(1); B. To exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency; and C. That the method and timing of the exchange of this information shall be as follows: 1. The Ceding Company shall submit a schedule to the Reinsurer by May 1 of each year with its calculation of the net consideration for the preceding calendar year. 2. The Reinsurer shall, in turn, complete the schedule by indicating acceptance of the Ceding Company's calculation of net consideration or shall note in writing any discrepancies, and then return the completed schedule to the Ceding Company by June 1 of each year. 3. If there are any discrepancies between the Ceding Company's and the Reinsurer's calculations of net consideration, the Parties shall act in good faith to resolve these discrepancies in a manner that is acceptable to both Parties by July 1 of each year. 4. Each Party shall attach the final schedule to its respective U.S. federal income tax return for each taxable year in which consideration is transferred under this Agreement. The schedule shall identify this Agreement, shall restate the election described in this Article, and shall be signed by a duly authorized representative of each Party. D. This DAC Tax Election shall be effective on the Effective Date of this Agreement and shall be effective for all years for which this Agreement remains in effect. E. The Ceding Company and the Reinsurer each represent and warrant that they are subject to U.S. taxation under the provisions of either Subchapter L of Chapter 1 or Subpart F of Part III of Subchapter N of Chapter 1 of the Code. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 25 F. Should the Reinsurer breach the representation and warranty of tax status set forth in this Article, the Reinsurer agrees to indemnify and hold the Ceding Company, its directors, officers, employees, agents, and shareholders harmless from any and all liability, loss, damages, fines, penalties, interest, and reasonable attorney's fees that the Ceding Company, its directors, officers, employees, agents, and shareholders may sustain by reason of such breach. ARTICLE XV INSOLVENCY A. Insolvency of the Ceding Company In the event of the insolvency of the Ceding Company, as determined by the regulatory agency responsible for such determination, all reinsurance will be payable by the Reinsurer on the basis of the liability of the Ceding Company under policies reinsured under this Agreement directly to the liquidator, receiver or statutory successor of the Ceding Company, without diminution because of the insolvency of the Ceding Company. In the event of the insolvency of the Ceding Company, the liquidator, receiver or statutory successor will give written notice to the Reinsurer of all pending claims against the Ceding Company on any policy reinsured under this Agreement within a reasonable time after such claim is filed in the insolvency proceeding. While a claim is pending, the Reinsurer may investigate and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses which it may deem available to the Ceding Company or its liquidator, receiver or statutory successor. The expenses incurred by the Reinsurer will be chargeable, subject to court approval, against the Ceding Company as part of the expense of the insolvent the Ceding Company to the extent of a proportionate share of the benefit which may accrue to the Ceding Company solely as a result of the defense undertaken by the Reinsurer. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose a defense or defenses to any such claim, the expense will be apportioned in accordance with the terms of this Agreement as though such expense had been incurred by the Ceding Company. Insolvency of one Ceding Company shall not affect this Agreement as it relates to the solvent Ceding Company. B. insolvency of the Reinsurer In the event of Reinsurer's insolvency, as determined by the regulatory agency responsible for such determination, the Ceding Company may recapture all of the inforce policies reinsured under this Agreement by giving written notice to the Reinsurer of its intent to do so. The effective date of recapture will be no earlier than the effective date of the Reinsurer's insolvency. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 26 ARTICLE XVI RECAPTURE OF REINSURED BUSINESS The Ceding Company has the right to recapture risks reinsured under this Agreement as described under the following circumstances: (1) If the Ceding Company does not agree with the rate increase on a Plan of Insurance in accordance with Section VI.E; (2) With sixty (60) days advance written notice to the Reinsurer, for risks reinsured under this Agreement for at least twenty (20) years; (3) If the Reinsurer fails to provide security in accordance with Section VIII.C; (4) If the Reinsurer is delinquent on payment of an undisputed net amount due in accordance with Section XII.C.3; or (5) If the Reinsurer is deemed insolvent, in accordance with Article XV. In the event recapture is elected based on Section A (1) or (2) described above, no recapture fees are due and no reserves will be transferred. In the event recapture is based on any of the other circumstances described in Section A above: 1. The Ceding Company and the Reinsurer shall mutually agree upon the recapture terms -- however, if no such agreement can be reached, an independent actuary shall be hired to determine the value of the business to be recaptured. The costs of the independent actuary will be shared equally between the Ceding Company and the Reinsurer; 2. The value of the business to be recaptured will be based on reasonable actuarial assumptions as to interest, mortality, and lapse rates; and 3. Other actuarial assumptions and considerations used to value the business to be recaptured shall include, but not be limited to: a. Projected future claims costs; b. Projected future Reinsurance Premiums; c. Statutory reserve requirements; d. NAIC risk based capital and/or other capital measures, which are reflective of statutory capital levels, that should be maintained for an insurance company with financial strength ratings comparable to those of the Ceding Company; and e. Any other considerations considered relevant by the Parties or the independent actuary. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 27 ARTICLE XVII OFFSET Any undisputed debts or credits, in favor of or against either the Reinsurer or the Ceding Company, with respect to this Agreement between the Parties, are deemed mutual debts or credits and may be offset, and only the balance will be allowed or paid provided the Party that seeks to avail itself of this right of offset is not in breach of any provision of this Agreement. To the extent permitted by applicable law, the right of offset will not be affected or diminished because of the insolvency of either Party. ARTICLE XVIII DISPUTE RESOLUTION In the event that any dispute between the Parties under this Agreement cannot be resolved to mutual satisfaction, the dispute will first be subject to good-faith negotiation, as described below, in an attempt to resolve the dispute without the need to institute formal arbitration proceedings. Within ten (10) calendar days after one of the Parties has given the other the first written notification of the specific dispute, each of the Parties will appoint a designated officer to attempt to resolve the dispute. The designated officers will meet at a mutually agreeable location as early as possible and as often as necessary, in order to discuss the dispute and to negotiate in good faith without the necessity of any formal arbitration proceedings. During the negotiation process, all reasonable requests made by one officer to the other for information will be honored. The designated officers will decide the specific format for such discussions. If the designated officers cannot resolve the dispute within thirty (30) calendar days of their first meeting, both Parties agree that they will submit the dispute to formal arbitration. However, the Parties may agree in writing to extend the negotiation period for an additional thirty (30) calendar days. No later than fifteen (15) calendar days after the final negotiation meeting, the designated officers taking part in the negotiation will give both Parties written confirmation that they are unable to resolve the dispute, and that they recommend establishment of formal arbitration in accordance with Article XIX. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 28 ARTICLE XIX ARBITRATION It is the intention of the Parties that the customs and practices of the life and health insurance and life and health reinsurance industries will be given full effect in the operation and interpretation of this Agreement. The Parties agree to act in all matters with good faith. However, if, in accordance with Article XVIII, the Parties cannot mutually resolve a dispute that arises out of or relates to this Agreement, the dispute will be decided through arbitration as follows: An arbitration panel consisting of three past or present officers of life and health insurance or life and health reinsurance companies not affiliated with either of the Parties in any way will settle the dispute. Each Party will appoint one arbitrator within thirty (30) calendar days of the demand for formal arbitration and the two so appointed shall then appoint the umpire. If either Party refuses or neglects to appoint an arbitrator within the thirty (30) calendar days, the other Party may appoint the second arbitrator. If the two arbitrators cannot agree on the umpire within thirty (30) calendar days after both arbitrators have been appointed, each of the two arbitrators shall nominate three individuals within ten (10) calendar days thereafter. Each arbitrator shall then decline two of the nominations presented by the other arbitrator. The umpire shall be chosen from the remaining two nominations by drawing lots. Within thirty (30) calendar days after the appointment of the umpire, the arbitration panel shall meet and determine timely periods for briefs, discovery procedures, and schedules for hearings. The arbitration shall take place at a location determined by the arbitration panel and, insofar as the arbitration panel looks to the substantive law, it shall consider the laws of the state of Connecticut. The arbitration panel shall have the power to set all procedural rules for the arbitration, including the discretion to make any order with respect to pleadings, discovery, depositions, scheduling, the hearing, reception of evidence and any other matter whatsoever relating to the conduct of the arbitration. Within sixty (60) calendar days after the beginning of the arbitration proceedings the arbitration panel will issue a written, reasoned, decision on the dispute and a statement of any award to be paid as a result. The decision will be based on the terms and conditions of this Agreement as well as the usual customs and practices of the insurance and reinsurance industry, rather than on strict interpretation of the law. The decision will be final and binding on both Parties and there will be no further appeal. Judgment upon the award may be entered in any court having jurisdiction thereof. In the absence of a decision to the contrary by the arbitration panel, each Party shall bear the expense of its own arbitration activities, including, but not limited to, its appointed arbitrator's fees, outside attorney fees, witness fees, expenses incurred in the taking or preservation of testimony, and other related expenses. The Parties shall jointly and equally bear the expense of the third arbitrator and other costs directly attended to the arbitration proceeding, provided that neither Party's liability for such costs shall ever exceed 50% of the total of such costs, regardless of the other Party's failure to pay. The Parties may mutually agree to extend any of the periods shown in this Article. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 29 ARTICLE XX TERMINATION OF THIS AGREEMENT FOR NEW BUSINESS A. Either Party may terminate this Agreement, as it applies to the reinsurance of new policies being issued by the Ceding Company: (1) immediately upon written notice to the other Party, if that other Party becomes insolvent as described in Article XV; or (2) with ninety (90) days advance written notice to the other Party. B. After termination of this Agreement for new business, the Parties shall remain liable under the terms of this Agreement for: (1) reinsurance of policies that becomes effective prior to such termination of this Agreement; (2) reinsurance of policies with an application date on or before the effective date of termination; and (3) reinsurance that becomes effective as a result of coverage changes described in accordance with Article X. C. The Ceding Company shall continue to cede, and the Reinsurer shall continue to accept, any new business issued prior to the termination of this Agreement. ARTICLE XXI CONFIDENTIALITY During the course of performance under this Agreement, a Party (the "Owner") or its agent may make available to the other Party (the "Recipient") or its agent certain technical materials such as manuals, policyholder lists, data files and the data contained therein, systems, forms, methods, processes and procedures, and other information or data (collectively, "Proprietary Information") that is proprietary or trade secret in nature. Proprietary Information shall specifically exclude information that was previously known to the Recipient or that is or was publicly disclosed to the Recipient by any party not known by the Recipient to be under a duty to retain such information as confidential. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 30 Each Party acknowledges that all Proprietary Information is offered for the sole purpose of performing its obligations under this Agreement. Further, each Party agrees that the Owner is deemed to be the sole owner of such Proprietary Information and that any use, furnishing, disclosure, dissemination, publication, or revealing of Proprietary Information in any way by the Recipient to any person, organization, firm or government agency contrary to applicable law or to the terms of this Agreement, shall obligate the Recipient to indemnify and hold the Owner harmless from any damages, litigation, liability, claimed liability, claims, and expenses -- including reasonable attorneys' fees and incidental expenses -- resulting from any such improper use, furnishing, disclosure, or revealing of Owner's Proprietary Information, whether occurring during the term of this Agreement or thereafter, except to the extent that any such loss or damage was caused or contributed to by the Owner. The Ceding Company acknowledges that the Reinsurer can aggregate the Ceding Company's Proprietary Information with other companies reinsured with the Reinsurer as long as the data cannot be identified as belonging to the Ceding Company. The Parties shall hold all Proprietary Information in trust and confidence and shall use Proprietary Information only for the purposes of this Agreement. Unless required by applicable law, neither Party shall disclose any Proprietary Information without the express written consent of the other Party. Notwithstanding the foregoing, the Parties may disclose Proprietary Information to their Representatives who need such Proprietary Information to carry out the purposes for which it was disclosed -- it being understood that the Party disclosing the Proprietary Information shall inform its Representatives of the confidential nature of the Proprietary Information, shall cause such Representatives to observe the terms of this Agreement, and shall be liable to the Owner for any breach of this Agreement by itself or by any of its Representatives. The term "Representatives," as used in this Agreement, shall mean a Party's directors, officers, employees, retrocessionaires, partners, agents, other controlling persons, and professional advisors, including but not limited to attorneys, accountants, actuaries, auditors and intermediaries. In the event the Recipient or its Representative breaches this obligation, the Owner shall have all rights and remedies available under law and equity, including the right to protect its Proprietary Information by injunction, without proving economic loss, which the Parties acknowledge and concede is appropriate and necessary to protect the value of the Owner's Proprietary Information. Notwithstanding anything herein to the contrary, except as reasonably necessary to comply with applicable securities laws, each Party (and each Representative of such Party) may consult any tax advisor regarding the U.S. federal income tax treatment or tax structure of the transaction ("Tax Treatment"), and disclose to any and all persons, without limitation of any kind, the Tax Treatment and all materials of any kind (including opinions or other tax analyses) that are provided to such Party relating to the Tax Treatment. This permission to disclose the Tax Treatment is limited to any facts relevant to the Tax Treatment and does not include information relating to the identity of the Parties. In the event that any Party is served with a subpoena, request for production of documents, other legal process, or request by regulator or arbitration panel, such Party shall immediately notify, and send a copy of such subpoena, other legal process, or regulatory request to, the other Party so that the other Party may reasonably determine whether any of its Proprietary Information may be included in the data required to be produced. Such other Party may, at its own expense, take such legal action as it deems necessary to preserve the confidentiality of its Proprietary Information or may waive its rights to do so. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 31 To the extent possible, Proprietary Information shall be promptly returned to the Owner or destroyed, as the Owner may direct, upon the termination of this Agreement or, with respect to any particular data files and data, on such earlier date that the same are no longer required by Recipient in order to continue to perform its obligations hereunder. The Recipient will not be obligated to destroy any Proprietary Information that is retained for back-up or archiving purposes, in accordance with a document retention policy, or that the Recipient, in the opinion of counsel, is legally compelled to keep and store. The Parties agree to immediately notify each other, in writing, of all circumstances surrounding any known or potential access to, or possession of, Proprietary Information by any person other than persons authorized by this Agreement. Such notice shall be provided under Article XXIII and shall include, but not be limited to, the name and address of each such unauthorized person. This Article shall survive the termination of this Agreement. ARTICLE XXII GENERAL PROVISIONS A. Policy Forms When requested, the Ceding Company will furnish the Reinsurer with a sample copy of each policy and rider form that applies to the Plans of Insurance to be reinsured hereunder. B. Severability If any provision of this Agreement shall be declared or found to be illegal, invalid, unenforceable, or void, the Parties shall be relieved of their obligations under such provision. The validity of the remaining provisions shall not be affected. To the extent possible, the Parties shall work in good faith to amend this Agreement to address such provision. C. Survival All provisions of this Agreement shall survive its termination to the extent necessary to carry out the purposes of this Agreement or to ascertain and enforce the Parties' rights or obligations hereunder existing at the time of its termination. D. Non-Waiver No act, delay, omission, course of dealing or prior transaction by or between the Parties to this Agreement shall constitute a waiver of any right or remedy under this Agreement. No waiver of any right or remedy under this Agreement shall be construed to be a waiver of any other or subsequent right or remedy under this Agreement. E. Currency The Reinsurance Premiums and benefits payable under this Agreement will be payable in United States Dollars. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 32 F. Definitions of Terms in Policies Terms that are not defined in this Agreement will have the meaning conferred on them in the underlying reinsured contracts. Such terms include, but may not be limited to: Monthly Activity Date, Monthly Deduction Amount, Account Value, and Policy Protection Account. G. Governing Law This Agreement shall be governed by the laws of the State of Connecticut, exclusive of the rules with respect to conflicts of law. H. Assignment and Transfer The rights, duties and obligations of the Parties under this Agreement shall not be assigned or transferred, in whole or in part, except as otherwise provided herein, by either Party without the prior written consent of the other Party. Such consent shall not be unreasonably withheld. This provision is not intended to preclude the Reinsurer from retroceding the reinsurance on an indemnity basis, nor to prevent successors in interest from having rights and obligations under this Agreement. I. Execution of Agreement in Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. J. Force Majeure Neither Party shall be liable for any delay or non-performance of any covenant contained herein nor shall any such delay or non-performance constitute a default hereunder, or give rise to any liability for damages if such delay or non-performance is caused by an event of "Force Majeure." As used herein, the term "Force Majeure" means: an event, explosion, action of the elements, strike or other labor relations problem; restriction or restraint imposed by law, rule, or regulation of any public authority, whether federal, state or local, and whether civil or military; act of any military authority or international terrorist group; interruption of transportation, communication, or transmission facilities; or any other cause that is beyond the reasonable control of such Party and that, by the exercise of reasonable diligence, such Party is unable to prevent. The existence of any event of Force Majeure shall extend the term of performance on the part of such Party to complete performance in the exercise of reasonable diligence after the event of Force Majeure has been removed. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 33 K. Anti-Money Laundering It is the intention of the Ceding Company and the Reinsurer to comply with all applicable laws, statutes, and regulations relating to anti-money laundering and anti-terrorism financing activities. The Ceding Company is responsible for compliance with all such laws, statutes, and regulations applicable to the sale and solicitation of policies reinsured under this Agreement, including, but not limited to, the requirements of the USA PATRIOT Act and the United States Department of the Treasury's Office of Foreign Assets Control (hereinafter referred to as "OFAC"). Should either Party receive information that a policy reinsured under this Agreement may insure, be owned by, be transferred or payable to, or be brokered or sold by a Specially Designated National, as such term is defined by OFAC (hereinafter referred to as "SDN"), that Party shall provide such information to the other Party. In no event shall the Reinsurer be liable for reinsurance of a risk under this Agreement unless the Ceding Company's issuance of life insurance coverage for such risk met the OFAC regulatory requirements. No reinsurance claim shall be payable on a policy insuring, owned by, or payable to a SDN that does not hold a valid OFAC license at the time of death of the insured. L. Material Compliance Provision The Parties represent that, to the best of their knowledge, they are in substantial compliance with all state and federal laws material to the business reinsured under this Agreement. In the event that either Party is found to be noncompliant with any law material to this Agreement, this Agreement will remain in effect and the non-compliant Party will indemnify the other Party for any direct loss that Party suffers as a result of the noncompliance and, to the extent practicable, will remedy the noncompliance as soon as possible. M. Representations and Warranties and Good Faith The Parties have entered into this Agreement in reliance upon mutual representations and warranties. Each Party represents to the other that, as of the Effective Date of this Agreement, it was solvent on a statutory basis in all states in which it is licensed to transact business. In addition, the Parties agree that the principles of good faith traditional to life reinsurance shall be adhered to in the performance of this Agreement, in the underwriting and administration of the business reinsured hereunder, and in their dealing with each other. Pursuant to such principles, the Ceding Company shall inform the Reinsurer in writing with thirty (30) days advance notice of any material change impacting the Reinsurer's liability in the underwriting (including changes to InfoBase), administration, claims practices, or Insurance Receipt for the Reinsurer's consideration and written approval. Any proposed changes to the Ceding Company's choice of underwriting manual, or the other items included in Ceding Company's standard underwriting practices and guidelines, shall be submitted to the Reinsurer's Chief Medical Director with thirty (30) days advance written notice for approval prior to implementation. If the Reinsurer does not respond in writing within this thirty (30) day period, it shall be presumed that the Reinsurer is agreeable to such modifications. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 34 If the Reinsurer does not consent to any such changes, the Reinsurer reserves the right to decline reinsurance coverage on such policies and/or negotiate a corresponding adjustment of the reinsurance terms and conditions for the risks reinsured hereunder. N. Taxes The Reinsurer will not reimburse the Company for premium taxes or other insurance-related taxes paid on business reinsured under this Agreement. O. Inspection of Records Each Party or its authorized representatives will have the right, at any reasonable time with at least thirty (30) days advance notice, to inspect, audit and review the other Party's documents and records that relate to this Agreement and the business that is the subject matter of this Agreement. P. Short-Term Interest For certain payments as specified under this Agreement that are due from one Party to the other Party, the Party owed has the right to charge the other Party interest on those payments. If that right is exercised, such interest will be computed, from the date the payment is due to the date payment is made, using the short-term interest method. Interest under the short-term interest method will accrue at an effective annual rate set equal to the lesser of (i) a rate equal to the sum of 50 basis points (0.50%) plus the annualized Three Month London Interbank Offering Rate (LIBOR) published in the Wall Street Journal (or, if not available, a comparable publication agreed upon by the Parties) on the due date of the payment, if the due date is a business day, or if not, on the first business day following the due date, or (ii) the maximum annual rate allowed by law for this purpose in the governing-law state specified above in Section G. The effective annual interest rate to be used under the short-term interest method for a payment due will be reset every three months after such due date, as necessary, if the payment accrues interest for a period longer than three months. If multiple payments are accruing interest under one computation, then the rate will be reset every three months after the due date of the earliest such payment, and the reset rate for each successive period shall apply to accrue interest on all such payments accrued during such period. Q. Expenses The Ceding Company shall pay the expense of all medical examinations, inspection fees, and other charges in connection with the issuance of the insurance reinsured under this Agreement. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 35 ARTICLE XXIII NOTICES AND COMMUNICATIONS A. Communications For the purpose of this Agreement, communications associated with material breach of this Agreement, rescission of policies challenged by legal action, termination or recapture of this Agreement, demand for arbitration or negotiation under this Agreement, a change in or loss of the Reinsurer's licensing or and/or confidentiality and compliance provisions set forth in this Agreement shall be addressed as follows: If to the Ceding Company: If to the Reinsurer: Individual Life Director of Reinsurance SVP, Value Added Services The Hartford SCOR Global Life Americas Reinsurance Company 200 Hopmeadow Street 101 South Tryon Street, Ste 3200 Simsbury, CT 06089 Charlotte, NC 28280 Facsimile: (860) 843-5860 Facsimile: (704) 331-0386
Copies (which shall not constitute Copies (which shall not constitute notice) to: notice) to:
Vice President of Ceded Reinsurance Chief Actuary The Hartford SCOR Global Life Americas Reinsurance Company 200 Hopmeadow Street 101 South Tryon Street, Ste. 3200 Simsbury, CT 06089 Charlotte NC 28280 Facsimile: (860) 843-8981 Facsimile: (704) 331-0386
Reinsurance Counsel General Counsel The Hartford SCOR Global Life Americas Reinsurance Company One Hartford Plaza 101 South Tryon Street, Ste. 3200 Hartford, CT 06155 Charlotte, NC 28280 Facsimile: (855) 414-4764 Facsimile: (704) 331-0386
or such other address or facsimile number as one Party may provide to the other Party. The foregoing shall not preclude the effectiveness of actual written notice given to a Party at any address or by any means. All other communications will be sent to the contact either (a) provided by the receiving party, or (b) identified in the course of routine administration of this Agreement. B. Notices All notices with regard to this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date when delivered personally; (ii) on the date sent by facsimile transmission or electronic mail with proof of delivery; or (iii) on the earlier of the date received and the date three (3) business days after any such notice was sent by nationally recognized courier or by first-class U.S. mail, postage prepaid, return receipt requested. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 36 EXECUTION In witness whereof, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate: SCOR GLOBAL LIFE AMERICAS REINSURANCE COMPANY By: /s/ Glenn Cunningham Attest: /s/ Robin Blackwell -------------------------------------- -------------------------------------- Name: Glenn Cunningham Name: Robin Blackwell Title: Executive Vice President Title: Assistant Vice President Date: November 5, 2012 Date: November 8, 2012
HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- -------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: November 16, 2012 Date: November 16, 2012
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 37 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE NOVEMBER 1, 2012 SINGLE LIFE PLANS OF INSURANCE
REINSURANCE NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ---------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 11/01/2012 Hartford Leaders VUL Liberty 2001 CSO M/F Composite Ultimate ANB A 11/01/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 11/01/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 11/01/2012 Extended Value Option Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B 11/01/2012 Hartford Bicentennial UL Freedom 2013 2001 CSO M/F S/NS Ultimate ANB B 11/12/2012 Hartford ExtraOrdinary Whole Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Extended Value Option Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Extended Value Option Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Extended Value Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Reinsurance Effective Date shown. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 38
REINSURANCE EFFECTIVE RIDERS THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 11/01/2012 Other Covered Insured Term Life Rider 11/01/2012 Cost of Living Adjustment (COLA) Rider 11/01/2012
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. ------------ ** Eligibility for new business is based on issue date on or after the Reinsurance Effective Date shown. RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE Accidental Death Benefit (ADB) Rider Accelerated Benefit Rider (ABR) LifeAccess Accelerated Benefit Rider (LAABR) Policy Continuation Rider Policy Protection Rider (PPR) Enhanced No Lapse Guarantee Rider Lifetime No Lapse Guarantee Rider Guaranteed Minimum Accumulation Benefit (GMAB) Rider Paid-Up Life Insurance Rider Conversion Option Rider Overloan Protection Rider Waiver of Specified Amount (WSA) Rider Waiver of Monthly Deductions (WMD) Rider Children's Life Insurance Rider Foreign Travel Exclusion Rider Modified Surrender Value Rider Cash Surrender Value Endorsement Automatic Premium Payment Rider Additional Premium Rider Qualified Plan Rider Owner Designated Settlement Option Rider DisabilityAccess Rider (DAR) LongevityAccess Rider LifeAccess Care Rider Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 39 RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, dDuring and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 40 RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 41 RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: This rider ilndicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. This rider allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention. Pool -- fective 11/1/2012 Between ILA and HLIC and SGLARC 42 LAST SURVIVOR PLANS OF INSURANCE
REINSURANCE NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------- Hartford Joint Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 11/01/2012 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B 11/01/2012 Hartford Bicentennial UL Joint Freedom II 2013 2001 COS M/F S/NS Ultimate ANB B 11/12/2012
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Reinsurance Effective Date shown.
REINSURANCE EFFECTIVE RIDERS THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 11/01/2012
RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE LS Exchange Option Rider Policy Protection Rider Foreign Travel Exclusion Rider Guaranteed Minimum Accumulation Benefit (GMAB) Rider Paid-Up Life Insurance Rider Owner Designated Settlement Option Rider Joint LifeAccess Rider Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 43 RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. This rider allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 44 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE NOVEMBER 1, 2012 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B. FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue) of the Total Net Amount at Risk for the risk. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* TOTAL NET AMOUNT AT RISK (TOTNAR) = For NAR TYPE A, Death Benefit minus the Account Value. For NAR TYPE B, Death Benefit minus the Working Reserve, where Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 45 STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* (CONTINUED) STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER For risks reinsured under this Agreement where the death benefit has been reduced as a result of acceleration or withdrawal in accordance with Riders, the Ceding Company shall use commercially reasonable efforts to eliminate the impact of acceleration on the Reinsured Net Amount at Risk. NOTE: For ReinsQS2% and ReinsQS3%, round percentages to 2 decimal places. (This rounding may cause slight increases or decreases in the amounts allocated to each Party.) Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 46 MINIMUM AUTOMATIC REINSURANCE CESSION: [ILLEGIBLE] MINIMUM FACULTATIVE REINSURANCE APPLICATION: [ILLEGIBLE] LEAD REINSURER: [ILLEGIBLE] Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 47 SCHEDULE C FOREIGN NATIONAL UNDERWRITING PROGRAM FOR SINGLE LIFE PERMANENT POLICIES ONLY; NOT AVAILABLE FOR LAST SURVIVOR POLICIES EFFECTIVE NOVEMBER 1, 2012 The Ceding Company's Foreign National business shall be automatically reinsured under the terms of this Agreement, if it meets all the requirements for Automatic Reinsurance in Section III.A, with the following differences. TYPE OF REINSURANCE Risks qualifying under this program will be reinsured on a first-dollar quota share basis. CEDING COMPANY'S RETENTION FOREIGN NATIONAL REINSURANCE POOL SHARE AUTOMATIC BINDING LIMIT (EXCLUDES CEDING COMPANY'S RETENTION): JUMBO LIMIT: TOTAL ALLOCATION LIMIT: ADDITIONAL PLAN, AMOUNT, [ILLEGIBLE] 1. Permanent life policies only. Term coverage may be considered, but only in the form of a rider included on a permanent base policy. Last survivor coverage is excluded from this program. 2. Other than term riders referenced in Paragraph 1, above, no supplemental benefit coverage, such as accidental death or waiver of premium, will be allowed. 3. The minimum face amount is as follows: 4. Annual premium or Check-O-Matic premium mode only. The minimum annual premium is the annual premium to endow. If Check-O-Matic is the premium mode, it must be arranged with a U.S. Bank. 5. Premiums must be paid in U.S. currency and must be billed to a residence or bank in the U.S. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 48 ADDITIONAL UNDERWRITING AND RISK CLASS GUIDELINES Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 49 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 50 SCHEDULE D OTHER SPECIAL UNDERWRITING PROGRAMS EFFECTIVE NOVEMBER 1, 2012 The Ceding Company has several special underwriting programs. The majority of these programs are contained within the Underwriting Brochure entitled "Life insurance underwriting that opens doors and closes cases", form LCM-05-418-1-09. Another program, Life Express, effective October 26, 2009, is documented in a LifeTIMES Bulletin dated October 30, 2009. Both of these publications have been shared in advance of the execution of this Agreement with the Reinsurer. The Ceding Company has two additional special underwriting programs not listed in the Underwriting Brochure, the "Benny Program" and the "Director's Charitable Award Program", which are listed below. BENNY PROGRAM Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 51 SCHEDULE D SPECIAL UNDERWRITING PROGRAMS EFFECTIVE NOVEMBER 1, 2012 DIRECTOR'S CHARITABLE AWARD PROGRAM (DCAP) -- FOR LAST SURVIVOR PLANS ONLY Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 52 DIRECTOR'S CHARITABLE AWARD PROGRAM (DCAP) -- CONTINUED Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 53 EXHIBIT I REINSURANCE PREMIUM CALCULATION EFFECTIVE NOVEMBER 1, 2012 FOR SINGLE LIFE PLANS OF INSURANCE REINSURANCE PREMIUM Reinsurance Premium shall be calculated each month for each risk reinsured as [ (i) + (ii) ] / 12, where: (i) equals the Yearly Renewable Term (YRT) Reinsurance Premium for the coverage (as defined below); and (ii) equals the Annual Flat Extra Reinsurance Premium (as defined below) for the coverage, where the sum of [ (i) + (ii) ] shall not exceed the Reinsured Net Amount at Risk for such coverage, defined in Schedule B. For the purposes of calculating Reinsurance Premium, the following will be considered separate coverages: base policy, increases in coverage, and reinsured riders. YEARLY RENEWABLE TERM (YRT) REINSURANCE PREMIUM The YRT Reinsurance Premium for each coverage shall equal (i) x (ii) x (iii) / 1,000, where: (i) equals [ (a) x (b) ],(the "YRT Reinsurance Premium Rate") where: (a) equals the applicable rate from the tables of Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit III; and (b) equals the applicable percentage from the tables of YRT Reinsurance Rate Factors to be applied to the Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit IV; (ii) equals the applicable Substandard Table Percentage, specified in Exhibit V, for the risk; and (iii) equals the Reinsured Net Amount at Risk for such coverage, defined in Schedule B. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 54 FOR SINGLE LIFE PLANS OF INSURANCE ANNUAL FLAT EXTRA REINSURANCE PREMIUM The Annual Flat Extra Reinsurance Premium for each coverage equals {(i) x [ 1 - (ii) ] x [(iii) / 1,000]}, where: (i) equals the applicable annual flat extra rate per 1,000, for the year of coverage, that the Ceding Company charges for the coverage; (ii) equals the Flat Extra Allowance Percentage, specified below; and (iii) equals the Reinsured Net Amount At Risk for such coverage, defined in Schedule B. FLAT EXTRA ALLOWANCE PERCENTAGE Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 55 FOR LAST SURVIVOR PLANS OF INSURANCE REINSURANCE PREMIUM Reinsurance Premium shall be calculated each month for each risk reinsured as [(i) x (ii) / 1,000] / 12, where: (i) equals the result of the following steps: (ii) equals the Reinsured Net Amount at Risk for the coverage, defined in Schedule B. For the purposes of calculating Reinsurance Premium, the following will be considered separate coverages: base policy, increases in coverage, and reinsured riders. Reinsurance Premium for a single life rider attached to a last survivor policy shall be determined in accordance with the Reinsurance Premium calculations for single life plans of insurance. YRT REINSURANCE PREMIUM RATE PER 1,000* The YRT Reinsurance Premium Rate per 1,000 for each life for each coverage shall equal (i) x (ii) + (iii), but in no event more than 1,000, where: (i) equals the YRT Reinsurance Premium Rate per 1,000, which equals the quantity [ (a) x (b) ] (the "YRT Reinsurance Premium Rate"), where: (a) equals the applicable rate from the tables of Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit III; and (b) equals the applicable percentage from the tables of YRT Reinsurance Rate Factors to be applied to the Annual Rates per $1,000 of Reinsured Net Amount at Risk specified in Exhibit IV; (ii) equals the applicable Substandard Table Percentage, specified in Exhibit V, for the risk; and (iii) equals the Annual Flat Extra Reinsurance Premium per 1,000, as defined below. * For purposes of determining the YRT Reinsurance Premium Rate per 1,000, a life deemed uninsurable will be treated as Table P with a $250 flat extra for 10 years. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 56 ANNUAL FLAT EXTRA REINSURANCE PREMIUM PER 1,000 The Annual Flat Extra Reinsurance Premium per 1,000 for each coverage equals {(i) x [ 1 - (ii)]}, where: (i) equals the applicable annual flat extra rate per 1,000, for the year of coverage, that the Ceding Company charges for the coverage; and (ii) equals the Flat Extra Allowance Percentage, specified below. FLAT EXTRA ALLOWANCE PERCENTAGE Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 57 EXHIBIT II RETENTION, BINDING, AND TOTAL POOL ISSUE LIMITS APPLICABLE TO ALL SINGLE LIFE AND LAST SURVIVOR PERMANENT LIFE BUSINESS (FOR SPECIFICS ON CALCULATION OF LIMITS WITH LAST SURVIVOR COVERAGE, SEE WORKSHEET ON PAGE 4) EFFECTIVE NOVEMBER 1, 2012 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 58 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 59 EXHIBIT II RETENTION, BINDING, AND TOTAL POOL ISSUE LIMITS APPLICABLE TO ALL SINGLE LIFE AND LAST SURVIVOR PERMANENT LIFE BUSINESS EFFECTIVE NOVEMBER 1, 2012 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 60 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 61 EXHIBIT III ANNUAL RATES PER $1,000 OF REINSURED NET AMOUNT AT RISK EFFECTIVE NOVEMBER 1, 2012 FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE AND FOR AUTOMATIC AND FACULTATIVE REINSURANCE Annual Rates per $1,000 of Reinsured Net Amount at Risk are provided in the following attached tables of Exhibit III. They are provided on a Select & Ultimate basis and vary by: 1. Age basis (Age Nearest Birthday or Age Last Birthday), to align with the Valuation Mortality Table for the Plan of Insurance; 2. Gender (Male, Female); and 3. Rate class -- a. Preferred Plus Non-Nicotine (PPNN); b. Preferred Non-Nicotine (PNN); c. Standard Non-Nicotine (SNN); d. Preferred Nicotine (PN); and e. Standard Nicotine (SN). For Life Solutions II UL plans, allowance percentages will be determined as follows: (1) For "Preferred" policies, use the SNN rate class; and (2) For "Standard" policies, use the SN rate class. All risks insured by the Ceding Company on a Unisex basis will be reinsured using gender-specific rates. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 62 EXHIBIT IV YRT REINSURANCE RATE FACTORS EFFECTIVE NOVEMBER 1, 2012 FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE AND FOR AUTOMATIC AND FACULTATIVE REINSURANCE Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 63 EXHIBIT V SUBSTANDARD TABLE PERCENTAGES EFFECTIVE NOVEMBER 1, 2012 Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 64 EXHIBIT VI REINSURANCE REPORTS EFFECTIVE NOVEMBER 1, 2012
REPORT ACCOUNTING PERIOD DUE DATE --------------------------------------------------------------------------------------------------------------- 1. New Business* Monthly 30thday after month end (New issues only -- first time policy reported to the Reinsurer) 2. Renewal Business* Monthly 30thday after month end (Policies with renewal dates within the Accounting Period) 3. Changes & Terminations* Monthly 30thday after month end (includes conversions, replacements reinstatements, increases, decreases, recaptures, lapses, claims, etc.) 4. Inforce List Monthly 30thday after month end (Listing of each policy in force) 5. Statutory Reserves Quarterly 30thday after quarter end 6. Policy Exhibit Monthly 30thday after month end
------------ * Policyrecord details for new business, renewal business, and changes and terminations (Reports 1, 2, and 3 above) may be reported as separate reports or combined into one report, provided the required data elements continue to be satisfied. REPORTING SYSTEM: The system used by the Ceding Company to administer its reinsurance is: TAI. NOTE: Certain policy transactions, such as increases, are coded in the policy administration system as riders, although they do not correspond to filed rider forms. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 65 MINIMUM DATA REQUIREMENTS INFORCE AND TRANSACTION FILE
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key Coverage/rider Coverage number which is part of the policy key. This number is used to identify specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer Transaction Sequence This field indicates the transaction record(s) created during the month. Line of Business This field indicates the line of business the policy falls under. Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Transaction Type Identifies the type of transaction being reported on the Transaction extract. Transaction Count This field is used on the Transaction extract to identify the addition or termination of a cession. Reinsurance From Date This field contains the beginning date of the period covered by this record. The premiums on the Transaction record cover the period beginning with the From Date through the To Date. Reinsurance To Date This field contains the end date of the period covered by a record. Date Reported On the Transaction extract, this is the month the transaction was reported. Mode Identifies the mode of reinsurance premium payment. Policy Duration The duration at issue is 01. Reinsurance Duration Contains the reinsurance duration. It may differ from the policy duration if the cession is a continuation. Cession Number Hartford does not currently use. Defaults to spaces. Policy Date This field contains the effective date of the policy. Reinsurance Date This field contains the effective date of the reinsurance. For most cessions it is the same as the Policy Date. For continuations, it contains the effective date of the original coverage. Issue State This field contains a two-letter abbreviation of the state or province of issue. Used to determine unisex rates. Resident State This field contains a two-letter abbreviation of the state or province of issue. Used to compute premium tax reimbursement if applicable. Joint Type Identifies Joint business type
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 66
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Joint Age Used for joint coverages using a joint equivalent age for rate searches. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Death Benefit Option This field contains the option chosen by the insured for death proceeds payment. Participation code This field indicates whether the business is Non Participating (N) or Participating (P). Issue Type Identifies how a cession was issued. (New business or Continuation) Underwriting Method Identifies the type of underwriting used to issue the coverage. Treaty Number This field contains the TAI system treaty number Reinsurance Type This field is a one-character code that identifies the type of reinsurance. (Y=YRT, C=Coinsurance & M=Modco.) Plan This field contains the coverage plan code. Product code This field contains the product type code. Product code 1 For Joint Life policies, this field contains the product type code for Insured 1. Product code 2 For Joint Life policies, this field contains the product type code for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Currency Code This field identifies the currency. (USD or CND if applicable) Last Name -- 1 This field contains the insured's last name. For Joint Life policies, this field contains the last name for Insured 1. (Maximum of 20 characters) First Name -- 1 This field contains the insured's first name. For Joint Life policies, this field contains the first name for Insured 1. (Maximum of 15 characters) Middle Initial -- 1 This field contains the insured's middle initial. For Joint Life policies, this field contains the middle initial for Insured 1. (1 character) Client ID -- 1 This field contains the unique client ID for an insured used to connect lives when calculating retention on a life. For Joint Life policies, this field indicates the client ID for Insured 1. (Maximum of 20 characters) Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 1. DOB -- 1 This field contains the insured's date of birth. For Joint Life policies, this field contains the date of birth for Insured 1. Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 1.
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 67
COMPANY IDENTIFIES THE CEDING COMPANY --------------------------------------------------------------------------------------------------------------------------------- Class -- 1 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 1. Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 1. Mortality Duration -- 1 This field contains the duration of the insured's mortality rating. For Joint Life policies, this field contains the duration of the mortality rating for Insured 1. Temp Flat -- 1 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains the temporary flat extra per 1000 for Insured 1. Temp Duration -- 1 This field contains the number of years that the temporary flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 1. Perm Flat -- 1 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains the permanent flat extra per 1000 for Insured 1. Perm Duration -- 1 This field contains the number of years that the permanent flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 1. Last Name -- 2 This field contains the insured's last name. For Joint Life policies, this field contains the last name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 20 characters) First Name -- 2 This field contains the insured's first name. For Joint Life policies, this field contains the first name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 15 characters) Middle Initial -- 2 This field contains the insured's middle initial. For Joint Life policies, this field contains the middle initial for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (1 character) Client ID -- 2 This field contains the unique client ID for an insured used to connect lives when calculating retention on a life. For Joint Life policies, this field indicates the client ID for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 20 characters) Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 2. (If this is not a Joint Life policy, this field will be blank.) DOB -- 2 This field contains the insured's date of birth. For Joint Life policies, this field contains the date of birth for Insured 2. (If this is not a Joint Life policy, this field will be blank.)
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 68
COMPANY IDENTIFIES THE CEDING COMPANY --------------------------------------------------------------------------------------------------------------------------------- Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.) Pricing Sex -- 2 This field contains the sex used to compute premiums and allowances. For Joint Life policies, this field contains the pricing sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.) Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Class -- 2 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality Duration -- 2 This field contains the duration of the insured's mortality rating. For Joint Life policies, this field contains the duration of the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Temp Flat -- 2 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains the temporary flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Temp Duration -- 2 This field contains the number of years that the temporary flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Perm Flat -- 2 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains the permanent flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Perm Duration -- 2 This field contains the number of years that the permanent flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Policy Face Amount Indicates the face amount of the total policy. Retained Amount This field contains the amount retained on this policy coverage, not on the life. Ceded Amount This field contains the policy amount ceded to a specific reinsurer. Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific reinsurer. Benefit Mortality ADB or Waiver mortality.
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 69
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Premium This field contains the reinsurance premium. Allowance This field contains the reinsurance allowance. Flat extra type This field indicates whether there is a temporary flat extra (T) or a permanent flat extra (P) being charged. Premium Tax If premium tax is reimbursed, this field contains the tax amount. Cash Value If applicable, this field is used to recover coinsured cash values from the Reinsurer. Benefit If applicable, this field is used to recover benefits from the Reinsurer. Dividend If applicable, this field contains the reinsurer's share of the direct dividend. Policy Fee This field contains the reinsurance policy fee. Continuation Original Company This field indicates the ceding company on the original policy. (Used for conversions only.) Continuation Original Policy This field indicates the policy number for the original policy. (Used for conversions only.) Continuation Original This field indicates the coverage/rider for the original policy. (Used for Coverage/Rider conversions only.) Message An informational message may be manually added to a policy by the Ceding Company. Image switch Hartford does not currently use. Defaults to spaces. Policy Fee Allowance This field contains the reinsurance policy fee allowance. Location Code Hartford does not currently use. Defaults to spaces. Treaty Reference Number Upon request, this field contains the Reinsurer's treaty number. Claim Hartford does not currently use. Defaults to spaces. Policy Status This field identifies the status of the cession. Policy Master Smoker -- 1 Policy smoker class on direct policy. For Joint Life policies, this field contains the policy master smoker class for Insured 1. Policy Master Smoker -- 2 Policy smoker class on direct policy. For Joint Life policies, this field contains the policy master smoker class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Policy Effective Date This field contains the issue date of the policy. Policy Application Date This field indicates the date the insured signed the application. NAR Type This field indicates the method used in determining the Total Net Amount at Risk (as defined in Schedule B).
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 70 POLICY EXHIBIT FILE*
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key. Coverage/rider Coverage number which is part of the policy key. This number is used to identify a specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer. Line of Business This field indicates the line of business the policy falls under. Report Date This is the month the transaction was reported. Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Treaty Number This field contains the TAI system treaty number. Transaction Type Identifies the type of transaction being reported on the Transaction extract. Policy Count Each New Business, Continuation & Reinstatement will be assigned a count of 1, Terminations will be assigned -1 and Renewals/NAR changes will be assigned 0. Base Ceded Amount This field contains the policy base amount ceded. ADB ceded Amount This field contains the policy ADB amount ceded. Waiver Ceded Amount This field contains the policy waiver amount ceded. Net Amount at Risk The reinsured net amount at risk (NAR). Plan This field contains the coverage plan code. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Reinsurance Type This field is a one-character code that identifies the type of reinsurance. (Y=YRT, C=Coinsurance & M=Modco.) Currency Code This field identifies the currency. (USD or CND if applicable)
------------ * The Policy Exhibit will include a summary of reinsurance movement for a given period categorized by transactions type. This summary provides the Cession Count, Ceded Amount and Net Amount at Risk at the beginning of the reporting period, a summary of the transactions occurring during the report period as well as what is in force as of the ending of the report period. Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 71 RESERVE FILE
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key Coverage/rider Coverage number which is part of the policy key. This number is used to identify a specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer Benefit Type This field is the reserve type. 1 = Life, 2=ADB, 3=Waiver, 4=Flat Extras, 5=Substandard Calc Method Hartford's TAI Valuation Method 1=Frasier Reserve + 1/2 cx, E=Coinsurance Reserve, H=Half Premium, L=Factor FLX1, X=1/2 cx Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Line of Business This field indicates the line of business the policy falls under. (L=Life) Treaty Number This field contains the TAI system treaty number Plan This field contains the coverage plan code. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Product code This field contains the product type code. Joint Type Identifies Joint business Type Joint Method Switch Identifies TAI Frasier method calculation Mode Identifies the mode of reinsurance premium payment. Cession Status This field identifies the status of the cession. Reinsurance Type This field is a one-character code that identifies the type of reinsurance. Duration Contains the reinsurance duration. It may differ from the policy duration if the cession is a continuation. Participation code This field indicates whether the business is Non participating (N) or Participating (P). Issue Date This field contains the effective date of the policy. Reinsurance To Date This field contains the end date of the period covered by a record. Policy Face Amount Indicates the face amount of the total policy. Ceded Amount This field contains the policy amount ceded to a specific reinsurer Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific reinsurer. Premium This field contains the reinsurance premium. Reserve Percent Value appears on Coinsurance business only Cession Count Cession count only appears under Life (Base), not benefits. Age Basis Nearest/Closest (C), Last (L), Next (N) Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 1.
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 72
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Age -- 1 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 1. Class -- 1 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 1. Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 1. Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 1. Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Class -- 2 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Reserve Statutory or Tax Reserve for each coverage. Reserve Interest Rate This field identifies the Interest Rate used when calculating reserves. Reserve Factor Applicable Mortality Basis YRT Factor Factor Pointer TAI specific field to identify applicable mortality table used when calculating reserves. Attained Age TAI specific field. Default is 1 Setback TAI specific field. Default is zero Class Switch TAI specific field. Valuation Class (D=Distinct) Curtate Switch This field indicates whether reserves are on a curtate or continuous basis. Caption Hartford's TAI Valuation Method Error Code Informational field used by Hartford -- Usually Blank Reserve Class 1 This field contains insured's smoker class. For Joint Life policies, this field contains the class for Insured 1. Reserve Class 2 This field contains insured's smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Currency Code This field identifies the currency. (USD or CND if applicable) Valuation Interest Pointer TAI assigned field that is used to read applicable interest rates when calculating 1/2 cx reserves. NAR Type This field indicates the method used in determining the Total Net Amount at Risk (as defined in Schedule B).
Allocated Retention. Pool -- Effective 11/1/2012 Between ILA and HLIC and SGLARC 73 EX-99.(G)(5)(I) 6 a13-3080_1ex99dg5i.txt EX-99.(G)(5)(I) AMENDMENT 10 EFFECTIVE MARCH 1, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND SWISS RE LIFE & HEALTH AMERICA INC. ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to restate the definition of Working Reserve for the Reinsured Net Amount at Risk to reflect that it is the approximate value of the reserve net of other reinsurance arrangements held by the Ceding Company; and WHEREAS, the Ceding Company and the Reinsurer wish to acknowledge that Hartford Bicentennial UL Freedom and Hartford Bicentennial UL Joint Freedom II will now use NAR Type B only. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Article III is hereby amended to include the following paragraph preceding Section III.A: The Ceding Company will notify the Reinsurer if it intends to change the components used for the calculation of the Working Reserve, as outlined in Schedule B. Changes to existing definitions of the Working Reserve will be handled in accordance with Section XXII.L. 3. Schedule A is hereby deleted in its entirety and replaced with the attached, revised Schedule A. 4. Schedule B is hereby deleted in its entirety and replaced with the attached, revised Schedule B. 5. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. SWISS RE LIFE & HEALTH AMERICA INC. By: /s/ Jeremy Lane Attest: /s/ Kyle Bauer -------------------------------------- -------------------------------------- Name: Jeremy Lane Name: Kyle Bauer Title: Vice President Title: Vice President Date: 5/9/2012 Date: 5/9/2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- -------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: May 21, 2012 Date: 5/22/2012
Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE MARCH 1, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** -------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Extended Value Option Annually Renewable Term (ART) 2001 CSO M/F S/NS Ultimate ANB C 10/01/2008 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Extended Value Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 5 Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider: Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 6 LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** -------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 7 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 8 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE MARCH 1, 2012 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B. FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue) of the Total Net Amount at Risk for the risk. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* TOTAL NET AMOUNT AT RISK (TOTNAR) = Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 9 STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 10 MINIMUM REINSURANCE APPLICATION: LEAD REINSURER: Allocated Retention Pool -- Effective 10/1/2008 Between HLAIC and Swiss Re Amendment #10 -- Effective 3/1/2012 11 AMENDMENT 11 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND SWISS RE LIFE & HEALTH AMERICA INC. ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer (collectively, the "Parties") agree that the Agreement was implemented using YRT Reinsurance Guaranteed Rates ("Annual Rates") and Allowance Percentages ("Allowances") which proved to be incorrect; and WHEREAS, the Parties have agreed to incorporate revised Annual Rates and Allowances as shown in the attached Exhibit III and Exhibit IV as of October 1, 2008; and WHEREAS, the Parties now wish to recalculate all billing transactions from October 1, 2008 using the revised Annual Rates and Allowances; and WHEREAS, the Ceding Company shall alter its administrative systems to enable the recalculation of premium. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Exhibit III is deleted in its entirety and replaced with the attached revised Exhibit III. 3. Exhibit IV is deleted in its entirety and replaced with the attached revised Exhibit IV. 4. The Ceding Company shall recalculate all billing transactions from October 1, 2008 and pay the Reinsurer accordingly. 5. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 11 -- Effective 10/01/2008 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. SWISS RE LIFE & HEALTH AMERICA INC. By: /s/ Kenneth Thieme Attest: /s/ [ILLEGIBLE] -------------------------------------- -------------------------------------- Name: Kenneth Thieme Name: [ILLEGIBLE] Title: Vice President Title: Vice President Date: 10-11-12 Date: 10/11/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- -------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: 10-19-12 Date: 10/19/12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 11 -- Effective 10/01/2008 2 EXHIBIT III ANNUAL RATES PER $1,000 OF REINSURED NET AMOUNT AT RISK EFFECTIVE OCTOBER 1, 2008 FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE AND FOR AUTOMATIC AND FACULTATIVE REINSURANCE Annual Rates per $1,000 of Reinsured Net Amount at Risk are included in the Excel file titled "Master File -- Guaranteed Rates -- Rev ANB-ALB Correction.xls" sent from Nathan Hill at the Ceding Company to Kenneth Thieme at the Reinsurer on February 3, 2012 at 1:00 P.M. They are provided on a Select & Ultimate basis and vary by: 1. Age basis (Age Nearest Birthday or Age Last Birthday), to align with the Valuation Mortality Table for the Plan of Insurance; 2. Gender (Male, Female); and 3. Rate class -- a. Non-Nicotine; b. Nicotine; All risks insured by the Ceding Company on a Unisex basis will be reinsured using gender-specific rates. Allocated Retention Pool -- Effective 10/01/2008 Between HLA1C and Swiss Re Amendment 11 -- Effective 10/01/2008 3 EXHIBIT IV ALLOWANCE PERCENTAGES TO BE APPLIED TO THE ANNUAL RATES PER $1,000 EFFECTIVE OCTOBER 1, 2008 FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE AND FOR AUTOMATIC AND FACULTATIVE REINSURANCE Allowance Percentages to be applied to the Annual Rates per $1,000 of Reinsured Net Amount at Risk are included in the Excel file titled "Master File -- Allowances -- Rev ANB-ALB Correction.xls" sent from Nathan Hill at the Ceding Company to Kenneth Thieme at the Reinsurer on February 3, 2012 at 1:00 P.M. They are provided on a Select & Ultimate basis and vary by: 1. Whether the Plan of Insurance is a Single Life or Last Survivor Plan; 2. Age basis (Age Nearest Birthday or Age Last Birthday), to align with the Valuation Mortality Table for the Plan of Insurance; 3. Gender (Male, Female); and 4. Rate class -- a. Preferred Plus Non-Nicotine (PPNN); b. Preferred Non-Nicotine (PNN); c. Standard Non-Nicotine (SNN); d. Preferred Nicotine (PN); and e. Standard Nicotine (SN). For Life Solutions II UL plans, allowance percentages will be determined as follows: (1) For "Preferred" policies, use the SNN rate class; and (2) For "Standard" policies, use the SN rate class. All risks insured by the Ceding Company on a Unisex basis will be reinsured using gender-specific allowance percentages. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 11 -- Effective 10/01/2008 4 AMENDMENT 12 EFFECTIVE OCTOBER 15, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND SWISS RE LIFE & HEALTH AMERICA INC. ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products will be added to the Agreement and the Effective Dates shown in Schedule A are the dates the products will become reinsured: - Hartford Joint Founders Plus UL, - Hartford Bicentennial UL Freedom 2013, and - Hartford Bicentennial UL Joint Freedom II 2013. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. SWISS RE LIFE & HEALTH AMERICA INC. By: /s/ Jeremy Lane Attest: /s/ Timothy J. Grusenmeyer -------------------------------------- -------------------------------- Name: Jeremy Lane Name: Timothy J. Grusenmeyer Title: Vice President Title: Vice President Date: 10/26/2012 Date: 10/26/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- -------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: 10/30/12 Date: 10/31/12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE OCTOBER 15, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** -------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Value Option Annually Renewable Term (ART) 2001 CSO M/F S/NS Ultimate ANB C 10/01/2008 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Option Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL Extended 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Value Option Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 Extended 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Value Option Hartford Bicentennial UL Freedom 2013 2001 CSO M/F S/NS Ultimate ANB B 11/12/2012
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 3 SINGLE LIFE PLANS OF INSURANCE
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached.
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 4 RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 5 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 6 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 7 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ---------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Joint Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/15/2012 Hartford Bicentennial UL Joint 2001 CSO M/F S/NS Ultimate ANB B 11/12/2012 Freedom II 2013
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 8 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 12 -- Effective 10/15/2012 9 AMENDMENT 13 EFFECTIVE JULY 16, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND SWISS RE LIFE & HEALTH AMERICA INC. ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products will be added to the Agreement and the Effective Dates shown in Schedule A are the dates the products will become reinsured: - Hartford Frontier 2012 Indexed UL, - Hartford Frontier 2012 Indexed UL Extended Value Option, - Hartford Leaders VUL Liberty 2012, and - Hartford Leaders VUL Liberty 2012 Extended Value Option. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. SWISS RE LIFE & HEALTH AMERICA INC. By: /s/ Jeremy Lane Attest: /s/ [ILLEGIBLE] -------------------------------------- -------------------------------------- Name: Jeremy Lane Name: [ILLEGIBLE] Title: Vice President Title: Vice President Date: 9/7/2012 Date: 9/7/12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis -------------------------------------- -------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Individual Life Product Management Date: 9-24-12 Date: 9-24-12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE JULY 16, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* 1DATE** -------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Extended Value Option Annually Renewable Term (ART) 2001 CSO M/F S/NS Ultimate ANB C 10/01/2008 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Extended Value Option Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Extended Value Option Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Extended Value Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 5 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. FOREIGN TRAVEL EXCLUSION RIDER: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 6 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 7 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 8 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and Swiss Re Amendment 13 -- Effective 07/16/2012 9 EX-99.(G)(6)(I) 7 a13-3080_1ex99dg6i.txt EX-99.(G)(6)(I) AMENDMENT 7 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to clarify Section III. A.1 to indicate that the insured must satisfy only one of the requirements listed; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to correct Section III. A.6 to state that the Automatic Binding Limit only applies to Excess Risks; and WHEREAS, the Ceding Company and the Reinsurer wish to clarify the administrative implications of the Reinsurer's liability for riders or policy features that accelerate the death benefit; and WHEREAS, the Ceding Company and the Reinsurer wish to outline how Reinsurance Premiums will be calculated in the event of a specific option's election under the Conversion Option Rider; and WHEREAS, the Ceding Company and the Reinsurer wish to confirm the Reinsurer's liability for policy increases not subject to new underwriting; and WHEREAS, the Ceding Company and the Reinsurer wish to reaffirm the basis for the minimum amount for a facultative reinsurance application; and WHEREAS, the Ceding Company and the Reinsurer wish to correct drafting errors in Schedule F; and WHEREAS, the Ceding Company and the Reinsurer wish to replace Exhibit VII to reflect updated definitions and references. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Article III is hereby deleted in its entirety and replaced with the attached, revised Article III. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 1 3. Section IV.F is hereby deleted in its entirety and replaced with the following Section IV.F: F. The Reinsurer's liability for reinsurance on each risk will terminate when the Ceding Company's liability terminates, unless it terminates earlier as specified otherwise in this Agreement or later as a result of the full acceleration of the death benefit. 4. Article X is hereby deleted in its entirety and replaced with the attached, revised Article X. 5. Schedule B is hereby deleted in its entirety and replaced with the attached, revised Schedule B. 6. Schedule F is hereby deleted in its entirety and replaced with the attached, revised Schedule F. 7. Exhibit VII is hereby deleted in its entirety and replaced with the attached, revised Exhibit VII. 8. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life US Re Insurance Company on September 12, 2011 Signature /s/ Glenn Cunningham Signature /s/ Robin S. Blackwell ----------------------------------------- ----------------------------------------- Name in Text Glenn Cunningham Name in Text Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life US Re Insurance Company SCOR Global Life US Re Insurance Company
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe ----------------------------------------- ----------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: May 23, 2012 Date: 5/31/12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendent 7 -- Effective 10/01/2008 2 ARTICLE III REINSURANCE COVERAGE Reinsurance under this Agreement will apply to those Plans of Insurance and Riders set forth in Schedule A that also fall within a category of policies eligible for reinsurance under this Agreement as described in Schedule F. Such reinsurance shall be either on an automatic basis, subject to the requirements set forth in Section A below, on an automatic processing basis, subject to the requirements set forth in Section B below, or on a facultative basis, subject to the requirements set forth in Section C below. Notwithstanding the foregoing, reinsurance coverage on a facultative basis may also apply on plans of insurance not listed in Schedule A, with the agreement of the Reinsurer. The specifications for all reinsurance under this Agreement are provided in Schedule B. The term "Excess Risk," as used in this Agreement, shall mean a risk for which the amount to be written on a life by the Ceding Company, when added to any other amounts of risk for that life already in the Automatic Pool and any amounts not in the Automatic Pool that are retained by the Ceding Company or its affiliated companies, exceeds, either in whole or in part, the Total Allocation Limit for that life shown in Exhibit II. A. Automatic Reinsurance For each risk that meets the requirements for Automatic Reinsurance as set forth below, the Reinsurer will participate in a reinsurance pool whereby the Reinsurer will automatically reinsure a portion of the risk as indicated in Schedule B ("Automatic Pool"). The requirements for Automatic Reinsurance are as follows: 1. Each life, at the time of application, must satisfy one of the following requirements: a. have been a legal resident of the United States or Canada for at least six months; or b. be a citizen of the United States or Canada; or c. qualify for the Foreign National Underwriting Program as specified in Schedule C. 2. Each risk must be underwritten according to the Ceding Company's Standard Underwriting Practices and Guidelines or one of the special underwriting programs. The Ceding Company's Standard Underwriting Practices and Guidelines as of the Effective Date are described in Schedule E, and the Ceding Company's special underwriting programs as of the Effective Date are described in Schedule C and Schedule D. Changes to such documents will be handled in accordance with Section XXII.M. If the Ceding Company would like to offer coverage at a risk class more favorable than the True Assessed Risk Class, the Ceding Company may: a. Reinsure the risk automatically under this Agreement with Reinsurance Premiums based on the True Assessed Risk Class; or b. Seek to reinsure the risk facultatively under this Agreement at rates more favorable than the True Assessed Risk Class; or c. Decide not to reinsure the risk under this Agreement. For purposes of this Agreement, "True Assessed Risk Class" shall mean the risk class assessed by the Ceding Company prior to any adjustments made as a result of the Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendent 7 -- Effective 10/01/2008 3 Ceding Company's Enhanced Standard or similar special underwriting program. 3. For any Excess Risk, if a risk on the life of a proposed insured was previously submitted by the Ceding Company on a facultative basis to the Reinsurer or to any other reinsurer, at least three (3) years must have elapsed since that previous risk was submitted facultatively, unless the original reason for submitting facultatively no longer applies. 4. The maximum issue age for each life is 85. For Last Survivor policies, the minimum issue age is 18, for all other policies, the minimum age is 0. 5. The mortality rating on each life does not exceed Table P. However, for Last Survivor policies, one life may be uninsurable if the other life does not exceed Table F. 6. For any Excess Risk, the total amount of risk on that life to be reinsured in the Automatic Pool and under any other individual life reinsurance agreement with any reinsurer does not exceed the Automatic Binding Limit for that life shown in Exhibit II. 7. For any Excess Risk, the total amount of risk on that life in force and applied for in all companies must not exceed the Jumbo Limit for that life shown in Exhibit II. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) Any amounts of risk being replaced by the Ceding Company may be deducted from this total amount of risk only under the following conditions: a. Existing permanent insurance is being replaced by the Ceding Company, with or without a Section 1035 exchange, and the Ceding Company has obtained a duly executed absolute assignment of the insurance being replaced; or b. Existing term insurance is being replaced by the Ceding Company, and the Ceding Company has obtained a duly executed absolute assignment of the insurance being replaced; or c. An internal replacement is being made, where the Ceding Company is replacing an in-force policy with a new policy of equal or greater death benefit. When the total amount in force and applied for, that is to be compared with the applicable Jumbo Limit, is reduced due to the above conditions, the Ceding Company assumes full responsibility to effect the cancellation of life insurance coverage under the replaced insurance concurrently with the commencement of coverage under the new policy. If the cancellation does not occur in a timely manner and the failure to cancel results in the new policy causing reinsurance coverage to exceed the applicable Jumbo Limit, then the Reinsurer may (when the Reinsurer becomes aware of the Jumbo Limit violation) decline reinsurance coverage on the new policy during the period of time while both policy coverages are in effect, by written notice to the Ceding Company. Once this notice has been given, the Reinsurer will have no liability for reinsurance coverage on the new policy while both policy coverages are in effect and shall refund to the Ceding Company all related Reinsurance Premiums for the new policy. However, if reinsurance coverage on the new policy is declined for this reason and the cancellation of life insurance coverage under the replaced insurance is later effected, then, upon receipt of the Ceding Company's written notice to this effect, the Reinsurer will again become liable for reinsurance coverage on the new policy as of the effective date of cancellation of coverage under the replaced policy, and Reinsurance Premiums for the new policy will again be payable. 8. If all the other requirements for Automatic Reinsurance are met and the life is a player or Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendent 7 -- Effective 10/01/2008 4 coach on a team in the National Hockey League, the National Football League, the National Basketball Association or Major League Baseball, and: a. The risk is not an Excess Risk, then the Ceding Company shall notify the Reinsurer of this fact at the time of issue of the risk; or b. The risk is an Excess Risk, then, prior to ceding the risk automatically under this Agreement, the Ceding Company must confirm the Reinsurer's available capacity for that risk. The Ceding Company, by telephone call or electronic mail, shall: (1) notify the Reinsurer's Chief Underwriter, or designee, of the life's name, date of birth, sport and team affiliation, the total life insurance in force and to be placed on the life, and the amount of new reinsurance coverage required from the Reinsurer; and (2) confirm that an application for insurance on the life has been completed. The Reinsurer shall endeavor to inform the Ceding Company of its available capacity for the risk within two business days after such notification and confirmation. After the Reinsurer has advised the Ceding Company of the amount of its available capacity, the Ceding Company may then cede to the Reinsurer no more than that amount on an automatic basis under this Agreement. 9. The Ceding Company, or one of its affiliates, shall retain its share of each risk on a life, as described in this Agreement and in any other life reinsurance agreement applicable to risk on that life. However, the Ceding Company reserves the right to separately reinsure any amount of the retained risk on a life reinsured under this Agreement with these conditions: a. This right, as it pertains to such lives, applies only to groups of risks defined as cohorts of risks reinsured for at least five (5) years and issued either during a continuous period (such as one or more years) or under one or more Plans of Insurance shown in Schedule A, and does not apply to individual lives or to small, non-homogeneous groups of risks; b. The remaining amount of risk retained on that life by the Ceding Company, c. Any amounts of retention separately reinsured in this manner shall not reduce the amount of the Ceding Company's retention on that life for the purpose of any other terms of this Agreement. B. Automatic Processing If the requirements for Automatic Reinsurance are met for a life except for the requirement stated above in Section A.6, but the total amount of risk on that life to be reinsured in the Automatic Pool and under any other individual life reinsurance agreement with any reinsurer does not exceed the Automatic Processing Limit for that life shown in Exhibit II, then the Ceding Company may submit to the Lead Reinsurer (designated in Schedule B) all information relating to the insurability of that life. For Last Survivor policies where one life is deemed uninsurable, only the information for the other life needs to be submitted. The Lead Reinsurer shall review the submitted information to determine if the life should be reinsured by the Automatic Pool and, if so, on what basis. The Lead Reinsurer shall endeavor to provide the Ceding Company with a response within 72 hours of receipt of such information. Approval by the Lead Reinsurer shall be binding on all other current Automatic Pool reinsurers. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendent 7 -- Effective 10/01/2008 5 This process shall be known as Automatic Processing and shall be subject to Exhibit II. Hereinafter, all references to Automatic Reinsurance, coverage automatically reinsured, and the Automatic Pool will include coverage reinsured through Automatic Processing. C. Facultative Reinsurance If the requirements for Automatic Reinsurance are not met and the Ceding Company applies for Facultative Reinsurance with the Reinsurer, or if the requirements for Automatic Reinsurance are met but the Ceding Company prefers to apply for Facultative Reinsurance with the Reinsurer, then the Ceding Company shall submit to the Reinsurer sufficient evidence agreed upon between the Ceding Company and the Reinsurer, relating to the insurability of each life submitted for Facultative Reinsurance. For Last Survivor policies where one life is deemed uninsurable, only the information for the ther life needs to be submitted. The Reinsurer shall promptly notify the Ceding Company in writing of its declination to offer, its underwriting offer subject to additional requirements, or its final underwriting offer. The final underwriting offer will automatically expire upon the earliest of: (1) the date the policy application is withdrawn; (2) the expiration date specified in the final offer; (3) the date one hundred twenty (120) days after the date of the final offer; and (4) the date the final offer is accepted, provided such offer is accepted within the lifetime of the proposed insured(s). Once the Ceding Company has accepted the Reinsurer's final underwriting offer, then Facultative Reinsurance for the risk under this Agreement will become effective under this Agreement as described below in Article IV.C or Article IV.E, as applicable. ARTICLE X POLICY CONVERSIONS, OTHER CHANGES, AND TERMINATIONS A. Conversions A conversion is a policyholder's exercise of a contractual right to replace in-force coverage with a new permanent policy without evidence of insurability. Conversions from a policy reinsured under this Agreement will continue to be reinsured under this Agreement as follows: 1. The converted coverage under the new policy will be reinsured with the Reinsurer in the same proportion as was determined for the in-force coverage converted; and 2. Reinsurance Premiums for such converted coverage shall be calculated on a point-in-scale basis. If the new policy was converted under the Conversion Option Rider from either (a) two single life policies reinsured under this Agreement; or (b) one single life policy reinsured under this Agreement and one newly underwritten life, to a last survivor policy, Reinsurance Premiums for both lives shall be calculated on a point-in-scale basis. The Reinsurance Premiums for both lives shall be calculated using the tables of Annual Rates per $1,000 of Reinsured Net Amount at Risk and table of YRT Reinsurance Rate Factors applicable to the earliest original coverage in accordance with the procedures set out in Exhibit I. Conversions from a policy not reinsured under this Agreement shall not be reinsured under this Agreement. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 6 B. Increases and Decreases in Policy Face Amount 1. If the face amount of a policy reinsured under this Agreement increases and: a. The increase is subject to full underwriting, then the provisions of Article III shall apply to the increase in reinsurance and Reinsurance Premiums for the increase shall be based on new-business rates; or b. The increase is not subject to full underwriting, the Reinsurer will accept the increase, provided that: (1) If the policy was ceded automatically, the Ceding Company underwrote the full face amount (including all scheduled increases) in accordance with the terms of this Agreement (whether through Automatic Reinsurance or Automatic Processing); or (2) If the policy was ceded facultatively, the Ceding Company received approval from the Reinsurer for the full face amount (including all scheduled increases) at the time of facultative application. Reinsurance Premiums for increases not subject to full underwriting shall be calculated on a point-in-scale basis. c. For increases in accordance with B.1.b, the Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined for the increase at the time the increase goes into effect, as follows: (1) For increases in accordance with B.1.b (1), in accordance with Schedule B; or (2) For increases in accordance with B.1.b (2), the Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined by mutual agreement of the Parties. 2. If the face amount of a policy reinsured under this Agreement decreases and: a. If the face amount of a policy that was previously increased is subsequently decreased, the decrease will be applied first to the increase with the latest effective date, and then to the increase with the next earlier effective date, and so forth as necessary, until applying any remaining decrease to the initial face amount of the policy. b. The Ceding Company's retention and the amount of risk ceded to the Reinsurer shall be determined at the time the decrease goes into effect, as follows: (1) For decreases under policies ceded automatically, in accordance with Schedule B; or (2) For decreases under policies ceded facultatively, the amount of the risk reinsured to the Reinsurer shall be reduced proportionately. C. Policy Exchanges and Other Changes A policy exchange is a new policy replacing an existing policy where the new policy is not fully Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 7 underwritten. Exchanges from one single life policy reinsured under this Agreement to a different single life policy will be reinsured on a point-in-scale basis. Likewise, exchanges from one last survivor policy reinsured under this Agreement to a different last survivor policy will be reinsured on a point-in-scale basis. Exchanges from a last survivor policy reinsured under this Agreement with the Last Survivor Exchange Option Rider or Twenty-Four (24) Month Exchange Rider to two single life policies will be reinsured, if both risks under the Last Survivor policy were fully underwritten (and neither was deemed to be uninsurable) and the total face amount of the two new Single Life policies does not exceed the face amount of the Last Survivor policy. In this event, the new Single Life policies shall be reinsured on a point-in-scale basis at the applicable single life rates. For each new policy after the exchange, the insurance will continue to be reinsured by the Reinsurer in the same proportions as set at issue of the original coverage. If there is a contractual change in a policy reinsured under this Agreement that is not subject to full underwriting, other than the changes described above in Sections A and B, the insurance shall continue to be reinsured with the Reinsurer in the same proportions as the original coverage and Reinsurance Premiums for contractual changes shall be calculated on a point-in scale basis. The Ceding Company shall notify the Reinsurer of any such changes in policies reinsured under this Agreement in its monthly reinsurance reports. Exchanges made from a policy not reinsured under this Agreement shall not be reinsured under this Agreement. D. Policy Terminations and Lapses If a policy reinsured under this Agreement terminates, the reinsurance for the risk will terminate as of the effective date of policy termination. For a policy terminated due to the expiry of any grace period for an unpaid amount, the effective date of termination for such policy will be the date such unpaid amount was first due. Notwithstanding the foregoing, if a policy is deemed to have terminated as a result of full acceleration of the death benefit, the corresponding reinsurance on the policy will continue as specified in Section IV.F. If a policy reinsured under this Agreement lapses to extended term insurance under the terms of that policy, the corresponding reinsurance on the reinsured policy will continue on the same basis as the original reinsurance until the expiry of the extended term period. If a policy reinsured under this Agreement lapses to reduced paid-up insurance under the terms of that policy, the amount of the corresponding reinsurance on the reinsured policy will be reduced according to the terms of Section 8.2. If the Ceding Company allows a policy reinsured under this Agreement to remain in force under its automatic premium loan provisions, the corresponding reinsurance on the reinsured policy will continue unchanged and in force as long as such provisions remain in effect, except as otherwise provided in this Agreement. E. Reduction in Retained Coverage on a Life If any portion of the aggregate amount of insurance retained by the Ceding Company or its affiliates on an individual life reduces or terminates, the Ceding Company or its affiliates will Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 8 recalculate its retention on any remaining risk(s) in force on that life. The Ceding Company or its affiliates will not be required to retain an amount in excess of its retention limit for the age, mortality rating, and risk classification based on the applicable retention limit that was in effect at the time of issue for any risk. Unless provided for otherwise in the applicable reinsurance agreements, the Ceding Company or its affiliates will first recalculate the retention on the risk(s) having the same mortality rating as the terminated risk(s). Order of recalculation will secondarily be determined by effective date of the risk, oldest first. F. Multiple Reinsurers If reinsurance of a risk is shared by more than one reinsurer, the Reinsurer's percentage of any increased or reduced reinsurance will be the same as its initial percentage of the reinsurance for that risk unless specified otherwise in Schedule B or agreed upon by the Reinsurer. G. Mortality Rating Changes On Facultative Reinsurance, if the Ceding Company wishes to reduce the mortality rating or otherwise improve the risk class, such change shall be subject to the Reinsurer's approval. On Automatic Reinsurance, the Reinsurer shall accept this change if the change qualifies under the underwriting practices and guidelines described in Schedules C, D, or E, as applicable. H. Rescission of Policy Coverage Prior to Death Claim If a misrepresentation, misstatement, or omission on an application results in the Ceding Company's rescission of coverage, the Reinsurer shall refund to the Ceding Company any Reinsurance Premiums it received on that coverage. This refund shall be in lieu of any and all other reinsurance benefits payable on that coverage under this Agreement. The Reinsurer shall also reimburse the Ceding Company for its proportionate share of any non-routine expenses incurred by the Ceding Company in connection with the rescission. Such non-routine expenses shall include the costs of investigations and of obtaining financial and medical reports; they would not include the compensation of salaried officers and employees of the Ceding Company. The Ceding Company shall promptly notify the Reinsurer in the event a rescission is challenged by legal action. The Ceding Company shall also furnish to the Reinsurer copies of all information related to such action. Recognizing the urgent nature of these communications, within eight (8) business days of receipt of such information, the Reinsurer shall notify the Ceding Company in writing of the Reinsurer's decision whether or not it shall participate in the defense of the rescission. If the Reinsurer does not respond to the Ceding Company within such eight (8) business day period, the Reinsurer will be deemed to have elected to participate in the defense of the rescission. If the Reinsurer elects or is deemed to have elected to participate in the defense of the rescission, the Reinsurer shall also reimburse the Ceding Company for its proportionate share of court costs and legal expenses incurred by the Ceding Company in connection with the defense of the rescission of coverage. If a rescission of policy coverage is reversed and the policy coverage is restored to in-force status, any related reinsurance coverage under this Agreement shall also be restored upon the Ceding Company's payment to the Reinsurer of all applicable Reinsurance Premiums. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 9 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE OCTOBER 1, 2008 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B. FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue) of the Total Net Amount at Risk for the risk. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* TOTAL NET AMOUNT AT RISK (TOTNAR) = For NAR TYPE A, Death Benefit minus the Account Value. For NAR TYPE B, Death Benefit minus the Working Reserve, where Working Reserve = (i) x (ii) / (iii), and Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 10 STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* (CONTINUED) STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER REINSURED NET AMOUNT AT RISK (REINSNAR) = REINSQS2% X NAR2 + REINSQS3% X NAR3 NOTE: For ReinsQS2% and ReinsQS3%, round percentages to 2 decimal places. (This rounding may cause slight increases or decreases in the amounts allocated to each Party.) Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 11 MINIMUM FACULTATIVE REINSURANCE APPLICATION: LEAD REINSURER: Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 12 SCHEDULE F POLICIES ELIGIBLE FOR REINSURANCE UNDER THIS AGREEMENT EFFECTIVE OCTOBER 1, 2008 The following categories of policies are eligible for reinsurance under this Agreement:
CATEGORY # CATEGORY DESCRIPTION -------------------------------------------------------------------------------------------------------- 1 Policies issued on or after March 1, 2009 2 Policies issued from the Effective Date of this Agreement through February 28, 2009 that were eligible for automatic reinsurance under one of the following Ceding Company reinsurance pools: i. Single Life Excess Pool effective November 1, 2002 ii. Advanced UL Pool effective September 1, 2004; iii. Last Survivor Excess Pool effective January 1, 2002; and iv. Advanced Last Survivor UL Pool effective January 1, 2005, but that were fully retained by the Ceding Company at the time of processing (see Note below). Notwithstanding the foregoing, fully retained policies issued during this period in which the insured has a subsequent policy that is partially or fully ceded to another pool (including the Hartford Term Pool effective April 10, 2006) will not be eligible for reinsurance under this Agreement.
NOTE: The Ceding Company completed the processing of Category 2 business in July 2009. At the time of processing, the Ceding Company paid the Reinsurer Reinsurance Premiums for all policies in Category 2 back to each policy's effective date. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 13 EXHIBIT VII REINSURANCE REPORTS EFFECTIVE OCTOBER 1, 2008
REPORT ACCOUNTING PERIOD DUE DATE ------------------------------------------------------------------------------------------------------------- 1. New Business* Monthly 30th day after month end (New issues only -- first time policy reported to the Reinsurer) 2. Renewal Business* Monthly 30th day after month end (Policies with renewal dates within the Accounting Period) 3. Changes & Terminations* Monthly 30th day after month end (includes conversions, replacements reinstatements, increases, decreases, recaptures, lapses, claims, etc.) 4. lnforce List Monthly 30th day after month end (Listing of each policy in force) 5. Statutory Reserves Quarterly 30th day after quarter end 6. Policy Exhibit Monthly 30th day after month end
------------ * Policy record details for new business, renewal business, and changes and terminations (Reports 1, 2, and 3 above) may be reported as separate reports or combined into one report, provided the required data elements continue to be satisfied. REPORTING SYSTEM: The system used by the Ceding Company to administer its reinsurance is: TAI. NOTE: Certain policy transactions, such as increases, are coded in the policy administration system as riders, although they do not correspond to filed rider forms. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 14 MINIMUM DATA REQUIREMENTS INFORCE AND TRANSACTION FILE
COMPANY IDENTIFIES THE CEDING COMPANY ----------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key Coverage/rider Coverage number which is part of the policy key. This number is used to identify specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer Transaction Sequence This field indicates the transaction record(s) created during the month. Line of Business This field indicates the line of business the policy falls under. Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Transaction Type Identifies the type of transaction being reported on the Transaction extract. Transaction Count This field is used on the Transaction extract to identify the addition or termination of a cession. Reinsurance From Date This field contains the beginning date of the period covered by this record. The premiums on the Transaction record cover the period beginning with the From Date through the To Date. Reinsurance To Date This field contains the end date of the period covered by a record. Date Reported On the Transaction extract, this is the month the transaction was reported. Mode Identifies the mode of reinsurance premium payment. Policy Duration The duration at issue is 01. Reinsurance Duration Contains the reinsurance duration. It may differ from the policy duration if the cession is a continuation. Cession Number Hartford does not currently use. Defaults to spaces. Policy Date This field contains the effective date of the policy. Reinsurance Date This field contains the effective date of the reinsurance. For most cessions it is the same as the Policy Date. For continuations, it contains the effective date of the original coverage. Issue State This field contains a two-letter abbreviation of the state or province of issue. Used to determine unisex rates. Resident State This field contains a two-letter abbreviation of the state or province of issue. Used to compute premium tax reimbursement if applicable. Joint Type Identifies Joint business type
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COMPANY IDENTIFIES THE CEDING COMPANY ----------------------------------------------------------------------------------------------------------------- Joint Age Used for joint coverages using a joint equivalent age for rate searches. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Death Benefit Option This field contains the option chosen by the insured for death proceeds payment. Participation code This field indicates whether the business is Non Participating (N) or Participating (P). Issue Type Identifies how a cession was issued. (New business or Continuation) Underwriting Method Identifies the type of underwriting used to issue the coverage. Treaty Number This field contains the TAI system treaty number Reinsurance Type This field is a one-character code that identifies the type of reinsurance. (Y=YRT, C=Coinsurance & M=Modco.) Plan This field contains the coverage plan code. Product code This field contains the product type code. Product code 1 For Joint Life policies, this field contains the product type code for Insured 1. Product code 2 For Joint Life policies, this field contains the product type code for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Currency Code This field identifies the currency. (USD or CND if applicable) Last Name -- 1 This field contains the insured's last name. For Joint Life policies, this field contains the last name for Insured 1. (Maximum of 20 characters) First Name -- 1 This field contains the insured's first name. For Joint Life policies, this field contains the first name for Insured 1. (Maximum of 15 characters) Middle Initial -- 1 This field contains the insured's middle initial. For Joint Life policies, this field contains the middle initial for Insured 1. (1 character) Client ID -- 1 This field contains the unique client ID for an insured used to connect lives when calculating retention on a life. For Joint Life policies, this field indicates the client ID for Insured 1. (Maximum of 20 characters) Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 1. DOB -- 1 This field contains the insured's date of birth. For Joint Life policies, this field contains the date of birth for Insured 1. Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 1. Pricing Sex -- 1 This field contains the sex used to compute premiums and allowances. For Joint Life policies, this field contains the pricing sex of Insured 1. Age -- 1 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 1.
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COMPANY IDENTIFIES THE CEDING COMPANY ----------------------------------------------------------------------------------------------------------------- Class -- 1 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 1. Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 1. Mortality Duration -- 1 This field contains the duration of the insured's mortality rating. For Joint Life policies, this field contains the duration of the mortality rating for Insured 1. Temp Flat -- 1 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains the temporary flat extra per 1000 for Insured 1. Temp Duration -- 1 This field contains the number of years that the temporary flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 1. Perm Flat -- 1 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains the permanent flat extra per 1000 for Insured 1. Perm Duration -- 1 This field contains the number of years that the permanent flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 1. Last Name -- 2 This field contains the insured's last name. For Joint Life policies, this field contains the last name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 20 characters) First Name -- 2 This field contains the insured's first name. For Joint Life policies, this field contains the first name for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 15 characters) Middle Initial -- 2 This field contains the insured's middle initial. For Joint Life policies, this field contains the middle initial for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (1 character) Client ID -- 2 This field contains the unique client ID for an insured used to connect lives when calculating retention on a life. For Joint Life policies, this field indicates the client ID for Insured 2. (If this is not a Joint Life policy, this field will be blank.) (Maximum of 20 characters) Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 2. (If this is not a Joint Life policy, this field will be blank.) DOB -- 2 This field contains the insured's date of birth. For Joint Life policies, this field contains the date of birth for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.)
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COMPANY IDENTIFIES THE CEDING COMPANY ----------------------------------------------------------------------------------------------------------------- Pricing Sex -- 2 This field contains the sex used to compute premiums and allowances. For Joint Life policies, this field contains the pricing sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.) Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Class -- 2 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality Duration -- 2 This field contains the duration of the insured's mortality rating. For Joint Life policies, this field contains the duration of the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Temp Flat -- 2 This field contains the temporary flat extra per 1000. For Joint Life policies, this field contains the temporary flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Temp Duration -- 2 This field contains the number of years that the temporary flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Perm Flat -- 2 This field contains the permanent flat extra per 1000. For Joint Life policies, this field contains the permanent flat extra per 1000 for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Perm Duration -- 2 This field contains the number of years that the permanent flat extra rating is being charged. For Joint Life policies, this field contains the number of years that the flat extra rating is being charged for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Policy Face Amount Indicates the face amount of the total policy. Retained Amount This field contains the amount retained on this policy coverage, not on the life. Ceded Amount This field contains the policy amount ceded to a specific reinsurer. Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific reinsurer. Benefit Mortality ADB or Waiver mortality. Premium This field contains the reinsurance premium. Allowance This field contains the reinsurance allowance. Flat extra type This field indicates whether there is a temporary flat extra (T) or a permanent flat extra (P) being charged. Premium Tax If premium tax is reimbursed, this field contains the tax amount. Cash Value If applicable, this field is used to recover coinsured cash values from the Reinsurer. Benefit If applicable, this field is used to recover benefits from the Reinsurer.
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COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Dividend If applicable, this field contains the reinsurer's share of the direct dividend. Policy Fee This field contains the reinsurance policy fee. Continuation Original Company This field indicates the ceding company on the original policy. (Used for conversions only.) Continuation Original Policy This field indicates the policy number for the original policy. (Used for conversions only.) Continuation Original Coverage/Rider This field indicates the coverage/rider for the original policy. (Used for conversions only.) Message An informational message may be manually added to a policy by the Ceding Company. Image switch Hartford does not currently use. Defaults to spaces. Policy Fee Allowance This field contains the reinsurance policy fee allowance. Location Code Hartford does not currently use. Defaults to spaces. Treaty Reference Number Upon request, this field contains the Reinsurer's treaty number. Claim Hartford does not currently use. Defaults to spaces. Policy Status This field identifies the status of the cession. Policy Master Smoker -- 1 Policy smoker class on direct policy. For Joint Life policies, this field contains the policy master smoker class for Insured 1. Policy Master Smoker -- 2 Policy smoker class on direct policy. For Joint Life policies, this field contains the policy master smoker class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Policy Effective Date This field contains the issue date of the policy. Policy Application Date This field indicates the date the insured signed the application. NAR Type This field indicates the method used in determining the Total Net Amount at Risk (as defined in Schedule B).
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 19 POLICY EXHIBIT FILE*
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key. Coverage/rider Coverage number which is part of the policy key. This number is used to identify a specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer. Line of Business This field indicates the line of business the policy falls under. Report Date This is the month the transaction was reported. Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Treaty Number This field contains the TAI system treaty number. Transaction Type Identifies the type of transaction being reported on the Transaction extract. Policy Count Each New Business, Continuation & Reinstatement will be assigned a count of 1, Terminations will be assigned -- 1 and Renewals/NAR changes will be assigned 0. Base Ceded Amount This field contains the policy base amount ceded. ADB ceded Amount This field contains the policy ADB amount ceded. Waiver Ceded Amount This field contains the policy waiver amount ceded. Net Amount at Risk The reinsured net amount at risk (NAR). Plan This field contains the coverage plan code. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Reinsurance Type This field is a one-character code that identifies the type of reinsurance. (Y=YRT, C=Coinsurance & M=Modco.) Currency Code This field identifies the currency. (USD or CND if applicable)
------------ * The Policy Exhibit will include a summary of reinsurance movement for a given period categorized by transactions type. This summary provides the Cession Count, Ceded Amount and Net Amount at Risk at the beginning of the reporting period, a summary of the transactions occurring during the report period as well as what is in force as of the ending of the report period. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 20 RESERVE FILE
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Policy Policy number which is part of the policy key Coverage/rider Coverage number which is part of the policy key. This number is used to identify a specific policy coverage. Cession ID This field contains the number assigned to this cession by the Reinsurer Benefit Type This field is the reserve type. 1 = Life, 2=ADB, 3=Waiver, 4=Flat Extras, 5=Substandard Calc Method Hartford's TAI Valuation Method 1=Frasier Reserve+ 1/2 cx, E=Coinsurance Reserve, H=Half Premium, L=Factor FLX1, X=1/2 cx Reinsurance Company Two character reinsurance company ID code that identifies the Reinsurer. Reporting Company Identifies the company used for reporting purposes. Will be the same as the Reinsurance Company. Line of Business This field indicates the line of business the policy falls under. (L=Life) Treaty Number This field contains the TAI system treaty number Plan This field contains the coverage plan code. Auto/Fac Indicator Indicates whether the policy is ceded on an Automatic or Facultative basis. Product code This field contains the product type code. Joint Type Identifies Joint business Type Joint Method Switch Identifies TAI Frasier method calculation Mode Identifies the mode of reinsurance premium payment. Cession Status This field identifies the status of the cession. Reinsurance Type This field is a one-character code that identifies the type of reinsurance. Duration Contains the reinsurance duration. It may differ from the policy duration if the cession is a continuation. Participation code This field indicates whether the business is Non participating (N) or Participating (P). Issue Date This field contains the effective date of the policy. Reinsurance To Date This field contains the end date of the period covered by a record. Policy Face Amount Indicates the face amount of the total policy. Ceded Amount This field contains the policy amount ceded to a specific reinsurer Net Amount at Risk This field contains the reinsured net amount at risk (NAR) for a specific reinsurer. Premium This field contains the reinsurance premium. Reserve Percent Value appears on Coinsurance business only Cession Count Cession count only appears under Life (Base), not benefits. Age Basis Nearest/Closest (C), Last (L), Next (N) Insured Status -- 1 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 1.
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 21
COMPANY IDENTIFIES THE CEDING COMPANY ---------------------------------------------------------------------------------------------------------------- Age -- 1 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 1. Class -- 1 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 1. Sex -- 1 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 1. Mortality -- 1 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 1. Insured Status -- 2 This field indicates the insured's coverage status. For Joint Life policies, this field indicates the insured's coverage status for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Age -- 2 This field contains the insured's issue age. For Joint Life policies, this field contains the issue age for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Class -- 2 This field contains the company's rating of standard or preferred and the smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Sex -- 2 This field is used to identify the sex of the insured. For Joint Life policies, this field contains the sex of Insured 2. (If this is not a Joint Life policy, this field will be blank.) Mortality -- 2 This field contains the insured's mortality rating. For Joint Life policies, this field contains the mortality rating for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Reserve Statutory or Tax Reserve for each coverage. Reserve Interest Rate This field identifies the Interest Rate used when calculating reserves. Reserve Factor App1icable Mortality Basis YRT Factor Factor Pointer TAI specific field to identify applicable mortality table used when calculating reserves. Attained Age TAI specific field. Default is 1 Setback TAI specific field. Default is zero Class Switch TAI specific field. Valuation Class (D=Distinct) Curtate Switch This field indicates whether reserves are on a curtate or continuous basis. Caption Hartford's TAI Valuation Method Error Code Informational field used by Hartford -- Usually Blank Reserve Class 1 This field contains insured's smoker class. For Joint Life policies, this field contains the class for Insured 1. Reserve Class 2 This field contains insured's smoker class. For Joint Life policies, this field contains the class for Insured 2. (If this is not a Joint Life policy, this field will be blank.) Currency Code This field identifies the currency. (USD or CND if applicable) Valuation Interest Pointer TAI assigned field that is used to read applicable interest rates when calculating 1/2 cx reserves. NAR Type This field indicates the method used in determining the Total Net Amount at Risk (as defined in Schedule B).
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 7 -- Effective 10/01/2008 22 AMENDMENT 8 EFFECTIVE SEPTEMBER 1, 2010 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to confirm the Reinsurer's coverage for policies issued under the Issue First policy issuance program. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Article III is hereby amended to include the following paragraph following Section III.A.: Notwithstanding the above, all policies issued under the Issue First program shall be deemed automatically reinsured. Issue First is a policy issuance program administered by the Ceding Company, under which a policy can be issued before the underwriting process has been completed. The Ceding Company shall provide notice to the Reinsurer of any material changes to the program. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between ILA and TLIC Amendment 8 -- Effective 09/01/2010 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY (As Successor to Transamerica Occidental Life lnsurance Company) by its Administrator and Attorney-in-Fact SCOR Global Life Americas Reinsurance Company on January 25, 2012 Signature /s/ Glenn Cunningham Signature /s/ Robin S. Blackwell -------------------------------- -------------------------- Name in Text Glenn Cunningham Name in Text Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life Americas SCOR Global Life Americas Reinsurance Company Reinsurance Company
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael J. Roscoe -------------------------------------- -------------------------------- Name: Paul Fischer Name: Michael J. Roscoe Title: Assistant Vice President and Actuary Title: Senior Vice President and Actuary Date: May 23, 2012 Date: 6/5/2012
Allocated Retention Pool -- Effective 10/01/2008 Between ILA and TLIC Amendment 8 -- Effective 09/01/2010 2 AMENDMENT 9 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer now wish to amend the Agreement to include certain policies which - Were issued between October 1, 2008 and February 28, 2009; and - Were part of replacement transactions; and - At time of issue did not satisfy the criteria for rollover processing and did not qualify for reinsurance under the Agreement; and - Now qualify for reinsurance under the Agreement. NOW, THEREFORE for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. The Ceding Company shall cede and the Reinsurer shall accept, on an Automatic Reinsurance basis, the risk on the policies listed in the table, below, effective as of the reinsurance effective dates specified, in accordance with the terms of this Agreement; and 3. Reinsurance Premiums for such policies shall be calculated from their effective dates in accordance with Exhibit 1. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment # 9 -- Effective 10/1/2008 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below, with an effective date of October 1, 2008. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life US Re Insurance Company on August 31, 2011 Signature /s/ Glenn Cunningham Signature /s/ Robin S. Blackwell ----------------------------------------- ----------------------------------------- Name in Text Glenn Cunningham Name in Text Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life US Re Insurance Company SCOR Global Life US Re Insurance Company
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe ----------------------------------------- ----------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: May 21, 2012 Date: 5/22/2012
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment # 9 -- Effective 10/1/2008 2 AMENDMENT 10 EFFECTIVE OCTOBER 3, 2011 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products and Riders were added to the Agreement as of the Effective Date shown for each on Schedule A: - Hartford Founders Plus UL - Hartford Founders Plus UL Extended Value Option - DisabilityAccess Rider - LongevityAccess Rider - LifeAccess Care Rider - Joint LifeAccess Rider, and WHEREAS, the Ceding Company and the Reinsurer wish to revise Schedule A to include the effective date on which each Base Policy and Rider was added to the Agreement and to amend the description of certain Riders with such descriptions being effective from the Effective Date shown for each on Schedule A. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life US Re Insurance Company on September 12, 2011 Signature /s/ Glenn Cunningham Signature /s/ Robin S. Blackwell ----------------------------------------- ----------------------------------------- Name in Text Glenn Cunningham Name in Text Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life US Re Insurance Company SCOR Global Life US Re Insurance Company
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe ----------------------------------------- ----------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: May 23, 2012 Date: 5/31/12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE OCTOBER 3, 2011 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ---------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom (a) 2001 CSO M/F S/NS Ultimate ANB B 10/01/2008 Hartford Bicentennial UL Freedom (b) 2001 CSO M/F S/NS Ultimate ANB A 07/01/2010 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Extended Value Option Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached.
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED) DATE** -------------------------------------------------------------------------------- LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 5 Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 6 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO MIF SINS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO MIF SINS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO MIF SINS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO MIF SINS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II (a) 2001 CSO MIF SINS Ultimate ANB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II (b) 2001 CSO MIF SINS Ultimate ANB A 07/01/2010
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 7 Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 10 -- Effective 10/03/2011 8 AMENDMENT 11 EFFECTIVE OCTOBER 1, 2008 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer (collectively, the "Parties") agree that the Agreement was implemented using YRT Reinsurance Rate Factors ("Factors") which proved to be incorrect; and WHEREAS, the Parties have agreed to incorporate revised Factors as shown in the attached Exhibit IV as of October 1, 2008; and WHEREAS, the Parties now wish to recalculate all billing transactions from October 1, 2008 using the revised Factors; and WHEREAS, the Ceding Company shall alter its administrative systems to enable the recalculation of premium. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Exhibit IV is deleted in its entirety and replaced with the attached revised Exhibit IV. 3. The Ceding Company shall recalculate all billing transactions from October 1, 2008 and pay the Reinsurer accordingly. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 11 -- Effective 10/01/2008 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life Americas Reinsurance Company By: /s/ Glenn Cunningham Attest: /s/ Robin S. Blackwell ---------------------------------------------- ---------------------------------------------- Name: Glenn Cunningham Name: Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life Americas Reinsurance Company SCOR Global Life Americas Reinsurance Company Date: April 4, 2012 Date: April 6, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe ---------------------------------------------- ---------------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: May 21, 2012 Date: 5/22/2012
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 11 -- Effective 10/01/2008 2 EXHIBIT IV YRT REINSURANCE RATE FACTORS EFFECTIVE OCTOBER 1, 2008 FOR SINGLE LIFE AND LAST SURVIVOR PLANS OF INSURANCE AND FOR AUTOMATIC AND FACULTATIVE REINSURANCE YRT REINSURANCE RATE FACTORS (SEE EXHIBIT I FOR USAGE) FOR YEARS OF COVERAGE 1-10 FOR YEARS OF COVERAGE 11-20 FOR YEARS OF COVERAGE 21 AND LATER Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 11 -- Effective 10/01/2008 3 AMENDMENT 12 EFFECTIVE MARCH 1, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to restate the definition of Working Reserve for the Reinsured Net Amount at Risk to reflect that it is the approximate value of the reserve net of other reinsurance arrangements held by the Ceding Company; and WHEREAS, the Ceding Company and the Reinsurer wish to acknowledge that Hartford Bicentennial UL Freedom and Hartford Bicentennial UL Joint Freedom II will now use NAR Type B only. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is hereby deleted in its entirety and replaced with the attached, revised Schedule A. 3. Schedule B is hereby deleted in its entirety and replaced with the attached, revised Schedule B. 4. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life Americas Reinsurance Company By: /s/ Glenn Cunningham Attest: /s/ Robin S. Blackwell -------------------------------------- -------------------------------- Name: Glenn Cunningham Name: Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life Americas Reinsurance SCOR Global Life Americas Company Reinsurance Company Date: September 20, 2012 Date: September 25, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- --------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: October 8, 2012 Date: 10/11/2012
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE MARCH 1, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** -------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Value Option Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Extended Value Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Option
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached.
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED) DATE** -------------------------------------------------------------------------------- LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 5 Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides far monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 6 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 II Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Freedom Hartford Bicentennial UL Joint 2001 CSO M/F S/NS Ultimate ANB B 10/01/2008 Freedom II
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 7 Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 8 SCHEDULE B REINSURANCE SPECIFICATIONS EFFECTIVE MARCH 1, 2012 AUTOMATIC REINSURANCE: The Ceding Company shall retain its available retention on each risk, defined below as the Retained Net Amount at Risk, subject to the applicable Ceding Company's Treaty Retention Limit shown in Exhibit II. The Reinsurer will automatically reinsure a portion of the remainder of the risk, called the Reinsured Net Amount at Risk, as defined below in this Schedule B. FACULTATIVE REINSURANCE: The Reinsurer will reinsure X% (as determined at issue) of the Total Net Amount at Risk for the risk. TOTAL ALLOCATION LIMIT (TAL): As shown in Exhibit II. CEDING COMPANY'S TREATY RETENTION LIMIT (CCTRL): As shown in Exhibit II. CEDING COMPANY'S ALLOCATED RETENTION (CCAR): As shown in Exhibit II. CURRENT RETENTION (CURRRET) = Current amount of life insurance retained by the Ceding Company and its affiliated companies on the life for in-force life insurance coverage. (For Last Survivor risks, see the Last Survivor Limits and Retention Worksheet in Exhibit II.) REINSURER'S ALLOCATED RETENTION (REINSARET): As shown in Exhibit II. REINSURER'S ATTACHMENT POINT (REINSAPT): As shown in Exhibit II. NAR TYPE for the Plan of Insurance to be reinsured under this Agreement, as shown in Schedule A. STEP 1 -- DETERMINE TOTAL NET AMOUNT AT RISK FOR THE COVERAGE* TOTAL NET AMOUNT AT RISK (TOTNAR) = For NAR TYPE A, Death Benefit minus the Account Value. For NAR TYPE B, Death Benefit minus the Working Reserve, where Working Reserve = (i) x (ii) / (iii), and Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 9 STEP 2 -- DETERMINE NET AMOUNT AT RISK FOR EACH "LAYER" OF COVERAGE STEP 3 -- DETERMINE THE NAR FOR THE CEDING COMPANY AND THEN FOR THE REINSURER Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 10 MINIMUM AUTOMATIC REINSURANCE CESSION: MINIMUM FACULTATIVE REINSURANCE APPLICATION: LEAD REINSURER: Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 12 -- Effective 03/01/2012 11 AMENDMENT 13 EFFECTIVE OCTOBER 15, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to include Hartford Joint Founders Plus UL as Base Policy under the Agreement, for policies issued on or after the Effective Date shown in Schedule A. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY BY ITS ADMINISTRATOR AND ATTORNEY-IN-FACT SCOR GLOB LIFE AMERICAS REINSURANCE COMPANY By: /s/ Glenn Cunningham Attest: /s/ Robin Blackwell -------------------------------------- ------------------------------------- Name: Glenn Cunningham Name: Robin Blackwell Title: Executive Vice President Title: Assistant Vice President Date: November 5, 2012 Date: November 8, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Michael Roscoe -------------------------------------- ------------------------------------- Name: Paul Fischer, FSA, MAAA Name: Michael Roscoe, FSA, MAAA Title: Assistant Vice President and Actuary Title: Senior Vice President Individual Life Product Management Individual Life Product Management Date: November 27, 2012 Date: 11/29/2012
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT Effective October 15, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life Extended Value 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 Extended Value Option 2001 CSO M/F Composite Ultimate ANB A 08/06/2012
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 3
SINGLE LIFE PLANS OF INSURANCE RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached.
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Accidental Death Benefit (ADB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 4 RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 5 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Guaranteed Minimum Accumulation Benefit (GMAB)Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 6 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 7 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ------------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy II 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint Freedom II 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Joint Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/15/2012
* NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 8 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 13 -- Effective 10/15/2012 9 AMENDMENT 14 EFFECTIVE JULY 16, 2012 TO THE AUTOMATIC AND FACULTATIVE MONTHLY RENEWABLE TERM REINSURANCE AGREEMENT EFFECTIVE OCTOBER 1, 2008 BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("CEDING COMPANY") AND TRANSAMERICA LIFE INSURANCE COMPANY ("REINSURER") ("AGREEMENT") WHEREAS, the Reinsurer currently reinsures the Ceding Company's plans or policies under the Agreement; and WHEREAS, the Ceding Company and the Reinsurer wish to amend the Agreement to reflect that the following Products will be added to the Agreement and the Effective Dates shown in Schedule A are the dates the products will become reinsured: - Hartford Frontier 2012 Indexed UL, - Hartford Frontier 2012 Indexed UL Extended Value Option, - Hartford Leaders VUL Liberty 2012, and - Hartford Leaders VUL Liberty 2012 Extended Value Option. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Ceding Company and the Reinsurer hereby agree as follows: 1. The above recitals are true and accurate and are incorporated herein. 2. Schedule A is deleted in its entirety and replaced with the attached revised Schedule A. 3. Except as herein amended, all other terms and conditions of the Agreement shall remain in full force and effect and unchanged. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 1 In witness of the foregoing, the Ceding Company and the Reinsurer have, by their respective officers, executed this Amendment in duplicate on the dates indicated below. TRANSAMERICA LIFE INSURANCE COMPANY by its Administrator and Attorney-in-Fact SCOR Global Life Americas Reinsurance Company By: /s/ Glenn Cunningham Attest: /s/ Robin S. Blackwell ---------------------------------------- ------------------------------ Name: Glenn Cunningham Name: Robin S. Blackwell Title: Executive Vice President Title: Assistant Vice President SCOR Global Life Americas Reinsurance SCOR Global Life Americas Company Reinsurance Company Date: August 13, 2012 Date: August 27, 2012
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ Paul Fischer Attest: /s/ Donna R. Jarvis ---------------------------------------- ------------------------------ Name: Paul Fischer, FSA, MAAA Name: Donna R. Jarvis Title: Assistant Vice President and Actuary Title: Vice President and Actuary Individual Life Product Management Date: 9-24-12 Date: 9-24-12
Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 2 SCHEDULE A PLANS OF INSURANCE COVERED UNDER THIS AGREEMENT EFFECTIVE JULY 16, 2012 SINGLE LIFE PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** --------------------------------------------------------------------------------------------------------------------------------- Stag UL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Bicentennial UL Founders 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford UL CV 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Wall Street VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Stag Protector II VUL 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Legacy 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Stag Accumulator II VUL 1980 CSO M/F Unismoke Ultimate ALB A 10/01/2008 Hartford Leaders VUL Liberty (a) 1980 CSO M/F Unismoke Ultimate ANB A 10/01/2008 Hartford Leaders VUL Liberty (b) 2001 CSO M/F Composite Ultimate ANB A 10/01/2008 Life Solutions II UL (a) 1980 CSO M/F S/NS Ultimate ALB A 10/01/2008 Life Solutions II UL (b) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Advanced Universal Life 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Freedom 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Hartford Quantum II VUL (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Quantum II VUL (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford ExtraOrdinary Whole Life (a) 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford ExtraOrdinary Whole Life (b) 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 Hartford Bicentennial UL Founders II 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Bicentennial UL Founders II Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 03/05/2010 Hartford Frontier Indexed Universal Life 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Hartford Frontier Indexed Universal Life Extended Value 2001 CSO M/F S/NS Ultimate ANB A 09/07/2010 Option Hartford Founders Plus UL 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Founders Plus UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 10/03/2011 Hartford Frontier 2012 Indexed UL 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Frontier 2012 Indexed UL Extended Value Option 2001 CSO M/F S/NS Ultimate ANB A 07/16/2012 Hartford Leaders VUL Liberty 2012 2001 CSO M/F Composite Ultimate ANB A 08/06/2012 Hartford Leaders VUL Liberty 2012 Extended Value Option 2001 CSO M/F Composite Ultimate ANB A 08/06/2012
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** --------------------------------------------------------------------------- Primary Term Insured Rider 10/01/2008 Other Covered Insured Term Life Rider 10/01/2008 Cost of Living Adjustment (COLA) Rider 10/01/2008
NOTE: NAR Type for term riders above is C. For COLA Rider, NAR Type follows Base Policy to which it is attached. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 3
RIDERS THAT PROVIDE ADDITIONAL BENEF EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** --------------------------------------------------------------------------- Accidental Death Benefit (AOB) Rider 10/01/2008 Accelerated Benefit Rider (ABR) 10/01/2008 LifeAccess Accelerated Benefit Rider (LAABR) 10/01/2008 Policy Continuation Rider 10/01/2008 Policy Protection Rider (PPR) 10/01/2008 Enhanced No Lapse Guarantee Rider 10/01/2008 Lifetime No Lapse Guarantee Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Conversion Option Rider 10/01/2008 Overloan Protection Rider 10/01/2008 Waiver of Specified Amount (WSA) Rider 10/01/2008 Waiver of Monthly Deductions (WMD) Rider 10/01/2008 Children's Life Insurance Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Estate Tax Repeal Benefit Rider 10/01/2008 Modified Surrender Value Rider 10/01/2008 Cash Surrender Value Endorsement 10/01/2008 Automatic Premium Payment Rider 10/01/2008 Additional Premium Rider 10/01/2008 Qualified Plan Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 DisabilityAccess Rider (DAR) 08/11/2009 LongevityAccess Rider 03/14/2011 LifeAccess Care Rider 04/11/2011
------------ ** Eligibility for new business is based on issue date on or after the Effective Date shown. RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING ADDITIONAL DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Primary Insured Term Rider: Provides additional level term life coverage on the base policy insured. Other Covered Insured Term Life Rider: Provides level term life coverage on an insured other than the base policy insured. Cost of Living Adjustment (COLA) Rider: Provides for biennial face amount increases, without underwriting, based on increases in the Consumer Price Index. The maximum amount of any single increase is $50,000. Any increase can be declined by the policyholder, which stops future increases. Available only at issue and only for non-substandard issue ages 0 through 60. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 4 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE: Accidental Death Benefit Rider: Pays an additional death benefit if the death on the insured is caused by a qualifying accident. Accelerated Benefit Rider: Provides the policyholder up to 100% of the death benefit, discounted with interest, if the insured's life expectancy is 12 months or less. After acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk as described in Schedule B, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. LifeAccess Accelerated Benefit Rider (LAABR): Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. In accordance with Schedule B, during and after acceleration, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to acceleration, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Policy Continuation Rider: Intended to prevent the lapse of highly loaned policies. Policy Protection Rider: Protects the death benefit of the base policy and any primary insured term rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Enhanced No Lapse Guarantee Rider: Provides that the policy will not lapse as long as cumulative premiums paid less indebtedness less withdrawals are greater than or equal to the cumulative no lapse guarantee premiums. Length of guarantee varies by issue age. Lifetime No Lapse Guarantee Rider: Same as Enhanced No Lapse Guarantee Rider but with lifetime guarantee. Guaranteed Minimum Accumulation Benefit (GMAB) Rider: Provides, at the end of the GMAB Guarantee Period (usually 20 years), that the policy Account Value will be increased, if necessary, to equal the sum of gross premiums paid to that date. There is a small monthly charge and a minimum cumulative premium requirement to keep the rider in force. Paid-Up Life Insurance Rider: Similar to the GMAB rider, with the same Guarantee Period, a monthly charge, and a cumulative premium requirement. At end of the Guarantee Period, the owner may elect to change coverage to paid-up life using the Account Value as a 5% NSP to determine the amount of coverage; however, the amount of coverage will never be lower than the sum of gross premiums paid to that date. Once elected, premiums are no longer payable. Conversion Option Rider: During certain policy years and prior to the insured's attained age 70, the policy may be converted, without evidence of insurability, to any permanent plan of life insurance the Ceding Company then makes available for conversions of this policy. Overloan Protection Rider: Protects a policy from terminating due to overloan. Waiver of Specified Amount (WSA) Rider: Waives a specified amount monthly while the insured is disabled. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 5 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Waiver of Monthly Deductions (WMD) Rider: Waives monthly deduction amounts while the insured is disabled. Children's Life Insurance Rider: Provides level term life coverage for each child of the insured. Foreign Travel Exclusion Rider: Provides a limited death benefit (Account Value less indebtedness) if the insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Estate Tax Repeal Benefit Rider: Pays the policy Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Modified Surrender Value Rider: Changes the Cash Surrender Value definition (to equal the Account Value) if the policy is surrendered within 3 years after the policy issue date. Cash Surrender Value Endorsement: Provides for enhanced Cash Surrender Value (equal to the current Account Value) in the event of policy surrender in the first 4 policy years, unless the policy is exchanged under Section 1035 to another company's policy. Automatic Premium Payment Rider: Provides for any Scheduled Premium due and unpaid by the end of any Policy Grace Period to be paid by an automatic deduction from the Account Value, if the Account Value exceeds the Guaranteed Cash Value. Additional Premium Rider: Allows additional premium amounts to be paid at the same payment intervals as scheduled premiums. Qualified Plan Rider: Indicates that the policy is owned by a qualified plan, details the policy owner's reporting responsibilities to the Ceding Company, and describes features and activities that are unavailable when the policy is owned by a Qualified Plan. Owner Designated Settlement Option Rider: Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. DisabilityAccess Rider (DAR): Pays a monthly benefit upon disability of the primary insured on the life insurance policy to which it is attached. The amount of monthly benefit is permanently set at rider issue and is limited to a 24-month benefit period. The maximum monthly benefit amount is $5,000; it is further limited to 2% of the initial face amount or 30% of monthly income at policy issue. The minimum monthly benefit is $1,000. LongevityAccess Rider: Provides for monthly benefits (up to 1% of death benefit) when the insured reaches age 90 and meets the rider's eligibility requirements. Includes a residual death benefit of 10% of the death benefit prior to withdrawals. In accordance with Schedule B, during and after withdrawals, the Ceding Company shall continue to pay the Reinsurer Reinsurance Premiums on the Reinsured Net Amount at Risk based on the Death Benefit prior to withdrawals, and the Reinsurer shall be liable for such Reinsured Net Amount at Risk upon the death of the insured. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 6 RIDERS THAT PROVIDE ADDITIONAL BENEFITS THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): LifeAccess Care Rider: Similar to the LifeAccess Accelerated Benefit Rider, but filed as a health product in some states. Provides for monthly benefits (up to 2% of death benefit) if insured meets certain ADL and home-care requirements. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 7 LAST SURVIVOR PLANS OF INSURANCE
NAR EFFECTIVE BASE POLICY VALUATION MORTALITY TABLE(S) TYPE* DATE** ------------------------------------------------------------------------------------------------- Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ALB A 10/01/2008 Hartford Leaders VUL Joint Legacy 2001 CSO M/F S/NS Ultimate ANB A 10/01/2008 II Hartford Advanced Last Survivor UL 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Hartford Bicentennial UL Joint 2001 CSO M/F S/NS Ultimate ALB B 10/01/2008 Freedom Hartford Bicentennial UL Joint 2001 CSO M/F S/NS Ultimate ANB B*** 10/01/2008 Freedom II
------------ * NAR Type is described in Schedule B. ** Eligibility for new business is based on issue date on or after the Effective Date shown. *** The version of this product launched on 7/1/2010 used NAR Type A prior to 3/1/2012. As of 3/1/2012, NAR Type B is used prospectively for all in force and new policies.
RIDERS PROVIDING DEATH BENEFITS EFFECTIVE THAT ARE ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- Estate Protection Rider (NAR Type is C) 10/01/2008
RIDERS THAT PROVIDE ADDITIONAL BENEFITS EFFECTIVE BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE DATE** -------------------------------------------------------------------------------- LS Exchange Option Rider 10/01/2008 Policy Protection Rider 10/01/2008 Estate Tax Repeal Rider 10/01/2008 Foreign Travel Exclusion Rider 10/01/2008 Guaranteed Minimum Accumulation Benefit (GMAB) Rider 10/01/2008 Paid-Up Life Insurance Rider 10/01/2008 Owner Designated Settlement Option Rider 03/05/2010 Joint LifeAccess Rider 01/31/2011
RIDER DESCRIPTIONS (Rider descriptions are added for convenience. To the extent the description conflicts with the terms of the rider, the rider will govern.) RIDERS PROVIDING DEATH BENEFITS THAT ARE ELIGIBLE FOR REINSURANCE: Estate Protection Rider: This rider provides last survivor level term life insurance on the base policy insureds for three years. RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE: LS Exchange Option Rider: Allows a Last Survivor policy to be split into two Single Life policies, without new evidence of insurability, if divorce, business dissolution, or estate-tax repeal or reduction occurs. The face amount of each new Single Life policy will equal one half of the Last Survivor policy face amount. Upon a split, reinsurance will continue at point-in-scale rates for each single life, as documented in Section X.C. (This rider is not available when one of the insureds is uninsurable or above Table H.) Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 8 RIDERS THAT PROVIDE ADDITIONAL BENEFITS BUT THAT ARE NOT ELIGIBLE FOR REINSURANCE (CONTINUED): Policy Protection Rider: Protects the death benefit of the base policy and any Estate Protection Rider from lapse as long as the Policy Protection Account Value ("shadow account") is not negative. Estate Tax Repeal Rider: Will pay the Account Value less indebtedness if the Federal Estate Tax Law is fully repealed by December 31, 2010, and the Ceding Company receives a request for this benefit amount from the policy owner. Foreign Travel Exclusion: Provides a limited death benefit (Account Value less indebtedness) if either insured dies due to travel to, from, or within certain foreign countries, or due directly or indirectly to illness or injury sustained during such travel. Guaranteed Minimum Accumulation Benefit Rider and Paid-Up Life Insurance Rider: Same as Single Life riders. Owner Designated Settlement Option Rider. Allows the policy owner to designate a Settlement Option to be used for the payment of Death Proceeds. Joint LifeAccess Rider: Similar to the LifeAccess Accelerated Benefit Rider. Available only on Last Survivor products where the benefit will be payable for the last surviving insured if chronically ill or if both insureds are concurrently chronically ill. Allocated Retention Pool -- Effective 10/01/2008 Between HLAIC and TLIC Amendment 14 -- Effective 07/16/2012 9 EX-99.(G)(7) 8 a13-3080_1ex99dg7.txt EX-99.(G)(7) EXECUTION VERSION REINSURANCE AGREEMENT BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (REFERRED TO AS THE CEDING COMPANY) AND THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (REFERRED TO AS THE REINSURER) TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- ARTICLE I. DEFINITIONS 1 Section 1.1 Definitions 1 ARTICLE II. BASIS OF REINSURANCE AND BUSINESS REINSURED 20 Section 2.1 Reinsurance 20 Section 2.2 Separate Accounts 20 Section 2.3 Existing Reinsurance 21 Section 2.4 Non-Guaranteed Elements 23 Section 2.5 Reserves and Liabilities Reporting 24 Section 2.6 Insurance Contract Changes 24 Section 2.7 Follow the Fortunes 24 ARTICLE III. TRANSFER OF ASSETS; PAYMENTS; SETTLEMENTS; ADMINISTRATION AND ACCOUNTING 25 Section 3.1 Payments by the Ceding Company 25 Section 3.2 Payments by the Reinsurer 26 Section 3.3 Modified Coinsurance 27 Section 3.4 Net Settlement 27 Section 3.5 Delayed Payments 28 Section 3.6 Offset and Recoupment Rights 29 Section 3.7 Administration and Accounting 29 Section 3.8 Certain Reports 29 Section 3.9 Reserved 30 Section 3.10 Books and Records 30 Section 3.11 Lockbox Accounts 31 Section 3.12 Ownership of Recoverables 31 Section 3.13 Reinsurer's Security Interest 32 Section 3.14 Novation of Covered Insurance Policies 33 Section 3.15 Alternative and Additional Structures 34 ARTICLE IV. LICENSES; REINSURANCE CREDIT 35 Section 4.1 Licenses 35 Section 4.2 Security 35 Section 4.3 Investment of Trust Assets 37 Section 4.4 Deposit of Assets 38 Section 4.5 Adjustments and Withdrawals 38 Section 4.6 Withdrawals by the Ceding Company 39 Section 4.7 Reserve Credit 41 Section 4.8 Representations, Warranties, and Covenants of the 41 Reinsurer Section 4.9 Triggering Event; Custodial Account 42 Section 4.10 Cure of Triggering Event or Recapture Triggering Event 43 Section 4.11 Withdrawal Event 44 Section 4.12 Actions Following Reinvestment Event 45 Section 4.13 Equitable Remedies 45 ARTICLE V. OVERSIGHTS; COOPERATION; REGULATORY MATTERS 45 Section 5.1 Oversights 45 Section 5.2 Cooperation 46
i Section 5.3 Regulatory Matters 46 ARTICLE VI. DAC TAX 46 Section 6.1 Election 46 Section 6.2 Definitions 46 Section 6.3 Exchange of Information 47 Section 6.4 Effectiveness 47 Section 6.5 United States Tax Status Representation 47 ARTICLE VII. INSOLVENCY 47 Section 7.1 Insolvency of the Ceding Company 47 ARTICLE VIII. CUT THROUGH AND NOVATIONS UPON RECAPTURE 48 Section 8.1 Direct Payments by the Reinsurer 48 Section 8.2 Satisfaction and Discharge 49 Section 8.3 Redomestication of the Ceding Company 49 Section 8.4 Reinsurer Existing Reinsurance Agreements 49 ARTICLE IX. DURATION; RECAPTURE 51 Section 9.1 Duration 51 Section 9.2 Survival 51 Section 9.3 Termination and Recapture 52 Section 9.4 Payments on Termination or Recapture 53 Section 9.5 Assignment of Reinsurer Existing Reinsurance Agreements Following Recapture 54 Section 9.6 Equitable Remedies 54 ARTICLE X. INDEMNIFICATION; DISCLAIMER 54 Section 10.1 Reinsurer's Obligation to Indemnify 54 Section 10.2 Ceding Company's Obligation to Indemnify 54 Section 10.3 Notice of Claim; Defense 55 Section 10.4 No Duplication; Exclusive Remedy 56 Section 10.5 Mitigation and Limitation on Set-off 57 Section 10.6 Recovery by Indemnified Party 57 Section 10.7 Waiver of Duty of Utmost Good Faith 58 ARTICLE XI. MISCELLANEOUS 58 Section 11.1 Notices 58 Section 11.2 Entire Agreement 59 Section 11.3 Governing Law and Jurisdiction 59 Section 11.4 No Third Party Beneficiaries 60 Section 11.5 Expenses 60 Section 11.6 Counterparts 60 Section 11.7 Severability 61 Section 11.8 Waiver of Jury Trial; Punitive Damages 61 Section 11.9 Treatment of Confidential Information 61 Section 11.10 Assignment 62 Section 11.11 Waivers 62 Section 11.12 Interpretation 62
ii REINSURANCE AGREEMENT THIS REINSURANCE AGREEMENT (the "Agreement"), is made and entered into on January 2, 2013 and effective as of the Effective Time by and between Hartford Life and Annuity Insurance Company, a Connecticut-domiciled life insurance company (the "Ceding Company") and The Prudential Insurance Company of America, a New Jersey-domiciled life insurance company (the "Reinsurer"). For purposes of this Agreement, the Ceding Company and the Reinsurer shall each be deemed a "Party." WHEREAS, Hartford Life, Inc. has agreed to sell, and Prudential Financial, Inc. has agreed to purchase, directly or through one or more Affiliates, the Business and certain assets of Hartford Financial Services Group, Inc. and its Affiliates pursuant to a Purchase and Sale Agreement, dated as of September 27, 2012 (the "Purchase Agreement"); WHEREAS, as contemplated by the Purchase Agreement, the Ceding Company wishes to cede and retrocede to the Reinsurer, and the Reinsurer wishes to reinsure, on a one-hundred percent (100%) indemnity reinsurance basis net of Collectible Reinsurance, on the terms and conditions set forth herein, the risks arising in respect of the Covered Insurance Policies (as hereinafter defined); and [REDACTED] NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Ceding Company and the Reinsurer agree as follows: ARTICLE I. DEFINITIONS SECTION 1.1 DEFINITIONS. Any capitalized term used but not defined herein shall have the meaning set forth in the Purchase Agreement. The following terms have the respective meanings set forth below throughout this Agreement: "Accounting Period" means each calendar quarter during the term of this Agreement or any fraction thereof ending on the Recapture Date, the Termination Date or the date this Agreement is otherwise terminated in accordance with Section 9.1, as applicable. "Actual Aggregate New Insurance Policy Reinsured Face Amount" means an amount equal to the actual aggregate face amount of the New Insurance Policies issued pursuant to Section 3.1(a)(i) of each Administrative Services Agreement (excluding, for the avoidance of doubt, Group Conversion Policies, and new insurance policies issued or reinsured pursuant to contractual commitments or exchanges, such as term conversions, additional coverage options, and other conversion rights) ceded under New Reinsurance Agreements as of the last day of the New Business Period. "Administrator" has the meaning set forth in the Administrative Services Agreement. [REDACTED] "Agreement" has the meaning set forth in the preamble. "Beneficiary" has the meaning set forth in Section 8.1. "Ceding Company" has the meaning set forth in the preamble. "Ceding Company Collateral" has the meaning set forth in Section 4.2(f). "Ceding Company Extra-Contractual Obligations" means (i) all Extra-Contractual Obligations to the extent arising out of, resulting from or related to any act, error or omission before the Effective Time, whether or not intentional, negligent, in bad faith or otherwise, by the Ceding Company or any of its Affiliates, or any service providers or Distributors engaged or compensated by the Ceding Company or any of its Affiliates or otherwise, (ii) all Extra-Contractual Obligations to the extent arising out of, resulting from or related to any act, error or omission on or after the Effective Time, whether or not intentional, negligent, in bad faith or otherwise, by the Ceding Company or any of its Affiliates, or any service providers or Distributors engaged or compensated by the Ceding Company or any of its Affiliates to the extent attributable to a direction or request of the Ceding Company or any of its Affiliates 2 (including without limitation, in the performance of its services under the Transition Services Agreement or Administrative Services Agreement), unless such direction or request of the Ceding Company or any of its Affiliates has been approved by the Reinsurer in writing, in which case any resulting error or omission shall not be a Ceding Company Extra-Contractual Obligation, and (iii) any liability of the Ceding Company as set forth on Schedule 1.1(A). For the avoidance of doubt, Ceding Company Extra-Contractual Obligations include "Extra-Contractual Obligations" assumed by the Ceding Company as part of its reinsured liabilities under the terms of any Underlying Reinsurance Agreements which such "Extra-Contractual Obligations" arise before or after the Effective Time out of acts or omissions by the Ceding Company as the reinsurer thereunder or any of its directors, officers, employees, Affiliates, agents or representatives relating to the business reinsured under such Underlying Reinsurance Agreements. "Ceding Company Indemnified Parties" has the meaning set forth in Section 10.1. "Claim Notice" has the meaning set forth in Section 10.3(a). "Collateral" has the meaning set forth in Section 3.13(a). "Collectible Reinsurance" means all Reinsurance Recoverables other than any amounts a reinsurer has failed to pay when due under any Existing Reinsurance Agreement (after giving effect to any cure periods thereunder) where such non-payment continues 90 days from the date such payment was due (after giving effect to any applicable cure periods) or, if the reinsurer is contesting such payment in good faith, the date a final and non-appealable judgment or arbitral award is entered requiring the reinsurer to pay such Reinsurance Recoverables. "Company Action Level RBC" means, at any date of determination, two hundred percent (200%) of the authorized control level risk-based capital of the Reinsurer (i) determined in accordance with the Applicable Law of the state of domicile of such entity and (ii) calculated using the risk-based capital factors and formula prescribed by the National Association of Insurance Commissioners (or any successor organization) and inclusive of any adjustments to such factors or formula resulting from prescribed or permitted practices granted by the applicable state of domicile. "Confidential Information" means all documents and information concerning one Party, any of its Affiliates, any Distributor, any mutual fund organization that has its mutual funds offered as funding vehicles for one or more Separate Accounts, the Business or the Covered Insurance Policies, including any information relating to any Person insured directly or indirectly under the Covered Insurance Policies, furnished to the other Party or such other Party's Affiliates or Representatives in connection with this Agreement or the transactions contemplated hereunder, including, without limitation, RBC Ratios of the Reinsurer reported hereunder, except that Confidential Information does not include information which: (a) at the time of disclosure or thereafter is generally available to and known by the public other than by way of a disclosure by the receiving Party hereunder or by any Representative or Affiliate of such Party hereto; (b) was in the possession of, or becomes available to, the receiving Party or such Party's Representatives or Affiliates on a non-confidential basis, directly or indirectly, from a source other than the disclosing Party or its Representatives, provided, that such source is not and was 3 not known to the receiving Party or its Representatives or Affiliates to be prohibited from transmitting the information by a contractual, legal, fiduciary, or other obligation of confidentiality by the disclosing Party; or (c) was independently developed without violating any obligations under this Agreement and without the use of any other Confidential Information or any derivative thereof. "Covered Insurance Policies" means (i) any and all binders, endorsements, riders, policies, certificates, and contracts of individual or group life insurance, and supplementary contracts of individual or group life insurance (including retained asset accounts and all other settlement options) issued, renewed or assumed by the Ceding Company in the United States, the District of Columbia, Puerto Rico or Guam and that correspond to the policy forms of the Ceding Company identified by form number on Schedule 1.1(B) (with the group life items identified under a separate heading on such schedule), (ii) any and all binders, endorsements, riders, policies, certificates, and contracts of individual life insurance, and supplementary contracts of individual life insurance (including retained asset accounts and all other settlement options) issued in the United States, the District of Columbia, Puerto Rico or Guam that are reinsured by the Ceding Company from an Underlying Company pursuant to the Underlying Reinsurance Agreements identified in Schedule 1.1(C) and that correspond to the policy forms of the Ceding Company (or the Underlying Companies) identified by form number on Schedule 1.1(B), (iii) all other binders, endorsements, riders, policies, certificates, and contracts of individual or group life insurance, and supplementary contracts of individual or group life insurance (including retained asset accounts and all other settlement options) issued, renewed, reinsured or assumed by the Ceding Company in the United States, the District of Columbia, Puerto Rico or Guam on policy forms that are substantially similar to the policy forms of the Ceding Company identified on Schedule 1.1(B), (iv) the endorsements and riders to policies of individual or group life insurance covered by clauses (i) through (iii) above that are identified on Schedule 1.1(B), in each of clauses (i) through (iv), issued, renewed, reinsured or assumed by the Ceding Company on or prior to the Closing Date (including those that have lapsed and terminated with unpaid claims), provided, that in each of clauses (i) through (iv) such item is reflected or otherwise taken into account in the Closing Statement of General Account Net Settlement, and (v) the New Insurance Policies; provided further, that Covered Insurance Policies shall not include any policies listed on Schedule 1.1(D). "Cure Acknowledgement" has the meaning set forth in Section 4.10. "Cure Event" has the meaning set forth in Section 4.10. "Cure Notice" has the meaning set forth in Section 4.10. "Current Policy Loan Amount" means, with respect to the Ceding Company, the aggregate principal and accrued interest thereon of all policy loans with respect to the Covered Insurance Policies, determined in accordance with SAP and appropriately includable on the Contract Loans line of the Asset page in the Statutory Financial Statements of the Ceding Company (or any successors to such page). 4 "Custodial Account" means an account established in the name of the Reinsurer with the Custodial Bank pursuant to Section 4.9, which shall be subject to the terms of the Custodial Account Control Agreement. "Custodial Account Eligible Assets" has the meaning set forth in Section 4.9(a). "Custodial Account Control Agreement" means the Account Control Agreement dated as of the date hereof by and among the Reinsurer, the Ceding Company and the Custodial Bank, substantially in the form of Exhibit I hereof. "Custodial Bank" means [REDACTED]. "Custodial Funds" has the meaning set forth in Section 4.9(b). "Custodial Fund Transfer Date" means, with respect to an Accounting Period, the latest of (i) the fifth Business Day following delivery of the report contemplated by Section 4.5(a) for such Accounting Period, (ii) the fifth Business Day following delivery of the report contemplated by Section 4.5(b) for such Accounting Period and (iii) the fifth Business Day following delivery of the Settlement Statement for such Accounting Period. "Economic Reserves" means, as of any date of determination, the general account economic reserves with respect to the Covered Insurance Policies as of such date without netting any reserves ceded to reinsurers under the Existing Reinsurance Agreements or the Reinsurer Existing Reinsurance Agreements, as determined by the Reinsurer in accordance with the methodologies and assumptions set forth on Schedule 1.1(E) consistently applied; provided that the term "Economic Reserves" shall not include reserves with respect to any Covered Insurance Policies reinsured on a coinsurance basis under any Underlying Reinsurance Agreement for which the Ceding Company holds the Trust Withheld Assets. "Effective Time" means 12:01 a.m. (New York time) on January 1, 2013. "Eligible Assets" has the meaning set forth in Section 4.3. "Estimated Aggregate New Insurance Policy Reinsured Face Amount" means, as of any date of determination, an amount equal to the good faith estimate of the amount of the New Insurance Policies that will be issued pursuant to Section 3.1(a)(i) of each Administrative Services Agreement (excluding, for the avoidance of doubt, Group Conversion Policies, and new insurance policies issued or reinsured pursuant to contractual commitments or exchanges, such as term conversions, additional coverage options, and other conversion rights) and ceded under New Reinsurance Agreements as of the last day of the New Business Period. "Existing Reinsurance Agreements" means (a) the reinsurance agreements listed on Schedule 1.1(F) under which the Ceding Company has ceded or retroceded to reinsurers (whether or not affiliated with the Ceding Company) risks arising in respect of the Covered Insurance Policies and the Ceding Company's interest in any trust or other agreement or instrument providing security for the Ceding Company with respect to such reinsurers' reinsurance obligations under such reinsurance agreement, and (b) any reinsurance agreement, trust or other agreement or instrument providing security for such reinsurance obligations entered 5 into by the Ceding Company with the prior written consent of the Reinsurer to replace any of such reinsurance agreements or security arrangements following any termination or recapture thereof, as all such reinsurance agreements may be in force and effect from time to time and at any time, in each case that are (i) in force or are being treated as being in force as of the date hereof or (ii) terminated but under which there remains any outstanding liability or obligation from the reinsurer. Any Existing Reinsurance Agreement that is novated to the Reinsurer shall cease to be an Existing Reinsurance Agreement upon the effectiveness of such novation. "Extra-Contractual Obligations" means all Liabilities to any Person arising out of or relating to the Covered Insurance Policies (other than Liabilities arising under the express terms and conditions of the Covered Insurance Policies), including, without limitation, any Liability for fines, penalties, Taxes, fees, forfeitures, compensatory, punitive, exemplary, special, treble, bad faith, tort or any other form of extra-contractual damages, as well as all legal fees and expenses relating thereto, which Liabilities arise out of, result from or relate to, any act, error or omission, whether or not intentional, negligent, in bad faith or otherwise, arising out of or relating to the Covered Insurance Policies, including, without limitation, (i) the form, sale, marketing, distribution, underwriting, production, issuance, cancellation or administration of the Covered Insurance Policies, (ii) the investigation, defense, trial, settlement or handling of claims, benefits, or payments under the Covered Insurance Policies, or (iii) the failure to pay or the delay in payment or errors in calculating or administering the payment of benefits, claims or any other amounts due or alleged to be due under or in connection with the Covered Insurance Policies. "Fair Market Value" means (i) as to cash, the amount of it; and (ii) as to an asset other than cash, the amount at which such asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. "General Account Liabilities" means all liabilities and obligations, net of Collectible Reinsurance under any Existing Reinsurance Agreements (but subject to Section 2.3(b)), arising under the express terms of the Covered Insurance Policies whether incurred before, at or after the Effective Time (unless specified otherwise below), including: 1. all liabilities and obligations for incurred but not reported claims, pending claims and benefits (including death benefits, waiver of premium benefits, accident and health benefits, endowments or matured endowments, paid-up additions, lump sum payments, annuitization payments, deferred payments, discontinuance disbursements, payments in respect of market value adjustments, rights to purchase additional coverage and any other settlement options), unearned premiums, claim expenses, interest on claims or unearned premiums, interest on policy funds, withdrawals, surrenders, amounts payable for returns or refunds of premiums, guaranteed minimum death benefits and loans made under the terms of any Covered Insurance Policy and other contract benefits, in each case arising under the express terms of the Covered Insurance Policies; 6 2. all liabilities and obligations (including any punitive, exemplary or other extra-contractual damages or obligations other than Ceding Company Extra-Contractual Obligations) to the extent assumed or reinsured by the Ceding Company under the terms of any of the Underlying Reinsurance Agreements; 3. Ceding Company's obligations to deliver or maintain collateral security (whether in trust, through a letter of credit or otherwise) or provide statutory financial statement credit to counterparties under the terms of any of the Underlying Reinsurance Agreements; 4. all liabilities and obligations arising out of any changes to the terms and conditions of the Covered Insurance Policies mandated by Applicable Law or initiated by the holder of any Covered Insurance Policy pursuant to the terms of such policy; 5. (i) Taxes due in respect of Premiums received or accrued after the Effective Time by the Ceding Company (other than Taxes measured by or imposed on the income of the Ceding Company) and (ii) assessments and similar charges to the extent attributable to Premiums received or accrued after the Effective Time in connection with participation by either the Ceding Company or the Reinsurer, whether voluntary or involuntary, in any guaranty association established or governed by any Governmental Body; provided, that the amount of any Taxes described in clause (i) shall be determined without regard to any credits, deductions or offsets to such Taxes otherwise available to the Ceding Company, other than any such credits, deductions or offsets that either are attributable to amounts described in clause (ii) or are reflected as an asset on the Closing Date Transfer Balance Sheet (calculated as if the Ceding Company issued and administered the Covered Insurance Policies through a separate legal entity that conducted no other insurance business); and provided further that, if any such credit, deduction or offset either attributable to amounts described in clause (ii) or reflected as an asset on the Closing Date Transfer Balance Sheet is used by the Ceding Company to offset or otherwise reduce Taxes due in respect of premiums that are not described in clause (i), the amount of such credit, deduction or offset shall be applied against, and reduce, reimbursements for Taxes due in respect of Premiums that are otherwise payable by the Reinsurer pursuant to this Agreement; 6. Compensation (including both fronted and trail commissions) and other servicing and administration fees payable with respect to the Covered Insurance Policies to or for the benefit of the Distributors who marketed or produced the Covered Insurance Policies, arising at and after the Effective Time; 7 7. Subject to Section 2.3(b), amounts payable to reinsurers under the Existing Reinsurance Agreements arising at and after the Effective Time; 8. all expense allowances payable under the terms of the Underlying Reinsurance Agreements and all experience refunds payable under the terms of the Underlying Reinsurance Agreements to the extent reflected in the Closing Statement of General Account Net Settlement or arising on and after the Effective Time; 9. dividends payable under the Covered Insurance Policies which are attributable to the operations of the Business or to surplus accumulated with respect to the Business; 10. all liabilities and obligations which relate to (x) Premiums received by the Reinsurer (or an Affiliate) or the Ceding Company pending transfer to the Separate Accounts, and (y) one or more Separate Accounts that are not payable out of the assets of the Separate Accounts, including any loss to a fund or product resulting from pricing errors, expense calculation errors or missing fund activity to the extent not resulting from acts or omission by the Ceding Company or any of its Affiliates; 11. all escheat or unclaimed property liabilities or obligations arising under or relating to the Covered Insurance Policies including any claim payment as a result of procedures implemented by the Ceding Company in connection with unclaimed property liabilities, whether or not included within the General Account Reserves; and 12. any other liability or obligation arising out of or relating to the Covered Insurance Policies for which a reserve or accrual has been established and reported in a specific line item on the Closing Statement of General Account Net Settlement applicable to the Ceding Company (after any disputes with respect thereto have been finally resolved in accordance with the Purchase Agreement); provided, however, that General Account Liabilities shall not include any Separate Account Liabilities or Ceding Company Extra-Contractual Obligations or expenses allocated to the Ceding Company under the Administrative Services Agreement. "General Account Modified Coinsurance Adjustment" means, with respect to any Accounting Period, an amount equal to the General Account Modified Coinsurance Amount as of the close of such Accounting Period less the General Account Modified Coinsurance Amount as of the close of the preceding Accounting Period. 8 "General Account Modified Coinsurance Amount" means, with respect to any Accounting Period, collectively (i) the aggregate amount held by Underlying Companies as modified coinsurance reserves with respect to the general account liabilities under the Covered Insurance Policies ceded to the Ceding Company on a modified coinsurance basis under the Underlying Reinsurance Agreements, and (ii) the aggregate amount of Trust Withheld Assets, in each case of clauses (i) and (ii) as of the close of such Accounting Period. "General Account Modified Coinsurance Assets" means the assets held by, or in trust by the Ceding Company for the benefit of, the Underlying Companies under the Underlying Reinsurance Agreements in support of the General Account Modified Coinsurance Amount. "General Account Modified Coinsurance Investment Income" means an amount equal to the investment income earned on the General Account Modified Coinsurance Assets plus the amortization of the Interest Maintenance Reserve on the Trust Withheld Assets. "General Account Reserves" means the aggregate amount of general account reserves (as described in Exhibits 5 and 6 of the Statutory Financial Statements of the Ceding Company or any successors to such exhibits), deposits (as described in Exhibit 7 of the Statutory Financial Statements of the Ceding Company or any successors to such exhibit) and liabilities (as described in Exhibit 8 of the Statutory Financial Statements of the Ceding Company or any successors to such exhibit) (in each case, without regard to the transactions contemplated by this Agreement) with respect to the Covered Insurance Policies, calculated in accordance with SAP; provided, the term "General Account Reserves" does not include the Separate Account Reserves. [REDACTED] 9 [REDACTED] 10 [REDACTED] "HLAC" means Hartford Life and Accident Insurance Company. "HLAC General Account Reserves" has the meaning given to the term "General Account Reserves" in the HLAC Reinsurance Agreement. [REDACTED] "HLAC Reinsurance Agreement" means the Reinsurance Agreement, effective as of the Effective Time, by and between HLAC and the Reinsurer, as the same may be amended, modified or supplemented from time to time. "HLAC Third Party Reinsurance" means collectively Existing Reinsurance Agreements (as defined in the HLAC Reinsurance Agreement) and Reinsurer Existing Reinsurance Agreements (as defined in the HLAC Reinsurance Agreement). "HLIC" means Hartford Life Insurance Company. "HLIC Covered Insurance Policies" has the meaning given to the term "Covered Insurance Policies" in the HLIC Reinsurance Agreement. "HLIC General Account Reserves" has the meaning given to the term "General Account Reserves" in the HLIC Reinsurance Agreement. [REDACTED] "HLIC Reinsurance Agreement" means the Reinsurance Agreement, effective as of the Effective Time, by and between HLIC and the Reinsurer, as the same may be amended, modified or supplemented from time to time. "HLIC Third Party Reinsurance" means collectively Existing Reinsurance Agreements (as defined in the HLIC Reinsurance Agreement) and Reinsurer Existing Reinsurance Agreements (as defined in the HLIC Reinsurance Agreement). "Indemnified Party" has the meaning set forth in Section 10.3(a). 11 "Indemnifying Party" has the meaning set forth in Section 10.3(a). "Interest Maintenance Reserve" means the liability reserve determined in accordance with SAP, the purpose of which is to amortize realized capital gains and losses resulting from fluctuations in interest rates. "Lockbox Account" has the meaning set forth in Section 3.11. "Lockbox Banks" has the meaning set forth in Section 3.11. "Lockbox Control Agreement" has the meaning set forth in Section 3.11. [REDACTED] "NAIC" means the National Association of Insurance Commissioners or any successor organization. [REDACTED] "Net Settlement" has the meaning set forth in Section 3.4(a). "New Business Period" means the period from the date hereof to (a) the 18-month anniversary of the date hereof or (b) the 24-month anniversary of the date hereof, if the period referred to in clause (i) of Section 3.01(a) of the Administrative Services Agreement is renewed for an additional 6 months pursuant to the terms of the Administrative Services Agreement. "New Insurance Policies" means the individual life insurance policies (including binders, endorsement, riders and supplementary contracts of individual life insurance) issued, renewed, reinsured or assumed by the Ceding Company following the Closing Date in accordance with the Administrative Services Agreement or the Wholesaling Agreement. New Insurance Policies shall exclude any Group Conversion Policies that are not reinsured under the Group Conversion Retrocession Agreement. "New Insurance Policy Percentage Reinsured" means (i) with respect to any date of determination prior to the last day of the New Business Period, the amount expressed as a percentage equal to (x) the Estimated Aggregate New Insurance Policy Reinsured Face Amount, divided by (y) the Aggregate Unreinsured Face Amount as of the Effective Time, and (ii) with respect to any date of determination on or following the last day of the New Business Period, the amount, expressed as a percentage, equal to (x) the Actual Aggregate New Insurance Policy Reinsured Face Amount, divided by (y) the Aggregate Unreinsured Face Amount as of the Effective Time. "New Reinsurance Agreements" means, collectively, (i) any new reinsurance agreement entered into by the Reinsurer referred to in clause (c) of the definition of "Reinsurer Existing Reinsurance Agreements", (ii) any new reinsurance agreement entered into by the Reinsurer referred to in clause (c) of the definition of "Reinsurer Existing Reinsurance Agreements" in the 12 HLAC Reinsurance Agreement and (iii) any new reinsurance agreement entered into by the Reinsurer referred to in clause (c) of the definition of "Reinsurer Existing Reinsurance Agreements" in the HLIC Reinsurance Agreement. "New Reinsurance Capacity" means, as of any date of determination, the product of (i) the excess (if any) of (x) [REDACTED] minus (y) the sum of the Percentage Reinsured for each fiscal year during the term of this Agreement or fraction thereof ending on or prior to such date minus (z) the New Insurance Policy Percentage Reinsured and (ii) the Aggregate Unreinsured Face Amount as of such date. "Non-Guaranteed Elements" means cost of insurance charges, credited interest rates, mortality and expense charges, administrative expense risk charges, policyholder dividends, policy loads and any other policy features that are subject to change, and those items set forth in Actuarial Standard of Practice 1-Non-Guaranteed Charges or Benefits for Life Insurance Policies and Annuity Contracts in effect as of the Effective Time and any successor rules for such Non-Guaranteed Elements as in effect from time to time. [REDACTED] "Party" has the meaning set forth in the preamble. [REDACTED] 13 [REDACTED] "Payee" has the meaning set forth in Section 8.1. "Percentage Reinsured" means, with respect to any fiscal year during the term of this Agreement or fraction thereof, the amount, expressed as a percentage, equal to (i) the aggregate face amount reinsured under each New Reinsurance Agreement entered into during such fiscal year or fraction thereof as of the effective date of such New Reinsurance Agreement, divided by (ii) the Aggregate Unreinsured Face Amount, which for the avoidance of doubt based on the definition of the "Aggregate Unreinsured Face Amount" will be determined as of the last day of the fiscal year ending immediately prior to such fiscal year in question or fraction thereof, or, with respect to the first fiscal year during the term of this Agreement, the Effective Time. [REDACTED] "Policy Loan Recoverables" means all policy loan repayments, policy loan interest and policy loan fees paid or payable in respect of the Covered Insurance Policies. "Premiums" means premiums, considerations, deposits, loan repayments and similar amounts paid or payable in respect of the Covered Insurance Policies. "Purchase Agreement" has the meaning set forth in the recitals. "Qualified Existing Reinsurance Dispute" has the meaning set forth in Section 2.3(b). 14 "RBC Ratio" means the percentage equal to (i) the quotient of the Total Adjusted Capital of the Reinsurer DIVIDED BY the Company Action Level RBC, MULTIPLIED BY (ii) 100. "RBC Reporting Deadline" means, as of any date, the date that is either: (i) 75 calendar days after the end of each calendar year, or (ii) 60 calendar days after the end of any calendar quarter other than the calendar quarter ending on December 31. "Recapture Date" has the meaning set forth in Section 9.3(a). "Recapture Triggering Event" means any of the following occurrences: [REDACTED] "Recoverables" has the meaning set forth in Section 3.1(b). "Reinsurance IMR" means the Interest Maintenance Reserve associated with the reinsurance by the Ceding Company on a modified coinsurance basis of the General Account 15 Liabilities of certain of the Covered Insurance Policies, determined in accordance with SAP applicable to the Underlying Companies that issued such Covered Insurance Policies. "Reinsurance IMR Investment Income" shall be equal to the investment income earned on the assets supporting the Reinsurance IMR. "Reinsurance Recoverables" means all amounts due or payable to the Ceding Company under the Existing Reinsurance Agreements, including all recoverables, returns, amounts in respect of profit sharing and all other sums to which the Ceding Company may be entitled under the Existing Reinsurance Agreements. [REDACTED] "Reinsured Liabilities" means the General Account Liabilities, the Separate Account Liabilities and any Reinsurer Extra-Contractual Obligations. "Reinsurer" has the meaning set forth in the preamble. [REDACTED] "Reinsurer Extra-Contractual Obligations" means all Extra-Contractual Obligations arising out of, resulting from or relating to any act, error or omission on and after the Effective Time, whether or not intentional, negligent, in bad faith or otherwise, by the Reinsurer or any of its Affiliates, or any service providers or Distributors engaged or compensated by the Reinsurer or its Affiliates or otherwise other than any Ceding Company Extra-Contractual Obligations. "Reinsurer Indemnified Parties" has the meaning set forth in Section 10.2. 16 "Reinvestment Event" means the following occurrence at any time following a Trust Withdrawal Event: [REDACTED] "Related Trust" means reserve trust accounts established by the Reinsuer [REDACTED] in connection with the transactions contemplated by the Purchase Agreement and related agreements. "Required Balance" means an amount equal to [REDACTED] of the Net Reserves. "Reserve Credit" means full Statutory Financial Statement credit for the reinsurance ceded to the Reinsurer under this Agreement or under any other Reinsurance Agreement in the relevant company's NAIC Annual Statement Blank and in all Statutory Financial Statements required to be filed with any Governmental Body charged with supervision of insurance companies in all United States jurisdictions in which such company is licensed, authorized or accredited to transact business. "Reserve Credit Event" means any event that would cause the Ceding Company to not be permitted to receive Reserve Credit on any of its Statutory Financial Statements and that such event has not been remedied prior to the last calendar day of the calendar quarter in which such event occurs. "SAP" means, with respect to any insurance company, the statutory accounting principles prescribed or permitted by the insurance regulatory authorities of the state of domicile of such insurance company or other applicable jurisdictions. "Separate Account Liabilities" means all liabilities, obligations, expenses and Taxes (for the avoidance of doubt, other than Taxes measured by or imposed on the income of the Ceding Company) arising out of or relating to the Covered Insurance Policies, whether incurred before, at or after the Effective Time, to the extent payable out of the Separate Accounts. "Separate Account Reserves" means the aggregate amount of reserves and deposits of the Ceding Company or any applicable Underlying Company attributable to the Separate Account Liabilities (as would be described in Exhibits 3, 4 and 6 of the Statutory Financial Statements related to separate accounts of the Ceding Company or any such Underlying Ceding Company or any successors to such exhibits), calculated in accordance with SAP. "Separate Accounts" means the registered and unregistered separate accounts of the Ceding Company and the Underlying Companies applicable to the Covered Insurance Policies as identified in Schedule 1.1(H) hereto. "Settlement Statement" has the meaning set forth in Section 3.4(a). 17 "Statutory Book Value" means with respect to any Eligible Asset, the dollar amount thereof stated on the Statutory Financial Statements as admitted assets of the Reinsurer, as determined in accordance with the statutory accounting requirements in the Reinsurer's state of domicile, but disregarding any permitted practices applicable to the Reinsurer. "Statutory Financial Statements" means, with respect to any Person, the annual and quarterly statutory financial statements of such Person filed with the Governmental Body charged with supervision of insurance companies in the jurisdiction of domicile of such Person to the extent such Person is required by Applicable Law to prepare and file such financial statements. "Terminal Accounting Period" means the Accounting Period during which the Recapture Date or the Termination Date, as applicable, occurs. "Terminal Settlement" has the meaning set forth in Section 9.4. "Terminal Settlement Statement" has the meaning set forth in Section 9.4. "Termination Date" has the meaning set forth in Section 9.3(b). "Termination Event" means any failure by the Ceding Company (or any successor by operation of law of the Ceding Company, including, but not limited to, any receiver, liquidator, rehabilitator, conservator or similar Person of the Ceding Company) to pay any material amount due to the Reinsurer under this Agreement payable by the Ceding Company (including any Recoverables received by the Ceding Company and payable to the Reinsurer) and such failure has not been cured within 90 calendar days after written notice thereof from the Reinsurer. "Third-Party Claim" has the meaning set forth in Section 10.3(a). "Total Adjusted Capital" means, with respect to any insurance company, its total adjusted capital as calculated in accordance with the most current formula for calculating such amount adopted by the insurance regulatory authority in such insurance company's state of domicile. "Transaction Agreements" means the Purchase Agreement and each of the Ancillary Agreements other than this Agreement. "Treasury Regulations" means the Treasury Regulations (including temporary and proposed Treasury Regulations) promulgated by the United States Department of Treasury with respect to the Code or other United States federal Tax statutes. "Triggering Event" shall occur if [REDACTED] 18 [REDACTED] "Trust Account" means the trust account established by the Reinsurer for the benefit of the Ceding Company under the Trust Agreement. [REDACTED] "Trust Withdrawal Event" has the meaning set forth in Section 4.11(a). "Trust Withdrawal Event Conditions" means [REDACTED] "Trust Withdrawal Event Acknowledgement" has the meaning set forth in Section 4.11(a). "Trust Withdrawal Event Notice" has the meaning set forth in Section 4.11(a). "Trust Withheld Assets" means those assets required to be held by the Ceding Company in trust for the benefit of any Underlying Company (and not transferred to the Reinsurer) with respect to any Covered Insurance Policies reinsured on a coinsurance basis under any Underlying Reinsurance Agreement. "Trustee" has the meaning set forth in Section 4.2(a). "UCC" means the Uniform Commercial Code as in effect from time to time in the Ceding Company's state of domicile. "Unamortized Portion of the Ceding Commission" means, [REDACTED] If the Parties cannot agree on the amount of the Unamortized Portion of the Ceding Commission as of the Termination Date or Recapture Date, as applicable, the issue will be referred to, and conclusively determined by [REDACTED] 19 [REDACTED] whose fees will be shared equally by the Parties. "Underlying Companies" means the insurance companies that have ceded any liabilities or obligations under Covered Insurance Policies to the Ceding Company pursuant to any Underlying Reinsurance Agreement. "Underlying Reinsurance Agreements" means the reinsurance agreements listed in Schedule 1.1(C) under which the Underlying Companies have ceded any liabilities or obligations under Covered Insurance Policies to the Ceding Company. ARTICLE II. BASIS OF REINSURANCE AND BUSINESS REINSURED SECTION 2.1 REINSURANCE. (a) Subject to the terms and conditions of this Agreement, as of the Effective Time, the Ceding Company hereby cedes on an indemnity reinsurance basis to the Reinsurer, and the Reinsurer hereby accepts and agrees to assume and indemnity reinsure, one hundred percent (100%) of all General Account Liabilities on a combined coinsurance basis and modified coinsurance basis (net of Collectible Reinsurance) and one hundred percent (100%) of all Separate Account Liabilities on a modified coinsurance basis. In addition, on and after the Effective Time, the Reinsurer hereby assumes all Reinsurer Extra-Contractual Obligations. This Agreement is solely between the Ceding Company and the Reinsurer and shall not create any legal relationship whatsoever between the Reinsurer and any Person other than the Ceding Company. The reinsurance effected under this Agreement shall be maintained in force, without reduction, unless such reinsurance is recaptured, terminated or reduced as provided herein. On and after the Effective Time, the Reinsurer shall be obligated to make payments to or on behalf of the Ceding Company, as and when due, of all Reinsured Liabilities in accordance with Article III. (b) Upon the reinstatement or reissuance of any lapsed or surrendered Covered Insurance Policy in accordance with the terms thereof, such Covered Insurance Policy shall be automatically reinsured hereunder. SECTION 2.2 SEPARATE ACCOUNTS. (a) For each of the Covered Insurance Policies, the amount to be invested on a variable basis in accordance with the terms of such Covered Insurance Policy shall be held by the Ceding Company or the Underlying Companies, as applicable, in the Separate Accounts, and all Premiums with respect to such Covered Insurance Policy shall be deposited in the Separate Accounts to the extent required to be deposited therein by such Covered Insurance Policy. 20 From and after the Effective Time, the Ceding Company shall retain, control and own all assets contained in the Ceding Company's Separate Accounts and shall hold its Separate Account Reserves with respect to the Covered Insurance Policies that are funded, in whole or in part, by one or more of the Ceding Company's Separate Accounts and such Separate Account Reserves shall be reported by the Ceding Company on its Separate Account balance sheets, consistent with SAP. The Reinsurer acknowledges that the Underlying Companies will retain, control and own all assets contained in such Underlying Companies' Separate Accounts and shall hold such Underlying Companies' Separate Account Reserves with respect to the Covered Insurance Policies that are funded, in whole or in part, by one or more such Underlying Companies' Separate Accounts. (b) For each of the Covered Insurance Policies, the amount to be paid with respect to surrenders, loans, annuitization payments, death benefits, Compensation or any other amounts with respect to such Covered Insurance Policy shall be paid out of the Separate Accounts to the extent required by such Covered Insurance Policy. For purposes hereof, the Reinsured Liabilities attributable to the Covered Insurance Policies shall be apportioned between the General Account Liabilities and the Separate Account Liabilities in a manner consistent with the applicable Covered Insurance Policies and Applicable Law. [REDACTED] 21 [REDACTED] SECTION 2.4 NON-GUARANTEED ELEMENTS. The Ceding Company shall set all Non- Guaranteed Elements under the Covered Insurance Policies from and after the Effective Time, taking into account the recommendations of the Reinsurer acting in its capacity as Administrator under the Administrative Services Agreement with respect thereto, which the Ceding Company shall only reject in good faith and on a reasonable basis that such recommendations fail to comport with Applicable Law, applicable Actuarial Standards of Practice or the terms of any Covered Insurance Policy. The Ceding Company shall, to the extent it has rights to do so, convey to the Underlying Companies under the Underlying Reinsurance Agreements the recommendations of the Reinsurer with respect to Non-Guaranteed Elements as if such recommendations were the Ceding Company's own. The Ceding Company will indemnify the Reinsurer for Losses arising out of any failure of the Ceding Company to implement or otherwise put into effect the Reinsurer's recommendations with respect to Non-Guaranteed 23 Elements in accordance with this Section, other than to the extent that following such recommendation would have violated any Applicable Law, applicable Actuarial Standards of Practice or the terms of any Covered Insurance Policy. SECTION 2.5 RESERVES AND LIABILITIES REPORTING. Pursuant to the Administrative Services Agreement and in accordance with the terms thereof, the Reinsurer shall, in its capacity as Administrator, provide to the Ceding Company information relating to the reserves and liabilities in respect of the Covered Insurance Policies. SECTION 2.6 INSURANCE CONTRACT CHANGES. Except as directed by the Reinsurer or as performed by the Reinsurer (or its duly appointed assignee or delegatee) acting on behalf of the Ceding Company in its capacity as Administrator, the Ceding Company, on its own initiative, shall not change the terms or conditions of any Covered Insurance Policy, other than for any change required by the terms of any Covered Insurance Policies, any Governmental Body or Applicable Law. If the Reinsured Liabilities under any of the Covered Insurance Policies are changed (a) because of changes made on or after the Effective Time in the terms and conditions of the Covered Insurance Policies effected by the Reinsurer, including in its capacity as Administrator, or (b) pursuant to the terms of any Covered Insurance Policies or by reason of the requirements of any Governmental Body or Applicable Law, the Reinsurer will participate, on the reinsurance basis set forth in Section 2.1, and assume one hundred percent (100%) of all liabilities and obligations resulting from such changes and shall fully indemnify the Ceding Company and hold the Ceding Company harmless with respect to such changes, in each case, subject to the terms and conditions of this Agreement. With respect to any change that, despite being required by the terms of any Covered Insurance Policies, any Governmental Body or Applicable Law, the Reinsurer is not implementing, the Ceding Company shall, to the extent practicable, prior to the effectiveness of any such change, promptly notify the Reinsurer of such proposed change and afford the Reinsurer, at the Reinsurer's expense, the opportunity, to the extent practicable, to object to such change under applicable administrative procedures (both formal and informal). In the event the Reinsurer seeks to object as provided in the previous sentence, the Reinsurer shall indemnify and hold the Ceding Company harmless for any Loss so suffered by the Ceding Company in accordance with Article X. SECTION 2.7 FOLLOW THE FORTUNES. The Reinsurer's liability under this Agreement shall attach simultaneously with that of the Ceding Company under the Covered Insurance Policies, and the Reinsurer's liability under this Agreement shall be subject in all respects to the same risks, terms, rates, conditions, interpretations, assessments, waivers, proportion of Premiums paid to the Ceding Company without any deductions, and to the same modifications, alterations, terminations and recaptures, as the respective Covered Insurance Policies and Reinsured Liabilities to which liability under this Agreement attaches, the true intent of this Agreement being that the Reinsurer shall, subject to the terms, conditions, and limits of this Agreement, follow the fortunes of the Ceding Company under the Covered Insurance Policies, and the Reinsurer shall be bound, without limitation, by all payments and settlements under the Covered Insurance Policies. 24 ARTICLE III. TRANSFER OF ASSETS; PAYMENTS; SETTLEMENTS; ADMINISTRATION AND ACCOUNTING SECTION 3.1 PAYMENTS BY THE CEDING COMPANY. (a) As consideration for the Reinsurer's agreement to provide reinsurance pursuant to this Agreement, the Ceding Company hereby sells, assigns, transfers and delivers to the Reinsurer, effective as of the Effective Time, in accordance with the Purchase Agreement, to the Reinsurer, (i) Investment Assets selected in accordance with the Purchase Agreement with a Statutory Book Value (as such term is defined in the Purchase Agreement) equal to (A) the Initial Reinsurance Premium, MINUS (B) the value of Policy Loans assigned to the Reinsurer hereunder, MINUS (C) the Accrued Investment Income transferred to the Reinsurer hereunder and MINUS (D) the Tax Gross-Up Change in IMR, in each case determined by reference to the Estimated Statement of General Account Net Settlement for the Ceding Company with respect to the Covered Insurance Policies hereunder pursuant to the Purchase Agreement, (ii) the Policy Loans identified on line B.2 of the Statement of General Account Net Settlement, (iii) the Accrued Investment Income identified on line B.1 of the Statement of General Account Net Settlement and (iv) cash in an amount equal to the Tax Gross-Up Change in IMR. Such transfer shall be adjusted following the date hereof in accordance with the procedures set forth therefor in the Purchase Agreement. (b) As additional consideration for the reinsurance provided herein, subject to Section 2.3(b), the Ceding Company hereby sells, assigns, transfers and delivers to the Reinsurer, effective as of the Effective Time, all of the Ceding Company's (or any of its Affiliates') right, title and interest in the following with respect to the Covered Insurance Policies or the Existing Reinsurance Agreements receivable by the Ceding Company and attributable to periods on and after the Effective Time (items (i) through (iv), collectively, the "Recoverables"): (i) Premiums; (ii) Reinsurance Recoverables, but not including any amounts to the extent attributable to any Excluded Liabilities retained by the Ceding Company including the Ceding Company Extra-Contractual Obligations; (iii) Without duplication, all charges and fees, including, management fees, marketing and distribution fees, cost of insurance charges, premium loads, record-keeping fees, policy loan fees, mortality and expense risk charges, administrative expense charges, rider charges, contract maintenance charges, back-end sales loads and other considerations billed separately, and amounts for the pre-Tax amount of any expense reimbursement (other than "soft dollars"), indemnification, revenue-sharing or other payments paid or payable to the Ceding Company or any of its Affiliates by any mutual fund organization attributable to the use of such 25 organization's mutual funds as funding vehicles to the extent attributable to the Covered Insurance Policies, but not including any amounts to the extent attributable to any Excluded Liabilities retained by the Ceding Company including the Ceding Company Extra-Contractual Obligations; and (iv) Without duplication, all other payments, collections, releases of funds paid or payable to the Ceding Company or any of its Affiliates and recoveries relating to the Reinsured Liabilities or the Covered Insurance Policies (including releases of funds (including releases of investment income to the Ceding Company) out of the Separate Accounts) but not including any amounts recovered to the extent attributable to any Excluded Liabilities retained by the Ceding Company including the Ceding Company Extra-Contractual Obligations. To the extent the foregoing sentences are ineffective to transfer ownership of the type of asset described, the Ceding Company agrees to execute and record or cause its Affiliates to execute and record all additional instruments, bills of sale, deeds and other documents necessary to transfer such asset as soon practicable after the Effective Time. Direct receipt by the Reinsurer or any of its Affiliates of any such amounts shall satisfy any obligation of the Ceding Company to transfer any such amount to the Reinsurer hereunder. Any Recoverables paid to, or received by, any Affiliate of the Ceding Company shall be deemed to have been received by the Ceding Company and shall be payable hereunder as if received directly by the Ceding Company. (c) The Ceding Company hereby appoints the Reinsurer as its agent to collect all Recoverables in the Ceding Company's name for the account of the Reinsurer. The Ceding Company agrees and acknowledges that the Reinsurer and its permitted assigns and delegatees are entitled to enforce, in the name of the Ceding Company, all rights at law or in equity or good faith claims of the Ceding Company with respect to such Recoverables. If necessary for such collection, the Ceding Company shall reasonably cooperate, at the Reinsurer's expense, in any litigation or other dispute resolution mechanism relating to such collection. The Parties acknowledge and agree that the Ceding Company shall have no obligation to seek collection of any Recoverables and that the Reinsurer shall be responsible for and has hereby assumed the financial risk of any uncollected or uncollectible Recoverables from any payors thereof (other than the Ceding Company or any of its Affiliates). To the extent that the Ceding Company recovers any Recoverables from any third party attributable to the Covered Insurance Policies, the Ceding Company shall, in accordance with Section 3.4, transfer such amounts to the Reinsurer, together with any pertinent information that the Ceding Company may have relating thereto. SECTION 3.2 PAYMENTS BY THE REINSURER. In consideration of the reinsurance by the Ceding Company of the Covered Insurance Policies, the Reinsurer shall pay to the Ceding Company, on the Closing Date, its share of the Ceding Commission attributable to the reinsurance hereunder in the manner contemplated in Section 3.3(b) of the Purchase Agreement. In addition, the Reinsurer shall pay and discharge all payments made under or as a result of the Reinsured Liabilities which are or which become due and payable at or at any time after the Effective Time. 26 SECTION 3.3 MODIFIED COINSURANCE. (a) The Reinsurer agrees that the Ceding Company shall retain, maintain, and own, and shall permit the Underlying Companies under the Covered Insurance Policies to retain, maintain, and own, their respective General Account Modified Coinsurance Assets collectively equal to the General Account Modified Coinsurance Amount. (b) Simultaneously with the payment of the Initial Reinsurance Premium pursuant to Section 3.1(a), the Ceding Company shall withhold from the Reinsurer an amount equal to the General Account Modified Coinsurance Amount, if any, as at the Effective Time as an initial General Account Modified Coinsurance Adjustment. SECTION 3.4 NET SETTLEMENT. (a) During the term of this Agreement, a settlement amount between the Ceding Company and the Reinsurer as of the last day of each Accounting Period or other shorter period as agreed upon by the Parties (the "Net Settlement") shall be calculated by the Reinsurer in accordance with clause (b) below, and a statement setting forth details of such calculation (the "Settlement Statement") containing the information set forth in Exhibit B hereto shall be delivered by the Reinsurer to the Ceding Company in accordance with the Administrative Services Agreement. If the amount of the Net Settlement for an Accounting Period is positive, the Ceding Company shall pay such amount to the Reinsurer within 5 Business Days of its receipt of the Settlement Statement for such Accounting Period. If the amount of the Net Settlement for an Accounting Period is negative, the Reinsurer shall pay the absolute value of such amount to the Ceding Company within 5 Business Days from the date it delivers the Settlement Statement for such Accounting Period to the Ceding Company. (b) The Net Settlement with respect to any Accounting Period for the reinsurance covered hereunder is equal to the following: (i) the Recoverables actually received by the Ceding Company or the Reinsurer with respect to the Covered Insurance Policies during such Accounting Period (without duplication for amounts under clauses (iv), (v) and (vi) below); MINUS (ii) the General Account Liabilities payable by the Reinsurer on a cash basis in respect of the Covered Insurance Policies during such Accounting Period; MINUS (iii) the Separate Account Liabilities payable out of the Separate Accounts in respect of the Covered Insurance Policies during such Accounting Period; MINUS 27 (iv) the Reinsurance IMR as of the close of such Accounting Period less the Reinsurance IMR as of the close of the preceding Accounting Period; PLUS (v) the General Account Modified Coinsurance Investment Income and the Reinsurance IMR Investment Income, in each case, received with respect to such Accounting Period; MINUS (vi) the General Account Modified Coinsurance Adjustment with respect to such Accounting Period. (c) To the extent that the Reinsurer makes any direct payments from its own funds or out of any Separate Account to or on behalf of the Ceding Company in respect of Reinsured Liabilities in respect of an Accounting Period, whether in its capacity as Administrator or otherwise, the amount of any such payments shall be deducted from the amount payable included in clause (ii) or clause (iii), as applicable, of Section 3.4(b) for such Accounting Period. In addition, to the extent Recoverables are actually received by, and are available to, the Reinsurer (or one of its Affiliates) in respect of an Accounting Period, whether in its capacity as Administrator or otherwise, the amount of any such Recoverables received shall be deducted from the amount of Recoverables included in clause (i) of Section 3.4(b) for such Accounting Period. To the extent that the Reinsurer makes any payments under the Hold Harmless and Indemnification Agreement, the amount of such payments shall be deducted from the amount payable included in clause (ii) or clause (iii), as applicable, of Section 3.4(b) and the Reinsurer shall be discharged of any obligation hereunder with respect thereto to the extent of such payment. (d) With respect to the General Account Modified Coinsurance Investment Income, the Reinsurance IMR Investment Income, the Reinsurance IMR and the General Account Modified Coinsurance Adjustment (in each case that are not with respect to the Trust Withheld Assets) for an Accounting Period, to the extent that the calculation of any of such items would result in an amount payable to the Reinsurer, only such amounts as are actually received by the Ceding Company from the Underlying Companies under the Covered Insurance Policies by way of payment or offset or otherwise shall be included in such Net Settlement. SECTION 3.5 DELAYED PAYMENTS. If there is a delayed settlement of any payment due hereunder, interest will accrue on such payment at the then applicable prime rate of interest, as reported by The Wall Street Journal (or, if The Wall Street Journal has ceased or suspended regular publication, another nationally distributed newspaper of general circulation reasonably selected by the Ceding Company) until settlement is made. For purposes of this Section 3.5, a payment will be considered overdue, and such interest will begin to accrue, on the 10th day immediately following the date such payment is due. For greater clarity, (i) a payment shall be deemed to be due hereunder on the last date on which such payment may be timely made under the applicable provision, and (ii) interest will not accrue on any payment due to a Party hereunder unless the delayed settlement thereof was caused by the other Party. 28 SECTION 3.6 OFFSET AND RECOUPMENT RIGHTS. Any debits or credits incurred on or after the Effective Time in favor of or against either the Ceding Company or the Reinsurer with respect to this Agreement are deemed mutual debits or credits and may be set off and recouped, and only the net balance shall be allowed or paid. In the event of any liquidation, rehabilitation, conservation, supervision, receivership or similar proceeding by or against the Ceding Company or the Reinsurer, the rights of offset and recoupment set forth in this Section 3.6 shall apply to the fullest extent permitted by Applicable Law. SECTION 3.7 ADMINISTRATION AND ACCOUNTING. Pursuant to the terms of the Administrative Services Agreement but subject to the Transition Services Agreement, the Reinsurer (or one of its Affiliates), in its capacity as Administrator, will administer the Covered Insurance Policies and the related administrative services agreements. SECTION 3.8 CERTAIN REPORTS. (a) At each RBC Reporting Deadline that pertains to a calendar year end, the Reinsurer shall provide to the Ceding Company the RBC Ratio of the Reinsurer as of the last day of such calendar year. At each RBC Reporting Deadline that pertains to a calendar quarter other than the calendar quarter ending on December 31, the Reinsurer shall provide to the Ceding Company: [REDACTED] (b) During the term of this Agreement, regardless of whether the Reinsurer is required by Applicable Law to calculate its RBC Ratio, it shall calculate its RBC Ratio in accordance with the factors and formulae prescribed by the applicable Governmental Body with respect to a standalone life insurance company domiciled in the Reinsurer's jurisdiction of domicile as if the RBC Ratio calculation were still in effect with respect to the Reinsurer. In the 29 event of an elimination by Applicable Law of the requirement for the Reinsurer to calculate risk based capital or a material change in the factors and formulae prescribed by the insurance regulatory authority in the Reinsurer's state of domicile with respect to the components and methodologies contained in the calculation of the RBC Ratio (including material changes to the calculation of Total Adjusted Capital), the Parties shall amend this Agreement to incorporate an alternative calculation that is reasonably equivalent to the components of and methodologies contained in the calculation of the Reinsurer's RBC Ratio in effect as of the Effective Time within 30 calendar days after the implementation of such change, and if the Parties cannot agree on any such alternative, the Reinsurer shall continue to calculate the RBC Ratio as if such material change had not occurred. (c) The Reinsurer shall provide written notice of the occurrence of any Triggering Event or a Recapture Triggering Event (i) within 2 Business Days after becoming aware of its occurrence or (ii) in connection with its reporting of the RBC Ratio to the Governmental Body charged with supervision of insurance companies in the Reinsurer's jurisdiction of domicile or its good faith estimate of its RBC Ratio in connection with a confirmation under clause (a) above which would result in a Triggering Event or a Recapture Triggering Event. In addition, the Reinsurer shall cooperate fully with the Ceding Company and promptly respond to the Ceding Company's reasonable inquiries from time to time concerning the determination of whether a Triggering Event or a Recapture Triggering Event has occurred. (d) The Reinsurer shall provide the Ceding Company with its annual and quarterly Statutory Financial Statements and a copy of its annual audited Statutory Financial Statements along with the audit report thereon, in each case to the extent not publicly available. SECTION 3.9 RESERVED. SECTION 3.10 BOOKS AND RECORDS. The Reinsurer shall, and shall cause its Affiliates to, preserve, until such date as may be required by the Reinsurer's standard document retention policies (or such other later date as may be required by Applicable Law), all books and records related to the Business. During such period, upon any reasonable request from the Ceding Company or its Representatives, the Reinsurer shall (a) provide to the Ceding Company and its Representatives reasonable access to such books and records during normal business hours; provided that such access shall not unreasonably interfere with the conduct of the business of the Reinsurer, and (b) permit the Ceding Company and its Representatives to make copies of such records, in each case, at no cost to the Ceding Company or its Representatives (other than for reasonable out-of-pocket expenses). Such books and records may be sought under this Section 3.10 by the Ceding Company for any reasonable purpose, including to the extent reasonably required in connection with accounting, litigation, federal securities disclosure or other similar purpose. Notwithstanding the foregoing, any and all such books and records may be destroyed by the Reinsurer if the Reinsurer sends to the Ceding Company written notice of its intent to destroy such records, specifying in reasonable detail the contents of the records to be destroyed; such records may then be destroyed after the 60th day following such notice unless the Ceding Company notifies the Reinsurer that it desires to obtain possession of such records, in which event the Reinsurer shall transfer the records to the Ceding Company and the Ceding Company 30 shall pay all reasonable expenses of the Reinsurer in connection therewith. Nothing herein shall require the Reinsurer to disclose any information to the Ceding Company or its Representatives if such disclosure would jeopardize any attorney-client privilege, the work product immunity or any other legal privilege or similar doctrine or contravene any Applicable Law, Court Order or Regulatory Agreement (including any confidentiality agreement with an unaffiliated litigant or regulator to which the Reinsurer or any of its Affiliates is a party) or require the Reinsurer to disclose its Tax records or any personnel or related records. SECTION 3.11 LOCKBOX ACCOUNTS. The Reinsurer shall establish one or more lockboxes and accounts in the name of the Reinsurer to be used solely with respect to the Recoverables (each lockbox and related account, a "Lockbox Account"). The Lockbox Accounts shall be owned by the Reinsurer and all Recoverables received directly by the Reinsurer or any of its Affiliates shall be deposited in the Lockbox Accounts. The Reinsurer may, and at the request of the Reinsurer the Ceding Company shall, give written notice to each Person responsible for payment of any Recoverables after the Effective Time that such Recoverables have been sold and assigned to the Reinsurer and that payment thereof is to be made to the Reinsurer at the Lockbox Account designated by the Reinsurer. The Parties acknowledge that the Lockbox Accounts shall be subject to the terms of the Account Control Agreement (the "Lockbox Control Agreement") being entered into concurrently herewith by the Ceding Company, the Reinsurer and each bank with which a Lockbox Account is maintained (the "Lockbox Banks"). On and after the date hereof, if the Reinsurer establishes any additional Lockbox Account, upon the establishment of such Lockbox Account, it shall be subject to an account control agreement with the relevant lockbox bank substantially similar to the Lockbox Control Agreement entered into by the Ceding Company, the Reinsurer and each bank with which such Lockbox Account is maintained. (a) Prior to the occurrence of a Triggering Event or a Recapture Triggering Event, the disposition of assets in the Lockbox Accounts shall be at the sole direction and discretion of the Reinsurer. Subject to Section 3.11(b) below, upon the occurrence, and during the continuance, of a Triggering Event or a Recapture Triggering Event, Recoverables collected in the Lockbox Accounts shall be transferred by the Reinsurer directly to the Custodial Account on a daily basis. (b) Upon the occurrence, and during the continuance, of a Recapture Triggering Event and upon notice by the Ceding Company to the Reinsurer and the Lockbox Banks, (x) the Reinsurer shall cease to be entitled to direct the disposition of assets in the Lockbox Accounts and (y) the Ceding Company shall be entitled, without the consent of the Reinsurer, to direct the Lockbox Banks to transfer assets in the Lockbox Accounts to the Custodial Account. During any period in which the Ceding Company is entitled to give the direction referred to in clause (y) of the preceding sentence, the Ceding Company shall cause Recoverables collected in the Lockbox Accounts to be transferred to the Custodial Account on a daily basis. SECTION 3.12 OWNERSHIP OF RECOVERABLES. The Parties intend that the Ceding Company's assignment pursuant to Section 3.1(b) to be a present sale and assignment of all of 31 the Ceding Company's rights, title and interest in the Recoverables and not an assignment for security. All monies, checks, drafts, money orders, postal notes and other instruments that may be received after the Effective Time by the Ceding Company for Recoverables shall be held in trust by the Ceding Company for the benefit of the Reinsurer and shall be promptly transferred and delivered to the Reinsurer, and any such instruments when so delivered shall bear all endorsements required to effect the transfer of same to the Reinsurer. The Reinsurer is hereby authorized to endorse for payment to the Reinsurer any such checks, drafts, money orders and other instruments pertaining to the Recoverables that are payable to, or to the order of, the Ceding Company and received by the Reinsurer under this Agreement, whether they are delivered to the Lockbox or otherwise transferred and delivered by the Ceding Company to the Reinsurer. SECTION 3.13 REINSURER'S SECURITY INTEREST. (a) To the extent that the assignment of Recoverables pursuant to Section 3.1(b) is not recognized as a present sale and assignment, is not valid or is recharacterized as a pledge rather than a lawful conveyance of ownership to the Reinsurer, the Ceding Company hereby grants to the Reinsurer a security interest in (i) all of the Ceding Company's right, title and interest (legal, equitable or otherwise), if any, to all Recoverables and all amounts and assets (including the Custodial Funds) held in, or investments thereof credited to, the Lockbox Accounts and the Custodial Account that are assigned to the Reinsurer hereunder as Recoverables and all proceeds of any and all of the foregoing and (ii) to the extent the Ceding Company is deemed to be the owner thereof, the Lockbox Accounts and the Custodial Account (collectively, the "Collateral") to secure all of the Ceding Company's obligations under this Agreement (including without limitation any obligation of the Ceding Company to pay the Terminal Settlement under Article IX). All costs and expenses incurred in connection with obtaining a first priority perfected security interest shall be borne by the Reinsurer. The Ceding Company hereby represents to the Reinsurer that as of the date hereof it has not granted any security interest in any Collateral to any Person other than as contemplated under this Section and during the term of this Agreement the Ceding Company will not grant any security interest in any Collateral to any Person other than the Reinsurer. (b) Upon the failure of the Ceding Company to fully perform and comply with any of its material obligations under this Agreement (including, without limitation, under Sections 3.4 and 9.4), which failure is not caused by the Reinsurer (or one of its Affiliates) as Administrator and remains uncured 10 days after written notice thereof is received by the Ceding Company, and subject to Section 3.13(c), the Reinsurer shall have, in addition to all other rights under this Agreement or under Applicable Law, the following rights: (i) the right to exercise all rights and remedies granted a secured party under the UCC, as though all the Collateral constituted property subject to a security interest under Article 9 thereof; 32 (ii) the right to set off against any and all of the Collateral any amounts owed by the Ceding Company hereunder; (iii) the right to intercept and retain monies and property in the Lockbox Account and otherwise; (iv) without giving rise to any right to double recovery under this Section 3.13 and Section 10.2, the right to reasonable attorneys' fees incurred in connection with the enforcement of this Agreement or in connection with disposition of the Collateral; and (v) the right to dispose of the Collateral in accordance with the UCC. (c) This Section 3.13 is being included in this Agreement to ensure that, if an insolvency or other court determines that, notwithstanding the provisions of this Agreement and the express intent of the Parties, the Ceding Company retained ownership of, or any rights in the Collateral, the Reinsurer's rights to the Collateral are protected with a first priority, perfected security interest, and it is the intent of the Parties that this Section 3.13 be interpreted as such. Upon the occurrence and during the continuation of a Triggering Event or a Recapture Triggering Event, Sections 3.11 and 4.9 shall apply. (d) Nothing contained herein shall be construed to support the conclusion that the Ceding Company will retain any ownership of or any rights in the Collateral after the Effective Time or to support the conclusion that the Reinsurer will not acquire full ownership thereof as of the Effective Time. (e) On or prior to the Closing Date, the Ceding Company shall execute and deliver and the Reinsurer is authorized to execute and deliver any and all financing statements reasonably requested by the Reinsurer in order to perfect the Reinsurer's title and security interest under Article 9 of the UCC to any and all Recoverables and all other Collateral. From and after the Effective Time, the Ceding Company shall do such further acts and things as the Reinsurer may request in order that the security interest granted hereunder may be maintained as a first perfected security interest, including, without limitation, entry into a control agreement with each bank at which the Lockbox is maintained. SECTION 3.14 NOVATION OF COVERED INSURANCE POLICIES. Following the Effective Time, if requested by the Reinsurer and subject to obtaining all applicable approvals from any Person, the Ceding Company shall cooperate with the Reinsurer and use its commercially reasonable efforts to novate any Covered Insurance Policies or the Underlying Reinsurance Agreements, other than any Covered Insurance Policies with amounts invested in Separate Accounts, from the Ceding Company to the Reinsurer or a designated Affiliate of the Reinsurer. The Ceding Company shall promptly advise the Reinsurer of any communications with respect to any such 33 proposed novation. All correspondence from either the Ceding Company or the Reinsurer to any policyholder under any Covered Insurance Policy or to any Underlying Company under any Underlying Reinsurance Agreement as applicable, in connection with any such proposed novation shall be in a form approved by the other Party; provided that any such approval shall not be unreasonably withheld, conditioned or delayed. At the Reinsurer's instruction and expense and subject to obtaining all applicable approvals from any Person, the Ceding Company shall effect any such action with respect to any such proposed novation as the Reinsurer shall reasonably request, including sending correspondence requesting that a Covered Insurance Policy or Underlying Reinsurance Agreement be novated to the Reinsurer or a designated Affiliate of the Reinsurer in a form approved by the Reinsurer. The Parties shall share the cost of obtaining any consents required for any novations of any of the Underlying Reinsurance Agreements listed on Schedule 8.13(b) of the Business Disclosure Schedule delivered pursuant to the Purchase Agreement on the same basis as provided in Section 8.13(b) of the Purchase Agreement and taking into account any amounts paid by the parties to the Purchase Agreement under Section 8.13(b) of the Purchase Agreement for purposes of applying any applicable caps to the parties obligations in connection thereto. Reinsurer shall be responsible for the cost of obtaining any other consents for the novations contemplated by this Section 3.14. Any Covered Insurance Policy or Underlying Reinsurance Agreement that is novated to the Reinsurer pursuant to this Section shall cease to be a Covered Insurance Policy or an Underlying Reinsurance Agreement upon the effectiveness of such novation. [REDACTED] 34 [REDACTED] ARTICLE IV. LICENSES; REINSURANCE CREDIT SECTION 4.1 LICENSES. At all times during the term of this Agreement, the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law and otherwise take all action that may be necessary (i) so that the Ceding Company may receive Reserve Credit, and (ii) to perform its obligations hereunder. [REDACTED] 35 [REDACTED] ARTICLE V. OVERSIGHTS; COOPERATION; REGULATORY MATTERS SECTION 5.1 OVERSIGHTS. Unintentional or inadvertent delays, errors or omissions made in connection with this Agreement or any transaction hereunder (i) shall not relieve either Party from any liability or obligation which would have attached had such delay, error or omission not occurred; and (ii) both Parties shall be restored as closely as possible to the positions they would have occupied if no delay, error or omission had occurred, provided that, in all cases, such error or omission is rectified as soon as reasonably practicable after discovery by the Party making such error or omission or responsible for such delay, and provided, further, that said responsible Party shall be responsible for any additional liability or obligation which attaches as a result. 45 SECTION 5.2 COOPERATION. Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement, including making available to each their respective officers, employees and agents for interviews and meetings with Governmental Bodies and furnishing any additional assistance, information and documents as may be reasonably requested by a party from time to time. SECTION 5.3 REGULATORY MATTERS. Subject to the provisions of Article X and solely to the extent not otherwise covered by the Administrative Services Agreement, if the Ceding Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation or proceeding from or at the direction of a Governmental Body relating to or affecting the Covered Insurance Policies that would reasonably be expected to have an adverse effect on the other Party, the Ceding Company or the Reinsurer, as applicable, shall promptly notify the other Party thereof, whereupon the Parties, at their own expense, shall cooperate in good faith and use their respective commercially reasonable efforts to resolve such matter in a mutually satisfactory manner, in light of all the relevant business, regulatory and legal facts and circumstances. ARTICLE VI. DAC TAX SECTION 6.1 ELECTION. The Ceding Company and the Reinsurer jointly agree to the deferred acquisition cost Tax election pursuant to Section 1.848-2(g)(8) of the Treasury Regulations issued under Section 848 of the Code, each as in effect as of the Effective Time. In accordance with, and in furtherance of, that election: (a) The Party with the net positive consideration for this Agreement for each taxable year shall capitalize specified policy acquisition expenses with respect to this Agreement without regard to the general deductions limitation of Code Section 848(c)(1); and (b) Both Parties shall exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency or as otherwise required by the Internal Revenue Service. (c) Both Parties agree to make such election by timely attaching to their federal income Tax Returns the schedule contemplated by Treasury Regulation Section 1.848-2(g)(8)(ii). SECTION 6.2 DEFINITIONS. As used in this Article, the terms "net consideration," "net positive consideration," "specified policy acquisition expenses," and "general deductions limitation" are defined by reference to Treasury Regulation Section 1.848-2 and Code Section 848, in effect as of the Effective Time. 46 SECTION 6.3 EXCHANGE OF INFORMATION. The method and timing of the exchange of information contemplated by Section 6.1(b) shall be as follows: (a) The Reinsurer shall submit a schedule to the Ceding Company by May 1 of each year of its calculation of the net consideration for the preceding calendar year. (b) The Ceding Company may contest such calculation by providing an alternative calculation to the Reinsurer in writing within 30 days of the Ceding Company's receipt of the Reinsurer's calculation. If the Ceding Company does not so notify the Reinsurer, the Ceding Company shall report the net consideration as determined by the Reinsurer. (c) If the Ceding Company contests the Reinsurer's calculation of the net consideration, the Parties shall act in good faith to reach an agreement as to the correct amount within 30 days of the date the Ceding Company submits its alternative calculation. If the Reinsurer and the Ceding Company do not reach agreement on the net consideration within such 30-day period, then the net consideration for such year shall be determined by an independent accounting firm acceptable to both the Reinsurer and the Ceding Company within 20 days after the expiration of such 30-day period. (d) The Parties shall attach the final schedule to their respective federal income Tax Returns for each taxable year in which consideration is transferred under this Agreement. The schedule shall identify this Agreement and restate the election described in this Article and shall be signed by both Parties. SECTION 6.4 EFFECTIVENESS. The Tax election described in Section 6.1 shall first become effective for the taxable year that includes the Effective Time and shall remain in effect for all years for which this Agreement remains in effect. SECTION 6.5 UNITED STATES TAX STATUS REPRESENTATION. Each of the Parties represents and warrants that it is subject to United States taxation under the provisions of Subchapter L of Chapter 1 of Subtitle A of the Code. ARTICLE VII. INSOLVENCY SECTION 7.1 INSOLVENCY OF THE CEDING COMPANY. (a) In the event of the insolvency of the Ceding Company, all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement shall be payable by the Reinsurer directly to the Ceding Company or to its statutory liquidator, receiver or statutory successor on the basis of the liability of the Ceding Company under the 47 Covered Insurance Policies without diminution because of the insolvency of the Ceding Company, except to the extent (i) paid by the Reinsurer to a Payee in accordance with Section 8.1 or (ii) the Reinsurer has, with the consent of the applicable policyholder or Underlying Company, assumed any such Covered Insurance Policy or Underlying Reinsurance Agreement in substitution for the obligations of the Ceding Company to such Person. (b) It is understood, however, that in the event of the insolvency of the Ceding Company, the liquidator, receiver or statutory successor of the Ceding Company shall give written notice of the pendency of a claim against the Ceding Company on a Covered Insurance Policy within a reasonable period of time after such claim is filed in the insolvency proceedings and that during the pendency of such claim the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses which it may deem available to the Ceding Company or its liquidator, receiver or statutory successor. It is further understood that the expense thus incurred by the Reinsurer shall be chargeable, subject to Applicable Law, against the Ceding Company as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the Ceding Company solely as a result of the defense undertaken by the Reinsurer. ARTICLE VIII. CUT THROUGH AND NOVATIONS UPON RECAPTURE SECTION 8.1 DIRECT PAYMENTS BY THE REINSURER. Subject to Applicable Law, in the event of the insolvency of the Ceding Company, the Reinsurer shall pay, in accordance with the Covered Insurance Policies or the Underlying Reinsurance Agreements, directly to the named insureds, Underlying Company or their designees entitled to receive payment thereunder (a "Beneficiary"), in each case in accordance with and as required by the applicable Covered Insurance Policy or Underlying Reinsurance Agreement (any such Beneficiary, a "Payee"), 100% of the General Account Liabilities due and payable by the Reinsurer to the Ceding Company under this Agreement with respect to such Covered Insurance Policy or Underlying Reinsurance Agreement, subject to the terms, conditions, exclusions and limitations of such Covered Insurance Policy or Underlying Reinsurance Agreement, in each case without duplication of any amounts paid by any reinsurer under any Reinsurer Existing Reinsurance Agreement directly to the Ceding Company with respect to such Covered Insurance Policy or Underlying Reinsurance Agreement pursuant to any endorsement or other provisions of the type contemplated in Section 8.4(b). Any such payment by the Reinsurer shall discharge the Ceding Company from its related payment obligation under the subject Covered Insurance Policy or Underlying Reinsurance Agreement to the extent of such payment and shall be treated as a payment by the Ceding Company for all purposes of such Covered Insurance Policy or Underlying Reinsurance Agreement and related documentation and otherwise. In the event of a payment by the Reinsurer pursuant to this Article VIII, the Reinsurer shall be entitled to all rights of the Ceding Company under the Covered Insurance Policy, in each case to the extent of payments under this Article VIII. The Ceding Company shall use commercially reasonable efforts to assist the Reinsurer in pursuing such rights. 48 SECTION 8.2 SATISFACTION AND DISCHARGE. Any payment by the Reinsurer pursuant to this Article VIII shall be, to the extent of the payment, in substitution, satisfaction and discharge of the Reinsurer's obligations to the Ceding Company, or to its receiver, liquidator, rehabilitator, conservator or similar Person or statutory successor, under this Agreement. Neither this Article VIII, nor any other provision of this Agreement nor any applicable Covered Insurance Policy or Underlying Reinsurance Agreement, shall be construed in a manner which would subject the Ceding Company or the Reinsurer to liability for duplicative payment of Reinsured Liabilities reinsured under this Agreement. When there is a payment made by the Reinsurer under this Article VIII, the Reinsurer shall promptly furnish the Ceding Company with a report as to all Reinsured Liabilities paid pursuant to this Article VIII in connection with delivery of the Settlement Statement under Section 3.4. It is the intent of the Parties to comply with Section 38a-88-10 of the Connecticut Insurance Regulations and any successor statute or amendments thereto. To the extent Section 8.1 or Section 8.2 is deemed to be inconsistent with such regulation, Section 7.1(a) shall be amended and restated without any further action by the Parties as follows: "(a) In the event of the insolvency of the Ceding Company, all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement shall be payable by the Reinsurer directly to the Ceding Company or to its statutory liquidator, receiver or statutory successor on the basis of the liability of the Ceding Company under the Covered Insurance Policies without diminution because of the insolvency of the Ceding Company, except to the extent the Reinsurer has, with the consent of the applicable policyholder or Underlying Company, assumed any such Covered Insurance Policy or Underlying Reinsurance Agreement in substitution for the obligations of the Ceding Company to such Person." SECTION 8.3 REDOMESTICATION OF THE CEDING COMPANY. The Ceding Company covenants and agrees that it shall not redomesticate to a state unless the Applicable Laws of such state contain an insolvency clause substantially similar to Connecticut Insurance Regulation Section 38a-88-10. [REDACTED] 49 [REDACTED] ARTICLE IX. DURATION; RECAPTURE SECTION 9.1 DURATION. This Agreement shall continue in force until such time as (i) the Ceding Company's liabilities and obligations arising out of or related to all Covered Insurance Policies reinsured hereunder are terminated in accordance with their respective terms, or (ii) the Ceding Company has elected to recapture the reinsurance of Covered Insurance Policies in full in accordance with Section 9.3(a) and the Terminal Settlement has been completed in accordance with Section 9.4, or (iii) the Reinsurer has elected to terminate this Agreement in accordance with Section 9.3(b) and the Terminal Settlement has been completed in accordance with Section 9.4. SECTION 9.2 SURVIVAL. Notwithstanding the other provisions of this Article IX, the terms and conditions of Articles I, IX and X and the provisions of Sections 11.1, 11.3, 11.5, 11.8 and 11.9 shall remain in full force and effect after the termination or recapture of this Agreement. In no event shall the termination of this Agreement affect the status of any Recoverables received and attributable to any Accounting Period (or a portion thereof) prior to such termination as provided in Sections 3.12 and 3.13. 51 SECTION 9.3 TERMINATION AND RECAPTURE. (a) Upon the occurrence of a Recapture Triggering Event, the Ceding Company shall have the right, but not the obligation, to recapture all, and not less than all, of the reinsurance ceded under this Agreement, by providing the Reinsurer with written notice of its intent to effect recapture. Recapture of the Covered Insurance Policies shall be effective on the 10th day following the day on which the Ceding Company has provided the Reinsurer with such notice (the "Recapture Date"). (b) Upon the occurrence of a Termination Event, the Reinsurer shall have the right, but not the obligation, to terminate this Agreement by providing the Ceding Company with written notice of its intent to terminate. Termination of this Agreement shall be effective on the date specified in such notice (the "Termination Date"). Upon termination of this Agreement pursuant to this Section 9.3(b), the Ceding Company shall be deemed to have recaptured all Reinsured Liabilities. Recapture of the Covered Insurance Policies shall be effective on the Termination Date. (c) Upon recapture by the Ceding Company pursuant to Section 9.3(a) or Section 9.3(b), the Ceding Company will only recapture liabilities and obligations arising under the express terms of the Covered Insurance Policies and will not be liable for any Reinsurer Extra-Contractual Obligations arising before the Recapture Date or Termination Date, as applicable or if arising after the Recapture Date or Termination Date, as applicable, to the extent attributable to a direction or request of the Reinsurer or any of its Affiliates. (d) Following a termination or recapture pursuant to this Section 9.3, subject to the payment obligations described in Section 9.4, both the Ceding Company and the Reinsurer will be fully and finally released from all rights and obligations under this Agreement in respect of the Covered Insurance Policies, other than any payment obligations incurred hereunder prior to the Recapture Date or Termination Date but still unpaid on such date. Following the consummation of the recapture or termination, (i) no additional Recoverables or other amounts payable under such Covered Insurance Policies shall be payable to the Reinsurer hereunder nor, for the avoidance of doubt, shall the Reinsurer have any further right to receive any Recoverables, (ii) the Reinsurer (including in its capacity as Administrator) shall be relieved of on-going responsibilities for servicing the Covered Insurance Policies in accordance with the terms of the Administrative Services Agreement, and (iii) the Reinsurer shall have no further obligations with respect to payment of claims, reinsurance of Reinsured Liabilities or any other obligations whatsoever under this Agreement except for obligations under the provisions that expressly survive termination as provided in Section 9.2. Upon a recapture or termination pursuant to this Section 9.3, the Reinsurer will sell, assign, transfer and deliver to the Ceding Company, effective as of the Recapture Date or Termination Date, as applicable, all of Reinsurer's right, title and interest in the Recoverables and the security interest granted pursuant to Section 3.13 shall be automatically released. 52 (e) Notwithstanding the remedies contemplated by this Article IX, Article IV or elsewhere in this Agreement or the other Transaction Agreements, if a Recapture Triggering Event has occurred, the Ceding Company may, in its sole discretion, require direct payment by the Reinsurer of any sum in default under this Agreement or any other Transaction Agreement in lieu of exercising its recapture rights under this Article IX, and it shall be no defense to any such claim that the Ceding Company might have had other recourse. SECTION 9.4 PAYMENTS ON TERMINATION OR RECAPTURE. In connection with a termination or recapture pursuant to Section 9.3, the Reinsurer shall prepare a settlement statement within 15 calendar days of the Recapture Date or the Termination Date (the "Terminal Settlement Statement") setting forth the terminal settlement for the Terminal Accounting Period (the "Terminal Settlement"). In the case of recapture by the Ceding Company pursuant to Section 9.3(a), the Terminal Settlement shall be calculated in accordance with Exhibit C-1. In the case of a termination by the Reinsurer pursuant to Section 9.3(b), the Terminal Settlement shall be calculated in accordance with Exhibit C-2. [REDACTED] 53 SECTION 9.5 ASSIGNMENT OF REINSURER EXISTING REINSURANCE AGREEMENTS FOLLOWING RECAPTURE. In connection with the recapture under Section 9.3 of this Agreement, to the extent any Reinsurer Existing Reinsurance Agreements are assignable without consent of the reinsurer thereof, effective as of the Termination Date or Recapture Date, as applicable, each such Reinsurer Existing Reinsurance Agreement shall be assigned automatically to the Ceding Company so that the Ceding Company shall have the benefits and obligations under each such Reinsurer Existing Reinsurance Agreement. In addition, as soon as practicable after receipt of a notice of termination or recapture pursuant to Section 9.3 and following the Termination Date or Recapture Date, as applicable, the Parties shall cooperate and use commercially reasonable efforts to seek to novate or assign the Reinsurer Existing Reinsurance Agreements to the Ceding Company with effect as of the Termination Date or Recapture Date, as applicable, whereupon the Ceding Company shall have the benefits and obligations under such Reinsurer Existing Reinsurance Agreements, in each case as of the Termination Date or Recapture Date, as applicable. SECTION 9.6 EQUITABLE REMEDIES. The Parties agree that irreparable harm for which damages will not provide a full and effective remedy will result if the provisions of this Article IX are not strictly and timely enforced and that, in addition to the rights under this Article IX, the rights under Article X, and any legal remedies the Parties may have, equitable remedies including but not limited to prohibitory injunction, mandatory injunction, preliminary injunction, emergency injunction, restraining order and specific performance shall be appropriate relief in enforcing these provisions and maintaining this Agreement in full force and effect. The Parties expressly waive the defense that a remedy in damages alone will be adequate or that equitable remedies, including injunction and specific performance are not appropriate for any reason at law or equity. For purposes of enforcing the provisions of this Article IX, the Parties agree that the appropriate forum for determining such matters shall be the courts of the Ceding Company's state of domicile, and the Parties hereby submit to the jurisdiction and venue of such courts. ARTICLE X. INDEMNIFICATION; DISCLAIMER SECTION 10.1 REINSURER'S OBLIGATION TO INDEMNIFY. The Reinsurer hereby agrees to indemnify, defend and hold harmless the Ceding Company and its Affiliates and their respective officers, directors, stockholders, employees, authorized Representatives, successors and assigns (collectively, the "Ceding Company Indemnified Parties") from and against and pay and reimburse any and all Losses imposed on, sustained, incurred or suffered by any of the Ceding Company Indemnified Parties resulting from, arising out of or relating to (whether or not arising from a Third-Party Claim) (i) any breach, violation or non-fulfillment by the Reinsurer of the covenants and agreements of the Reinsurer contained in this Agreement, (ii) the Reinsured Liabilities and (iii) any successful enforcement of this indemnity. SECTION 10.2 CEDING COMPANY'S OBLIGATION TO INDEMNIFY. The Ceding Company hereby agrees to indemnify, defend and hold harmless the Reinsurer and its Affiliates and their respective officers, directors, stockholders, employees, authorized Representatives, successors 54 and assigns (collectively, the "Reinsurer Indemnified Parties") from and against and pay and reimburse any and all Losses imposed on, sustained, incurred or suffered by any of the Reinsurer Indemnified Parties resulting from, arising out of or relating to (whether or not arising from a Third-Party Claim) to the extent arising from (i) any breach, violation or non-fulfillment by the Ceding Company of the covenants and agreements of the Ceding Company contained in this Agreement, (ii) any Ceding Company Extra-Contractual Obligations, or (iii) any successful enforcement of this indemnity; provided that any indemnification of the Reinsurer Indemnified Parties with respect to Product Tax Non-Compliance shall be solely as provided in Section 12.6 of the Purchase Agreement. SECTION 10.3 NOTICE OF CLAIM; DEFENSE. (a) If (i) any non-affiliated third party or Governmental Body institutes or asserts any Action that may give rise to Losses for which a Party (an "Indemnifying Party") may be liable for indemnification under this Article X (a "Third-Party Claim") or (ii) any Person that may be entitled to indemnification under this Agreement (an "Indemnified Party") desires to make a claim not involving a Third-Party Claim to be indemnified by an Indemnifying Party that does not involve a Third-Party Claim, then the Indemnified Party shall promptly send to the Indemnifying Party a written notice specifying the nature of such claim and a good faith estimate of the amount of all related Losses to the extent they are ascertainable (a "Claim Notice"). The Indemnifying Party shall not be relieved from any of its indemnification obligations under this Article X as a result of a failure of the Indemnified Party to provide a Claim Notice, except to the extent that it is materially prejudiced by such failure. (b) The Indemnifying Party may, by notice delivered within 20 Business Days of the receipt of a Claim Notice with respect to a Third-Party Claim, assume the defense and control of such Third-Party Claim (at the expense of such Indemnifying Party). The Indemnified Party may take any actions reasonably necessary to defend any Third-Party Claim prior to the time that it receives notice from the Indemnifying Party as contemplated by the preceding sentence. The Indemnifying Party shall not be entitled to assume or maintain control of the defense of any Third-Party Claim and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party if (i) the Third-Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation against the Indemnified Party or (ii) the Third-Party Claim would reasonably be expected to result in an injunction or equitable relief against the Indemnified Party that would, in each case, have a material effect on the operation of the business of such Indemnified Party or any of its Affiliates. (c) Subject to Section 10.3(b), in the event of a Third-Party Claim, if the Indemnifying Party assumes the defense of a Third-Party Claim, the Indemnifying Party may elect to retain counsel reasonably acceptable to the Indemnified Parties to represent such Indemnified Parties in connection with such Action and shall pay the fees, charges and disbursements of such counsel. Subject to Section 10.3(b), if the Indemnifying Party so elects, the Indemnified Parties may participate, at their own expense and through legal counsel of their choice, in any such Action; provided that (i) the Indemnifying Party shall control the defense of 55 the Indemnified Parties in connection with such Action and (ii) the Indemnified Parties and their counsel shall reasonably cooperate with the Indemnifying Party and its counsel in connection with such Action. To the extent such action can be taken in a way that does not unreasonably jeopardize the attorney-client privilege: (i) the Indemnified Party's right to participate in the defense of any Action shall include the right to attend all significant internal meetings, all meetings with representatives of plaintiffs, hearings and the like; and (ii) counsel for an Indemnified Party also shall be given a reasonable opportunity to comment upon all memoranda of law, pleadings and briefs and other documents relating to the Third-Party Claim, and the Indemnifying Party and its counsel shall give reasonable consideration to the comments of counsel for the Indemnified Party. The Indemnifying Party shall not settle any such Action without the relevant Indemnified Parties' prior written consent, unless the terms of such settlement (A) provide for no relief other than the payment of monetary damages, (B) involve no finding or admission of any breach or violation by any Indemnified Party and (C) include an express unconditional release of each Indemnified Party from all Liability arising from such Action. Notwithstanding the foregoing, if the Indemnifying Party does not promptly retain counsel and assume control of such defense, then the Indemnified Parties may retain counsel reasonably acceptable to the Indemnifying Party in connection with such Action and assume control of the defense in connection with such Action. Under no circumstances will the Indemnifying Party have any liability in connection with any settlement of any Action that is entered into without its prior written consent (such consent not to be unreasonably withheld, delayed or conditioned). (d) From and after the delivery of a Claim Notice involving a Third-Party Claim, at the reasonable request of the Indemnifying Party, each Indemnified Party shall grant the Indemnifying Party and its counsel, experts and Representatives full access, during normal business hours, to the books, records, personnel and properties of the Indemnified Party to the extent reasonably related to such Claim Notice at no cost to the Indemnifying Party (other than for reasonable out-of-pocket expenses of the Indemnified Parties). (e) In the event any Indemnifying Party receives a Claim Notice from an Indemnified Party that does not involve a Third-Party Claim, the Indemnifying Party shall notify the Indemnified Party within 20 Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Article X. SECTION 10.4 NO DUPLICATION; EXCLUSIVE REMEDY. (a) To the extent that a Reinsurer Indemnified Party or a Ceding Company Indemnified Party has received payment in respect of a Loss pursuant to the provisions of any other Transaction Agreement, such Reinsurer Indemnified Party or Ceding Company Indemnified Party shall not be entitled to indemnification for such Loss under this Agreement to the extent of such payment. 56 (b) Except (i) with respect to claims alleging fraud, (ii) as otherwise provided under this Agreement (including the right to recapture and equitable remedies in addition to the indemnification under Article X) or (iii) the provisions of any Transaction Agreement, from and after the Closing, the exclusive remedy of the Reinsurer, the Reinsurer Indemnified Parties, the Ceding Company and the Ceding Company Indemnified Parties in connection with this Agreement (and any certificate or instrument delivered hereunder) and the transactions contemplated hereby (whether under this Agreement or arising under Applicable Law) shall be as provided in this Article X. In furtherance of the foregoing, each of the Reinsurer, on behalf of itself and each other Reinsurer Indemnified Party, and the Ceding Company, on behalf of itself and each other Ceding Company Indemnified Party, hereby waives, from and after the Closing, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud) it may have against the Ceding Company or any of its Affiliates or Representatives and the Reinsurer or any of its Affiliates or Representatives, as the case may be, arising under or based upon this Agreement or any certificate or instrument delivered in connection herewith, except (x) pursuant to the indemnification provisions set forth in this Article X or (y) as otherwise provided under this Agreement or the provisions of any Transaction Agreement. SECTION 10.5 MITIGATION AND LIMITATION ON SET-OFF. The Reinsurer and the Ceding Company shall cooperate with each other with respect to resolving any claim or liability with respect to which one Party is obligated to indemnify the other Party under this Article X, including by making commercially reasonable efforts to mitigate such claim or liability, to the extent required by Applicable Law. Neither the Reinsurer nor the Ceding Company shall have any right to set off any unresolved indemnification claim pursuant to this Article X against any payment due pursuant to Article III and Section 9.4 or any Transaction Agreement. SECTION 10.6 RECOVERY BY INDEMNIFIED PARTY. (a) In any case where an Indemnified Party recovers from a third party not affiliated with such Indemnified Party any amount in respect of any Loss for which an Indemnifying Party has actually reimbursed it pursuant to this Article X, such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (net of any out-of-pocket expenses incurred by such Indemnified Party in collecting such amount), but not in excess of the sum of (i) any amount previously paid by the Indemnifying Party to or on behalf of the Indemnified Party in respect of such claim and (ii) any amount expended by the Indemnifying Party in pursuing or defending any claim arising out of such matter. (b) If any portion of Losses to be reimbursed by the Indemnifying Party pursuant to this Article X could be recovered from a third party not affiliated with the relevant Indemnified Party (including under any applicable third-party insurance coverage) based on the underlying claim or demand asserted against such Indemnifying Party, then the Indemnified Party shall promptly give notice thereof to the Indemnifying Party and, upon the request of the Indemnifying Party, shall use commercially reasonable efforts to collect the maximum amount recoverable from such third party, in which event the Indemnifying Party shall reimburse the 57 Indemnified Party for all reasonable costs incurred in connection with such collection. If any portion of Losses actually paid by the Indemnifying Party pursuant to this Article X could have been recovered from a third party not affiliated with the relevant Indemnified Party (including under any applicable third-party insurance coverage) based on the underlying claim or demand asserted against such Indemnifying Party, then the Indemnified Party shall transfer, to the extent transferable, such of its rights to proceed against such third party as are necessary to permit the Indemnifying Party to recover from such third party any amount actually paid by the Indemnifying Party pursuant to this Article X. SECTION 10.7 WAIVER OF DUTY OF UTMOST GOOD FAITH. In recognition that each Party has consummated the transactions contemplated by this Agreement and the Transaction Agreements to which it is a party, based on mutually negotiated representations, warranties, covenants, remedies and other terms and conditions as are fully set forth herein and therein, the Ceding Company and the Reinsurer absolutely and irrevocably waive resort to the duty of "utmost good faith" or any similar principle in connection with the formation or performance of this Agreement. ARTICLE XI. MISCELLANEOUS SECTION 11.1 NOTICES. Except as otherwise agreed by the Parties, all notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the Party to whom notice is to be given, (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission, or (c) on the Business Day after delivery to an overnight courier (such as Federal Express) or an overnight mail service (such as the Express Mail service) maintained by the United States Postal Service, to the Party as follows: To the Ceding Company: Hartford Life and Annuity Insurance Company 200 Hopmeadow Street Simsbury, CT 06089 Fax: (866) 522-0308 Attention: President With concurrent copies (which will not constitute notice) to: The Hartford One Hartford Plaza Hartford, CT 06155 Fax: (860) 547-6959 Attention: Ceded Reinsurance & General Counsel 58 Sutherland Asbill & Brennan LLP 999 Peachtree Street, NE Atlanta, GA 30309 Fax: (404) 853-8806 Attention: B. Scott Burton To the Reinsurer: The Prudential Insurance Company of America 213 Washington Street Newark, NJ 07102 Attention: Chief Legal Officer, Individual Life Insurance Fax: (973) 367-8920 With a concurrent copy (which will not constitute notice) to: Debevoise & Plimpton LLP 919 Third Avenue New York, NY 10022 Fax: (212) 909-6836 Attention: John M. Vasily or to such other address as such Party may indicate by a notice delivered to the other Party hereto. SECTION 11.2 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and Schedules referred to herein, the Purchase Agreement, the Administrative Services Agreement, the Transition Services Agreement, the Trust Agreement and the other documents delivered pursuant hereto and thereto, constitute the entire agreement among the Parties hereto with respect to the subject matter hereof and supersede all prior representations, warranties, negotiations, discussions, writings, agreements, understandings and letters of intent between them with respect thereto, none of which shall have any further force and effect for any purpose. This Agreement may not be amended, modified or supplemented except by a written instrument signed by an authorized Representative of each of the Parties hereto or their respective successors in interest. SECTION 11.3 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the Ceding Company's state of domicile, without regard to principles of conflicts of law thereof that would result in the application of the laws of a different jurisdiction. Except as contemplated in the definition of Unamortized Portion of the Ceding Commission, Articles IV and IX or in Section 2.4 of the Purchase Agreement, each of the Parties irrevocably agrees that any and all Actions arising out of, relating to or in connection with this Agreement or its subject matter and the rights and obligations arising hereunder, or for recognition and enforcement of any settlement or judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other Party or its successors or assigns, shall be brought and determined exclusively in the courts of the State of New York located in the Borough of Manhattan, The City of New York or in the 59 courts of the United States of America for the Southern District of New York. Each of the Parties agrees that mailing of process or other papers in connection with any such Action in the manner provided in Section 11.1 or in such other manner as may be permitted by Applicable Laws, will be valid and sufficient service thereof. Each of the Parties hereby irrevocably submits with regard to any such Action for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any Action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Agreement, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by Applicable Law, any claim that (i) the Action in such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. In order to facilitate the comprehensive resolution of related disputes, and upon request of any Party to any Action, the court may consolidate the Action with any other Action relating to this Agreement, the Purchase Agreement or any other Ancillary Agreement and the Parties hereby agree not to oppose any request by the other Party to consolidate any such Action with another Action relating to this Agreement, the Purchase Agreement or any other Ancillary Agreement. SECTION 11.4 NO THIRD PARTY BENEFICIARIES. Except as otherwise expressly set forth in any provision of this Agreement, including with respect to the Ceding Company Indemnified Parties and the Reinsurer Indemnified Parties, nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person, other than the Parties and their respective successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. SECTION 11.5 EXPENSES. Except as otherwise provided herein, the Parties hereto shall each bear their respective expenses incurred in connection with the negotiation, preparation, execution, and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of counsel, actuaries and other Representatives. SECTION 11.6 COUNTERPARTS. This Agreement may be executed by the Parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the Parties hereto. Each counterpart may be delivered by facsimile or electronic mail transmission, which transmission shall be deemed delivery of an originally executed document. 60 SECTION 11.7 SEVERABILITY. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, that provision shall be interpreted to be only so broad as is enforceable. SECTION 11.8 WAIVER OF JURY TRIAL; PUNITIVE DAMAGES. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTERCLAIM, THIRD-PERSON CLAIM OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION. EACH PARTY ALSO IRREVOCABLY WAIVES ANY RIGHT TO PUNITIVE DAMAGES, EITHER PURSUANT TO COMMON LAW OR STATUTE, IN EACH CASE IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (BUT NOT AS TO ANY ACTION BY ONE PARTY AGAINST THE OTHER SEEKING INDEMNIFICATION FOR A THIRD PARTY CLAIM AGAINST THE PARTY INITIATING THE ACTION, TO THE EXTENT THAT SUCH DAMAGES MAY BE RECOVERABLE AS PART OF THE INDEMNIFICATION BY THE INDEMNIFIED PARTY). SECTION 11.9 TREATMENT OF CONFIDENTIAL INFORMATION. (a) The Parties agree that, other than as contemplated by this Agreement or any Transaction Agreement and to the extent permitted or required to implement the transactions contemplated by this Agreement and the other Transaction Agreements, the Parties will keep confidential and will not use or disclose the other Party's Confidential Information and the terms and conditions of this Agreement, including the exhibits and schedules hereto, except (x) as otherwise required by Applicable Law or any order or ruling of any state insurance regulatory authority or any other Governmental Body, (y) as may be required to be disclosed in the financial statements of such Party or any of its Affiliates or (z) such disclosure as may be required in connection with any dispute resolution proceeding between the Parties in respect hereof. For clarity, Business Records shall be deemed to be Confidential Information of the Reinsurer and its Affiliates and subject to the confidentiality obligations in Section 8.6 of the Purchase Agreement. (b) The confidentiality obligations contained in this Agreement shall not apply to the federal Tax structure or federal Tax treatment of this Agreement and each Party hereto may disclose to any and all persons, without limitation of any kind, the federal Tax structure and federal Tax treatment of this Agreement; provided, that such disclosure may not be 61 made until the earliest of (x) the date of the public announcement of discussions relating to this Agreement, (y) the date of the public announcement of this Agreement, or (z) the date of the execution of this Agreement. The preceding sentence is intended to cause this Agreement to be treated as not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Code, and shall be construed in a manner consistent with such purpose. Subject to the provision with respect to disclosure in the first sentence of this subsection (b), each Party hereto acknowledges that it has no proprietary or exclusive rights to the federal Tax structure of this Agreement or any federal Tax matter or federal Tax idea related to this Agreement. SECTION 11.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided below in this Section 11.10, neither Party may assign any of its rights, duties or obligations hereunder without the prior written consent of the other Party and any attempted assignment in violation of this provision shall be invalid AB INITIO; provided, however, that this Agreement shall inure to the benefit and bind those who, by operation of law, become successors to the Parties, including any receiver or any successor, merged or consolidated entity. SECTION 11.11 WAIVERS. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, in writing at any time by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any Party, it is authorized in writing by an authorized Representative of such Party. The failure of any Party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any preceding or subsequent breach. SECTION 11.12 INTERPRETATION. The table of contents, articles, titles, captions and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein are to be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they are deemed to be followed by the words "without limitation". Unless the context otherwise requires, the words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine genders of such term. Any agreement or instrument defined or referred to herein or any 62 agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent and references to all attachments thereto and instruments incorporated therein. Any statute or regulation referred to herein means such statute or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, includes any rules and regulations promulgated under the statute), and references to any section of any statute or regulation include any successor to the section. Any agreement referred to herein include reference to all Exhibits, Schedules and other documents or agreements attached thereto. [The rest of this page intentionally left blank.] 63 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on this 2 day of January, 2013. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ [ILLEGIBLE] ----------------------------------- Name: Mark M [ILLEGIBLE] Title: Vice President THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ Gaurav Wadhwa ----------------------------------- Name: Gaurav Wadhwa Title: Second Vice President [SIGNATURE PAGE TO ILA REINSURANCE AGREEMENT] SCHEDULE 1.1(A) SCHEDULED EXTRA-CONTRACTUAL OBLIGATIONS [REDACTED] SCHEDULE 1.1(B) COVERED INSURANCE POLICY FORMS [REDACTED] SCHEDULE 1.1(C) UNDERLYING REINSURANCE AGREEMENTS KEY: ILA = HARTFORD LIFE AND ANNUITY INSURANCE COMPANY [REDACTED] SCHEDULE 1.1(D) EXCLUDED INSURANCE POLICIES [Please see attached] SCHEDULE 1.1(E) ECONOMIC RESERVES ASSUMPTIONS AND METHODOLOGIES [REDACTED] SCHEDULE 1.1(F) EXISTING REINSURANCE AGREEMENTS [REDACTED] 1 SCHEDULE 1.1(G) GUL BUSINESS COVERED INSURANCE POLICIES The Covered Insurance Policies subject to NAIC Actuarial Guideline 38 "The Application of the Valuation of Life Insurance Policies Model Regulation", commonly known as "AXXX", as set forth below: [REDACTED] SCHEDULE 1.1(H) SEPARATE ACCOUNTS [REDACTED] EXHIBIT A FORM OF TRUST AGREEMENT EXHIBIT B SETTLEMENT STATEMENT EXHIBIT C-1 TERMINAL SETTLEMENT UNDER SECTION 9.4 -- RECAPTURE BY CEDING COMPANY [REDACTED] EXHIBIT C-2 TERMINAL SETTLEMENT UNDER SECTION 9.4 -- TERMINATION BY REINSURER [REDACTED] EXHIBIT D INVESTMENT GUIDELINES [REDACTED] 1 EXHIBIT E FORM OF CURE NOTICE [REDACTED] EXHIBIT F FORM OF CURE ACKNOWLEDGMENT [REDACTED] EXHIBIT G FORM OF TRUST /GUL TRUST WITHDRAWAL EVENT NOTICE [REDACTED] EXHIBIT H FORM OF TRUST / GUL TRUST WITHDRAWAL EVENT ACKNOWLEDGEMENT [REDACTED] EXHIBIT I FORM OF CUSTODIAL ACCOUNT CONTROL AGREEMENT EXHIBIT J FORM OF GUL TRUST AGREEMENT EX-99.(H)(2)(I) 9 a13-3080_1ex99dh2i.txt EX-99.(H)(2)(I) AMENDMENT NO. 6 DATED JANUARY 28, 2013 TO THE FUND PARTICIPATION AGREEMENT EFFECTIVE JULY 1, 2000 (AS AMENDED FROM TIME TO TIME, THE "AGREEMENT") BETWEEN HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY AMERICAN FUNDS INSURANCE SERIES AND CAPITAL RESEARCH AND MANAGEMENT COMPANY All defined terms in the Agreement are applicable to this Amendment. WHEREAS, Hartford, CRMC and American Funds Insurance Series, entered into the Agreement, whereby the Series offers the "Funds" to the Account(s) for variable life insurance policies made available by the Hartford; WHEREAS, Hartford and CRMC are members of the National Securities Clearing Corporation ("NSCC") or otherwise have access to the NSCC's Networking System ("Networking") through a registered clearing agency; WHEREAS, Networking permits the transmission of shareholder data between Hartford and the Series or CRMC pursuant to certain processes established by the NSCC's Defined Contribution Clearing & Settlement ("DCC&S") FundSERV system and pursuant to certain Networking levels ("Networking Matrix Level") established by the NSCC; WHEREAS, American Funds Service Company ("Transfer Agent"), an affiliate of CRMC, serves as transfer agent, dividend-disbursing agent and shareholder servicing agent, acting under the control of CRMC, and American Funds Distributors, Inc. ("AFD") serves as distributor, for the Funds; and WHEREAS, Hartford and CRMC desire to facilitate the purchase and sale of shares of the Funds by the Accounts via the NSCC as described herein. NOW, THEREFORE, the parties hereto agree that effective January 28, 2013, the Agreement is amended as follows: 1. Schedule A shall be deleted in its entirety and replaced with the attached Schedule A. 2. Section 4 shall be deleted in its entirety and replaced with the following; 4. The Series agrees to make Class 1 and Class 2 shares of all of its Funds available to the Contract. To the extent Hartford uses Class 2 shares, it will be entitled to a Rule 12b-1 service fee paid by the Series and to be accrued daily and paid monthly at an annual rate of 0.25% of the average daily net assets of the Class 2 shares of each Fund attributable to the Contracts for personal services and account maintenance services for Contract owners with investments in subaccounts corresponding to the Class 2 shares of each Fund (each, a "Subaccount") for as long as the Series' Plan of Distribution pursuant to Rule 12b-l under the 1940 Act (the "12b-l plan") remains in effect. 1 For purposes of this section 4, HL and HL&A each shall be a designee of the Series for receipt of orders from each Account. Pricing and settlement of Fund transactions shall be governed by the following: (a) Pricing Information. The Series or CRMC, or its designee, will compute the closing net asset value, and any distribution information (including the applicable ex-date, record date, payable date, distribution rate per share, income accrual and capital gains information) for each Fund as of the close of regular trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on each day the New York Stock Exchange is open for business (a "Business Day") or at such other time as the net asset value of a Fund is calculated, as disclosed in the relevant Funds' current prospectuses. The Series or CRMC, or its designee, will use their best efforts to communicate to Hartford (whether through the Fund/SERV system or manually) such information by 6:30 p.m. Eastern Time on each Business Day. Such information shall be accurate and true in all respects and updated continuously. (b) Pricing Adjustments a. In the event an adjustment is made to the computation of the net asset value of Fund shares as reported to Hartford under paragraph 4, (1) the correction will be handled in a manner consistent with SEC guidelines and the Investment Company Act of 1940, as amended and (2) the Series or CRMC, or its designee, shall notify Hartford as soon as practicable after discovering the need for any such adjustment. Notification may be made in the following manner: Method of Communication (i) Fund/SERV Transactions. The parties agree that they will ordinarily choose to use the National Securities Clearing Corporation's Mutual Fund Settlement, Entry and Registration Verification ("Fund/SERV") system, and if Fund/SERV is used, any corrections to the fund prices for the prior trade date will be submitted through the Mutual Fund Profile with the correct fund prices and applicable date. (ii) Manual Transactions. If there are technical problems with Fund/SERV, or if the parties are not able to transmit or receive information through Fund/ SERV, any corrections to the fund prices should be communicated by facsimile or by electronic transmission acceptable to CRMC, or its designee, and will include for each day on which an adjustment has occurred the incorrect Fund price, the correct price, and, to the extent communicated to the applicable Fund's shareholders, the reason for the adjustment. The Series and CRMC agree that Hartford may send this notification or a derivation thereof (so long as such derivation is approved in advance by the Series or CRMC, as applicable) to Contract owners whose accounts are affected by the adjustment. 2 b. To the extent a price adjustment results in a deficiency or excess to a Contract owner's account, Hartford and CRMC agree to evaluate the situation together on a case-by-case basis with the goal towards pursuing an appropriate course of action. To the extent the price adjustment was due to CRMC's, or its designee's, error, CRMC, or its designee, shall reimburse Contract owner's account. Any administrative costs incurred for correcting Contract owner accounts will be at Hartford's expense. (c) Purchases and Redemption Orders; Settlement of Transactions a. Fund/SERV Transactions. The parties will ordinarily use the Fund/SERV system, and if used, the following provisions shall apply: (i) Without limiting the generality of the following provisions of this section, Hartford and Transfer Agent each will perform any and all duties, functions, procedures and responsibilities assigned to it and as otherwise established by the NSCC applicable to Fund/SERV and the Networking Matrix Level then being utilized. (ii) Any information transmitted through Networking by any party to the other and pursuant to this Agreement will be accurate, complete, and in the format prescribed by the NSCC. Each party will adopt, implement and maintain procedures reasonably designed to ensure the accuracy of all transmissions through Networking and to limit the access to, and the inputting of data into, Networking to persons specifically authorized by such party. (iii) Same Day Trades. On each Business Day, Hartford shall aggregate and calculate the purchase orders and redemption orders for each Account received by Hartford prior to the Close of Trading on each Business Day. Hartford shall communicate to Transfer Agent for that Business Day, by Fund/SERV, the aggregate purchase orders and redemption orders (if any) for each Account received by the Close of Trading such Business Day (the "Trade Date") by the DCC&S Cycle 8 (generally, 6:30 a.m. Eastern time) on the following Business Day. Transfer Agent shall treat all trades communicated to Transfer Agent in accordance with the foregoing as if received prior to the Close of Trading on the Trade Date. All orders received by Hartford after the close of trading on a Business Day shall not be transmitted to NSCC prior to the conclusion of the DCC&S Cycle 8 on the following Business Day, and Hartford represents that orders received by it after 4:00 p.m. Eastern time on any given Business Day will be transmitted to the Transfer Agent using the following Business Day's net asset value. Transfer Agent may process orders it receives after the DCC&S Cycle 8 deadline using the net asset value determined on the Business Day following the Trade Date. (iv) When transmitting instructions for the purchase and/or redemption of shares of the Funds, Hartford shall submit one order for all contractholder purchase transactions and one order for all contractholder redemption transactions, unless otherwise agreed to by the Hartford and the Transfer Agent. 3 b. Manual Transactions. Manual transactions via facsimile shall be used by Hartford only in the event that Hartford is in receipt of orders for purchase or redemption of shares and is unable to transmit the orders to the Transfer Agent due to unforeseen circumstances such as system wide computer failures experienced by Hartford or the NSCC or other events beyond the Hartford's reasonable control. In the event manual transactions are used, the following provisions shall apply: (i) Next Day Transmission of Orders. Hartford will notify the Transfer Agent by 9:00 a.m. Eastern Time, on the next Business Day the aggregate amounts of purchase orders and redemption orders, that were placed by Contract owners in each Account by 4:00 p.m. Eastern time on the prior Business Day (the "Trade Date"). Hartford represents that orders it receives after 4:00 p.m. Eastern time on any given Business Day will be transmitted to the Transfer Agent using the following Business Day's net asset value. Transfer Agent may process orders it receives after the 9:00 a.m. deadline using the net asset value next determined. (ii) Purchases. All orders received by Hartford by 4:00 p.m. on a Business Day and communicated to the Transfer Agent by 9:00 a.m. deadline shall be treated by the Transfer Agent as if received as of the close of trading on the Trade Date and the Transfer Agent will therefore execute orders at the net asset values determined as of the close of trading on the Trade Date. Hartford will initiate payment by wire transfer to a custodial account designated by the Funds for the aggregate purchase amounts prior to 4:00 p.m. Eastern time on the next Business Day following Trade Date. (iii) Redemptions. Aggregate orders for redemption of shares of the Funds will be paid in cash and wired from the Funds' custodial account to an account designated by the Hartford. Transfer Agent will initiate payment by wire to Hartford or its designee proceeds of such redemptions two Business Days following the Trade Date (T+2). c. Contingencies. All orders are subject to acceptance by Transfer Agent and become effective only upon confirmation by Transfer Agent. Upon confirmation, the Transfer Agent will verify total purchases and redemptions and the closing share position for each fund/account. In the case of delayed settlement, Transfer Agent and Hartford shall make arrangements for the settlement of redemptions by wire no later than the time permitted for settlement of redemption orders by the Investment Company Act of 1940. Such wires for Hartford should be sent to: If to HL: If to HL&A BANK OF AMERICA BANK OF AMERICA 100 N. TRYON STREET 100 N. TRYON STREET CHARLOTTE, NC 28255 CHARLOTTE, NC 28255 ACCT. #: 5034-7095 ACCT. #: 5035-3970 4 ROUTING #: 0260-0959-3 ROUTING #: 0260-0959-3 EXTERNAL COMMENTS: EXTERNAL COMMENTS: FOR THE BENEFIT OF FOR THE BENEFIT OF HLIC SEPARATE ACCOUNT HLA SEPARATE ACCOUNTS Such wires for Transfer Agent should be sent to: WELLS FARGO BANK 707 WILSHIRE BLVD. 13TH FLOOR LOS ANGELES, CA 90017 ABA#: 121000248 AFS ACCOUNT#: 4100060532 FOR CREDIT TO AFS ACCT. NO. (ACCOUNT NUMBER AND FUND) FBO HARTFORD [(PRIVATE ACCOUNTS)] d. Processing Errors. Processing errors which result from any delay or error caused by Hartford may be adjusted through the NSCC System by Hartford by the necessary transactions on a current basis. e. Coding. If applicable, orders for the purchase of Fund shares shall include the appropriate coding to enable Transfer Agent to properly calculate commission payments to any broker-dealer firm assigned to the Account. f. Reconciliation. Hartford shall reconcile share positions with respect to each Fund for each Account as reflected on its records to those reflected on statements from Transfer Agent and shall, on request, certify that each Account's share positions with respect to each Fund reported by Transfer Agent reconcile with Hartford's share positions for that Account. Hartford shall promptly inform Transfer Agent of any record differences and shall identify and resolve all non-reconciling items within five business days. g. Verification. Within a reasonable period of time after receipt of a confirmation relating to an instruction, Hartford shall verify its accuracy in terms of such instruction and shall notify Transfer Agent of any errors appearing on such confirmation. h. Order Processing. Any order by Hartford for the purchase of shares of the respective Funds through CRMC, or its designee, shall be accepted at the time when it is received by CRMC, or its designee, (or any clearinghouse agency that CRMC, or its designee, may designate from time to time), and at the offering and sale price determined in accordance with this Agreement, unless rejected by CRMC, its designee, or the respective Funds. In addition to the right to reject any order, the Funds have reserved the right to withhold shares from sale temporarily or permanently. CRMC, or its designee, will not accept any order from Hartford that is placed on a conditional basis or subject to any delay or contingency prior to execution. The procedure relating to the handling of orders shall be subject to instructions that CRMC, or its designee, shall forward from time to time. The shares purchased will be issued by the respective Funds only against receipt of the purchase price, in collected New York or Los Angeles Clearing House funds. If payment for the shares purchased is not received within three days after the date 5 of confirmation, the sale may be cancelled by CRMC, or its designee, or by the respective Funds without any responsibility or liability on the part of CRMC, its designee, or the Funds, and CRMC, its designee, and/or the respective Funds may hold the Hartford responsible for any loss, expense, liability or damage, including loss of profit suffered by CRMC, its designee, and/or the respective Funds, resulting from Hartford's delay or failure to make payment as aforesaid. i. Right to Suspend. The Series reserves the right to temporarily suspend sales if the Board of Trustees of the Series, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deems it appropriate and in the best interests of shareholders or in response to the order of an appropriate regulatory authority. Hartford shall abide by requirements of the Funds' frequent trading policy as described in the Series' prospectus and statement of additional information. 3. The following sentence is added to Section 7: "All such dividends and distributions shall be automatically reinvested at the ex-dividend date net asset value." 4. Section 8 shall be deleted in its entirety. 5. The following paragraphs shall be added to the Agreement as Sections 27 and 28: 27. Books and Records. Each party hereto shall cooperate with the other parties and all appropriate governmental authorities and shall permit such authorities reasonable access to its books and records relating to this Agreement upon proper notice in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Each party shall maintain and preserve all records relating to this Agreement in its possession as required by law to be maintained and preserved in connection with the provision of the services contemplated hereunder. Upon the request of a party, the other party shall provide copies of all records relating to this Agreement as may be necessary to (a) monitor and review the performance of either party's activities, (b) assist either party in resolving disputes, reconciling records or responding to auditor's inquiries, (c) comply with any request of a governmental body or self-regulatory organization, (d) verify compliance by a party with the terms of this Agreement, (e) make required regulatory reports, or (f) perform general customer service. The parties agree to cooperate in good faith in providing records to one another under this provision. 28. Independent Audit. In the event Transfer Agent determines, based on a review of complaints received in accordance with paragraph 27, above, that Hartford is not processing Contract owner transactions accurately, Transfer Agent reserves the right to require that Hartford's data processing activities as they relate to this Agreement be subject to an audit by an independent accounting firm, at Transfer Agent's expense, to ensure the existence of, and adherence to, proper operational controls. Hartford shall make available upon Transfer Agent's request a copy of any report created by such accounting firm as a result of said audit. Hartford shall immediately notify Transfer Agent in the event of a material breach of operational controls. 6 All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. In Witness Whereof, the parties hereto have caused this Amendment No. 6 to the Agreement to be duly executed as of the date first above written. HARTFORD LIFE INSURANCE AMERICAN FUNDS INSURANCE COMPANY SERIES (FKA AMERICAN VARIABLE INSURANCE SERIES) By its authorized officer, By its authorized officer, By: /s/ Lisa Proch By: /s/ Steven I. Koszalka ---------------------------- ------------------------------ Name: Lisa Proch Name: Steven I. Koszalka Its: Vice President Its: Secretary
HARTFORD LIFE AND ANNUITY CAPITAL RESEARCH AND INSURANCE COMPANY MANAGEMENT COMPANY
By its authorized officer, By its authorized officer, By: /s/ Lisa Proch By: /s/ Michael J. Downer ---------------------------- ------------------------------ Name: Lisa Proch Name: Michael J. Downer Its: Vice President Its: Senior Vice President and Secretary
Approved for Signature by CRMC Legal Dept. [LOGO MCJT] 7 SCHEDULE A ACCOUNTS AND CONTRACTS SUBJECT TO THE PARTICIPATION AGREEMENT
NAME OF SEPARATE ACCOUNT CONTRACTS FUNDED BY SEPARATE ACCOUNT ------------------------------------------------------------------------------------------------------ Separate Account ICMG Series II (December 12, GVL-93P, IVL-97P 1997) Separate Account ICMG Series II-C (December 12, GVL-93P, IVL-97P 1997) Separate Account ICMG Series II-D (June 7, 1999) GVL-93P, IVL-97P Separate Account ICMG Series III-B (February 8, GVL-93P, IVL-97P 1996) Separate Account ICMG Series VII (April 1, 1999) IVL-99P Separate Account VLI (September 30, 1992) HL-15486 (00), HL-15471 (99), HL-13865, HL- 14875, HL-15898 (03), HL-15894 (03) Separate Account VL II (September 30, 1994) HL-15441 (98) (NY), HL-14623 Separate Account VL I (June 8, 1995) LA-1200 (02), LA-1154 (99), LA-1158 (00), ILA- 1098, ILA-1007, LA-1155 (99), LA-1238 (03), LA-1240 (03) Separate Account VL II (September 30, 1994) LA-1151 (98), ILA-1020 Separate Account One (May 20, 1991) VA03, VA99, ASHARE03, ASHARE98, NCDSC98, NCDSC03, VAXC99, VAXC03 Separate Account Two (June 2, 1986) HV-1442-0,HV-1499-0 Separate Account Three HL (June 22, 1994) HL-VA03 Separate Account Three HLA (June 22, 1994) LA-VA03 Separate Account Seven HL (December 8, 1996) HL-VA03 Separate Account Seven HLA (April 1, 1999) LA-VA03 ICMG Registered Variable Life Sep. Account A HL-GVL95(P)NY (April 14, 1998) ICMG Registered Variable Life Sep. Account One GVL95(P) (October 9, 1995)
8 [LOGO] CAPITAL RESEARCH AND MANAGEMENT(SM) CAPITAL RESEARCH AND MANAGEMENT COMPANY 333 South Hope Street Los Angeles, California 90071-1406 February 7, 2013 The Hartford 2000 Hopmeadow Street LawDrpt. B1-E Simsbury, CT 06089 Attention: James Bronsdon Dear Mr. Bronsdon, Enclosed is one executed original American Funds FPA Amendment No. 6 for your records. If you have any questions please contact Michael Triessl at (213) 615-4024. Sincerely, /s/ Kathy Grogan ---------------------------------------- Kathy Grogan Assistant to Michael Triessl THE CAPITAL GROUP COMPANIES American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust EX-99.(I)(6) 10 a13-3080_1ex99di6.txt EX-99.(I)(6) EXECUTION VERSION ADMINISTRATIVE SERVICES AGREEMENT BY AND BETWEEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY AND THE PRUDENTIAL INSURANCE COMPANY OF AMERICA DATED JANUARY 2, 2013 TABLE OF CONTENTS PAGE -------------------------------------------------------------------------------- Article I DEFINITIONS 1 Section 1.01 Definitions 1 Article II APPOINTMENT; NOTIFICATION OF INTERESTED PARTIES 9 Section 2.01 Appointment 9 Section 2.02 Provision of Services Subject to the Transition Services 10 Agreement Section 2.03 ILA Services 10 Section 2.04 Power of Attorney 10 Section 2.05 Notification of Interested Parties 11 Section 2.06 Ongoing Communications 11 Section 2.07 Coordinators 11 Article III NEW INSURANCE POLICIES 12 Section 3.01 New Insurance Policies 12 Section 3.02 Guidelines 13 Section 3.03 Termination of Authority 13 Section 3.04 ILA Licenses; Certain Actions 13 Section 3.05 Marketing Activities 13 Article IV SERVICES PROVIDED BY ADMINISTRATOR 14 Section 4.01 Services 14 Section 4.02 Standards and Licenses 14 Section 4.03 Subcontracting 15 Section 4.04 Recommendations 15 Section 4.05 Decision Authority 15 Section 4.06 Non-Guaranteed Elements 16 Section 4.07 Additional Covenants of ILA 16 Section 4.08 Certain Actions with Respect to Recoverables 17 Section 4.09 Product Filings 17 [REDACTED] [REDACTED] Article V FEES FOR SERVICES 20 Section 5.01 Fees for Services 20 Article VI CERTAIN REPORTS; BOOKS AND RECORDS; 20 BANK ACCOUNTS AND REMITTANCES 20 Section 6.01 Reports 20 Section 6.02 Books and Records and Access to Books and Records 21 Section 6.03 Disbursing Accounts 22 Section 6.04 Remittances 23 Section 6.05 Audit Rights 23 Section 6.06 Internal Controls Over Financial Reporting 24 Article VII INABILITY TO PERFORM SERVICES; ERRORS 24 Section 7.01 Inability to Perform Services 24 Section 7.02 Errors 25 Article VIII REGULATORY COMPLAINTS AND LEGAL ACTIONS 25 Section 8.01 Routine Complaints 25 Section 8.02 Regulatory Actions 25 Section 8.03 Legal Actions 26 Section 8.04 Cooperation 27 Section 8.05 Reporting 28 Section 8.06 Relationship with Other Agreements 28 Section 8.07 Taxes 28 [REDACTED] Article X DURATION; TERMINATION 30 Section 10.01 Duration 30 Section 10.02 Termination 30 Section 10.03 Survival 31 Article XI CUSTOMER INFORMATION 31 Section 11.01 Customer Information 31 Article XII DISASTER RECOVERY 32 Section 12.01 Disaster Recovery 32 Article XIII INDEMNIFICATION 32 Section 13.01 Indemnification by ILA 32 Section 13.02 Indemnification by the Administrator 32 Section 13.03 Notice of Claim; Defense 33 Section 13.04 No Duplication; Exclusive Remedy 35 Section 13.05 Limitation on Set-off 36 Section 13.06 Mitigation 36 Section 13.07 Recovery by Indemnified Party 36 Section 13.08 Relationship with Reinsurance Agreement 36 Article XIV COOPERATION 37 Section 14.01 Cooperation 37 Article XV TRADEMARK LICENSE 37 Section 15.01 Trademark License 37 Article XVI FIDELITY BOND 37 Section 16.01 Fidelity Bond 37 Article XVII TAX MATTERS 37 Section 17.01 Premium Taxes 37 Section 17.02 Tax Information Reporting, Withholding, and Depositing 40 Section 17.03 Sales Taxes 40 Section 17.04 Reinsurer Product Tax Liabilities 40 Section 17.05 Conflicts 41 Article XVIII MISCELLANEOUS 41 Section 18.01 Notices 41 Section 18.02 Entire Agreement 42 Section 18.03 Dispute Escalation; Governing Law and Jurisdiction 42 Section 18.04 No Third Party Beneficiaries 43 Section 18.05 Expenses 43 Section 18.06 Counterparts 44 Section 18.07 Severability 44 Section 18.08 Waiver of Jury Trial; Multiplied and Punitive Damages 44 Section 18.09 Treatment of Confidential Information 44 Section 18.10 Assignment 45 Section 18.11 Waivers 45 Section 18.12 Relationship 45 Section 18.13 Interpretation 46 Section 18.14 Conflict 46 Section 18.15 Force Majeure 46 SCHEDULES AND EXHIBITS Schedule I Scheduled Reports Schedule II Services Schedule III Information Security Requirements Schedule IV Investment Accounting Exhibit A Form of Trademark License Agreement This ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and entered into on January 2, 2013 by and between HARTFORD LIFE AND ANNUITY INSURANCE COMPANY, a Connecticut-domiciled life insurance company ("ILA"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey-domiciled life insurance company (the "Administrator"). RECITALS WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated September 27, 2012 (the "Purchase Agreement"), by and among Hartford Life, Inc., a Delaware corporation (the "Seller"), and Prudential Financial, Inc., a New Jersey corporation (the "Buyer"), and for purposes of Sections 8.4, 8.5 and 14.16 of the Purchase Agreement, The Hartford Financial Services Group, Inc., a Delaware corporation, Seller and Buyer are required to cause the execution and delivery of this Agreement in connection with the closing of the transactions contemplated thereunder; WHEREAS, pursuant to that certain Reinsurance Agreement, dated the date hereof (the "Reinsurance Agreement"), between ILA and the Administrator, ILA has agreed to cede to the Administrator and the Administrator has agreed to assume from ILA, on a one-hundred percent (100%) indemnity reinsurance basis, on the terms and conditions set forth in the Reinsurance Agreement, certain liabilities arising in respect of the Covered Insurance Policies (as hereinafter defined); WHEREAS, pursuant to the Reinsurance Agreement, the Administrator has purchased from ILA, and ILA has sold and assigned to the Administrator, all Recoverables (as hereinafter defined); and [REDACTED] WHEREAS, ILA wishes to appoint the Administrator to provide administrative and other services as specified in this Agreement with respect to the Administered Business (as hereinafter defined), and the Administrator desires to provide such administrative and other services in consideration for ILA entering into the Reinsurance Agreement. NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Capitalized terms not defined herein and which are defined in the Purchase Agreement or Reinsurance Agreement, as applicable, shall have the meanings ascribed to them in the Purchase Agreement or Reinsurance Agreement, as applicable. As used herein, the following terms have the respective meanings set forth in this Section 1.01: "Accounting Firm" has the meaning set forth in Schedule IV. "Accounting Period" has the meaning set forth in the Reinsurance Agreement. "Action" has the meaning set forth in the Purchase Agreement. "Additional Restrictions" has the meaning set forth in the Investment Guidelines. "Administered Business" means the Business of ILA with respect to the Covered Insurance Policies, the Separate Accounts, the Existing Reinsurance Agreements and any Reinsured Liabilities. For the avoidance of doubt, the Administered Business does not include any Discovered Policies unless otherwise agreed to by the parties. "Administrator" has the meaning set forth in the preamble. "Administrator Disbursing Accounts" has the meaning set forth in Section 6.03(a). "Administrator Indemnified Parties" has the meaning set forth in Section 13.01. "Affiliate" has the meaning set forth in the Purchase Agreement. "Agreement" has the meaning set forth in the preamble. "Ancillary Agreement Covered Contracts" has the meaning set forth in the Purchase Agreement. "Ancillary Agreements" has the meaning set forth in the Purchase Agreement. "Applicable Law" has the meaning set forth in the Purchase Agreement. "Applicable Privacy Laws" means Applicable Laws relating to privacy, data protection and the collection and use of an individual's personal information and user information gathered, accessed, collected or used by ILA or any of its Affiliates in the course of the operations of the Business, including any applicable provisions of state insurance privacy laws and state privacy regulations. "Authorized Persons" has the meaning set forth in Schedule III. "Broker Price" has the meaning set forth in Schedule IV. "Business" has the meaning set forth in the Purchase Agreement. "Business Day" has the meaning set forth in the Purchase Agreement. 2 "Buyer" has the meaning set forth in the recitals. "Claim Notice" has the meaning set forth in Section 13.03(a). "Closing" has the meaning set forth in the Purchase Agreement. "Compliance Program" has the meaning set forth in Schedule II. "Confidential Information" has the meaning set forth in the Reinsurance Agreement. "Contract" has the meaning set forth in the Purchase Agreement. "Coordinators" means the two (2) individuals, one designated by ILA and the other designated by the Administrator, who are primarily responsible for managing performance with respect to this Agreement as described in Section 2.07. "Covered Insurance Policies" has the meaning set forth in the Reinsurance Agreement. "Court Order" has the meaning set forth in the Purchase Agreement. "Custodial Account" has the meaning set forth in the Reinsurance Agreement. "Custodial Funds" has the meaning set forth in the Reinsurance Agreement. "Customer Information" means any financial or personal information about a policyholder, insured or beneficiary under any Covered Insurance Policy, including, but not limited to, such policyholder's, insured's or beneficiary's name, street or mailing address, electronic mail address, telephone or other contact information, employer, social security or tax identification number, date of birth, driver's license number, state identification card number, financial account, credit or debit card number, health and medical information or photograph or documentation of identity or residency (whether independently disclosed or contained in any disclosed document) and any other information of such policyholder, insured or beneficiary deemed "nonpublic" and protected by any Applicable Privacy Law. "Data" has the meaning set forth in Schedule III. "Data Provider" has the meaning set forth in Schedule III. "Data Recipient" has the meaning set forth in Schedule III. "Disbursing Accounts" has the meaning set forth in Section 6.03(a). "Discovered Policies" has the meaning set forth in the Purchase Agreement. "Distributor" has the meaning set forth in the Purchase Agreement. "Distribution Intermediaries" has the meaning set forth in the Wholesaling 3 Agreement. "DRP" has the meaning set forth in Section 12.01. "Effective Time" means the effective time of the Closing under the Purchase Agreement. "Eligible Assets" has the meaning set forth in the Reinsurance Agreement. "Existing Reinsurance Agreements" has the meaning set forth in the Reinsurance Agreement. "Filings" means all documents (including electronic media) required to be filed with the SEC relating to any Separate Account, including, but not limited to, registration statements, policyholder proxy materials and filings on Form N-6, Form NSAR and Form 24 F-2 or any successor forms. [REDACTED] 4 [REDACTED] "GAAP" has the meaning set forth in the Purchase Agreement. "General Account Liabilities" has the meaning set forth in the Reinsurance Agreement. "General Account Reserves" has the meaning set forth in the Reinsurance Agreement. "Governmental Body" has the meaning set forth in the Purchase Agreement. "HESCO" has the meaning set forth in the Purchase Agreement. "HFIC" means Hartford Fire Insurance Company. "ILA" has the meaning set forth in the preamble. "ILA Indemnified Parties" has the meaning set forth in Section 13.02. "ILA NAV Reports" has the meaning set forth in Schedule IV. "ILA Services" has the meaning set forth in Section 2.03. "Indemnified Party" has the meaning set forth in Section 13.03(a). "Indemnifying Party" has the meaning set forth in Section 13.03(a). "Information Security Requirements" has the meaning set forth in Schedule III. "Information Security Safeguards" has the meaning set forth in Schedule III. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Investment Guidelines" has the meaning set forth in the Investment Management Agreement. "Investment Management Agreement" means that certain Investment Management Agreement dated as of the date hereof by and between ILA and Prudential Investment Management, Inc. (the "Investment Manager"), [REDACTED] "Investment Manager" has the meaning set forth in the definition of Investment Management Agreement. [REDACTED] 5 [REDACTED] "Legal Action" has the meaning set forth in Section 8.03(a). "Losses" has the meaning set forth in the Purchase Agreement. "Material Breach" has the meaning set forth in Section 7.01(b). "Material Threshold Variance" has the meaning set forth in Schedule IV. "Modco Assets" has the meaning set forth in Section 4.11(a). "New Business Period" has the meaning set forth in Section 3.01(a). "New Insurance Policies" means any and all binders, endorsements, riders, policies, certificates and contracts of individual life insurance, and supplementary contracts of individual life insurance (including retained asset accounts and all other settlement options) issued, renewed, reinsured or assumed by ILA following the Closing Date in accordance with Article III of this Agreement. "Non-Guaranteed Elements" has the meaning set forth in the Reinsurance Agreement. "Non-Guaranteed Elements Policy" means the policy of the Administrator (in its capacity as the "Reinsurer" under the Reinsurance Agreement) as in effect from time to time with respect to the Non-Guaranteed Elements relating to the Covered Insurance Policies. "Party" means each of ILA and the Administrator. "Person" has the meaning set forth in the Purchase Agreement. "Portfolio" has the meaning set forth in the Investment Management Agreement. "Premium Taxes" shall mean any Taxes that constitute General Account Liabilities as provided for in the Reinsurance Agreement. "Premiums" has the meaning set forth in the Reinsurance Agreement. "Product Tax IT" has the meaning set forth in the Purchase Agreement. "Private Securities Material Threshold Variance" has the meaning set forth in Schedule IV. 6 "Public Securities Material Threshold Variance" has the meaning set forth in Schedule IV. "Purchase Agreement" has the meaning set forth in the recitals. "Purchase Agreement Amendment" means that certain Amendment to the Purchase Agreement by and among Buyer, Seller and The Hartford Financial Services Group, Inc. dated as of the date hereof. "Recapture Triggering Event" has the meaning set forth in the Reinsurance Agreement. "Recoverables" has the meaning set forth in the Reinsurance Agreement. "Regulatory Action" has the meaning set forth in Section 8.02. "Reinsurance Agreement" has the meaning set forth in the recitals. "Reinsured Liabilities" has the meaning set forth in the Reinsurance Agreement. "Reinsured Portfolio" has the meaning set forth in Section 4.10(a). "Reinsurance Recoverables" has the meaning set forth in the Reinsurance Agreement. "Reinsurer Existing Reinsurance Agreements" has the meaning set forth in the Reinsurance Agreement. "Reinsurer Extra-Contractual Obligations" has the meaning set forth in the Reinsurance Agreement. "Reinsurer Product Tax Liabilities" has the meaning set forth in Section 17.04. "Representative" has the meaning set forth in the Purchase Agreement. "Required Balance" has the meaning set forth in the Reinsurance Agreement. "Retained Portfolio" has the meaning set forth Section 4.10(b). "Routine Complaints" has the meaning set forth in Section 8.01. "SAP" has the meaning set forth in the Reinsurance Agreement. "Schedule T" shall mean Schedule T, Premiums and Other Considerations, of the NAIC Annual Statement or any successor schedule. "SEC" means the United States Securities and Exchange Commission. "Security Incident" has the meaning set forth in Schedule III. 7 "Seller" has the meaning set forth in the recitals. "Specified Action" has the meaning set forth in the Purchase Agreement. "Separate Accounts" has the meaning set forth in the Reinsurance Agreement. "Separate Account Reserves" has the meaning set forth in the Reinsurance Agreement. "Services" has the meaning set forth in Section 2.01. "Settlement Statement" has the meaning set forth in the Reinsurance Agreement. "Statutory Book Value" has the meaning set forth in the Reinsurance Agreement. "Subcontractor" has the meaning set forth in Section 4.03. "Taxes" has the meaning set forth in the Purchase Agreement. "Tax Returns" has the meaning set forth in the Purchase Agreement. "Terminal Settlement Statement" has the meaning set forth in the Reinsurance Agreement. "Third-Party Claim" has the meaning set forth in Section 13.03(a). [REDACTED] "Trademark License Agreement" has the meaning set forth in Section 15.01. "Transaction Agreements" means the Purchase Agreement and each of the Ancillary Agreements other than this Agreement. "Transferred Contract" has the meaning set forth in the Purchase Agreement. "Transferred Disbursing Accounts" has the meaning set forth in Section 6.03(a). "Transition Services Agreement" has the meaning set forth in the Purchase Agreement. "Treasury Regulations" has the meaning set forth in the Reinsurance Agreement. "Triggering Event" has the meaning set forth in the Reinsurance Agreement. "Underlying Companies" means the insurance companies that have ceded any liabilities or obligations under Covered Insurance Policies to ILA pursuant to any Underlying Reinsurance Agreement. 8 "Underlying Reinsurance Agreements" has the meaning set forth in the Reinsurance Agreement. [REDACTED] "Virus" means any computer code (a) designed to disrupt, disable, harm, or otherwise impede in any manner, including aesthetical disruptions or distortions, the operation thereof, of any other associated software, firmware, hardware, computer system or network (sometimes referred to as "viruses" or "worms"), (b) that would disable or impair in any way the operation thereof based on the elapsing of a period of time, the exceeding of an authorized number of users or copies, or the advancement to a particular date or other numeral (sometimes referred to as "time bombs", "time locks", or "drop dead" devices), or (c) that would permit access by the Administrator or any third party to cause such disablement or impairment (sometimes referred to as "traps", "access codes" or "trap door" devices), or any other similar harmful, malicious or hidden procedures, routines or mechanisms that would cause the Services, systems or software to malfunction or to damage or corrupt data, storage media, programs, equipment or communications, or otherwise interfere with operations. "Wholesaling Agreement" means that certain Wholesaling Agreement dated as of the date hereof by and among HESCO, Hartford Securities Distribution Company, Inc., HLIC, ILA, Hartford Life and Accident Insurance Company, Pruco Securities, LLC and Prudential Insurance Agency, LLC. ARTICLE II APPOINTMENT; NOTIFICATION OF INTERESTED PARTIES Section 2.01 Appointment. On the terms and subject to the limitations and conditions set forth herein, ILA hereby appoints the Administrator as of the Effective Time as its agent to provide, as an independent contractor of ILA, all required, necessary and appropriate administrative and other services, including the services set forth in Section 4.01 and Schedule II, with respect to the Administered Business (other than those services to be provided by HFIC and its Affiliates pursuant to the terms of the Transition Services Agreement for so long as such services are required to be provided by HFIC and its Affiliates under the Transition Services Agreement and the ILA Services) (collectively, the "Services"), and the Administrator hereby accepts such appointment and shall perform such Services at and following the Effective Time on behalf of and in the name of ILA. At all times during the term of this Agreement, the Administrator shall hold and maintain any and all licenses, permits and authorizations required in any state in the United States and in Guam and Puerto Rico to perform its duties and obligations under this Agreement on behalf of ILA. For purposes of this Agreement, the intention of the Parties is that the Administrator shall perform all Services in such a manner as to minimize the involvement of ILA and its Affiliates, subject to (a) Section 2.02 below and (b) Section 2.03 below. Except for the ILA Services, as between ILA and the Administrator, neither ILA nor any of its Affiliates shall be obligated to provide any services under this Agreement relating to the Administered Business. 9 Section 2.02 Provision of Services Subject to the Transition Services Agreement. The Parties hereby agree that to the extent any Service is provided by ILA or its Affiliate pursuant to the Transition Services Agreement, the Administrator shall have no obligation to provide such Service pursuant hereto until ILA's or its Affiliate's obligation to provide such Service pursuant to the Transition Services Agreement has terminated in accordance with the terms of such agreement. If Administrator relies on a service that is provided by ILA or its Affiliate pursuant to the Transition Services Agreement to provide a Service hereunder, Administrator shall have no obligation to provide such Service, or have any liability in connection with the provision of that Service, to the extent ILA or its Affiliate has failed to provide a required service under the Transition Services Agreement. Section 2.03 ILA Services. The Parties hereby agree that, notwithstanding anything herein to the contrary, ILA shall, for the term of this Agreement, continue to take those actions (i) that ILA is required by Applicable Law to take without the Administrator or any other third party acting on its behalf, if any, but only to the extent such actions are to be taken from and after the Effective Time and are necessary or appropriate with respect to the Administered Business and (ii) that do not exclusively relate to the Administered Business and are performed on the entity level, including with respect to accounting reports, tax returns, guaranty fund reports, actuarial reports and other reports and certifications, in each instance, if and to the extent relevant, based on information and statements provided by the Administrator as contemplated therein (collectively with the actions that are identified to be taken by ILA set forth in Section 4.11(a) through (f), the "ILA Services"), in each case, in accordance with Applicable Law, and that the Administrator shall have no obligation to provide such services; provided, that the Administrator shall be obligated to provide Services to ILA that the Administrator is permitted to take under Applicable Law to allow ILA to perform the ILA Services; provided, further; that all reasonable and necessary out-of-pocket costs and expenses incurred by ILA in connection with any ILA Services that exclusively relate to the Administered Business shall be paid or reimbursed by the Administrator. To the extent either Party becomes aware of any ILA Services, such Party shall give the other Party notice of such ILA Services, and the Parties shall reasonably cooperate in performing such ILA Services. Section 2.04 Power of Attorney. Subject to the terms and conditions herein and in Section 12.2(c) of the Purchase Agreement, ILA hereby appoints and names the Administrator, acting through its authorized officers and employees, as ILA's lawful attorney-in-fact, from and after the Effective Time for so long as the Administrator is authorized to perform the Services and solely to the extent necessary to provide the Services (all on terms and subject to the limitations set forth herein), (a) to do any and all lawful acts that ILA might have done with respect to the Administered Business, and (b) to proceed by all lawful means (i) to perform any and all of ILA's obligations with respect to the Administered Business, (ii) to enforce any right and defend (in the name of ILA, when necessary) against any liability arising with respect to the Administered Business, (iii) to sue or defend (in the name of ILA, when necessary) any Action arising from or relating to the Administered Business, (iv) to sign (in ILA's name, when necessary) vouchers, receipts, releases and other papers in connection with any of the foregoing matters, (v) to take actions necessary, as may be reasonably determined, to maintain the Administered Business in compliance with Applicable Law, (vi) to sign any and all documents necessary to carry out its obligations under this Agreement in accordance with the terms and conditions of this Agreement, including without limitation, Section 4.07(a), and (vii) to do 10 everything lawful in connection with the satisfaction of the Administrator's obligations and the exercise of its rights under this Agreement. ILA shall execute such powers of attorney and other documents as may be required or are reasonably necessary or appropriate in furtherance of the foregoing. For the avoidance of doubt, the powers of attorney set forth in this Section 2.04 shall not apply to any Intellectual Property Rights held by ILA or its Affiliates, except as expressly set forth in the Ancillary Agreements (excluding this Agreement). Section 2.05 Notification of Interested Parties. The Administrator shall send to (a) the policyholders of the Covered Insurance Policies and (b) any applicable service providers, reinsurers, Underlying Companies, custodians, Distributors, mutual fund organizations or other counterparties, in each case of (a) and (b), to the extent required by Applicable Law or any Transferred Contract or Ancillary Agreement Covered Contract, a written notice prepared by the Administrator and reasonably acceptable to ILA, advising that the Administrator has been appointed by ILA to provide the Services. Such notices shall be sent to such Persons' last known address of record as furnished by ILA to the Administrator. ILA shall cooperate in the preparation and mailing of any such required notices, including by providing the names and addresses of the relevant Persons to whom such notices are to be sent in an agreed upon electronic format. The Administrator may include such notice in a regularly scheduled mailing to such Persons in lieu of a separate mailing. Section 2.06 Ongoing Communications. The Administrator shall comply with the terms of the Trademark License Agreement and all Applicable Laws with respect to the use of ILA's name in communications with policyholders, insureds and beneficiaries of the Covered Insurance Policies. ILA shall cooperate with the Administrator in connection therewith, including by providing sample forms (both hard copies and electronic copies) of the ILA stationary used in communications with policyholders, insureds and beneficiaries of the Covered Insurance Policies and the Administrator's use of trademarks on the stationary will be governed by the terms of the Trademark License Agreement. Section 2.07 Coordinators. ILA and the Administrator shall each appoint a Coordinator, each of whom will serve as the primary contact point for their respective Party with respect to issues that may arise out of the performance of this Agreement. ILA and the Administrator may replace their respective Coordinator by giving notice pursuant to Section 18.01 to the other Party stating the name, title and contact information for the new Coordinator. The Parties shall cause the Coordinators to meet, either in person or telephonically, at least once quarterly, or more frequently if mutually agreed upon, to discuss the status of the Services, and to manage open issues related to this Agreement and performance hereunder. In addition, either Coordinator may call a meeting with the other Coordinator upon five (5) Business Days' prior written notice to address any time critical (in the reasonable judgment of the requesting Coordinator) issues related to the Services. 11 ARTICLE III NEW INSURANCE POLICIES Section 3.01 New Insurance Policies. (a) Subject to Section 3.02 and 3.03, ILA hereby authorizes and grants the Administrator the authority, [REDACTED] to (x) new insurance policies to be issued or reinsured pursuant to contractual commitments or exchanges under certain insurance contracts of ILA, such as term conversions, additional coverage options, and other conversion rights written by ILA or its Affiliates with respect to the Business or (y) as required to replace or remediate Covered Insurance Policies in order to comply with Applicable Law or to terms of such policies or as required to resolve or remediate a complaint, lawsuit or regulatory matter involving a Covered Insurance Policy (such period, the "New Business Period"), to quote, market, sell, underwrite, issue, renew, reinsure or assume in the name of ILA, binders, endorsements, riders, policies, certificates and contracts of individual life insurance, and supplementary contracts of individual life insurance (including retained asset accounts and all other settlement options). [REDACTED] In no event shall the authority granted hereunder be deemed to authorize the Administrator to quote, market, sell, underwrite, issue, renew, reinsure or assume any insurance policies in jurisdictions where ILA does not hold the required licenses therefore. (b) Subject to Sections 3.01(a)(ii) and 3.01(a)(iii), the Administrator shall have the sole and exclusive right to make decisions with respect to the issuance, renewal, non-renewal, reinsurance, cancellation or termination of the Covered Insurance Policies, subject to compliance with Applicable Law and the terms and conditions set forth in the applicable Covered Insurance Policies, the Reinsurance Agreement and this Agreement. [REDACTED] (c) Subject to the Reinsurance Agreement and in accordance with the terms thereof, all New Insurance Policies shall be automatically ceded (effective immediately upon issuance thereof) by ILA to the Administrator (in its capacity as "Reinsurer" under the Reinsurance Agreement), and reinsured by the Administrator (in its capacity as "Reinsurer" under the Reinsurance Agreement) from ILA, on a one hundred percent (100%) indemnity reinsurance basis in accordance with the terms of the Reinsurance Agreement. (d) All costs and expenses associated with the quotation, marketing, sale, underwriting, issuance, renewal and reinsurance of New Insurance Policies, including surcharges and assessments imposed on the basis of Premiums or otherwise with respect to the New Insurance Policies, shall be borne by the Administrator. 12 Section 3.02 Guidelines. Any and all New Insurance Policies shall be (a) quoted, marketed, sold, underwritten, issued, renewed and reinsured in accordance with standards, guidelines, procedures and practices consistent with those utilized by the Administrator in its business and in accordance with (i) the Existing Reinsurance Agreements, (ii) Applicable Law and (iii) in the case of conversions, the Contract and related practices giving rise to the conversion right and (b) written on policy forms and using the rating plans in effect for ILA for such type of business at the Effective Time, except for, in the case of both (a) and (b), changes required by Applicable Law or changes that have been approved in advance and in writing by ILA, such approval not to be unreasonably withheld, delayed or conditioned. Section 3.03 Termination of Authority. The authority granted to the Administrator under Sections 3.01(a) and (b) may be terminated by ILA upon written notice to the Administrator: (i) in the event that the Administrator assigns or delegates its underwriting authority with respect to such New Insurance Policies to be issued pursuant to sub-clause (i) of Section 3.01 to any Person without the prior written consent of ILA (which consent may be withheld in ILA's sole discretion), (ii) upon termination of the Reinsurance Agreement or the inability of the Administrator under the Reinsurance Agreement, to reinsure New Insurance Policies under the Reinsurance Agreement, (iii) in the event that the Administrator becomes insolvent or is placed into liquidation, rehabilitation, conservation, supervision, receivership or similar proceedings (whether voluntary or involuntary), or there is instituted against the Administrator proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or assume control of its operations, or (iv) if a Recapture Triggering Event has occurred under the Reinsurance Agreement and the business reinsured thereunder is recaptured by ILA under the Reinsurance Agreement pursuant to its terms. Section 3.04 ILA Licenses; Certain Actions. ILA shall, until and including the last calendar day of the New Business Period: (a) hold and maintain all material licenses, permits and authorizations required under Applicable Law to issue New Insurance Policies during the New Business Period in accordance with Section 3.01; provided, that notwithstanding the foregoing, in no event shall ILA be required to maintain any given license, permit or authorization to the extent that there is a change in Applicable Law or issuance of a binding order from a Governmental Body that prohibits ILA from maintaining such license, permit or authorization; and (b) take no action within ILA's actual control and without the Administrator's consent (which consent shall not be unreasonably withheld, delayed or conditioned) that would adversely affect in any material respect the ability of the Administrator to quote, market, sell, issue, renew or reinsure New Insurance Policies during the New Business Period in accordance with the terms and conditions of Section 3.01; provided, that this Section 3.04(b) shall in no event be construed to require ILA to maintain any insurance financial strength or similar rating. Section 3.05 Marketing Activities. (a) Subject to the terms and conditions set forth in the Trademark 13 License Agreement and the Wholesaling Agreement, the Administrator may develop and use new marketing and sales materials for the New Insurance Policies in accordance with Applicable Law. To the extent not otherwise provided to ILA pursuant to the Trademark License Agreement or the Wholesaling Agreement, the Administrator shall provide ILA with copies of all such materials prior to use for ILA's prompt review. Administrator shall not use such new marketing and sales material until ILA provides Administrator written approval (such approval not to be unreasonably withheld or delayed). (b) The Administrator shall have responsibility for, and shall bear all costs, expenses and liabilities associated with, all activities relating to the marketing and sale of the New Insurance Policies by the Administrator, in the name of ILA, including, without limitation, developing, printing and distributing marketing materials, and training agents and other Distributors. ARTICLE IV SERVICES PROVIDED BY ADMINISTRATOR Section 4.01 Services. During the term of this Agreement and except as otherwise provided in the Transition Services Agreement or in Sections 2.02 and 2.03, the Services to be provided by the Administrator hereunder shall include all services that are required, necessary or appropriate for the administration, handling and performance of the Administered Business and any other administrative services (including reporting services) that are reasonably required, necessary or appropriate under Applicable Law, the terms of the Covered Insurance Policies, the Separate Accounts, the Existing Reinsurance Agreements [REDACTED] or otherwise in connection with, or incidental to, the administration of the Administered Business. Without limiting the generality of the foregoing, the Services to be provided by the Administrator hereunder shall include the Services set forth on Schedule II hereto. Section 4.02 Standards and Licenses. (a) The Administrator acknowledges that the performance of the Services in an accurate and timely manner is of paramount importance to ILA. Administrator shall provide each of the Services: (i) with the same priority it accords its own operations, (ii) in substantially the same manner and using at least the same standard of care and degree of efficiency and quality that Seller, its Affiliates and their subcontractors used during the twelve (12)-month period immediately prior to the Effective Time in performing such Services or similar services (to the extent such Services were provided by Seller prior to the Effective Time) for the Business and (iii) in compliance with (A) Applicable Law, (B) the Covered Insurance Policies [REDACTED] ILA understands and agrees that Administrator is not in the business of providing Services to third parties, and under no circumstances shall Administrator be held accountable to a higher standard of care than that set forth herein. 14 (b) For the duration of this Agreement, the Administrator hereby covenants that it shall, at its sole cost and expense, as an independent contractor: (i) subject to the Administrator's right to delegate or subcontract its responsibility to perform any portion of the Services, in accordance with and subject to the terms hereof, employ and retain staff with the requisite experience, skill and expertise to perform the Services it is obligated to perform hereunder, in a manner consistent with the standards set forth in Section 4.02(a) and using the Administrator's facilities, systems and equipment; and (ii) own, hold, possess and maintain all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from any Governmental Body in any state in the United States and in Puerto Rico and Guam that are necessary for the provision by the Administrator of the Services. (c) The Administrator shall not be liable to ILA for any acts, errors or omissions in performing the Services to the extent such acts, errors or omissions were directed by ILA in writing or caused by any act or omission of ILA or any of its Affiliates or resulted from a breach of any of the Transaction Agreements by ILA or any of its Affiliates. Section 4.03 Subcontracting. The Administrator may delegate or subcontract the performance of any Service (or any portion thereof) to another Person (the "Subcontractor"); provided, that the Administrator shall provide ILA with reasonable advance written notice of its intention to delegate or subcontract to an unaffiliated third party any Service or portion thereof; provided, further, that no such subcontracting or delegation shall relieve the Administrator from any of its obligations or liabilities hereunder, and the Administrator shall remain responsible for all obligations or liabilities of such Subcontractor with respect to the provision of such Service or Services as if provided by the Administrator. ILA shall cooperate in good faith with the Administrator's efforts to, and take all actions reasonably requested by the Administrator to, delegate or subcontract the performance of any Service or portion thereof to any Subcontractor. The Administrator shall reimburse ILA for any reasonable and necessary out-of-pocket costs associated with such cooperation. Section 4.04 Recommendations. The Administrator may recommend to ILA amendments to the products, benefits, forms, rating plans and prospectuses in use for the Covered Insurance Policies, including the New Insurance Policies. With ILA's prior consent, which may not be unreasonably withheld, the Administrator may make such amendments on behalf of ILA. Section 4.05 Decision Authority. (a) Notwithstanding any other provision of this Agreement to the contrary, ILA shall have the right to direct the Administrator to perform any action necessary with respect to the Administered Business or the administration thereof to comply with Applicable Law, or to cease performing any action that constitutes a violation of Applicable Law to the extent such action, inaction or administration is within the control of the Administrator, in each case, taking into account the recommendations of the Administrator provided to ILA 15 hereunder, which ILA shall only reject in good faith and in light of the intent of the parties to, and the stated purposes of, the Purchase Agreement, the Ancillary Agreements and this Agreement. The Administrator shall have the right to request ILA to perform any action necessary for the Covered Insurance Policies, the Separate Accounts, and Existing Reinsurance Agreements or the administration thereof to comply with Applicable Law, or to cease performing any action that constitutes a violation of Applicable Law and ILA shall use commercially reasonable efforts to comply with such request. (b) In the event of any dispute as to whether or not an action is required or should be suspended in order to comply with Applicable Law, such dispute shall be referred to the Coordinators, pursuant to Section 18.03. Section 4.06 Non-Guaranteed Elements. ILA shall set all Non-Guaranteed Elements under the Covered Insurance Policies from and after the Effective Time, taking into account the recommendations of the Administrator, which ILA shall only reject in good faith and on a reasonable basis that such recommendations fail to comport with Applicable Law, applicable Actuarial Standards of Practice or the terms of any Covered Insurance Policy. ILA shall convey to the Underlying Companies under the Underlying Reinsurance Agreements the recommendations of the Administrator with respect to Non-Guaranteed Elements as if such recommendations were the ILA's own. In connection with any recommendation by the Administrator with respect to any Non-Guaranteed Elements under this Section, the Administrator shall provide ILA a copy of its Non-Guaranteed Elements Policy in effect as of the Closing Date and from time to time thereafter upon a change or amendment to the Non-Guaranteed Elements Policy. Section 4.07 Additional Covenants of ILA. [REDACTED] 16 [REDACTED] (b) The Administrator may make recommendations to ILA as to fund options for the Separate Accounts and ILA shall not unreasonably reject or delay such recommendations. If the Administrator makes a change in the Covered Insurance Policies or the Separate Accounts in connection with the change of a fund option as permitted above, the Administrator shall, at its own expense, prepare for signature by ILA and transmit on behalf of ILA to the appropriate Governmental Body any SEC exemptive application, no-action letter or other regulatory filing necessary to reflect or implement such change. (c) ILA shall take all actions necessary to execute amendments to the Ancillary Agreement Covered Contracts, prepared from time to time by the Administrator to conform such Ancillary Agreement Covered Contracts to the extent required by any changes in Applicable Law. (d) ILA shall take all actions necessary to execute agreements to facilitate trading via National Securities Clearing Corporation (NSCC) with respect to the Administered Business. [REDACTED] Section 4.08 Certain Actions with Respect to Recoverables. The Administrator shall (i) deposit in the applicable Separate Account any Recoverables attributable to such Separate Account to the extent required to be deposited therein by such Covered Insurance Policy and (ii) on behalf of ILA, pay out of the applicable Separate Account any amounts to be paid out of such Separate Account in accordance with the terms of the applicable Covered Insurance Policy. If any Recoverables attributable to a Separate Account are received by ILA, such amounts shall be paid to the Administrator for deposit into such Separate Account. Section 4.09 Product Filings. The Administrator shall have the exclusive authority to make filings with respect to the Covered Insurance Policies with applicable Governmental Bodies, in the name of and on behalf of ILA, to apply for amendments to any policy form or any other document related to the Covered Insurance Policies, including, without limitation, any application, sales illustration related to new business, marketing material, endorsement or rider; provided that the Administrator shall deliver to ILA copies of any filings it makes with Governmental Bodies relating to the Covered Insurance Policies prior to or contemporaneously with making such filings. ILA shall use commercially reasonable efforts to assist the Administrator in seeking approval of any filing made pursuant to this Section 4.09. 17 The Administrator shall reimburse ILA for any reasonable and necessary out-of-pocket costs associated with such assistance. [REDACTED] 18 [REDACTED] 19 [REDACTED] ARTICLE V FEES FOR SERVICES Section 5.01 Fees for Services. Except as otherwise provided for in this Agreement, the Administrator shall provide Services with respect to the Administered Business pursuant to this Agreement at its sole cost and expense (including payment of all necessary fees to any third parties) in consideration for the promises made by ILA and its Affiliates under this Agreement and the Transaction Agreements, and shall not receive any separate fee from ILA for the provision of the Services. ARTICLE VI CERTAIN REPORTS; BOOKS AND RECORDS; BANK ACCOUNTS AND REMITTANCES Section 6.01 Reports. [REDACTED] (b) As of and following the Effective Time, the Administrator shall prepare and furnish the reports identified in Schedule I (the "Scheduled Reports") on the dates set forth on Schedule I (or such later dates as mutually agreed upon by the parties). 20 (c) To the extent additional reports are requested by ILA under this Agreement, the Administrator shall provide such reports in a form and manner as is reasonably requested by ILA; provided, that ILA shall reimburse the Administrator for the reasonable costs and expenses incurred by the Administrator in the preparation of such reports. (d) The Parties acknowledge and agree that changes in Applicable Law may make delivery of Scheduled Reports and other reports on the timeframes contemplated herein and in the Schedules hereto impracticable. In such case, the Parties shall cooperate in good faith to revise such deadlines. Section 6.02 Books and Records and Access to Books and Records. (a) As of and following the Effective Time, to the extent not otherwise maintained by the Administrator under the Reinsurance Agreement and except as provided under the Transition Services Agreement, the Administrator shall assume responsibility for maintaining accurate and complete books and records of all transactions pertaining to the Administered Business and all data used by the Administrator in the performance of Services required under this Agreement, including claims filed in respect of the Covered Insurance Policies and any documents relating thereto, any communications with any Governmental Body, complaint logs, billing and collection files, files containing actuarial data and all other data used by the Administrator in performance of the Services. All such books and records shall be maintained by the Administrator (i) in accordance with any and all Applicable Laws, (ii) in accordance with the Administrator's record retention procedures and policies and (iii) in a format accessible by ILA and its Representatives. (b) During the term of this Agreement, upon any reasonable request from ILA or its Representatives, the Administrator shall (i) provide to ILA and its Representatives reasonable access during normal business hours to the books and records (including any such materials developed after the Effective Time by a Party hereto or its Affiliates) under the control of the Administrator pertaining to the Administered Business and the Services to be provided under this Agreement and the reinsurance to be provided under the Reinsurance Agreement; provided that such access shall not unreasonably interfere with the conduct of the business of the Administrator, and (ii) permit ILA and its Representatives to make copies of such records, in each case, at no cost to ILA (other than for reasonable out-of-pocket expenses). Nothing herein shall require the Administrator to disclose any information to ILA or its Representatives if such disclosure would jeopardize any attorney-client privilege, the work product immunity or any other legal privilege or similar doctrine or contravene any Applicable Law or any Contract (including any confidentiality agreement to which the Administrator or any of its Affiliates is a party) (it being understood that the Administrator shall use commercially reasonable efforts to obtain waivers or make other arrangements (including redacting information or entering into joint defense agreements) that would enable otherwise required disclosure to ILA or its Representatives to occur without so jeopardizing privilege or contravening such Applicable Law, Court Order or Contract, or require the Administrator to disclose its tax records or tax returns of the Administrator or any of its Affiliates or any personnel or related records. (c) During the term of this Agreement, upon any reasonable request 21 from the Administrator or its Representatives, ILA shall (i) provide to the Administrator and its Representatives reasonable access during normal business hours to the books and records (including any such materials developed after the Effective Time by a Party hereto or its Affiliates) under the control of ILA or any of its Affiliates pertaining to the Administered Business and the Services to be provided under this Agreement and the reinsurance to be provided under the Reinsurance Agreement (including the books and records of HESCO); provided that such access shall not unreasonably interfere with the conduct of the business of ILA, and (ii) permit the Administrator and its Representatives to make copies of such records, in each case, at no cost to the Administrator (other than for reasonable out-of-pocket expenses). Nothing herein shall require ILA to disclose any information to the Administrator or its Representatives if such disclosure would jeopardize any attorney-client privilege, the work product immunity or any other legal privilege or similar doctrine or contravene any Applicable Law or any Contract (including any confidentiality agreement to which ILA or any of its Affiliates is a party) (it being understood that ILA shall use commercially reasonable efforts to obtain waivers or make other arrangements (including redacting information or entering into joint defense or common interest agreements) that would enable otherwise required disclosure to the Administrator or its Representatives to occur without so jeopardizing privilege or contravening such Applicable Law, Court Order or Contract) or require ILA to disclose its tax records (except as otherwise provided under the Purchase Agreement or Article XVII of this Agreement) or any personnel or related records. (d) The Parties shall maintain facilities and procedures that are in accordance with Applicable Law and commercially reasonable standards of insurance recordkeeping for safekeeping the books and records maintained by the applicable Party or its Affiliates that pertain to the Administered Business. (e) The Administrator shall cooperate with any Governmental Body having jurisdiction over ILA in providing access to the books and records referenced in this Section 6.02. Section 6.03 Disbursing Accounts. (a) During the term of this Agreement, the Administrator shall maintain one or more accounts (which may be zero balance accounts) in the name of the Administrator with banking institutions as necessary to allow the Administrator to make or direct all payments required to be made or directed by the Administrator on behalf of ILA with respect to the Administered Business (the "Administrator Disbursing Accounts"); provided, that the Parties acknowledge and agree that disbursement accounts maintained by ILA may be used on a transitional basis until relevant functions are migrated to the Administrator Disbursing Accounts. If requested by the Administrator, ILA, in its sole discretion, shall assign and transfer to the Administrator, and the Administrator shall accept and acquire, one or more additional accounts held in the name of ILA with banking institutions and related to the Administered Business (the "Transferred Disbursing Accounts" and, collectively with the Administrator Disbursing Accounts, the "Disbursing Accounts"). The Disbursing Accounts shall be used for all disbursements provided for in connection with the Services, including but not limited to benefit payments, insurance contract surrenders, annuity payments and other benefits under Covered Insurance Policies. Until the occurrence of a Triggering Event or Recapture Triggering Event, 22 the Administrator shall, as needed, deposit in the Disbursing Accounts funds sufficient to cover checks drawn on the Disbursing Accounts by the Administrator with respect to the Administered Business from time to time. The Administrator shall be solely responsible for all fees, costs and expenses of the Disbursing Accounts, and in no event shall ILA have any obligation to provide funding for the Disbursing Accounts with respect to the Administered Business or be responsible for any fees, costs or expenses associated therewith. Checks drawn on the Disbursing Accounts in connection with the Services shall show the Administrator, acting on behalf of ILA. (b) Unless prohibited by Applicable Law and excluding any payments in progress to policyholders or beneficiaries, upon the occurrence of, and during the continuance of, a Triggering Event or a Recapture Triggering Event, the Administrator, immediately upon becoming aware of such Triggering Event or Recapture Triggering Event, shall, in accordance with the terms of the Reinsurance Agreement, (i) transfer all Custodial Funds previously deposited or held in the Disbursing Accounts from the Disbursing Accounts into the Custodial Account, (ii) deposit all Custodial Funds directly into the Custodial Account as set forth in Section 4.9(b) of the Reinsurance Agreement and (iii) to the extent permitted pursuant to the Reinsurance Agreement, apply such Custodial Funds as set forth in Section 4.9(c) of the Reinsurance Agreement. (c) ILA shall cooperate with the establishment and maintenance of the Disbursing Accounts (including the assignment and transfer of the Transferred Disbursing Accounts). Section 6.04 Remittances. If ILA or the Administrator or any of their respective Affiliates receives any remittance or other payment that it is not entitled to under the terms of this Agreement, the Reinsurance Agreement or any other Transaction Agreement, ILA, the Administrator or such Affiliate shall hold such remittance or other payment in trust for the benefit of ILA, the Administrator or the applicable Separate Account, as the case may be. Upon becoming aware that another Party is entitled to such remittance or other payment, ILA or the Administrator shall endorse any such remittance to the order of ILA, the Administrator or the applicable Separate Account, as the case may be, and promptly transfer such remittance or other payment to ILA, the Administrator or to the applicable Separate Account, as the case may be. Section 6.05 Audit Rights. (a) During the term of this Agreement and continuing for one (1) year after the termination of this Agreement, the Administrator shall permit ILA to review the Administrator's compliance with its obligations under this Agreement, not more than once annually and on no less than thirty (30) calendar days' notice (except as set forth below) during normal business hours. Such audits shall be conducted by personnel of ILA or its Affiliates or by an independent auditor selected by ILA. The Administrator shall accommodate such audits and shall provide each auditor access to pertinent books and records during normal business hours upon reasonable advance notice. ILA shall bear the expenses of any such audits. (b) Upon the written request of ILA and if specifically available solely related to the Services, the Administrator shall provide to ILA a copy of its SSAE 16 Type II report (or any successor or other substantially similar report). 23 Section 6.06 Internal Controls Over Financial Reporting. Each Party shall provide the other with reasonable access to its personnel, books and records, and such other certifications and information as the other Party may reasonably deem necessary to enable its designated officers to evaluate the effectiveness of the disclosing party's internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) and Subsection I of Section 3 of the NAIC Annual Financial Reporting Model Regulation ("Internal Control Over Financial Reporting") with respect to the Administered Business (including with respect to any financial information provided by the disclosing Party to the other Party under this Agreement or any other Ancillary Agreement). ARTICLE VII INABILITY TO PERFORM SERVICES; ERRORS Section 7.01 Inability to Perform Services. (a) In the event that the Administrator is unable to perform all or a portion of the Services for any reason for a period that could reasonably be expected to exceed twenty (20) Business Days, the Administrator shall promptly provide notice to ILA of its inability to perform the applicable Services and shall cooperate with ILA in obtaining an alternative means of providing such Services. The Administrator shall be responsible for all fees, costs and expenses incurred in order to obtain such alternative means of providing the applicable Services and in order to restore such Services. (b) In the event that the Administrator commits three (3) independent Material Breaches (as such term is defined below) during any rolling twelve (12) month period, ILA will, at its option, initiate the dispute resolution process set forth in Section 18.03(a). If, after Level Three Negotiations, ILA is not reasonably satisfied with the results thereof, the CEO or CFO of ILA's ultimate parent will provide written notice to the CEO or CFO of the Administrator's ultimate parent and the Administrator shall use commercially reasonable efforts to obtain an alternative means of providing the impacted Services pursuant to the service standards set forth in Section 4.02(a). In such event, the Administrator shall be responsible for the incremental costs incurred in providing such alternative services. The term "Material Breach" shall mean a material breach of a material obligation under this Agreement by the Administrator, the occurrence of which is not subject to a good faith dispute between the Parties, that remains in existence ninety (90) calendar days after receipt by the Administrator of ILA's written notice of such breach (which notice shall specify ILA's view that such breach is a material breach of a material obligation hereunder), which breach shall not have been cured within such ninety (90) calendar day period; provided, however, that if the Administrator can demonstrate that, despite having used its commercially reasonable efforts to cure such failure within the ninety (90) calendar day period, it has not been able to effect such a cure, ILA may, at its sole discretion, grant the Administrator additional time in which to effect such a cure. The remedy set forth herein and ILA's indemnification rights pursuant to Section 13.02 shall be ILA's sole and exclusive remedy with respect to any Material Breach that is not cured within the foregoing cure period. (c) For the avoidance of doubt, if the Administrator fails to perform 24 any obligation hereunder and such failure is attributable to (i) an act, error or omission of ILA, including any failure by ILA or ILA's Representatives to perform any obligation of ILA hereunder or under any of the Ancillary Agreements (excluding this Agreement), (ii) revocation by ILA of any or all authority of the Administrator under Section 6.03(c) or (iii) the termination upon the occurrence of a Recapture Triggering Event of Administrator's right to direct disbursements from the Custodial Account, then in each such case, such failure to perform such obligation by the Administrator shall not be a breach of this Agreement and the Administrator shall have no liability under this Agreement with respect to such obligation. (d) In the event that a third party administrator is engaged in accordance with Section 7.01(b) and the Administrator subsequently determines that such third party administrator is incapable of performing the Services subcontracted to such third party administrator, the Parties agree that the Administrator shall, at its option, replace the third party administrator with another third party administrator or resume its performance of such Services pursuant to this Agreement. Section 7.02 Errors. The Administrator shall, at its own expense, correct any errors in the Services caused by it as promptly as practicable following notice thereof from ILA or any other Person or upon discovery thereof by the Administrator. ILA shall, at its own expense, cooperate with and assist Administrator to correct any errors resulting from any act or omission by ILA as promptly as practicable following notice thereof from Administrator or any other Person or upon discovery thereof by ILA. ILA shall reimburse the Administrator for the reasonable costs and expenses incurred by the Administrator in making any such corrections. ARTICLE VIII REGULATORY COMPLAINTS AND LEGAL ACTIONS Section 8.01 Routine Complaints. The Administrator shall supervise and control the investigation, contest, defense and/or settlement of any policyholder, insured or beneficiary complaints (including any such complaints asserted through any Governmental Body) that in the Administrator's reasonable judgment would reasonably be expected to result solely in monetary Losses [REDACTED] relating to the Administered Business (the "Routine Complaints") at its own cost and expense, and in the name of ILA when necessary. Notwithstanding anything in this Agreement to the contrary, the Administrator shall not be required to provide notice to ILA with respect to any Routine Complaints; provided, that at ILA's request, the Administrator shall, no more frequently than monthly, provide ILA with a report summarizing the nature and status of any pending or resolved Routine Complaints, the alleged actions or omissions giving rise to such Routine Complaints, and the status of any such Routine Complaints. Section 8.02 Regulatory Actions. (a) If ILA or the Administrator receives notice of, or otherwise becomes aware of, any Regulatory Action (as defined below), ILA or the Administrator, as applicable, shall promptly notify the other Party thereof. The term "Regulatory Action" means any Action initiated by or involving the participation of a Governmental Body related to the 25 Administered Business other than Routine Complaints. ILA, upon twenty (20) calendar days written notice to the Administrator, shall have the right at any time to assume sole and exclusive control over the response, defense, settlement or other resolution of any Regulatory Action; provided that ILA shall be solely responsible for all costs and expenses related thereto (including any Losses, fines, penalties or other amounts imposed on or suffered by the Administrator and its Affiliates, and the cost of any remediation efforts by the Administrator) and any increased liability of the Administrator, in its capacity as the Reinsurer, under the Reinsurance Agreement or this Agreement resulting from ILA's control thereof. The Administrator shall have the right at its sole expense to engage its own separate legal representation and to participate fully in, but not control, any such defense, settlement, or compromise assumed by ILA. Notwithstanding the foregoing, ILA shall not settle or compromise any such Regulatory Action without the Administrator's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) unless (i) there is no finding or admission of any violation of Applicable Law or any violation of the rights of any Person by the Administrator or any of its Affiliates, (ii) ILA pays all settlement amounts with respect thereto, (iii) ILA obtains a complete release for the Administrator and its Affiliates who are parties to the proceedings with respect to such Regulatory Action, and (iv) the terms of the proposed settlement or compromise of the Regulatory Action do not impose injunctive, equitable relief or remediation or result in any non-monetary restriction or condition or material burden on the Business or operations of the Administrator and its Affiliates. (b) In the event that ILA does not timely assert its right to control the handling of Regulatory Actions pursuant to Section 8.02(b), the Administrator shall assume sole and exclusive control over the response, defense, settlement or other resolution of any Regulatory Action. ILA shall have the right at its sole expense to engage its own separate legal representation and to participate fully in, but not control, any such defense, settlement, or compromise assumed by the Administrator. Notwithstanding the foregoing, the Administrator shall not settle or compromise any such Regulatory Action without ILA's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) unless (i) there is no finding or admission of any violation of Applicable Law or any violation of the rights of any Person by ILA or any of its Affiliates, (ii) the Administrator pays all settlement amounts with respect thereto, (iii) the Administrator obtains a complete release for ILA and its Affiliates who are parties to the proceeding with respect to such Regulatory Action, and (iv) the terms of the proposed settlement of the Regulatory Action do not impose injunctive, equitable relief or remediation or result in any non-monetary restriction or condition on ILA or its Affiliates. (c) Upon the other Party's request, the controlling Party shall provide such other Party with a report of any pending Regulatory Actions controlled by the controlling Party that are covered under this Section 8.02, summarizing the nature of any such pending Regulatory Actions, the alleged actions or omissions, if any, giving rise to such Regulatory Actions and copies of any files or other documents that the controlling Party may reasonably request in connection with its review of such matters. Section 8.03 Legal Actions. (a) The Administrator shall promptly notify ILA of any Action other than a Regulatory Action or a Routine Complaint that has been instituted or threatened in writing 26 with respect to the Administered Business or any Covered Insurance Policy (each, a "Legal Action"), and in no event more than five (5) Business Days after receipt or notice thereof. (b) ILA shall promptly notify the Administrator of any Legal Action to the extent known to it and not made against or served on the Administrator as administrator hereunder, and in no event more than five (5) Business Days after receipt or notice thereof, and shall promptly furnish to the Administrator copies of all pleadings in connection therewith. (c) The Administrator shall supervise and shall exclusively control the investigation, contest, defense and/or settlement of all Legal Actions, at its own cost and expense and in the name of ILA when necessary. (d) Notwithstanding anything in this Agreement to the contrary, ILA shall have the right to engage its own separate legal representation, at its own expense, and to participate fully in, but not control, the defense of any Legal Action with respect to which ILA is a named party to the extent that such Legal Action, if successful, could (in ILA's reasonable opinion) materially interfere with the business, assets, liabilities, obligations, financial condition, results of operations or reputation of ILA or any of its Affiliates other than the Administered Business, without waiving any right to indemnification or payment that it may have under the terms of the Purchase Agreement, the Reinsurance Agreement or this Agreement. The Administrator and ILA shall use commercially reasonable efforts to cooperate with each other with respect to the administration of any such Legal Action. The Administrator shall not settle or compromise any Legal Action without ILA's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) unless (i) there is no finding or admission of any violation of Applicable Law or any violation of the rights of any Person by ILA or any of its Affiliates, (ii) the Administrator pays all settlement amounts with respect thereto, (iii) the Administrator obtains a complete release for ILA and its Affiliates who are parties to the proceeding with respect to such Legal Action, and (iv) the terms of the proposed settlement do not impose injunctive, equitable relief or remediation or result in any non-monetary restriction or condition on ILA or its Affiliates. (e) The Administrator shall keep ILA informed of the progress of all pending Legal Actions and, at ILA's request (which requests shall be reasonable in their frequency and nature as reasonably determined by the Administrator), provide to ILA a report summarizing the nature of any pending Legal Action, the alleged actions or omissions giving rise to such Legal Action and copies of any files or other documents that ILA may reasonably request in connection with its review of such matters, in each case other than such files, documents and other information as would, in the judgment of counsel to the Administrator, lead to the loss or waiver of legal privilege. Except to the extent that the Administrator prepares such reports in the ordinary course of business, ILA shall reimburse the Administrator for the reasonable out-of-pocket costs incurred by it in preparing the reports and copies described in this Section 8.03(e). Section 8.04 Cooperation. Each Party shall use commercially reasonable efforts to cooperate with and assist the controlling Party in responding to, defending, prosecuting and Routine Complaint, Regulatory Action or Legal Action pursuant to Article VIII, provided, that neither Party shall be required to waive any applicable attorney-client, attorney work product or other evidentiary privileges; provided, further, that, except as set forth in this Article VIII, the 27 Administrator shall reimburse ILA for any reasonable out-of-pocket costs and expenses incurred by ILA in connection with such efforts. Neither ILA nor the Administrator shall have the authority to institute, prosecute or maintain any legal or regulatory proceeding on behalf of the other Party without the prior written consent of such other Party, except as expressly contemplated in this Agreement. Section 8.05 Reporting. On a quarterly basis, (a) ILA shall prepare and provide to the Administrator a report containing a summary of any Regulatory Actions with respect to which ILA has exercised its right to supervise and control the defense thereof in accordance with Section 8.02(b), and (b) the Administrator shall prepare and provide to ILA a report containing a summary of any Legal Actions and Regulatory Actions controlled by the Administrator in a form reasonably acceptable to ILA. Section 8.06 Relationship with Other Agreements. Notwithstanding anything to the contrary contained herein, the provisions of this Article VIII (including any obligation of the Administrator to bear any costs associated with any Regulatory Action or Legal Action) shall be subject to and shall not impair or reduce the indemnity obligations and rights of the Parties and their Affiliates and other provisions related to indemnification under the Purchase Agreement and the Reinsurance Agreement. The Parties acknowledge and agree that this Article VIII shall not apply to the Specified Action, with respect to which the provisions of Section 8.20 of the Business Disclosure Schedule to the Purchase Agreement shall govern. Section 8.07 Taxes. This Article VIII shall not apply to matters relating to Taxes. ARTICLE IX [REDACTED] 28 [REDACTED] ARTICLE X DURATION; TERMINATION Section 10.01 Duration. This Agreement shall become effective as of the Effective Time and shall continue until the earlier of (a) the date on which the Reinsurance Agreement is terminated in accordance with the terms thereof (b) the date on which this Agreement is terminated in accordance with the provisions of Section 10.02, or (c) the date of a recapture under the Reinsurance Agreement. Section 10.02 Termination. (a) This Agreement may be terminated at any time upon the mutual written consent of the Parties hereto, which written consent shall state the effective date and relevant terms of termination. (b) This Agreement is subject to immediate termination at the option of ILA, upon written notice to the Administrator, in the event that the Administrator becomes insolvent or is placed into liquidation, rehabilitation, conservation, supervision, receivership or similar proceedings (whether voluntary or involuntary), or there is instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or assume control of its operations. (c) This Agreement is subject to immediate termination in its entirety upon written notice to the Administrator, if the business reinsured under the Reinsurance Agreement is recaptured pursuant to its terms or the Reinsurance Agreement is terminated. (d) Upon termination of this Agreement (other than a termination resulting from the termination of all liabilities of ILA under all Covered Insurance Policies in accordance with their respective terms), the Administrator shall reasonably cooperate in the transfer of the applicable Services and any books and records and other materials maintained by the Administrator related to such Services as promptly as practicable (or, where required by Applicable Law, copies thereof) to ILA or ILA's designee, such that ILA or its designee shall be able to perform the applicable Services without interruption following termination of this 30 Agreement. Section 10.03 Survival. Notwithstanding the other provisions of this Article X, Articles I, XIII and XIV and Sections 18.01, 18.03, 18.05, 18.08 and 18.09 shall remain in full force and effect after the termination of this Agreement. ARTICLE XI CUSTOMER INFORMATION Section 11.01 Customer Information. (a) The Administrator shall, and shall cause its Affiliates and its and their respective Representatives to, comply with Applicable Privacy Laws and the Information Security Requirements set forth in Schedule III attached hereto. (b) ILA agrees that the Administrator may use and disclose Customer Information for any and all purposes described in: (i) Sections 16 and 17 of the NAIC Model Privacy of Consumer Financial and Health Information Regulation and (ii) Section 13 of the NAIC Insurance Information and Privacy Protection Model Act, except where disclosure is prohibited by Applicable Law. (c) ILA agrees that the Administrator may use Customer Information for the Administrator's own purposes relating to its insurance products and services, including but not limited to: servicing, administering, and maintaining its insurance products and services; administering and servicing benefits or claims; underwriting, risk management and control; and the detection and prevention of fraud, criminal activity, misrepresentations, or unauthorized transactions. (d) ILA hereby enters into a joint marketing agreement with the Administrator as described in Section 15 of the NAIC Model Privacy of Consumer Financial and Health Information Regulation such that Nonpublic Personal Financial Information, as defined in the NAIC Model Privacy of Consumer Financial and Health Information Regulation, relating to the Covered Insurance Policies may be disclosed to the Administrator and used by the Administrator to market insurance products and services to insureds or policyholders under the Covered Insurance Policies. Specifically, ILA agrees that it will send or cause the Administrator to send, on ILA letterhead, at Administrator's sole cost and expense, marketing material regarding the products and services of the Administrator and its affiliates and subsidiaries to insureds or policyholders under the Covered Insurance Policies. The content of such marketing material is subject to approval by ILA, the approval of which shall not be unreasonably withheld by ILA. Notwithstanding the foregoing, Administrator shall not solicit individuals that are included in ILA's Do Not Contact Database (which database shall be made available to the Administrator by ILA upon Administrator's reasonable request). 31 ARTICLE XII DISASTER RECOVERY Section 12.01 Disaster Recovery. The Administrator represents that it has developed and shall maintain, for as long as Services are provided hereunder, a disaster recovery plan ("DRP") related to the Services that is consistent with commercially reasonable business practices. For as long as Services are provided hereunder, the Administrator will: (a) periodically, but no less than one time per calendar year, update and test the operability of the DRP; (b) certify to ILA at least once during every calendar year that the DRP is fully operational; (c) in consultation with ILA, implement the DRP upon the declaration of a disaster under such DRP; and (d) reinstate the Services upon the declaration of such a disaster within the applicable timeframes specified in the DRP. ILA shall have the right to review the DRP periodically, but no more than one time per calendar year at the Administrator's location. ARTICLE XIII INDEMNIFICATION Section 13.01 Indemnification by ILA. ILA shall indemnify, defend and hold harmless Administrator and its Affiliates, including the Investment Manager, and their respective Representatives, successors and assigns (collectively, the "Administrator Indemnified Parties") from and against and pay and reimburse all Losses imposed on, sustained, incurred or suffered by the Administrator Indemnified Parties resulting from, arising out of or relating to (whether or not arising from a Third-Party Claim): (a) any breach by ILA of the covenants and agreements of ILA contained in this Agreement; [REDACTED] 32 (d) any fraud, theft or embezzlement by officers, employees or agents of ILA with respect to the Reinsured Portfolios during the term of this Agreement and the Investment Management Agreement; (e) the failure of ILA to comply with any Applicable Law; and (f) any successful enforcement of this indemnity. Notwithstanding anything in this Agreement to the contrary, the indemnification claims set forth in subsections (b) and (c) of this Section 13.01 shall not constitute "Legal Actions" as defined in Section 8.03(a), and any indemnification thereunder shall be governed by this Article XIII. Nothing contained in this Section 13.01 is intended to amend or supersede any provision of the Investment Management Agreement. Section 13.02 Indemnification by the Administrator. Except as otherwise provided in Section 4.02(c), Administrator shall indemnify, defend and hold harmless ILA and its Affiliates and their respective Representatives, successors and assigns (collectively, the "ILA Indemnified Parties") from and against and pay and reimburse all Losses imposed on, sustained, incurred or suffered by the ILA Indemnified Parties resulting from, arising out of or relating to (whether or not arising from a Third-Party Claim): (a) any breach by the Administrator of the covenants and agreements of the Administrator contained in this Agreement; [REDACTED] (c) any fraud, theft or embezzlement by officers, employees or agents of the Investment Manager during the term of this Agreement or the Investment Management Agreement; (d) the failure of Administrator, the Investment Manager or any sub-manager retained by the Investment Manager in accordance with Section 3 of the Investment Management Agreement to comply with any Applicable Law; and (f) any successful enforcement of this indemnity. 33 Notwithstanding anything in this Agreement to the contrary, the indemnification claims set forth in subsection (b) of this Section 13.02 shall not constitute "Legal Actions" as defined in Section 8.03(a), and any indemnification thereunder shall be governed by this Article XIII. Nothing contained in this Section 13.02 is intended to amend or supersede any provision of the Investment Management Agreement. Section 13.03 Notice of Claim; Defense. (a) If (i) any non-affiliated third party or Governmental Body institutes asserts any Action that may give rise to Losses for which a Party (an "Indemnifying Party") may be liable for indemnification under this Article XIII (a "Third-Party Claim") or (ii) any Person that may be entitled to indemnification under this Agreement (an "Indemnified Party") desires to make a claim not involving a Third-Party Claim to be indemnified by an Indemnifying Party, then the Indemnified Party shall promptly send to the Indemnifying Party a written notice specifying the nature of such claim and a good faith estimate of the amount of all related Losses to the extent they are ascertainable (a "Claim Notice"). The Indemnifying Party shall not be relieved from any of its indemnification obligations under this Article XIII as a result of a failure of the Indemnified Parties to provide a Claim Notice except to the extent that it is prejudiced by such failure. (b) The Indemnifying Party may, by notice delivered within twenty (20) Business Days of the receipt of a Claim Notice with respect to a Third-Party Claim, assume the defense and control of such Third-Party Claim (at the expense of such Indemnifying Party). The Indemnified Party may take any actions reasonably necessary to defend any Third-Party Claim prior to the time that it receives notice from the Indemnifying Party as contemplated by the preceding sentence. The Indemnifying Party shall not be entitled to assume or maintain control of the defense of any Third-Party Claim and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party if (i) the Third-Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation against the Indemnified Party or (ii) the Third-Party Claim would reasonably be expected to result in an injunction or equitable relief against the Indemnified Party that would, in each case, have a material effect on the operation of the business of such Indemnified Party or any of its Affiliates. (c) Subject to Section 13.03(b), in the event of a Third-Party Claim, if the Indemnifying Party assumes the defense of a Third-Party Claim, the Indemnifying Party may elect to retain counsel reasonably acceptable to the Indemnified Parties to represent such Indemnified Parties in connection with such Action and shall pay the fees, charges and disbursements of such counsel. Subject to Section 13.03(b), if the Indemnifying Party so elects, the Indemnified Parties may participate, at their own expense and through legal counsel of their choice, in any such Action; provided that (i) the Indemnifying Party shall control the defense of the Indemnified Parties in connection with such Action and (ii) the Indemnified Parties and their counsel shall reasonably cooperate with the Indemnifying Party and its counsel in connection with such Action. To the extent such action can be taken in a way that does not unreasonably jeopardize the attorney-client privilege: (i) the Indemnified Party's right to participate in the defense of any Action shall include the right to attend all significant internal meetings, all meetingswith representatives of plaintiffs, hearings and the like; and (ii) counsel for a 34 Indemnified Party also shall be given a reasonable opportunity to comment upon all memoranda of law, pleadings and briefs and other documents relating to the Third-Party Claim, and the Indemnifying Party and its counsel shall give reasonable consideration to the comments of counsel for the Indemnified Party. The Indemnifying Party shall not settle any such Action without the relevant Indemnified Parties' prior written consent, unless the terms of such settlement (A) provide for no relief other than the payment of monetary damages, (B) involve no finding or admission of any breach or violation by any Indemnified Party and (C) include an express unconditional release of each Indemnified Party from all liability arising from such Action. Notwithstanding the foregoing, if the Indemnifying Party does not promptly retain counsel and assume control of such defense, then the Indemnified Parties may retain counsel reasonably acceptable to the Indemnifying Party in connection with such Action and assume control of the defense in connection with such Action. Under no circumstances will the Indemnifying Party have any liability in connection with any settlement of any Action that is entered into without its prior written consent (such consent not to be unreasonably withheld, delayed or conditioned). (d) From and after the delivery of a Claim Notice involving a Third-Party Claim, at the reasonable request of the Indemnifying Party, each Indemnified Party shall grant the Indemnifying Party and its counsel, experts and Representatives full access, during normal business hours, to the books, records, personnel and properties of the Indemnified Party to the extent reasonably related to such Claim Notice at no cost to the Indemnifying Party (other than for reasonable out-of-pocket expenses of the Indemnified Parties). (e) In the event any Indemnifying Party receives a Claim Notice from an Indemnified Party that does not involve a Third-Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Article XIII. Section 13.04 No Duplication; Exclusive Remedy. (a) To the extent that an Administrator Indemnified Party or an ILA Indemnified Party has received payment in respect of a Loss pursuant to the provisions of any other Ancillary Agreement, such Administrator Indemnified Party or ILA Indemnified Party shall not be entitled to indemnification for such Loss under this Agreement to the extent of such payment. (b) Except with respect to claims alleging fraud and as otherwise provided under this Agreement or the provisions of any other Ancillary Agreement, from and after the Closing, the exclusive remedy of the Administrator, the Administrator Indemnified Parties, ILA and the ILA Indemnified Parties in connection with this Agreement (and any certificate or instrument delivered hereunder) and the transactions contemplated hereby (whether under this Agreement or arising under Applicable Law) shall be as provided in this Article XIII. In furtherance of the foregoing, each of Administrator, on behalf of itself and each other Administrator Indemnified Party, and ILA, on behalf of itself and each other ILA Indemnified Party, hereby waives, from and after the Closing, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action 35 arising from, fraud) it may have against ILA or any of its Affiliates or Representatives and the Administrator or any of its Affiliates or Representatives, as the case may be, arising under or based upon this Agreement or any certificate or instrument delivered in connection herewith, except (x) pursuant to the indemnification provisions set forth in this Article XIII or (y) as otherwise provided under this Agreement or the provisions of any other Ancillary Agreement. Section 13.05 Limitation on Set-off. Neither ILA nor the Administrator shall have any right to set off any unresolved indemnification claim pursuant to this Article XIII against any payment due pursuant to any Transaction Agreement. Section 13.06 Mitigation. The Administrator and ILA shall cooperate with each other with respect to resolving any claim or liability with respect to which one Party is obligated to indemnify the other Party under this Article XIII, including by making commercially reasonable efforts to mitigate such claim or liability, to the extent required by Applicable Law. Section 13.07 Recovery by Indemnified Party. (a) In any case where an Indemnified Party recovers from a third party not affiliated with such Indemnified Party any amount in respect of any Loss for which an Indemnifying Party has actually reimbursed it pursuant to this Article XIII, such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (net of any out-of-pocket expenses incurred by such Indemnified Party in collecting such amount), but not in excess of the sum of (i) any amount previously paid by the Indemnifying Party to or on behalf of the Indemnified Party in respect of such claim and (ii) any amount expended by the Indemnifying Party in pursuing or defending any claim arising out of such matter. (b) If any portion of Losses to be reimbursed by the Indemnifying Party pursuant to this Article XIII could be recovered from a third party not affiliated with the relevant Indemnified Party (including under any applicable third-party insurance coverage) based on the underlying claim or demand asserted against such Indemnifying Party, then the Indemnified Party shall promptly give notice thereof to the Indemnifying Party and, upon the request of the Indemnifying Party, shall use commercially reasonable efforts to collect the maximum amount recoverable from such third party, in which event the Indemnifying Party shall reimburse the Indemnified Party for all reasonable costs incurred in connection with such collection. If any portion of Losses actually paid by the Indemnifying Party pursuant to this Article XIII could have been recovered from a third party not affiliated with the relevant Indemnified Party (including under any applicable third-party insurance coverage) based on the underlying claim or demand asserted against such Indemnifying Party, then the Indemnified Party shall transfer, to the extent transferable, such of its rights to proceed against such third party as are necessary to permit the Indemnifying Party to recover from such third party any amount actually paid by the Indemnifying Party pursuant to this Article XIII. Section 13.08 Relationship with Reinsurance Agreement. Nothing contained in this Article XIII is intended to amend or supersede any provision of the Reinsurance Agreement. 36 ARTICLE XIV COOPERATION Section 14.01 Cooperation. The Parties hereto shall use commercially reasonable efforts to reasonably cooperate in order that the duties assumed by the Administrator hereunder will be effectively, efficiently and promptly discharged, and will not take any actions that would frustrate the intent of the transactions contemplated by this Agreement or any Transaction Agreement. In accordance with the foregoing and at the Administrator's sole cost and expense, each Party shall, at all reasonable times under the circumstances, make available to the other Party properly authorized personnel for the purpose of consultation and decision. ARTICLE XV TRADEMARK LICENSE Section 15.01 Trademark License. On the date hereof, HFIC and the Administrator shall enter into the Trademark License Agreement, a form of which is attached hereto as Exhibit A (the "Trademark License Agreement"), pursuant to which HFIC will grant the Administrator a license to the trade names and marks described therein, subject to the terms and conditions set forth therein. ARTICLE XVI FIDELITY BOND Section 16.01 Fidelity Bond. The Administrator shall, at its sole cost and expense, obtain from an insurance company or companies and maintain in-force at all times during the performance of the Services a fidelity bond or employee dishonesty insurance policy [REDACTED], subject to a deductible which is subject to the Administrator's self-insurance. The insurance companies providing insurance under this Article XVI shall have a Best's Financial Performance Rating of A- or higher and a Financial Size Category of VIII or higher, unless otherwise approved in writing by ILA. ARTICLE XVII TAX MATTERS Section 17.01 Premium Taxes. (a) Quarterly Premium Tax Report. Within 20 calendar days of the end of each calendar quarter, the Administrator (i) will provide a report (a "Quarterly Premium Tax Report") to ILA and (ii) will forward to ILA, in the Administrator's capacity as the Reinsurer, any reimbursement for Premium Taxes and assessments due and payable by the Reinsurer in respect of the Covered Insurance Policies under the terms of the Reinsurance Agreement (a "Quarterly Premium Tax Payment"). Each Quarterly Premium Tax Report shall provide Premium and Premium Tax rate information by state, which information shall include, without limitation, the applicable rate for Premium Taxes for each state in the report. The Quarterly Premium Tax Payment accompanying a Quarterly Premium Tax Report shall be 37 calculated using the statutory rate for Premium Taxes in each of the states listed in the report. (b) Retaliatory Premium Taxes. For purposes of preparing each Quarterly Premium Tax Report, ILA shall provide to the Administrator, in accordance with Section 17.01(c), such additional information as is necessary and appropriate for purposes of facilitating the Administrator's calculation of retaliatory Premium Taxes for such preceding calendar quarter. Unless ILA (i) provides the Administrator with such additional information in accordance with Section 17.01(c) and (ii) certifies to the Administrator that the information so provided is the same as the information that will be reported on, or taken into account in preparing, ILA's Premium Tax Returns for the taxable period to which the Quarterly Premium Tax Report relates, the Administrator shall calculate retaliatory Premium Taxes for the relevant Quarterly Premium Tax Report (x) based upon the difference between ILA's state of domicile rate for Premium Taxes and the statutory rates for Premium Taxes of other applicable jurisdictions and (y) only when the rate for Premium Taxes of another jurisdiction is lower than the rate for Premium Taxes of ILA's state of domicile. (c) Requested Information. ILA shall provide to the Administrator on a timely basis any information within ILA's possession or control that is reasonably requested by the Administrator in connection with the Administrator's obligations under this Article XVII. The Quarterly Premium Tax Report shall be based on Premiums collected by the Administrator with respect to the Covered Insurance Policies pursuant to this Agreement and the information in its possession. ILA and the Administrator shall cooperate in the accurate preparation and timely filing of all Tax Returns that must be filed in connection with Premium Taxes. Each Party shall furnish to the other Party all information and records reasonably requested by the other Party for use in the preparation, review or verification of all Tax Returns that must be filed in connection with Premium Taxes. ILA will provide to Administrator copies of any communications received from a Taxing Authority relating to Premium Taxes or to any related credits, deductions or offsets. (d) Credits, Deductions, Offsets. The Quarterly Premium Tax Report will indicate any credits, deductions, or offsets that reduce the Reinsurer's obligation to reimburse ILA for Premium Taxes under the terms of the Reinsurance Agreement. If (i) a credit, deduction, or offset against Premium Taxes was reflected as an asset on the Closing Date Transfer Balance Sheet or (ii) the Reinsurer shall have reimbursed ILA under the Reinsurance Agreement for an assessment by any guaranty fund, insolvency fund, plan, pool, association, or any similar assessment that has given rise to a credit, deduction, or offset against Premium Taxes, and such credit, deduction or offset cannot be fully used by ILA to offset a liability for Premium Taxes for which the Reinsurer otherwise would be required to reimburse ILA, and the remainder of the credit, deduction or offset is applied against other Taxes payable by ILA, then such credit, deduction or offset shall be applied to reduce the Reinsurer's obligation to reimburse ILA as reflected on the Quarterly Premium Tax Report for the next succeeding calendar quarter (or the first calendar quarter thereafter for which the Reinsurer would otherwise be required to reimburse ILA with respect to Premium Taxes under the terms of the Reinsurance Agreement). To the extent that ILA receives any refunds of amounts previously paid to a guarantee fund, plan, pool, or association or of any similar assessment, ILA shall reimburse the Administrator (in the Administrator's capacity as the Reinsurer) to the extent such amount was reflected as an asset on the Closing Date Transfer Balance Sheet or the Reinsurer shall have reimbursed ILA under the 38 Reinsurance Agreement for the amount refunded. (e) Pro Forma Schedule T. Within twenty (20) calendar days of the end of each calendar year, the Administrator shall prepare and provide ILA with a pro forma Schedule T with respect to the Administered Business for the preceding calendar year. The pro forma Schedule T will be prepared on the basis of the Quarterly Premium Tax Reports for the calendar year to which the pro forma Schedule T relates. ILA will file its Schedule T in a manner consistent with the pro forma Schedule T provided to it by the Administrator and will provide a copy of its filed Schedule T to the Administrator. Should the Administrator come into possession of any additional information that it would have used to prepare the pro forma Schedule T after it has provided the pro forma Schedule T to ILA in accordance with this Section 17.01(e), the Administrator shall promptly provide such additional information to ILA in writing, along with a reasonably detailed written explanation of what changes should be made to the pro forma Schedule T to reflect such additional information. (f) Annual Premium Tax Report. The Administrator will provide ILA with a final annual report of Premiums and Premium Taxes for each calendar year of this Agreement (the "Annual Premium Tax Report") on or before March 31st of the following calendar year. Each Annual Premium Tax Report (i) shall provide Premium and Premium Tax rate information by state, which information shall include, without limitation, the applicable rate for Premium Taxes for each state in the report and (ii) shall be prepared by the Administrator in a manner consistent with the pro forma Schedule T provided by the Administrator to ILA with respect to such calendar year pursuant to Section 17.01(e) (taking into account any additional information provided by the Administrator to ILA in accordance with the last sentence of Section 17.01(e)), as adjusted to reflect any additional information in the Administrator's possession at the time the Annual Premium Tax Report is prepared and to take into account the definition of General Account Liabilities in the Reinsurance Agreement and Section 17.01(d). The Annual Premium Tax Report will reflect (x) any overpayment or underpayment of reimbursements by the Reinsurer for Premium Taxes due in respect of Premiums reported and paid to ILA with the Quarterly Premium Tax Reports for the calendar year to which the Annual Premium Tax Report relates and (y) any other relevant adjustments to Premium Taxes, which adjustments shall be described in reasonable detail in a schedule to the Annual Premium Tax Report. Such overpayment or underpayment will be reconciled in conjunction with the next Quarterly Premium Tax Payment following ILA's receipt of the Annual Premium Tax Report. (g) Notice. Each of ILA and the Administrator shall promptly notify the other in writing upon receipt by it or any of its Affiliates of notice of any pending or threatened Action related to any Premium Taxes or any Tax Returns filed in connection with such Taxes. (h) Actions. ILA shall have the sole right to control the conduct of any Action related to any Premium Taxes or any Tax Returns filed in connection with such Premium Taxes, and to employ counsel of ILA's choice at ILA's expense; provided, that the Administrator shall be permitted, at the Administrator's expense, to be present at, and to participate in, any such Action. Notwithstanding such control, ILA shall not settle, either administratively or after the commencement of litigation, any claim for Premium Taxes without the consent of the Administrator, which consent shall not be unreasonably withheld or delayed. 39 ILA and the Administrator shall furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the preparation for any Tax audit or other Action related to Taxes, and the prosecution or defense of any Action related to any Premium Taxes or any Tax Returns filed in connection with such Premium Taxes. ILA and the Administrator shall reasonably cooperate with each other in the conduct of any Action related to any Premium Taxes. For the avoidance of doubt, nothing in this Agreement shall require ILA to provide the Administrator access to any federal, state, or local consolidated income Tax Return that includes ILA or its Affiliates. Any information obtained under this Section 17.01(h) shall be kept confidential, except as otherwise reasonably may be required in connection with the filing of Tax Returns or claims for Tax refunds or in conducting any Action related to Taxes. Section 17.02 Tax Information Reporting, Withholding, and Depositing. (a) The Administrator shall be responsible for all Tax information reporting, withholding, and depositing required under Applicable Law with respect to the Administered Business. All Tax Returns required to be filed with respect to such Tax information reporting, withholding, and depositing shall be accurate and complete in all material respects, and filed by the Administrator on a timely basis and, where required by Applicable Law, shall be accompanied by the correct amount of required payments or deposits of Taxes. (b) Upon ILA's reasonable request, the Administrator shall (i) provide ILA reasonable access during normal business hours to (A) review, audit, or copy any Tax Returns for which the Administrator is responsible under Article XVII (either prior to or following the filing of such Tax Returns) and (B) review the Administrator's processes and operations with respect to its obligations under Article XVII, provided that such access shall not unreasonably interfere with the conduct of the business of the Administrator; (ii) provide information to ILA demonstrating the Administrator's compliance with Article XVII; and (iii) cooperate with ILA in connection with any Action related to any Tax Return for which the Administrator is responsible under Article XVII (provided that such cooperation shall not unreasonably interfere with the business or operations of the Administrator). Section 17.03 Sales Taxes. ILA shall reimburse the Administrator for all sales, value-added, goods and services, or similar Taxes (including any such Taxes that are collected through withholding, but excluding any Taxes based upon, or calculated by reference to, the income, receipts, or capital of the Administrator, which Taxes shall be solely the liability of the Administrator) imposed on or paid by the Administrator with respect to its receipt of payments from ILA under this Agreement; provided that the Administrator shall provide ILA with written notice that, and information reasonably sufficient to verify that, such Taxes have been paid or are payable by the Administrator. In any case where the Administrator has not previously paid such Taxes, the Administrator shall promptly make payment of such Taxes to the appropriate Governmental Body upon receipt of the reimbursement from ILA. Section 17.04 Reinsurer Product Tax Liabilities. To the extent that the Reinsurer is liable under the Reinsurance Agreement for any Reinsurer Extra-Contractual Obligations that relate to the Tax treatment or the Tax status of one or more Covered Insurance Policies ("Reinsurer Product Tax Liabilities"), including, without limitation, any Losses described in clauses (i) and (ii) of Section 12.6(a) of the Purchase Agreement, ILA and the Administrator 40 shall cooperate in the defense and resolution of any Action related to such Reinsurer Product Tax Liabilities, provided that such cooperation shall not unreasonably interfere with the business or operations of either Party. Section 17.05. Conflicts. Notwithstanding any other provision in this Agreement, with respect to the matters specifically set forth in this Article XVII, the provisions of this Article XVII shall control. To the extent not provided for in this Article XVII or any other provisions of this Agreement, including the schedules to the same, matters related to Taxes shall be governed by the Purchase Agreement, the Reinsurance Agreement, the Transition Services Agreement, the Trust Agreement, or another Ancillary Agreement, as applicable and as appropriate. ARTICLE XVIII MISCELLANEOUS Section 18.01 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the Party to whom notice is to be given, (b) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission, or (c) on the Business Day after delivery to an overnight courier (such as Federal Express) or an overnight mail service (such as the Express Mail service) maintained by the United States Postal Service, to the Party as follows: To ILA or HFIC: Hartford Life and Annuity Insurance Company 200 Hopmeadow Street Simsbury, CT 06089 Fax: (866) 522-0308 Attention: President With concurrent copies (which will not constitute notice) to: The Hartford One Hartford Plaza Hartford, CT 06155 Fax: (860) 547-6959 Attention: Ceded Reinsurance & General Counsel [REDACTED] 41 To the Administrator: The Prudential Insurance Company of America 213 Washington Street, 15th Floor Newark, NJ 07102 Facsimile: (973) 367-8920 Attention: Chief Legal Officer, Individual Life Insurance With concurrent copies (which will not constitute notice) to: Prudential Financial, Inc. 751 Broad St., 21st Floor Newark, NJ 07102 Facsimile: (973) 367-8105 Attention: General Counsel [REDACTED] or to such other address as such Party may indicate by a notice delivered to the other Party hereto. Notwithstanding the foregoing, pursuant to Section 18.01 notice shall also be given by e-mail to the respective party's Coordinator. Section 18.02 Entire Agreement. This Agreement, together with the Schedules and Exhibits referred to herein, the Purchase Agreement, the Reinsurance Agreement, the Transition Services Agreement, the Trust Agreement and the other documents delivered pursuant hereto and thereto, contain the entire understanding of the Parties hereto with regard to the subject matter contained herein or therein, and supersede all other prior representations, warranties, agreements, understandings or letters of intent between or among any of the Parties hereto which representations, warranties, agreements, understandings or letters of intent shall be of no force or effect for any purpose. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized Representative of each of the Parties hereto or their respective successors in interest. Section 18.03 Dispute Escalation; Governing Law and Jurisdiction. (a) In the event a dispute arises between the Parties under this Agreement, face-to-face negotiations shall be conducted between the Parties' respective Coordinators within five (5) calendar days following a written request from any Party ("Level One Negotiations"). The Parties shall ensure that their respective Coordinators shall use reasonable efforts and work together in good faith to resolve any disagreements or disputes between the Parties as expeditiously as possible. If such Project Managers are unable to resolve the dispute within five (5) calendar days after the Parties have commenced Level One Negotiations, then either Party may request that face to face or telephonic negotiations be conducted within five (5) calendar days of such request by the Parties' respective internal subject matter experts ("Level Two Negotiations"). If such individuals are unable to resolve the dispute within five (5) calendar days after the Parties have commenced Level Two Negotiations, any Party may request that face to face or telephonic negotiations shall be conducted within five (5) calendar days of such request between a senior executive of ILA and a senior executive of the 42 Administrator ("Level Three Negotiations"). Except for Material Breaches under Section 7.01, if such executives are unable to resolve the dispute within ten (10) calendar days after the Parties have commenced Level Three Negotiations, any unresolved dispute arising out of the interpretation, performance, or breach of this Agreement, including the formation or validity thereof, shall be resolved pursuant to Section 18.03(b). (b) This Agreement shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts of law provisions) of the State of New York (other than Sections 5-1401 and 5-1402 of the General Obligations Law, which shall apply). Each of the Parties hereto irrevocably agrees that any and all Actions arising out of, relating to or in connection with this Agreement or its subject matter and the rights and obligations arising hereunder, or for recognition and enforcement of any settlement or judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any other Party hereto or its successors or assigns, shall be brought and determined exclusively in the courts of the State of New York located in the Borough of Manhattan, The City of New York or in the courts of the United States of America for the Southern District of New York. Each of the Parties agrees that mailing of process or other papers in connection with any such Action in the manner provided in Section 18.01 or in such other manner as may be permitted by Applicable Laws, will be valid and sufficient service thereof. Each of the Parties hereto hereby irrevocably submits with regard to any such Action for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any Action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Agreement, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by Applicable Law, any claim that (i) the Action in such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. In order to facilitate the comprehensive resolution of related disputes, and upon request of any Party to any Action, the court may consolidate the Action with any other Action relating to this Agreement or to any Ancillary Agreement and the Parties hereby agree not to oppose any request by the other Party to consolidate any such Action with another Action relating to this Agreement or to any Ancillary Agreement. Section 18.04 No Third Party Beneficiaries. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the Parties and permitted successors and assigns and the Administrator Indemnified Persons and the ILA Indemnified Persons any right, remedy or claim under or by reason of this Agreement. Section 18.05 Expenses. Except as otherwise expressly set forth in this Agreement, each Party hereto will pay all costs and expenses incident to its negotiation and 43 preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein or therein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and independent public accountants. Section 18.06 Counterparts. This Agreement may be executed in one or more counterparts, including by facsimile or by electronic delivery in .pdf format, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the Parties hereto. Section 18.07 Severability. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under Applicable Law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable. Section 18.08 Waiver of Jury Trial; Multiplied and Punitive Damages. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTERCLAIM, THIRD-PERSON CLAIM OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION. EACH PARTY ALSO IRREVOCABLY WAIVES ANY RIGHT TO PUNITIVE, INCIDENTAL, CONSEQUENTIAL OR MULTIPLIED DAMAGES, EITHER PURSUANT TO COMMON LAW OR STATUTE, IN EACH CASE IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (BUT NOT AS TO ANY ACTION BY ONE PARTY AGAINST THE OTHER SEEKING INDEMNIFICATION FOR A THIRD PARTY CLAIM AGAINST THE PARTY INITIATING THE ACTION, TO THE EXTENT THAT SUCH DAMAGES MAY BE RECOVERABLE AS PART OF THE INDEMNIFICATION BY THE INDEMNIFIED PARTY). Section 18.09 Treatment of Confidential Information. (a) The Parties agree that, other than as contemplated by this Agreement or any Transaction Agreement and to the extent permitted or required to implement the transactions contemplated by this Agreement and the other Transaction Agreements, the Parties will keep confidential and will not use or disclose the other Party's Confidential Information and the terms and conditions of this Agreement, including the exhibits and schedules hereto, except (x) as otherwise required by Applicable Law or any order or ruling of any state insurance regulatory authority or any other Governmental Body, (y) as may be required to be disclosed in the financial statements of such Party or any of its Affiliates or (z) such disclosure as may be required in connection with any dispute resolution proceeding between the Parties in respect hereof. 44 (b) The confidentiality obligations contained in this Agreement shall not apply to the federal tax structure or federal tax treatment of this Agreement and each Party hereto may disclose to any and all persons, without limitation of any kind, the federal tax structure and federal tax treatment of this Agreement; provided, that such disclosure may not be made until the earliest of (x) the date of the public announcement of discussions relating to this Agreement, (y) the date of the public announcement of this Agreement, or (z) the date of the execution of this Agreement. The preceding sentence is intended to cause this Agreement to be treated as not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Code, and shall be construed in a manner consistent with such purpose. Subject to the provision with respect to disclosure in the first sentence of this subsection (b), each Party hereto acknowledges that it has no proprietary or exclusive rights to the federal tax structure of this Agreement or any federal tax matter or federal tax idea related to this Agreement. Section 18.10 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided below in this Section 18.10, the rights and obligations of either Party under this Agreement shall not be assignable or delegable by such Party hereto without the written consent of the other Party; provided, that the Administrator may (i) assign this Agreement or any rights, duties or obligations hereunder to any Affiliate of the Administrator and (ii) subcontract the performance of any Service (or any portion thereof) under this Agreement to another Person in accordance with Section 4.03; provided further, that no such assignment or delegation (including with respect to permitted Subcontractors) shall relieve the Administrator from any of its obligations or liabilities hereunder, and the Administrator shall remain responsible for all obligations or liabilities of any such assignee with respect to the provision on any Services as if provided by the Administrator. Section 18.11 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, in writing at any time by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any Party, it is authorized in writing by an authorized Representative of such Party. The failure of any Party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any preceding or subsequent breach. Section 18.12 Relationship. ILA and the Administrator are and shall remain independent contractors and not employees or agents of the other Party. Except as expressly granted in this Agreement or otherwise by the other Party in writing or as may be required by Applicable Law or as necessary to perform the services to be provided hereunder or to obtain the benefits hereof, no Party shall have any authority, express or implied, to act as an agent of the other Party or its subsidiaries or Affiliates under this Agreement. Except as otherwise provided by this Agreement or by any other agreement between the Parties, each Party shall be responsible for the payment of all employment, income and social security Taxes arising in connection with the compensation payable to its personnel involved in the provision of the Services hereunder. 45 Section 18.13 Interpretation. The table of contents, articles, titles and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". Unless the context otherwise requires, the words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine genders of such term. Any agreement or instrument defined or referred to herein or any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent, and references to all attachments thereto and instruments incorporated therein. Any statute or regulation referred to herein means such statute or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of any statute, includes any rules and regulations promulgated under such statute), and references to any section of any statute or regulation include any successor to such section. Any agreement referred to herein shall include reference to all Exhibits, Schedules and other documents or agreements attached thereto. Section 18.14 Conflict. In the event of any conflict between the terms of this Agreement and the Reinsurance Agreement, the terms of the Reinsurance Agreement shall control. Section 18.15 Force Majeure. No Party shall be liable for any expense, loss or damage whatsoever arising out of any interruption of Service or delay or failure to perform under this Agreement caused by Force Majeure (except to the extent that the Service being provided was a disaster recovery service). For purposes of this Agreement, "Force Majeure" means any circumstance or event beyond the reasonable control of any Party relying upon such event or circumstance, including: acts of God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province or other political division thereof, changes in Applicable Law, fires, floods, epidemics, riots, quarantine restrictions, freight embargoes or other similar causes. In any such event, ILA's and the Administrator's obligations hereunder shall be postponed for such time as its or their performance is suspended or delayed on account thereof. If any Party is so affected, such Party will notify the other Parties in writing upon learning of the occurrence of such event of Force Majeure. Upon the cessation of the Force Majeure event, such Party will use commercially reasonable efforts to resume, or to cause the relevant Subcontractor, to resume, its performance with the least practicable delay. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 46 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY By: /s/ David C. Robinson ------------------------------- Name: David C. Robinson Title: Senior Vice President THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ Gaurav Wadhwa ------------------------------- Name: Gaurav Wadhwa Title: Second Vice President [SIGNATURE PAGE TO ILA ADMINISTRATIVE SERVICES AGREEMENT] SCHEDULE I SCHEDULED REPORTS [REDACTED] (ii) Within twenty (20) Business Days after the end of each Accounting Period, the Administrator shall prepare and provide to ILA a Settlement Statement (and, upon the request of ILA, detailed supporting records therefor) in accordance with Section 3.4 of the Reinsurance Agreement. (iii) Within fifteen (15) Business Days after the end of each calendar quarter that this Agreement is in effect, the Administrator shall provide to ILA reports (including quarterly statement exhibits and schedules) including all such items related to the General Account Reserves (including average liability credit rate), General Account Liabilities, Separate Account Reserves, Separate Account Liabilities, and all other General Account and Separate Account general ledger data required to be reported on ILA's financial statements, footnotes, tax returns, and other SAP and GAAP financial reports required by ILA's auditors or any Governmental Body related to the Covered Insurance Policies; provided, however, that quarterly AG 36 certifications shall be provided within twenty (20) Business Days after the end of each calendar quarter that this Agreement is in effect. Notwithstanding the foregoing, for tax reserves, such quarterly reports shall contain estimates of the General Account Reserves and the Separate Account Reserves. The Administrator shall provide such reports in such form and manner as may reasonably be requested by ILA prior to the end of each calendar quarter. (iv) Within forty-five (45) Business Days after the end of each calendar year, the Administrator shall provide to ILA a report setting forth projections of General Account Reserves, GUL Net Reserves and the Required Balance, on an annual basis going forward each year until the expiry of the liabilities ceded under the Reinsurance Agreement. (v) Within twenty (20) Business Days after the end of each calendar year that this Agreement is in effect, the Administrator shall provide to ILA reports, including (i) relevant information regarding the Covered Insurance Policies (including any New Insurance Policies), the face amount thereof and the reinsurance coverage provided for such policies in order for ILA to reasonably verify the calculations described in Section 8.4(d) of the Reinsurance Agreement; and (ii) all such items related to the General Account Reserves (including average liability credit rate), General Account Liabilities, Separate Account Reserves, Separate Account Liabilities, and all other General Account and Separate Account general ledger data required to be reported on ILA's financial statements, unaudited footnotes, tax returns, and other SAP and GAAP financial reports required by ILA's auditors or any Governmental Body related to the Covered Insurance Policies. Notwithstanding the foregoing, for tax reserves, the reports with respect to General Account Reserves and Separate Account Reserves shall be provided as soon as possible, but in any event by May 1st of the following year. In addition, the Administrator shall provide to ILA as soon as possible, but in no event later than the dates sets forth below: (1) final, clean copies of all required actuarial opinions of the Administrator and supporting actuarial memoranda prepared by the Administrator's actuaries, independent or otherwise, in each case, pertaining to the Covered Insurance Policies in a form to be mutually agreed by the Parties (which may include redactions of confidential information not related to the Covered Insurance Policies) by a date mutually agreed by the Parties each year, provided such date shall in any event be reasonably sufficient to allow ILA to comply with any regulatory filing requirements or deadlines (and provided that ILA shall have given Administrator sufficient advance detailed notice of the need thereof); (2) annual certifications, in a form to be mutually agreed by the Parties, by an actuary employed by the Administrator (who meets the requirements of the American Academy of Actuaries for providing actuarial opinions) that the General Account Reserves and the Separate Account Reserves reported by the Administrator with respect to the Covered Insurance Policies are consistent with the requirements for such calculation by no later than February 15th of each year to the extent required to allow ILA to comply with applicable regulatory filing requirements; (3) all actuarial exhibits and schedules as available starting with Exhibit 5 and Schedule S with a target of February 7th of each year but no later than February 15th of each year; (4) final, clean copies of all other reports such as analysis of increase in reserves, exhibit of life insurance, and state business pages required to be included in ILA's annual statement and to complete ILA's New York Annual Statement Supplement filing by no later than February 15th of each year and other state specific information with sufficient time to allow ILA to meet any other regulatory filing requirements (and in any event at least ten (10) calendar days prior to the date such filings are due); and (5) final, clean copies of all non-actuarial annual statement exhibits and schedules by no later than January 31st of each year; provided, however, that in the case of items (1) through (4) above, the Administrator may provide its reasonable best estimate with respect to AAT reserves as are available by February 15th; (vi) The Administrator shall timely provide written notice to ILA of any material changes in the reserve basis or reserve methodology used in calculating the General Account Reserves and the Separate Account Reserves in each case in accordance with Applicable Law. [REDACTED] 2 (viii) During the term of this Agreement, the Administrator shall furnish to ILA the reports and certifications specified by the Trust Account Investment Guidelines. (ix) Within thirty (30) Business Days after the end of each calendar quarter that this Agreement is in effect, other than the calendar quarters ending on December 31, the Administrator shall provide to ILA information required to file reports BE-45 and BE-140 required by the U.S. Department of Commerce. Such information to include premiums earned and losses incurred on reinsurance assumed from insurance companies resident abroad and premiums incurred and losses recovered on reinsurance ceded to insurance companies resident abroad. The Administrator shall provide such reports in such form and manner as may reasonably be requested by ILA prior to the end of each calendar quarter. (x) Within forty-five (45) Business Days after the end of each calendar year that this Agreement is in effect, the Administrator shall provide to ILA information required to file reports BE-45 and BE-140 required by the U.S. Department of Commerce. Such information to include premiums earned and losses incurred on reinsurance assumed from insurance companies resident abroad; premiums incurred and losses recovered on reinsurance ceded to insurance companies resident abroad and premiums earned and losses incurred on primary insurance sold to foreign persons. The Administrator shall provide such reports in such form and manner as may reasonably be requested by ILA prior to the end of each calendar year. (xi) The Administrator shall provide its Asset Impairment (OTTI) Policy (i) at or before the Effective Time, as such policy is in effect as of the Effective Time and (b) after the Effective Time, promptly upon any changes to such policy. (xii) With respect to any commercial mortgage loans held in any trust account established pursuant to the Reinsurance Agreement, the Administrator shall provide (or shall cause the servicer of such loans to provide) to ILA the following standard reports, which shall be substantially in the forms set forth in Exhibit A to this Schedule I within fifteen (15) Business Days after the end of each calendar month: (a) monthly remittance reports detailing loan number, loan name, investor trial balance, UPB, collections of principal, interest, prepayment premium/yield maintenance, and any other amounts paid by the borrower under such loan and (b) a month end loan listing report which reflects loan number, loan name, end of month UPB, book value, market value and maturity date. 3 EXHIBIT A TO SCHEDULE I SCHEDULE II SERVICES The Services shall include, but are not limited to, the following: (a) Upon the reasonable request by ILA, the Administrator shall provide "ledger information" feeds with respect to the General Account and the Separate Account concerning the Administered Business as soon as practicable thereafter. Parties will make commercially reasonable efforts to migrate the use of "ledger information" feeds to provide the Services in Schedule II and the reports in Schedule I as are reasonably practicable. (b) Preparing and/or mailing all necessary, required or appropriate statements, notices, reports, confirmation statements, policy statements (quarterly and annual), contract prospectuses, and communications to Underlying Companies, policyholders of the Covered Insurance Policies, and to individual insurance producers, including notices of premiums and notices of any grace and lapse in coverage, as required by Applicable Law and performing services necessary to meet SEC requirements with respect to any Covered Insurance Policy, In addition, the Administrator, shall distribute at its expense to policy owners all required contract and fund prospectuses, post effective amendments or supplements to the registration statements of the Separate Accounts or of any underlying funds as well as annual and semi-annual reports; (c) billing, collecting (for the account of the Administrator) and processing Recoverables and other amounts due under the Covered Insurance Policies and Existing Reinsurance Agreements and processing and paying any return Recoverables and other amounts due under the Covered Insurance Policies, Existing Reinsurance Agreements, any other Ancillary Agreement Covered Contracts, this Agreement and the Reinsurance Agreement; (d) providing usual and customary services for the Underlying Companies and policyholders of the Covered Insurance Policies, including processing reinstatements, cancellations, policy lapses, expiries, non-forfeiture options, policyholder and beneficiary changes, policy loans, surrenders, policyholder sub-account transfer requests, and systematic payouts or other changes provided for under the Covered Insurance Policies and calculations relating thereto, and processing any policy changes requested by policyholders of the Covered Insurance Policies, including name changes, address changes, loss payee changes and increases and decreases in coverage amounts; (e) as provided in Article XVI, calculating all premium taxes and assessments due in respect of the Administered Business and notifying ILA of the full amount of said premium taxes and assessments for ILA to make payment to the appropriate Governmental Body or guaranty association and furnishing ILA with all information necessary for ILA to make such payments and comply with all related filing and reporting requirements under the terms of this Agreement; (f) preparing and delivering to ILA or an ILA Affiliate all accounting, financial, regulatory and actuarial information and reports related to the Administered Business that is necessary to meet any regulatory, statutory, tax or GAAP accounting requirements; (g) monitoring the Required Balance of the Trust Account and the assets held therein for purposes of delivering the reports required under Schedule I(vii); (h) subject to Article VIII, handling all Governmental Body compliance matters in connection with the Administered Business and the Services; (i) receiving, administering, processing, investigating and evaluating claims and disbursement requests filed by or on behalf of policyholders or Underlying Companies of the Covered Insurance Policies and either (i) paying, within the time periods and in the manner prescribed by Applicable Law, on behalf of ILA, such claims and disbursement requests in accordance with the terms and conditions of the Covered Insurance Policies and Applicable Law (it being understood that this obligation is merely in furtherance of the provision of Services and is not intended to expand the Administrator's liability with respect to the Covered Insurance Policies, which liability shall be solely governed by the Reinsurance Agreement) or (ii) proposing to deny or denying, or compromising in accordance with the terms and conditions of the Covered Insurance Policies, Applicable Law and customary practices, such claims and disbursements in whole or in part and communicating the reason for denial to the claimant. In the event of non-payment of claims on account of incomplete or insufficient data, the Administrator shall acknowledge such fact to the claimant by the number of days provided by Applicable Law. The Administrator shall also communicate with reinsurers with respect to submission approval and payment, compromise or denial of claims made under the Covered Insurance Policies; maintain such files and records as are necessary to enable ILA, at any time, to determine the true and accurate claim experience of the Covered Insurance Policies; and perform such other claim services as may be reasonably required in connection with the support and administration of the Covered Insurance Policies; (j) The Administrator shall provide ILA, on a monthly basis a list of all reported and discovered deaths of insureds under Covered Insurance Policies so that ILA can comply with state death claim sharing requirements. (k) The Administrator shall search public records to identify insured deaths. Such searches shall be done in accordance with Applicable Law, any applicable regulatory settlement or agreement in a process as reasonably agreed by the Parties. The Administrator may utilize the services of third party vendors to identify and locate insureds as long as the vendors are obligated to safeguard and keep confidential Customer Information relating to the Covered Insurance Policies to the same extent as the Administrator. (l) Preparing all required escheat filings with respect to the Administered Business and timely providing information to ILA upon request in order to allow ILA to timely file such escheat filings; (m) transferring assets or funds (i) between one or more Separate Accounts and ILA's general account, (ii) between one or more sub-accounts of any such Separate Accounts, or (iii) between ILA and the Reinsurer in support of the Reinsurance Agreement; 2 (n) providing the following services related to the Separate Accounts on behalf ILA and any additional Services reasonably requested by ILA with respect to the Separate Accounts: (i) maintaining copies of each Separate Account's governing documents; provided that ILA shall provide to the Administrator all current copies of such documents; (ii) preparing and filing with state insurance departments, necessary filings for the Separate Accounts, and preparing and maintaining required licenses and permits and complying with all related regulatory requirements; provided that the Administrator shall not be required to take any action pursuant to this paragraph (n)(ii) with respect to the modified guaranteed life insurance business; (iii) (1) preparing all Filings with the SEC in an accurate and complete manner and consistent with all applicable requirements for such Filings, except as provided below for Form N-6 filings; (2) with respect to Covered Insurance Policies required to be filed on Form N-6, the Administrator shall coordinate the preparation and filing with the SEC of registration statements and any amendments thereto. The Administrator shall prepare the prospectus, statement of additional information, Part C and any exhibits and letters required to be filed in or with the registration statement. The Administrator shall also prepare and file the financial statements of the Registrant (the separate account as defined in Section 2(a)(37) of the Investment Company Act of 1940 and as required by Form N-6 (SA Financials)) and coordinate the review of the SA Financials and the registration statement with the appointed independent auditing firms, ILA will provide the Administrator with the financial statements of the Depositor as required by Form N-6 as soon as reasonably practicable for the Administrator to edgarize and include in the registration statement filings with the SEC. The Administrator shall obtain the necessary consents and exhibits for the registration statements. The Administrator shall provide ILA with each registration statement prior to filing so that ILA can review the filing and sign the Legal Opinion Letter provided in Item 26(k) of Form N-6. ILA agrees to cooperate with the Administrator and provide the Administrator information and assistance reasonably necessary in order for the Administrator to timely file the registration statements, (iv) upon reasonable prior notice, the Administrator may cease updating prospectuses relating to the Covered Insurance Policies in accordance with the SEC no-action letter dated October 23, 1990 issued to Great-West Life & Annuity Insurance Company and any subsequent related no-action letters, or may begin to update prospectuses that ILA has previously stopped updating. (v) administering Contracts on behalf of ILA with, among others, mutual fund organizations that make their mutual funds available as investment options within the Separate Accounts; 3 (vi) performing all accounting services with respect to the Separate Accounts as may be reasonably requested by ILA from time to time or as required by Applicable Law, including that (1) within fifteen (15) days after the end of each calendar month, the Administrator shall provide "ledger information" in a mutually agreeable format with respect to the Separate Account so that ILA can prepare the statutory annual statements, and (2) Administrator shall perform daily net asset/ unit valuations; and (vii) performing, in the name and on behalf of ILA or on behalf of an Affiliate of ILA, all of ILA's or an Affiliate's obligations under, and shall comply with the terms of, (i) any Mutual Fund Agreements, (ii) the underwriting agreements between ILA and the principal underwriters for the policies, and (iii) any Distribution Agreements or other agreements related to the distribution of the policies, in each case to the extent that ILA has provided complete copies of such agreements (including any amendments thereto) to the Administrator, in each case, to the extent consistent with Applicable Law, (o) performing monthly reconciliations of suspense and withholding accounts and, upon ILA's request, providing documentation of these reconciliations to ILA; (p) receiving, logging and responding to complaints in respect of the Covered Insurance Policies in accordance with Article VIII; (q) providing any standard supplies needed for the administration of the Administered Business, which materials shall strictly be used in accordance with this Agreement; (r) making recommendations to ILA with respect to: (i) Non- Guaranteed Elements in accordance with Section 4.06, (ii) reserving methodologies related to the Covered Insurance Policies, (iii) dividends with respect to any par policies and (iv) changes to fund options in accordance with Section 4.07; (s) managing any communications with Distributors or Distribution Intermediaries regarding the Covered Insurance Policies; (t) Rule 38a-l Compliance Program. For as long as any Covered Insurance Policy that is registered as a security with the SEC remains in force and the Administrator continues to act as an "administrator" (as defined in the Investment Company Act of 1940, as amended), the Administrator shall implement and, throughout the term of this Agreement, maintain in effect, policies and procedures reasonably designed to prevent, detect, and correct violations of "federal securities laws" (as defined in Rule 38a-1), insofar as applicable to the Services the Administrator is providing hereunder, by the Administrator and its respective employees, officers, agents and Affiliates. The Administrator will promptly notify ILA in the event that it becomes aware of any "material compliance matter" (as defined in Rule 38a-1) arising with respect to the Services provided hereunder. The Administrator shall promptly provide true and complete copies of such policies and procedures (or summaries thereof) and related information required by Applicable Law upon reasonable request including 4 but not limited to, control reports, incident reports, exception reports, compliance check-lists and internal audit reports. The Administrator shall cooperate with periodic reviews by ILA's personnel of such policies and procedures, their operation and implementation, including visual inspection of the Administrator's facilities and processes, and provide such additional information, reports, and certifications to ILA in respect of such policies and procedures, compliance with federal securities laws and related compliance matters as ILA may reasonably request. The Administrator shall appoint a Chief Compliance Officer whose responsibilities include preparation of reports on the operation and effectiveness of the Separate Account's Rule 38a-l compliance program ("COMPLIANCE PROGRAM"), and providing information with respect to the Compliance Program to ILA so that the ILA 38a-l CCO can prepare the annual and periodic reports as required. (u) The Administrator shall provide ILA or an Affiliate of ILA as required by Applicable Law, with the following non-exclusive list of periodic reports, certifications, and additional information, the frequency of which may be changed from time to time at the discretion of ILA: (i) The Administrator's Compliance Program shall include an annual review by the Administrator's Chief Compliance Officer of the adequacy and effectiveness of the policies and procedures of the Administrator's Compliance Program and the effectiveness of its implementation and the submission of a signed annual report by the Administrator's Chief Compliance Officer by no later than May 1 of every calendar year containing all customary and reasonable detail and elements of a report necessary for the ILA 38a-l CCO to prepare the reports as provided in Rule 38a-l; (ii) The Administrator shall promptly notify ILA in the event that it becomes aware of any compliance matter arising with respect to the Services provided hereunder within 24 hours of discovery, if possible, but in no instance later than three (3) Business Days after discovery thereof, and shall provide ILA with copies of all pertinent files and information relating thereto and the ILA 38a-l CCO shall have the opportunity to discuss the Administrator's remediation plans, prior to implementation if practicable, regarding any such compliance matter and to make reasonable recommendations to the Administrator regarding such remediation plan; (iii) In the event the Administrator contemplates making any material changes to the existing compliance policies and procedures under its Compliance Program, the Administrator shall timely notify and provide ILA with copies of the proposed amendments for review, comment, and final approval by ILA of such documents; (iv) Provide ILA with reports upon request, regarding the compliance personnel employed and retained by the Administrator to provide services to the Covered Insurance Policies, or on behalf of an Affiliate of ILA, and describing the experience, skill, expertise, licenses and accreditation of said compliance staff; and 5 (v) Create and maintain all internal reports, control reports, exception reports, and certifications necessary to administer the business, and make such reports and certifications available to ILA as needed for internal and external purposes. (v) Perform services to administer and manage the Existing Reinsurance Agreements, including: (i) Provide reports and data to reinsurers as required under the Existing Reinsurance Agreements; (ii) Calculate amounts required, pay amounts due and collect amounts owing as required under the Existing Reinsurance Agreements; (iii) Consult with reinsurers as required under the terms of the Existing Reinsurance Agreements (such consultation may include notification of changes in rates or terms of Covered Insurance Policies, changes in policies, manuals or processes related to the Covered Insurance Policies or review of claims made under the Covered Insurance Policies ); (iv) Respond to reinsurer requests for information and facilitate audits as permissible under the Existing Reinsurance Agreements; (v) Initiate and facilitate amendments to Existing Reinsurance Agreements, as requested by ILA or the reinsurers; (vi) Facilitate, in accordance with the Existing Reinsurance Agreements, the timely update of any collateral supporting ILA's reserve credit under such Existing Reinsurance Agreements in its Statutory Financial Statements; (vii) Provide ILA with updated collateral documentation within fifteen (15) Business Days of receipt by the Administrator and an annual verification of collateral amounts no later than fifteen (15) Business Days after every calendar year; and (viii) Provide ILA with information related to the Existing Reinsurance Agreements to complete internal and external reporting related to reinsurance. Such reporting includes, but is not limited to quarterly and annual statutory and GAAP reporting, rating agency surveys, and regulatory reports, requests and inquiries. (w) The Administrator shall investigate and prepare responses to all customer complaints and regulatory inquiries or complaints. Subject to the foregoing, all customer complaints shall be handled in accordance with Applicable Law (including without limitation any response time requirements applicable thereto). A record of all customer complaints shall be maintained in a log showing the date received, the nature of the complaint, the action taken (if any) and the date of the response. As used herein, a "customer complaint" 6 shall be deemed to include any written communication primarily expressing a grievance against ILA, an Affiliate of ILA, or the Administrator; (x) Print and mail privacy notices to policy owners as required by Applicable Law; (y) Provide regulatory supervision and compliance, to the extent the Administrator is permitted under Applicable Law, as to all Services contemplated by this Agreement; (z) Monitor statutes and regulations of the insurance departments in the various states in which the policyowners or Covered Insurance Policies are located to ensure compliance therewith and to provide reasonable assurance that any actions or communications required by such regulations or statutes are properly made; (aa) Monitor the federal securities statutes and the rules, regulations, orders and interpretations thereunder and the securities statutes and rules, regulations, orders and interpretations thereunder of the various states in which the policy owners or Covered Insurance Policies are located to provide reasonable assurance of compliance therewith and to ensure that any actions or communications required thereby are properly made; (bb) Monitor the federal Tax and the rules, regulations, orders, and interpretations thereunder and the tax statutes and rules, regulations, orders and interpretations thereunder of the various states in which the policy owners or Covered Insurance Policies are located to provide reasonable assurance of compliance therewith and to ensure that any actions or communications required thereby are properly made; and (cc) Provide such services as ILA or an Affiliate of ILA may require in connection with responding to inquiries from the SEC, FINRA, NAIC or the insurance or securities departments in accordance with Article VIII. (dd) Provide the Commission Payment Services, as such term is defined in and, in accordance with, the Letter Agreement dated January 2, 2013 by and among Administrator, HESCO, Hartford Securities Distribution Company, Inc., Hartford Life Insurance Company, Hartford Life and Accident Insurance Company and Hartford Life and Annuity Insurance Company as long as it remains in effect, including: (i) Providing ministerial services involving the calculation and provision of commission disbursement payment instructions to a financial institution selected by ILA for the payment of commissions to Distribution Intermediaries distributing products covered by this Agreement, including variable life insurance policies underwritten by ILA's affiliated broker-dealers; (ii) Providing ILA and any affiliated broker-dealer information reasonably necessary for ILA and any such affiliated broker-dealer to monitor the Administrator's performance with respect to the functions described in paragraph (i) above; 7 (iii) Providing ILA and any affiliated broker-dealer with information necessary for such affiliated broker-dealer to properly reflect the commission payments described in (i) above on any affiliated broker-dealer's books and records in accordance with FINRA rules and regulations; (iv) Creating and maintaining books and records reflecting the commission payment instructions with respect to insurance policies covered by this Agreement in accordance with Applicable Law (as defined in the Purchase Agreement), retaining such books and records for time periods required by Applicable Law, and providing access to the books and records to ILA and any affiliated broker-dealer upon their reasonable written request. 8 SCHEDULE III INFORMATION SECURITY REQUIREMENTS 1. Purpose. This Schedule III sets forth the minimum information security program and infrastructure policies (the "Information Security Requirements") that each Party (the "Data Recipient") must meet and maintain in order to protect Confidential Information and Personal Information (collectively, the "Data") of the other Party (the "Data Provider") from unauthorized use, access, disclosure, theft, manipulation, reproduction and/or possible security breach during the term of the Agreement and for any period of time thereafter during which the Data Recipient has possession of or access to the Data. 2. Information Security Safeguards. The Data Recipient and all of its Affiliates and Representatives have implemented, currently maintain, and will maintain throughout the term of this Agreement an information security program designed to protect Data, which program includes administrative, technical and physical safeguards (i) to ensure the security and confidentiality of Data; (ii) to protect against any anticipated threats or hazards to the security or integrity of such Data; and (iii) to protect against unauthorized access to or use of Data which could result in harm or inconvenience to the Data Provider or its customers ("Information Security Safeguards"). 2.1 Standards & Practices. The Data Recipient's Information Security Safeguards shall incorporate commercially reasonable methods and safeguards to ensure the security, confidentiality, integrity, availability and privacy of the Data. 2.2 Information Security Policies. The Data Recipient must have in place and adhere to internal information security and privacy policies that address the roles and responsibilities of the Data Recipient's personnel, including both technical and non-technical personnel, who have direct or indirect access to the Data. These internal security and privacy policies must, at a minimum, include: security policy; organization of information security; asset management; human resources security; physical and environment security; communications and operations management; access control; information systems procurement, development and maintenance; information security incident management; business continuity management; and compliance. 2.3 Workspace Security. The Data Recipient's Information Security Safeguards must include reasonable workspace controls designed to protect Customer Information. 2.4 Appropriate Safeguards. The Data Recipient's Information Security Safeguards shall include (i) safeguards against the unauthorized destruction, loss, or alteration of the Data; (ii) safeguards against unauthorized access to such data; and (iii) network and internet security procedures, protocols, security gateways and firewalls with respect to such data in accordance with best commercial practices. 2.5 Physical Security Safeguards. The Data Recipient's Information Security Safeguards shall include physical safety and security safeguards at any facilities where any Services are performed or received that meet or exceed reasonable best commercial practices. 3. Vulnerability Assessments. Without limiting the Data Recipient's obligations set forth in this Agreement, the Data Recipient will maintain, at its own expense, a vulnerability assessment program that is consistent with the Data Recipient's standard process and procedures, or at least annually, on all information applications and/or systems associated with accessing, processing, storage, communication and/or transmission of the Data including the Data Recipient's systems and networks. The assessment program must include a methodology for identifying, quantifying, ranking and mitigating weaknesses in the Data Recipient's systems. 4. Third Party Security Assessment. No more than one time per year, the Administrator shall complete ILA's Third-Party Security Assessment Questionnaire and forward a completed copy to ILA's information protection department. No more than one time per year, ILA shall complete Administrator's Third-Party Security Assessment Questionnaire and forward a completed copy to Administrator's information protection department. 5. Information Security Infrastructure. 5.1 Access Controls. The Data Recipient will ensure appropriate access controls are in place to protect the Data. The Data Recipient must also ensure that segregation of duties principles are employed in the assignment of all critical job functions. The Data Provider will be solely responsible for implementing and maintaining access controls on its own systems to which the Data Recipient may be granted access. 5.2 Authorized Persons. The Data Recipient shall limit access to the Data to those of its Representatives who have a need to access such data in connection to the uses permitted by this Agreement ("Authorized Persons"). The Data Recipient shall ensure that each Authorized Person is trained and shall comply with the requirements of the Data Recipient's Information Security Safeguards. The Data Recipient shall re-evaluate its list of Authorized Persons at least annually. 5.3 Password Administration. The Data Recipient's passwords that are associated with access to Data must comply with PCI password requirements. 5.4 Encryption. The Data Recipient must encrypt all off-site tapes, removable media devices, laptops, e-mail between the Parties, network file transfers, and web transactions. Encryption is provided through commercial grade, industry-standard strong cryptographic algorithms, protocols, and commercially reasonable key strengths. 5.5 Network and Host Security. The Data Recipient must have commercially reasonable and efficient network intrusion detection, firewalls and anti-virus protection in place and functioning properly. The Data Recipient shall use commercially reasonable efforts to ensure that operating systems and applications that are associated with the Data must be patched within a commercially 2 reasonable time period after Data Recipient has actual or constructive knowledge of any security vulnerabilities. The Data Recipient will exercise generally accepted industry standards to protect against malware and Viruses. 6. Audit and Reporting. Each Data Recipient must conduct annual self-audits to ensure compliance with these Information Security Requirements and its internal information security and privacy policies and, upon request, shall provide a copy of the latest report for such audits to the Data Provider. 7. Customer Information. 7.1 The Data Recipient shall notify the Data Provider, promptly and without unreasonable delay, but in no event more than two (2) Business Days after learning that unauthorized access to, disclosure of, or breach in the security (in each case as defined by Applicable Law) of Customer Information disclosed or provided by the Data Recipient has occurred (a "Security Incident"). Thereafter, the Data Recipient shall, at its own cost and expense: (a) promptly furnish to the Data Provider full details of the Security Incident; (b) assist and cooperate fully with the Data Provider in the Data Provider's investigation of the Data Recipient and employees or third parties related to the Security Incident (subject to the Data Recipient being present at any discussions with such employees or third parties), including providing the Data Provider with reasonable and necessary physical access to the facilities and operations affected, facilitating interviews with employees and others involved in the matter (subject to the Data Recipient being present at any interviews with such employees or others), and making available all relevant requested records, logs, files, and data; (c) cooperate with the Data Provider in any litigation or other action against third parties deemed necessary by Data Provider to protect its rights; and\ (d) promptly use its commercially reasonable efforts to prevent a recurrence of any such Security Incident. 7.2 In addition to the foregoing, the Data Recipient agrees that in the event of a Security Incident, the Data Provider shall have the sole right to determine (i) whether notice is to be provided to any individuals, regulators, law enforcement agencies, consumer reporting agencies, or others as required by law or regulation; (ii) the contents of such notice; and (iii) whether any type of remediation may be offered to affected persons (provided that such remediation shall be limited to two (2) years of credit monitoring at a level at least equal to that offered by Equifax ID Patrol). Any such notice or remediation shall be at the Data Recipient's sole cost and expense. 7.3 The Data Recipient agrees that its treatment of Customer Information is in compliance with Applicable Laws and/or regulations with respect to privacy and 3 data security and that it has implemented and currently maintains an effective information security program that includes administrative, technical, and physical safeguards to (i) ensure the security and confidentiality of such Customer Information; (ii) protect against any anticipated threats or hazards to the security or integrity of such Customer Information; and (iii) protect against unauthorized access to, destruction, modification, disclosure or use of such Customer Information which could result in substantial harm or inconvenience to the Data Provider, or to any person who may be identified by such Customer Information. The Data Recipient shall immediately notify the Data Provider if the Data Recipient is in material breach of this Schedule III. The Data Recipient shall allow the Data Provider to perform an audit, the scope of which is mutually agreed upon, of the Data Recipient's facilities and records to ensure compliance with the privacy and security provisions of this Agreement. 4 EXHIBIT A FORM OF TRADEMARK LICENSE AGREEMENT [REDACTED] EX-99.(K) 11 a13-3080_1ex99dk.txt EX-99.(K) [LOGO] THE HARTFORD April 22, 2013 Board of Directors Hartford Life and Annuity Insurance Company 200 Hopmeadow Street Simsbury, CT 06089 RE: SEPARATE ACCOUNT VL II HARTFORD LIFE AND ANNUITY INSURANCE COMPANY FILE NO. 333-155092 Dear Sir/Madam: I have acted as Counsel to Hartford Life and Annuity Insurance Company (the "Company"), a Connecticut insurance company, and Hartford Life and Annuity Insurance Company Separate Account VL II (the "Account") in connection with the registration of an indefinite amount of securities in the form of flexible premium variable life insurance policies (the Policies") with the Securities and Exchange Commission under the Securities Act of 1933, as amended. I have examined such documents (including the Form N-6 Registration Statement) and reviewed such questions of law as I considered necessary and appropriate, and on the basis of such examination and review, it is my opinion that: 1. The Company is a corporation duly organized and validly existing as a stock life insurance company under the laws of the State of Connecticut and is duly authorized by the Insurance Department of the State of Connecticut to issue the Policies. 2. The Account is a duly authorized and validly existing separate account established pursuant to the provisions of Section 38a-433 of the Connecticut Statutes. 3. To the extent so provided under the Policies, that portion of the assets of the Account equal to the reserves and other contract liabilities with respect to the Account will not be chargeable with liabilities arising out of any other business that the Company may conduct. 4. The Policies, when issued as contemplated by the Form N-6 Registration Statement, will constitute legal, validly issued and binding obligations of the Company. I hereby consent to the filing of this opinion as an exhibit to the Form N-6 Registration Statement for the Policies and the Account. Sincerely, /s/ Lisa M. Proch -------------------------------------------------------------- Lisa M. Proch Vice President and Assistant General Counsel EX-99.(N)(1) 12 a13-3080_1ex99dn1.txt EX-99.(N)(1) CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Post-Effective Amendment No. 9 to Registration Statement No. 333-155092 of Hartford Life and Annuity Insurance Company Separate Account VL II, on Form N-6, of our report dated March 28, 2013, relating to the statements of assets and liabilities of Hartford Life and Annuity Insurance Company Separate Account VL II as of December 31, 2012, and the related statements of operations for each of the periods presented in the year then ended, the statements of changes in net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended, 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 April 22, 2013 EX-99.(N)(2) 13 a13-3080_1ex99dn2.txt EX-99.(N)(2) CONSENT OF INDEPENDENT AUDITORS' We consent to the use in this Post-Effective Amendment No. 9 to Registration Statement No. 333-155092 of Hartford Life and Annuity Insurance Company Separate Account VL II, on Form N-6, of our report dated April 10, 2013, relating to the statutory-basis financial statements of Hartford Life and Annuity Insurance Company ("Company") as of December 31, 2012 and 2011 and for each of three years in the period ended December 31, 2012 (which report expresses an unmodified opinion in accordance with accounting practices prescribed and permitted by the Insurance Department of the State of Connecticut), 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 April 22, 2013 EX-99.(N)(3) 14 a13-3080_1ex99dn3.txt EX-99.(N)(3) HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POWER OF ATTORNEY ------------ Beth A. Bombara does hereby authorize Jack Ewing, Blakely Fishlin, Sun-Jin Moon and/or Erin Schwerzmann, individually, to sign as her agent any and all pre-effective amendments and post-effective amendments filed on Form N-6 for the File Numbers listed on Appendix A attached hereto, with respect to Hartford Life Insurance Company and/or Hartford Life and Annuity Insurance Company and does hereby ratify such signature heretofore made by such persons. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the purpose herein set forth. By: /s/ Beth A. Bombara Dated as of February 4, 2013 ---------------------------------------------------- Beth A. Bombara
APPENDIX A Hartford Life Insurance Company Hartford Life and Annuity Insurance Company Power of Attorney dated as of February 4, 2013 Filed on Form N-6 File Numbers: 333-180756 333-180757 333-155092 333-155096 333-148814 333-148815 333-148816 333-148817 333-109529 333-109530 333-93319 333-88787 333-83057 333-82866 333-07471 033-53692 HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POWER OF ATTORNEY ------------ Mark J. Niland does hereby authorize Jack Ewing, Blakely Fishlin, Sun-Jin Moon and/or Erin Schwerzmann, individually, to sign as his agent any and all pre-effective amendments and post-effective amendments filed on Form N-6 for the File Numbers listed on Appendix A attached hereto, with respect to Hartford Life Insurance Company and/or Hartford Life and Annuity Insurance Company and does hereby ratify such signature heretofore made by such persons. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the purpose herein set forth. By: /s/ Mark J. Niland Dated as of February 4, 2013 ---------------------------------------------------- Mark J. Niland
APPENDIX A Hartford Life Insurance Company Hartford Life and Annuity Insurance Company Power of Attorney dated as of February 4, 2013 Filed on Form N-6 File Numbers: 333-180756 333-180757 333-155092 333-155096 333-148814 333-148815 333-148816 333-148817 333-109529 333-109530 333-93319 333-88787 333-83057 333-82866 333-07471 033-53692 HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POWER OF ATTORNEY ------------ Robert W. Paiano does hereby authorize Jack Ewing, Blakely Fishlin, Sun-Jin Moon and/or Erin Schwerzmann, individually, to sign as his agent any and all pre-effective amendments and post-effective amendments filed on Form N-6 for the File Numbers listed on Appendix A attached hereto, with respect to Hartford Life Insurance Company and/or Hartford Life and Annuity Insurance Company and does hereby ratify such signature heretofore made by such persons. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the purpose herein set forth. By: /s/ Robert W. Paiano Dated as of February 4, 2013 ---------------------------------------------------- Robert W. Paiano
APPENDIX A Hartford Life Insurance Company Hartford Life and Annuity Insurance Company Power of Attorney dated as of February 4, 2013 Filed on Form N-6 File Numbers: 333-180756 333-180757 333-155092 333-155096 333-148814 333-148815 333-148816 333-148817 333-109529 333-109530 333-93319 333-88787 333-83057 333-82866 333-07471 033-53692 HARTFORD LIFE INSURANCE COMPANY HARTFORD LIFE AND ANNUITY INSURANCE COMPANY POWER OF ATTORNEY ------------ Peter F. Sannizzaro does hereby authorize Jack Ewing, Blakely Fishlin, Sun-Jin Moon and/or Erin Schwerzmann, individually, to sign as his agent any and all pre-effective amendments and post-effective amendments filed on Form N-6 for the File Numbers listed on Appendix A attached hereto, with respect to Hartford Life Insurance Company and/or Hartford Life and Annuity Insurance Company and does hereby ratify such signature heretofore made by such persons. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the purpose herein set forth. By: /s/ Peter F. Sannizzaro Dated as of February 4, 2013 ---------------------------------------------------- Peter F. Sannizzaro
APPENDIX A Hartford Life Insurance Company Hartford Life and Annuity Insurance Company Power of Attorney dated as of February 4, 2013 Filed on Form N-6 File Numbers: 333-180756 333-180757 333-155092 333-155096 333-148814 333-148815 333-148816 333-148817 333-109529 333-109530 333-93319 333-88787 333-83057 333-82866 333-07471 033-53692