497 1 a07-32113_2497.txt 497 HARTFORD LEADERS FOUNDATION HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 4/1/99) HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (EST. 12/8/86) P.O. BOX 5085 HARTFORD, CONNECTICUT 06102-5085 [TELEPHONE ICON] 1-800-862-6668 (CONTRACT OWNERS) 1-800-862-7155 (REGISTERED REPRESENTATIVES) [COMPUTER ICON] WWW.HARTFORDINVESTOR.COM [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This variable annuity prospectus describes a contract between each Owner and joint Owner ("you") and Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company ("us," "we" or "our"). This is an individual, deferred, flexible-premium variable annuity. This variable annuity allows you to allocate your Premium Payment among the following portfolio companies: X AIM Variable Insurance Funds X AllianceBernstein Variable Products Series Fund, Inc. X American Funds Insurance Series X Fidelity Variable Insurance Products Funds X Franklin Templeton Variable Insurance Products Trust X Hartford HLS Series Fund II, Inc. X Hartford Series Fund, Inc. X Lord Abbett Series Fund, Inc. X MFS(R) Variable Insurance Trust X Oppenheimer Variable Account Funds X Putnam Variable Trust X The Universal Institutional Funds, Inc. X Van Kampen Life Investment Trust Please see Appendix C (Fund Data) for additional information. This prospectus refers to several Contract options that differ most significantly in terms of sales charges, if any, and Mortality and Expense Risk Charges. As used throughout this prospectus, Core has a 7 year contingent deferred sales charge (CDSC) and Edge has a front end sales charge. The form of Contract selected will be identified on your application and Contract. Please read this prospectus carefully before investing and keep it for your records and for future reference. You can also contact us to get a Statement of Additional Information free of charge. The Statement of Additional Information contains more information about this Contract and, like this prospectus, is filed with the Securities and Exchange Commission ("SEC" or "Commission"). Although we file this prospectus and the Statement of Additional Information with the SEC, the SEC doesn't approve or disapprove these securities or determine if the information in this prospectus is truthful or complete. Anyone who represents that the SEC does these things may be guilty of a criminal offense. This prospectus and the Statement of Additional Information can also be obtained from us or the SEC's website (www.sec.gov). This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing. You will get NO ADDITIONAL TAX advantage from this variable annuity if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account ("IRA")). This prospectus is not intended to provide tax, accounting or legal advice. NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT] FDIC FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE [NOT] BANK
-------------------------------------------------------------------------------- PROSPECTUS DATED: MAY 1, 2008 STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 2008 2 ------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- 1. HIGHLIGHTS 3 2. SYNOPSIS 5 3. GENERAL INFORMATION 13 The Company 13 The Separate Account 13 The Funds 13 Fixed Accumulation Feature 15 4. PERFORMANCE RELATED INFORMATION 15 5. THE CONTRACT 16 a. Purchases and Contract Value 16 b. Charges and Fees 24 c. Surrenders 26 d. Annuity Payouts 28 e. Standard Death Benefits 31 6. OPTIONAL DEATH BENEFITS 34 a. MAV Plus 34 7. OPTIONAL WITHDRAWAL BENEFITS 36 a. The Hartford's Lifetime Income Builder Selects The Hartford's Lifetime Income Builder Portfolios 36 b. The Hartford's Principal First 45 8. MISCELLANEOUS 49 a. Glossary 49 b. State Variations 52 c. More Information 53 d. Legal Proceedings 54 e. How Contracts Are Sold 54 9. FEDERAL TAX CONSIDERATIONS 56 10. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS 62 TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 70 APPENDIX A -- EXAMPLES APP A-1 APPENDIX B -- ACCUMULATION UNIT VALUES APP B-1 APPENDIX C -- COMPARISON AND FUND DATA APP C-1 APPENDIX D -- OPTIONAL BENEFIT COMPARISONS APP D-1 APPENDIX E -- THE HARTFORD'S LIFETIME INCOME FOUNDATION APP E-1 APPENDIX F -- THE HARTFORD'S LIFETIME INCOME BUILDER II APP F-1 APPENDIX G -- EXCHANGE PROGRAMS APP G-1
3 ------------------------------------------------------------------------------- 1. HIGHLIGHTS A. OVERVIEW This is a deferred, flexible-premium variable annuity. A deferred variable annuity has an accumulation phase and a payout phase. You make investments during the accumulation phase. The value of your investments is used to set your benefits. At the end of the accumulation phase, we use that accumulated value to set the payments that we make during the payout phase. Generally speaking, the longer the accumulation phase, the greater your Contract Value will be for setting your benefits and annuity payouts. This variable annuity provides: X Tax-deferred investing (subject to possible IRS penalty)(Sections 5(c), 9 & 10) X Professional money management (Sections 3, 5(a) & Appendix C) X Guaranteed fixed or lifetime withdrawal benefits (Sections 2, 5(d) & 7) X Optional death and/or withdrawal benefits (Section 7, Appendix E & F) X Death benefit protection (Sections 2, 5(e) & 6) B. HOW TO BUY THIS VARIABLE ANNUITY (Sections 5(a) & 8(a)) [Thumbs up] Choose the contract version right for you. Versions available in this prospectus include:
SALES CHARGE TYPE -------------------------------------------------------------------------------- CORE 7 Year - Contingent Deferred Sales Charge EDGE Front End Sales Charge
The form of Contract selected will be identified on your application and Contract. Not every variation of this variable annuity may be available from your Financial Intermediary. Other available variations for certain Financial Intermediaries are not described in this prospectus. [Thumbs up] Choose an optional feature right for you. Options include:
OPTIONAL FEATURE GENERAL PURPOSE -------------------------------------------------------------------------------- MAV/MAV Plus Guaranteed Minimum Death Benefit that ratchets up based on performance The Hartford's Principal First Guaranteed Minimum Withdrawal Benefit with periodic step-up rights The Hartford's Lifetime Income Builder Guaranteed Minimum Lifetime Withdrawal Selects Benefit with limited annual step-up rights The Hartford's Lifetime Income Builder Guaranteed Minimum Lifetime Withdrawal Portfolios Benefit with full annual step-up rights
For The Hartford's Lifetime Income Builder Selects, we reserve the right to limit the Funds into which you may allocate your Contract Value. For The Hartford's Lifetime Income Builder Portfolios, your Contract Value must be invested in one or more Programs and in an approved model portfolio, Funds, Programs, or other investment vehicles established from time to time. Partial Surrenders taken prior to the Lifetime Eligibility Date or in excess of the available Lifetime Benefit Payment will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Threshold/Lifetime Benefit Payment, and (ii) proportionate basis for the amount in excess of the Threshold/Lifetime Benefit Payment. Optional features are subject to restrictions that may limit or eliminate the availability of these benefits. Optional features selected will be identified on your application and Contract. Not every optional feature may be available from your Financial Intermediary and may be subject to additional restrictions. Other optional features that are not actively sold are referenced in Appendices. For more information, see Sections 6, 7 & Appendices D, E & F. 4 ------------------------------------------------------------------------------- [In writing] Complete our application or order request and submit it to your Financial Intermediary for approval. $ Pay the applicable minimum initial Premium Payment.
QUALIFIED CONTRACT NON-QUALIFIED CONTRACT -------------------------------------------------------------------------------- CORE $1,000 $1,000 EDGE $1,000 $1,000
C. INVESTMENT OPTIONS (Sections 3, 5(a) & Appendix C) You may invest in: X Funds with different investment strategies, objectives and risk/reward profiles. X In certain circumstances, you may also invest in a Fixed Accumulation Feature. D. CHARGES AND FEES (Sections 2, 5(b) & 5(c)) You will pay the following types of fees: X Sales charges (vary by Contract version) X Contract expenses X Optional rider fees (if selected) X Fund expenses E. ASK QUESTIONS BEFORE YOU INVEST Before you decide to buy any variable annuity, consider the following questions: X Will you use the variable annuity primarily to save for retirement or a similar long-term goal? X Are you investing in the variable annuity through a retirement plan or IRA (which would mean that you are not receiving any additional tax-deferral benefit from the variable annuity)? X Are you willing to take the risk that your Contract Value may decrease if your underlying investment options perform poorly? X Do you intend to hold this variable annuity long enough to avoid paying any surrender charges if you have to withdraw money? X If you are exchanging one annuity for another one, do the benefits of the exchange outweigh the costs, such as any surrender charges you might have to pay if you withdraw your money before the end of the surrender charge period for the new annuity? X Do you need an optional living or Death Benefit? X Can you cancel your contract? (Section 5(a)) F. COMMISSIONS PAID FOR SELLING THIS VARIABLE ANNUITY (Section 8(f)) We pay a commission for selling this variable annuity to you. Commissions vary based on a variety of factors such as whether they are paid up front or over time, the type of variable annuity sold and your age. Maximum up-front commissions are 7%. We also provide various promotional incentives to Financial Intermediaries to promote our products. These arrangements create a potential conflict of interest. You should ask your Registered Representative for information regarding these matters. 5 ------------------------------------------------------------------------------- 2. SYNOPSIS THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES
CORE EDGE -------------------------------------------------------------------------------- SALES CHARGE IMPOSED ON PURCHASES (as a percentage of None Premium Payments) $0 - $49,999 5.5% $50,000 - $99,999 4.5% $100,000 - $249,999 3.5% $250,000 - $499,999 2.5% $500,000 - $999,999 2% $1,000,000+ 1% CONTINGENT DEFERRED SALES CHARGE (1) (as a percentage of None Premium Payments) First Year 7% Second Year 7% Third Year 7% Fourth Year 6% Fifth Year 5% Sixth Year 4% Seventh Year 3% Eighth Year 0% Ninth Year 0% SURRENDER FEE (as a percentage of amount Surrendered, if None None applicable) TRANSFER FEE None None
(1) Each Premium Payment has its own Contingent Deferred Sales Charge schedule. CONTRACT OWNER PERIODIC EXPENSES THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY AND ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
CORE EDGE -------------------------------------------------------------------------------- ANNUAL MAINTENANCE FEE (2) $30 $30 SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily Contract Value) Mortality and Expense Risk Charge 1.15% 0.65% Administrative Charge 0.20% 0.20% Total Separate Account Annual Expenses 1.35% 0.85% MAXIMUM OPTIONAL CHARGES (as a percentage of average daily Contract Value) The Hartford's Principal First Charge (3)(4) 0.75% 0.75%
(2) Fee waived if Contract Value is $50,000 or more on your Contract Anniversary. (3) You may not own more than one of these optional riders at the same time. (4) Current charges for new purchases are: The Hartford's Lifetime Income Builder II (0.40%), The Hartford's Principal First (0.50%), The Hartford's Lifetime Income Builder Selects (0.55%) and The Hartford's Lifetime Income Builder Portfolios (0.65%). 6 -------------------------------------------------------------------------------
CORE EDGE -------------------------------------------------------------------------------- MAV/MAV Plus Charge 0.30% 0.30% Total Separate Account Annual Expenses with optional 2.40% 1.90% benefit separate account charges MAXIMUM OPTIONAL CHARGES (3) (as a percentage of Payment Base) The Hartford's Lifetime Income Foundation(3) 0.30% 0.30% The Hartford's Lifetime Income Builder II (3)(4) 0.75% 0.75% The Hartford's Lifetime Income Builder Selects (3)(4) -- Single Life Option 1.50% 1.50% -- Joint/Spousal Life Option 1.50% 1.50% The Hartford's Lifetime Income Builder Portfolios (3)(4) -- Single Life Option 1.50% 1.50% -- Joint/Spousal Life Option 1.50% 1.50%
THE NEXT ITEM SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM MAXIMUM --------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 0.47% 1.73% (these are expenses that are deducted from Fund assets, including management fees, Rule 12b-1 distribution and/or service fees, and other expenses) (5)
(5) Please see Appendix C for additional information. THE FOLLOWING TABLE SHOWS THE TOTAL ANNUAL FUND OPERATING EXPENSES FOR EACH UNDERLYING FUND AS OF ITS YEAR END. ACTUAL FEES AND EXPENSES FOR THE UNDERLYING FUNDS VARY DAILY. AS A RESULT, THE FEES AND EXPENSES FOR ANY GIVEN DAY MAY BE GREATER OR LESS THAN THE TOTAL ANNUAL FUND OPERATING EXPENSES LISTED BELOW. MORE DETAIL CONCERNING EACH UNDERLYING FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. 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. THESE EXPENSES MAY VARY FROM YEAR TO YEAR. ANNUAL FUND OPERATING EXPENSES AS OF THE FUND'S YEAR END (As a percentage of net assets)
DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Capital Appreciation Fund --Series II 0.610% 0.250% 0.270% 0.000% AIM V.I. Capital Development Fund --Series II 0.750% 0.250% 0.310% 0.000% AIM V.I. Core Equity Fund -- Series II 0.600% 0.250% 0.280% 0.020% AIM V.I. International Growth Fund -- Series II 0.710% 0.250% 0.360% 0.010% AIM V.I. Small Cap Equity Fund -- Series II 0.750% 0.250% 0.370% 0.010% ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio -- Class B 0.550% 0.250% 0.270% N/A AllianceBernstein VPS International Growth Portfolio -- Class B 0.750% 0.250% 0.450% N/A AllianceBernstein VPS International Value Portfolio -- Class B 0.750% 0.250% 0.060% N/A AllianceBernstein VPS Small/Mid Cap Value Portfolio -- Class B 0.750% 0.250% 0.080% N/A TOTAL CONTRACTUAL MASTER FUND NET TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ------------------------------- ------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Capital Appreciation Fund --Series II 1.130% 0.000% N/A 1.130% (1)(3)(4)(5) AIM V.I. Capital Development Fund --Series II 1.310% 0.010% N/A 1.300% (1)(2)(3)(4)(5) AIM V.I. Core Equity Fund -- Series II 1.150% 0.010% N/A 1.140% (1)(3)(4)(5) AIM V.I. International Growth Fund -- Series II 1.330% 0.010% N/A 1.320% (1)(3)(4)(5) AIM V.I. Small Cap Equity Fund -- Series II 1.380% N/A N/A 1.380% (1)(4)(5)(6) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. N/A AllianceBernstein VPS Balanced Wealth Strategy Portfolio -- Class B 1.070% 0.060% N/A 1.010% (7) AllianceBernstein VPS International Growth Portfolio -- Class B 1.450% N/A N/A 1.450% AllianceBernstein VPS International Value Portfolio -- Class B 1.060% N/A N/A 1.060% AllianceBernstein VPS Small/Mid Cap Value Portfolio -- Class B 1.080% N/A N/A 1.080%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------- AllianceBernstein VPS Value Portfolio -- Class B 0.550% 0.250% 0.100% N/A AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund -- Class 2 0.310% 0.250% 0.010% N/A American Funds Blue Chip Income and Growth Fund -- Class 2 0.410% 0.250% 0.010% N/A American Funds Bond Fund -- Class 2 0.400% 0.250% 0.010% N/A American Funds Global Bond Fund -- Class 2 0.570% 0.250% 0.040% N/A American Funds Global Growth and Income Fund -- Class 2 0.690% 0.250% 0.020% N/A American Funds Global Growth Fund -- Class 2 0.530% 0.250% 0.020% N/A American Funds Global Small Capitalization Fund -- Class 2 0.700% 0.250% 0.030% N/A American Funds Growth Fund -- Class 2 0.320% 0.250% 0.010% N/A American Funds Growth-Income Fund -- Class 2 0.260% 0.250% 0.010% N/A American Funds International Fund --Class 2 0.490% 0.250% 0.030% N/A American Funds New World Fund -- Class 2 0.760% 0.250% 0.060% N/A FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio -- Service Class 2 0.560% 0.250% 0.090% N/A Fidelity VIP Dynamic Capital Appreciation Portfolio -- Service Class 2 0.560% 0.250% 0.230% N/A Fidelity VIP Growth Portfolio -- Service Class 2 0.560% 0.250% 0.090% N/A Fidelity VIP Mid Cap Portfolio -- Service Class 2 0.560% 0.250% 0.100% N/A Fidelity VIP Value Strategies Portfolio --Service Class 2 0.560% 0.250% 0.140% N/A FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund -- Class 2 0.730% 0.250% 0.310% 0.040% Franklin Income Securities Fund -- Class 2 0.450% 0.250% 0.020% N/A Franklin Small Cap Value Securities Fund -- Class 2 0.510% 0.250% 0.150% 0.020% Franklin Small-Mid Cap Growth Securities Fund -- Class 2 0.470% 0.250% 0.280% 0.010% Franklin Strategic Income Securities Fund -- Class 2 0.370% 0.250% 0.250% N/A Mutual Discovery Securities Fund -- Class 2 0.800% 0.250% 0.170% N/A Mutual Shares Securities Fund -- Class 2 0.590% 0.250% 0.130% N/A Templeton Developing Markets Securities Fund -- Class 2 1.230% 0.250% 0.250% N/A Templeton Foreign Securities Fund -- Class 2 0.630% 0.250% 0.140% 0.020% Templeton Global Income Securities Fund -- Class 2 0.500% 0.250% 0.140% N/A TOTAL CONTRACTUAL MASTER FUND NET TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ------------------------------- ------------------------------------------------------------------------- AllianceBernstein VPS Value Portfolio -- Class B 0.900% N/A N/A 0.900% AMERICAN FUNDS INSURANCE SERIES N/A American Funds Asset Allocation Fund -- Class 2 0.570% N/A N/A 0.570% (8) American Funds Blue Chip Income and Growth Fund -- Class 2 0.670% N/A N/A 0.670% (8) American Funds Bond Fund -- Class 2 0.660% N/A N/A 0.660% (8) American Funds Global Bond Fund -- Class 2 0.860% N/A N/A 0.860% (8) American Funds Global Growth and Income Fund -- Class 2 0.960% N/A N/A 0.960% (8) American Funds Global Growth Fund -- Class 2 0.800% N/A N/A 0.800% (8) American Funds Global Small Capitalization Fund -- Class 2 0.980% N/A N/A 0.980% (8) American Funds Growth Fund -- Class 2 0.580% N/A N/A 0.580% (8) American Funds Growth-Income Fund -- Class 2 0.520% N/A N/A 0.520% (8) American Funds International Fund --Class 2 0.770% N/A N/A 0.770% (8) American Funds New World Fund -- Class 2 1.070% N/A N/A 1.070% (8) FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity VIP Contrafund(R) Portfolio -- Service Class 2 0.900% N/A N/A 0.900% (10) Fidelity VIP Dynamic Capital Appreciation Portfolio -- Service Class 2 1.040% N/A N/A 1.040% (9) Fidelity VIP Growth Portfolio -- Service Class 2 0.900% N/A N/A 0.900% (10) Fidelity VIP Mid Cap Portfolio -- Service Class 2 0.910% N/A N/A 0.910% (10) Fidelity VIP Value Strategies Portfolio --Service Class 2 0.950% N/A N/A 0.950% FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund -- Class 2 1.330% 0.360% N/A 0.970% (11)(12) Franklin Income Securities Fund -- Class 2 0.720% N/A N/A 0.720% (13) Franklin Small Cap Value Securities Fund -- Class 2 0.930% 0.020% N/A 0.910% (12) Franklin Small-Mid Cap Growth Securities Fund -- Class 2 1.010% 0.010% N/A 1.000% (12) Franklin Strategic Income Securities Fund -- Class 2 0.870% N/A N/A 0.870% Mutual Discovery Securities Fund -- Class 2 1.220% N/A N/A 1.220% Mutual Shares Securities Fund -- Class 2 0.970% N/A N/A 0.970% Templeton Developing Markets Securities Fund -- Class 2 1.730% N/A N/A 1.730% Templeton Foreign Securities Fund -- Class 2 1.040% 0.020% N/A 1.020% (12) Templeton Global Income Securities Fund -- Class 2 0.890% N/A N/A 0.890% (13)
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 0.730% 0.250% 0.030% N/A HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund -- Class IA 0.610% N/A 0.030% N/A Hartford LargeCap Growth HLS Fund --Class IA 0.650% N/A 0.030% N/A Hartford MidCap Growth HLS Fund -- Class IA 0.800% N/A 0.050% N/A Hartford SmallCap Growth HLS Fund --Class IA 0.610% N/A 0.020% N/A Hartford U.S. Government Securities HLS Fund -- Class IA 0.450% N/A 0.020% N/A Hartford Value Opportunities HLS Fund -- Class IA 0.610% N/A 0.030% N/A HARTFORD SERIES FUND, INC. Hartford Advisers HLS Fund -- Class IA 0.600% N/A 0.030% N/A Hartford Capital Appreciation HLS Fund -- Class IA 0.630% N/A 0.040% N/A Hartford Disciplined Equity HLS Fund --Class IA 0.670% N/A 0.030% N/A Hartford Dividend and Growth HLS Fund --Class IA 0.640% N/A 0.030% N/A Hartford Equity Income HLS Fund -- Class IA 0.800% N/A 0.040% N/A Hartford Fundamental Growth HLS Fund --Class IA 0.800% N/A 0.050% N/A Hartford Global Equity HLS Fund -- Class IA 0.950% N/A 0.100% N/A Hartford Global Growth HLS Fund -- Class IA 0.690% N/A 0.040% N/A Hartford Growth HLS Fund -- Class IA 0.790% N/A 0.040% N/A Hartford High Yield HLS Fund -- Class IA 0.690% N/A 0.040% N/A Hartford International Growth HLS Fund --Class IA 0.790% N/A 0.040% N/A Hartford International Opportunities HLS Fund -- Class IA 0.670% N/A 0.040% N/A Hartford Money Market HLS Fund -- Class IA 0.440% N/A 0.030% N/A Hartford Small Company HLS Fund -- Class IA 0.670% N/A 0.030% N/A Hartford Stock HLS Fund -- Class IA 0.460% N/A 0.030% N/A Hartford Total Return Bond HLS Fund -- Class IA 0.460% N/A 0.030% N/A Hartford Value HLS Fund -- Class IA 0.800% N/A 0.040% N/A LORD ABBETT SERIES FUND, INC. Lord Abbett America's Value Portfolio -- Class VC 0.750% N/A 0.450% N/A Lord Abbett Bond-Debenture Portfolio --Class VC 0.500% N/A 0.450% N/A Lord Abbett Growth and Income Portfolio --Class VC 0.470% N/A 0.410% N/A TOTAL CONTRACTUAL MASTER FUND NET TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ------------------------------- ------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 1.010% N/A N/A 1.010% (13) HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund -- Class IA 0.640% N/A N/A 0.640% Hartford LargeCap Growth HLS Fund --Class IA 0.680% N/A N/A 0.680% Hartford MidCap Growth HLS Fund -- Class IA 0.850% N/A N/A 0.850% Hartford SmallCap Growth HLS Fund --Class IA 0.630% N/A N/A 0.630% Hartford U.S. Government Securities HLS Fund -- Class IA 0.470% N/A N/A 0.470% Hartford Value Opportunities HLS Fund -- Class IA 0.640% N/A N/A 0.640% HARTFORD SERIES FUND, INC. Hartford Advisers HLS Fund -- Class IA 0.630% N/A N/A 0.630% Hartford Capital Appreciation HLS Fund -- Class IA 0.670% N/A N/A 0.670% Hartford Disciplined Equity HLS Fund --Class IA 0.700% N/A N/A 0.700% Hartford Dividend and Growth HLS Fund --Class IA 0.670% N/A N/A 0.670% Hartford Equity Income HLS Fund -- Class IA 0.840% N/A N/A 0.840% Hartford Fundamental Growth HLS Fund --Class IA 0.850% N/A N/A 0.850% (14) Hartford Global Equity HLS Fund -- Class IA 1.050% N/A N/A 1.050% (15) Hartford Global Growth HLS Fund -- Class IA 0.730% N/A N/A 0.730% Hartford Growth HLS Fund -- Class IA 0.830% N/A N/A 0.830% Hartford High Yield HLS Fund -- Class IA 0.730% N/A N/A 0.730% (16) Hartford International Growth HLS Fund --Class IA 0.830% N/A N/A 0.830% Hartford International Opportunities HLS Fund -- Class IA 0.710% N/A N/A 0.710% Hartford Money Market HLS Fund -- Class IA 0.470% N/A N/A 0.470% (17) Hartford Small Company HLS Fund -- Class IA 0.700% N/A N/A 0.700% Hartford Stock HLS Fund -- Class IA 0.490% N/A N/A 0.490% Hartford Total Return Bond HLS Fund -- Class IA 0.490% N/A N/A 0.490% Hartford Value HLS Fund -- Class IA 0.840% N/A N/A 0.840% LORD ABBETT SERIES FUND, INC. Lord Abbett America's Value Portfolio -- Class VC 1.200% 0.050% N/A 1.150% (18) Lord Abbett Bond-Debenture Portfolio --Class VC 0.950% 0.100% N/A 0.850% (19) Lord Abbett Growth and Income Portfolio --Class VC 0.880% N/A N/A 0.880%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEE FEES* EXPENSES EXPENSES ----------------------------------------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Service Class 0.750% 0.250% 0.120% N/A MFS(R) Investors Trust Series -- Service Class 0.750% 0.250% 0.100% N/A MFS(R) Research Bond Series -- Service Class 0.600% 0.250% 0.170% N/A MFS(R) Total Return Series -- Service Class 0.750% 0.250% 0.080% N/A MFS(R) Value Series --Service Class 0.750% 0.250% 0.110% N/A OPPENHEIMER VARIABLE ACCOUNT FUNDS Oppenheimer Capital Appreciation Fund/VA - - Service Shares 0.640% 0.250% 0.020% N/A Oppenheimer Global Securities Fund/VA --Service Shares 0.620% 0.250% 0.020% N/A Oppenheimer Main Street Fund(R)/VA --Service Shares 0.640% 0.250% 0.010% N/A Oppenheimer Main Street Small Cap Fund(R)/VA -- Service Shares 0.700% 0.250% 0.020% N/A Oppenheimer Value Fund/VA -- Service Shares 0.750% 0.250% 0.630% N/A PUTNAM VARIABLE TRUST Putnam VT Diversified Income Fund -- Class IB 0.700% 0.250% 0.130% 0.010% Putnam VT Global Asset Allocation Fund -- Class IB 0.700% 0.250% 0.150% 0.010% Putnam VT International Equity Fund -- Class IB 0.730% 0.250% 0.110% 0.010% Putnam VT International Growth and Income Fund -- Class IB 0.800% 0.250% 0.150% N/A Putnam VT Small Cap Value Fund -- Class IB 0.770% 0.250% 0.100% 0.070% THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Van Kampen -- UIF Mid Cap Growth Portfolio --Class II 0.750% 0.350% 0.340% N/A Van Kampen -- UIF U.S. Mid Cap Value Portfolio -- Class II 0.720% 0.350% 0.290% N/A VAN KAMPEN LIFE INVESTMENT TRUST Van Kampen LIT Growth and Income Portfolio --Class II 0.560% 0.250% 0.040% N/A TOTAL CONTRACTUAL MASTER FUND NET TOTAL ANNUAL FEE WAIVER TOTAL ANNUAL ANNUAL OPERATING AND/OR EXPENSE OPERATING OPERATING UNDERLYING FUND: EXPENSES REIMBURSEMENT EXPENSES EXPENSES ------------------------------- ------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series -- Service Class 1.120% N/A N/A 1.120% (20) MFS(R) Investors Trust Series -- Service Class 1.100% N/A N/A 1.100% (21) MFS(R) Research Bond Series -- Service Class 1.020% N/A N/A 1.020% (22) MFS(R) Total Return Series -- Service Class 1.080% N/A N/A 1.080% (23) MFS(R) Value Series --Service Class 1.110% N/A N/A 1.110% (24) OPPENHEIMER VARIABLE ACCOUNT FUNDS Oppenheimer Capital Appreciation Fund/VA - - Service Shares 0.910% N/A N/A 0.910% (25) Oppenheimer Global Securities Fund/VA --Service Shares 0.890% N/A N/A 0.890% (25) Oppenheimer Main Street Fund(R)/VA --Service Shares 0.900% N/A N/A 0.900% (25) Oppenheimer Main Street Small Cap Fund(R)/VA -- Service Shares 0.970% N/A N/A 0.970% (25) Oppenheimer Value Fund/VA -- Service Shares 1.630% N/A N/A 1.630% (25)(26) PUTNAM VARIABLE TRUST Putnam VT Diversified Income Fund -- Class IB 1.090% 0.070% N/A 1.020% (27)(30) Putnam VT Global Asset Allocation Fund -- Class IB 1.110% 0.060% N/A 1.050% (27)(28)(30) Putnam VT International Equity Fund -- Class IB 1.100% N/A N/A 1.100% (27) Putnam VT International Growth and Income Fund -- Class IB 1.200% 0.030% N/A 1.170% (29)(30) Putnam VT Small Cap Value Fund -- Class IB 1.190% N/A N/A 1.190% (27) THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Van Kampen -- UIF Mid Cap Growth Portfolio --Class II 1.440% N/A N/A 1.440% (31) Van Kampen -- UIF U.S. Mid Cap Value Portfolio -- Class II 1.360% N/A N/A 1.360% VAN KAMPEN LIFE INVESTMENT TRUST Van Kampen LIT Growth and Income Portfolio --Class II 0.850% N/A N/A 0.850%
* The 12b-1 fees deducted from these classes cover certain distribution, shareholder support and administrative services provided by intermediaries (the insurance company, broker dealer or other service provider). NOTES (1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the Fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. (2) Through at least April 30, 2009, the advisor has contractually agreed to waive a portion of its advisory fees to the extent necessary so that the advisory fees payable by the Fund does not exceed a specified maximum annual advisory fee rate, wherein the fee rate includes breakpoints and is based upon net asset levels. The Fund's maximum annual advisory fee rate ranges from 0.745% (for average net assets up to $250 million) to 0.64% (for average net assets over $10 billion). (3) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.45% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. These credits are used to pay certain expenses incurred by the Fund. The expense limitation agreement is in effect through at least April 30, 2009. 10 ------------------------------------------------------------------------------- (4) Effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the fund in such affiliated money market funds. Fee Waiver reflects this agreement. This waiver agreement is in effect through at least April 30, 2009. (5) Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Net Annual Fund Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expense are included in the total returns of the Fund. (6) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series II shares to 1.40% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. These credits are used to pay certain expenses incurred by the Fund. This expenses limitation agreement is in effect through at least April 30, 2009. (7) Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Portfolio's operating expenses. This waiver extends through May 1, 2009 and may be extended by the Adviser for additional one-year terms. (8) The funds' investment adviser is currently waiving 10% of its management fee. The waiver may be discontinued at any time in consultation with the funds' board, but it is expected to continue at this level until further notice. The funds' investment adviser and board intend to review the waiver as circumstances warrant. Management fees and total expenses do not reflect any waivers. Information regarding the effect of any waiver on total annual fund operating expenses can be found in the Financial Highlights table in the funds' prospectus and in the funds' annual report. (9) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. Including this reduction, the total class operating expenses would have been 1.03%. (10) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been: Fidelity VIP Contrafund(R) Portfolio -- Service Class 2: 0.89%; Fidelity Growth Portfolio -- Service Class 2: 0.89%; and Fidelity VIP Mid Cap Portfolio -- Service Class 2: 0.90%. These offsets may be discontinued at any time. (11) 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, excluding acquired fund fees and expenses, so that net annual Fund operating expenses do not exceed 0.93% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2009. This waiver is separate from the waiver related to the Sweep Money Fund. (12) The manager has agreed in advance to reduce its fee from assets invested by the Fund in a Franklin Templeton money market fund (the Sweep Money Fund which is "the acquired fund" in this case) to the extent of the Fund's fees and expenses of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order by the Securities and Exchange Commission; this arrangement will continue as long as the exemptive order is relied upon. This reduction is not reflected in Net annual Fund operating expenses, which would be lower if it were. (13) The Fund administration fee is paid indirectly through the management fee. (14) Effective March 30, 2007, HL Advisors has permanently reduced its management fee schedule for this fund. Using the most recent fiscal year average net assets, the management fee decreased from 0.85% to 0.80%. (15) Other expenses are estimated based upon amounts for the current fiscal year. (16) Effective January 1, 2008, HL Advisors has permanently reduced its management fee schedule for this fund. Using the most recent fiscal year average net assets, the management fee decreased from 0.73% to 0.69%. (17) Effective January 1, 2007, HL Advisors has voluntarily agreed to waive a portion of its management fees until December 31, 2008. While such waiver is in effect, using the most recent fiscal year average net assets, the management fee is 0.39% and the total annual operating expenses are 0.42%. (18) For the period May 1, 2008 through April 30, 2009, Lord Abbett contractually agreed to reimburse the Fund to the extent necessary so that the Fund's expenses (excluding management fee) do not exceed an annual rate of 0.40% of average daily net assets. (19) For the period January 1, 2007 through April 30, 2008, Lord Abbett contractually agreed to reimburse the Fund to the extent necessary so that the Fund's expenses (excluding management fee) do not exceed an annual rate of .40% of average daily net assets. Effective May 1, 2008 through April 30, 2009, Lord Abbett contractually agreed to reimburse the Fund to the extent necessary so that the Fund's expenses (excluding management fee) do not exceed an annual rate of .35% of average daily net assets. (20) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees" in the Fund's prospectus. The fund has entered into an expense offset arrangement that reduce the fund's custodian fee based upon the amount of cash maintained by the fund with its custodian. Such fee reduction is not reflected in the table. Had this fee reduction been taken into account, "Net Expenses" would be lower. (21) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees" in the Fund's prospectus. The fund has entered into an expense offset arrangement that reduces the fund's custodian fee based upon the amount of cash maintained by the fund with its custodian. Such fee reduction is not reflected in the table. Had this fee reduction been taken into account, "Net Expenses" would be lower. 11 ------------------------------------------------------------------------------- (22) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees" in the Fund's prospectus. The fund has entered into an expense offset arrangement that reduces the fund's custodian fee based upon the amount of cash maintained by the fund with its custodian. Such fee reduction is not reflected in the table. Had this fee reduction been taken into account, "Net Expenses" would be lower. MFS has agreed in writing to reduce its management fee to 0.50% of average daily net assets annually. This written agreement will remain in effect until modified by the fund's Board of Trustees. (23) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees" in the Fund's prospectus. The fund has entered into an expense offset arrangement that reduces the fund's custodian fee based upon the amount of cash maintained by the fund with its custodian. Such fee reduction is not reflected in the table. Had this fee reduction been taken into account, "Net Expenses" would be lower. MFS has agreed in writing to reduce its management fee to 0.65% annually on average daily net assets in excess of $3 billion. This written agreement will remain in effect until modified by the fund's Board of Trustees. (24) The fund's Rule 12b-1 plan permits it to pay distribution and/or service fees to support the sale and distribution of the fund's Service Class shares and the services provided by financial intermediaries. The maximum rates that may be charged under the plan, together with details of any fee reduction arrangements, are set forth under "Distribution and Service Fees" in the Fund's prospectus. The fund has entered into an expense offset arrangement that reduces the fund's custodian fee based upon the amount of cash maintained by the fund with its custodian. Such fee reduction is not reflected in the table. Had this fee reduction been taken into account, "Net Expenses" would be lower. (25) The "Other Expenses" in the table are based on, among other things, the fees the Fund would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.35% of average daily net assets per fiscal year for all classes. The undertaking may be amended or withdrawn at any time. For the Fund's fiscal year ended December 31, 2007, the transfer agent fees did not exceed the expense limitation described above. The manager will voluntarily waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in Oppenheimer Institutional Money Market Fund. During the fiscal year, these amounts were not material to the above ratios. The Fund also receives certain credits from the Fund's custodian that, during the fiscal year, reduced its custodial expenses for all share classes [by less than 0.01% of average daily net assets]. (26) Effective January 1, 2007, the Manager has voluntarily agreed to an expense waiver of any total expenses over 1.25% of average annual net assets for Non-Service shares and 1.50% of average annual net assets of Service shares. After the waivers the actual "Other Expenses" were 0.50% for the Service Shares and the "Total Annual Operating Expenses" were 1.50% for the Service shares. (27) "Net Total Annual Operating Expenses" includes the amount from "Acquired Fund Fees and Expenses" column, which is an estimate of expenses attributable to the fund's investments in other investment companies, based on the total annual fund operating expenses of such companies as reported in their most recent shareholder reports (net of any applicable expense limitations). These indirect expenses will vary from time to time depending on the fund's investments in other investment companies and their operating expenses. (28) In order to further limit expenses, Putnam Management has agreed to waive fees and reimburse expenses of the funds to the extent necessary to ensure that the funds pay total fund operating expenses at an annual rate that does not exceed the simple average of the expenses of a custom group of competitive funds selected by Lipper Inc. based on the size of the applicable fund. For these purposes, total fund operating expenses of both the applicable fund and the Lipper custom group average are calculated without giving effect to 12b-1 fees or any expense offset and brokerage service arrangements that may reduce fund expenses. The expense limitation that resulted in the greater reduction in expenses of the funds at the end of each applicable period for each applicable fund was applied to such fund for that period. During the year ended December 31, 2007 this limitation decreased expenses by the following additional amounts: Putnam VT Capital Opportunities Fund 0.03 % Putnam VT The George Putnam Fund of Boston 0.02 % Putnam VT Global Asset Allocation Fund 0.02 % Putnam VT Health Sciences Fund 0.02 % Putnam VT Money Market Fund 0.03 %
(29) "Other Expenses" includes estimated expenses attributable to the fund's investments in other investment companies that the fund bears indirectly. (30) Reflects Putnam Management's contractual agreement to limit fund expenses through April 30, 2009. (31) For the fiscal year ended December 31, 2007, after giving effect to the Adviser's voluntary fee waivers and/or expense reimbursements, the total annual portfolio operating expenses incurred by investors, including certain investment related expenses, was 1.16% for Class II. The total annual portfolio operating expenses excluding certain investment related expense was 1.15% for Class II. 12 ------------------------------------------------------------------------------- EXAMPLE THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THIS VARIABLE ANNUITY WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITIES. LET'S SAY, HYPOTHETICALLY, THAT YOUR ANNUAL INVESTMENT RETURN IS 5% AND THAT YOUR FEES AND EXPENSES TODAY WERE AS HIGH AS POSSIBLE. THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR EVERY $10,000 INVESTED HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS POSED: (1) If you do not Surrender, your Contract Value will be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- Core $528 $1,582 $2,632 $5,237 Edge $1,009 $1,928 $2,849 $5,159
(2) If you do Surrender at the end of the applicable time period, your Surrender Value is:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- Core $1,191 $2,147 $3,099 $5,237 Edge $1,009 $1,928 $2,849 $5,159
(3) If you annuitize at the end of the applicable time period, the amount applied will be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- Core $346 $1,400 $2,450 $5,055 Edge $827 $1,748 $2,669 $4,979
FINANCIAL INFORMATION -------------------------------------------------------------------------------- When Premium Payments are credited to your Funds, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium Taxes, by the Accumulation Unit Value for that day. All classes of Accumulation Unit Values may be obtained, free of charge, by contacting us. See Appendix B -- Accumulation Unit Values for additional information. You can find financial statements for us and the Separate Account in the Statement of Additional Information. To receive a copy of the Statement of Additional Information free of charge, call your Registered Representative or contact us. 13 ------------------------------------------------------------------------------- 3. GENERAL INFORMATION THE COMPANY We are a stock life insurance company engaged in the business of writing life insurance and individual and group annuities. Hartford Life Insurance Company is authorized to do business in all states of the United States, Puerto Rico and the District of Columbia. Hartford Life and Annuity Insurance Company is authorized to do business in all states of the United States except New York, Puerto Rico and the District of Columbia. Hartford Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Hartford Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Our offices are located in Simsbury, Connecticut. Not all Contracts are available from each issuing company. Neither company cross guarantees the obligations of the other. We are ultimately controlled by The Hartford Financial Services Group, Inc., one of the largest financial service providers in the United States. THE SEPARATE ACCOUNT We set aside and invest the assets of some of our annuity contracts, including this Contract, in a Separate Account. These Separate Accounts are registered as unit investment trusts under the 1940 Act. This registration does not involve supervision by the SEC of the management or the investment practices of a Separate Account or us. Separate Accounts meet the definition of "Separate Account" under federal securities law. The Separate Accounts referenced in this prospectus hold only assets for variable annuity contracts. These Separate Accounts: - Hold assets for your benefit and the benefit of other Contract Owners, and the persons entitled to the payouts described in the Contract. - Are not subject to the liabilities arising out of any other business we may conduct. All guarantees under the Contract are our general corporate obligations. - Are not affected by the rate of return of our General Account or by the investment performance of any of our other Separate Accounts. - May be subject to liabilities from a Sub-Account of a Separate Account that holds assets of other variable annuity contracts offered by a Separate Account, which are not described in this prospectus. - Are credited with income and gains, and takes losses, whether or not realized, from the assets they hold without regard to our other income, gains or loss. We do not guarantee the investment results of any Separate Account. There is no assurance that the value of your Contract will equal the total of the payments you make to us. THE FUNDS The Funds available for investment are described in Appendix C. These are not the same mutual funds that you can buy through your stockbroker even though they may have similar investment strategies and the same portfolio managers. Each Fund has varying degrees of investment risk. Funds are also subject to separate fees and expenses such as management fees, distribution fees and operating expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the prospectuses for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all variations of this Contract. MIXED AND SHARED FUNDING -- Fund shares may be sold to our other separate accounts, our insurance company affiliates or other unaffiliated insurance companies to serve as an underlying investment for variable annuity contracts and variable life insurance policies, pursuant to a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of Contract Owners, and other contract owners investing these Funds. If a material conflict arose, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another underlying fund. VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate Account and we have the right to vote at the Funds' shareholder meetings. To the extent required by federal securities laws or regulations, we will: - Notify you of any Fund shareholders' meeting if the shares held for your Contract may be voted. - Send proxy materials and a form of instructions that you can use to tell us how to vote the Fund shares held for your Contract. - Arrange for the handling and tallying of proxies received from Contract Owners. - Vote all Fund shares attributable to your Contract according to instructions received from you, and 14 ------------------------------------------------------------------------------- - Vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. If any federal securities laws or regulations, or their present interpretation, change to permit us to vote Fund shares on our own, we may decide to do so. You may attend any shareholder meeting at which shares held for your Contract may be voted. After we begin to make Annuity Payouts to you, the number of votes you have will decrease. As a result of proportional voting, a small number of Contract Owners could determine the outcome of a proposition subject to shareholder vote. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- Subject to any applicable law, we may make certain changes to the underlying funds offered under your Contract. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Contract Owners as we deem appropriate. We may also close one or more Funds to additional Premium Payments or transfers from existing Funds. We may liquidate one or more Sub-Accounts if the board of directors of any Fund determines that such actions are prudent. Unless otherwise directed, investment instructions will be automatically updated to reflect the Fund surviving after any merger, substitution or liquidation. We may eliminate the shares of any of the Funds from the Contract for any reason and we may substitute shares of another registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account. To the extent required by the 1940 Act, substitutions of shares attributable to your interest in a Fund will not be made until we have the approval of the SEC and we have notified you of the change. In the event of any substitution or change, we may, by appropriate endorsement, make any changes in the Contract necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Contract Owners, the Separate Account may be operated as a management company under the 1940 Act or any other form permitted by law, may be de-registered under the 1940 Act in the event such registration is no longer required, or may be combined with one or more other Separate Accounts. FEES WE RECEIVE FROM FUNDS AND RELATED PARTIES -- We receive substantial and varying administrative service payments and Rule 12b-1 fees from certain Funds or related parties. These types of payments and fees are sometimes referred to as "revenue sharing" payments. We consider revenue sharing payments and fees among a number of factors when deciding to add or keep a fund on the menu of Funds that we offer through the Contract. We collect these payments and fees under agreements between us and a Fund's principal underwriter, transfer agent, investment adviser and/or other entities related to the Fund. We expect to make a profit on these fees. The availability of these types of arrangements creates an incentive for us to seek and offer Funds (and classes of shares of such Funds) that pay us revenue sharing. Other funds (or available classes of shares) may have lower fees and better overall investment performance. As of December 31, 2007, 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): A I M Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, Branch Banking & Trust Company, Evergreen Investment Services Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Fifth Third Bank Corporation, Franklin Templeton Services, LLC, The Huntington Funds, Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Merrill Lynch Asset Management & Princeton Funds Distributor, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, MTB Investment Advisors, Inc., Banc of America Advisors, LLC, Banc One Investment Advisors Corporation, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Pioneer Variable Contracts Trust & Pioneer Investment Management, Inc. & Pioneer Funds Distributor, Inc., Prudential Investment Management Services, LLC, Putnam Retail Management Limited Partnership, SunTrust Securities, Inc. & Trusco Capital Management, Inc., UBS Financial Services, Inc., Van Kampen Life Investment Trust & Van Kampen Asset Management, Van Kampen Funds, The Victory Variable Insurance Funds & Victory Capital Management, Inc. & Victory Capital Advisers, Inc. and Wells Fargo Variable Trust & Wells Fargo Fund Management, LLC. We are affiliated with Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. (collectively, the "HLS Funds") based on our affiliation with their investment advisers HL Investment Advisors, LLC and Hartford Investment Management Company. In addition to investment advisory fees, we, or our other insurance company affiliates, receive fees to provide, among other things, administrative, processing, accounting and shareholder services for the HLS Funds. Not all Fund complexes pay the same amounts of revenue sharing payments and/or Rule 12b-1 fees. Therefore, the amount of fees we collect may be greater or smaller based on the Funds you select. Revenue sharing and Rule 12b-1 fees did not exceed 0.50% and 0.25%, respectively, in 2007, and are not expected to exceed 0.50% and 0.35%, respectively, in 2008, of the annual percentage of the average daily net assets (for instance, in 2007, 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 $75 from that Fund). We will endeavor to update this listing 15 ------------------------------------------------------------------------------- annually and interim arrangements may not be reflected. For the fiscal year ended December 31, 2007, revenue sharing and Rule 12b-1 fees did not exceed $162.2 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. FIXED ACCUMULATION FEATURE THIS PORTION OF THE PROSPECTUS RELATING TO THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED UNDER THE 1933 ACT AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. THE FIXED ACCUMULATION FEATURE OR ANY OF ITS INTERESTS ARE 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 ACCUMULATION FEATURE. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE FIXED ACCUMULATION FEATURE IS NOT OFFERED IN ALL CONTRACTS AND IS NOT AVAILABLE IN ALL STATES. Premium Payments and Contract Values allocated to the Fixed Accumulation Feature become a part of our General Account assets. We invest the assets of the General Account according to the laws governing the investments of insurance company General Accounts. Premium Payments and Contract Values allocated to the Fixed Accumulation Feature are available to our general creditors. We guarantee that we will credit interest to amounts you allocate to the Fixed Accumulation Feature at a rate that meets your State's minimum requirements. We may change the minimum guaranteed interest rate subject only to applicable State insurance law. We may credit interest at a rate in excess of the minimum guaranteed interest rate. We will periodically publish the Fixed Accumulation Feature interest rates currently in effect. There is no specific formula for determining interest rates. Some of the factors that we may consider in determining whether to credit excess interest are: general economic trends, rates of return currently available and anticipated on our investments, regulatory and tax requirements and competitive factors. We will account for any deductions, Surrenders or transfers from the Fixed Accumulation Feature on a "first-in, first-out" basis. The Fixed Accumulation Feature interest rates may vary by State. ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCUMULATION FEATURE IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. From time to time, we may credit increased interest rates under certain programs established in our sole discretion. We may restrict your ability to allocate Contract Values or Premium Payments to the Fixed Accumulation Feature at any time in our sole discretion. We may close the Fixed Accumulation Feature to new Premium Payments or transfers of existing Contract Value. We may also make the Fixed Accumulation Feature available only through enrollment in a program that we establish. 4. PERFORMANCE RELATED INFORMATION The Separate Account may advertise certain performance-related information concerning the Sub-Accounts. Performance information about a Sub-Account is based on the Sub-Account's past performance only and is no indication of future performance. When a Sub-Account advertises its standardized total return, it will usually be calculated from the date of either the Separate Account's inception or the Sub-Account's inception, whichever is later, for one year, five years, and ten years or some other relevant periods if the Sub-Account has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. Total return calculations reflect a deduction for Total Annual Fund Operating Expenses, any Contingent Deferred Sales Charge (CDSC), and Separate Account Annual Expenses without any optional charge deductions, and the Annual Maintenance Fee. The Separate Account may also advertise non-standardized total returns that pre-date the inception of the Separate Account. These non-standardized total returns are calculated by assuming that the Sub-Accounts have been in existence for the same periods as the Funds and by taking deductions for charges equal to those currently assessed against the Sub-Accounts. Non-standardized total return calculations reflect a deduction for Total Annual Fund Operating Expenses and Separate Account Annual Expenses without any optional charge deductions, and do not include deduction for any applicable CDSC or the Annual Maintenance Fee. This means the non-standardized total return for a Sub-Account is higher than the standardized total return for a Sub-Account. These non-standardized returns must be accompanied by standardized returns. If applicable, the Sub-Accounts may advertise yield in addition to total return. This yield is based on the 30-day SEC yield of the Fund less the recurring charges at the Separate Account level. A money market Sub-Account may advertise yield and effective yield. The yield of a Sub-Account is based upon the income earned by the Sub-Account over a seven-day period and then annualized, i.e. the income earned in the period is assumed to be earned every 16 ------------------------------------------------------------------------------- seven days over a 52-week period and stated as a percentage of the investment. Effective yield is calculated similarly but when annualized, the income earned by the investment is compounded in the course of a 52-week period. Yield and effective yield include the recurring charges at the Separate Account level. We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as systematic investing, Dollar Cost Averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contract and the characteristics of and market for such alternatives. 5. THE CONTRACT A. PURCHASES AND CONTRACT VALUE WHO CAN BUY THIS CONTRACT? The Contract is an individual or group tax-deferred variable annuity Contract. It is designed for retirement planning purposes and may be purchased by any individual, group or trust, including: - Any trustee or custodian for a retirement plan qualified under Section 401(a) of the Code; - Individual Retirement Annuities adopted according to Section 408 of the Code; - Employee pension plans established for employees by a state, a political subdivision of a state, or an agency of either a state or a political subdivision of a state; and - Certain eligible deferred compensation plans as defined in Section 457 of the Code. The examples above represent qualified Contracts, as defined by the Code. In addition, individuals and trusts can also purchase Contracts that are not part of a tax qualified retirement plan. These are known as non-qualified Contracts. If you are purchasing the Contract for use in an IRA or other qualified retirement plan, you should consider other features of the Contract besides tax deferral, since any investment vehicle used within an IRA or other qualified plan receives tax-deferred treatment under the Code. We no longer accept any incoming 403(b) exchanges or applications for 403(b) individual annuity contracts. Not all forms of contracts may be available through your Registered Representative or from each issuing company. HOW DO YOU PURCHASE A CONTRACT? You may only purchase a Contract through a Financial Intermediary. A Registered Representative will work with you to complete and submit an application or an order request form. Part of this process will include an assessment whether this variable annuity may be suitable for you. Prior to recommending the purchase or exchange of a deferred variable annuity, your Registered Representative shall make reasonable efforts to obtain certain information about you and your investment needs. This recommendation will be independently reviewed by a principal within your Financial Intermediary before an application or order will be sent to us. Your Premium Payment will not be invested in any Fund during this period. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, your Financial Intermediary will ask for your name, address, date of birth and other information that will allow us to identify you. They may also ask to see your driver's license or other identifying documents. Non-Resident Alien ("NRA") application submissions require our prior approval. The minimum initial Premium Payment required to buy this Contract varies based on the type of purchaser, variable annuity variation chosen and whether you enroll in a systematic investment program such as the InvestEase(R) Program. See the Highlights section for more information. Financial Intermediaries may impose other requirements regarding the form of payment they will accept. Premium Payments not actually received by us within the time period provided below will result in the rejection of your application or order request. Premium Payments sent to us must be made in U.S. dollars and checks must be drawn on U.S. banks. We do not accept cash; third party checks or double endorsed checks. We reserve the right to limit the number of checks processed at one time. If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees incurred. A check must clear our account through our Administrative Office to be considered to be in good order. 17 ------------------------------------------------------------------------------- Premium Payments may not exceed $1 million without our prior approval. We reserve the right to impose special conditions on anyone who seeks our approval to exceed this limit. You and your Annuitant must not be older than age 85 on the date that your Contract is issued. You must be of minimum legal age in the state where the Contract is being purchased or a guardian must act on your behalf. Optional riders are subject to additional maximum issue age restrictions. Please refer to Appendix G for a description of Contract exchange programs offered to eligible investors. CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT? Yes. If for any reason you are not satisfied with your Contract, simply return it within ten days after you receive it with a written request for cancellation that indicates your tax-withholding instructions. In some states, you may be allowed more time to cancel your Contract. We may require additional information, including a signature guarantee, before we can cancel your Contract. Please see Appendix D for more information. Unless otherwise required by state law, we will pay you your Contract Value as of the Valuation Day we receive your request to cancel and will refund any sales or Contract charges incurred during the period you owned the Contract. The Contract Value may be more or less than your Premium Payments depending upon the investment performance of your Account. This means that you bear the risk of any decline in your Contract Value until we receive your notice of cancellation. In certain states, however, we are required to return your Premium Payment without deduction for any fees or charges. HOW ARE PREMIUM PAYMENTS APPLIED TO YOUR CONTRACT? Your initial Premium Payment will usually be invested within two Valuation Days of our actual receipt in-hand at our Administrative Office of both a properly completed application or order request and the Premium Payment; both being in good order. If we receive your subsequent Premium Payment before the end of a Valuation Day, it will be invested on the same Valuation Day. If we receive your subsequent Premium Payment after the end of a Valuation Day, it will be invested on the next Valuation Day. If we receive your subsequent Premium Payment on a non-Valuation Day, the amount will be invested on the next Valuation Day. Unless we receive new instructions, we will invest all Premium Payments based on your last instructions on record. We will send you a confirmation when we invest your Premium Payments If the request or other information accompanying the initial Premium Payment is incomplete or not in good order when received, we will hold the money in a non-interest bearing account for up to five Valuation Days (from the Valuation Day that we actually receive your initial Premium Payment at our Administrative Office) while we try to obtain complete information. If we cannot obtain the information within five Valuation Days, we will either return the Premium Payment and explain why the Premium Payment could not be processed or keep the Premium Payment if you authorize us to keep it until you provide the necessary information. Generally, we will receive your application or order request (whether for an initial purchase or a subsequent investment) after your Financial Intermediary has completed a suitability review. We will then consider if your investment is in good order. The suitability and good order process can take up to 17 Business Days from when you leave your Premium with your Registered Representative. During this period, Premium Payments will not be applied to your Contract. You will not earn any interest on Premium Payments even if your Premium Payments have been sent to us or deposited into our bank account. We are not responsible for market losses, gains or lost investment opportunities incurred during this review period or if your Financial Intermediary asks us to unwind a transaction based on their review of your Registered Representative's recommendations. Your Financial Institution, and we, may directly or indirectly earn income on your Premium Payments. These circumstances represent a conflict of interest. For more information, contact your Registered Representative. HOW IS THE VALUE OF YOUR CONTRACT CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE? The Contract Value is the sum of the value of the Fixed Accumulation Feature, if applicable, and all Funds. There are two things that affect your Contract Value: (1) the number of Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is determined by multiplying the number of Accumulation Units by the Accumulation Unit Value. On any Valuation Day the investment performance of the Sub-Accounts will fluctuate with the performance of the Funds. When Premium Payments are credited to your Account, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium Taxes, by the Accumulation Unit Value for that day. The more Premium Payments you make to your Contract, the more Accumulation Units you will own. You decrease the number of Accumulation Units you have by requesting partial or full Surrenders, settling a Death Benefit claim or by annuitizing your Contract. 18 ------------------------------------------------------------------------------- To determine the current Accumulation Unit Value, we take the prior Valuation Day's Accumulation Unit Value and multiply it by the Net Investment Factor for the current Valuation Day. - The Net Investment Factor is used to measure the investment performance of a Sub-Account from one Valuation Day to the next. The Net Investment Factor for each Sub-Account equals: - The net asset value per share plus applicable distributions per share of each Fund at the end of the current Valuation Day; reduced by - The net asset value per share of each Fund at the end of the prior Valuation Day; reduced by - Contract charges including the deductions for the mortality and expense risk charge and any other periodic expenses, including charges for optional benefits, divided by the number of days in the year multiplied by the number of days in the Valuation period. We will send you a statement at least annually. WHAT OTHER WAYS CAN YOU INVEST? You may enroll in the following features (sometimes called a "Program") for no additional fee. Not all Programs are available with all Contract variations. - INVESTEASE This electronic funds transfer feature allows you to have money automatically transferred from your checking or savings account and deposited into your Contract on a monthly or quarterly basis. It can be changed or discontinued at any time. The minimum amount for each transfer is $50. You can elect to have transfers made into any available Fund. You can not use this Program to invest in the DCA Plus Programs. - STATIC ASSET ALLOCATION MODELS This feature allows you to select an asset allocation model of Funds based on several potential factors including your risk tolerance, time horizon, investment objectives, or your preference to invest in certain funds or fund families. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Contract. Some asset allocation models are based on generally accepted investment theories that take into account the historic returns of different asset classes (e.g., equities, bonds or cash) over different time periods. Other asset allocation models focus on certain potential investment strategies that could possibly be achieved by investing in particular funds or fund families and are not based on such investment theories. If you choose to participate in one of these asset allocation models, you must invest all of your Premium Payment into one model. You may invest in an asset allocation model through the Dollar Cost Averaging Program where the Fixed Accumulation Feature, a Money Market sub-account, or a Dollar Cost Averaging Plus Program is the source of the assets to be invested in the asset allocation model you have chosen. You can also participate in these asset allocation models while enrolled in the Automatic Income Program. You may participate in only one asset allocation model at a time. Asset allocation models cannot be combined with other asset allocation models or with individual sub-account elections. You can switch asset allocation models up to twelve times per year. Your ability to elect or switch into and between asset allocation models may be restricted based on fund abusive trading restrictions. You may be required to invest in an acceptable asset allocation model as a condition for electing and maintaining certain guaranteed minimum withdrawal benefits. Your investments in an asset allocation model will be rebalanced quarterly to reflect the model's original percentages. We have no discretionary authority or control over your investment decisions. These asset allocation models are based on then available Funds and do not include the Fixed Accumulation Feature. We make available educational information and materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case studies) that can help you select an asset allocation model, but we do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you. While we will not alter allocation percentages used in any asset allocation model, allocation weightings could be affected by mergers, liquidations, fund substitutions or closures. Individual availability of these models is subject to fund company restrictions. Please refer to WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? for more information. 19 ------------------------------------------------------------------------------- You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the asset allocation models, and we will not reallocate your Account Value based on those updates. Information on updated asset allocation models may be obtained by contacting your Registered Representative. Investment alternatives other than these asset allocation models are available that may enable you to invest your Contract Value with similar risk and return characteristics. When considering an asset allocation model for your individual situation, you should consider your other assets, income and investments in addition to this annuity. - ASSET REBALANCING In asset rebalancing, you select a portfolio of Funds, and we will rebalance your assets at the specified frequency to reflect the original allocation percentages you selected. You can choose how much of your Contract Value you want to invest in this program. You can also combine this program with others such as the Automatic Income Program and Dollar Cost Averaging Program (subject to restrictions). You may designate only one set of asset allocation instructions at a time. - DOLLAR COST AVERAGING We offer three dollar cost averaging programs: - DCA Plus - Fixed Amount DCA - Earnings/Interest DCA DCA Plus -- These programs allow you to earn a fixed rate of interest on investments. These programs are different from the Fixed Accumulation Feature. We determine, in our sole discretion, the interest rates to be credited. These interest rates may vary depending on the Contract you purchased. Please consult your Registered Representative to determine the interest rate for your Program. You may elect either the "12-Month Transfer Program" or the "6-Month Transfer Program". - Under the 12-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 12 months. You must then transfer these investments into available Funds (and not the Fixed Accumulation Feature) during this 12 month period. You must elect to make not less than 7 nor more than 12 transfers to fully deplete sums invested in this Program. - Under the 6-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 6 months. You must then transfer these investments into available Funds (and not the Fixed Accumulation Feature) during this 6 month period. You must make not less than 3 nor more than 6 transfers at any frequency you chose to fully deplete sums invested in this Program. - Each time you make a subsequent Premium Payment, you can invest in a different rate lock program. Any subsequent investments made in a month (or other interest rate effective period) other than your last program investment are considered a separate rate lock program investment. You can invest in up to 5 different rate lock programs at one time. - You must invest at least $5,000 in each rate lock program ($2,000 for qualified plan transfers or rollovers, including IRAs). We may pre- authorize transfers from our Fixed Accumulation Feature subject to restrictions. This minimum amount applies to the initial and all subsequent Premium Payments in a given rate lock program. - Pre-authorized transfers will begin within 15 days of receipt of the Program payment provided we receive complete enrollment instructions in good order. - If a DCA Plus payment is received without enrollment instructions and a DCA Plus program is active on the contract, we will set up the new Program to mirror the existing one. If a DCA Plus payment is received without enrollment instructions and a DCA Plus program is not active on the contract, but is the future investment allocation and a Static Model Portfolio Plan is active on the contract, we will set up the new Program to move funds to the Static Model Portfolio Plan. Otherwise, we will contact your investment professional to obtain complete instructions. If we do not receive in good order enrollment instructions within the 15 day timeframe noted above, we will refund the Program payment for further instruction. - If your Program payment is less than the required minimum amount, we will invest into the destination funds indicated on the Program instructions accompanying the payment. If Program instructions were not provided and a DCA Plus Program is active on the contract, we will apply the payment to the destination funds of the current DCA Plus program. Otherwise, we will contact your investment professional to obtain further investment instructions. - The credited interest rate used under the DCA Plus Programs is not earned on the full amount of your Premium Payment for the entire length of the Program because Program transfers to Funds decrease the amount of your Premium Payment remaining in the Program. 20 ------------------------------------------------------------------------------- - You may elect to terminate your involvement in this Program at any time. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the Funds you designated. Fixed Amount DCA -- This feature allows you to regularly transfer (monthly or quarterly) a fixed amount from the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund into a different Fund. This program begins in 15 days unless you instruct us otherwise. You must make at least three transfers in order to remain in this program. Earnings/Interest DCA -- This feature allows you to regularly transfer (monthly or quarterly) the interest earned from your investment in the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund into another Fund. This program begins two business days plus the frequency selected unless you instruct us otherwise. You must make at least three transfers in order to remain in this program. - AUTOMATIC INCOME PROGRAM This systematic withdrawal feature allows you to make partial Surrenders up to 10% of your total Premium Payments each Contract Year without a Contingent Deferred Sales Charge, if applicable. You can designate the Funds to be surrendered from and also choose the frequency of partial Surrenders (monthly, quarterly, semiannual, or annually). The minimum amount of each Surrender is $100. Amounts taken under this program will count towards the Annual Withdrawal Amount, and if received prior to age 59 1/2, may have adverse tax consequences, including a 10% federal income tax penalty on the taxable portion of the Surrender payment. You may satisfy Code Section 72(t)/(q) requirements by enrolling in this program. Please see sections 9 and 10 for more information about the tax consequences associated with your Contract. Your level of participation in this program may result in your exceeding permissible withdrawal limits under certain optional withdrawal riders. - OTHER PROGRAM CONSIDERATIONS - You may terminate your enrollment in any Program at any time. - We may discontinue, modify or amend any of these Programs at any time. We will automatically and unilaterally amend your enrollment instructions if: - any Fund is merged or substituted into another Fund -- then your allocations will be directed to the surviving Fund; or - any Fund is liquidated -- then your allocations to that Fund will be directed to any available money market Fund. You may always provide us with updated instructions following any of these events. - Continuous or periodic investment neither insures a profit nor protects against a loss in declining markets. Because these Programs involve continuous investing regardless of fluctuating price levels, you should carefully consider your ability to continue investing through periods of fluctuating prices. - If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait 6 months after your last systematic transfer before moving Sub-Account Values back to the Fixed Accumulation Feature. - 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. - Asset allocation does not guarantee that your Contract Value will increase nor will it protect against a decline if market prices fall. If you choose to participate in an asset allocation program, you are responsible for determining which model portfolio is best for you. Tools used to assess your risk tolerance may not be accurate and could be useless if your circumstances change over time. Although each model portfolio is intended to maximize returns given various levels of risk tolerance, a model portfolio may not perform as intended. Market, asset class or allocation option class performance may differ in the future from historical performance and from the assumptions upon which the model portfolio is based, which could cause a model portfolio to be ineffective or less effective in reducing volatility. A model portfolio may perform better or worse than any single Fund, allocation option or any other combination of Funds or allocation options. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of model portfolios can cause their component Funds to incur transactional expenses to raise cash for money flowing out of Funds or to buy securities with money flowing into the Funds. Moreover, large outflows of money from the Funds may increase the expenses attributable to the assets remaining in the Funds. These expenses can adversely affect the performance of the relevant Funds and of the model portfolios. In addition, these inflows and outflows may cause a Fund to hold a large portion of its assets in cash, which could detract from the achievement of the Fund's investment objective, particularly in periods of rising market prices. For additional information regarding the risks of investing in a particular Fund, see that Fund's prospectus. - Additional considerations apply for qualified Contracts with respect to Static Asset Allocation Model programs. Neither we, nor any third party service provider, nor any of their respective affiliates, is acting as a fiduciary under The Employee Retirement Income 21 ------------------------------------------------------------------------------- Security Act of 1974, as amended (ERISA) or the Code, in providing any information or other communication contemplated by any Program, including, without limitation, any model portfolios. That information and communications are not intended, and may not serve as a primary basis for your investment decisions with respect to your participation in a Program. Before choosing to participate in a Program, you must determine that you are capable of exercising control and management of the assets of the plan and of making an independent and informed decision concerning your participation in the Program. Also, you are solely responsible for determining whether and to what extent the Program is appropriate for you and the assets contained in the qualified Contract. Qualified Contracts are subject to additional rules regarding participation in these Programs. It is your responsibility to ensure compliance of any recommendation in connection with any model portfolio with governing plan documents. - These Programs may be modified, terminated or adversely impacted by the imposition of Fund trading policies. CAN YOU TRANSFER FROM ONE FUND TO ANOTHER? Yes. During those phases of your Contract when transfers are permissible, you may make transfers between Funds according to the following policies and procedures, as they may be amended from time to time. - WHAT IS A SUB-ACCOUNT TRANSFER? A Sub-Account transfer is a transaction requested by you that involves reallocating part or all of your Contract Value among the Funds available in your Contract. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order. Otherwise, your request will be processed on the following Valuation Day. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly advising us of any errors within 30 days of receiving the confirmation. - WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER? Many Contract 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 Contract Owners allocate new Premium Payments to Sub-Accounts, and others request Surrenders. We combine all the daily requests to transfer out of a Sub-Account along with all Surrenders from that Sub-Account and determine how many shares of that Fund we would need to sell to satisfy all Contract Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or new Premium Payments allocated to that Sub-Account and determine how many shares of that Fund we would need to buy to satisfy all Contract Owners' "transfer-in" requests. In addition, many of the Funds that are available as investment options in our variable annuity products are also available as investment options in variable life insurance policies, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and participants in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Fund for many of the variable annuities, variable life insurance policies, retirement plans, funding agreements or other products offered by us or our affiliates. We also combine many of the purchases of that particular 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 net asset value of the Fund shares that you purchase or sell. This means that we sometimes reallocate shares of a Fund rather than buy new shares or sell shares of the Fund. For example, if we combine all transfer-out (redemption) requests and Surrenders of a stock Fund Sub-Account with all other sales of that Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Contract Owners and the owners of other products offered by us, want to transfer-in (purchase) an amount equal to $300,000 of that same Fund, then we would send a sell order to the Fund for $700,000 (a $1 million sell order minus the purchase order of $300,000) rather than making two or more transactions. - WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We limit each Contract 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 Contract Value more than once a Valuation Day. EXAMPLES
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE? -------------------------------------------------------------------------------- Transfer $10,000 from a money market Sub-Account to a growth Yes Sub-Account Transfer $10,000 from a money market Sub-Account to any number Yes of other Sub-Accounts (dividing the $10,000 among the other Sub-Accounts however you chose) Transfer $10,000 from any number of different Sub-Accounts to Yes any number of other Sub-Accounts Transfer $10,000 from a money market Sub-Account to a growth No Sub-Account and then, before the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
22 ------------------------------------------------------------------------------- SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH CONTRACT YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet or telephone. Once you have reached the maximum number of Sub-Account transfers, you may only submit any additional Sub-Account transfer requests and any trade cancellation requests in writing through U.S. Mail or overnight delivery service. In other words, Voice Response Unit, Internet or telephone transfer requests will not be honored. We may, but are not obligated to, notify you when you are in jeopardy of approaching these limits. For example, we will send you a letter after your 10th Sub-Account transfer to remind you about the Transfer Rule. After your 20th transfer request, our computer system will not allow you to do another Sub-Account transfer by telephone, Voice Response Unit or via the Internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service. We reserve the right to aggregate your Contracts (whether currently existing or those recently surrendered) for the purposes of enforcing these restrictions. The Transfer Rule does not apply to Sub-Account transfers that occur automatically as part of a Company sponsored asset allocation or Dollar Cost Averaging program. Reallocations made based on a Fund merger or liquidation also do not count toward this transfer limit. Restrictions may vary based on state law. We make no assurances that the Transfer Rule is or will be effective in detecting or preventing market timing. THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS. You should not purchase this Contract if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Contract if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of a Fund. Even if you do not engage in market timing, certain restrictions may be imposed. You are subject to Fund trading policies, if any. We are obligated to provide, at the Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading policy. In certain instances, we have agreed to serve as a Fund's agent to help monitor compliance with that Fund's trading policy. We are obligated to follow each Fund's instructions regarding enforcement of their trading policy. Penalties for violating these policies may include, among other things, temporarily or permanently limiting or banning you from making Sub-Account transfers into a Fund or other funds within that fund complex. We are not authorized to grant an exception to a Fund's trading policy. Please refer to each Fund's prospectus for more information. Fund trading policies do not apply or may be limited. For instance: - Certain types of financial intermediaries may not be required to provide us with shareholder information. - "Excepted funds" such money market funds and any Fund that affirmatively permits short-term trading of its securities may opt not to adopt this type of policy. This type of policy may not apply to any financial intermediary that a Fund treats as a single investor. - A Fund can decide to exempt categories of contract holders whose contracts are subject to inconsistent trading restrictions or none at all. - Non-shareholder initiated purchases or redemptions may not always be monitored. These include Sub-Account transfers that are executed: (i) automatically pursuant to a company sponsored contractual or systematic program such as transfers of assets as a result of "dollar cost averaging" programs, asset allocation programs, automatic rebalancing programs, annuity payouts, loans, or systematic withdrawal programs; (ii) as a result of the payment of a Death Benefit; (iii) as a step-up in Contract Value pursuant to a Contract Death Benefit or guaranteed minimum withdrawal benefit; (iv) as a result of any deduction of charges or fees under a Contract; or (v) as a result of payments such as loan repayments, scheduled contributions, scheduled withdrawals or surrenders, retirement plan salary reduction contributions, or planned premium payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading or market timing activities. For instance, - Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked. - Certain forms of variable annuities and types of Funds may be attractive to market timers. We can not provide assurances that we will be capable of addressing possible abuses in a timely manner. - These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all. 23 ------------------------------------------------------------------------------- - HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS? We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce value of other optional benefits available under your Contract. Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund's trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product investors if the Fund and we 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 Contract Owner to provide the information. If the Contract Owner does not provide the information, we may be directed by the Fund to restrict the Contract Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Contract will also be precluded from further purchases of Fund shares. FIXED ACCUMULATION FEATURE TRANSFERS For Core and Edge contracts only, during each Contract Year, you may make transfers out of the Fixed Accumulation Feature to Sub-Accounts, subject to the transfer restrictions discussed below. All transfer allocations must be in whole numbers (e.g., 1%). Each Contract Year you may transfer the greater of: - 30% of the greatest Contract Value in the Fixed Accumulation Feature as of any Contract Anniversary or Contract issue date. When we calculate the 30%, we add Premium Payments made after that date but before the next Contract Anniversary. The 30% does not include Contract Value in any DCA Plus Program; or - An amount equal to your largest previous transfer from the Fixed Accumulation Feature in any one Contract Year. We apply these restrictions to all transfers from the Fixed Accumulation Feature, including all systematic transfers and Dollar Cost Averaging Programs, except for transfers under our DCA Plus Program. If your interest rate renews at a rate at least 1% lower than your prior interest rate, you may transfer any amount up to 100% of the amount to be invested at the renewal rate. You must make this transfer request within 60 days of being notified of the renewal rate. We may defer transfers and Surrenders from the Fixed Accumulation Feature for up to 6 months from the date of your request. You must wait 6 months after your most recent transfer from the Fixed Accumulation Feature before moving Sub-Account Values back to the Fixed Accumulation Feature. If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait 6 months after your last systematic transfer before moving Sub-Account Values back to the Fixed Accumulation Feature. As a result of these limitations, it may take a significant amount of time (i.e., several years) to move Contract Values in the Fixed Accumulation Feature to Sub-Accounts and therefore this may not provide an effective short term defensive strategy. TELEPHONE AND INTERNET TRANSFERS Transfer instructions received by telephone before the end of any Valuation Day will be carried out at the end of that day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the end of any Valuation Day, the instructions will be carried out at the end of that Valuation Day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. If you do not receive an electronic acknowledgement, you should contact us as soon as possible. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly reporting any inaccuracy or discrepancy to us and your Registered Representative. Any oral communication should be re-confirmed in writing. Telephone or Internet transfer requests may currently only be cancelled by calling us before the end of the Valuation Day you made the transfer request. We, our agents or our affiliates are NOT responsible for losses resulting from telephone or electronic requests that we believe are genuine. We will use reasonable procedures to confirm that instructions received by telephone or through our website are genuine, including a requirement that Contract Owners provide certain identification information, including a personal identification number. We record all telephone transfer instructions. We may suspend, modify, or terminate telephone or electronic transfer privileges at any time. 24 ------------------------------------------------------------------------------- POWER OF ATTORNEY You may authorize another person or your Registered Representative to make transfers on your behalf by submitting a completed power of attorney form. Once we have the completed form on file, we will accept transfer instructions, subject to our transfer restrictions, from your designated third party until we receive new instructions in writing from you. You will not be able to make transfers or other changes to your Contract if you have authorized someone else to act under a power of attorney. B. CHARGES AND FEES MORTALITY AND EXPENSE RISK CHARGE We deduct a daily charge for assuming mortality and expense risks under the Contract. This charge is deducted from your Sub-Account Value. The mortality and expense risk charge is broken into charges for mortality risks and for an expense risk: - Mortality Risk -- There are two types of mortality risks that we assume, those made while your Premium Payments are accumulating and those made once Annuity Payouts have begun. During the accumulation phase of your Contract, we are required to cover any difference between the Death Benefit paid and the Surrender Value. These differences may occur in periods of declining value or in periods where the CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates. Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates. - Expense Risk -- We also bear an expense risk that the CDSCs, if applicable, and the Annual Maintenance Fee collected before the Annuity Commencement Date may not be enough to cover the actual cost of selling, distributing and administering the Contract. Although variable Annuity Payouts will fluctuate with the performance of the Fund selected, your Annuity Payouts will not be affected by (a) the actual mortality experience of our Annuitants, or (b) our actual expenses if they are greater than the deductions stated in the Contract. Because we cannot be certain how long our Annuitants will live, we charge this percentage fee based on the mortality tables currently in use. The mortality and expense risk charge enables us to keep our commitments and to pay you as planned. If the mortality and expense risk charge under a Contract is insufficient to cover our actual costs, we will bear the loss. If the mortality and expense risk charge exceeds these costs, we keep the excess as profit. We may use these profits, as well as revenue sharing and Rule 12b-1 fees received from certain Funds, for any proper corporate purpose including, among other things, payment of sales expenses, including the fees paid to distributors. We expect to make a profit from the mortality and expense risk charge. The following table describes Mortality & Expense Risk Charges:
MORTALITY & EXPENSE RISK -------------------------------------------------------------------------------- Core 1.15% Edge 0.65%
ANNUAL MAINTENANCE FEE The Annual Maintenance Fee is a flat $30 fee that is deducted from your Contract Value to reimburse us for expenses relating to the administrative maintenance of the Contract and your Account. The annual charge is deducted on a Contract Anniversary or when the Contract is fully Surrendered if the Contract Value at either of those times is less than $50,000. The charge is deducted proportionately from each Sub-Account in which you are invested. We will waive the Annual Maintenance Fee if your Contract Value is $50,000 or more on your Contract Anniversary or when you fully Surrender your Contract. In addition, we will waive one Annual Maintenance Fee for Contract Owners who own more than one Contract with a combined Contract Value between $50,000 and $100,000. If you have multiple Contracts with a combined Contract Value of $100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts. However, we may limit the number of waivers to a total of six Contracts. We also may waive the Annual Maintenance Fee under certain other conditions. We do not include Contracts from our Putnam Hartford line of variable annuity contracts with the Contracts when we combine Contract Value for purposes of this waiver. ADMINISTRATIVE CHARGE We apply a daily administration charge of 0.20% against all Contract Values held in the Separate Account during both the accumulation and annuity phases of the Contract. There is not necessarily a relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributable to that Contract; expenses may be more or less than the charge. This charge compensates us for administrative expenses that exceed revenues from the Annual Maintenance Fee described above. 25 ------------------------------------------------------------------------------- PREMIUM TAXES We deduct premium taxes, if required, by a state or other government agency. Some states collect these taxes when Premium Payments are made; others collect at Annuitization. Since we pay premium taxes when they are required by applicable law, we may deduct them from your Contract when we pay the taxes, upon Surrender, or on the Annuity Commencement Date. The premium tax rate varies by state or municipality and currently ranges from 0 - 3.5%. SALES CHARGES This charge is designed to recover the expense of distributing the Contracts that are surrendered before distribution expenses have been recouped from revenue generated by these Contracts. Core Contracts are each subject to a CDSC schedule. Each Premium Payment has its own CDSC schedule. Only amounts invested for less than the requisite holding period are subject to a CDSC. When a CDSC is applicable, only Surrenders in excess of the Annual Withdrawal Amount (AWA) will be subject to a CDSC. A CDSC will not exceed your total Premium Payments. After the AWA deduction, surrenders will then be taken: 1st - from earnings, 2nd - from Premium Payments not subject to a CDSC, and 3rd - from Premium Payments subject to a CDSC on a first-in-first-out basis. THE FOLLOWING SURRENDERS ARE NOT SUBJECT TO A CDSC: - Annual Withdrawal Amount (AWA) -- During the Contract Years when a CDSC applies, you may take partial Surrenders up to 10% of the total Premium Payments otherwise subject to a CDSC. If you do not take 10% one year, you may not take more than 10% the next year. These amounts are different for Contracts issued to a Charitable Remainder Trust. - Benefit Payments or Lifetime Benefit Payments that may exceed the AWA under any optional benefit rider. - If you are a patient in a certified long-term care facility or other eligible facility -- We will waive any CDSC for a partial or full Surrender if you, the joint Contract Owner or the Annuitant, are confined for at least 180 calendar days to a: X facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals; X facility certified as a hospital or long-term care facility; or X nursing home licensed by the state in which it is located and offers the services of a registered nurse 24 hours a day. For this waiver to apply, you must: X have owned the Contract continuously since it was issued, X provide written proof of your eligibility satisfactory to us, and X request the Surrender within 91 calendar days of the last day that you are an eligible patient in a recognized facility or nursing home. This waiver is not available if you, the joint Contract Owner or the Annuitant is in a facility or nursing home when you purchase the Contract. We will not waive any CDSC applicable to any Premium Payments made while you are in an eligible facility or nursing home. This waiver may not be available in all states. - Upon death of the Annuitant or any Contract Owner(s) -- No CDSC will be deducted if the Annuitant or any Contract Owner(s) dies. - Upon Annuitization -- The CDSC is not deducted when you annuitize the Contract. However, we will charge a CDSC if the Contract is Surrendered during the CDSC period under an Annuity Payout Option which allows Surrenders. - For Required Minimum Distributions -- This allows Annuitants who are age 70 1/2 or older, with a Contract held under an IRA, to Surrender an amount equal to the Required Minimum Distribution for the Contract without a CDSC for one year's required minimum distribution for that Contract Year. All requests for Required Minimum Distributions must be in writing. - For substantially equal periodic payments -- We will waive the CDSC if you take partial Surrenders under the Automatic Income Program where you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59 1/2. - Upon cancellation during the Right to Cancel Period -- No CDSC will be deducted if you cancel your Contract during the Right to Cancel Period. - Exchanges -- As an accommodation, we may, in our sole discretion, credit the time that you held an annuity previously issued by us against otherwise applicable CDSCs. 26 ------------------------------------------------------------------------------- - Settlements -- We may, in our sole discretion, waive or time-credit CDSCs in connection with the settlement of disputes or if required by regulatory authorities. EDGE CONTRACTS ARE SUBJECT TO A FRONT-END SALES CHARGE (FESC). FESCs do not reflect Rights of Accumulation. Under the Rights of Accumulation program, we will use the aggregate amount of Eligible Investments to calculate the applicable sales charge. This program may help investors who currently pay front end sales charges on Eligible Investments qualify for front end sales charge discounts by meeting certain investment levels (called breakpoints). For Contracts bought after November 1, 2005, Eligible Investments are (a) any other individual variable annuity from us or our affiliates subject to a front-end sales charge and (b) Class A shares of any retail mutual fund of an Fund family held by you as owner or joint owner. Your Financial Intermediary must be the broker of record for Eligible Investments. For earlier contracts, Eligible Investments are any individual annuity contract or variable life insurance policy from us or our affiliates and shares of any mutual fund or 529 plan that we have approved owned by you, your spouse or any immediate family member. Eligible Investments must be identified in your application (or comparable request for annuity) and each time you make subsequent Premium Payments. Premium Payments received through any other means of transmission will be subject to a sales charge based on the lower of your most recent sales charge level on record under this program or the otherwise applicable sales charge. For example: You wish to invest $40,000 into a Leaders Edge variable annuity with a front end sales charge of 5.50%. You previously invested $30,000 into a Director M Edge variable annuity. Your spouse also owns $25,000 worth of Hartford class A mutual funds and your immediately family has $5,000 invested in the Hartford SMART 529 College Savings Plan. Given that these investments are all Eligible Investments linked to the Rights of Accumulation program, and that the next breakpoint for variable annuity front end sales charges is $100,000, you would qualify for a reduced sales charge (i.e. 4.50%). Also, the entire purchase ($40,000) would qualify for the reduced sales charge and not just the amount in excess of $100,000. We also accept Letters of Intent as a basis to reduce sales charges. A Letter of Intent is a non-binding commitment to invest a certain amount of Premium Payments within 13 months from the date you purchase your Contract in exchange for which we deduct a sales charge based on the total amount you plan on investing over this time period. If you don't make the Premium Payments promised, we will recalculate the sales charge based on your actual Premium Payments and proportionately deduct this charge from your Sub-Accounts. We may accept a Letter of Intent for another 13 month period. For example: You wish to invest $100,000 into a Leaders Edge variable annuity with a front end sales charge of 4.50%. However, you only have $40,000 today to invest (otherwise requiring a 5.50% front end sales charge). If you sign a letter of intent committing to invest the additional $60,000 over the following 13 months, we will only charge the lower front end sales charge (4.50%). If you fail to invest the additional $60,000 over this time period, then we will deduct the additional 1% of the original premium amount (5.50% - 4.50%) front end sales charge proportionately from your Sub-Accounts based on your original investment (i.e., the effect of the sales charge will vary based on market performance as of the expiration of your unfulfilled Letter of Intent). CHARGES AGAINST THE FUNDS Annual Fund Operating Expenses -- The Separate Account purchases shares of the Funds at net asset value. The net asset value of the Fund reflects investment advisory fees, distribution fees, operating expenses and administrative expenses already deducted from the assets of the Funds. These charges are described in the Funds' prospectuses and the Synopsis. REDUCED FEES AND CHARGES We may offer, in our discretion, reduced fees and charges including, but not limited to, CDSCs, the Mortality and Expense Risk Charge, the Annual Maintenance Fee, and charges for optional benefits, for certain Contracts (including employer sponsored savings plans) which may result in decreased costs and expenses. Reductions in these fees and charges will not be unfairly discriminatory against any Contract Owner. C. SURRENDERS WHAT KINDS OF SURRENDERS ARE AVAILABLE? BEFORE THE ANNUITY COMMENCEMENT DATE: Full Surrenders -- When you Surrender your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium Taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract. Partial Surrenders -- You may request a partial Surrender of Contract Values at any time before the Annuity Commencement Date. We will deduct any applicable CDSC. You can ask us to deduct the CDSC from the amount you are Surrendering or from your remaining Contract Value. If we deduct the CDSC from your remaining Contract Value, that amount will also be subject to CDSC. This is our default option. 27 ------------------------------------------------------------------------------- Both full and partial Surrenders are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. Please see section 8(b) (State Variations) for additional details. There are several restrictions on partial Surrenders before the Annuity Commencement Date: - The partial Surrender amount must be at least equal to $100, our current minimum for partial Surrenders, and - After a Surrender, your Contract Value must be equal to or greater than our then current minimum Contract Value that we establish according to our current policies and procedures. We may change the minimum Contract Value in our sole discretion, with notice to you. We will close your Contract and pay the full Surrender Value if the Contract Value is under the minimum after a Surrender. Your resulting standard Death Benefit will be reduced proportionately if you Surrender the majority of your Contract Value. See sections 6 and 7 for information regarding the impact of Surrenders to optional benefits. AFTER THE ANNUITY COMMENCEMENT DATE: Full Surrenders -- You may Surrender your Contract on or after the Annuity Commencement Date only if you selected the Payment for a Period Certain Annuity Payout Option. Under this option, we pay you the Commuted Value of your Contract minus any applicable CDSCs. The Commuted Value is determined on the day we receive your written request for Surrender. Partial Surrenders -- Partial Surrenders are permitted after the Annuity Commencement Date if you select the Life Annuity With Payments for a Period Certain, Joint and Last Survivor Life Annuity With Payments for a Period Certain or the Payment for a Period Certain Annuity Payout Options. You may take partial Surrenders of amounts equal to the Commuted Value of the payments that we would have made during the "Period Certain" for the number of years you select under the Annuity Payout Option that we guarantee to make Annuity Payouts. To qualify for partial Surrenders under these Annuity Payout Options you must make the Surrender request during the Period Certain. Both full and partial Surrenders are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. Please see section 8(b) (State Variations) for additional details. We will deduct any applicable CDSCs. If you elect to take the entire Commuted Value of the Annuity Payouts we would have made during the Period Certain, we will not make any Annuity Payouts during the remaining Period Certain. If you elect to take only some of the Commuted Value of the Annuity Payouts we would have made during the Period Certain, we will reduce the remaining Annuity Payouts during the remaining Period Certain. Annuity Payouts that are to be made after the Period Certain is over will not change. These options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. For such Contracts, this option will be available only if the guaranteed payment period is less than the life expectancy of the annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. Please check with your qualified tax adviser because there could be adverse tax consequences for partial Surrenders after the Annuity Commencement Date. HOW DO YOU REQUEST A SURRENDER? Requests for full Surrenders must be in writing. Requests for partial Surrenders can be made in writing or by telephone or on the Internet. We will send your money within seven days of receiving complete instructions. However, we may postpone payment of Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and orders postponement or (d) the SEC determines that an emergency exists to restrict valuation. Written Requests -- To request a full or partial Surrender, complete a Surrender Form or send us a letter, signed by you, stating: - the dollar amount that you want to receive, either before or after we withhold taxes and deduct for any applicable charges, - your tax withholding amount or percentage, if any, and - your mailing address. If there are joint Contract Owners, both must authorize all Surrenders. For a partial Surrender, specify the Sub-Accounts that you want your Surrender to come from; otherwise, the Surrender will be taken in proportion to the value in each Sub-Account. Telephone Requests -- To request a partial Surrender by telephone, we must have received your completed Telephone Redemption Program Enrollment Form. If there are joint Contract Owners, both must sign this form. By signing the form, you authorize us to accept telephone instructions for partial Surrenders from either Contract Owner. Telephone authorization will remain in effect until we receive a written cancellation notice from you or your joint Contract Owner, we discontinue the program, or you are no longer the owner of the Contract. Please call us with any questions regarding restrictions on telephone Surrenders. 28 ------------------------------------------------------------------------------- Internet Requests -- To request a partial Surrender by internet; we must have received your completed Internet Partial Withdrawal Program Enrollment Form. If there are joint Contract Owners, both must sign this form. By signing the form, you authorize us to accept internet instructions for partial Surrenders from either Owner. Internet authorization will remain in effect until we receive a written cancellation notice from you or your joint Contract Owner, we discontinue the program, or you are no longer the owner of the Contract. Please call us with any questions regarding restrictions on Internet Surrenders. We may record telephone calls and use other procedures to verify information and confirm that instructions are genuine. We will not be liable for losses or expenses arising from telephone instructions reasonably believed to be genuine. WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME. Telephone and Internet Surrender instructions received before the end of a Valuation Day will be processed at the end of that Valuation Day. Otherwise, your request will be processed at the end of the next Valuation Day. Completing a Power of Attorney form for another person to act on your behalf may prevent you from making Surrenders via telephone and Internet. WHAT SHOULD BE CONSIDERED ABOUT TAXES? There are certain tax consequences associated with Surrenders. If you make a Surrender prior to age 59 1/2, there may be adverse tax consequences including a 10% federal income tax penalty on the taxable portion of the Surrender payment. Surrendering before age 59 1/2 may also affect the continuing tax-qualified status of some Contracts. WE DO NOT MONITOR SURRENDER REQUESTS. CONSULT YOUR PERSONAL TAX ADVISER TO DETERMINE WHETHER A SURRENDER IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY. More than one Contract issued in the same calendar year -- If you own more than one Contract issued by us or our affiliates in the same calendar year, then these Contracts may be treated as one Contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. D. ANNUITY PAYOUTS When you "annuitize" your Contract, you begin the process of converting Accumulation Units in what is known as the "payout phase." The payout phase starts with your Annuity Commencement Date and ends when we make the last payment required under your Contract. You should answer the following questions: - When do you want Annuity Payouts to begin? - Which Annuity Payout Option do you want to use? - How often do you want the Payee to receive Annuity Payouts? - Do you want Annuity Payouts to be fixed dollar amount or variable dollar amount? Please check with your Registered Representative to select the Annuity Payout Option that best meets your income needs. WHEN DO YOUR ANNUITY PAYOUTS BEGIN? Your Annuity Commencement Date cannot be earlier than: X 2nd Contract Anniversary - if choosing a fixed dollar amount Annuity Payout X Immediately - if choosing a variable dollar amount Annuity Payout or be later than: X Annuitant's 90th birthday (or if the Contract Owner is a Charitable Remainder Trust, the Annuitant's 100th birthday) X 10th Contract Year (subject to state variation) X The Annuity Commencement Date stated in an extension request (subject to your Financial Intermediary's rules for granting extension requests) received by us not less than 30 days prior to a scheduled Annuity Commencement Date We reserve the right, in our sole discretion, to refuse to extend your Annuity Commencement Date regardless of whether we may have granted extensions in the past to you or other similarly situated investors. In certain instances, a Financial Intermediary has asked us to prohibit Annuity Commencement Date extensions for their customers when the Annuitant turns age 95. Please ask your Registered Representative whether you are affected by any such prohibition and make sure that you fully understand the implications this might have in regard to your living and Death Benefits. 29 ------------------------------------------------------------------------------- The Annuity Calculation Date is when the amount of your Annuity Payout is determined. This occurs within five Valuation Days before your selected Annuity Commencement Date. All Annuity Payouts, regardless of frequency, will occur on the same day of the month as the Annuity Commencement Date. After the initial payout, if an Annuity Payout date falls on a non-Valuation Day, the Annuity Payout is computed on the prior Valuation Day. If the Annuity Payout date does not occur in a given month due to a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE? Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. Once we begin to make Annuity Payouts, the Annuity Payout Option cannot be changed. - LIFE ANNUITY We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth. - LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as the Annuitant is living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus the Annuitant's age. If the Annuitant dies before the guaranteed number of years have passed, then the Beneficiary may elect to continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. - LIFE ANNUITY WITH A CASH REFUND We will make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, if the Annuity Payouts already made are less than the Contract Value on the Annuity Commencement Date minus any Premium Tax, the remaining value will be paid to the Beneficiary. The remaining value is equal to the Contract Value minus any Premium Tax minus all Annuity Payouts already made. This option is only available for fixed dollar amount Annuity Payouts. - JOINT AND LAST SURVIVOR LIFE ANNUITY We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are living. When one Annuitant dies, we continue to make Annuity Payouts until that second Annuitant dies. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable Annuity Payouts, these percentages represent Annuity Units; for fixed Annuity Payouts, they represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus your younger Annuitant's age. If the Annuitant and the Joint Annuitant both die before the guaranteed number of years have passed, then the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. 30 ------------------------------------------------------------------------------- For variable dollar amount Annuity Payouts, these percentages represent Annuity Units. For fixed dollar amount Annuity Payouts, these percentages represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. PAYMENTS FOR A PERIOD CERTAIN We agree to make payments for a specified time. The minimum period that you can select is 10 years during the first two Contract Years and 5 years after the second Contract Anniversary. The maximum period that you can select is 100 years minus your Annuitant's age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE SELECTED LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN, JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN, OR PAYMENTS FOR A PERIOD CERTAIN ANNUITY PAYOUT OPTION. A CONTINGENT DEFERRED SALES CHARGE, IF APPLICABLE, MAY BE DEDUCTED. For qualified Contracts, if you elect an Annuity Payout Option with a Period Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables. AUTOMATIC ANNUITY PAYOUTS If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under the Life Annuity with Payments for a Period Certain Annuity Payout Option with a ten-year period certain. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to 5%. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS? In addition to selecting an Annuity Commencement Date and an Annuity Payout Option, you must also decide how often you want the Payee to receive Annuity Payouts. You may choose to receive Annuity Payouts: - monthly, - quarterly, - semi-annually, or - annually. Once you select a frequency, it cannot be changed. If you do not make a selection, the Payee will receive monthly Annuity Payouts. You must select a frequency that results in an Annuity Payout of at least $50. If the amount falls below $50, we have the right to change the frequency to bring the Annuity Payout up to at least $50. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED DOLLAR AMOUNT OR VARIABLE DOLLAR AMOUNT? You may choose an Annuity Payout Option with fixed dollar amounts or variable dollar amounts, depending on your income needs. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. - FIXED DOLLAR AMOUNT ANNUITY PAYOUTS Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium Taxes, by an annuity rate set by us. - VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts. The dollar amount of the first variable Annuity Payout depends on: - the Annuity Payout Option chosen, - the Annuitant's attained age and gender (if applicable), 31 ------------------------------------------------------------------------------- - the applicable annuity purchase rates based on the 1983a Individual Annuity Mortality table adjusted for projections based on accepted actuarial principles, and - the Assumed Investment Return ("AIR"). The total amount of the first variable dollar amount Annuity Payout is determined by dividing the Contract Value minus any applicable Premium Taxes, by $1,000 and multiplying the result by the payment factor defined in the Contract for the selected Annuity Payout Option. The dollar amount of each subsequent variable dollar amount Annuity Payout is equal to the total of Annuity Units for each Sub-Account multiplied by the Annuity Unit Value of each Sub-Account. The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to the Accumulation Unit Value Net Investment Factor for the current Valuation Period multiplied by the Annuity Unit Factor, multiplied by the Annuity Unit Value for the preceding Valuation Period. The Annuity Unit Factor offsets the AIR used to calculate your first variable dollar amount Annuity Payout. The first Annuity Payout will be based upon the AIR. The remaining Annuity Payouts will fluctuate based on the performance of the Funds in relation to the AIR. The degree of the fluctuation will depend on the AIR you select. You can select one of the following AIRs offered, subject to state variations:
ANNUITY ANNUITY ANNUITY AIR UNIT FACTOR AIR UNIT FACTOR AIR UNIT FACTOR ------------------------------------------------------------------- 3% 0.999919% 5% 0.999866% 6% 0.999840%
The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR. For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first. Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select. After the Annuity Calculation Date, you may transfer dollar amounts of Annuity Units from one Sub-Account to another. On the day you make a transfer, the dollar amounts are equal for both Sub-Accounts and the number of Annuity Units will be different. We will transfer the dollar amount of your Annuity Units the day we receive your written request if received before the close of the New York Stock Exchange. Otherwise, the transfer will be made on the next Valuation Day. All Sub-Account transfers must comply with applicable transfer restriction policies. - COMBINATION ANNUITY PAYOUT You may choose to receive a combination of fixed dollar amount and variable dollar amount Annuity Payouts as long as they total 100% of your Annuity Payout. For example, you may choose to use 40% fixed dollar amount and 60% variable dollar amount to meet your income needs. Combination Annuity Payouts are not available during the first two Contract Years. E. STANDARD DEATH BENEFITS WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED? The Death Benefit is the amount we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. This Death Benefit is the higher of Contract Value or total Premium Payments adjusted for partial Surrenders. We calculate the Death Benefit when, and as of the date that, we receive a certified death certificate or other legal document acceptable to us. The standard Death Benefit is issued at no additional cost. The standard Death Benefit is replaced in certain optional benefits. Terms and titles used in riders to your Contract may differ from those used in this prospectus. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. 32 ------------------------------------------------------------------------------- ADJUSTMENTS FOR SURRENDERS We calculate the adjustment to your aggregate Premium Payments for any Surrenders by reducing your aggregate Premium Payments on a dollar-for-dollar basis for any Surrenders within a Contract Year up to 10% of aggregate Premium Payments. After that, we reduce your aggregate Premium Payments proportionately based on the amount of any Surrenders that exceed 10% of aggregate Premium Payments divided by your aggregate Contract Value at the time of Surrender. See Examples 1 and 2 under Standard Death Benefit in Appendix A. ADDITIONAL INFORMATION ABOUT DEATH BENEFITS We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you make $5 million or more in total aggregate Premium Payments. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of Premium Payments (as reduced by an adjustment for Surrenders), or - Contract Value plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. HOW IS THE DEATH BENEFIT PAID? The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. We will calculate the Death Benefit as of the date we receive a certified death certificate or other legal documents acceptable by us. The Death Benefit amount remains invested and is subject to market fluctuation until complete settlement instructions are received from each Beneficiary. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If your Beneficiary elects to receive the Death Benefit amount as a lump sum payment, unless we are otherwise instructed, we may transfer that amount to our General Account and issue the Beneficiary a draft book. The Beneficiary can write one draft for total payment of the Death Benefit, or keep the money in the General Account and write drafts as needed. We will credit interest at a rate determined periodically in our sole discretion. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit amount to the General Account. The interest will be taxable to the Beneficiary in the tax year that it is credited. If the Beneficiary resides or the Contract was purchased in a state that imposes restrictions on this method of lump sum payment, we may issue a check to the Beneficiary. The Beneficiary may elect under the Annuity Proceeds Settlement Option "Death Benefit Remaining with the Company" to leave proceeds from the Death Benefit invested with us for up to five years from the date of death if death occurred before the Annuity Commencement Date. Once we receive a certified death certificate or other legal documents acceptable to us, the Beneficiary can: (a) make Sub-Account transfers (subject to applicable restrictions) and (b) take Surrenders without paying Contingent Deferred Sales Charges, if any. We reserve the right to inform the IRS in the event that we believe that any Beneficiary has intentionally delayed delivering proper proof of death in order to circumvent applicable Code proceeds payment duties. We shall endeavor to fully discharge the last instructions from the Owner wherever possible or practical. The Beneficiary of a non-qualified Contract or IRA (prior to the required distribution date) may also elect the Single Life Expectancy Only option. This option allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. If the Owner dies before the Annuity Commencement Date, the Death Benefit must be distributed within five years after death or be distributed under a distribution option or Annuity Payout Option that satisfies the Alternatives to the Required Distributions described below. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. 33 ------------------------------------------------------------------------------- WHAT SHOULD THE BENEFICIARY CONSIDER? Alternatives to the Required Distributions -- The selection of an Annuity Payout Option and the timing of the selection will have an impact on the tax treatment of the Death Benefit. To receive favorable tax treatment, the Annuity Payout Option selected: (a) cannot extend beyond the Beneficiary's life or life expectancy, and (b) must begin within one year of the date of death. If these conditions are not met, the Death Benefit will be treated as a lump sum payment for tax purposes. This sum will be taxable in the year in which it is considered received. Spousal Contract Continuation -- If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the Contract may continue with the Spouse as Owner through a Spousal Contract continuation election, unless the Spouse elects to receive the Death Benefit as a lump sum payment or as an Annuity Payment Option. If the Contract continues with the Spouse as Owner, we will adjust the Contract Value to the amount that we would have paid as the Death Benefit payment, had the Spouse elected to receive the Death Benefit as a lump sum payment. Spousal Contract continuation will only apply one time for each Contract. If you do not name another Beneficiary at the time of continuation, the Beneficiary will default to your estate. WHO WILL RECEIVE THE DEATH BENEFIT? The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. If death occurs on or after the Annuity Commencement Date, there may be no payout at death unless the Owner has elected an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value. IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving joint The Annuitant is living or Joint Contract Owner receives Contract Owner deceased the Death Benefit. Contract Owner There is no surviving joint The Annuitant is living or Designated Beneficiary receives Contract Owner deceased the Death Benefit. Contract Owner There is no surviving joint The Annuitant is living or Contract Owner's estate Contract Owner and the deceased receives the Death Benefit. Beneficiary predeceases the Contract Owner Annuitant The Contract Owner is living There is no named Contingent The Contract Owner becomes the Annuitant Contingent Annuitant and the Contract continues. The Contract Owner may waive this presumption and receive the Death Benefit. Annuitant The Contract Owner is living The Contingent Annuitant is Contingent Annuitant becomes living the Annuitant, and the Contract continues.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . THEN THE . . . Contract Owner The Annuitant is living Designated Beneficiary becomes the Contract Owner. Annuitant The Contract Owner is living Contract Owner receives the payout at death, if any. Annuitant The Annuitant is also the Owner Designated Beneficiary receives the payout at death, if any.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A PAYOUT AT DEATH. 34 ------------------------------------------------------------------------------- 6. OPTIONAL DEATH BENEFITS A. MAV PLUS OBJECTIVE Refund net Premium Payments as well as some percentage of any Contract Value gains. HOW DOES THIS RIDER HELP ACHIEVE THIS GOAL? The Death Benefit will be the greater of the standard Death Benefit and MAV Plus Death Benefit. If you also elect any optional benefit rider, the Death Benefit will be the greater of such optional rider and this rider. See Examples 1 and 2 under MAV Plus in Appendix A. The MAV Plus Death Benefit is the greatest of A, B, C or D, WHERE: A = Contract Value on the date we receive due proof of death. B = Total Premium Payments adjusted for any partial Surrenders (see clause D below for a description of this adjustment). C = Maximum Anniversary Value -- The Maximum Anniversary Value is based on a series of calculations on Contract Anniversaries of Contract Values, Premium Payments and partial Surrenders. We will calculate an Anniversary Value for each Contract Anniversary prior to the deceased's 81st birthday or the date of death, whichever is earlier. The Anniversary Value is equal to the Contract Value as of a Contract Anniversary with the following adjustments: (a) Anniversary Value is increased by the dollar amount of any Premium Payments made since the Contract Anniversary; and (b) Anniversary Value is adjusted for any partial Surrenders since the Contract Anniversary. The Maximum Anniversary Value is equal to the greatest Anniversary Value attained from this series of calculations. We calculate the adjustment to your Maximum Anniversary Value for any Surrenders by reducing your Maximum Anniversary Value on a dollar-for-dollar basis for any Surrenders within a Contract Year up to 10% of aggregate Premium Payments. After that, we reduce your Maximum Anniversary Value proportionately based on the amount of any Surrenders that exceed 10% of aggregate Premium Payments divided by your aggregate Contract Value at the time of Surrender. Please refer to the examples in Appendix A for illustrations of this adjustment. D = Earnings Protection Benefit -- The Earnings Protection Benefit depends on the age of you and/or your Annuitant on the date this rider is added to your Contract. - If each is aged 69 or younger, the Death Benefit is the Contract Value on the date we receive due proof of death plus 40% of the lesser of Contract gain on that date and the cap. - If you and/or your Annuitant are age 70 or older on the date this rider is added to your Contract, the benefit is the Contract Value on the date we receive due proof of death plus 25% of the lesser of Contract gain on that date and the cap. We determine Contract gain by subtracting your Contract Value on the date you added this rider from the Contract Value on the date we receive due proof of death. We then deduct any Premium Payments and add adjustments for any partial Surrender made during that time. We make an adjustment for partial Surrenders if the amount of Surrender is greater than the Contract gain immediately prior to the Surrender. The adjustment is the difference between the two, but not less than zero. The Contract gain that is used to determine your Death Benefit has a limit or cap. The cap is 200% of the following: - the Contract Value on the date this rider was added to your Contract; plus - Premium Payments made after this rider was added to your Contract, excluding any Premium Payments made within 12 months of the date we receive due proof of death; minus - any adjustments for partial Surrenders. If you elect MAV Plus, the Death Benefit will be the greater of the standard Death Benefit and the MAV Plus Death Benefit. WHEN CAN YOU BUY THIS RIDER? You may elect this rider only at the time of issue and once you do so, your choice is irrevocable. You may not choose this optional Death Benefit if the Owner(s) and/or Annuitant are age 76 or older on the Contract issue date. In states where the MAV Plus Death Benefit is not available, we offer the "Maximum Anniversary Value (MAV) Death Benefit" for the same additional fee. The MAV Death Benefit is the same as the MAV Plus Death Benefit but excludes the Earnings Protection Benefit. 35 ------------------------------------------------------------------------------- DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? No. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The annual charge for this rider is based on your daily Contract Value and is deducted daily. The charge for this rider continues to be deducted until we begin to make Annuity Payouts. DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER? No. This rider is not affected by the Benefit Amount or Payment Base. IS THIS RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? No. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. DOES THIS RIDER REPLACE STANDARD DEATH BENEFITS? No. CAN YOU REVOKE THIS RIDER? No. WHAT EFFECT DO PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THIS RIDER? Surrenders will reduce the MAV Plus Death Benefit and will be subject to CDSCs, if any. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes, including any assignment of your Contract to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. Changes in ownership can also adversely affect your Death Benefits and optional withdrawal benefits. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. CAN YOUR SPOUSE CONTINUE YOUR CONTRACT RIGHTS? Yes. If your Spouse continues the Contract as Owner, we will use the date the Contract is continued with your Spouse as Owner as the effective date this rider was added to the Contract. This means we will use the date the Contract is continued with your Spouse as Owner as the effective date for calculating this Death Benefit going forward. The percentage used for this Death Benefit will be determined by the oldest age of any remaining joint Owner or Annuitant at the time the Contract is continued. Spousal Contract continuation can apply once during the term of this Contract. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? This rider will be terminated and the fee will no longer be assessed. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? No. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? No. CAN WE AGGREGATE CONTRACTS? Yes. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you make $5 million or more in total aggregate Premium Payments. If applicable, the aggregate limit on total Death Benefits payable by us or our affiliates will never exceed a maximum of: - $5 million of Premium Payments (as reduced by an adjustment for Surrenders), or - Contract Value plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. 36 ------------------------------------------------------------------------------- OTHER INFORMATION This rider may not be appropriate for all investors. Several factors, among others, should be considered: - This rider is not available in all states or is named differently in those states. - If your Contract has no gain, your Beneficiary will receive no additional benefit. - A Death Benefit is paid to Beneficiaries upon the death of the Annuitant or any Owner, whichever occurs first. - This rider may be used to supplement Death Benefits in other optional riders. In certain instances, however, this additional Death Benefit coverage could be superfluous. - Annuitizing your Contract will cause this rider to terminate. 7. OPTIONAL WITHDRAWAL BENEFITS a. THE HARTFORD'S LIFETIME INCOME BUILDER SELECTS THE HARTFORD'S LIFETIME INCOME BUILDER PORTFOLIOS OBJECTIVE The objective of these two different riders is to (i) protect your investment from poor market performance; (ii) provide longevity protection through Lifetime Benefit Payments; and (iii) provide Death Benefit protection. HOW DO THE RIDERS HELP ACHIEVE THIS GOAL? - LIFETIME WITHDRAWAL FEATURE. Provided you follow the rules below, the riders provide a series of Lifetime Benefit Payments payable in each Contract Year following the Relevant Covered Life's Lifetime Income Eligibility Date until the first death of any Covered Life ("Single Life Option") or until the second death of any Covered Life ("Joint/Spousal Option"). Lifetime Benefit Payments are based on the rider chosen: Lifetime Income = Payment Base or Contract x Withdrawal Percent Builder Selects Value, whichever is higher -or - Lifetime Income = Payment Base x Withdrawal Percent Builder Portfolios
- GUARANTEED MINIMUM DEATH BENEFIT. This guaranteed minimum Death Benefit provides a Death Benefit equal to the greater of Premium Payments (adjusted for partial Surrenders) or Contract Value as of the date due proof of death is received by us for any Contract Owner or Annuitant. PARTIAL SURRENDERS WILL REDUCE OR ELIMINATE THE GUARANTEED MINIMUM DEATH BENEFIT. THIS GUARANTEED MINIMUM DEATH BENEFIT REPLACES THE STANDARD DEATH BENEFITS PROVIDED UNDER THIS CONTRACT. See Optional Benefit Comparisons in Appendix D. WHEN CAN YOU BUY THE RIDERS? Subject to state availability, you may elect either rider at the time of purchase, or at a later date if you are eligible to participate in a designated Company sponsored exchange program. The benefits comprising either rider may not be purchased separately. The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios riders are sold separately. These riders may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw either or both riders and any options at any time. When you buy either rider, you must provide us with the names and date of birth of the Owner, any joint Owner, Annuitant and Beneficiary. We then determine who the "Relevant Covered Life" and other "Covered Lives" will be when establishing the Withdrawal Percent. - A Covered Life must be a living person. If you choose the Joint/Spousal Option, we reserve the right to (a) prohibit non-natural entities from being designated as an Owner, (b) prohibit anyone other than your Spouse from being a joint Owner; and (c) impose other designation restrictions from time to time. - For the Single Life Option, the Covered Life is most often the same as the Contract Owner and joint Owner (which could be two different people). In the Joint/Spousal Option, the Covered Life is most often the Contract Owner, and his or her Spouse as the joint Owner or Beneficiary. - The Relevant Covered Life will be one factor used to establish your Withdrawal Percent. When the Single Life Option is chosen, we use the older Covered Life as the Relevant Covered Life; and when the Joint/Spousal Option is chosen, we use the younger Covered Life as the Relevant Covered Life. 37 ------------------------------------------------------------------------------- The maximum age of any Contract Owner or Annuitant when electing this rider is 80. These age restrictions also apply to the Beneficiary when the Joint/Spousal Option is chosen. DOES ELECTING EITHER RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. If you elect either rider, you may not elect any rider other than MAV Plus (MAV only in applicable states). HOW IS THE CHARGE FOR EITHER RIDER CALCULATED? The fee for the riders is based on your then current Payment Base (not your Contract Value) as of each Contract Anniversary. This charge will automatically be deducted from your Contract Value on your Contract Anniversary AFTER your Anniversary Value and Payment Base have been computed and prior to all other financial transactions. In the event of a full Surrender, a prorated charge will be deducted from your Surrender Value. The charge for the riders will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts. The rider charge may limit access to the Fixed Accumulation Feature in certain states. We reserve the right to increase the charge for either or both riders (and any option) up to the maximum fees described in the Synopsis at any time 12 months after either rider's effective date. The fee increase will only apply if you are eligible for future automatic Payment Base and/or Withdrawal Percent increases. Any future fee increase will be based on the charge that we are then currently charging other customers who have not previously elected such rider. If we cease sales of either or both riders, we will predetermine the rider charge on a non-discriminatory basis. Fee increases will not apply if (a) the age of the Relevant Covered Life is 80 or older; (b) you notify us in writing of your election to permanently waive automatic Payment Base and Withdrawal Percent increases; or (c) we convert your benefits based on our Minimum Amount rules defined in your Contract. This fee may not be the same as the fee that we charge new purchasers or the fee we set before we cease offering either or both riders (or options). Subject to the foregoing limitation, we also reserve the right to charge a different fee for either rider (or options) to any new Contract Owners as a result of a change of Covered Life. Unless exempt, we will automatically deduct rider fees, as they may be increased from time to time. DOES THE PAYMENT BASE CHANGE UNDER EITHER RIDER? Yes. Your initial Payment Base is equal to your initial Premium Payment. It will fluctuate based on: - automatic Payment Base increases; and - subsequent Premium Payments; and - partial Surrenders (including partial Surrenders taken prior to the Lifetime Income Eligibility Date or if the amount of the partial Surrender exceeds either your Threshold or Lifetime Benefit Payment amount). - Automatic Payment Base Increase: Your automatic annual Payment Base increase varies depending on whether you choose The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios. The following table describes how these options operate:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME BUILDER SELECTS LIFETIME INCOME BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- New Payment [(current Anniversary Value (prior to the rider charge The higher of current Contract Value or Base being taken) divided by your prior Payment Base)] Payment Base multiplied by your prior Payment Base Annual Payment Base 0% - 10% Unlimited increase limits
We will determine if you are eligible for annual automatic Payment Base increases on each Contract Anniversary. Automatic Payment Base increases will cease upon the earliest of: - your Annuity Commencement Date; - the Contract Anniversary immediately following the Relevant Covered Life's attained age of 80; or - You waive your right to receive automatic Payment Base increases. Your Payment Base can never be less than $0 or more than $5 million. Any activities that would otherwise increase the Payment Base above this ceiling will not be included for any benefits under either rider. See Examples 16 and 17 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. 38 ------------------------------------------------------------------------------- - Subsequent Premium Payments increase your Payment Base on a dollar-for-dollar basis. See Examples 10 and 11 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. - Partial Surrenders may trigger a recalculation of the Payment Base depending on (a) whether the partial Surrender takes place prior to the Lifetime Income Eligibility Date, and (b) if the cumulative amount of all partial Surrenders during any Contract Year exceeds the applicable limits as discussed below: A. If cumulative partial Surrenders taken during any Contract Year and prior to the Lifetime Income Eligibility Date, are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Payment Base on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to the Lifetime Income Eligibility Date are greater than the Threshold (subject to rounding), then we will reduce the Payment Base on a (i) dollar-for-dollar basis up to the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders taken after the Lifetime Income Eligibility Date are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will not reduce the Payment Base. C. For any partial Surrender that causes cumulative partial Surrenders after the Lifetime Income Eligibility Date to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Payment Base on a proportionate basis for the amount in excess of the Lifetime Benefit Payment. See Examples 3-9 and 12-15 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. - Covered Life Changes may also trigger a recalculation of your Payment Base, Lifetime Benefit Payment, Guaranteed Minimum Death Benefit and rider fees. See "WHAT HAPPENS IF YOU CHANGE OWNERSHIP?" below. - Option Conversion. We reserve the right to offer a one-time only conversion from The Hartford's Lifetime Income Builder Selects to The Hartford's Lifetime Income Builder Portfolios, or vice versa, on or after the first Contract Anniversary after the rider has been in effect and prior to the Relevant Covered Life's reaching attained age 81. Your then current Payment Base will be your new Payment Base for the purposes of the converted rider. This conversion will go into effect on the next following Contract Anniversary. A conversion notice must be received by us in good order between 30 days prior to, or within 15 days after, a Contract Anniversary. This privilege may be withdrawn at our sole discretion at any time without prior notice. The rider fee and any associated restrictions will be based on the rider then in effect. You may rescind your election within 15 days after making your election. Upon rescission; however, your Payment Base will be reset at the LOWER of the then applicable Payment Base or the Contract Value at the time of rescission. RESCISSION OF A CONVERSION OPTION MAY THEREFORE RESULT IN A PERMANENT REDUCTION OF BENEFITS. Once rescinded, this privilege will be terminated. - Partial Surrenders taken during any Contract Year that cumulatively exceed the Annual Withdrawal Amount but do not exceed the Lifetime Benefit Payment will be free of any applicable CDSC. IS EITHER RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? Yes. However, withdrawals taken prior to the Lifetime Income Eligibility Date are not guaranteed to be available throughout your lifetime. Such withdrawals will reduce (and may even eliminate) the Payment Base otherwise available to establish Lifetime Benefit Payments and Guaranteed Minimum Death Benefits. As shown in the following table, the Withdrawal Percent for all partial Surrenders taken BEFORE the Lifetime Income Eligibility Date will be 5% (Single Life Option) or 4.5% (Joint/Spousal Option). In contrast, the Withdrawal Percent for partial Surrenders taken AFTER the Lifetime Income Eligibility Date will be based on the chronological age of the Relevant Covered Life at the time of the first withdrawal as shown below:
WITHDRAWAL PERCENT SINGLE LIFE JOINT/SPOUSAL RELEVANT COVERED LIFE ATTAINED AGE OPTION OPTION -------------------------------------------------------------------------------- [LESS THAN]59 1/2 - 64 5.0% 4.5% 65 - 69 5.5% 5.0% 70 - 74 6.0% 5.5% 75 - 79 6.5% 6.0% 80+ 7.0% 6.5%
Your Withdrawal Percentage will increase according to this schedule if: - You are entitled to an automatic Payment Base increase during the Contract Year when the Relevant Covered Life's birthday coincides with a new age band; and 39 ------------------------------------------------------------------------------- - You have not waived your obligation to pay potential rider fee increases. Your new Withdrawal Percent will take effect on either of the following dates depending on whether a partial Surrender was ever taken: - If a partial Surrender HAS NOT been taken, your new Withdrawal Percent will be effective on the next birthday that brought the Relevant Covered Life into a new Withdrawal Percent age band; or - If a partial Surrender HAS been taken, then your new Withdrawal Percent will be effective as of the Contract Anniversary when the next automatic Payment Base increase occurs after the birthday that brought you into a new Withdrawal Percent age band (and not that birthday). See "WHAT HAPPENS IF YOU CHANGE OWNERSHIP?" for a description of circumstances when your Withdrawal Percent may change based on a permissible Covered Life change. See Examples 1-3 and 20 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. IS EITHER RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Guaranteed Minimum Death Benefit guarantees that we will pay a Death Benefit equal to the greater of Premium Payments adjusted for partial Surrenders or Contract Value as of the date we receive due proof of death of the Contract Owner(s) or Annuitant. Termination of either rider will result in the rescission of the Guaranteed Minimum Death Benefit and result in your Beneficiary receiving the Contract Value as of the date we receive due proof of death. For Joint/Spousal election of either rider, no Death Benefit will be available when a Relevant Covered Life is the Beneficiary and the Beneficiary dies. Partial Surrenders will affect the Guaranteed Minimum Death Benefit as follows: A. If cumulative partial Surrenders taken prior to the Lifetime Income Eligibility Date are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to the Lifetime Income Eligibility Date are greater than the Threshold (subject to rounding), then we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders after the Lifetime Income Eligibility Date are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. C. For any partial Surrender that causes cumulative partial Surrenders after the Lifetime Income Eligibility Date to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Lifetime Benefit Payment, and (ii) proportionate basis for the amount in excess of the Lifetime Benefit Payment. Please refer to the section labeled "CAN YOUR SPOUSE CONTINUE YOUR LIFETIME WITHDRAWAL FEATURE" for more information on the continuation of the Lifetime Benefit Payments by your Spouse. DOES EITHER RIDER REPLACE THE STANDARD DEATH BENEFIT? YES, IT PERMANENTLY REPLACES THE STANDARD DEATH BENEFIT. The Guaranteed Minimum Death Benefit differs from the standard Death Benefit in terms of how it is reduced by excess withdrawals. The standard Death Benefit is depleted proportionately for partial Surrenders in excess of the Annual Withdrawal Amount whereas the Guaranteed Minimum Death Benefit is depleted proportionately for partial Surrenders in excess of Lifetime Benefit Payments or the Threshold. The Guaranteed Minimum Death Benefit will be reset to equal Contract Value when there is a Covered Life change that exceeds the permissible age limitation under either rider. This may also occur for the Single Life Option when the Spouse elects Spousal Contract continuation and the new Covered Life exceeds the age limit. CAN YOU REVOKE EITHER RIDER? No. However, a Company-sponsored exchange of either rider will not be considered to be a revocation by you of either rider. WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER EITHER RIDER? Please refer to "DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER EITHER RIDER?" for the effect of partial Surrenders on your Payment Base, Guaranteed Minimum Death Benefit and Lifetime Benefit Payments. You may make a full Surrender of your entire Contract at any time. However, you will receive your Contract Value with any applicable charges deducted and not the Payment Base or any Lifetime Benefit Payment that you would have received under either rider. 40 ------------------------------------------------------------------------------- If your Contract Value on any Contract Anniversary is ever reduced below the minimum amount (as defined in your Contract -- generally, the greater of $500 or one Lifetime Benefit Payment) as a result of investment performance or if on any Valuation Day a partial Surrender is taken that reduces your Contract Value below the minimum amount, then the following will occur: - We will no longer accept subsequent Premium Payments; and - You will be required to either make a full Surrender or promptly transfer your remaining Contract Value to an approved investment Sub-Account(s) and/or Programs (failure to do so after a reasonable amount of time being deemed as acquiescence to our reallocation of these sums to the Money Market Sub-Account); and - Lifetime Benefit Payments will continue; - Your Guaranteed Minimum Death Benefit will continue to be reduced by Lifetime Benefit Payments until reduced to zero at which time your Death Benefit shall be equal to your Contract Value; and - All other privileges under this rider will terminate and you will no longer be charged a rider fee or Annual Maintenance Fee; and - If any amount greater than a Lifetime Benefit Payment is requested, the Contract will be liquidated, the rider will terminate and the Guaranteed Minimum Death Benefit will be lost. See Examples 21 and 22 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? Inasmuch as either rider is affected only by changes to the Covered Life, only these types of changes are discussed below. We reserve the right to approve all Covered Life changes. Certain approved changes in the designation of the Covered Life may cause a re-calculation of the benefits. Covered Life changes also allow us, in our discretion, to impose investment restrictions, as described below. Any Covered Life change made within the first 6 months from the Contract Issue date will have no impact on the Payment Base or Guaranteed Minimum Death Benefit as long as each succeeding Covered Life is less than the maximum age limitation of the applicable rider at the time of the change. The Withdrawal Percent and Lifetime Benefit Payment will thereafter change based on the age of the new relevant Covered Life. After the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and partial Surrenders have not yet been taken, in the event that you and your Spouse become legally divorced, you may add a new Spouse to the Contract. Provided that the age limitation of the rider is not exceeded, the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will then recalculate your Withdrawal Percent based on the age of the younger Covered Life as of the date of the change. The charge for this rider will remain the same. Alternatively, if after the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and Surrenders have been taken, in the event that you and your Spouse become legally divorced, you may only remove your ex-Spouse from the Contract whereupon the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will then recalculate your Withdrawal Percent based on the age of the remaining Covered Life as of the date of the change. The charge for this rider will remain the same. You may not convert your Joint/Spousal Option election to a Single Life Option. In addition, after the first six months following the Contract issue date, if any Covered Life change takes place that is not due to a divorce, then: A. If the older Covered Life after the change is equal to or less than the maximum age limitation of the rider at the time of the change, then we will revoke the Lifetime Withdrawal Feature of either rider and continue the Guaranteed Minimum Death Benefit only. The charge for the rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter. B. If the older Covered Life after the change exceeds the maximum age limitation of either rider at the time of the change, or we no longer offer either rider, then either rider will terminate. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If you elected the Single Life Option and any Covered Life changes after the first 6 months from Contract Issue date, then: A. If we no longer offer such rider, we will continue the Guaranteed Minimum Death Benefit after resetting this benefit to the lower of the then applicable Guaranteed Minimum Death Benefit or Contract Value on the effective date of the Covered Life change; whereupon the Lifetime Withdrawal Feature will terminate. The charge for either rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter; or 41 ------------------------------------------------------------------------------- B. If we offer such rider, then we will use the attained age of the oldest Covered Life as of date of the Covered Life change to reset the Withdrawal Percent. The Payment Base will be recalculated to be the lesser of the Contract Value or the Payment Base effective on the date of the change. The Guaranteed Minimum Death Benefit will be recalculated to be the lesser of the Contract Value or the Guaranteed Minimum Death Benefit effective on the date of the change; or C. If we offer such rider and the older Covered Life after the change exceeds the maximum age limitation of this rider at the time of the change; the rider will be terminated and removed from the Contract. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If such rider is no longer available for sale, we will determine the issue age limitation of the rider on a non-discriminatory basis. The following tables illustrate only some of the various changes and the resulting outcomes associated with deaths of the Contract Owner(s) or Annuitant before and after the Annuity Commencement Date. SINGLE LIFE OPTION ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving The Annuitant is living or Joint Contract Owner receives non-spousal Contract Owner deceased the Death Benefit and this rider terminates Contract Owner There is a surviving spousal The Annuitant is living or Joint Contract Owner receives Contract Owner deceased the Death Benefit and this rider can continue under Spousal Contract continuation Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Designated Owner deceased Beneficiary receives the Death Benefit Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Estate Owner or Beneficiary deceased receives the Death Benefit Annuitant Contract Owner is living There is no Contingent Contract continues, no Death Annuitant and the Contract Benefit is paid, and this rider Owner becomes the Contingent continues Annuitant Annuitant Contract Owner is living There is no Contingent Rider terminates and Contract Annuitant and the Contract Owner receives the Death Owner waives their right to Benefit become the Contingent Annuitant Annuitant Contract Owner is Living Contingent Annuitant is Living Contingent Annuitant becomes the Annuitant and the Contract and this rider continues
JOINT/SPOUSAL ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving Contract The Annuitant is living or The surviving Contract Owner Owner deceased continues the Contract and rider; we will increase the Contract Value to the Death Benefit value Contract Owner There is no surviving Contract The Spouse is the sole primary Follow Spousal Contract Owner beneficiary continuation rules for joint life elections Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates and Contract Owner or Beneficiary deceased Owner's estate receives the Death Benefit Annuitant The Contract Owner is living There is a Contingent Annuitant The Rider continues; upon the death of the last surviving Covered Life, the rider will terminate.
42 ------------------------------------------------------------------------------- CAN YOUR SPOUSE CONTINUE YOUR LIFETIME WITHDRAWAL BENEFIT? - SINGLE LIFE OPTION: If a Covered Life dies and the sole Beneficiary is the deceased Covered Life's Spouse at the time of death, such Spouse may continue the Contract. If the Spouse elects to continue the Contract and such rider, we will continue the rider with respect to all Lifetime Withdrawal Benefits at the charge that is currently being assessed for new sales at the time of continuation. We will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater. The Covered Life will be re-determined on the date of Spousal Contract continuation. If the new Covered Life is less than age 81 at the time of the Spousal Contract continuation, and such (or a similar rider, as we determine) is still available for sale, the Payment Base and the Guaranteed Minimum Death Benefit will be set equal to the Contract Value, the Withdrawal Percent will be recalculated based on the age of the older remaining Covered Life on the effective date of the Spousal Contract continuation. If the new Covered Life is 81 or older at the time of the Spousal Contract continuation, the rider will terminate and the Guaranteed Minimum Death Benefit will be equal to the Contract Value. If we are no longer offering such rider at the time of Spousal Contract continuation, we will revoke the Lifetime Withdrawal Feature, the Guaranteed Minimum Death Benefit will be set equal to the Contract Value and the rider charge will no longer be assessed. - JOINT/SPOUSAL OPTION: Either rider is designed to facilitate the continuation of your rights under the rider by your Spouse through the inclusion of a Joint/Spousal Option. If a Covered Life dies and the Spouse elects to continue the Contract, we will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater and we will continue either rider with respect to all benefits at the current rider charge. The benefits will be reset as follows: - The Payment Base will be equal to the greater of Contract Value or the Payment Base on the Spousal Contract continuation date; - The Guaranteed Minimum Death Benefit will be equal to the Contract Value on the Spousal Contract continuation date; - The Withdrawal Percent will remain at the current percentage if partial Surrenders have commenced; otherwise the Withdrawal Percent will be based on the attained age of the remaining Covered Life on the Spousal Contract continuation date; and - The Lifetime Benefit Payment will be recalculated. The remaining Covered Life can not name a new owner on the Contract. Any new Beneficiary that is added to the Contract will not be taken into consideration as a Covered Life. Either rider will terminate upon the death of the remaining Covered Life. See Examples 18 and 19 under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios in Appendix A. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? If you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value and will not be able to elect any of the annuitization options allowed under this rider. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules or, alternatively, under the rules applicable when the Contract Value is below our Minimum Amount rule then in effect. If your Contract Value is reduced below our Minimum Amount rule defined in your Contract, then in effect, your Annuity Commencement Date will be attained and we will no longer accept subsequent Premium Payments. We will then issue you a payout annuity. You may elect the frequency of your payments from those offered by us at such time, but will not be less frequently than annually. - SINGLE LIFE OPTION: If you have elected the Single Life Option, we will issue you a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the Covered Life determined at Annuity Commencement Date. We treat the Covered Life as the Annuitant for this payout option. If there is more than one Covered Life, then the lifetime portion will be based on both Covered Lives. The Covered Lives will be the Annuitant and joint Annuitant for this payout option. The lifetime portion will terminate on the first death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit under this rider. If the older Annuitant is age 59 1/2 or younger, we will automatically defer the date the payments begin until the anniversary after the older Annuitant attains age 59 1/2 and is eligible to receive payments in a fixed dollar amount until the later of the death of any Annuitant or a minimum number of years. If the Annuitant and joint Annuitant are alive and the older Annuitant is age 59 1/2 or older, you will receive payments in a fixed dollar amount until the later of the death of any Annuitant or a period certain. 43 ------------------------------------------------------------------------------- The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the greater of the period certain, or until the death of any Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of the Withdrawal Percent or the applicable Threshold. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of any Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. This option may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. - JOINT/SPOUSAL OPTION: If you have elected the Joint/Spousal Option and both Spouses are alive, we will issue you a Fixed Joint & Survivor Lifetime and Period Certain Payout. If only one Spouse is alive, we will issue a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the surviving Covered Life. The Covered Lives will be the Annuitant and Joint Annuitant for this payout option. The lifetime benefit will terminate on the last death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit. If the younger Annuitant is alive and age 59 1/2 or younger, we will automatically defer the date that payments begin until the anniversary after the younger Annuitant attains age 59 1/2 and is eligible to receive payments in a fixed dollar amount until the death of the last surviving Annuitant or a period certain. If the Annuitant is alive and the younger Annuitant is age 59 1/2 or older, you will receive payments in a fixed dollar amount until the later of the death of the last surviving Annuitant or a minimum number of years. The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the greater of the period certain, or until the death of the last Surviving Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of the Withdrawal Percent or the applicable Threshold. Therefore, the higher your then remaining Guaranteed Minimum Death Benefit is at the time of annuitization, the longer the time period you will be entitled to receive annuitization payments. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of the last surviving Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. These options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes, as described in the following table: Lifetime Income Builder We reserve the right to limit the Funds into which you may allocate your Contract Value. We may Selects prohibit investment in certain Funds or require you to allocate your Contract Value only to certain Funds or in accordance with one of a number of model portfolios or Programs. Lifetime Income Builder Your Contract Value must be invested in one or more Programs and in an approved model portfolio, Portfolios Funds or other investment vehicles established from time to time. Permissible portfolios, Funds, or other investment vehicles are described in your application and other communications. Not all model portfolios or Programs are available through all Financial Intermediaries. We may, in our sole discretion, add, replace or alter Funds, Programs and model portfolios from time to time. You will be provided with advance notification of any investment restriction changes. Changes may be made on a prospective basis with respect to any additional Premium Payments received. While you may switch from model portfolio to model portfolio, you can not pick and choose Funds within any model portfolios nor may you specify which Funds should be redeemed to satisfy the Lifetime Withdrawal Feature. You may provide written investment instructions to invest Contract Value in a manner that violates these investment restrictions. Any such action will; however, result in the termination of your rights under either rider.
44 ------------------------------------------------------------------------------- Investments within model portfolios will fluctuate in value and may be worth more or less than your original investment. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. Please refer to each Fund's investment objectives, policies and restrictions and the risks of investing in each Fund as described in this prospectus and the prospectus for each Fund. If your Lifetime Withdrawal Feature is revoked due to failure to comply with the investment restrictions, You will have a one time opportunity to reinstate the Lifetime Withdrawal Feature on your rider. There is a 15 calendar day reinstatement period that will begin from the date your Lifetime Withdrawal Feature is revoked. During the reinstatement period if you make a subsequent Premium Payment, take a partial Surrender or make a Covered Life change, your opportunity to reinstate will be terminated. Upon reinstatement of your Lifetime Withdrawal Feature under either rider, Your Payment Base will be reset at the lower of the Payment Base prior to the revocation and Contract Value as of the date of the reinstatement. Your Withdrawal Percentage will be set equal to the Withdrawal Percentage prior to the Lifetime Withdrawal Feature revocation; unless, if within the reinstatement period You reach a new age band and no partial Surrenders have been taken, then the Withdrawal Percentage will be set equal to the appropriate percentage based on the attained age of the Relevant Covered Life. Your Lifetime Benefit Payment will be recalculated based on the Lifetime Withdrawal Feature values as of the date of the reinstatement. We will deduct a prorated rider charge on your Contract Anniversary following the reinstatement for the time period between the reinstatement date and your first Contract Anniversary following the reinstatement. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. These restrictions are is not currently enforced. CAN WE AGGREGATE CONTRACTS? Yes. For purposes of determining the Payment Base and Premium Payment limits, we reserve the right to treat as one all deferred variable annuity Contracts issued by us where you have elected any optional withdrawal benefit rider. If we elect to aggregate Contracts, we will change the period over which we measure Surrenders against future Lifetime Benefit Payments. We will treat the effective date of our aggregation election until the end of the applicable calendar year as a Contract Year for the purposes of the Lifetime Benefit Payment limit. A pro-rata rider fee will be taken at the end of that calendar year. After the first calendar year following aggregation, the Lifetime Benefit Payment limits will be aggregated and will thereafter be set on a calendar year (i.e., January 1 Contract Anniversary) basis. The rider fee then in effect will be taken at the end of each new Contract Anniversary. OTHER INFORMATION The riders may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under either rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - Your annual Lifetime Benefit Payments may fluctuate based on changes in the Payment Base and Contract Value. The Payment Base is sensitive to partial Surrenders in excess of the then current maximum Lifetime Benefit Payment or Threshold. It is therefore possible that Surrenders and subsequent Premium Payments within the same Contract Year, whether or not equal to one another, can result in lower Lifetime Benefit Payments. - Annuitizing your Contract, whether voluntary or not, will impact and possibly eliminate these "lifetime" benefits. First, you may no longer invest additional Premium Payments. Second, the Death Benefit will immediately terminate. Third, any Guaranteed Minimum Withdrawal Benefit guarantees you elect may end. In cases where you are required to annuitize, you will forfeit automatic Payment Base increases (if applicable) and lifetime annuitization payments may equal (or possibly exceed) Lifetime Benefit Payments. However, where you elect to annuitize before a required Annuity Commencement Date, lifetime annuitization payments might be less than the income guaranteed by your Guaranteed Minimum Withdrawal Benefit. - If you had elected the conversion option from The Hartford's Lifetime Income Builder Selects to The Hartford's Lifetime Income Builder Portfolios, or vice versa, and subsequently rescinded that election, your Payment Base will be set to the lower of the Payment Base or the Contract Value on the date of the rescission and therefore your old Payment Base will not be restored. The Death Benefit will also be set to the lower of the Guaranteed Minimum Death Benefit and the Contract Value on the date of the rescission. - Even though either rider is designed to provide living benefits, you should not assume that you will necessarily receive "payments for life" if you have violated any of the terms of either rider. 45 ------------------------------------------------------------------------------- - While there is no minimum age for electing either rider, withdrawals taken prior to the Lifetime Income Eligibility Date will reduce, or can even eliminate guaranteed Lifetime Benefit Payments. PAYMENTS TAKEN PRIOR TO THE LIFETIME INCOME ELIGIBILITY DATE ARE NOT GUARANTEED TO LAST FOR A LIFETIME. Either rider may not be suitable if a Covered Life is under attained age 59 1/2. - The determination of the Relevant Covered Life is established by the Company and is critical to the determination of many important benefits such as the Withdrawal Percent used to set Lifetime Benefit Payments. Applicants should confirm this determination and be sure they fully appreciate its importance before investing. - We may terminate either or both riders post-election based on your violation of benefit rules and may otherwise withdraw such rider (or any option) for new sales at any time. In the event that either rider (or any option) is terminated by us, your Lifetime Benefit Payments will cease; your Payment Base, including any automatic Payment Base increases will be eliminated and the Guaranteed Minimum Death Benefit will then be equal to the Contract Value, and you will not be allowed to elect any other optional benefit rider. - Unless otherwise provided, you may select either rider only at the time of sale and once you do so, you may not add any other optional withdrawal benefits during the time you own this Contract. If you elect either rider you will not be eligible to elect optional riders other than MAV or MAV Plus. - When the Single Life Option is chosen, Spouses may find continuation of either rider to be unavailable or unattractive after the death of the Contract Owner. Continuation of the benefits available in either optional rider is dependent upon its availability at the time of death of the first Covered Life and will be subject to then prevailing charges. - The Joint/Spousal Option provides that if you and your Spouse are no longer married for any reason other than death, the removal and replacement of your Spouse will constitute a Covered Life change. This can result in the resetting of all benefits under either rider. - Certain Covered Life changes may result in a reduction, recalculation or forfeiture of benefits. - Annuity pay-out options available subsequent to the Annuity Commencement Date may not necessarily provide a stream of income for your lifetime and may be less than Lifetime Benefit Payments. - The fee for either rider may increase if any time after 12 months from either rider's effective date and when automatic Payment Base increases take place. There are no assurances as to the fee we will be charging at the time of each Payment Base increase. This is subject to the maximum fee disclosed in the Synopsis. - Because these benefits are bundled and interdependent upon one another, there is a risk that you may ultimately pay for benefits that you may never get to use. - The purchase of an optional withdrawal benefit feature may not be appropriate for Contracts owned by certain types of non-natural entities, including Charitable Trusts. Because many non-natural entities are required to make certain periodic distributions and those amounts may be different than the withdrawal amounts permitted by the optional withdrawal benefit feature, you may wish to consult with your tax advisor to help determine the appropriateness of this benefit. B. THE HARTFORD'S PRINCIPAL FIRST OBJECTIVE Protect your investment from poor market performance through annual Benefit Payments until the Benefit Amount is reduced to zero. HOW DOES THIS RIDER HELP ACHIEVE THIS GOAL? This rider protects your investment by guaranteeing Benefit Payments until your Benefit Amount, rather than your Contract Value, has been exhausted. You may also elect "step-ups" that reset your Benefit Amount to the then prevailing Contract Value. See Optional Benefit Comparisons in Appendix D You or your Spouse (if Spousal Contract continuation has been chosen) may elect to step-up your Benefit Amount following the 5th Contract Year that you added this rider to your Contract and again on each fifth anniversary from the last time you elected to step-up your Benefit Amount (or upon Spousal Contract continuation, whichever is earlier)(these dates are called "election dates" in this section). Your Benefit Amount will then become the Contract Value as of the close of business on the Valuation Date that you properly made this election. Each time that you exercise step-up rights, your Benefit Payment will be reset to 7% of the new Benefit Amount, but will never be less than your then existing Benefit Payment. You must follow certain requirements to make this election: - We will accept requests for a step-up in writing, verbally or electronically, if available. - Written elections must be submitted using the forms we provide. For telephonic and Internet elections, if available, you must authenticate your identity and acknowledge your understanding of the implications of making this election. We will take direction 46 ------------------------------------------------------------------------------- from one joint Owner. We are not responsible for lost investment opportunities associated with elections that are not in good order and for relying on the genuiness of any election. - We will not accept any election request prior to an election date. You may not post-date your election. - If an election form is received in good order on or after an election date, the step-up will occur as of the close of business on the Valuation Day that the request is received by us at our Administrative Office. We reserve the right to require you to elect step-ups only on Contract Anniversaries. - We will not honor any election request if your Contract Value is less than your Benefit Amount effective as of the step-up effective date. - Your election is irrevocable. This means that if your Contract Value increases after your step-up, you can not ask us to reset your Benefit Amount again until your next election date. The fee for this rider may also change when you make this election and will remain in effect until your next election, if any. WHEN CAN YOU BUY THIS RIDER? You may elect this benefit at any time, provided we are still offering this rider for new sales. Once elected, your choice is irrevocable. The maximum age of any Contract Owner or Annuitant when electing this rider is 85 for non-qualified plans and age 80 for IRA or qualified plans. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. If you elect this rider, you may not elect any riders other than MAV Plus (MAV only in applicable states). HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The annual charge for this rider is based on your daily Sub-Account Value and is deducted daily. The charge continues to be deducted until we begin to make Annuity Payouts. We will recalculate the charge each time that you step-up your Benefit Amount. The fee at the time of step-up will be the charge that we are then currently charging other customers who have previously elected this rider and have elected to step-up. This fee may not be the same as, but will not be more than, the fee that we charge new purchasers or the fee we set before we cease offering this rider. If we cease sales of this rider, we will predetermine the rider charge on a non-discriminatory basis. Before you decide to exercise your step-up privileges, you should request a current prospectus which will describe the then current charge effective upon exercising step-up rights. We also reserve the right to increase the charge for this rider up to a maximum rate of 0.75% any time on or after the fifth anniversary of electing this rider or five years from the date from which we last notified you of a fee increase, whichever is later. The fee increase will only apply if you are eligible for future step-ups. Subject to the foregoing limitation, we also reserve the right to charge a different fee for this rider to any new Contract Owners as a result of a change of ownership of this Contract. DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER? Yes. If elected at the time of Contract issuance, your initial Benefit Amount is your initial Premium Payment. If elected after the Contract has been issued, your initial Benefit Amount will be the based on your Contract Value at the time the rider is elected. Any time after the 5th Contract Year that this rider has been in effect and thereafter on each fifth anniversary of the last step-up (or sooner upon Spousal Contract continuation); you (or your Spouse if Spousal Contract continuation rights have been elected) may elect to step-up the Benefit Amount to the Contract Value. Your Benefit Amount will fluctuate based on subsequent Premium Payments or partial Surrenders. (Partial Surrenders in excess of your Benefit Payments may also trigger a recalculation of the Benefit Amount and future Benefit Payments.) Your Benefit Amount can never be more than $5 million. You cannot elect the step-up privilege if your then current Benefit Amount is higher than your Contract Value on step-up dates. See Example 1 under The Hartford's Principal First in Appendix A. IS THIS RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? No. You can continue to take Benefit Payments until the Benefit Amount has been depleted. Once the initial Benefit Amount has been determined, we calculate the Benefit Payment. The maximum Benefit Payment is 7% of your Benefit Amount on rider effective date, or if more recently, the last date on which a step up was elected, or the Benefit Amount was reduced due to a partial Surrender exceeding the Benefit Payment. Benefit Payments can begin at any time and can be taken on any schedule that you request. Benefit Payments are non-cumulative, which means that your Benefit Payment will not increase in the future if you fail to take your full Benefit Payment for the current year. For example, if you do not take 7% one year, you may not take more than 7% the next year. 47 ------------------------------------------------------------------------------- If you elect this rider when you purchase your Contract, we count one year as the time between each Contract Anniversary. If you purchase this rider after you purchase your Contract, we count the first year as the time between the date we added this rider to your Contract and your next Contract Anniversary, which could be less than a year. Each time you add a Premium Payment, we increase your Benefit Amount by the amount of the subsequent Premium Payment. When you make a subsequent Premium Payment, your Benefit Payments will increase by 7% of the amount of the subsequent Premium Payment. See Examples 2 and 3 under The Hartford's Principal First in Appendix A. Your Benefit Amount cannot be less than $0 or more than $5 million. Any activities that would otherwise increase the Benefit Amount above this ceiling will not be included for any benefits under this rider. IF, IN ONE YEAR, YOUR SURRENDERS TOTAL MORE THAN YOUR BENEFIT PAYMENT, WE WILL RE-CALCULATE YOUR BENEFIT AMOUNT AND YOUR BENEFIT PAYMENT COULD BE SIGNIFICANTLY LOWER IN THE FUTURE. Any time we recalculate your Benefit Amount or your Benefit Payment, we count one year as the time between the date we re-calculate and your next Contract Anniversary, which could be less than a year. Whenever a partial Surrender is made, the Benefit Amount will be equal to the amount determined in either (A) or (B) as follows: A. If the total partial Surrenders since the later of (i) the most recent Contract Anniversary, or (ii) the Valuation Day that the Benefit Payment was last established (excluding establishments for subsequent Premium Payments), are equal to or less than the Benefit Payment, the Benefit Amount becomes the Benefit Amount immediately prior to the partial Surrender, less the amount of the partial Surrender. B. If the total partial Surrenders as determined in (A) above exceed the Benefit Payment, the Benefit Amount will have an automatic reset to the greater of zero or the lesser of (i) or (ii) as follows: (i) The Contract Value immediately following the partial Surrender; or (ii) The Benefit Amount immediately prior to the partial Surrender, less the amount of the partial Surrender. See Examples 2 and 6 under The Hartford's Principal First in Appendix A. Qualified Contracts are subject to certain federal tax rules requiring that minimum distributions be withdrawn from the Contract on a calendar year basis (i.e., compared to a Contract Year basis), usually beginning after age 70 1/2. These withdrawals are called Required Minimum Distributions. A Required Minimum Distribution may exceed your Benefit Payment, which will cause a recalculation of your Benefit Amount. Recalculation of your Benefit Amount may result in a lower Benefit Payment in the future. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? No. However, partial Surrenders will reduce the standard Death Benefit. DOES THIS RIDER REPLACE STANDARD DEATH BENEFITS? No. CAN YOU REVOKE THIS RIDER? No. However, a Company-sponsored exchange of this rider will not be considered to be a revocation or termination of this rider. WHAT EFFECT DO PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THIS RIDER? Benefit Payments are treated as partial Surrenders and are deducted from your Contract Value and Benefit Amount. Each Benefit Payment reduces the amount you may Surrender under your Annual Withdrawal Amount. Surrenders in excess of your Benefit Payment include any applicable CDSC. If, in one year, your Surrenders total more than your Benefit Payment, we will re-calculate your Benefit Amount and your Benefit Payment could be significantly lower in the future. Any time we re-calculate your Benefit Amount or your Benefit Payment, we count one year as the time between the date we re-calculate and your next Contract Anniversary, which could be less than a year. If your Contract Value is reduced to zero due to receiving Benefit Payments, and you still have a Benefit Amount, you will continue to receive a Benefit Payment through a fixed Annuity Payout option until your Benefit Amount is depleted. While you are receiving payments under fixed Annuity Payout options, you may not make additional Premium Payments, and if you die before you receive all of your payments, your Beneficiary will continue to receive the remaining Benefit Payments. You can Surrender your entire Contract Value any time; however, you will receive your Contract Value at the time you request a full Surrender with any applicable charges deducted and not the Benefit Amount or the Benefit Payment amount that you would have received under this rider. 48 ------------------------------------------------------------------------------- WHAT HAPPENS IF YOU CHANGE OWNERSHIP? If you change the ownership or assign this Contract to someone other than your Spouse after 12 months of electing this rider, we will recalculate the Benefit Amount and the Benefit Payment may be lower in the future. The Benefit Amount will be recalculated to equal the lesser of: - The Benefit Amount immediately prior to the ownership change or assignment; or - The Contract Value at the time of the ownership change or assignment. The Benefit Payment will then be reset to 7% of the new Benefit Amount. If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the surviving Spouse can either become the Contract Owner or elect to receive the standard Death Benefit. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. CAN YOUR SPOUSE CONTINUE YOUR WITHDRAWAL BENEFIT? Yes. If the Owner dies and the Beneficiary is the deceased Owner's Spouse at the time of death, the Spouse may continue the Contract and this rider. This right may be exercised only once during the term of the Contract. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? You may elect the annuitization option at any time. If you annuitize your Contract, you may choose this Annuity Payout Option in addition to those Annuity Payout Options offered in the Contract. Under this Annuity Payout Option (called the "PF Annuity Payout Option"), we will pay a fixed dollar amount for a specific number of years ("Payout Period"). If you, the joint Owner or the Annuitant should die before the PF Annuity Payout Period is complete, the remaining payments will be made to the Beneficiary. The PF Annuity Payout Period is determined on the Annuity Calculation Date and it will equal the current Benefit Amount divided by the Benefit Payment. The total amount of the Annuity Payouts under this option will be equal to the Benefit Amount. We may offer other Payout Options. If you, the joint Owner or Annuitant die before the Annuity Calculation Date and all of the Benefit Payments guaranteed by us have not been made, the Beneficiary may elect to take the remaining Benefit Payments by electing the PF Annuity Payout Option or any of the Death Benefit options offered in your Contract. If the Annuitant dies after the Annuity Calculation Date and before all of the Benefit Payments guaranteed by us have been made, the payments will continue to be made to the Beneficiary. If your Contract Value is reduced to zero, you will receive a fixed dollar amount Annuity Payout option until your Benefit Amount is depleted. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? No. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? No; however, your Benefit Amount cannot be more than $5 million. Any activities that would otherwise increase the Benefit Amount above this ceiling will not be included for any benefits under this rider. CAN WE AGGREGATE CONTRACTS? We reserve the right to treat all Contracts issued to you by us or one of our affiliates as one Contract for purposes of this rider. This means that if you purchase two Contracts from us in any twelve month period and elect any optional withdrawal benefit rider on both Contracts, withdrawals from one Contract may be treated as withdrawals from the other Contract. OTHER INFORMATION This rider may not be appropriate for all investors. Several factors, among others, should be considered: - The annual percentage used for determining Benefit Payments is not a fixed rate of return. The Contract Value used to set Benefit Payments is based on the investment performance of your Sub-Accounts. - Benefit Payments cannot be carried forward from one year to the next. You will not be warned if you take less than the maximum withdrawals available without triggering recalculation of your Benefit Payments. - Annual Surrenders exceeding 7% accelerate depletion of your Benefit Amount even if you use the Automatic Income Program to meet RMD requirements. No reliable assumptions can be made that your payments will continue for any particular number of years. - Additional contributions made to your Contract after withdrawals have begun may not restore the previous amount of Benefit Payments, even if the additional contribution restores the Benefit Amount to the previous Benefit Amount. 49 ------------------------------------------------------------------------------- - Voluntary or involuntary annuitization will terminate Benefit Payments. Annuity Payout options available subsequent to the Annuity Commencement Date may be less than Benefit Payments. - There are no assurances made or implied that automatic Benefit Amount increases will occur and if occurring, will be predictable. - The fee for this rider may increase if and when automatic Benefit Amount increases take place. There are no assurances as to the fee we will be charging at the time of each step-up. This is subject to the maximum fee disclosed in the Synopsis and this section. - When the Contract Value is small in relation to the Benefit Amount, Surrenders may have a significant effect on future Benefit Payments. - Withdrawals can deplete and even eliminate death benefits. 8. MISCELLANEOUS A. GLOSSARY Except as provided elsewhere in this prospectus, the following capitalized terms shall have the meaning ascribed below: ACCOUNT: Any of the Sub-Accounts or the Fixed Accumulation Feature. ACCUMULATION UNITS: If you allocate your Premium Payment to any of the Sub-Accounts, we will convert those Payments into Accumulation Units in the selected Sub-Accounts. Accumulation Units are valued at the end of each Valuation Day and are used to calculate the value of your Contract prior to Annuitization. ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation Day. ADMINISTRATIVE OFFICE: Our location and overnight mailing address is: 200 Hopmeadow Street, Simsbury, Connecticut 06089. Our standard mailing address is: U.S. Wealth Management, P.O. Box 5085, Hartford, Connecticut 06102-5085. ANNIVERSARY VALUE: The value equal to the Contract Value as of a Contract Anniversary, as adjusted for subsequent Premium Payments and partial Surrenders. ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or upon full Surrender. The charge is deducted proportionately from each Sub-Account in which you are invested. ANNUAL WITHDRAWAL AMOUNT: This is the amount you can Surrender per Contract Year without paying a Contingent Deferred Sales Charge. This amount is non-cumulative, meaning that it cannot be carried over from one year to the next. ANNUITANT: The person on whose life the Contract is issued. Except as otherwise provided, the Annuitant may not be changed after your Contract is issued. ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout. ANNUITY COMMENCEMENT DATE: The later of the 10th Contract Anniversary or the date the Annuitant reaches age 90, unless we, in our sole discretion, agree to postpone to another date following our receipt of an extension request. ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the duration and frequency you select. ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity Commencement Date or death of the Contract Owner or Annuitant. ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity Payouts under a variable dollar amount Annuity Payout Option. ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day. BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of the Contract upon the death of any Contract Owner and Annuitant as the case may be. BENEFIT AMOUNT: The basis used to determine the maximum payout guaranteed under The Hartford's Principal First. The Benefit Amount is comprised of net Premium Payments, less any Payment Enhancements, if applicable, and may be subject to periodic step ups when The Hartford's Principal First has been elected. BENEFIT PAYMENT: The maximum guaranteed amount that may be withdrawn each Contract Year under The Hartford's Principal First. A Benefit Payment constitutes a partial Surrender. 50 ------------------------------------------------------------------------------- CHARITABLE REMAINDER TRUST: An irrevocable trust, where an individual donor makes a gift to the trust, and in return receives an income tax deduction. In addition, the individual donor has the right to receive a percentage of the trust earnings for a specified period of time. CODE: The Internal Revenue Code of 1986, as amended. COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts. This amount is calculated using the Assumed Investment Return for variable dollar amount Annuity Payouts and a rate of return determined by us for fixed dollar amount Annuity Payouts. CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if the original Annuitant dies before the Annuity Commencement Date. You must name a Contingent Annuitant before the original Annuitant's death. CONTINGENT DEFERRED SALES CHARGE: The deferred sales charge, if applicable, that may apply when you make a full or partial Surrender. CONTRACT: The individual Annuity Contract and any endorsements or riders. Group participants and some individuals may receive a certificate rather than a Contract. CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If the Contract Anniversary falls on a Non-Valuation Day, then the Contract Anniversary will be the next Valuation Day. CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in this prospectus including any joint Owner(s). We do not capitalize "you" in the prospectus. CONTRACT VALUE: The total value of the Accounts on any Valuation Day. CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued. COVERED LIFE: The governing life or lives used for determining the Lifetime Withdrawal Feature under The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios. DEATH BENEFIT: The amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date. DOLLAR COST AVERAGING: A program that allows you to systematically make transfers between Accounts available in your Contract. ELIGIBLE WITHDRAWAL YEAR: As used in The Hartford's Lifetime Income Foundation and The Hartford's Lifetime Income Builder II, any Contract Year following the Relevant Covered Life's 60th birthday. FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate all or a portion of your Contract Value. In your Contract, the Fixed Accumulation Feature may be called the Fixed Account. Not all forms of Contracts we offer contain a Fixed Accumulation Feature. FUND: A registered investment company or a series thereof in which assets of a Sub-Account may be invested. We sometimes call the Funds you select a "Sub-Account". GENERAL ACCOUNT: The General Account includes our company assets, including any money you may have invested in the Fixed Accumulation Feature, if available. The assets in the General Account are available to our creditors. JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the Annuitant dies after Annuitization. You may name a Joint Annuitant only if your Annuity Payout Option provides for a survivor. The Joint Annuitant may not be changed. LIFETIME BENEFIT PAYMENT: The maximum guaranteed amount that can be withdrawn each year pursuant to The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios. A Lifetime Benefit Payment constitutes a partial Surrender. Withdrawals taken prior to an Eligible Withdrawal Year (Lifetime Income Foundation and Lifetime Income Builder II) or prior to the Lifetime Income Eligibility Date (The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios) are excluded from this definition. For the purposes of The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II and The Hartford's Lifetime Income Builder Selects, a Lifetime Benefit Payment is the greater of (a) your Withdrawal Percent multiplied by your Payment Base (sometimes referred to as "Guaranteed Withdrawal") or (b) your Withdrawal Percent multiplied by your Contract Value as of the relevant measuring point (sometimes referred to as "Withdrawal Available"). LIFETIME INCOME ELIGIBILITY DATE: Under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, the date the relevant Covered Life attains age 59 1/2, at which point Lifetime Benefit Payments can begin. LIFETIME WITHDRAWAL FEATURE: Under The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, a series of Lifetime Benefit Payments in each Contract Year following the Lifetime Income Eligibility Date. 51 ------------------------------------------------------------------------------- MAXIMUM ANNIVERSARY VALUE: This is the highest Anniversary Value, adjusted for subsequent Premium Payments and partial Withdrawals, prior to the deceased's 81st birthday or the date of death, if earlier. MAXIMUM CONTRACT VALUE: The greatest of: (i) the Contract Value on the rider issue date, plus Premium Payments received after such date or (ii) the Contract Value on each subsequent Contract Anniversary, excluding the current Contract Anniversary, plus Premium Payments received after such Contract Anniversary date. MINIMUM CONTRACT VALUE: Subject to state variations, the Minimum Contract Value we establish from time to time. NET INVESTMENT FACTOR: This is used to measure the investment performance of a Sub-Account from one Valuation Day to the next, and is also used to calculate your Annuity Payout amount. 1933 ACT: The Securities Act of 1933, as amended. 1934 ACT: The Securities Exchange Act of 1934, as amended. 1940 ACT: The Investment Company Act of 1940, as amended. NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading. PAYEE: The person or party you designate to receive Annuity Payouts. PAYMENT BASE: The amount used to determine the Lifetime Benefit Payments for The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios. The Payment Base may be subject to automatic annual Payment Base increases when The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios has been elected. In The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, Payment Base includes front end sales charges (Edge Contracts only) but excludes any Employee Gross-Up. Your initial Payment Base equals your initial Premium Payment except in regard to a company sponsored exchange program. PREMIUM PAYMENT: Money sent to us to be invested in your Contract (not taking into consideration any applicable front-end sales charges or Payment Enhancements, etc.). PREMIUM TAX: A tax charged by a state or municipality on Premium Payments. RELEVANT COVERED LIFE: When the Single Life option is chosen, the Relevant Covered Life will be based on the attained age of the oldest Contract Owner(s) if the Contract Owner is a natural person or the Annuitant(s) if the Contract Owner is not a natural person. When the Joint/Spousal Option is chosen, however, the Relevant Covered Life will be based on the attained age of the youngest Contract Owner and his or her Spouse if the Contract Owner is a natural person or the Annuitant if the Contract Owner is not a natural person. As used herein, "attained age" means the chronological age of the Relevant Covered Life as of the applicable measuring point. REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2 and older must take a distribution from their tax-qualified retirement account by December 31, each year. For employer sponsored qualified Contracts, the individual must begin taking distributions at the age of 70 1/2 or upon retirement, whichever comes later. RIGHTS OF ACCUMULATION: The Right of Accumulation program allows an investor to get lower front end sales charges through multiple Premium Payments, instead of requiring a single Premium Payment to be over a given amount. SPOUSE: A person related to a Contract Owner by marriage pursuant to the Code. This definition does not currently take into consideration domestic partners pursuant to state civil union laws. SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund. There is a Sub-Account for each Fund. We sometimes call the Funds you select your "Sub-Account". SUB-ACCOUNT VALUE: The value on or before the Annuity Calculation Date, which is determined on any day by multiplying the number of Accumulation Units by the Accumulation Unit Value for each Sub-Account. SURRENDER: A complete or partial withdrawal from your Contract. SURRENDER VALUE: The amount we pay you if you terminate your Contract before the Annuity Commencement Date. The Surrender Value is equal to the Contract Value minus any applicable charges (subject to rounding). THRESHOLD: For the purposes of The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, the amount used to determine the change in the Payment Base following a partial Surrender in any Contract Year that is not an Eligible Withdrawal Year (The Hartford's Lifetime Income Foundation and The Hartford's Lifetime Income Builder II) or any Contract Year that is prior to the Lifetime Income Eligibility Date (The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios). For the 52 ------------------------------------------------------------------------------- purposes of these optional riders, this percentage used to determine your Threshold amount is 5% (Single Life Election) or 4 1/2% (Joint/Spousal Election) of the Payment Base. VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values of the Separate Account are determined as of the close of the New York Stock Exchange. The Exchange generally closes at 4:00 p.m. Eastern Time but may close earlier on certain days and as conditions warrant. VALUATION PERIOD: The time span between the close of trading on the New York Stock Exchange from one Valuation Day to the next. WE, US OR OUR: Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company, as the case may be. WITHDRAWAL PERCENT: The multiplier used in calculating Lifetime Benefit Payments under The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios. YOU: The Owner including any joint Owner(s). We do not capitalize "you" or "your" in this prospectus. B. STATE VARIATIONS The following section describes modifications to this prospectus required by one or more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of Contracts we issue. References to certain state's variations do not imply that we actually offer Contracts in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders. ALABAMA -- The Fixed Accumulation Feature is not available. The DCA Plus Fixed Accumulation Feature is available. CALIFORNIA -- If you are 60 years old or older you must either elect the Senior Protection Program, or elect to immediately allocate the initial Premium Payments to the other investment options. Under the Senior Protection Program, we will allocate your initial Premium Payment to a money market Fund for the first 35 days your initial Premium Payment is invested. After the 35th day we will automatically allocate your Contract Value according to your most current investment instructions. If you elect the Senior Protection Program you will not be able to participate in any InvestEase (if otherwise available) or Dollar Cost Averaging Program until after the Program has terminated. The Dollar Cost Averaging Plus, the Static Asset Allocation Models and certain Automatic Income Programs are not available if you elect the Senior Protection Program. Under the Senior Protection Program any subsequent Premium Payment received during the 35 days after the initial Premium Payment is invested will also be invested in a money market Fund unless you direct otherwise. You may voluntarily terminate your participation in the Senior Protection Program by contacting us in writing or by telephone. You will automatically terminate your participation in the Senior Protection Program if you allocate a subsequent Premium Payment to any other investment option or transfer Contract Value from a money market Fund to another investment option. When you terminate your participation in the Senior Protection Program you may reallocate your Contract Value in the Program to other investment options; or we will automatically reallocate your Contract Value in the Program according to your original instructions 35 days after your initial Premium Payment was invested. CONNECTICUT -- The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, contract aggregation provisions do not apply. A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). FLORIDA -- The limit on Death Benefits imposed when aggregate Premium Payments total $5 million or more does not apply. The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, contract aggregation provisions do not apply. GEORGIA -- The Hartford's Lifetime Income Builder Selects is referred to as the Guaranteed Withdrawal and Death Benefit Rider (Limited Automatic Increase Feature) in your Contract. The Hartford's Lifetime Income Builder Portfolios is referred to as Guaranteed Withdrawal and Death Benefit Rider (Unlimited Automatic Increase Feature). ILLINOIS -- The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, contract aggregation provisions do not apply. The rider charge for The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, are only deducted from the Sub-Accounts. The Fixed Accumulation Feature is not available if you elect The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios,. MASSACHUSETTS -- We will accept subsequent Premium Payments only until the Annuitant's 63rd birthday or the third Contract Anniversary, whichever is later (Core Contracts). MINNESOTA -- MAV Plus is not available. The Maximum Anniversary Value (MAV) Death Benefit is offered instead. 53 ------------------------------------------------------------------------------- NEW HAMPSHIRE -- A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). NEW JERSEY -- The only AIRs available are 3% and 5%. The investment restrictions and the contract aggregation provisions of The Hartford's Lifetime Income Builder are not applicable. The Nursing Home Waiver is not available. A state recognized civil union partner who is the designated beneficiary may exercise contract continuation privileges if and when the Code is amended to recognize such "spouses" as meeting federal tax distribution requirements (under current tax law, a "spouse" is limited to married people of the opposite sex). NEW YORK -- A Contract issued by Hartford Life and Annuity Insurance Company is not available in New York. The rider charge for The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, are only deducted from the Sub-Accounts. The Fixed Accumulation Feature is not available if you elect The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios. The Minimum Contract Value is $1,000 after any Surrender. The minimum monthly Annuity Payout is $20. MAV Plus is not available. The Maximum Anniversary Value (MAV) Death Benefit is offered instead. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. OKLAHOMA -- The only AIRs available are 3% and 5%. OREGON -- We will accept subsequent Premium Payments during the first three Contract Years (Core Contracts). Owners may only sign up for DCA Plus Programs that are 6 months or longer (Core Contracts). You may not choose a fixed dollar amount Annuity Payout. The Life Annuity with a Cash Refund Annuity Payout Option is not available. The only AIRs available are 3% and 5%. PENNSYLVANIA -- The Nursing Home Waiver minimum confinement period is changed from 180 days to 90 days. You may not choose a fixed dollar amount Annuity Payout. The Life Annuity with a Cash Refund Annuity Payout Option is not available. WASHINGTON -- MAV Plus is not available. Maximum Anniversary Value (MAV) Death Benefit is offered instead. In any year when no Premium Payment is paid into the Fixed Accumulation Feature, any pro-rata portion of the fee taken from the Fixed Accumulation Feature will be limited to interest earned in excess of the 3% for that year (Core Contracts). The rider charge for The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, The Hartford's Lifetime Income Builder II and The Hartford's Lifetime Income Foundation is only deducted from the Sub-Accounts. The Fixed Accumulation is not available if you elect The Hartford's Lifetime Income Builder Selects, The Hartford's Lifetime Income Builder Portfolios, The Hartford's Lifetime Income Builder II or The Hartford's Lifetime Income Foundation (Core Contracts). C. MORE INFORMATION OWNERSHIP CHANGES -- We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. Changes in ownership can also adversely affect your Death Benefits and optional withdrawal benefits. If the Owner dies and the sole Beneficiary is the Owner's Spouse, then the surviving Spouse can either become the Contract Owner or elect to receive the applicable Death Benefit. We will adjust the Contract Value in these circumstances to equal the amount that we would have paid as the Death Benefit payment, had the Spouse elected to receive the applicable Death Benefit as a lump sum payment. This privilege will only apply once for each Contract. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. ASSIGNMENT -- A non-qualified Contract may be assigned. We must be properly notified in writing of an assignment. Any Annuity Payouts or Surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract. CONTRACT MODIFICATION -- We may modify the Contract, but no modification will affect the amount or term of any Contract unless a modification is required to conform the Contract to applicable federal or state law. No modification will affect the method by which Contract Values are determined. Any modifications to the Contract will be filed with each state in which the Contract is for sale. Contract changes will be communicated to Contract Owners through regular mail as an endorsement to their Contract. MEDICAID BENEFITS -- Medicaid is a program that covers most medical costs, including nursing home and home care for the elderly and certain persons with disabilities. To qualify, individuals must meet both income and resource tests. Subject to state law, income tests 54 ------------------------------------------------------------------------------- measure whether earned and unearned income such as benefit payments exceeds predetermined monthly caps. Resource tests look to the value of countable assets such as this Contract. Medicaid also allows the costs of benefits such as nursing home care, home and community based services, and related hospital prescription drug services to be recaptured from a recipient's estate after their death (or if the recipient has a surviving Spouse, the recapture is suspended until after the death of the recipient's surviving Spouse). Medicaid estate planning may be important to people who are concerned about long term care costs or the adequacy of their private LTC insurance. Benefits associated with this variable annuity may have an impact on your Medicaid eligibility and the assets considered for Medicaid benefits. Certain asset and/or trust transfers (or a "spend down" of assets) made to become eligible for Medicaid may trigger periods of potentially unlimited ineligibility and can be considered fraud. Each state examines the financial history of a person to determine whether he or she transferred funds at below market value in order to qualify for Medicaid. These look-back periods are currently 36-months for asset transfers and 60-months for Medicaid exempt trust transfers. Ownership interests or beneficiary status under this variable annuity can render you or your loved ones ineligible for Medicaid. This may be particularly troubling if your Spouse or Beneficiary is already receiving Medicaid benefits at the time of transfer or receipt of Death Benefits. As certain ownership changes are either impermissible or are subject to benefit resetting rules, you may want to carefully consider how you structure the ownership and beneficiary status of your Contract. This discussion is intended to provide a very general overview and does not constitute legal advice or in any way suggest that you circumvent these rules. You should seek advice from a competent elder law attorney to make informed decisions about how this variable annuity may affect your plans. D. LEGAL PROCEEDINGS There continues to be significant federal and state regulatory activity relating to financial services companies. Like other insurance companies, we are involved in lawsuits, arbitrations, and regulatory/legal proceedings. While it is not possible to predict with certainty the ultimate outcome of any pending or future legal proceeding or regulatory action, we do not expect any of these actions to result in a material adverse effect on the Company or its Separate Accounts. E. HOW CONTRACTS ARE SOLD We have entered into a distribution agreement with our affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD serves as the principal underwriter for the Contracts, which are offered on a continuous basis. HSD is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of HSD is the same as ours. PLANCO Financial Services, LLC, a subsidiary of Hartford Life Insurance Company, provides marketing support for us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that sells this Contract. HSD has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to HSD for sales of the Contracts by Financial Intermediaries. HSD, in its role as principle underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2007. Contracts will be sold by individuals who have been appointed by us as insurance agents and who are registered representatives of Financial Intermediaries ("Registered Representatives"). Core and Edge Contracts may be sold directly to the following individuals free of any commission ("Employee Gross-Up" on Core and no front-end sales charge on Edge): 1) current or retired officers, directors, trustees and employees (and their families) of our ultimate corporate parent and affiliates; 2) employees and Registered Representatives (and their families) of Financial Intermediaries; 3) otherwise eligible individuals who request a rollover from their employer-sponsored defined contribution plan within 60 days of separation from service. If applicable, we will credit the Core Contract with a credit of 5.0% of the initial Premium Payment and each subsequent Premium Payment, if any. This additional percentage of Premium Payment in no way affects current or future charges, rights, benefits or account values of other Contract Owners. We list below types of arrangements that help to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affect each variable annuity. These types of arrangements could be viewed as creating conflicts of interest. Financial Intermediaries receive commissions (described below under "Commissions"). Certain selected Financial Intermediaries also receive additional compensation (described below under "Additional Payments"). All or a portion of the payments we make to Financial Intermediaries may be passed on to Registered Representatives according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive commissions based on the type of Contract or optional benefits sold. Commissions are based on a specified amount of Premium Payments or Contract Value. 55 ------------------------------------------------------------------------------- - COMMISSIONS Up front commissions paid to Financial Intermediaries generally range from 1% to up to 7% of each Premium Payment you pay for your Contract. Trail commissions (fees paid for customers that maintain their Contracts generally for more than 1 year) range up to 1.20% of your Contract Value. We pay different commissions based on the Contract variation that you buy. We may pay a lower commission for sales to people over age 80. Commission arrangements vary from one Financial Intermediary to another. We are not involved in determining your Registered Representative's compensation. Under certain circumstances, your Registered Representative may be required to return all or a portion of the commissions paid. Check with your Registered Representative to verify whether your account is a brokerage or an advisory account. Your interests may differ from ours and your Registered Representative (or the Financial Intermediary with which they are associated). Please ask questions to make sure you understand your rights and any potential conflicts of interest. If you are an advisory client, your Registered Representative (or the Financial Intermediary with which they are associated) can be paid both by you and by us based on what you buy. Therefore, profits, and your Registered Representative's (or their Financial Intermediary's) compensation, may vary by product and over time. Contact an appropriate person at your Financial Intermediary with whom you can discuss these differences. - ADDITIONAL PAYMENTS Subject to FINRA and Financial Intermediary rules, we (or our affiliates) also pay the following types of fees to among other things encourage the sale of this Contract. These additional payments could create an incentive for your Registered Representative, and the Financial Intermediary with which they are associated, to recommend products that pay them more than others, which may not necessarily be to your benefit.
ADDITIONAL PAYMENT TYPE WHAT IT'S USED FOR --------------------------------------------------------------------------------------------------------------------------------- Access Access to Registered Representatives and/or Financial Intermediaries such as one-on-one wholesaler visits or attendance at national sales meetings or similar events. Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and other gifts. Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/ participation; sponsorship of Financial Intermediary sales contests and/or promotions in which participants (including Registered Representatives) receive prizes such as travel awards, merchandise and recognition; client generation expenses. Marketing Expense Allowances Pay Fund related parties for wholesaler support, training and marketing activities for certain Funds. Support Sales support through such things as providing hardware and software, operational and systems integration, links to our website from a Financial Intermediary's websites; shareholder services (including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and reimbursements. Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training, and/or client or prospect seminar sponsorships. Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or visibility at, national and regional conferences; and/or articles in Financial Intermediary publications highlighting our products and services. Volume Pay for the overall volume of their sales or the amount of money investing in our products.
As of December 31, 2007, we have entered into ongoing contractual arrangements to make Additional Payments to the following Financial Intermediaries for our entire suite of variable annuities: A.G. Edwards & Sons, Inc., AIG Advisors Group, Inc., (Advantage Capital, AIG Financial Advisors, American General, FSC Securities Corporation, Royal Alliance Assoc., Inc.), Bancwest Investment Services, Inc., Cadaret, Grant & Co., Inc., Capital Analyst Inc., Centaurus Financial, Inc., Citigroup, Inc. (various divisions and affiliates), Comerica Securities, Commonwealth Financial Network, Compass Brokerage, Inc., Crown Capital Securities, L.P., Cuna Brokerage Services, Inc., Cuso Financial Services, L.P., Edward D. Jones & Co., L.P., FFP Securities, Inc., First Allied Securities, Inc., First Citizens Investor Services, First Montauk Securities Corp., First Tennessee Bank, First Tennessee Brokerage, Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc., H. Beck, Inc., H.D. Vest Investment Services (subsidiary of Wells Fargo & Company), Harbour Investments, Inc., Heim & Young Securities, Huntington Investment Company, Independent Financial Group LLC, Infinex Financial Group, ING Advisors Network, (Financial Network Services (or Investment) Corp., ING Financial Partners, Multi-Financial Securities, Primevest Financial Services, Inc.,), Investacorp, Inc. , Investment Professionals, Inc., Investors Capital Corp., J.J.B. Hilliard, James T. Borello & Co., Janney Montgomery Scott, Inc., Jefferson Pilot Securities Corporation, Key Investment Services, LaSalle Financial 56 ------------------------------------------------------------------------------- Services, Inc., Lincoln Financial Advisors Corp. (marketing name for Lincoln National Corp.), LPL Financial Corporation, M&T Securities, Inc., Merrill Lynch Pierce Fenner & Smith, Morgan Keegan & Company, Inc., Morgan Keegan FID Division, Morgan Stanley & Co., Inc. (various divisions and affiliates), Mutual Service Corporation, NatCity Investments, National Planning Holdings (Invest Financial Corp., Investment Centers of America, Inc., National Planning Corp., SII Investments, Inc.), Newbridge Securities Corp., NEXT Financial Group, Inc., NFP Securities, Inc., Pension Planners Securities, Inc., Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James & Associates, Inc., Raymond James FID Division, Raymond James Financial Services, RBC Dain FID Division, RBC Dain Rauscher Inc., RDM Investment Svcs Inc., Robert W. Baird & Co. Inc., Securities America, Inc., Sigma Financial Corporation, Sorrento Pacific, Stifel Nicolaus & Company, Incorporated, Summit Brokerage Services Inc., Sun Trust Bank, TFS Securities, Inc., The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc., Triad Advisors, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services, Inc. (Union Bank of California, N.A.), UBS Financial Services, Inc., Uvest Financial Services Group Inc., Vanderbilt Securities, LLC, Wachovia Securities, LLC (various divisions), Walnut Street Securities, Inc., Wells Fargo Brokerage Services, L.L.C., WaMu Investments, Inc., Woodbury Financial Services, Inc. (an affiliate of ours), XCU Capital Corporation, Inc. Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their Registered Representative is or should be included in any such listing. As of December 31, 2007, we have entered into arrangements to pay Marketing Expense Allowances to the following Fund Companies (or affiliated parties) for our entire suite of variable annuities: A I M Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investment Research and Management, Inc., American Variable Insurance Series & Capital Research and Management Company, Franklin Templeton Services, LLC, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Putnam Retail Management Limited Partnership. Marketing Expense Allowances may vary based on the form of Contract sold and the age of the purchaser. We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify you whether any Financial Intermediary is or should be included in any such listing. You are encouraged to review the prospectus for each Fund for any other compensation arrangements pertaining to the distribution of Fund shares. For the fiscal year ended December 31, 2007, Additional Payments did not in the aggregate exceed approximately $66.4 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.06% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $15.8 million or approximately 0.25% of the Premium Payments invested in a particular Fund during this period. Financial Intermediaries that received Additional Payments in 2007, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. 9. FEDERAL TAX CONSIDERATIONS A. INTRODUCTION The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the 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 "Annuity Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity purchases by non-U.S. Persons or residents. This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract. In addition, this discussion does not address many of the tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in 57 ------------------------------------------------------------------------------- any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW. B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT The Separate Account is taxed as 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 any realized capital gains on assets of the Separate Account are reinvested and taken into account in determining the value of the Accumulation and Annuity Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the Contract. Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. 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. C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN TAX-QUALIFIED RETIREMENT PLANS Section 72 of the Code governs the taxation of annuities in general. 1. NON-NATURAL PERSONS AS OWNERS Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Contract Owner generally could be required to include in gross income currently for each taxable year the excess of (a) the sum of the Contract Value as of the close of the taxable year and all previous distributions under the Contract over (b) the sum of net premiums paid for the taxable year and any prior taxable year and the amount includable in gross income for any prior taxable year with respect to the Contract under Section 72(u). However, Section 72(u) does not apply to: - A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person), - A contract acquired by the estate of a decedent by reason of such decedent's death, - Certain contracts acquired with respect to tax-qualified retirement arrangements, - Certain contracts held in structured settlement arrangements that may qualify under Code Section 130, or - A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract's purchase. A non-natural Contract Owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code Section 72(u). However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts. Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements. 2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected. Except as provided below, upon the death of the Contract Owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving spouse of the Contract Owner; (a) or the civil union partner of the Contract Owner in a civil union established under applicable state law (or any law succeeding or replacing such statute(s)); or (b) the civil union partner or member of a similar same sex relationship under the law of any state; and the Annuitant or Joint Annuitant, if any, is alive, then such designated 58 ------------------------------------------------------------------------------- beneficiary may continue the Contract as the succeeding Contract Owner. The right of the designated beneficiary (as spouse or civil union partner) to continue the Contract is contingent upon the treatment of the designated beneficiary as the "holder" of the Contract in accordance with the provisions of section 72(s)(3) of the Code (which under current tax law is limited to different sex spouses). In the event that the designated beneficiary continues the Contract, the distribution requirements of Code section 72(s) will only arise upon the death of such designated beneficiary, unless the designated beneficiary elects not to continue the Contract. If the designated beneficiary is not treated as the "holder" under section 72(s)(3) of the Code (as is the case under current federal tax law for a civil union partner), the distribution requirements of Code section 72(s)(1) and (2) outlined above shall apply at the time of the Contract Owner's death and the entire interest in the Contract must be distributed within five years of the Contract Owner's death or under the Alternative Election. Contract continuation under this provision may take effect only once with respect to this Contract. The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts which were purchased prior to August 14, 1982. a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. i. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract" under Section 72 of the Code. ii. To the extent that the value of the Contract (ignoring any surrender charges except on a full surrender) exceeds the "investment in the contract," such excess constitutes the "income on the contract." It is unclear what value should be used in determining the "income on the contract." We believe that the current Contract value (determined without regard to surrender charges) generally is an appropriate measure. However, in some instances the IRS could take the position that the value should be the current Contract value (determined without regard to surrender charges) increased by some measure of the value of certain future cash-value type benefits. iii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a partial withdrawal or surrender) is deemed to come first from any such "income on the contract" and then from "investment in the contract," and for these purposes such "income on the contract" shall be computed by reference to any aggregation rule in subparagraph 2.c. below. As a result, any such amount received or deemed received (1) shall be includable in gross income to the extent that such amount does not exceed any such "income on the contract," and (2) shall not be includable in gross income to the extent that such amount does exceed any such "income on the contract." If at the time that any amount is received or deemed received there is no "income on the contract" (e.g., because the gross value of the Contract does not exceed the "investment in the contract" and no aggregation rule applies), then such amount received or deemed received will not be includable in gross income, and will simply reduce the "investment in the contract." iv. The receipt of any amount as a loan under the Contract or the assignment or pledge of any portion of the value of the Contract shall be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. v. In general, the transfer of the Contract, without full and adequate consideration, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. This transfer rule does not apply, however, to certain transfers of property between Spouses or incident to divorce. vi. In general, any amount actually received under the Contract as a Death Benefit, including an optional Death Benefit, if any, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made periodically after the Annuity Commencement Date are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the "investment in the contract" to the total amount of the payments to be made after the Annuity Commencement Date (the "exclusion ratio"). i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the investment in the contract as of the Annuity Commencement Date, any additional payments (including surrenders) will be entirely includable in gross income. ii. If the annuity payments cease by reason of the death of the Annuitant and, as of the date of death, the amount of annuity payments excluded from gross income by the exclusion ratio does not exceed the investment in the contract as of the Annuity Commencement Date, then the remaining portion of unrecovered investment shall be allowed as a deduction for the last taxable year of the Annuitant. iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date are not entitled to any exclusion ratio and shall be fully includable in gross income. However, upon a full surrender after such date, only the excess of the amount received (after any surrender charge) over the remaining "investment in the contract" shall be includable in gross income (except to the extent that the aggregation rule referred to in the next subparagraph c. may apply). 59 ------------------------------------------------------------------------------- c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after October 21, 1988 by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract may be treated as a new contract for this purpose. We believe that for any Contracts subject to such aggregation, the values under the Contracts and the investment in the contracts will be added together to determine the taxation under subparagraph 2.a., above, of amounts received or deemed received prior to the Annuity Commencement Date. Withdrawals will first be treated first as withdrawals of income until all of the income from all such Contracts is withdrawn. In addition, the Treasury Department has specific authority under the aggregation rules in Code Section 72(e)(12) to issue regulations to prevent the avoidance of the income-out-first rules for non-periodic distributions through the serial purchase of annuity contracts or otherwise. As of the date of this prospectus, there are no regulations interpreting these aggregation provisions. d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS. i. If any amount is received or deemed received on the Contract (before or after the Annuity Commencement Date), the Code applies a penalty tax equal to ten percent of the portion of the amount includable in gross income, unless an exception applies. ii. The 10% penalty tax will not apply to the following distributions: 1. Distributions made on or after the date the recipient has attained the age of 59 1/2. 2. Distributions made on or after the death of the holder or where the holder is not an individual, the death of the primary annuitant. 3. Distributions attributable to a recipient's becoming disabled. 4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the recipient (or the joint lives or life expectancies of the recipient and the recipient's designated Beneficiary). 5. Distributions made under certain annuities issued in connection with structured settlement agreements. 6. Distributions of amounts which are allocable to the "investment in the contract" prior to August 14, 1982 (see next subparagraph e.). 7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service. If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST 14, 1982. If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first from the amount of the "investment in the contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then from the portion of the "income on the contract" (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining "income on the contract" and (4) last from the remaining "investment in the contract." As a result, to the extent that such amount received or deemed received does not exceed such pre-8/14/82 investment, such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the contract" attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e. f. REQUIRED DISTRIBUTIONS i. Death of Contract Owner or Primary Annuitant Subject to the alternative election or Spouse beneficiary provisions in ii or iii below: 1. If any Contract Owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death; 60 ------------------------------------------------------------------------------- 2. If any Contract Owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and 3. If the Contract Owner is not an individual, then for purposes of 1. or 2. above, the primary annuitant under the Contract shall be treated as the Contract Owner, and any change in the primary annuitant shall be treated as the death of the Contract Owner. The primary annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract. ii. Alternative Election to Satisfy Distribution Requirements If any portion of the interest of a Contract Owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the Contract Owner's death. iii. Spouse Beneficiary If any portion of the interest of a Contract Owner is payable to or for the benefit of his or her Spouse, and the Annuitant or Contingent Annuitant is living, such Spouse shall be treated as the Contract Owner of such portion for purposes of section i. above. This spousal contract continuation shall apply only once for this Contract. g. ADDITION OF RIDER OR MATERIAL CHANGE. The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information. h. PARTIAL EXCHANGES. The IRS in Rev. Rul. 2003-76 has confirmed that the owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul. 2003-76 also refers to caveats and additional guidance in the companion Notice 2003-51, which discusses cases in which a partial exchange is followed by a surrender, withdrawal or other distribution from either the old contract or the new contract. Notice 2003-51 specifically indicates that the IRS is considering (1) under what circumstances it should treat a partial exchange followed by such a distribution within 24 months as presumptively for "tax avoidance" purposes (e.g., to avoid the income-out-first rules on amounts received under Code Section 72) and (2) what circumstances it should treat as rebutting such a presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of employment). Notice 2003-51 was superseded by Revenue Procedure 2008-24, effective for partial exchanges completed on or after June 30, 2008. Partial exchanges completed on or after this date will qualify for tax free treatment if: (1) no amounts are withdrawn from, or received in surrender of, either of the contracts involved in the exchange during the 12 months beginning on the date on which amounts are treated as received as premiums or other consideration paid for the contract received in the exchange (the date of transfer); or (2) the taxpayer demonstrates that certain conditions (e.g., death, disability, reaching age 50 1/2, divorce, loss of employment) occurred between the date of transfer and the date of the withdrawal or surrender. A transfer within the scope of the revenue procedure, but not treated as a tax-free exchange, will be treated as a taxable distribution, followed by a payment for a second contract. Two annuity contracts that are the subject of a tax-free exchange pursuant to the revenue procedure will not be aggregated, even if issued by the same insurance company. We advise you to consult with a qualified tax adviser as to potential tax consequences before attempting any partial exchange. 3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting your Contract be adequately diversified. Code Section 817(h) provides that a variable annuity contract will not be treated as an annuity contract for any period during which the investments made by the separate account or Fund are not adequately diversified. If a contract is not treated as an annuity contract, the contract owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of the segregated asset account underlying a variable contract is represented by any one investment, - no more than 70% is represented by any two investments, - no more than 80% is represented by any three investments and - no more than 90% is represented by any four investments. 61 ------------------------------------------------------------------------------- In determining whether the diversification standards are met, all securities of the same issuer, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. In the case of government securities, each government agency or instrumentality is treated as a separate issuer. A separate account must be in compliance with the diversification standards on the last day of each calendar quarter or within 30 days after the quarter ends. If an insurance company inadvertently fails to meet the diversification requirements, the company may still comply within a reasonable period and avoid the taxation of contract income on an ongoing basis. However, either the insurer or the contract owner must agree to pay the tax due 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 letter ruling ("PLR") from the IRS. As long as the Funds comply with certain terms and conditions contained in the PLR, Fund diversification will not be prevented if purported tax-qualified plans invest in the Funds. Hartford and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. 4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the "owner" of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the "tax owner" of certain separate account assets, income and gain from such assets would be includable in the variable contract owner's gross income. The Treasury Department indicated in 1986 that, in regulations or revenue rulings under Code Section 817(d) (relating to the definition of a variable contract), 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. For instance, the IRS in Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, reiterated its position in prior rulings that, where shares in a fund offered in an insurer's separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such shares can be purchased directly by the general public or others without going through such a variable contract), such "public availability" means that such shares 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 shares directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer's variable contracts or by other permitted entities. The IRS in Rev. Rul. 2003-91 also indicated that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund 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. D. FEDERAL INCOME TAX WITHHOLDING The portion of an amount received under a Contract that is taxable gross income to the Payee is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following: 1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless an individual elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" form is not submitted to us in a timely manner, generally we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS. 2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is generally subject to federal income tax withholding as if the Payee were a married individual claiming 3 exemptions, unless the individual elects otherwise. An individual generally may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such 62 ------------------------------------------------------------------------------- a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming 3 exemptions, and remit this amount to the IRS. Generally no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the Payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A Payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the Payee's total tax liability. E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to Section 10 for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans. F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and mandatory withholding on U.S. source taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In addition, purchasers may be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence. G. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS Any amount payable upon a Contract Owner's death, whether before or after the Annuity Commencement Date, is generally includable in the Contract Owner's estate for federal estate tax purposes. Similarly, prior to the Contract Owner's death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-Spouse beneficiary who either is (1) 37 1/2 or more years younger than a Contract Owner or (2) a grandchild (or more remote further descendent) of a Contract Owner may have federal generation-skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations under Code Section 2662 may require us to deduct any such GST tax from your Contract, or from any applicable payment, and pay it directly to the IRS. However, any federal estate, gift or GST tax payment with respect to a Contract could produce an offsetting income tax deduction for a beneficiary or transferee under Code Section 691(c) (partially offsetting such federal estate or GST tax) or a basis increase for a beneficiary or transferee under Code Section 691(c) or Section 1015(d). In addition, as indicated above in "Distributions Prior to the Annuity Commencement Date," the transfer of a Contract for less than adequate consideration during the Contract Owner's lifetime generally is treated as producing an amount received by such Contract Owner that is subject to both income tax and the 10% penalty tax. To the extent that such an amount deemed received causes an amount to be includable currently in such Contract Owner's gross income, this same income amount could produce a corresponding increase in such Contract Owner's tax basis for such Contract that is carried over to the transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and Section 1015. 10. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences. The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts or accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan. THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN 63 ------------------------------------------------------------------------------- ADMINISTRATIVE DUTIES INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS, DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF QUALIFIED PLAN LOANS, COMPLIANCE REGULATORY REQUIREMENTS AND FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A QUALIFIED CONTRACT, YOU SHOULD CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE. The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences. We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future. 1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS"). In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) that include after-tax employee contributions may be treated as deemed IRAs subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available. a. TRADITIONAL IRAS Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the Owner reaches age 70 1/2 or dies, as described below, may result in imposition of a 50% penalty tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA. You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into a Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to the Traditional IRA. In addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant). In addition, such a Plan is not required to permit such a rollover. IRAs generally may not invest in life insurance contracts. However, an annuity contract that is used as an IRA may provide a death benefit that equals the greater of the premiums paid or the contract's cash value. The Contract offers an enhanced death benefit that may exceed the greater of the Contract Value or total premium payments. The tax rules are unclear as to what extent an IRA can provide a death benefit that exceeds the greater of the IRA's cash value or the sum of the premiums paid and other contributions into the IRA. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. b. SEP IRAS Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer, employee and salary reduction contributions, as well as 64 ------------------------------------------------------------------------------- higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. c. SIMPLE IRAS The Savings Incentive Match Plan for Employees of small employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax on premature distributions, as described below. In addition, the 10% penalty tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection. If we do not serve as the Designated Financial Institution for your employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us. d. ROTH IRAS Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract Owner's lifetime. Generally, however, upon the Owner's death the amount remaining in a Roth IRA must be distributed by the end of the fifth year after such death or distributed over the life expectancy of a designated beneficiary. The Owner of a Traditional IRA may convert a Traditional IRA into a Roth IRA under certain circumstances. The conversion of a Traditional IRA to a Roth IRA will subject the fair market value of the converted Traditional IRA to federal income tax. In addition to the amount held in the converted Traditional IRA, the fair market value may include the value of additional benefits provided by the annuity contract on the date of conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. 2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice. In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject 65 ------------------------------------------------------------------------------- to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. 3. TAX SHELTERED ANNUITY UNDER SECTION 403(B) ("TSA") Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations described in Code Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and, subject to certain limitations, exclude employer contributions to a TSA from such an employee's gross income. Generally, total contributions may not exceed the lesser of an annual dollar limit (e.g., $46,000 in 2008) or 100% of the employee's "includable compensation" for the most recent full year of service, subject to other adjustments. The general annual elective deferral limit for a TSA participant after 2005 is $15,000. In addition, for years after 2006 this $15,000 limit will be indexed for cost-of-living adjustments under Code Section 402(g)(4) at $500 increments. For any such participant age 50 or older, the contribution limit after 2005 generally is increased by an additional $5,000 under Code Section 414(v). For years after 2006 this "over-50 catch-up" $5,000 limit also will be indexed for cost-of-living adjustments under Code Section 414(v)(2)(C) at $500 increments. Special provisions may allow certain employees different overall limitations. A TSA is subject to a prohibition against distributions from the TSA attributable to contributions made pursuant to a salary reduction agreement, unless such distribution is made: a. after the employee reaches age 59 1/2; b. upon the employee's separation from service; c. upon the employee's death or disability; d. in the case of hardship (and in the case of hardship, any income attributable to such contributions may not be distributed); or e. as a qualified reservist distribution upon certain calls to active duty. Please note that the TSA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a TSA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. In particular, please note that tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. In addition, a life insurance contract issued after September 23, 2007 is generally ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2). Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. ' 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant's or beneficiary's accumulated benefit immediately before such exchange (taking into account such participant's or beneficiary's accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant's employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. We are no longer accepting any incoming exchange request, or new contract application, for any individual TSA contract. 66 ------------------------------------------------------------------------------- 4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS") Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $15,000 for 2006 and thereafter. The $15,000 limit will be indexed for cost-of-living adjustments at $500 increments. The Plan may provide for additional "catch-up" contributions during the three taxable years ending before the year in which the participant attains normal retirement age. In addition, with an eligible Deferred Compensation Plan for a governmental employer, the contribution limitation may be increased under Code Section 457(e)(18) to allow certain "catch-up" contributions for individuals who have attained age 50, but only one "catch-up" may be used in a particular year. In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70 1/2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations). Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. However, where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer's general creditors under Code Section 457(b)(6). 5. TAXATION OF AMOUNTS RECEIVED FROM QUALIFIED PLANS Except under certain circumstances in the case of Roth IRAs, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above. For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Contract Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual. In addition, penalty taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan. 6. PENALTY TAXES FOR QUALIFIED PLANS Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal penalty taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Penalty taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The penalty taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below. a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59 1/2. However, this 10% penalty tax does not apply to a distribution that is either: (i) made to a beneficiary (or to the employee's estate) on or after the employee's death; (ii) attributable to the employee's becoming disabled under Code Section 72(m)(7); (iii) part of a series of substantially equal periodic payments (not less frequently than annually -- "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP 67 ------------------------------------------------------------------------------- Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service; (iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans); (v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse); (vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year; or (vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty. In addition, the 10% penalty tax does not apply to a distribution from an IRA that is either: (viii) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions are met; (ix) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or (x) for a qualified first-time home buyer and meets the requirements of Code Section 72(t)(8). If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 59 1/2 and (b) 5 years have elapsed since the first of these periodic payments. For any premature distribution from a SIMPLE IRA during the first 2 years that an individual participates in a salary reduction arrangement maintained by that individual's employer under a SIMPLE Plan, the 10% penalty tax rate is increased to 25%. b. RMDS AND 50% PENALTY TAX If the amount distributed from a Qualified Contract or Plan is less than the amount of the required minimum distribution ("RMD") for the year, the participant is subject to a 50% penalty tax on the amount that has not been timely distributed. An individual's interest in a Qualified Plan generally must be distributed, or begin to be distributed, not later than the Required Beginning Date. Generally, the Required Beginning Date is April 1 of the calendar year following the later of -- (i) the calendar year in which the individual attains age 70 1/2, or (ii) (except in the case of an IRA or a 5% owner, as defined in the Code) the calendar year in which a participant retires from service with the employer sponsoring a Qualified Plan that allows such a later Required Beginning Date. The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over -- (a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or (b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary. If an individual dies before reaching the Required Beginning Date, the individual's entire interest generally must be distributed within 5 years after the individual's death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual's death to a designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If such beneficiary is the individual's surviving spouse, distributions may be delayed until the deceased individual would have attained age 70 1/2. If an individual dies after RMDs have begun for such individual, any remainder of the individual's interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual's death. The RMD rules that apply while the Contract Owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the Owner apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own. The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of 68 ------------------------------------------------------------------------------- the Owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs. In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% penalty tax for RMDs if such additional RMD amount is not timely distributed. 7. TAX WITHHOLDING FOR QUALIFIED PLANS Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" (described below in "ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution." Also, special withholding rules apply with respect to distributions from non-governmental Section 457(b) Plans, and to distributions made to individuals who are neither citizens nor resident aliens of the United States. Regardless of any "election out" (or any actual amount of tax actually withheld) on an amount received from a Qualified Contract or Plan, the payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the payee's total tax liability. 8. ROLLOVER DISTRIBUTIONS The current tax rules and limits for tax-free rollovers and transfers between Qualified Plans vary according to (1) the type of transferor Plan and transferee Plan, (2) whether the amount involved is transferred directly between Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed first to a participant or beneficiary who then transfers that amount back into another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the distribution is made to a participant, spouse or other beneficiary. Accordingly, we advise you to consult with a qualified tax adviser before receiving any amount from a Qualified Contract or Plan or attempting some form of rollover or transfer with a Qualified Contract or Plan. For instance, generally any amount can be transferred directly from one type of Qualified Plan (e.g., a TSA) to the same type of Plan for the benefit of the same individual, without limit (or federal income tax), if the transferee Plan is subject to the same kinds of restrictions as the transferor Plan (e.g., a TSA that is subject to the same kinds of salary reduction restrictions) and certain other conditions to maintain the applicable tax qualification are satisfied (e.g., as described above for TSA exchanges after September 24, 2007). Such a "direct transfer" between the same kinds of Plan is generally not treated as any form of "distribution" out of such a Plan for federal income tax purposes. By contrast, an amount distributed from one type of Plan (e.g., a TSA) into a different type of Plan (e.g., a Traditional IRA) generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to such tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover", the missing amount that is not rolled over remains subject to normal income tax plus any applicable penalty tax. Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either -- a. an RMD amount; b. one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or 69 ------------------------------------------------------------------------------- c. any distribution made upon hardship of the employee. Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457 (e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution penalty tax applicable to distributions from such a "predecessor" Qualified Plan. Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and 408A(d)(3) also vary according to the type of transferor IRA and type of transferee IRA or other Plan. For instance, generally no tax-free "direct rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a "conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In addition, generally no tax-free "direct rollover" or "60-day rollover" can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA set up by that same individual as the original owner. Generally, any amount other than an RMD distributed from a Traditional or SEP IRA is eligible for a "direct rollover" or a "60-day rollover" to another Traditional IRA for the same individual. Similarly, any amount other than an RMD distributed from a Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to another Roth IRA for the same individual. However, in either case such a tax-free 60-day rollover is limited to 1 per year (365-day period); whereas no 1-year limit applies to any such "direct rollover." Similar rules apply to a "direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another SIMPLE IRA or a Traditional IRA, except that any distribution of employer contributions from a SIMPLE IRA during the initial 2-year period in which the individual participates in the employer's SIMPLE Plan is generally disqualified (and subject to the 25% penalty tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a "direct rollover" or a "60-day rollover" to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible). Special rules also apply to transfers or rollovers for the benefit of a spouse (or ex-spouse) or a nonspouse designated beneficiary, Plan distributions of property, and obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. The Katrina Emergency Tax Relief Act of 2005 (KETRA) allows certain amounts to be recontributed within three years as a rollover contribution to a plan from which a KETRA distribution was taken. 70 ------------------------------------------------------------------------------- TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION GENERAL INFORMATION Safekeeping of Assets Experts Non-Participating Misstatement of Age or Sex Principal Underwriter Additional Payments PERFORMANCE RELATED INFORMATION Total Return for all Sub-Accounts Yield for Sub-Accounts Money Market Sub-Accounts Additional Materials Performance Comparisons ACCUMULATION UNIT VALUES FINANCIAL STATEMENTS
APP A-1 ------------------------------------------------------------------------------- APPENDIX A -- EXAMPLES TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- STANDARD DEATH BENEFIT APP A-2 THE HARTFORD'S LIFETIME INCOME BUILDER SELECTS AND THE HARTFORD'S APP A-3 LIFETIME INCOME BUILDER PORTFOLIOS THE HARTFORD'S PRINCIPAL FIRST APP A-16 THE HARTFORD'S LIFETIME INCOME FOUNDATION APP A-17 THE HARTFORD'S LIFETIME INCOME BUILDER II APP A-21 MAV PLUS APP A-27
APP A-2 ------------------------------------------------------------------------------- STANDARD DEATH BENEFIT EXAMPLE 1 Assume that: - You made an initial Premium Payment of $100,000, - In your fourth Contract Year, you made a partial Surrender of $8,000, - Your Contract Value in the fourth year immediately before your Surrender was $109,273, - On the day we calculate the Death Benefit, your Contract Value was $117,403. The adjustment to your total Premium Payments for partial Surrenders is on a dollar-for-dollar basis up to 10% of total Premium Payments. The partial Surrender of $8,000 is less than 10% of Premium Payments. Your adjusted total Premium Payments is $92,000. Because your Contract Value at death was greater than the adjusted total Premium Payments, your Death Benefit is $117,403. EXAMPLE 2 Assume that: - You made an initial Premium Payment of $100,000, - In your fourth Contract Year, you made a partial Surrender of $60,000, - Your Contract Value in the fourth year immediately before your Surrender was $150,000, - On the day we calculate the Death Benefit, your Contract Value was $120,000. The adjustments to your Premium Payments for partial Surrenders is on a dollar-for-dollar basis up to 10% of total Premium Payments. 10% of the total Premium Payments is $10,000. Total Premium Payments adjusted for dollar-for-dollar partial Surrenders is $90,000. The remaining partial Surrenders equal $50,000. This amount will reduce your total Premium Payments by a factor. To determine this factor, we take your Contract Value immediately before the Surrender [$150,000] and subtract the $10,000 dollar-for dollar adjustment to get $140,000. The proportional factor is 1 - ($50,000/$140,000) = .64286. This factor is multiplied by $90,000. The result is an adjusted total Premium Payment of $57,857. Because your Contract Value at death was greater than the adjusted total Premium Payments, your Death Benefit is $120,000. APP A-3 ------------------------------------------------------------------------------- THE HARTFORD'S LIFETIME INCOME BUILDER SELECTS AND THE HARTFORD'S LIFETIME INCOME BUILDER PORTFOLIOS EXAMPLE 1: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000.
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment THRESHOLD $5,000 $5,000 - 5% of your Payment Base - 5% of your Payment Base LIFETIME BENEFIT PAYMENT N/A N/A GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
EXAMPLE 2: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000.
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment THRESHOLD $4,500 $4,500 - 4.5% of your Payment Base - 4.5% of your Payment Base LIFETIME BENEFIT PAYMENT N/A N/A GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
EXAMPLE 3: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000.
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment WITHDRAWAL PERCENT 5% 5% - Based on your age - Based on your age LIFETIME BENEFIT PAYMENT $5,000 $5,000 - 5% of your Payment Base - 5% of your Payment Base GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
EXAMPLE 4: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 3 (SINGLE LIFE), HOWEVER YOUR FIRST PARTIAL SURRENDER IS TAKEN AT AGE 70. YOUR WITHDRAWAL PERCENT IS 6% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE YEAR IS $105,000. YOUR CONTRACT VALUE UPON ATTAINING AGE 70 IS $105,500. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $105,000 $105,000 LIFETIME BENEFIT PAYMENT $6,330 $6,300 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by your greater of your Payment Base or Contract Payment Base Value upon attaining age 70
APP A-4 ------------------------------------------------------------------------------- YOU TAKE A PARTIAL SURRENDER OF $6,000, VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $105,000 $105,000 WITHDRAWAL PERCENT 6%(1) 6%(1) LIFETIME BENEFIT PAYMENT $330 $300 - Remaining for Contract Year - Remaining for Contract Year CONTRACT VALUE AFTER THE WITHDRAWAL $99,000 $99,000 GUARANTEED MINIMUM DEATH BENEFIT $94,000 $94,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the withdrawal withdrawal
EXAMPLE 5: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000.
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment WITHDRAWAL PERCENT 4.5% 4.5% - Based on your age - Based on your age LIFETIME BENEFIT PAYMENT $4,500 $4,500 - 4.5% of your Payment Base - 4.5% of your Payment Base GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
EXAMPLE 6: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 5 (JOINT/SPOUSAL), HOWEVER YOUR FIRST PARTIAL SURRENDER IS TAKEN AT AGE 70. YOUR WITHDRAWAL PERCENT IS 5.5% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE CONTRACT YEAR IS $110,000. YOUR CONTRACT VALUE UPON ATTAINING AGE 70 IS $111,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $110,000 $110,000 LIFETIME BENEFIT PAYMENT $6,105 $6,050 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by your greater of your Payment Base or Contract Payment Base Value upon attaining age 70
YOU TAKE A PARTIAL SURRENDER OF $6,000, VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $110,000 $110,000 WITHDRAWAL PERCENT 5.5%(1) 5.5%(1) LIFETIME BENEFIT PAYMENT $105 $50 - Remaining for Contract Year - Remaining for Contract Year CONTRACT VALUE AFTER THE WITHDRAWAL $105,000 $105,000 GUARANTEED MINIMUM DEATH BENEFIT $94,000 $94,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the withdrawal withdrawal
(1) The Withdrawal Percentage will remain for the duration of your Contract unless an automatic Payment Base increase occurs on a future anniversary and a new Withdrawal Percent age band is applicable; if no automatic Payment Base increase occurs on a future anniversary where a new Withdrawal Percent age band is applicable, your Withdrawal Percent will remain as is. APP A-5 ------------------------------------------------------------------------------- EXAMPLE 7: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE PRIOR TO THE RIDER CHARGE BEING DEDUCTED ON YOUR FIRST ANNIVERSARY IS $95,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 THRESHOLD $5,000 $5,000 GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000
VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 - Prior Payment Base reduced by - Prior Payment Base reduced by withdrawal withdrawal WITHDRAWAL PERCENT 5%(1) 5%(1) THRESHOLD $4,000 $4,000 - Remaining for the Contract Year - Remaining for the Contract Year GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the withdrawal withdrawal
VALUES AFTER THE ANNIVERSARY PROCESSING:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($95,000) divided by your current Payment the rider charge being taken, or Base ($99,000), less 1 - Your current Payment Base - Resulting in -0.04%, subject to minimum of 0%, No change to the Payment Base THRESHOLD $4,950 $4,950 - 5% of your Payment Base - 5% of your Payment Base RIDER CHARGE $544.50 $643.50 - Rider charge of 0.55% multiplied by - Rider charge of 0.65% multiplied by your current Payment Base your current Payment Base GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - No change due to anniversary processing - No change due to anniversary processing
EXAMPLE 8: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE PRIOR TO THE RIDER CHARGE BEING DEDUCTED ON YOUR FIRST ANNIVERSARY IS $105,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 THRESHOLD $5,000 $5,000 GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000
APP A-6 ------------------------------------------------------------------------------- VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 - Prior Payment Base reduced by - Prior Payment Base reduced by withdrawal withdrawal WITHDRAWAL PERCENT 5%(1) 5%(1) THRESHOLD $4,000 $4,000 - Remaining for the Contract Year - Remaining for the Contract Year GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the withdrawal withdrawal
VALUES AFTER THE ANNIVERSARY PROCESSING:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $105,000 $105,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($105,000) divided by your current the rider charge being taken, or Payment Base ($99,000), less 1 - Your current Payment Base - Resulting in 0.06%, subject to minimum of 0% and maximum of 10% THRESHOLD $5,250 $5,250 - 5% of your Payment Base - 5% of your Payment Base RIDER CHARGE $577.50 $682.50 - Rider charge of 0.55% multiplied by - Rider charge of 0.65% multiplied by your current Payment Base your current Payment Base GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - No change due to anniversary processing - No change due to anniversary processing
EXAMPLE 9: ASSUME THE SAME FACTS AS EXAMPLE 2 (JOINT/SPOUSAL). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE PRIOR TO THE RIDER CHARGE BEING DEDUCTED ON YOUR FIRST ANNIVERSARY IS $95,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 THRESHOLD $4,500 $4,500 GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000
APP A-7 ------------------------------------------------------------------------------- VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 - Prior Payment Base reduced by - Prior Payment Base reduced by withdrawal withdrawal WITHDRAWAL PERCENT 4.5%(1) 4.5%(1) THRESHOLD $3,500 $3,500 - Remaining for the Contract Year - Remaining for the Contract Year GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the withdrawal withdrawal
VALUES AFTER THE ANNIVERSARY PROCESSING:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($95,000) divided by your current Payment the rider charge being taken, or Base ($99,000), less 1 - Your current Payment Base - Resulting in -0.04%, subject to minimum of 0%, No change to the Payment Base THRESHOLD $4,455 $4,455 - 4.5% of your Payment Base - 4.5% of your Payment Base RIDER CHARGE $544.50 $643.50 - Rider charge of 0.55% multiplied by - Rider charge of 0.65% multiplied by your current Payment Base your current Payment Base GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000 - No change due to anniversary processing - No change due to anniversary processing
EXAMPLE 10: ASSUME THE SAME FACTS AS EXAMPLE 7 (SINGLE LIFE). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, THE CONTRACT VALUE AFTER THE PAYMENT IS $121,000. VALUES PRIOR TO THE PREMIUM PAYMENT:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 THRESHOLD $4,950 $4,950 GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000
APP A-8 ------------------------------------------------------------------------------- VALUES AFTER THE PREMIUM PAYMENT:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $119,000 $119,000 - Prior Payment Base increased by the - Prior Payment Base increased by the Premium Payment Premium Payment THRESHOLD $6,050 $5,950 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by your greater of your current Payment Base or current Payment Base Contract Value GUARANTEED MINIMUM DEATH BENEFIT $119,000 $119,000 - Prior Death Benefit increased by the - Prior Death Benefit increased by the Premium Payment Premium Payment
EXAMPLE 11: ASSUME THE SAME FACTS AS EXAMPLE 9 (JOINT/SPOUSAL). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, THE CONTRACT VALUE AFTER THE PAYMENT IS $125,000. VALUES PRIOR TO THE PREMIUM PAYMENT:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $99,000 $99,000 THRESHOLD $4,455 $4,455 GUARANTEED MINIMUM DEATH BENEFIT $99,000 $99,000
VALUES AFTER THE PREMIUM PAYMENT:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $119,000 $119,000 - Prior Payment Base increased by the - Prior Payment Base increased by the Premium Payment Premium Payment THRESHOLD $5,625 $5,355 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by your greater of your current Payment Base or current Payment Base Contract Value GUARANTEED MINIMUM DEATH BENEFIT $119,000 $119,000 - Prior Death Benefit increased by the - Prior Death Benefit increased by the Premium Payment Premium Payment
APP A-9 ------------------------------------------------------------------------------- EXAMPLE 12: ASSUME THE OLDER COVERED LIFE IS 74 (SINGLE LIFE). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $3,000 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 6%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000. VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $50,000 $50,000 - Partial Surrender did not exceed the - Partial Surrender did not exceed the Lifetime Benefit Payment Lifetime Benefit Payment WITHDRAWAL PERCENT 6%(1) 6%(1) LIFETIME BENEFIT PAYMENT $300 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was 6% multiplied by the greater of the 6% multiplied by the Payment Base on the Payment Base or Contract Value on the Contract Anniversary Contract Anniversary - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was $3,000 $3,300 GUARANTEED MINIMUM DEATH BENEFIT $47,000 $47,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the partial Surrender partial Surrender
EXAMPLE 13: ASSUME THE YOUNGER COVERED LIFE IS 74 (JOINT/SPOUSAL). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $2,750 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 5.5%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000. VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $50,000 $50,000 - Partial Surrender did not exceed the - Partial Surrender did not exceed the Lifetime Benefit Payment Lifetime Benefit Payment WITHDRAWAL PERCENT 5.5%(1) 5.5%(1) LIFETIME BENEFIT PAYMENT $275 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was 5.5% multiplied by the greater of the 5.5% multiplied by the Payment Base on Payment Base or Contract Value on the the Contract Anniversary Contract Anniversary - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was $2,750 $3,025 GUARANTEED MINIMUM DEATH BENEFIT $47,250 $47,250 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the partial Surrender partial Surrender
APP A-10 ------------------------------------------------------------------------------- EXAMPLE 14: ASSUME THE SAME FACTS AS EXAMPLE 12 (SINGLE LIFE). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $1,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $52,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $51,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $50,000 $50,000 - Partial Surrender did not exceed the - Partial Surrender did not exceed the Lifetime Benefit Payment Lifetime Benefit Payment WITHDRAWAL PERCENT 6% 6% LIFETIME BENEFIT PAYMENT $300 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was 6% multiplied by the greater of the 6% multiplied by the Payment Base on the Payment Base or Contract Value on the Contract Anniversary Contract Anniversary - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was $3,000 $3,300 GUARANTEED MINIMUM DEATH BENEFIT $47,000 $47,000 - Prior Death Benefit reduced by the - Prior Death Benefit reduced by the partial Surrender partial Surrender
VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $49,323 $49,038 - Proportional reduction: - Proportional reduction: 1-($700/($52,000-$300) 1-($1000/$52,000) LIFETIME BENEFIT PAYMENT $0 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year GUARANTEED MINIMUM DEATH BENEFIT $46,068 $46,096 - Prior Death Benefit reduced by partial - Prior Death Benefit reduced by partial surrender NOT exceeding the Lifetime surrender NOT exceeding the Lifetime Benefit Payment. Then, proportional Benefit Payment. Then, proportional reduction multiplied by the result of the reduction multiplied by the result of the above above
APP A-11 ------------------------------------------------------------------------------- EXAMPLE 15: ASSUME THE SAME FACTS AS EXAMPLE 13 (JOINT/SPOUSAL). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $2,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $49,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $47,000. VALUES PRIOR TO THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $50,000 $50,000 WITHDRAWAL PERCENT 5.5% 5.5% LIFETIME BENEFIT PAYMENT $275 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was 5.5% multiplied by the greater of the 5.5% multiplied by the Payment Base on Payment Base or Contract Value on the the Contract Anniversary Contract Anniversary - Available Lifetime Benefit Payment was - Available Lifetime Benefit Payment was $2,750 $3,025 GUARANTEED MINIMUM DEATH BENEFIT $47,250 $47,250
VALUES AFTER THE PARTIAL SURRENDER:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $48,230 $47,959 - Proportional reduction: - Proportional reduction: 1-($1,725/($49,000-$275) 1-($2,000/$49,000) LIFETIME BENEFIT PAYMENT $0 $0 - Remaining Lifetime Benefit Payment for - Remaining Lifetime Benefit Payment for the Contract Year the Contract Year GUARANTEED MINIMUM DEATH BENEFIT $45,312 $45,321 - Prior Death Benefit reduced by partial - Prior Death Benefit reduced by partial surrender NOT exceeding the Lifetime surrender NOT exceeding the Lifetime Benefit Payment. Then, proportional Benefit Payment. Then, proportional reduction multiplied by the result of the reduction multiplied by the result of the above above
EXAMPLE 16: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). NOW ASSUME YOU HAVE REACHED YOUR FIRST CONTRACT ANNIVERSARY. YOUR CONTRACT VALUE ON THE CONTRACT ANNIVERSARY IS $115,000. VALUES PRIOR TO THE CONTRACT ANNIVERSARY:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment THRESHOLD $5,000 $5,000 - 5% of your Payment Base - 5% of your Payment Base LIFETIME BENEFIT PAYMENT N/A N/A GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
APP A-12 ------------------------------------------------------------------------------- VALUES AFTER THE ANNIVERSARY PROCESSING:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $110,000 $115,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($115,000) divided by your current the rider charge being taken, or Payment Base ($100,000), less 1 - Your current Payment Base - Resulting in 0.15%, capped at 10%. Subject to minimum of 0% and maximum of 10% THRESHOLD $5,500 $5,750 - 5% of your Payment Base - 5% of your Payment Base GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - No change due to anniversary processing - No change due to anniversary processing
EXAMPLE 17: ASSUME THE SAME FACTS AS EXAMPLE 2 (JOINT/SPOUSAL). NOW ASSUME YOU HAVE REACHED YOUR FIRST CONTRACT ANNIVERSARY. YOUR CONTRACT VALUE ON THE ANNIVERSARY IS $115,000. VALUES PRIOR TO THE CONTRACT ANNIVERSARY:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment THRESHOLD $4,500 $4,500 - 4.5% of your Payment Base - 4.5% of your Payment Base LIFETIME BENEFIT PAYMENT N/A N/A GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - Equal to your initial Premium Payment - Equal to your initial Premium Payment
VALUES AFTER THE CONTRACT ANNIVERSARY: PAYMENT BASE $110,000 $115,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($115,000) divided by your current the rider charge being taken, or Payment Base ($100,000), less 1 - Your current Payment Base - Resulting in 0.15%, capped at 10%. Subject to minimum of 0% and maximum of 10% THRESHOLD $4,950 $5,175 - 4.5% of your Payment Base - 4.5% of your Payment Base GUARANTEED MINIMUM DEATH BENEFIT $100,000 $100,000 - No change due to anniversary processing - No change due to anniversary processing
APP A-13 ------------------------------------------------------------------------------- EXAMPLE 18: SPOUSAL CONTRACT CONTINUATION (SINGLE LIFE) On date of Spousal Contract continuation, we increase the Contract Value to equal the Death Benefit (if greater). For illustration purposes, we will assume the Contract Value on the date of continuation is set equal to the Death Benefit of $150,000 and the Payment Base is $125,000. VALUES UPON SPOUSAL CONTRACT CONTINUATION:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $150,000 $150,000 - Equal to the Contract Value on date of - Equal to Contract Value on date of continuation continuation WITHDRAWAL PERCENTAGE 6% 6% - Withdrawal Percent is set using the - Withdrawal Percent is set using the oldest Covered Life's age on the oldest Covered Life's age on the effective date of continuation effective date of continuation LIFETIME BENEFIT PAYMENT $9,000 $9,000 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by the Payment Base on date of continuation Payment Base on date of continuation GUARANTEED MINIMUM DEATH BENEFIT $150,000 $150,000 - Equal to Contract Value on date of - Equal to Contract Value on date of continuation continuation
EXAMPLE 19: SPOUSAL CONTRACT CONTINUATION (JOINT/SPOUSAL) On date of Spousal Contract continuation, we increase the Contract Value to equal the Death Benefit (if greater). For illustration purposes, we will assume the Contract Value on the date of continuation is set equal to the Death Benefit of $150,000 and the Payment Base is $125,000. VALUES UPON SPOUSAL CONTRACT CONTINUATION:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $150,000 $150,000 - Greater of Contract Value or Payment - Greater of Contract Value or Payment Base on date of continuation Base on date of continuation WITHDRAWAL PERCENTAGE 5.5% 5.5% - Withdrawal Percent is set using the - Withdrawal Percent is set using the oldest Covered Life's age on the oldest Covered Life's age on the effective date of continuation effective date of continuation LIFETIME BENEFIT PAYMENT $8,250 $8,250 - Withdrawal Percent multiplied by the - Withdrawal Percent multiplied by greater of the Contract Value or Payment Payment Base on date of continuation Base on date of continuation GUARANTEED MINIMUM DEATH BENEFIT $150,000 $150,000 - Equal to Contract Value on date of - Equal to Contract Value on date of continuation continuation
APP A-14 ------------------------------------------------------------------------------- EXAMPLE 20: WITHDRAWAL PERCENT INCREASE; ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 4 (SINGLE LIFE). YOUR WITHDRAWAL PERCENT IS 6%, WHICH WAS BASED ON YOUR AGE (70) AT THE TIME OF FIRST WITHDRAWAL. YOUR LIFETIME BENEFIT PAYMENT PRIOR TO THE CONTRACT ANNIVERSARY IS $6,300. YOU ARE NOW AGE 75 AND YOUR ANNIVERSARY IS BEING PROCESSED. YOUR CONTRACT VALUE ON ANNIVERSARY IS $117,000. VALUES PRIOR TO THE ANNIVERSARY:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $105,000 $105,000 WITHDRAWAL PERCENT 6% 6% LIFETIME BENEFIT PAYMENT $6,300 $6,300 GUARANTEED MINIMUM DEATH BENEFIT $94,000 $94,000
VALUES AFTER THE ANNIVERSARY PROCESSING:
THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME FEATURE BUILDER SELECTS BUILDER PORTFOLIOS ------------------------------------------------------------------------------------------------------------------------------- PAYMENT BASE $115,500 $117,000 - The ratio is the Contract Value - Greater of the Contract Value prior to ($117,000) divided by your current the rider charge being taken, or Payment Base ($105,000), less 1 - Your current Payment Base - Resulting in 0.11%, capped at 10%. Subject to minimum of 0% and maximum of 10% WITHDRAWAL PERCENT 6.5% 6.5% - Due to the automatic increase and - Due to the automatic increase and client reaching a new age band, the client reaching a new age band, the Withdrawal Percent has increased Withdrawal Percent has increased LIFETIME BENEFIT PAYMENT $7,507.50 $7,605 RIDER CHARGE $635.25 $760.50 - Rider charge of 0.55% multiplied by - Rider charge of 0.65% multiplied by your current Payment Base your current Payment Base GUARANTEED MINIMUM DEATH BENEFIT $94,000 $94,000 - No change due to anniversary processing - No change due to anniversary processing
EXAMPLE 21 Assume the following Contract values: Contract Value = $3,000 Lifetime Benefit Payment = $2,000 Client takes a partial Surrender of $2,000 (within rider limit) New Contract Value = $1,000 - Minimum Amount Rule is reached as remaining Contract Value is reduced below one Lifetime Benefit Payment and the Partial Surrender was within the rider limit - Contract Value is transferred to approved investment program - We will no longer accept subsequent Premium Payments - We will begin to automatically pay the annual Lifetime Benefit Payment via the Automatic Income Program. The Lifetime Benefit Payment will be paid out of our General Account - The payout of the Lifetime Benefit Payment will no longer reduce the Contract Value, however, the Death Benefit will continue to be reduced - We will waive the Annual Maintenance Fee and rider fee - Benefit Increases will no longer be applied NOTE: If the Contract Value is reduced below one Lifetime Benefit Payment on any Contract Anniversary due to performance the above scenario would occur. APP A-15 ------------------------------------------------------------------------------- EXAMPLE 22 Assume the following Contract values: Contract Value = $3,000 Lifetime Benefit Payment = $2,000 Client takes a partial Surrender of $2,800 (exceeds rider limit) New Contract Value = $200 - Minimum Account Rule is reached as remaining Contract Value is reduced below the Minimum Account Rule under the contract, $500 (varies by state) and the Partial Surrender exceeded the rider limit - Contract is fully liquidated APP A-16 ------------------------------------------------------------------------------- THE HARTFORD'S PRINCIPAL FIRST EXAMPLE 1: ASSUME YOU SELECT THE HARTFORD'S PRINCIPAL FIRST WHEN YOU PURCHASE YOUR CONTRACT AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Benefit Amount is $100,000, which is your initial Premium Payment. - Your Benefit Payment is $7,000, which is 7% of your Benefit Amount. EXAMPLE 2: IF YOU MAKE AN ADDITIONAL PREMIUM PAYMENT OF $50,000, THEN - Your Benefit Amount is $150,000, which is your prior Benefit Amount ($100,000) plus your additional Premium Payment ($50,000). - Your Benefit Payment is $10,500, which is your prior Benefit Payment ($7,000) plus 7% of your additional Premium Payment ($3,500). EXAMPLE 3: ASSUME THE SAME FACTS AS EXAMPLE 1. IF YOU TAKE THE MAXIMUM BENEFIT PAYMENT BEFORE THE END OF THE FIRST CONTRACT YEAR, THEN - Your Benefit Amount becomes $93,000, which is your prior Benefit Amount ($100,000) minus the Benefit Payment ($7,000). - Your Benefit Payment for the next year remains $7,000, because you did not take more than your maximum Benefit Payment ($7,000). EXAMPLE 4: ASSUME THE SAME FACTS AS EXAMPLE 1. IF YOU SURRENDER $50,000, AND YOUR CONTRACT VALUE IS $150,000 AT THE TIME OF THE SURRENDER, THEN We recalculate your Benefit Amount by comparing the results of two calculations: - First we deduct the amount of the Surrender ($50,000) from your Contract Value ($150,000). This equals $100,000 and is your "New Contract Value." - Second, we deduct the amount of the Surrender ($50,000) from your Benefit Amount ($100,000). This is $50,000 and is your "New Benefit Amount." Since the New Contract Value ($100,000) is more than or equal to the New Benefit Amount ($50,000), and it is more than or equal to your Premium Payments invested in the Contract before the Surrender ($100,000), the Benefit Payment is unchanged and remains $7,000. EXAMPLE 5: ASSUME THE SAME FACTS AS EXAMPLE 1. IF YOU SURRENDER $50,000, AND YOUR CONTRACT VALUE IS $80,000 AT THE TIME OF THE SURRENDER, THEN We recalculate your Benefit Amount by comparing the results of two calculations: - First we deduct the amount of the Surrender ($50,000) from your Contract Value ($80,000). This equals $30,000 and is your "New Contract Value." - Second, we deduct the amount of the Surrender ($50,000) from your Benefit Amount ($100,000). This is $50,000 and is your "New Benefit Amount." Since the New Contract Value ($30,000) is less than the New Benefit Amount ($50,000), your "New Benefit Amount" becomes the New Contract Value ($30,000), as we have to recalculate your Benefit Payment. We recalculate the Benefit Payment by comparing the "old" Benefit Payment ($7,000) to 7% of the New Benefit Amount ($2,100). Your Benefit Payment becomes the lower of those two values, or $2,100. EXAMPLE 6: IF YOU ELECT TO "STEP UP" THE HARTFORD'S PRINCIPAL FIRST AFTER THE 5TH YEAR, ASSUMING YOU HAVE MADE NO WITHDRAWALS, AND YOUR CONTRACT VALUE AT THE TIME OF STEP UP IS $200,000, THEN - We recalculate your Benefit Amount to equal your Contract Value, which is $200,000. - Your new Benefit Payment is equal to 7% of your new Benefit Amount, or $14,000. APP A-17 ------------------------------------------------------------------------------- THE HARTFORD'S LIFETIME INCOME FOUNDATION This Optional Withdrawal Benefit is closed to new investors if The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios is approved in your state. EXAMPLE 1: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $5,000, which is 5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 2: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $4,500, which is 4.5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 3: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Withdrawal Percent is 5%, which is based on your age. - Your Lifetime Benefit Payment is $5,000, which is 5% of your Payment Base. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 4: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 3, HOWEVER YOUR FIRST PARTIAL SURRENDER IS TAKEN AT AGE 70. YOUR WITHDRAWAL PERCENT IS 6% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE YEAR IS $105,000. - Your Lifetime Benefit Payment is $6,300, which is the product of your Withdrawal Percent multiplied by $105,000, which is the greater of your Contract Value at the beginning of the year and your Payment Base. - You take a partial Surrender of $6,000. - Your Payment Base remains at $100,000, since the withdrawal did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent will remain at 6% for the duration of your Contract; this is based on your age on the most recent Contract Anniversary prior to your first partial Surrender. - Your remaining Lifetime Benefit Payment for the Contract Year is $300. - Your Contract Value after the withdrawal is $99,000. - Your Guaranteed Minimum Death Benefit is $94,000, which is your prior Death Benefit reduced by the amount of the withdrawal. EXAMPLE 5: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Withdrawal Percent is 4.5%, which is based on your age. - Your Lifetime Benefit Payment is $4,500, which is 4.5% of your Payment Base. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. APP A-18 ------------------------------------------------------------------------------- EXAMPLE 6: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 5, HOWEVER YOUR FIRST PARTIAL SURRENDER AT AGE 70. YOUR WITHDRAWAL PERCENT IS 5.5% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE YEAR IS $106,500. - Your Lifetime Benefit Payment is $5,857.50, which is the product of your Withdrawal Percent multiplied by $106,500, which is the greater of your Contract Value at the beginning of the year and your Payment Base. - You take a partial Surrender of $5,500. - Your Payment Base remains at $100,000, since the withdrawal did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent will remain at 5.5% for the duration of your Contract; this is based on your age on the most recent Contract Anniversary prior to your first partial Surrender. - Your remaining Lifetime Benefit Payment for the Contract Year is $357.50. - Your Contract Value after the withdrawal is $101,000. - Your Guaranteed Minimum Death Benefit is $94,500, which is your prior Death Benefit reduced by the withdrawal. EXAMPLE 7: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE ON YOUR FIRST ANNIVERSARY IS $95,000. PRIOR TO THE SURRENDER: - Your initial Payment Base is $100,000. - Your Threshold is $5,000. - Your Guaranteed Minimum Death Benefit is $100,000. AFTER THE SURRENDER: - Your Payment Base is $99,000, which is your prior Payment Base reduced by the amount of the partial Surrender. - Your Withdrawal Percentage, used to determine Lifetime Benefit Payments when you are in an Eligible Withdrawal Year, will remain at 5% for the duration of your Contract. - Your remaining Threshold amount for the Contract Year is $4,000, which is your prior Threshold amount reduced by the amount of the partial Surrender. - The annual charge for The Hartford's Lifetime Income Foundation is 0.30% of the Payment Base. - $99,000 x 0.30% = $297, this amount is deducted from the Contract Value. - Your Guaranteed Minimum Death Benefit is $99,000, which is your prior Death Benefit reduced by the amount of the partial Surrender. EXAMPLE 8: ASSUME THE SAME FACTS AS EXAMPLE 2 (JOINT/SPOUSAL). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE ON YOUR FIRST ANNIVERSARY IS $95,000. PRIOR TO THE SURRENDER: - Your initial Payment Base is $100,000. - Your Threshold is $4,500. - Your Guaranteed Minimum Death Benefit is $100,000. AFTER THE SURRENDER: - Your Payment Base is $99,000, which is your prior Payment Base reduced by the amount of the partial Surrender. - Your Withdrawal Percentage, used to determine Lifetime Benefit Payments when you are in an Eligible Withdrawal Year, will remain at 4.5% for the duration of your Contract. - Your remaining Threshold amount for the Contract Year is $3,500, which is your prior Threshold amount reduced by the amount of the partial Surrender. - The annual charge for The Hartford's Lifetime Income Foundation is 0.30% of the Payment Base. - $99,000 x 0.30% = $297, this amount is deducted from the Contract Value. - Your Guaranteed Minimum Death Benefit is $99,000, which is your prior Death Benefit reduced by the amount of the partial Surrender. APP A-19 ------------------------------------------------------------------------------- EXAMPLE 9: ASSUME THE SAME FACTS AS EXAMPLE 7 (SINGLE LIFE). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, JUST PRIOR TO THE PAYMENT, THE CONTRACT VALUE WAS $96,000. PRIOR TO THE PREMIUM PAYMENT: - At the beginning of Contract Year 2, your initial Payment Base is $99,000. - Your Threshold amount is $4,950. - Your Guaranteed Minimum Death Benefit is $99,000. AFTER THE PREMIUM PAYMENT: - Your Payment Base is $119,000, which is your prior Payment Base increased by the amount of the Premium Payment. - Your Threshold amount is $5,950, which is 5% of the greater of your Contract Value immediately following the Premium Payment or your Payment Base immediately following the Premium Payment. - Your Guaranteed Minimum Death Benefit is $119,000, which is your prior Death Benefit increased by the amount of the Premium Payment. EXAMPLE 10: ASSUME THE SAME FACTS AS EXAMPLE 8 (JOINT/SPOUSAL). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, JUST PRIOR TO THE PAYMENT, THE CONTRACT VALUE WAS $96,000. PRIOR TO THE PREMIUM PAYMENT: - At the beginning of Contract Year 2, your initial Payment Base is $99,000. - Your Threshold amount is $4,455. - Your Guaranteed Minimum Death Benefit is $99,000. AFTER THE PREMIUM PAYMENT: - Your Payment Base is $119,000, which is your prior Payment Base increased by the amount of the Premium Payment. - Your Threshold amount is $5,355, which is 4.5% of the greater of your Contract Value immediately following the Premium Payment or your Payment Base immediately following the Premium Payment. - Your Guaranteed Minimum Death Benefit is $119,000, which is your prior Death Benefit increased by the amount of the Premium Payment. EXAMPLE 11: ASSUME THE OLDER COVERED LIFE IS 74 (SINGLE LIFE). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $3,300 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 6%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000; THE LIFETIME BENEFIT PAYMENT IS 6% MULTIPLIED BY THE GREATER OF THE PAYMENT BASE OR CONTRACT VALUE, OR $3,300. AFTER THE PARTIAL SURRENDER: - Your Payment Base remains at $50,000, which is the Payment Base prior to the partial Surrender, since the partial Surrender did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent is 6% for the duration of your Contract. - Your Lifetime Benefit Payment for the remainder of the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,700, which is your prior Death Benefit reduced by the amount of the partial Surrender. EXAMPLE 12: ASSUME THE YOUNGER COVERED LIFE IS 74 (JOINT/SPOUSAL). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $3,025 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 5.5%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000; THE LIFETIME BENEFIT PAYMENT IS 5.5% MULTIPLIED BY THE GREATER OF PAYMENT BASE OR CONTRACT VALUE, OR $3,025. AFTER THE PARTIAL SURRENDER: - Your Payment Base remains at $50,000, which is the Payment Base prior to the partial Surrender, since the partial Surrender did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent is 5.5% for the duration of your Contract. - Your Lifetime Benefit Payment for the remainder of the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,975, which is your prior Death Benefit reduced by the amount of the partial Surrender. APP A-20 ------------------------------------------------------------------------------- EXAMPLE 13: ASSUME THE SAME FACTS AS EXAMPLE 11 (SINGLE LIFE). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $1,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $52,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $51,000. PRIOR TO THE PARTIAL SURRENDER: - Your Payment Base is $50,000. - Your Withdrawal Percent was previously locked in at 6%. - Your remaining Lifetime Benefit Payment for this Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,700. AFTER THE PARTIAL SURRENDER: - Your Payment Base is $49,038, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Payment Base. - Your Lifetime Benefit Payment remaining for the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $45,802, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Death Benefit. EXAMPLE 14: ASSUME THE SAME FACTS AS EXAMPLE 12 (JOINT/SPOUSAL). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $2,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $49,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $47,000. PRIOR TO THE PARTIAL SURRENDER: - Your Payment Base is $50,000. - Your Withdrawal Percent was previously locked in at 5.5%. - Your remaining Lifetime Benefit Payment for this Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,975. AFTER THE PARTIAL SURRENDER: - Your new Payment Base is $47,959, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Payment Base. - Your Lifetime Benefit Payment remaining for the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $45,058, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Death Benefit. APP A-21 ------------------------------------------------------------------------------- THE HARTFORD'S LIFETIME INCOME BUILDER II This Optional Withdrawal Benefit is closed to new investors if The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios is approved in your state. EXAMPLE 1: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $5,000, which is 5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 2: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS LESS THAN AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $4,500, which is 4.5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 3: ASSUME YOU SELECT SINGLE LIFE OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE OLDER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Withdrawal Percent is 5%, which is based on your age. - Your Lifetime Benefit Payment is $5,000, which is 5% of your Payment Base. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. EXAMPLE 4: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 3, HOWEVER YOUR FIRST PARTIAL SURRENDER IS TAKEN AT AGE 70. YOUR WITHDRAWAL PERCENT IS 6% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE YEAR IS $105,000. - Your Lifetime Benefit Payment is $6,300, which is the product of your Withdrawal Percent multiplied by $105,000, which is the greater of your Contract Value at the beginning of the year and your Payment Base. - You take a partial Surrender of $6,000. - Your Payment Base remains at $100,000, since the withdrawal did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent will remain at 6% for the duration of your Contract; this is based on your age on the most recent Contract Anniversary prior to your first partial Surrender. - Your remaining Lifetime Benefit Payment for the Contract Year is $300. - Your Contract Value after the withdrawal is $99,000. - Your Guaranteed Minimum Death Benefit is $94,000, which is your prior Death Benefit reduced by the amount of the withdrawal. EXAMPLE 5: ASSUME YOU SELECT JOINT/SPOUSAL OPTION WHEN YOU PURCHASE YOUR CONTRACT, THE YOUNGER COVERED LIFE IS AGE 60, AND YOUR INITIAL PREMIUM PAYMENT IS $100,000. - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Withdrawal Percent is 4.5%, which is based on your age. - Your Lifetime Benefit Payment is $4,500, which is 4.5% of your Payment Base. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. APP A-22 ------------------------------------------------------------------------------- EXAMPLE 6: ASSUME THE SAME CONTRACT ISSUE FACTS AS EXAMPLE 5, HOWEVER YOUR FIRST PARTIAL SURRENDER AT AGE 70. YOUR WITHDRAWAL PERCENT IS 5.5% BASED ON YOUR AGE. YOUR CONTRACT VALUE AT THE BEGINNING OF THE YEAR IS $106,500. - Your Lifetime Benefit Payment is $5,857.50, which is the product of your Withdrawal Percent multiplied by $106,500, which is the greater of your Contract Value at the beginning of the year and your Payment Base. - You take a partial Surrender of $5,500. - Your Payment Base remains at $100,000, since the withdrawal did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent will remain at 5.5% for the duration of your Contract; this is based on your age on the most recent Contract Anniversary prior to your first partial Surrender. - Your remaining Lifetime Benefit Payment for the Contract Year is $357.50. - Your Contract Value after the withdrawal is $101,000. - Your Guaranteed Minimum Death Benefit is $94,500, which is your prior Death Benefit reduced by the withdrawal. EXAMPLE 7: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE ON YOUR FIRST ANNIVERSARY IS $95,000. PRIOR TO THE SURRENDER: - Your initial Payment Base is $100,000. - Your Threshold is $5,000. - Your Guaranteed Minimum Death Benefit is $100,000. AFTER THE SURRENDER: - At the anniversary, we calculate the automatic Payment Base increase. The ratio is the Contract Value ($95,000) divided by the Maximum Contract Value ($100,000), less 1. Subject to a minimum of 0% and a maximum of 10%. - ($95,000/$100,000) - 1 = -.05 subject to the minimum of 0%. - Your Payment Base is $99,000, which is your prior Payment Base reduced by the amount of the partial Surrender, since the automatic Payment Base increase was 0%. - Your Withdrawal Percentage, used to determine Lifetime Benefit Payments when you are in an Eligible Withdrawal Year, will remain at 5% for the duration of your Contract. - Your remaining Threshold amount for the Contract Year is $4,000, which is your prior Threshold amount reduced by the amount of the partial Surrender. - The annual charge for The Hartford's Lifetime Income Builder II is 0.40% of the Payment Base after the automatic increase calculation. - $99,000 x 0.40% = $396, this amount is deducted from the Contract Value. - Your Guaranteed Minimum Death Benefit is $99,000, which is your prior Death Benefit reduced by the amount of the partial Surrender. APP A-23 ------------------------------------------------------------------------------- EXAMPLE 8: ASSUME THE SAME FACTS AS EXAMPLE 2 (JOINT/SPOUSAL). ALSO ASSUME THAT YOU TAKE A $1,000 PARTIAL SURRENDER IN THE FIRST CONTRACT YEAR AND THAT THE CONTRACT VALUE ON YOUR FIRST ANNIVERSARY IS $95,000. PRIOR TO THE SURRENDER: - Your initial Payment Base is $100,000. - Your Threshold is $4,500. - Your Guaranteed Minimum Death Benefit is $100,000. AFTER THE SURRENDER: - At the anniversary, we calculate the automatic Payment Base increase. The ratio is the Contract Value ($95,000) divided by the Maximum Contract Value ($100,000), less 1. Subject to a minimum of 0% and a maximum of 10%. - ($95,000/$100,000) - 1 = -.05 subject to the minimum of 0%. - Your Payment Base is $99,000, which is your prior Payment Base reduced by the amount of the partial Surrender, since the automatic Payment Base increase was 0%. - Your Withdrawal Percentage, used to determine Lifetime Benefit Payments when you are in an Eligible Withdrawal Year, will remain at 4.5% for the duration of your Contract. - Your remaining Threshold amount for the Contract Year is $3,500, which is your prior Threshold amount reduced by the amount of the partial Surrender. - The annual charge for The Hartford's Lifetime Income Builder II is 0.40% of the Payment Base after the automatic increase calculation. - $99,000 x 0.40% = $396, this amount is deducted from the Contract Value. - Your Guaranteed Minimum Death Benefit is $99,000, which is your prior Death Benefit reduced by the amount of the partial Surrender. EXAMPLE 9: ASSUME THE SAME FACTS AS EXAMPLE 7 (SINGLE LIFE). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, JUST PRIOR TO THE PAYMENT, THE CONTRACT VALUE WAS $96,000. PRIOR TO THE PREMIUM PAYMENT: - At the beginning of Contract Year 2, your initial Payment Base is $99,000. - Your Threshold amount is $4,950. - Your Guaranteed Minimum Death Benefit is $99,000. AFTER THE PREMIUM PAYMENT: - Your Payment Base is $119,000, which is your prior Payment Base increased by the amount of the Premium Payment. - Your Threshold amount is $5,950, which is 5% of the greater of your Contract Value immediately following the Premium Payment or your Payment Base immediately following the Premium Payment. - Your Guaranteed Minimum Death Benefit is $119,000, which is your prior Death Benefit increased by the amount of the Premium Payment. APP A-24 ------------------------------------------------------------------------------- EXAMPLE 10: ASSUME THE SAME FACTS AS EXAMPLE 8 (JOINT/SPOUSAL). ASSUME THAT AN ADDITIONAL PREMIUM PAYMENT OF $20,000 IS MADE IN CONTRACT YEAR 2, JUST PRIOR TO THE PAYMENT, THE CONTRACT VALUE WAS $96,000. PRIOR TO THE PREMIUM PAYMENT: - At the beginning of Contract Year 2, your initial Payment Base is $99,000. - Your Threshold amount is $4,455. - Your Guaranteed Minimum Death Benefit is $99,000. AFTER THE PREMIUM PAYMENT: - Your Payment Base is $119,000, which is your prior Payment Base increased by the amount of the Premium Payment. - Your Threshold amount is $5,355, which is 4.5% of the greater of your Contract Value immediately following the Premium Payment or your Payment Base immediately following the Premium Payment. - Your Guaranteed Minimum Death Benefit is $119,000, which is your prior Death Benefit increased by the amount of the Premium Payment. EXAMPLE 11: ASSUME THE OLDER COVERED LIFE IS 74 (SINGLE LIFE). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $3,300 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 6%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000; THE LIFETIME BENEFIT PAYMENT IS 6% MULTIPLIED BY THE GREATER OF THE PAYMENT BASE OR CONTRACT VALUE, OR $3,300. AFTER THE PARTIAL SURRENDER: - Your Payment Base remains at $50,000, which is the Payment Base prior to the partial Surrender, since the partial Surrender did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent is 6% for the duration of your Contract. - Your Lifetime Benefit Payment for the remainder of the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,700, which is your prior Death Benefit reduced by the amount of the partial Surrender. EXAMPLE 12: ASSUME THE YOUNGER COVERED LIFE IS 74 (JOINT/SPOUSAL). ASSUME THE OWNER MAKES THE FIRST PARTIAL SURRENDER UNDER THE CONTRACT OF $3,025 WHEN, JUST PRIOR TO THE PARTIAL SURRENDER, THE PAYMENT BASE IS $50,000; THE CONTRACT VALUE (ON ANNIVERSARY) IS $55,000; THE WITHDRAWAL PERCENT IS 5.5%; THE GUARANTEED MINIMUM DEATH BENEFIT IS $50,000; THE LIFETIME BENEFIT PAYMENT IS 5.5% MULTIPLIED BY THE GREATER OF PAYMENT BASE OR CONTRACT VALUE, OR $3,025. AFTER THE PARTIAL SURRENDER: - Your Payment Base remains at $50,000, which is the Payment Base prior to the partial Surrender, since the partial Surrender did not exceed your Lifetime Benefit Payment. - Your Withdrawal Percent is 5.5% for the duration of your Contract. - Your Lifetime Benefit Payment for the remainder of the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,975, which is your prior Death Benefit reduced by the amount of the partial Surrender. APP A-25 ------------------------------------------------------------------------------- EXAMPLE 13: ASSUME THE SAME FACTS AS EXAMPLE 11 (SINGLE LIFE). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $1,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $52,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $51,000. PRIOR TO THE PARTIAL SURRENDER: - Your Payment Base is $50,000. - Your Withdrawal Percent was previously locked in at 6%. - Your remaining Lifetime Benefit Payment for this Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,700. AFTER THE PARTIAL SURRENDER: - Your Payment Base is $49,038, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Payment Base. - Your Lifetime Benefit Payment remaining for the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $45,802, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Death Benefit. EXAMPLE 14: ASSUME THE SAME FACTS AS EXAMPLE 12 (JOINT/SPOUSAL). ASSUME THAT A SECOND PARTIAL SURRENDER IS TAKEN IN THE SAME CONTRACT YEAR FOR $2,000; THE CONTRACT VALUE PRIOR TO THE PARTIAL SURRENDER IS $49,000; THE CONTRACT VALUE AFTER THE PARTIAL SURRENDER IS $47,000. PRIOR TO THE PARTIAL SURRENDER: - Your Payment Base is $50,000. - Your Withdrawal Percent was previously locked in at 5.5%. - Your remaining Lifetime Benefit Payment for this Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $46,975. AFTER THE PARTIAL SURRENDER: - Your new Payment Base is $47,959, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Payment Base. - Your Lifetime Benefit Payment remaining for the Contract Year is $0. - Your Guaranteed Minimum Death Benefit is $45,058, which is calculated by determining the proportional reduction 1 - (Surrender exceeding the Lifetime Benefit Payment/Contract Value prior to the Surrender); then this factor is multiplied by the prior Death Benefit. APP A-26 ------------------------------------------------------------------------------- EXAMPLE 15: ASSUME THE SAME FACTS AS EXAMPLE 1 (SINGLE LIFE). NOW ASSUME YOU HAVE REACHED YOUR FIRST CONTRACT ANNIVERSARY. YOUR CONTRACT VALUE ON THE CONTRACT ANNIVERSARY IS $110,000. PRIOR TO THE CONTRACT ANNIVERSARY: - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $5,000, which is 5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. AFTER THE CONTRACT ANNIVERSARY: - At the anniversary, we calculate the automatic Payment Base increase. The ratio is the Contract Value ($110,000) divided by the Maximum Contract Value ($100,000), less 1. Subject to a minimum of 0% and a maximum of 10%. - ($110,000/$100,000) - 1 = .10 subject to the maximum of 10%. - Your Payment Base is $110,000, which is your prior Payment Base multiplied by the automatic Payment Base increase. - Your Threshold amount for the Contract Year is $5,500, which is your new Payment Base multiplied by 5%. - Your Guaranteed Minimum Death Benefit remains $100,000, as it is not impacted by the automatic Payment Base increase. EXAMPLE 16: ASSUME THE SAME FACTS AS EXAMPLE 2 (JOINT/SPOUSAL). NOW ASSUME YOU HAVE REACHED YOUR FIRST CONTRACT ANNIVERSARY. YOUR CONTRACT VALUE ON THE ANNIVERSARY IS $105,000. PRIOR TO THE CONTRACT ANNIVERSARY: - Your Payment Base is $100,000, which is your initial Premium Payment. - Your Threshold is $4,500, which is 4.5% of your Payment Base. - Your Lifetime Benefit Payment is not calculated. The Lifetime Benefit Payment will be determined in the first Eligible Withdrawal Year in which you take a partial Surrender. - Your Guaranteed Minimum Death Benefit is $100,000, which is your initial Premium Payment. AFTER THE CONTRACT ANNIVERSARY: - At the anniversary, we calculate the automatic Payment Base increase. The ratio is the Contract Value ($105,000) divided by the Maximum Contract Value ($100,000), less 1. Subject to a minimum of 0% and a maximum of 10%. - ($105,000/$100,000) - 1 = .05 subject to the maximum of 10%. - Your Payment Base is $105,000, which is your prior Payment Base multiplied by the automatic Payment Base increase. - Your Threshold amount for the Contract Year is $4,725, which is your new Payment Base multiplied by 4.5%. - Your Guaranteed Minimum Death Benefit remains $100,000, as it is not impacted by the automatic Payment Base increase. EXAMPLE 17: SPOUSAL CONTRACT CONTINUATION On date of Spousal Contract continuation, we increase the Contract Value to equal the Death Benefit (if greater). For illustration purposes, we will assume the Contract Value on the date of continuation is set equal to the Death Benefit of $150,000 and the Payment Base is $125,000. The values for the rider are impacted as follows: Payment Base = $150,000 (greater of Contract Value or Payment Base on date of continuation) Withdrawal Percent = existing Withdrawal Percent if partial Surrender have been taken, or else it is set using the remaining Spouse's attained age on the Contract Anniversary prior to the first partial Surrender (for this example we will say it is 6%). Lifetime Benefit Payment = $9,000 (Withdrawal Percent x greater of Payment Base or Contract Value on date of continuation) Death Benefit = $150,000 (Contract Value on date of continuation) Maximum Contract Value (LIB II Only) = $150,000 (greater of Contract Value or Payment Base on date of continuation) APP A-27 ------------------------------------------------------------------------------- MAV PLUS EXAMPLE 1 Assume that: - You elected the MAV Plus Death Benefit when you purchased your Contract with the standard Death Benefit, - You made a single Premium Payment of $100,000, - In your fourth Contract Year, you made a withdrawal of $8,000, - Your Contract Value in your fourth Contract Year immediately before your withdrawal was $109,273, - On the day we receive proof of Death, your Contract Value was $117,403, - Your Maximum Anniversary Value was $106,000, - The Contract Value on the date we calculate the Death Benefit plus 40% of the Contract gain was greater than the standard Death Benefit, your adjusted total Premium Payments, and your Maximum Anniversary Value. ADJUSTMENT FOR PARTIAL SURRENDERS FOR EARNINGS PROTECTION BENEFIT To calculate the Earnings Protection Benefit, we make an adjustment for partial Surrenders if the amount of a Surrender is greater than the Contract gain in the Contract immediately prior to the Surrender. To determine if the partial Surrender is greater than the Contract gain: - We determine Contract gain by subtracting the Contract Value on the date you added the MAV Plus Death Benefit from the Contract Value immediately before the partial surrender, then deduct any premium payments and add any adjustments for partial Surrenders made during that time [$109,273 - $100,000 - $0 + $0 = $9,273] Since the Contract gain at the time of partial Surrender [$9,273] exceeds the partial Surrender [$8,000], there is no adjustment for the partial Surrender in this case. CALCULATION OF CONTRACT GAIN We would calculate the Contract gain as follows: - Contract Value on the day we receive proof of Death [$117,403], - Subtract the Contract Value on the date the MAV Plus Death Benefit was added to your Contract [$100,000], - Add any adjustments for partial Surrenders [$0], So the Contract gain equals $17,403. CALCULATION OF EARNINGS PROTECTION BENEFIT CAP To determine if the cap applies: - We calculate the Contract Value on the date the MAV Plus Death Benefit was added to your Contract ($100,000), - plus Premium Payments made since that date excluding Premium Payments made in the 12 months prior to death ($0), - minus any adjustments for partial Surrenders ($0), which equals $100,000. The cap is 200% of $100,000, which is $200,000. MAV PLUS DEATH BENEFIT AMOUNT IS $106,000. ADJUSTED TOTAL PREMIUM PAYMENT AMOUNT IS $92,000. (See Example 1 under the standard Death Benefit for details of calculation.) MAV PLUS DEATH BENEFIT In this situation the cap does not apply, so we take the Contract Value on the date we receive proof of death and add 40% of gain [$117,403 + 40% (17,403)] which totals $124,364. This is the greatest of the four values compared, and so is the Death Benefit. APP A-28 ------------------------------------------------------------------------------- EXAMPLE 2 Assume that: - You elected the MAV Plus Death Benefit when you purchased your Contract with the standard Death Benefit, - You made a single Premium Payment of $100,000, - In your fourth Contract Year, you made a partial Surrender of $60,000, - Your Contract Value in the fourth year immediately before your Surrender was $150,000, - Your Maximum Anniversary Value is $83,571 (based on an adjustment to an anniversary value that was $140,000 before the partial Surrender (see below)) - On the day we receive proof of Death, your Contract Value was $120,000, - The Contract Value on the date we calculate the Death Benefit plus 40% of the Contract gain was the greatest of the Death Benefit calculations. ADJUSTMENT FOR PARTIAL SURRENDERS FOR EARNINGS PROTECTION BENEFIT To calculate the Earnings Protection Benefit, we make an adjustment for partial Surrenders if the amount of a Surrender is greater than the Contract gain in the Contract immediately prior to the Surrender. To determine if the partial Surrender is greater than the Contract gain: - We determine Contract gain by subtracting the Contract Value on the date you added the MAV Plus Death Benefit from the Contract Value immediately before the partial surrender, then deduct any premium payments and add any adjustments for partial Surrenders made during that time [$150,000 - $100,000 - $0 + $0 = $50,000] Since the partial Surrender [$60,000] exceeds the Contract gain at the time of partial Surrender [$50,000], the adjustment for the partial Surrender is the difference, or $10,000. CALCULATION OF CONTRACT GAIN We would calculate the Contract gain as follows: - Contract Value on the day we receive proof of Death [$120,000], - Subtract the Contract Value on the date the MAV Plus Death Benefit was added to your Contract [$100,000], - Add any adjustments for partial Surrenders [$10,000], So the Contract gain equals $30,000. CALCULATION OF EARNINGS PROTECTION BENEFIT CAP To determine if the cap applies: - We calculate the Contract Value on the date the MAV Plus Death Benefit was added to your Contract ($100,000), - plus Premium Payments made since that date excluding Premium Payments made in the 12 months prior to death ($0), - minus any adjustments for partial Surrenders ($10,000), which equals $90,000. The cap is 200% of $90,000, which is $180,000. ADJUSTMENT FOR PARTIAL SURRENDERS FOR MAXIMUM ANNIVERSARY VALUE The adjustment to your Maximum Anniversary Value for partial Surrenders is on a dollar for dollar basis up to 10% of total Premium Payments. 10% of Premium Payments is $10,000. Maximum Anniversary Value adjusted for dollar for dollar Surrenders is $140,000 - $10,000 = $130,000. Remaining Surrenders equal $50,000. This amount will reduce the Maximum Anniversary Value proportionally. Contract Value immediately before Surrender is $150,000 minus $10,000 = $140,000. The proportional factor is 1 - (50,000/140,000) = .64286. This factor is multiplied by $130,000. The result is an adjusted Maximum Anniversary Value of $83,571. DEATH BENEFIT WITH EARNINGS PROTECTION BENEFIT In this situation the cap does not apply, so we take 40% of Contract gain on the day we receive proof of death (40% of $30,000 is $12,000), and add that to the Contract Value on the date we receive proof of death. Therefore, the Earnings Protection Benefit is [40% ($30,000) + $120,000], which equals $132,000 APP B-1 ------------------------------------------------------------------------------- APPENDIX B -- ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in the Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows only the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits. A table showing all classes of Accumulation Unit Values corresponding to all combinations of optional benefits is shown in the Statement of Additional Information, which you may obtain free of charge by contacting us. There is no information for any of the Sub-Accounts because as of December 31, 2007, none of the Sub-Accounts had commenced operations.
AS OF DECEMBER 31, SUB-ACCOUNT 2008 2009 2010 --------------------------------------------------------------------------------------
APP C-1 -------------------------------------------------------------------------------- APPENDIX C -- COMPARISON AND FUND DATA Presented below are some, but certainly not all, of the differentiating features between the individual deferred variable annuities described in this prospectus. We also offer other individual deferred variable annuities that have different sales charges arrangements, charges (i.e., mortality and expense risk charges and annual fund operating expenses), commission structures and investment options. For instance, The Director variable annuities have different charges and investment options than the comparable Core version of this variable annuity. Your Registered Representative can help you decide which contract variation may be appropriate for you based on your individual circumstances, time horizon, policy feature preferences and risk tolerance. You should consider these differences and discuss them with your Registered Representative to choose a variable annuity. Not all contract variations are offered by all Financial Intermediaries. This Appendix does not constitute, and may not be used for the purposes of making, any offer or solicitation by anyone of any form of variable annuity other than as specifically provided in this prospectus. The form of Contract you select will be identified on your application and the contract issued to you. Consider the investment objectives, risks, charges and expenses of an investment carefully before investing. Both the variable annuity product and underlying Fund prospectuses contain other information about variable annuities and investment options. Your Registered Representative can provide you with prospectuses or you can contact us to receive one. This and any of the other variable annuities referenced in this Appendix are underwritten and distributed by Hartford Securities Distribution Company, Inc. Member SIPC. Please read the prospectus carefully before investing. I. COMPARISON TABLE
MINIMUM INITIAL PREMIUM NON- QUALIFIED QUALIFIED CONTRACT CONTRACT CONTRACT SALES CHARGE ------------------------------------------------------------------------------------------------------------------------------ ACCESS $2,000 $10,000 None CORE $1,000 $1,000 Year 1 2 3 4 CDSC 7% 7% 7% 6% EDGE $1,000 $1,000 Premium $0 - $50,000 - $100,000 - $250,000 - 49,999 99,999 249,999 499,999 FESC 5.5% 4.5% 3.5% 2.5% OUTLOOK $2,000 $10,000 Year 1 2 3 4 CDSC 7% 6% 5% 4% PLUS $2,000 $10,000 Year 1 2 3 4 CDSC 8% 8% 8% 8% MORTALITY & MAXIMUM EXPENSE RISK UP-FRONT CONTRACT SALES CHARGE CHARGE(1) COMMISSION -------- -------------------------------------------------------------------------------------------------- ACCESS 1.45% 2% CORE 5 6 7 8+ 5% 4% 3% 0% 0.95% 7% EDGE $500,000 - $1MM+ 999,999 2.0% 1% 0.55% 6.5% OUTLOOK 5+ 0% 1.40% 5.75% PLUS 5 6 7 8 9+ 7% 6% 5% 4% 0% 1.40% 6.5%
(1) Excluded fees include administrative charges (up to 0.20%), annual maintenance fees (applies to contracts with anniversary/surrender contract values less than $50,000), premium taxes (0 - 3.5%) and optional benefit fees. APP C-2 ------------------------------------------------------------------------------- II. INVESTMENT OPTIONS (STANDARD)
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. CAPITAL APPRECIATION FUND -- Growth of capital Invesco Aim Advisors, Inc. SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. CAPITAL DEVELOPMENT FUND -- Long-term growth of capital Invesco Aim Advisors, Inc. SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. CORE EQUITY FUND -- SERIES II Growth of capital Invesco Aim Advisors, Inc. Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. INTERNATIONAL GROWTH FUND -- Long-term growth of capital Invesco Aim Advisors, Inc. SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. AIM V.I. SMALL CAP EQUITY FUND -- Long-term growth of capital Invesco Aim Advisors, Inc. SERIES II Sub-adviser: Advisory entities affiliated with Invesco Aim Advisors, Inc. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS BALANCED WEALTH Maximize total return consistent with AllianceBernstein L.P. STRATEGY PORTFOLIO -- CLASS B Advisor's determination of reasonable risk ALLIANCEBERNSTEIN VPS INTERNATIONAL Long-term growth of capital AllianceBernstein L.P. GROWTH PORTFOLIO -- CLASS B ALLIANCEBERNSTEIN VPS INTERNATIONAL Long-term growth of capital AllianceBernstein L.P. VALUE PORTFOLIO -- CLASS B ALLIANCEBERNSTEIN VPS SMALL/MID CAP Long-term growth of capital AllianceBernstein L.P. VALUE PORTFOLIO -- CLASS B ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO Long-term growth of capital AllianceBernstein L.P. -- CLASS B AMERICAN FUNDS INSURANCE SERIES AMERICAN FUNDS ASSET ALLOCATION FUND High total return, including income and Capital Research and Management Company -- CLASS 2 capital gains, consistent with the preservation of capital over the long term. AMERICAN FUNDS BLUE CHIP INCOME AND Produce income exceeding the average yield Capital Research and Management Company GROWTH FUND -- CLASS 2 on U.S. stocks generally (as represented by the average yield on the Standard & Poor's 500 Composite Index)and to provide an opportunity for growth of principal consistent with sound common stock investing. AMERICAN FUNDS BOND FUND -- CLASS 2 High level of current income as is Capital Research and Management Company consistent with the preservation of capital. AMERICAN FUNDS GLOBAL BOND FUND -- Seeks to provide you, over the long term, Capital Research and Management Company CLASS 2 with a high level of total return as consistent with prudent management, by investing primarily in investment grade bonds issued by entities based around the world and denominated in various currencies, including U.S. dollars
APP C-3 -------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH AND Seeks to make your investment grow over Capital Research and Management Company INCOME FUND -- CLASS 2 time and provide you with current income by investing primarily in stocks of well-established companies located around the world. AMERICAN FUNDS GLOBAL GROWTH FUND -- Seeks to make your investment grow over Capital Research and Management Company CLASS 2 time by investing primarily in common stocks of companies located around the world. AMERICAN FUNDS GLOBAL SMALL Seeks to make your investment grow over Capital Research and Management Company CAPITALIZATION FUND -- CLASS 2 time by investing primarily in stocks of smaller companies located around the world. AMERICAN FUNDS GROWTH FUND -- CLASS 2 Seeks to make your investment grow by Capital Research and Management Company investing primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. AMERICAN FUNDS GROWTH -- INCOME FUND Seeks to make your investment grow and Capital Research and Management Company -- CLASS 2 provide you with income over time by investing primarily in common stocks or other securities that demonstrate the potential for appreciation and/or dividends. AMERICAN FUNDS INTERNATIONAL FUND -- Seeks to make your investment grow over Capital Research and Management Company CLASS 2 time by investing primarily in common stocks of companies located outside the United States. AMERICAN FUNDS NEW WORLD FUND -- CLASS Long-term capital appreciation Capital Research and Management Company 2 FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS FIDELITY VIP CONTRAFUND(R) PORTFOLIO Long-term capital appreciation Fidelity Management & Research Company -- SERVICE CLASS 2 FIDELITY VIP DYNAMIC CAPITAL Seeks capital appreciation FMR Sub-advised by FMR Co., Inc. APPRECIATION PORTFOLIO -- SERVICE and Fidelity Research and Analysis Company CLASS 2 FIDELITY VIP GROWTH PORTFOLIO -- Capital appreciation Fidelity Management & Research Company SERVICE CLASS 2 FIDELITY VIP MID CAP PORTFOLIO -- Long-term growth of capital Fidelity Management & Research Company SERVICE CLASS 2 FIDELITY VIP VALUE STRATEGIES Seeks capital appreciation Fidelity Management & Research Company PORTFOLIO -- SERVICE CLASS 2 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN FLEX CAP GROWTH SECURITIES Capital appreciation Franklin Advisers, Inc. FUND -- CLASS 2 FRANKLIN INCOME SECURITIES FUND -- Maximize income while maintaining prospects Franklin Advisers, Inc. CLASS 2 for capital appreciation
APP C-4 -------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- FRANKLIN SMALL CAP VALUE SECURITIES Seeks long-term total return. The Fund Franklin Advisory Services, LLC FUND -- CLASS 2 normally invests at least 80% of its net assets in investments of small capitalization companies, and normally invests predominantly in equity securities. The Fund invests mainly in equity securities of companies that the manager believes are undervalued. FRANKLIN SMALL -- MID CAP GROWTH Long-term growth of capital Franklin Advisers, Inc. SECURITIES FUND -- CLASS 2 (1) FRANKLIN STRATEGIC INCOME SECURITIES High level of current income, with capital Franklin Advisers, Inc. FUND -- CLASS 2 appreciation over the long term as a secondary goal MUTUAL DISCOVERY SECURITIES FUND -- Capital appreciation Franklin Mutual Advisers, LLC CLASS 2 Sub-advised by Franklin Templeton Investment Management Limited MUTUAL SHARES SECURITIES FUND -- CLASS Capital appreciation, with income as a Franklin Mutual Advisers, LLC 2 secondary goal TEMPLETON DEVELOPING MARKETS Long-term capital appreciation Templeton Asset Management Ltd. SECURITIES FUND -- CLASS 2 TEMPLETON FOREIGN SECURITIES FUND -- Long-term growth of capital Templeton Investment Counsel, LLC CLASS 2 Sub-advised by Franklin Templeton Investment Management Limited TEMPLETON GLOBAL INCOME SECURITIES Seeks high current income, consistent with Templeton Global Advisors Limited FUND -- CLASS 2 preservation of capital, with capital Sub-advised by Templeton Asset Management appreciation as a secondary consideration. Ltd. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets. TEMPLETON GROWTH SECURITIES FUND -- Long-term growth of capital Templeton Global Advisors Limited CLASS 2 Sub-advised by Templeton Asset Management Ltd. HARTFORD HLS SERIES FUND II, INC. HARTFORD GROWTH OPPORTUNITIES HLS FUND Capital appreciation HL Investment Advisors, LLC -- CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD LARGECAP GROWTH HLS FUND -- Long-term growth of capital HL Investment Advisors, LLC CLASS IA Sub-advised by Hartford Investment Management Company HARTFORD MIDCAP GROWTH HLS FUND -- Long-term growth of capital HL Investment Advisors, LLC CLASS IA Sub-advised by Hartford Investment Management Company HARTFORD SMALLCAP GROWTH HLS FUND -- Maximize capital appreciation HL Investment Advisors, LLC CLASS IA Sub-advised by Wellington Management Company, LLP and Hartford Investment Management Company HARTFORD U.S. GOVERNMENT SECURITIES Maximize total return with a high level of HL Investment Advisors, LLC HLS FUND -- CLASS IA current income consistent with prudent Sub-advised by Hartford Investment investment risk Management Company
APP C-5 -------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- HARTFORD VALUE OPPORTUNITIES HLS FUND Capital appreciation HL Investment Advisors, LLC -- CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD SERIES FUND, INC. HARTFORD ADVISERS HLS FUND -- CLASS IA Maximum long-term total return HL Investment Advisors, LLC Sub-advised by Wellington Management Company, LLP HARTFORD CAPITAL APPRECIATION HLS FUND Growth of capital HL Investment Advisors, LLC -- CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD DISCIPLINED EQUITY HLS FUND Growth of capital HL Investment Advisors, LLC -- CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD DIVIDEND AND GROWTH HLS FUND High level of current income consistent HL Investment Advisors, LLC -- CLASS IA with growth of capital Sub-advised by Wellington Management Company, LLP HARTFORD EQUITY INCOME HLS FUND -- High level of current income consistent HL Investment Advisors, LLC CLASS IA with growth of capital Sub-advised by Wellington Management Company, LLP HARTFORD FUNDAMENTAL GROWTH HLS FUND Long-term capital appreciation HL Investment Advisors, LLC -- CLASS IA (2) Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL EQUITY HLS FUND -- Seeks long term capital appreciation HL Investment Advisors, LLC CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL GROWTH HLS FUND -- Growth of capital HL Investment Advisors, LLC CLASS IA (3) Sub-advised by Wellington Management Company, LLP HARTFORD GROWTH HLS FUND -- CLASS IA Long-term capital appreciation HL Investment Advisors, LLC Sub-advised by Wellington Management Company, LLP HARTFORD HIGH YIELD HLS FUND -- CLASS High current income with growth of capital HL Investment Advisors, LLC IA as a secondary objective Sub-advised by Hartford Investment Management Company HARTFORD INTERNATIONAL GROWTH HLS FUND Capital appreciation HL Investment Advisors, LLC -- CLASS IA (4) Sub-advised by Wellington Management Company, LLP HARTFORD INTERNATIONAL OPPORTUNITIES Long-term growth of capital HL Investment Advisors, LLC HLS FUND -- CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD MONEY MARKET HLS FUND -- Maximum current income consistent with HL Investment Advisors, LLC CLASS IA* liquidity and preservation of capital Sub-advised by Hartford Investment Management Company HARTFORD SMALL COMPANY HLS FUND -- Growth of capital HL Investment Advisors, LLC CLASS IA Sub-advised by Wellington Management Company, LLP and Hartford Investment Management Company HARTFORD STOCK HLS FUND -- CLASS IA Long-term growth of capital HL Investment Advisors, LLC Sub-advised by Wellington Management Company, LLP
APP C-6 -------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- HARTFORD TOTAL RETURN BOND HLS FUND -- Competitive total return, with income as a HL Investment Advisors, LLC CLASS IA secondary objective Sub-advised by Hartford Investment Management Company HARTFORD VALUE HLS FUND -- CLASS IA Long-term total return HL Investment Advisors, LLC Sub-advised by Wellington Management Company, LLP LORD ABBETT SERIES FUND, INC. LORD ABBETT AMERICA'S VALUE PORTFOLIO Current income and capital appreciation Lord, Abbett & Co. LLC -- CLASS VC LORD ABBETT BOND -- DEBENTURE High current income and capital Lord, Abbett & Co. LLC PORTFOLIO -- CLASS VC appreciation to produce a high total return LORD ABBETT GROWTH AND INCOME Long-term growth of capital and income Lord, Abbett & Co. LLC PORTFOLIO -- CLASS VC without excessive fluctuations in market value MFS(R) VARIABLE INSURANCE TRUST MFS(R) GROWTH SERIES -- SERVICE CLASS Capital appreciation MFS Investment Management(R) MFS(R) INVESTORS TRUST SERIES -- Capital appreciation MFS Investment Management(R) SERVICE CLASS MFS(R) RESEARCH BOND SERIES -- SERVICE Total return with an emphasis on current MFS Investment Management(R) CLASS income, but also considering capital appreciation. MFS(R) TOTAL RETURN SERIES -- SERVICE Total return MFS Investment Management(R) CLASS MFS(R) VALUE SERIES -- SERVICE CLASS Capital appreciation MFS Investment Management(R) OPPENHEIMER VARIABLE ACCOUNT FUNDS OPPENHEIMER CAPITAL APPRECIATION Seeks to achieve capital appreciation by OppenheimerFunds, Inc. FUND/VA -- SERVICE SHARES investing in securities of well-known established companies. OPPENHEIMER GLOBAL SECURITIES FUND/VA Seeks long-term capital appreciation by OppenheimerFunds, Inc. -- SERVICE SHARES investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations which are considered to have appreciation possibilities, but which may be considered to be speculative. OPPENHEIMER MAIN STREET FUND(R)/VA -- Seeks a high total return (which includes OppenheimerFunds, Inc. SERVICE SHARES growth in the value of its shares as well as current income) from equity and debt securities. From time to time the Fund may focus on small to medium capitalization common stocks, bonds and convertible securities. OPPENHEIMER MAIN STREET SMALL CAP The Fund seeks capital appreciation from OppenheimerFunds, Inc. FUND(R)/VA -- SERVICE SHARES small company stocks. OPPENHEIMER VALUE FUND/VA -- SERVICE Seeks long term growth of capital by OppenheimerFunds, Inc. SHARES investing primarily in common stocks with low price earnings ratios and better- than-anticipated earnings.
APP C-7 -------------------------------------------------------------------------------
FUNDING OPTION INVESTMENT OBJECTIVE SUMMARY INVESTMENT ADVISER/SUB-ADVISER --------------------------------------------------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST PUTNAM VT DIVERSIFIED INCOME FUND -- As high a level of current income as Putnam Putnam Investment Management, LLC CLASS IB Management believes is consistent with Sub-advised by Putnam Investments Limited preservation of capital PUTNAM VT GLOBAL ASSET ALLOCATION FUND High level of long-term total return Putnam Investment Management, LLC -- CLASS IB consistent with preservation of capital PUTNAM VT INTERNATIONAL EQUITY FUND -- Capital appreciation Putnam Investment Management, LLC CLASS IB Sub-advised by Putnam Investments Limited PUTNAM VT INTERNATIONAL GROWTH AND Capital growth. Current income is a Putnam Management INCOME FUND -- CLASS IB secondary objective Sub-advised by Putnam Investments Limited PUTNAM VT SMALL CAP VALUE FUND -- Capital appreciation Putnam Investment Management, LLC CLASS IB THE UNIVERSAL INSTITUTIONAL FUNDS, INC. VAN KAMPEN -- UIF MID CAP GROWTH Long-term capital growth by investing Morgan Stanley Investment Management Inc. PORTFOLIO -- CLASS II primarily in common stocks and other equity securities. VAN KAMPEN -- UIF U.S. MID CAP VALUE Above-average total return over a market Morgan Stanley Investment Management Inc. PORTFOLIO -- CLASS II cycle of three to five years by investing primarily in common stocks and other equity securities. VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT GROWTH AND INCOME Seeks to provide long-term growth of Van Kampen Asset Management PORTFOLIO -- CLASS II capital and income primarily through investments in common stocks. FIXED ACCUMULATION FEATURE** Preservation of Capital General Account
NOTES (1) Formerly Franklin Small Cap Fund (2) Formerly Hartford Focus HLS Fund -- Class IA (3) Formerly Hartford Global Leaders HLS Fund -- Class IA (4) Formerly Hartford International Capital Appreciation HLS Fund -- Class IA * In a low interest rate environment, yields for money market funds, after deduction of Contract charges may be negative even though the fund's yield, before deducting for such charges, is positive. If you allocate a portion of your Contract Value to a money market Sub-Account or participate in an Asset Allocation Program where Contract Value is allocated to a money market Sub-Account, that portion of your Contract Value may be decreased in value. ** The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this feature. The Fixed Accumulation Feature is currently not available to Plus and Outlook products. APP D-1 -------------------------------------------------------------------------------- APPENDIX D -- OPTIONAL BENEFIT COMPARISONS The following information summarizes aspects of the following optional benefits and is qualified in its entirety by the descriptions of these riders elsewhere in this prospectus.
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- OBJECTIVES Guaranteed income - Guaranteed income THE HARTFORD'S LIFETIME - Guaranteed income for life for life INCOME BUILDER SELECTS: for a set time - Potential - Guaranteed income for life period (14 years automatic annual - Potential automatic annual estimated) Payment Base Payment Base increases (0 - Potential step-ups increases (0 - 10%) - 10%) every 5 years THE HARTFORD'S LIFETIME - Principal INCOME BUILDER PORTFOLIOS: protection - Guaranteed income for life - Potential automatic annual Payment Base increase DEATH BENEFIT - Greater of Same as The Same as The Hartford's Not Applicable Contract Value or Hartford's Lifetime Lifetime Income Foundation Premium Payments Income Foundation for both options adjusted for partial Surrenders - Replaces the Standard Death Benefit - MAV Plus (MAV only) may be purchased with this rider AVAILABILITY - Available at Same as The Same as The Hartford's - Available at Contract issue only Hartford's Lifetime Lifetime Income Foundation Contract issue - Available subject Income Foundation for both options or post-issue on to state approval current products - Plus contracts must reach the 1st anniversary before adding post-issue. MAXIMUM Qualified, Qualified, Qualified, Non-Qualified - Non-Qualified and ISSUE AGE Non-Qualified Non-Qualified maximum issue age is 80 for Roth IRA -- age 85 maximum issue age is maximum issue age is any Covered Life and - IRA/Qualified -- 80 for any Covered 75 for any Covered Annuitant age 80 Life and Annuitant Life and Annuitant. REVOCABILITY - Only the Lifetime - Irrevocable FOR BOTH OPTIONS: Irrevocable Withdrawal Feature - We may terminate - Irrevocable is revocable by the Rider upon Owner - We may terminate the Rider client, revocation default upon Owner default can be requested in writing anytime after the 5th Contract Year or upon Spousal Continuation - We may terminate the Rider upon Owner default
APP D-2 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- RIDER Cannot be elected Cannot be elected THE HARTFORD'S LIFETIME Cannot be elected COMPATIBILITY with any of the with any of the INCOME BUILDER SELECTS: with any of the following: following: Cannot be elected with any following: - The Hartford's - The Hartford's of the following: - The Hartford's Principal First Principal First - The Hartford's Principal Lifetime Income - The Hartford's - The Hartford's First Builder II Lifetime Income Lifetime Income - The Hartford's Lifetime - The Hartford's Builder II Foundation Income Foundation Lifetime Income - The Hartford's - The Hartford's - The Hartford's Lifetime Foundation Lifetime Income Lifetime Income Income Builder II - The Hartford's Builder Selects Builder Selects - The Hartford's Lifetime Lifetime Income - The Hartford's - The Hartford's Income Builder Portfolios Builder Selects Lifetime Income Lifetime Income THE HARTFORD'S LIFETIME - The Hartford's Builder Portfolios Builder Portfolios INCOME BUILDER PORTFOLIOS: Lifetime Income Cannot be elected with any Builder Portfolios of the following: - The Hartford's Principal First - The Hartford's Lifetime Income Foundation - The Hartford's Lifetime Income Builder II - The Hartford's Lifetime Income Builder Selects
APP D-3 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- ADDITIONAL 0.30% (30 bps) of - 0.40% (40 bps) of THE HARTFORD'S LIFETIME - Annual charge of CHARGE the Payment Base the Payment Base INCOME BUILDER SELECTS: 0.50% (50 bps) charged annually on charged annually on - 0.55% (55 bps -- Single assessed daily each Contract the Contract Option), 0.55% (55 bps -- - Can increase the Anniversary (flat Anniversary (flat Joint/Spousal Option) of the fee on or after the dollar) dollar) Payment Base charged 5th contract - Can increase the annually on the Contract anniversary and then fee on or after the Anniversary (flat dollar) every 5 years 5th anniversary from - Can increase the fee on or thereafter only if the rider effective after step-up elected date and then every 12 months from the rider - Maximum charge of 5 years thereafter effective date or upon 0.75% or upon Covered Life Covered Life changes changes - Maximum charge of 1.50% - Maximum charge of THE HARTFORD'S LIFETIME 0.75% INCOME BUILDER PORTFOLIOS: - 0.65% (65 bps -- Single Option), 0.65% (65 bps -- Joint/Spousal Option) of the Payment Base charged annually on the Contract Anniversary (flat dollar) - Can increase the fee on or after 12 months from the rider effective date or upon Covered Life changes - Maximum charge of 1.50% BENEFIT Not applicable Not applicable Not applicable - 100% of Premium AMOUNT Payment when added at issue - Contract Value on the rider effective date when added post-issue PAYMENT 100% of Premium 100% of Premium BOTH OPTIONS: Not applicable BASE Payment when added Payment when added 100% of Premium Payment plus at issue at issue any Payment Enhancements, if applicable (Plus Contracts) when added at issue.
APP D-4 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- WITHDRAWAL - Varies based on: Same as The BOTH OPTIONS: Not applicable PERCENTAGE - attained age of Hartford's Lifetime - Varies based on: Relevant Covered Income Foundation - attained age of Relevant Life Covered Life - survivor option - survivor option chosen chosen - Withdrawal Percent for - date of first Single Life Option starts at partial Surrender 5% and increases by 0.5% for - Withdrawal Percent every 5 year increment for Single Life between the Relevant Covered Option starts at 5% Life's attained ages 59 1/2 and increases by -80 0.5% for every 5 - Withdrawal Percent for year increment Joint/Spousal Life Option between the Relevant starts at 4.5% and increases Covered Life's by 0.5% for every 5 year attained ages 60 - increment between the 80 Relevant Covered Life's - Withdrawal Percent attained ages 59 1/2 - 80 for Joint/Spousal - The Withdrawal Percent Life Option starts will be set at the time of at 4.5% and the first partial Surrender increases by 0.5% and is based on the attained for every 5 year age of the Relevant Covered increment between Life the Relevant Covered - Potential to increase WP Life's attained ages if a new age band is reached 60 - 80 and there is an automatic - The Withdrawal Payment Base Increase on an Percent will be set anniversary. at the time of the first partial Surrender and is based on the attained age of the Relevant Covered Life
APP D-5 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- ANNUAL PRIOR TO AN ELIGIBLE Same as The THE HARTFORD'S LIFETIME BEGINNING AMOUNT AVAILABLE FOR WITHDRAWAL YEAR: Hartford's Lifetime INCOME BUILDER SELECTS: IMMEDIATELY: SURRENDER Partial Surrenders Income Foundation PRIOR TO THE LIFETIME INCOME Benefit Payments (1) equal either: ELIGIBILITY DATE: equal 7% of the SINGLE LIFE OPTION Partial Surrenders (1) equal Benefit Amount -- 5% multiplied by either: the greater of SINGLE LIFE OPTION -- 5% Payment Base or multiplied by the greater of Contract Value (on Payment Base or Contract the Contract Value (on the Contract Anniversary) Anniversary) JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION -- 4.5% -- 4.5% multiplied multiplied by the greater of by the greater of Payment Base or Contract Payment Base or Value (on the Contract Contract Value (on Anniversary) the Contract ON OR AFTER THE LIFETIME Anniversary) INCOME ELIGIBILITY DATE: DURING AN ELIGIBLE Lifetime Benefit Payments WITHDRAWAL YEAR: equal applicable Withdrawal Lifetime Benefit Percent (varies by option Payments equal elected, Single Life vs. applicable Joint/ Spousal) multiplied Withdrawal Percent by the greater of Payment (varies by option Base or Contract Value (on elected, Single Life the Contract Anniversary) vs. Joint/ Spousal) THE HARTFORD'S LIFETIME multiplied by the INCOME BUILDER PORTFOLIOS: greater of Payment PRIOR TO THE LIFETIME INCOME Base or Contract ELIGIBILITY DATE: Value (on the Partial Surrenders (1) equal Contract either: Anniversary) SINGLE LIFE OPTION -- 5% multiplied by the Payment Base JOINT/SPOUSAL OPTION -- 4.5% multiplied by the Payment Base ON OR AFTER THE LIFETIME INCOME ELIGIBILITY DATE: Lifetime Benefit Payments equal applicable Withdrawal Percent (varies by option elected, Single Life vs. Joint/ Spousal) multiplied by the Payment Base RMD RESET - Contracts enrolled Same as The BOTH RIDERS: - All partial in automatic RMD Hartford's Lifetime Same as The Hartford's Surrenders that go (AIP) that go over Income Foundation Lifetime Income Foundation over the 7% allowed the annual Lifetime will result in a Benefit Payment reset of the Benefit amount will not Amount and possibly result in a reset of a reset of the the Lifetime Benefit Benefit Payment Payment if no other amount partial Surrenders - NOT 72t/q friendly have occurred during the Contract Year - NOT 72t/q friendly
(1) As in the case of any partial Surrender, taking partial Surrenders prior to an Eligible Withdrawal Year, will reduce the Payment Base and your future Lifetime Benefit Payment. Such partial Surrender may potentially eliminate your Lifetime Benefit Withdrawal Guarantee and Guaranteed Minimum Death Benefit. APP D-6 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- INVESTMENT - Not currently Same as The THE HARTFORD'S LIFETIME None RESTRICTIONS enforced Hartford's Lifetime INCOME BUILDER SELECTS: - Can be triggered Income Foundation Same as The Hartford's by changes in Lifetime Income Foundation Covered Life THE HARTFORD'S LIFETIME - If the INCOME BUILDER PORTFOLIOS: restrictions are - Contract Value must be violated, the invested in an approved Lifetime Withdrawal asset allocation model, Benefit of this fund-of-funds or rider will be Sub-Accounts -- failure to revoked and the do so will result in the Death Benefit only termination of this rider will continue OWNERSHIP CHANGES Refer to Covered Refer to Covered Refer to Covered Life Change - Ownership changes Life Change feature Life Change feature feature below in the first 12 below below months from the effective date of the rider will have no impact on the rider benefits as long as age limitation is met. - Ownership changes after the first 12 months to someone other than the Spouse will cause a recalculation of the Benefit Amount SPOUSAL CONTINUATION Refer to Covered Refer to Covered Refer to Covered Life Change Spouse may choose to Life Change feature Life Change feature feature below step up the Benefit below below Amount to the current Contract Value
APP D-7 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- COVERED LIFE SINGLE LIFE OPTION SINGLE LIFE OPTION BOTH RIDERS: N/A - Natural Owner -- - Same as The SINGLE LIFE OPTION Owner and Joint Hartford's Lifetime - Same as The Hartford's Owner (if any) on Income Foundation Lifetime Income Foundation rider effective date - Non-Natural Owner -- the Annuitant on rider effective date - All age based benefit provisions based on the attained age of the OLDER Covered Life JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION - Natural Owner -- - Same as The - Same as The Hartford's The Covered Life is Hartford's Lifetime Lifetime Income Foundation both spouses (as Income Foundation defined by Federal Law) - Non-Natural Owner -- the Annuitant on rider effective date - All age based provisions based on the attained age of the YOUNGER Covered Life ISSUE RULES SINGLE LIFE OPTION SINGLE LIFE OPTION BOTH RIDERS: N/A - No Additional - Same as The SINGLE LIFE OPTION Requirements Hartford's Lifetime - Same as The Hartford's Income Foundation Lifetime Income Foundation JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION - The sole primary - Same as The - Same as The Hartford's beneficiary (defined Hartford's Lifetime Lifetime Income Foundation as the individual to Income Foundation receive the Death Benefit) must be the Owner's Spouse. If the Joint Owner is the Spouse, the primary beneficiary can be someone other than the Spouse - A joint Owner who is not the Owner's Spouse is not allowed. - We reserve the right to prohibit non-natural entities from being listed as Owner
APP D-8 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- COVERED LIFE CHANGE SINGLE LIFE OPTION SINGLE LIFE OPTION BOTH RIDERS: N/A - Covered Life - Same as The SINGLE LIFE OPTION changes within the Hartford's Lifetime - Same as The Hartford's first 6 months have Income Foundation Lifetime Income Foundation no impact to the Death Benefit or Payment Base, however, the Withdrawal Percent, Threshold, if applicable, and Lifetime Benefit Payment may change based on the attained age of the new Relevant Covered Life - After the first 6 months: - Covered Life changes will cause a reset in the benefits - Allow us to impose investment restrictions - May cause an increase in rider charge Joint/Spousal Option JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION - Covered Life - Same as The - Same as The Hartford's changes within the Hartford's Lifetime Lifetime Income Foundation first 6 months have Income Foundation -- no impact to the Joint/Spousal Option Death Benefit or except in addition, Payment Base, Covered Life changes however, the within the first 6 Withdrawal Percent, months have no Threshold, if impact to the applicable, and Maximum Contract Lifetime Benefit Value Payment may change based on the attained age of new Relevant Covered Life - If Owner and their Spouse are no longer married, for reasons other than death, Covered Life changes may occur: - If Surrenders have not been taken, Owner may remove their Spouse and replace with new Spouse (both events do not need to occur at the same time)(1) - If Surrenders have been taken, Owner may remove their Spouse but may not add a new Spouse - Any other contractual change which causes a change in the Covered Life will cause the Withdrawal Feature to terminate
(1) The Covered Life will be reset at time of removal and time of replacement. The Withdrawal Percent scale will be based on the younger Covered Life. APP D-9 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- SPOUSAL CONTRACT SINGLE LIFE OPTION SINGLE LIFE OPTION BOTH RIDERS: - Spouse may choose CONTINUATION - We will increase - Same as The SINGLE LIFE OPTION to step up the the Contract Value Hartford's Lifetime - Same as The Hartford's Benefit Amount to to the Death Benefit Income Foundation Lifetime Income Foundation the current Contract value Value - The Relevant Covered Life will be re-determined on the date of the continuation - The Payment Base and Death Benefit will be set equal to the Contract Value, and the Threshold, if applicable, Lifetime Benefit Payment and Withdrawal Percent will be recalculated on the continuation date - If Relevant Covered Life is greater than or equal to 81 at the time of continuation, the Rider will terminate. The Death Benefit will be equal to the Contract Value JOINT/SPOUSAL OPTION JOINT/SPOUSAL OPTION THE HARTFORD'S LIFETIME - We will increase - Same as The INCOME BUILDER SELECTS: the Contract Value Hartford's Lifetime JOINT/SPOUSAL OPTION to the Death Benefit Income Foundation -- - We will increase the value Joint/Spousal Option Contract Value to the Death - The Spouse may except the Maximum Benefit Value elect to either: Contract Value will - The spouse does not have A) Continue the be the greater of the option under Spousal Contract and rider; Contract Value or Contract continuation to or Payment Base on the revoke the rider B) Continue the continuation date contract and revoke the Withdrawal Feature of the rider
APP D-10 --------------------------------------------------------------------------------
THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME THE HARTFORD'S FEATURES FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS PRINCIPAL FIRST -------------------------------------------------------------------------------------------------------------------- If the Spouse elects The spouse will continue the to continue the Contract and rider: Contract and rider: - The Payment Base will be - The Payment Base set equal to the greater of will be set equal to Contract Value or Payment the greater of Base on the continuation Contract Value or date Payment Base on the - The Withdrawal Percent continuation date will remain frozen at the - The Withdrawal current Withdrawal Percent Percent will remain if there have been partial frozen at the Surrenders since the rider current Withdrawal effective date. If not, the Percent if there Withdrawal Percent will be have been partial based on the attained age of Surrenders since the the remaining Covered Life rider effective on the continuation date. date. If not, the - The Lifetime Benefit Withdrawal Percent Payment or Threshold, if will be based on the applicable, will be attained age of the recalculated to equal the remaining Covered Withdrawal Percent Life on the Contract multiplied by the greater of Anniversary prior to Contract Value or Payment the first partial Base on the continuation Surrender date - The Lifetime Benefit Payment will be recalculated to equal the Withdrawal Percent multiplied by the greater of Contract Value or Payment Base on the continuation date THE HARTFORD'S LIFETIME INCOME BUILDER PORTFOLIOS: JOINT/SPOUSAL OPTION - We will increase the Contract Value to the Death Benefit Value - The spouse does not have the option under Spousal Contract continuation to revoke the rider The spouse will continue the Contract and rider: - The Payment Base will be set equal to the greater of Contract Value or Payment Base on the continuation date - The Withdrawal Percent will remain frozen at the current Withdrawal Percent if there have been partial Surrenders since the rider effective date. If not, the Withdrawal Percent will be based on the attained age of the remaining Covered Life on the continuation date.
APP D-11 -------------------------------------------------------------------------------- FEATURES THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S THE HARTFORD'S LIFETIME INCOME LIFETIME INCOME LIFETIME INCOME PRINCIPAL FIRST FOUNDATION BUILDER II BUILDER SELECTS & PORTFOLIOS - The Lifetime Benefit Payment or Threshold, if applicable, will be recalculated to equal the Withdrawal Percent multiplied by the Payment Base on the continuation date
APP E-1 ------------------------------------------------------------------------------- APPENDIX E -- THE HARTFORD'S LIFETIME INCOME FOUNDATION OBJECTIVE Protect principal from poor market performance, provide longevity protection through Lifetime Benefit Payments, and ensure a Death Benefit equivalent to the greater of Premium Payments reduced for partial Surrenders or Contract Value. HOW DOES THIS RIDER HELP ACHIEVE THIS GOAL? This rider provides two separate but bundled benefits that help achieve this goal. In other words, this rider is a guarantee that you can access two ways: - LIFETIME WITHDRAWAL BENEFIT. This rider provides a series of Lifetime Benefit Payments payable in each Contract Year following the Relevant Covered Life's 60th birthday, until the first death of any Covered Life ("Single Life Option") or the second death of any Covered Life ("Joint/Spousal Option"). Lifetime Benefit Payments are maximum amounts that can be withdrawn each year based on the higher of your Payment Base or Contract Value on each Contract Anniversary multiplied by the applicable Withdrawal Percent. Payments may continue even if the Contract Value has been reduced to below our minimum Contract Value. The Withdrawal Percent varies based upon the attained age of the Relevant Covered Life as of the Contract Anniversary prior to the first partial Surrender, and the survivor option chosen. Any partial Surrender taken prior to the Contract Anniversary following the Relevant Covered Life's 60th birthday will reduce the Payment Base and your future Lifetime Benefit Payment. Such partial Surrender may potentially eliminate your Lifetime Benefit Withdrawal Guarantee. - GUARANTEED MINIMUM DEATH BENEFIT. This guaranteed minimum Death Benefit provides a Death Benefit equal to the greater of Premium Payments reduced for partial Surrenders or Contract Value as of the date due proof of death is received for any Contract Owner or Annuitant. PARTIAL SURRENDERS WILL REDUCE OR ELIMINATE THE GUARANTEED MINIMUM DEATH BENEFIT. THIS GUARANTEED MINIMUM DEATH BENEFIT REPLACES THE STANDARD DEATH BENEFITS PROVIDED UNDER THIS CONTRACT. See Examples 1-14 under The Hartford's Lifetime Income Foundation in Appendix A. WHEN CAN YOU BUY THIS RIDER? Subject to State approval of The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, The Hartford's Lifetime Income Foundation is closed to new investors. If available, you may elect this rider at the time of purchase, or at a later date, if you are eligible to participate in a designated company sponsored exchange program. The benefits comprising this rider may not be purchased separately. This rider may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw this rider at any time. When you buy this rider, you must provide us with the names and ages of the Owner, any joint Owner, Annuitant and Beneficiary. A Covered Life must be a living person. If you choose the Joint/Spousal Option, we reserve the right to (a) prohibit non-natural entities from being designated as an Owner, (b) prohibit anyone other than your Spouse from being a joint Owner; and (c) impose other designation restrictions from time to time. For the Single Life Option, the Covered Life is most often the same as the Contract Owner and joint Owner (which could be two different people). In the Joint/Spousal Option, the Covered Life is most often the Contract Owner and his or her Spouse, as joint Owner or Beneficiary. The Relevant Covered Life will be one factor used to establish your Withdrawal Percent. When the Single Life Option is chosen, we use the older Covered Life as the Relevant Covered Life; and when the Joint/Spousal Option is chosen, we use the younger Covered Life as the Relevant Covered Life. The maximum age of any Contract Owner or Annuitant when electing this rider is 80. When the Joint/Spousal Option is chosen, the Beneficiary also must be younger than age 81. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. If you elect this rider, you may not elect any rider other than MAV Plus (MAV only in applicable states). HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for this rider is based on your then current Payment Base (not your Contract Value) as of each Contract Anniversary. This charge will automatically be deducted from your Contract Value on your Contract Anniversary AFTER your Anniversary Value and Payment Base have been computed and prior to all other financial transactions. In the event of a full Surrender, a prorated charge will be deducted from your Surrender Value. The charge for this rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts. The rider charge may limit access to the Fixed Accumulation Feature in certain states. APP E-2 ------------------------------------------------------------------------------- DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER? Yes. Your initial Payment Base equals your initial Premium Payment. Your Payment Base will fluctuate based on subsequent Premium Payments and partial Surrenders. Your Payment Base can never be less than $0 or more than $5 million. Any activities that would otherwise increase the Payment Base above this ceiling will not be included for any benefits under this rider. The Payment Base will be recalculated based on: - Subsequent Premium Payments. Subsequent Premium Payments increase your Payment Base on a dollar-for-dollar basis. - Partial Surrenders. Partial Surrenders may trigger a recalculation of the Payment Base depending on (a) whether the partial Surrender takes place prior or during an Eligible Withdrawal Year, and (b) if the aggregate amount of the partial Surrenders during any Contract Year exceeds the applicable Threshold, as discussed below: A. If cumulative partial Surrenders taken during any Contract Year and prior to an Eligible Withdrawal Year are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Payment Base on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are greater than the Threshold (subject to rounding), then we will reduce the Payment Base on a (i) dollar-for-dollar basis up to the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders during an Eligible Withdrawal Year are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will not reduce the Payment Base. C. For any partial Surrender that causes cumulative partial Surrenders in an Eligible Withdrawal Year to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Payment Base on a proportionate basis for the amount in excess of the Lifetime Benefit Payment. Partial Surrenders taken during any Contract Year that cumulatively exceed the Annual Withdrawal Amount but do not exceed the Lifetime Benefit Payment will be free of any applicable CDSC. Partial Surrenders will diminish the Guaranteed Minimum Death Benefit. See Examples 1-14 under The Hartford's Lifetime Income Foundation in Appendix A. IS THIS RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? Yes. However, your Withdrawal Percent, and therefore the amount of your Lifetime Benefit Payment, is dependent upon when you take your first partial Surrender. For instance, - If you take your first partial Surrender before an Eligible Withdrawal Year, your Withdrawal Percent will never increase above 5% for Single Life Option or 4.5% for Joint/Spousal option for the remaining duration of your Contract. - If you take your first partial Surrender during an Eligible Withdrawal Year, your Withdrawal Percent will never increase above the Withdrawal Percent corresponding with the attained age of the Relevant Covered Life as of the Contract Anniversary prior to the first partial Surrender. If such a partial Surrender took place during the first Contract Year, we will use the attained age of the Relevant Covered Life as of Contract issue date to set the Withdrawal Percent. Once the Withdrawal Percent has been established, it will not change for the remaining duration of your Contract. In other words, prior to the Relevant Covered Life turning 80, the longer the first partial Surrender is delayed, the higher your Withdrawal Percent shall be.
ATTAINED AGE OF RELEVANT COVERED WITHDRAWAL PERCENT LIFE ON THE CONTRACT ANNIVERSARY SINGLE LIFE JOINT/SPOUSAL PRIOR TO THE FIRST PARTIAL SURRENDER OPTION OPTION -------------------------------------------------------------------------------- 60 - 64 5.0% 4.5% 65 - 69 5.5% 5.0% 70 - 74 6.0% 5.5% 75 - 79 6.5% 6.0% 80+ 7.0% 6.5%
Your Withdrawal Percent may change based on a permissible Covered Life change. If you choose to receive less than your full Lifetime Benefit Payment in any Contract Year; you will not be able to carry remaining amounts forward to future Contract Years. IS THIS RIDER DESIGNED TO PAY YOU A DEATH BENEFIT? Yes. This Guaranteed Minimum Death Benefit guarantees that we will pay a Death Benefit equal to the greater of Premium Payments reduced for partial Surrenders or Contract Value as of the date we receive due proof of death of the Contract Owner(s) or Annuitant. Termination of this rider will result in the rescission of the Guaranteed Minimum Death Benefit and result in your Beneficiary APP E-3 ------------------------------------------------------------------------------- receiving the Contract Value as of the date we receive due proof of death. Partial Surrenders will affect the Guaranteed Minimum Death Benefit as follows: A. If cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are greater than the Threshold (subject to rounding), we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders during an Eligible Withdrawal Year are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. C. For any partial Surrender that causes cumulative partial Surrenders in an Eligible Withdrawal Year to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Lifetime Benefit Payment, and (ii) proportionate basis for the amount in excess of the Lifetime Benefit Payment. Please refer to the section labeled "CAN YOUR SPOUSE CONTINUE YOUR WITHDRAWAL BENEFIT" for more information on the continuation of the Lifetime Benefit Payments by your Spouse. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU REVOKE THIS RIDER? Yes. Anytime following the earlier of Spousal Contract continuation or the 5th Contract Year, the Contract Owner may also elect to revoke the Lifetime Withdrawal Benefits whereupon we will deduct one last pro-rated fee for this rider and only the Guaranteed Minimum Death Benefit shall continue to apply. Certain changes in the Covered Life will also constitute a revocation of the Withdrawal Benefits. A Company-sponsored exchange of this rider will not be considered to be a revocation or termination of this rider. In the event that this rider is terminated, whether as a result of your actions or ours, your Lifetime Benefit Payments will cease; your Payment Base will be eliminated, the Guaranteed Minimum Death Benefit will then be equal to the Contract Value, and you will not be allowed to elect any other optional benefit rider. WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THIS RIDER? Please refer to the discussion under "DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER?" for the effect of partial Surrenders on your Payment Base, Guaranteed Minimum Death Benefit and Lifetime Benefit Payments. You may make a full Surrender of your entire Contract at any time. However, you will receive your Contract Value with any applicable charges deducted and not the Payment Base or any Lifetime Benefit Payment that you would have received under this rider. If Your Contract Value is reduced below our minimum Contract Value rules in effect on a particular Valuation Day, and your Lifetime Benefit Payment amount remains greater than zero, then we will consider this date as your Annuity Commencement Date and we will no longer accept subsequent Premium Payments. See Examples 4, 6-8 and 11-14 under The Hartford's Lifetime Income Foundation in Appendix A. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? Inasmuch as this rider is affected only by changes to the Covered Life, only these types of changes are discussed below. We reserve the right to approve all Covered Life changes. Certain approved changes in the designation of the Covered Life may cause a re-calculation of the benefits. Covered Life changes also allow us, in our discretion, to impose investment restrictions, as described below. Any Covered Life change made within the first 6 months from the Contract Issue date will have no impact on the Payment Base or Guaranteed Minimum Death Benefit as long as each succeeding Covered Life is less than the maximum age limitation of the rider at the time of the change. The Withdrawal Percent and Lifetime Benefit Payment will thereafter change based on the age of the new Relevant Covered Life. After the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and partial Surrenders have not yet been taken, in the event that you and your Spouse become legally divorced, you may add a new Spouse to the Contract. Provided that the age limitation of the rider is not exceeded, the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will recalculate your Withdrawal Percent based on the age of the younger Covered Life as of the date of the change. Alternatively, if after the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and partial Surrenders have been taken, in the event that you and your Spouse become legally divorced, you may only remove your ex-Spouse from the APP E-4 ------------------------------------------------------------------------------- Contract whereupon the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will then recalculate your Withdrawal Percent based on the age of the remaining Covered Life as of the date of the change. You may not convert your Joint/Spousal Option election to a Single Life Option. In addition, after the first six months following the Contract issue date, if any Covered Life change takes place that is not due to a divorce, then we will: A. If the older Covered Life after the change is equal to or less than the maximum age limitation of the rider at the time of the change, then we will revoke the Withdrawal Benefits of this rider and continue the Guaranteed Minimum Death Benefit only. The charge for this rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter. B. If the older Covered Life after the change exceeds the maximum age limitation of the rider at the time of the change, or we no longer offer this rider, then the rider will terminate. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If you elected the Single Life Option and any Covered Life changes after the first 6 months from Contract Issue date, then: A. If we no longer offer this rider, we will continue the Guaranteed Minimum Death Benefit after resetting this benefit to the lower of the then applicable Guaranteed Minimum Death Benefit or Contract Value on the effective date of the Covered Life change; whereupon the Withdrawal Benefit will terminate. The charge for this rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter; or B. If we offer this rider and: (i) if partial Surrenders have been taken prior to the first Contract Anniversary, then we will use the attained age of the oldest Covered Life as of the rider effective date to reset the Withdrawal Percent, or (ii) if partial Surrenders have not been taken prior to the first Contract Anniversary, then we will use the attained age of the older Covered Life as of the Contract Anniversary prior to the first partial Surrender to reset the Withdrawal Percent. The Payment Base will be recalculated to be the lesser of the Contract Value or the Payment Base effective on the date of the change. The Guaranteed Minimum Death Benefit will be recalculated to be the lesser of the Contract Value or the Guaranteed Minimum Death Benefit effective on the date of the change; or C. If we offer this rider and the older Covered Life after the change exceeds the maximum age limitation of this rider at the time of the change; the rider will be terminated and removed from the Contract. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If the rider is no longer available for sale, we will determine the issue age limitation of the rider on a non-discriminatory basis. APP E-5 ------------------------------------------------------------------------------- The following tables illustrate only some of the various changes and the resulting outcomes associated with deaths of the Contract Owner(s) or Annuitant before and after the Annuity Commencement Date. SINGLE LIFE OPTION ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving The Annuitant is living or Joint Contract Owner receives non-spousal Contract Owner deceased the Death Benefit and this rider terminates Contract Owner There is a surviving spousal The Annuitant is living or Joint Contract Owner receives Contract Owner deceased the Death Benefit and this rider can continue under Spousal Contract continuation Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Designated Owner deceased Beneficiary receives the Death Benefit Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Estate Owner or Beneficiary deceased receives the Death Benefit Annuitant Contract Owner is living There is no Contingent Contract continues, no Death Annuitant and the Contract Benefit is paid, and this rider Owner becomes the Contingent continues Annuitant Annuitant Contract Owner is living There is no Contingent Rider terminates and Contract Annuitant and the Contract Owner receives the Death Owner waives their right to Benefit become the Contingent Annuitant Annuitant Contract Owner is Living Contingent Annuitant is Living Contingent Annuitant becomes the Annuitant and the Contract and this rider continues Annuitant Contract Owner is any There is no Contingent Contract Owner receives Death non-natural entity Annuitant Benefit and this rider terminates
JOINT/SPOUSAL ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving Contract The Annuitant is living or The surviving Contract Owner Owner deceased continues the Contract and rider; we will increase the Contract Value to the Death Benefit value Contract Owner There is no surviving Contract The Spouse is the sole primary Follow Spousal Contract Owner beneficiary continuation rules for joint life elections Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates and Contract Owner or Beneficiary deceased Owner's estate receives the Death Benefit Annuitant The Contract Owner is living There is a Contingent Annuitant The Rider continues; upon the death of the last surviving Covered Life, the rider will terminate.
CAN YOUR SPOUSE CONTINUE YOUR WITHDRAWAL BENEFIT? - SINGLE LIFE OPTION: If a Covered Life dies and the Beneficiary is the deceased Covered Life's Spouse at the time of death, such Spouse may continue the Contract. If the Spouse elects to continue the Contract and this rider, we will continue the rider with respect to all Lifetime APP E-6 ------------------------------------------------------------------------------- Withdrawal Benefits at the charge that is currently being assessed for new sales of this rider at the time of continuation. We will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater. The Covered Life will be re-determined on the date of Spousal Contract continuation. If the new Covered Life is less than age 81 at the time of the Spousal Contract continuation, and the rider is still available for sale, the Payment Base and the Guaranteed Minimum Death Benefit will be set equal to the Contract Value, the Withdrawal Percent will be recalculated based on the age of the older remaining Covered Life on the effective date of the Spousal Contract continuation. If the new Covered Life is 81 or older at the time of the Spousal Contract continuation, the rider will terminate and the Guaranteed Minimum Death Benefit will be equal to the Contract Value. If we are no longer offering this rider at the time of Spousal Contract continuation, we will revoke the Lifetime Withdrawal Benefit, the Guaranteed Minimum Death Benefit will be set equal to the Contract Value and the rider charge will no longer be assessed. - JOINT/SPOUSAL OPTION: This rider is designed to facilitate the continuation of your rights under this rider by your Spouse through the inclusion of a Joint/Spousal Option. If a Covered Life dies and the Spouse elects to continue the Contract, we will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater and we will continue the rider with respect to all benefits at the current rider charge. The benefits will be reset as follows: - The Payment Base will be equal to the greater of Contract Value or the Payment Base on the Spousal Contract continuation date; - The Guaranteed Minimum Death Benefit will be equal to the Contract Value on the Spousal Contract continuation date; - The Withdrawal Percent will remain at the current percentage if partial Surrenders have commenced; otherwise the Withdrawal Percent will be based on the attained age of the remaining Covered Life on the Contract Anniversary prior to the first partial Surrender; and - The Lifetime Benefit Payment will be recalculated to equal the Withdrawal Percent multiplied by the greater of the Contract Value or Payment Base on the date of Spousal Contract continuation. The remaining Covered Life can not name a new Owner of the Contract. Any new beneficiary that is added to the Contract will not be taken into consideration as a Covered Life. The rider will then terminate upon the death of the remaining Covered Life. If the Spouse elects to continue the Contract and revoke the Lifetime Withdrawal Benefit, we will assess the charge on the revocation date and it will no longer be assessed thereafter. The Covered Life will be re-determined on the date of Spousal Contract continuation for purposes of the Guaranteed Minimum Death Benefit. If the age of the Covered Life is greater than the age limitation of the rider at the time of Spousal Contract continuation, the rider will terminate and the Guaranteed Minimum Death Benefit will equal the Contract Value. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? If you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value and will not be able to elect any of the annuitization options allowed under this rider. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules or, alternatively, under the rules applicable when the Contract Value is below our minimum Contract Value then in effect. By annuitizing your Contract and choosing an income option, you will be exchanging your accumulated savings and Death Benefits for a guaranteed income stream. If your Contract Value is reduced below our minimum Contract Value then in effect, your Annuity Commencement Date will be attained and we will no longer accept subsequent Premium Payments. We will then issue you a payout annuity. You may elect the frequency of your payments from those offered by us at such time, but will not be less frequently than annually. - SINGLE LIFE OPTION: If you have elected the Single Life Option, we will issue you a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the Covered Life determined at Annuity Commencement Date. We treat the Covered Life as the Annuitant for this payout option. If there is more than one Covered Life, then the lifetime portion will be based on both Covered Lives. The Covered Lives will be the Annuitant and joint Annuitant for this payout option. The lifetime portion will terminate on the first death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit under this rider. If the older Annuitant is age 59 or younger, we will automatically defer the date the payments begin until the anniversary after the older Annuitant attains age 60 and is eligible to receive payments in a fixed dollar amount until the later of the death of any Annuitant or a minimum number of years. APP E-7 ------------------------------------------------------------------------------- If the Annuitant is alive and the older Annuitant is age 60 or older, you will receive payments in a fixed dollar amount until the later of the death of any Annuitant or a period certain. The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the greater of the period certain, or until the death of any Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of your Withdrawal Percent or 5%. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of any Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. This option may not be available if the Contract is issued to qualify under Code Section 401, 403, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. - JOINT/SPOUSAL OPTION: If you have elected the Joint/Spousal Option and both Spouses are alive, we will issue you a Fixed Joint & Survivor Lifetime and Period Certain Payout. If only one Spouse is alive, we will issue a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the surviving Covered Life. The Covered Lives will be the Annuitant and Joint Annuitant for this payout option. The lifetime benefit will terminate on the last death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit. If the younger Annuitant is alive and age 59 or younger, we will automatically defer the date that payments begin until the anniversary after the younger Annuitant attains age 60 and is eligible to receive payments in a fixed dollar amount until the death of the last surviving Annuitant or a period certain. If the Annuitant is alive and the younger Annuitant is age 60 or older, you will receive payments in a fixed dollar amount until the later of the death of the last surviving Annuitant or a minimum number of years. The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the greater of the period certain, or until the death of the last Surviving Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of Withdrawal Percent or 4.5%. Therefore, the higher your then remaining Guaranteed Minimum Death Benefit is at the time of annuitization, the longer the time period you will be entitled to receive annuitization payments. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of the last surviving Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. These options may not be available if the Contract is issued to qualify under Code Sections 401, 403, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. We reserve the right to limit the Sub-Accounts into which you may allocate your Contract Value on and after the effective date of a Covered Life change. We may prohibit investment in any Sub-Account; require you to allocate your Contract Value in one of a number of asset allocation models, investment programs or fund of funds Sub-Accounts. Any transfers required to reallocate Contract Value will not be used in determining the number of transfers allowed during a Contract Year. If the restrictions are violated, the Withdrawal Benefit will be revoked but the Guaranteed Minimum Death Benefit will continue to apply. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We will not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments to in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. This restriction is not currently enforced. CAN WE AGGREGATE CONTRACTS? Yes. For purposes of determining the Payment Base and Premium Payment limits, we reserve the right to treat as one all deferred variable annuity Contracts issued by us where you have elected any optional withdrawal benefit rider. If we elect to aggregate Contracts, we will change the period over which we measure Surrenders against future Lifetime Benefit Payments. APP E-8 ------------------------------------------------------------------------------- We will treat the effective date of our aggregation election until the end of the applicable calendar year as a Contract Year for the purposes of the Lifetime Benefit Payment limit. A pro-rata rider fee will be taken at the end of that calendar year. After the first calendar year following aggregation, the Lifetime Benefit Payment limits will be aggregated and will thereafter be set on a calendar year (i.e., January 1 Contract Anniversary) basis. The rider fee then in effect will be taken at the end of each new Contract Anniversary. OTHER INFORMATION This rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under this rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate this rider and allow us to terminate the rider. - Your annual Lifetime Benefit Payment may fluctuate based on changes in the Payment Base and Contract Value. The Payment Base is sensitive to partial Surrenders in excess of the Lifetime Benefit Payment/Threshold. It is therefore possible that Surrenders and subsequent Premium Payments within the same Contract Year, whether or not equal to one another, can result in lower Lifetime Benefit Payments. - Annuitizing your Contract, whether voluntary or not, will impact and possibly eliminate these "lifetime" benefits. First, you may no longer invest additional Premium Payments. Second, any Death Benefit, whether standard or optional, will immediately terminate. Third, any Guaranteed Minimum Withdrawal Benefit guarantees you elect may end. In cases where you are required to annuitize (because you reach the Annuity Commencement Date or your Guaranteed Minimum Withdrawal Benefit requires annuitization because the Contract Value has fallen below our minimum Contract Value then in effect), lifetime annuitization payments may equal (or possibly exceed) Lifetime Benefit Payments. However, where you elect to annuitize before a required Annuity Commencement Date, lifetime annuitization payments might be less than the income guaranteed by your Guaranteed Minimum Withdrawal Benefit. - Even though this rider is designed to provide "living benefits," you should not assume that you will necessarily receive "payments for life" if you have violated any of the terms of this rider. - The amount of the Withdrawal Percent used to compute your Lifetime Benefit Payment is frozen based on the date of the first partial Surrender. - The determination of the "Relevant" Covered Life is established by the Company and is critical to the determination of many important benefits such as the Withdrawal Percent used to set Lifetime Benefit Payments. Applicants should confirm this determination and be sure they fully appreciate its importance before investing. - We may terminate this rider post-election based on your violation of benefit rules and may otherwise withdraw this rider for new sales at any time. - Because these benefits are bundled and interdependent upon one another, there is a risk that you may ultimately pay for benefits that you may never get to use. - You may select this rider only at the time of sale and once you do so, you may not add any other optional withdrawal benefits during the time you own this Contract. If you elect this rider you will not be eligible for the standard Death Benefits or be able to elect optional riders other than MAV Plus. - When the Single Life Option is chosen, your Spouse may find continuation of this rider to be unavailable or unattractive after the death of the Covered Life. Continuation of the benefits available in this optional rider is dependent upon its availability at the time of death of the first Covered Life and will be subject to then prevailing charges. - The Joint/Spousal Option provides that if you and your Spouse are no longer married for any reason other than death, the removal and replacement of your Spouse will constitute a Covered Life change. This can result in the resetting of all benefits under this rider. - Certain Covered Life changes may result in a reduction, recalculation or forfeiture of benefits. - This rider may not be suitable if a Covered Life is under attained age 60. - The purchase of an optional withdrawal benefit feature may not be appropriate for contracts owned by certain types of non-natural entities, including Charitable Trusts. Because many non-natural entities are required to make certain periodic distributions and those amounts may be different than the withdrawal amounts permitted by the optional withdrawal benefit feature, you may wish to consult with your tax advisor to help determine the appropriateness of this benefit. APP F-1 ------------------------------------------------------------------------------- APPENDIX F -- THE HARTFORD'S LIFETIME INCOME BUILDER II OBJECTIVE Protect your investment from poor market performance through potential annual automatic Payment Base increases, provide longevity protection through Lifetime Benefit Payments, and ensure a Death Benefit equivalent to the greater of Premium Payments reduced for partial Surrenders or Contract Value. HOW DOES THIS RIDER HELP ACHIEVE THIS GOAL? This rider provides two separate but bundled benefits that help achieve this goal. In other words, this rider is a guarantee that you can access two ways: - LIFETIME WITHDRAWAL BENEFIT. This rider provides a series of Lifetime Benefit Payments payable in each Contract Year following the Relevant Covered Life's 60th birthday, until the first death of any Covered Life ("Single Life Option") or until the second death of any Covered Life ("Joint/Spousal Option"). Lifetime Benefit Payments are maximum amounts that can be withdrawn each year based on the higher of your Payment Base or Contract Value on each Contract Anniversary, as adjusted by annual Payment Base increases, multiplied by the applicable Withdrawal Percent. The Withdrawal Percent varies based upon the attained age of the Relevant Covered Life as of the Contract Anniversary prior to the first partial Surrender, and the survivor option chosen. Any partial Surrender taken prior to the Contract Anniversary following the Relevant Covered Life's 60th birthday will reduce the Payment Base and your future Lifetime Benefit Payment. Such partial Surrender may potentially eliminate your Lifetime Benefit Withdrawal Guarantee. - GUARANTEED MINIMUM DEATH BENEFIT. This guaranteed minimum Death Benefit provides a Death Benefit equal to the greater of Premium Payments reduced for Partial Surrenders or Contract Value as of the date due proof of death is received for any Contract Owner or Annuitant. PARTIAL SURRENDERS WILL REDUCE OR ELIMINATE THE GUARANTEED MINIMUM DEATH BENEFIT. THIS GUARANTEED MINIMUM DEATH BENEFIT REPLACES THE STANDARD DEATH BENEFITS PROVIDED UNDER THIS CONTRACT. See Examples 1-16 under The Hartford's Lifetime Income Builder II in Appendix A. See Optional Benefit Comparisons in Appendix C. WHEN CAN YOU BUY THIS RIDER? Subject to State approval of The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios, The Hartford's Lifetime Income Builder II is closed to new investors. If available, you may elect this rider at the time of purchase, may exchange the rider, if you are eligible to participate in a designated company sponsored exchange program described in Appendix G. The benefits comprising this rider may not be purchased separately. This rider may not be available through all Registered Representatives and may be subject to additional restrictions set by your Registered Representative or us. We reserve the right to withdraw this rider at any time. When you buy this rider, you must provide us with the names and ages of the Owner, any joint Owner, Annuitant and Beneficiary. A Covered Life must be a living person. If you choose the Joint/Spousal Option, we reserve the right to (a) prohibit non-natural entities from being designated as an Owner, (b) prohibit anyone other than your Spouse from being a joint Owner; and (c) impose other designation restrictions from time to time. For the Single Life Option, the Covered Life is most often the same as the Contract Owner and joint Owner (which could be two different people). In the Joint/Spousal Option, the Covered Life is most often the Contract Owner and his or her Spouse, as joint Owner or Beneficiary. The Relevant Covered Life will be one factor used to establish your Withdrawal Percent. When the Single Life Option is chosen, we use the older Covered Life as the Relevant Covered Life; and when the Joint/Spousal Option is chosen, we use the younger Covered Life as the Relevant Covered Life. The maximum age of any Contract Owner or Annuitant when electing this rider is 75. When the Joint/Spousal Option is chosen, the Beneficiary also must be younger than age 76. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. If you elect this rider, you may not elect any rider other than MAV Plus (MAV only in applicable states). HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for this rider is based on your then current Payment Base (not your Contract Value) as of each Contract Anniversary. This charge will automatically be deducted from your Contract Value on your Contract Anniversary AFTER your Anniversary Value and Payment Base have been computed and prior to all other financial transactions. In the event of a full Surrender, a prorated charge will be deducted from your Surrender Value. The charge for this rider will be withdrawn from each Sub-Account and the Fixed Accumulation APP F-2 ------------------------------------------------------------------------------- Feature in the same proportion that the value of each Sub-Account bears to the total Contract Value. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts. The rider charge may limit access to the Fixed Accumulation Feature in certain states. We reserve the right to increase the charge for this rider up to a maximum rate of 0.75% any time on or after the fifth anniversary of electing this rider or five years from the date from which we last notified you of a fee increase, whichever is later. The fee increase will only apply if you are eligible for future automatic Payment Base increases. Any future fee increase will be based on the charge that we are then currently charging other customers who have not previously elected this rider. If we cease sales of this rider, we will predetermine the rider charge on a non-discriminatory basis. Fee increases will not apply if (a) the age of the Relevant Covered Life is 80 or older; or (b) you notify us in writing of your election to permanently waive automatic Payment Base increases. This fee may not be the same as the fee that we charge new purchasers or the fee we set before we cease offering this rider. In no event will this charge exceed 0.75% annually. Subject to the foregoing limitation, we also reserve the right to charge a different fee for this rider to any new Contract Owners as a result of a change of Covered Life. Unless exempt, we will automatically deduct rider fees, as they may be increased from time to time. We may offer a lower fee to customers who agree to participate in any asset allocation models, investment programs, or fund-of-funds we may designate from time to time. DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER? Yes. Your initial Payment Base equals your initial Premium Payment. Your Payment Base will fluctuate based on subsequent Premium Payments and partial Surrenders as well as automatic Payment Base increases. Your Payment Base can never be less than $0 or more than $5 million. Any activities that would otherwise increase the Payment Base above this ceiling will not be included for any benefits under this rider. The Payment Base will be recalculated based on certain changes in Covered Lives. See Examples 15 and 16 under The Hartford's Lifetime Income Builder II in Appendix A. - Automatic Payment Base increases. Your Payment Base may fluctuate based on annual "automatic Payment Base increases." You will be qualified for annual automatic Payment Base increases commencing on your first Contract Anniversary. Automatic Payment Base increases will cease upon the earlier of the Annuity Commencement Date or the Contract Anniversary immediately following the Relevant Covered Life's attained age of 80. Automatic Payment Base increases are based on your then current Anniversary Value (prior to the rider charge being taken) divided by your Maximum Contract Value and then reduced by 1. In no event will this factor be less than 0% or greater than 10% provided; however, there is no cap on Automatic Payment Base increases if you allocate your Contract Value in one of a number of asset allocation models, investment programs or fund of funds Sub-Accounts designated by us. Automatic Payment Base increases will not take place if the investment performance of your Sub-Accounts is neutral or negative. See Examples 9 and 10 under The Hartford's Lifetime Income Builder II in Appendix A. - Subsequent Premium Payments increase your Payment Base on a dollar-for-dollar basis. - Partial Surrenders may trigger a recalculation of the Payment Base depending on (a) whether the partial Surrender takes place prior or during an Eligible Withdrawal Year, and (b) if the cumulative amount of all partial Surrenders during any Contract Year exceeds the applicable Threshold, as discussed below: A. If cumulative partial Surrenders taken during any Contract Year and prior to an Eligible Withdrawal Year are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Payment Base on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are greater than the Threshold (subject to rounding), then we will reduce the Payment Base on a (i) dollar-for-dollar basis up to the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders during an Eligible Withdrawal Year are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will not reduce the Payment Base. C. For any partial Surrender that first causes cumulative partial Surrenders in an Eligible Withdrawal Year to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Payment Base on a proportionate basis for the amount in excess of the Lifetime Benefit Payment. Partial Surrenders taken during any Contract Year that cumulatively exceed the Annual Withdrawal Amount but do not exceed the Lifetime Benefit Payment will be free of any applicable CDSC. APP F-3 ------------------------------------------------------------------------------- Partial Surrenders will diminish the Guaranteed Minimum Death Benefit. See Examples 4, 6-8 and 11-14 under The Hartford's Lifetime Income Builder II in Appendix A. IS THIS RIDER DESIGNED TO PAY YOU WITHDRAWAL BENEFITS FOR YOUR LIFETIME? Yes. However, your Withdrawal Percentage and therefore the amount of your Lifetime Benefit Payment, is dependent upon when you take your first partial Surrender. For instance: - If you take your first partial Surrender before an Eligible Withdrawal Year, your Withdrawal Percent will never increase above 5% for Single Life Option or 4.5% for Joint/Spousal option for the remaining duration of your Contract. - If you take your first partial Surrender during an Eligible Withdrawal Year, your Withdrawal Percent will never increase above the Withdrawal Percent corresponding with the attained age of the Relevant Covered Life as of the Contract Anniversary prior to the first partial Surrender. If such a partial Surrender took place during the first Contract Year, we will use the attained age of the Relevant Covered Life as of Contract issuance to set the Withdrawal Percent. Once the Withdrawal Percent has been established, it will not change for the remaining duration of your Contract. In other words, prior to the Relevant Covered Life turning 80, the longer the first partial Surrender is delayed, the higher your Withdrawal Percent shall be.
ATTAINED AGE OF RELEVANT COVERED WITHDRAWAL PERCENT LIFE ON THE CONTRACT ANNIVERSARY SINGLE LIFE JOINT/SPOUSAL PRIOR TO THE FIRST PARTIAL SURRENDER OPTION OPTION -------------------------------------------------------------------------------- 60 - 64 5.0% 4.5% 65 - 69 5.5% 5.0% 70 - 74 6.0% 5.5% 75 - 79 6.5% 6.0% 80+ 7.0% 6.5%
Your Withdrawal Percent may change based on a permissible Covered Life change. If you choose to receive less than your full Lifetime Benefit Payment in any Contract Year; you will not be able to carry remaining amounts forward to future Contract Years. See Examples 1-6 and 11-14 under The Hartford's Lifetime Income Builder II. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Guaranteed Minimum Death Benefit guarantees that we will pay a Death Benefit equal to the greater of Premium Payments reduced for partial Surrenders or Contract Value as of the date we receive due proof of death of the Contract Owner(s) or Annuitant. Termination of this rider will result in the rescission of the Guaranteed Minimum Death Benefit and result in your Beneficiary receiving the Contract Value as of the date we receive due proof of death. Partial Surrenders will affect the Guaranteed Minimum Death Benefit as follows: A. If cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are equal to, or less than, the Threshold (subject to rounding), then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders taken prior to an Eligible Withdrawal Year are greater than the Threshold (subject to rounding), then we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Threshold, and (ii) proportionate basis for the amount in excess of the Threshold. B. If cumulative partial Surrenders during an Eligible Withdrawal Year are (i) equal to or less than the Lifetime Benefit Payment (subject to rounding), or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD; then the cumulative partial Surrender will reduce the Guaranteed Minimum Death Benefit on a dollar-for-dollar basis. C. For any partial Surrender that causes cumulative partial Surrenders in an Eligible Withdrawal Year to exceed the Lifetime Benefit Payment and the RMD exception in (B) does not apply, we will reduce the Guaranteed Minimum Death Benefit on a (i) dollar-for-dollar basis up to the amount of the Lifetime Benefit Payment, and (ii) proportionate basis for the amount in excess of the Lifetime Benefit Payment. Please refer to the section labeled "CAN YOUR SPOUSE CONTINUE YOUR WITHDRAWAL BENEFIT" for more information on the continuation of the Lifetime Benefit Payments by your Spouse. See Examples 9 and 10 under The Hartford's Lifetime Income Builder II. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU REVOKE THIS RIDER? No. However, a Company-sponsored exchange of this rider will not be considered to be a revocation or termination of this rider. APP F-4 ------------------------------------------------------------------------------- WHAT EFFECT DOES PARTIAL OR FULL SURRENDERS HAVE ON YOUR BENEFITS UNDER THIS RIDER? Please refer to "DOES THE BENEFIT AMOUNT/PAYMENT BASE CHANGE UNDER THIS RIDER?" for the effect of partial Surrenders on your Payment Base, Guaranteed Minimum Death Benefit and Lifetime Benefit Payments. You may make a full Surrender of your entire Contract at any time. However, you will receive your Contract Value with any applicable charges deducted and not the Payment Base or any Lifetime Benefit Payment that you would have received under this rider. If Your Contract Value is reduced below our minimum Contract Value rules in effect on a particular Valuation Day, and your Lifetime Benefit Payment amount remains greater than zero, then we will consider this date as your Annuity Commencement Date and we will no longer accept subsequent Premium Payments. See Examples 7, 8 and 10 - 14 under The Hartford's Lifetime Income Builder II. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? Inasmuch as this rider is affected only by changes to the Covered Life, only these types of changes are discussed below. We reserve the right to approve all Covered Life changes. Certain approved changes in the designation of the Covered Life may cause a re-calculation of the benefits. Covered Life changes also allow us, in our discretion, to impose investment restrictions, as described below. Any Covered Life change made within the first 6 months from the Contract Issue date will have no impact on the Payment Base or Guaranteed Minimum Death Benefit as long as each succeeding Covered Life is less than the maximum age limitation of the rider at the time of the change. The Withdrawal Percent and Lifetime Benefit Payment will thereafter change based on the age of the new relevant Covered Life. After the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and partial Surrenders have not yet been taken, in the event that you and your Spouse become legally divorced, you may add a new Spouse to the Contract. Provided that the age limitation of the rider is not exceeded, the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will then recalculate your Withdrawal Percent based on the age of the younger Covered Life as of the date of the change. Alternatively, if after the first 6 months from the Contract Issue date, if you elected the Joint/Spousal Option and Surrenders have been taken, in the event that you and your Spouse become legally divorced, you may only remove your ex-Spouse from the Contract whereupon the Payment Base and Guaranteed Minimum Death Benefit will remain the same. We will then recalculate your Withdrawal Percent based on the age of the remaining Covered Life as of the date of the change. You may not convert your Joint/Spousal Option election to a Single Life Option. In addition, after the first six months following the Contract issue date, if any Covered Life change takes place that is not due to a divorce, then: A. If the older Covered Life after the change is equal to or less than the maximum age limitation of the rider at the time of the change, then we will revoke the Withdrawal Benefits of this rider and continue the Guaranteed Minimum Death Benefit only. The charge for this rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter. B. If the older Covered Life after the change exceeds the maximum age limitation of the rider at the time of the change, or we no longer offer this rider, then the rider will terminate. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If you elected the Single Life Option and any Covered Life changes after the first 6 months from Contract Issue date, then we will: A. If we no longer offer this rider, we will continue the Guaranteed Minimum Death Benefit after resetting this benefit to the lower of the then applicable Guaranteed Minimum Death Benefit or Contract Value on the effective date of the Covered Life change; whereupon the Withdrawal Benefit will terminate. The charge for this rider then in effect will be assessed on the revocation date and will no longer be assessed thereafter; or B. If we offer this rider and: (i) if partial Surrenders have been taken prior to the first Contract Anniversary, then we will use the attained age of the oldest Covered Life as of the rider effective date to reset the Withdrawal Percent, or (ii) if partial Surrenders have not been taken prior to the first Contract Anniversary, then we will use the attained age of the older Covered Life as of the Contract Anniversary prior to the first partial Surrender to reset the Withdrawal Percent. The Payment Base will be recalculated to be the lesser of the Contract Value or the Payment Base effective on the date of the change. The Guaranteed Minimum Death Benefit will be recalculated to be the lesser of the Contract Value or the Guaranteed Minimum Death Benefit effective on the date of the change. The Maximum Contract Value will be recalculated to equal the Contract Value on the date of the change; or C. If we offer this rider and the older Covered Life after the change exceeds the maximum age limitation of this rider at the time of the change; the rider will be terminated and removed from the Contract. The Guaranteed Minimum Death Benefit will then be equal to the Contract Value. If the rider is no longer available for sale, we will determine the issue age limitation of the rider on a non-discriminatory basis. APP F-5 ------------------------------------------------------------------------------- The following tables illustrate only some of the various changes and the resulting outcomes associated with deaths of the Contract Owner(s) or Annuitant before and after the Annuity Commencement Date. SINGLE LIFE OPTION ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving The Annuitant is living or Joint Contract Owner receives non-spousal Contract Owner deceased the Death Benefit and this rider terminates Contract Owner There is a surviving spousal The Annuitant is living or Joint Contract Owner receives Contract Owner deceased the Death Benefit and this rider can continue under Spousal Contract continuation Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Designated Owner deceased Beneficiary receives the Death Benefit Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates. Estate Owner or Beneficiary deceased receives the Death Benefit Annuitant Contract Owner is living There is no Contingent Contract continues, no Death Annuitant and the Contract Benefit is paid, and this rider Owner becomes the Contingent continues Annuitant Annuitant Contract Owner is living There is no Contingent Rider terminates and Contract Annuitant and the Contract Owner receives the Death Owner waives their right to Benefit become the Contingent Annuitant Annuitant Contract Owner is Living Contingent Annuitant is Living Contingent Annuitant becomes the Annuitant and the Contract and this rider continues
JOINT/SPOUSAL ELECTION: IF THE DECEASED IS . . . AND . . . AND . . . THEN THE . . . Contract Owner There is a surviving Contract The Annuitant is living or The surviving Contract Owner Owner deceased continues the Contract and rider; we will increase the Contract Value to the Death Benefit value Contract Owner There is no surviving Contract The Spouse is the sole primary Follow Spousal Contract Owner beneficiary continuation rules for joint life elections Contract Owner There is no surviving Contract The Annuitant is living or Rider terminates and Contract Owner or Beneficiary deceased Owner's estate receives the Death Benefit Annuitant The Contract Owner is living There is a Contingent Annuitant The Rider continues; upon the death of the last surviving Covered Life, the rider will terminate.
CAN YOUR SPOUSE CONTINUE YOUR WITHDRAWAL BENEFIT? - SINGLE LIFE OPTION: If a Covered Life dies and the Beneficiary is the deceased Covered Life's Spouse at the time of death, such Spouse may continue the Contract. If the Spouse elects to continue the Contract and this rider, we will continue the rider with respect to all Lifetime Withdrawal Benefits at the charge that is currently being assessed for new sales at the time of continuation. We will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater. The Covered Life will be re-determined on the date of Spousal APP F-6 ------------------------------------------------------------------------------- continuation. If the new Covered Life is less than age 81 at the time of the Spousal Contract continuation, and the rider is still available for sale, the Payment Base and the Guaranteed Minimum Death Benefit will be set equal to the Contract Value, the Withdrawal Percent will be recalculated based on the age of the older remaining Covered Life on the effective date of the Spousal Contract continuation. If the new Covered Life is 81 or older at the time of the Spousal Contract continuation, the rider will terminate and the Guaranteed Minimum Death Benefit will be equal to the Contract Value. If we are no longer offering this rider at the time of Spousal Contract continuation, we will revoke the Lifetime Withdrawal Benefit, the Guaranteed Minimum Death Benefit will be set equal to the Contract Value and the rider charge will no longer be assessed. - JOINT/SPOUSAL OPTION: This rider is designed to facilitate the continuation of your rights under this rider by your Spouse through the inclusion of a Joint/Spousal Option. If a Covered Life dies and the Spouse elects to continue the Contract, we will increase the Contract Value to the Guaranteed Minimum Death Benefit, if greater and we will continue the rider with respect to all benefits at the current rider charge. The benefits will be reset as follows: - The Payment Base will be equal to the greater of Contract Value or the Payment Base on the Spousal Contract continuation date - The Guaranteed Minimum Death Benefit will be equal to the Contract Value on the Spousal Contract continuation date - The Withdrawal Percent will remain at the current percentage if partial Surrenders have commenced; otherwise the Withdrawal Percent will be based on the attained age of the remaining Covered Life on the Contract Anniversary prior to the first partial Surrender - The Lifetime Benefit Payment will be recalculated to equal the Withdrawal Percent multiplied by the greater of the Contract Value or Payment Base on the date of Spousal Contract continuation. The remaining Covered Life can not name a new owner on the Contract. Any new beneficiary that is added to the Contract will not be taken into consideration as a Covered Life. The rider will terminate upon the death of the remaining Covered Life. If the Spouse elects to continue the Contract and revoke the Lifetime Withdrawal Benefit, we will assess the charge on the revocation date and it will no longer be assessed thereafter. The Covered Life will be re-determined on the date of Spousal Contract continuation for purposes of the Guaranteed Minimum Death Benefit. If the Covered Life is greater than the age limitation of the rider at the time of Spousal Contract continuation, the rider will terminate and the Guaranteed Minimum Death Benefit will equal the Contract Value. See Example 17 under The Hartford's Lifetime Income Builder II in Appendix A. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? If you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value and will not be able to elect any of the annuitization options allowed under this rider. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules or, alternatively, under the rules applicable when the Contract Value is below our minimum Contract Value then in effect. If your Contract Value is reduced below our minimum Contract Value then in effect, your Annuity Commencement Date will be attained and we will no longer accept subsequent Premium Payments. We will then issue you a payout annuity. You may elect the frequency of your payments from those offered by us at such time, but will not be less frequently than annually. - SINGLE LIFE OPTION: If you have elected the Single Life Option, we will issue you a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the Covered Life determined at Annuity Commencement Date. We treat the Covered Life as the Annuitant for this payout option. If there is more than one Covered Life, then the lifetime portion will be based on both Covered Lives. The Covered Lives will be the Annuitant and joint Annuitant for this payout option. The lifetime portion will terminate on the first death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit under this rider. If the older Annuitant is age 59 or younger, we will automatically defer the date the payments begin until the anniversary after the older Annuitant attains age 60 and is eligible to receive payments in a fixed dollar amount until the later of the death of any Annuitant or a minimum number of years. If the Annuitant and joint Annuitant are alive and the older Annuitant is age 60 or older, you will receive payments in a fixed dollar amount until the later of the death of any Annuitant or a period certain. The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the APP F-7 ------------------------------------------------------------------------------- greater of the period certain, or until the death of any Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of the Withdrawal Percent or 5%. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of any Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. This option may not be available if the Contract is issued to qualify under Code Sections 401, 403, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. - JOINT/SPOUSAL OPTION: If you have elected the Joint/Spousal Option and both Spouses are alive, we will issue you a Fixed Joint & Survivor Lifetime and Period Certain Payout. If only one Spouse is alive, we will issue a Fixed Lifetime and Period Certain Payout. The lifetime portion will be based on the surviving Covered Life. The Covered Lives will be the Annuitant and Joint Annuitant for this payout option. The lifetime benefit will terminate on the last death of the two. The minimum amount paid to you under this Annuity Option will at least equal the remaining Guaranteed Minimum Death Benefit. If the younger Annuitant is alive and age 59 or younger, we will automatically defer the date that payments begin until the anniversary after the younger Annuitant attains age 60 and is eligible to receive payments in a fixed dollar amount until the death of the last surviving Annuitant or a period certain. If the Annuitant is alive and the younger Annuitant is age 60 or older, you will receive payments in a fixed dollar amount until the later of the death of the last surviving Annuitant or a minimum number of years. The period certain over which payments will be made is equal to the Guaranteed Minimum Death Benefit divided by the product of the Payment Base multiplied by the Withdrawal Percent on the Annuity Commencement Date. Payments will be made over the greater of the period certain, or until the death of the last Surviving Annuitant, in the frequency that you elect. The annual amount that will be paid to you will be equal to the Payment Base on the Annuity Commencement Date multiplied by the greater of the Withdrawal Percent or 4.5%. Therefore, the higher your then remaining Guaranteed Minimum Death Benefit is at the time of annuitization, the longer the time period you will be entitled to receive annuitization payments. The frequencies will be among those offered by us at that time but will be no less frequently than annually. If, at the death of the last surviving Annuitant, payments have been made for less than the period certain, the remaining scheduled period certain payments will be made to the Beneficiary. A lump sum option is not available. These options may not be available if the Contract is issued to qualify under Code Sections 401, 403, 408, or 457. For such Contracts, this option will be available only if the Period Certain Payout is less than the life expectancy of the Annuitant at the time the option becomes effective. Such life expectancy will be computed under the mortality table then in use by us. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. We reserve the right to limit the Sub-Accounts into which you may allocate your Contract Value on and after the effective date of any Covered Life change. If there is a Covered Life change, we may prohibit investment in any Sub-Account; require you to allocate your Contract Value in one of a number of asset allocation models, investment programs or fund of funds Sub-Accounts. Any transfers required to reallocate Contract Value will not be used in determining the number of transfers allowed during a Contract Year. If the restrictions are violated, the Withdrawal Benefit will be revoked but the Guaranteed Minimum Death Benefit will continue to apply. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We will not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments to in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. This restriction is not currently enforced. See Examples 9 and 10 under The Hartford Lifetime Income Builder II in Appendix A. CAN WE AGGREGATE CONTRACTS? Yes. For purposes of determining the Payment Base and Premium Payment limits, we reserve the right to treat as one all deferred variable annuity Contracts issued by us where you have elected any optional withdrawal benefit rider. If we elect to aggregate Contracts, we will change the period over which we measure Surrenders against future Lifetime Benefit Payments. We will treat the effective date of our aggregation election until the end of the applicable calendar year as a Contract Year for the purposes of the Lifetime Benefit Payment limit. A pro-rata rider fee will be taken at the end of that calendar year. After the first calendar year following aggregation, the Lifetime Benefit Payment limits will be aggregated and will thereafter be set on a calendar year (i.e., January 1 Contract Anniversary) basis. The rider fee then in effect will be taken at the end of each new Contract Anniversary. APP F-8 ------------------------------------------------------------------------------- OTHER INFORMATION This rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under this rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate this rider and allow us to terminate the rider. - Your annual Lifetime Benefit Payments may fluctuate based on changes in the Payment Base and Contract Value. The Payment Base is sensitive to partial Surrenders in excess of the Lifetime Benefit Payment/Threshold. It is therefore possible that Surrenders and subsequent Premium Payments within the same Contract Year, whether or not equal to one another, can result in lower Lifetime Benefit Payments. - Annuitizing your Contract, whether voluntary or not, will impact and possibly eliminate these "lifetime" benefits. First, you may no longer invest additional Premium Payments. Second, any Death Benefit, whether standard or optional, will immediately terminate. Third, any Guaranteed Minimum Withdrawal Benefit guarantees you elect may end. In cases where you are required to annuitize (because you reach the Annuity Commencement Date or your Guaranteed Minimum Withdrawal Benefit requires annuitization because the Contract Value has fallen below our minimum Contract Value then in effect), you will forfeit automatic Payment Base increases (if applicable) and lifetime annuitization payments may equal (or possibly exceed) Lifetime Benefit Payments. However, where you elect to annuitize before a required Annuity Commencement Date, lifetime annuitization payments might be less than the income guaranteed by your Guaranteed Minimum Withdrawal Benefit. - Even though this rider is designed to provide "living benefits," you should not assume that you will necessarily receive "payments for life" if you have violated any of the terms of this rider. - The amount of the Withdrawal Percent used to compute your Lifetime Benefit Payment is frozen based on the date of the first partial Surrender. - The determination of the "Relevant" Covered Life is established by the Company and is critical to the determination of many important benefits such as the Withdrawal Percent used to set Lifetime Benefit Payments. Applicants should confirm this determination and be sure they fully appreciate its importance before investing. - We may terminate this rider post-election based on your violation of benefit rules and may otherwise withdraw this rider for new sales at any time. In the event that this rider is terminated by us, your Lifetime Benefit Payments will cease; your Payment Base, including any automatic Payment Base increases will be eliminated, the Guaranteed Minimum Death Benefit will then be equal to the Contract Value, and you will not be allowed to elect any other optional benefit rider. - Because these benefits are bundled and interdependent upon one another, there is a risk that you may ultimately pay for benefits that you may never get to use. - You may select this rider only at the time of sale and once you do so, you may not add any other optional withdrawal benefits during the time you own this Contract. If you elect this rider you will not be eligible for the Standard Death Benefits or able to elect optional riders other than MAV Plus. - When the Single Life Option is chosen, Spouses may find continuation of this rider to be unavailable or unattractive after the death of the Contract Owner. Continuation of the benefits available in this optional rider is dependent upon its availability at the time of death of the first Covered Life and will be subject to then prevailing charges. - The Joint/Spousal Option provides that if you and your Spouse are no longer married for any reason other than death, the removal and replacement of your Spouse will constitute a Covered Life change. This can result in the resetting of all benefits under this rider. - Certain Covered Life changes may result in a reduction, recalculation or forfeiture of benefits. - This rider may not be suitable if a Covered Life is under attained age 60. - Annuity pay-out options available subsequent to the Annuity Commencement Date may not necessarily provide a stream of income for your lifetime and may be less than Lifetime Benefit Payments. - The fee for this rider may increase if and when automatic Payment Base increases take place. There are no assurances as to the fee we will be charging at the time of each Payment Base increase. This is subject to the maximum fee disclosed in the Synopsis and this section. - The purchase of an optional withdrawal benefit feature may not be appropriate for contracts owned by certain types of non-natural entities, including Charitable Trusts. Because many non-natural entities are required to make certain periodic distributions and those amounts may be different than the withdrawal amounts permitted by the optional withdrawal benefit feature, you may wish to consult with your tax advisor to help determine the appropriateness of this benefit. APP G-1 ------------------------------------------------------------------------------- APPENDIX G -- EXCHANGE PROGRAMS TABLE OF CONTENTS
PAGE ------------------------------------------------------------------------------------------------------------------------ A. The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios APP G-2 B. Contract Exchange Programs: APP G-3 Edge Offer APP G-3 Union Security Offer APP G-6
APP G-2 ------------------------------------------------------------------------------- A. THE HARTFORD'S LIFETIME INCOME BUILDER SELECTS AND THE HARTFORD'S LIFETIME INCOME BUILDER PORTFOLIOS CONVERSION PROGRAM We reserve the right, in our sole discretion, to offer the Eligible Contract Owners the opportunity to exchange The Hartford's Lifetime Income Builder II or The Hartford's Lifetime Income Foundation for the currently issued version of either The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios subject to the terms and conditions below. The availability of the conversion program is at our discretion and may be withdrawn in whole, or in part, at any time without notice. The opportunity to convert your rider to The Hartford's Lifetime Income Builder Portfolios will expire 90 days after the effective date of this rider exchange program. You should convert your rider only if it is appropriate for your needs and financial considerations. Please read this prospectus carefully and discuss this conversion with your Registered Representative prior to electing to participate in this conversion program. I. WHO IS ELIGIBLE TO PARTICIPATE IN THIS CONVERSION PROGRAM? This conversion program is available to Owners who meet ALL of the following qualifications ("Eligible Contract Owners"): You must: - If electing The Hartford's Lifetime Income Builder Portfolios, you must have purchased a deferred individual annuity contract from us between 1/1/08 - 5/3/08 (later if The Hartford's Lifetime Income Builder Portfolios was not approved in your state). If or if electing The Hartford's Lifetime Income Builder Selects, you must have purchased a deferred individual annuity contract from us after 8/14/06 (each, an "Eligible Contract"). You must still and own such Contract as of the conversion date (defined below); and - Have previously elected The Hartford's Lifetime Income Builder II or The Hartford's Lifetime Income Foundation at the time of purchase or as a result of a Company-sponsored exchange program; and - Be a customer of a Financial Intermediary that has approved the sale of The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios; and - The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios are approved for sale in your state. You must not be age 81 or older as of the conversion date (including any other Covered Life). II. WHAT ARE KEY DIFFERENCES BETWEEN THE NEW RIDERS AND MY CURRENT RIDER? Please refer to Appendix D for a table describing some of the key differences between The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios. III. HOW DOES THE CONVERSION PROCESS WORK? - You must complete a Conversion Program Form to exchange your The Hartford's Lifetime Income Builder II or The Hartford's Lifetime Income Foundation rider. The date that you comply with all our requirements to exchange your existing rider ("conversion date") will be the date we use to set your benefits under your The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios rider selected. We will also use the conversion date for establishing your eligibility for this conversion program. Your request for conversion will not be in good order until the requisite fund transfers are made. - If you elect either The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios, you must abide by all restrictions applicable to these riders, including, but not limited to, investment restrictions described in this prospectus. - Except as modified by this election, your existing Contract and all other features and functions previously selected will be and remain in full force and effect after the conversion date. - You may not cancel your election after the conversion date. - A prorated final rider charge for your pre-conversion rider will be assessed as of the conversion date. There are no exchange or transfer fees associated with making this election. - Your Contract Value as of the conversion date will become your new Payment Base. Your Payment Base under your existing rider will not carry over as your new Payment Base. - Your Withdrawal Percent under The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios is based on the attained age of the relevant Covered Life on the effective date of the conversion. If the Withdrawal APP G-3 ------------------------------------------------------------------------------- Percent had been locked in under The Hartford Lifetime Income Builder II or The Hartford's Lifetime Income Foundation, it will be unlocked and reset upon conversion. - Your new death benefit will equal your Contract Value on the effective date of the conversion and thereafter may operate under the terms of the Guaranteed Minimum Death Benefit. A conversion of your rider may result in a reduction of your death benefit. - Your Lifetime Benefit Payment will be equal to your Payment Base multiplied by your Withdrawal Percent for the remainder of the rider year. Your Lifetime Benefit Payment will reset upon the next Contract Anniversary according to the terms of the rider you selected. - All Joint Owners and the Annuitant must consent to this conversion. - Any changes in Covered Lives will affect your benefits under your new riders. - The survivorship option selected under your existing riders may not be amended in connection with your exercising your conversion privileges. IV. WHAT OTHER THINGS SHOULD BE CONSIDERED? - Please refer to section 7(a) of this prospectus, and in particular the sub-section entitled "OTHER INFORMATION," as well as Appendix D, for pertinent risks associated with electing The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios. - YOUR PAYMENT BASE, GUARANTEED MINIMUM DEATH BENEFIT AND LIFETIME BENEFIT PAYMENTS MAY BE LOWER AND RIDER CHARGES MAY BE HIGHER THAN THOSE AVAILABLE UNDER YOUR CURRENT RIDER. - You should discuss with your Registered Representative whether or not converting your rider is suitable for you and your particular needs, investment horizon and financial plans. You should discuss your particular circumstances and the tax consequences of this conversion with your tax advisor, as we make no representation regarding the tax consequences of an exchange of these riders. - We are not obligated to offer rider conversion privileges if and once this offer is withdrawn. - These conversion privileges may not be available through all Financial Intermediaries. B. CONTRACT EXCHANGE PROGRAMS EDGE OFFER Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company (collectively, "we" or "our") is offering Eligible Contract Owners (as defined below) the opportunity to exchange an Eligible Contract (as defined below) for a then currently issued Hartford Leaders Foundation variable annuity contract. This offer may be withdrawn at any time without notice in our sole and absolute discretion. All initial capitalized terms shall have such meaning as provided in the applicable prospectus. I. WHO IS ELIGIBLE TO PARTICIPATE IN THIS EXCHANGE PROGRAM? This exchange program is available to Contract Owners who meet ALL of the following qualifications ("Eligible Contract Owners"): - You must own one or more Eligible Contracts as of the exchange date (as defined below). Eligible Contracts are: X Versions of The Director Series I - VIIIR and Hartford Leaders Series I-IIR (including all proprietary versions) with a 6 or 7 year CDSC. Please check your Contract to verify the version owned. X The Owner(s) and Annuitant must be the same in all Eligible Contracts that will be surrendered. - The Contract Value of all Eligible Contracts surrendered must be at least $100,000 in the aggregate as of the exchange date. - You must be a customer of a Financial Intermediary that is authorized to sell The Hartford Leaders Foundation variable annuity Contract. - You must not: X Be age 75 or older as of the exchange date (including any other Contract Owner(s) and the Annuitant). X Have any Premium Payments that are any longer subject to CDSCs. X Be a group or trust that is: (a) any trustee or custodian for a retirement plan qualified under Sections 401(a) or 403(a) of the Internal Revenue Code ("Code"); (b) annuity purchase plans adopted by public school systems or tax-exempt organizations according to Section 403(b) of the Code; (c) an employee pension plan established for employees by a state, a political sub-division of a state, or an agency of either a state or a political subdivision of a state; and/or (d) a deferred compensation plan as defined in Section 457 of the Code. APP G-4 ------------------------------------------------------------------------------- X Be subject to sales charges in excess of 9% of the total Premium Payments made in connection with the replacement Hartford Leaders Foundation Contract as of the exchange date. X Have elected either The Hartford's Principal First Preferred or The Hartford's Principal First (optional guaranteed minimum withdrawal benefits available under certain Eligible Contracts). II. WHAT ARE SOME KEY DIFFERENCES BETWEEN THESE CONTRACTS?
THE DIRECTOR SERIES I - VIIIR AND HARTFORD LEADERS SERIES I-IIR YEAR 1 2 3 4 5 6 7 8 ---------------------------------------------------------------------------------------- SALES CHARGE CDSC(8) 5 - 7% 5 - 7% 4 - 7% 3 - 6% 2 - 5% 0 - 4% 0 - 3% 0% HARTFORD LEADERS FOUNDATION $0 $50,000 $100,000 $250,000 $500,000 - - - - - PREMIUM $49,999 $99,999 $249,999 $499,999 $999,999 $1,000,000+ ---------------- ------------------------------------------------------------------------- SALES CHARGE FESC(9) 5.5% 4.5% 3.5% 2.5% 2.0% 1%
THE DIRECTOR SERIES I - VIIIR AND HARTFORD LEADERS SERIES I-IIR -------------------------------------------------------------------------- MORTALITY & EXPENSE RISK CHARGE (10) 1.00 - 1.25% ADMINISTRATIVE CHARGES 0.00% - 0.15% ANNUAL MAINTENANCE FEE (11) $25 - $30 HARTFORD LEADERS FOUNDATION ---------------------------------------- ---------------------------------- MORTALITY & EXPENSE RISK CHARGE (10) .65% ADMINISTRATIVE CHARGES 0.20% ANNUAL MAINTENANCE FEE (11) $30
- Optional Guaranteed Minimum Withdrawal Benefits (12). For an additional fee, Eligible Contract Owners electing to exchange their Contract(s) will be entitled to elect any of the optional guaranteed minimum withdrawal benefits; including lifetime guaranteed minimum withdrawal benefits, as described in The Hartford Leaders Foundation prospectus. - Funds Available. Eligible Contract Owners electing to exchange their Contract(s) will have access to the Funds offered in The Hartford Leaders Foundation prospectus. These may include many of the Funds currently offered under your existing Contract but also include a wide array of Funds managed by unaffiliated portfolio managers. - Standard Guaranteed Minimum Death Benefits (13). Eligible Contract Owners electing to exchange their Contract(s) will be automatically entitled to receive the standard Death Benefit. Differences between the standard death benefit offered under existing Contracts and the standard death benefit provided in The Hartford Leaders Foundation are highlighted in the following table: (8) Varies based on contract version. (9) Front-end Sales Charges ("FESC") do not reflect Rights of Accumulation. Under the Rights of Accumulation program, we will use the aggregate amount of Eligible Investments to calculate the applicable sales charge. Eligible Investments are (a) any other individual variable annuity issued by us or our affiliates subject to a front-end sales charge and (b) Class A shares of any retail mutual fund of a Fund family held by you as owner or joint owner. Your Financial Intermediary must be the broker of record for Eligible Investments. Eligible Investments must be identified in your application (or comparable request for annuity) and each time you make subsequent Premium Payments. Premium Payments received through any other means of transmission will be subject to a sales charge based on the lower of your most recent sales charge level on record under this program or the otherwise applicable sales charge. We also accept Letters of Intent as a basis to reduce sales charges. A Letter of Intent is a commitment to invest a certain amount of Premium Payments within 13 months from the date you exchange your Contract in exchange for which we deduct a sales charge based on the total amount you plan on investing over this time period. If you don't make the Premium Payments promised, we will recalculate the sales charge based on your actual Premium Payments and proportionately deduct this charge from your Sub-Accounts. We may allow an extended period by accepting a Letter of Intent for an additional 13 month period. (10) Mortality and Expense Risk Charges also vary based on the contract version selected. Premium taxes (0 - 3.5%) and optional benefit fees excluded. (11) For The Director Series II - VIIIR, Hartford Leaders Series I-IIR or Hartford Leaders Foundation, Annual Maintenance Fees are waived if the Contract Value is greater than $50,000 on any Contract Anniversary or upon Surrender. (12) Taxable distributions (and certain deemed distributions) are subject to ordinary income tax, and if made prior to age 59 1/2 may also be subject to a 10% federal income tax penalty. (13) Death benefits may be subject to ordinary income tax. APP G-5 -------------------------------------------------------------------------------
CONTRACT STANDARD DEATH BENEFIT -------------------------------------------------------------------------------- Hartford Leaders The higher of Contract Value or total Premium Payments Foundation (14) adjusted for partial Surrenders. Director Series I The higher of Contract Value (15) or total Premium Payments -IIR adjusted for partial Surrenders. Director Series The highest of: (A) Contract Value (15); or (B) total III - V Premium Payments adjusted for partial Surrenders; or (C) Contract Value on the Specified Contract Anniversary (16) immediately preceding the date of death, increased by any Premium Payments made and decreased by any Surrenders since the preceding Specified Contract Anniversary. Director Series VI The highest of: (A) Contract Value; or (B) total Premium -VIIR and Hartford Payments adjusted for partial Surrenders; or (C) Maximum Leaders Series I Anniversary Value. Director Series Premium Protection: The higher of total Premium Payments VIIIR and Hartford adjusted for partial Surrenders or Contract Value, or Asset Leaders Series IIR Protection: The highest of: (A) Contract Value; (B) Contract Value plus 25% of the total Premium Payments (excluding any subsequent Premium Payments we receive within 12 months of death or after death less any partial Surrenders); or (C) Contract Value plus 25% of Maximum Anniversary Value (excluding any subsequent Premium Payments we receive within 12 months of death or after death). This Death Benefit cannot exceed the greatest of: (i) Contract Value; (ii) total Premium Payments adjusted for any partial Surrenders; or (iii) Maximum Anniversary Value.
(14) The standard Death Benefit is replaced by the Guaranteed Minimum Death Benefit upon election of The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder, The Hartford's Lifetime Income Builder II or The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios. (15) The Director Series I - V Annuitants who die after age 90 are entitled only to Contract Value. (16) Specified Contract Anniversary is: The Director Series III -- every sixth Contract Anniversary; The Director Series IV & V -- every seventh Contract Anniversary. - Other Differences. Some of the other differences include: X Death Benefit Aggregate Limit: Death benefits are not subject to aggregate limits in The Director Series I - VIIIR and Hartford Leaders Series I (without amendatory rider); whereas in The Director Series I - VIIIR and Hartford Leaders Series I (with amendatory rider), Hartford Leaders Series IIR and Hartford Leaders Foundation Death Benefits are limited to $5 million of Premium Payments (as reduced by an adjustment for Surrenders), or Contract Value plus $1 million. X Partial Surrenders: In all versions of The Director (other than The Director Series VII and Hartford Leaders Series I (with amendatory rider) and Director Series VIIIR), partial surrenders reduce Death Benefits on a dollar-for-dollar basis; whereas in The Director Series VII and Hartford Leaders Series I (with amendatory rider), Director Series VIII/R and Hartford Leaders Edge Series II/R and Hartford Leaders Foundation, partial Surrenders reduce Death Benefits on a proportionate basis. X Miscellaneous. Hartford Leaders Foundation Contracts may also differ from your existing Contract in terms of (a) minimum interest rates credited to the Fixed Accumulation Feature; (b) AIR rates used for the variable Annuity Payout (subject to state variations); and (c) minimum guaranteed fixed annuitization rates. - State Variations. The foregoing discussion does not take into consideration state variations, if any. III. HOW DOES THE EXCHANGE PROCESS WORK? - This exchange will constitute a full Surrender (replacement) of your Eligible Contract(s). You may Surrender more than one existing Eligible Contract(s) as part of this program. Partial Surrenders will not be permitted. - The Contract Value of your Eligible Contract(s) as of the exchange date will be considered to be the initial Premium Payment for your Hartford Leaders Foundation Contract. This amount will be used to establish your benefits under your Hartford Leaders Foundation Contract. No exchange or transfer fees will be charged when electing to make this exchange. - We will impose a sales charge on initial and subsequent Premium Payments under your Hartford Leaders Foundation Contract, subject to possible adjustments associated with any Rights of Accumulation and a Letter of Intent. Your initial Premium Payment can not be used to satisfy the terms of any outstanding Letter of Intent. For example, if your Premium Payments under your existing Contract were $100,000 (A) and your Account Value at the time of exchange was $225,000 (B), then a sales charge of $7,875 [sales charge = the lesser of: [(A) x 9%] or [(B) x 3.5%]] will be deducted from your account. However, if you signed a APP G-6 ------------------------------------------------------------------------------- Letter of Intent committing to deposit another $25,000 (C), then your sales charge would be reduced to $6,250 [sales charge = the lesser of: [(A) x 9%] or [(B) + (C) x 2.5%] (based on exceeding the next sales charge break point)]. - The date that you comply with all our requirements to exchange your Eligible Contract(s) ("exchange date") will be the date we use to set your benefits under your Hartford Leaders Foundation Contract. We will use the exchange date for establishing your eligibility for this program and various age-sensitive optional riders under your Hartford Leaders Foundation Contract. - Certain optional guaranteed minimum withdrawal benefits may ONLY be elected at the exchange date. - The Contract Owner(s) and Annuitant must be the same in your replacement Hartford Leaders Foundation Contract as they are in your Eligible Contract(s). - If there is more than one Contract Owner, then all Contract Owners must consent to this exchange. - Subject to the laws of your state, you may cancel your Hartford Leaders Foundation Contract for any reason within ten (10) days of receipt of your Contract in accordance with the cancellation privileges described in your Hartford Leaders Edge Series IV prospectus. IV. WHAT OTHER THINGS SHOULD BE CONSIDERED? - YOUR STANDARD AND OPTIONAL DEATH BENEFITS UNDER YOUR ELIGIBLE CONTRACT(S) WILL NOT CARRY OVER TO YOUR HARTFORD LEADERS FOUNDATION CONTRACT. For instance, because the value of the MAV Plus Death Benefit (if elected and available) fluctuates based on Maximum Anniversary Value rather than Contract Value, THE INITIAL DEATH BENEFIT UNDER YOUR HARTFORD LEADERS EDGE SERIES IV CONTRACT COULD BE LOWER THAN THE DEATH BENEFIT UNDER YOUR EXISTING ELIGIBLE CONTRACT(S). - SURRENDERING YOUR NEW HARTFORD LEADERS FOUNDATION CONTRACT SOON AFTER BUYING IT MAY LEAVE YOU IN A WORSE FINANCIAL POSITION THAN IF YOU NEVER ACCEPTED THIS EXCHANGE OFFER. - You should discuss the merits of this exchange with your Registered Representative to be sure that The Hartford Leaders Foundation Contract is suitable for you and your particular circumstances. You should discuss your particular circumstances and the tax consequences of this exchange with your tax advisor, as we make no representation regarding the tax consequences of an exchange. - You should read The Hartford Leaders Foundation prospectus and those of the underlying Funds before investing. These prospectuses contain other information about variable annuities and investment options including risks that you should carefully consider. Your Registered Representative can provide you with prospectuses or you can contact us to receive one. These variable annuities are underwritten and distributed by Hartford Securities Distribution Company, Inc. - We are not obligated to offer exchange privileges if and once this offer is withdrawn or to extend these privileges to other contract variations. UNION SECURITY OFFER Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company (collectively, "we" or "our") are offering Eligible Contract Owners (as defined below) the opportunity to exchange an Eligible Contract (as defined below) for a then currently issued Core version of this variable annuity Contract ("Hartford Leaders Series IV"). This offer may be withdrawn at any time without notice in our sole and absolute discretion. All initial capitalized terms shall have such meaning as provided in the applicable prospectus. I. WHO IS ELIGIBLE TO PARTICIPATE IN THIS EXCHANGE PROGRAM? This exchange program is available to Contract Owners who meet ALL of the following qualifications ("Eligible Contract Owners"): - You must own one or more Eligible Contracts as of the exchange date (as defined below). Eligible Contracts are: X all versions of the Masters, Masters+, Opportunity or Opportunity+ variable annuities issued by Union Security Insurance Company or Union Security Life Insurance Company of New York (collectively, "Union Security"). Please check your Contract to verify the version owned. X The Owner(s) and Annuitant must be the same in all Eligible Contracts that will be surrendered. - The Contract Value of all Eligible Contracts surrendered must be at least $25,000 in the aggregate as of the exchange date. - You must be a customer of a Financial Intermediary that is authorized to sell The Hartford Leaders Series IV variable annuity Contract. - You must not: X Be age 81 or older as of the exchange date (including any other Contract Owner(s) and the Annuitant). APP G-7 ------------------------------------------------------------------------------- X Have any Premium Payments that are any longer subject to CDSCs. X Be a group or trust, that is: (a) any trustee or custodian for a retirement plan qualified under Sections 401(a) or 403(a) of the Internal Revenue Code ("Code"); (b) annuity purchase plans adopted by public school systems or tax-exempt organizations according to Section 403(b) of the Code; (c) an employee pension plan established for employees by a state, a political subdivision of a state, or an agency of either a state or a political subdivision of a state; and/or (d) a deferred compensation plan as defined in Section 457 of the Code. II. WHAT ARE SOME KEY DIFFERENCES BETWEEN THESE CONTRACTS?
MORTALITY & EXPENSE ANNUAL RISK ADMIN. MAINTENANCE CONTRACT CHARGE(17)(18) CHARGES FEE ------------------------------------------------------------ Hartford Leaders 1.05% 0.20% $30(19) Series IV Opportunity 1.25% 0.10% $35(20) Masters 1.25% 0.10% None SALES CHARGE CONTRACT YEAR 1 2 3 4 5 6 7 8+ ------------------- ---------------------------------------------------------------------------------------- Hartford Leaders CDSC(1) 7% 7% 7% 6% 5% 4% 3% 0% Series IV Opportunity CDSC(1) 5% 5% 5% 5% 5% 0% 0% 0% Masters CDSC(1) 7% 7% 6% 6% 5% 3% 1% 0%
- Optional Guaranteed Minimum Withdrawal Benefits (21). For an additional fee, Eligible Contract Owners electing to exchange their Contract(s) will be entitled to elect any of the optional guaranteed minimum withdrawal benefits; including lifetime guaranteed minimum withdrawal benefits, as described in The Hartford Leaders Series IV prospectus. - Funds Available. Eligible Contract Owners electing to exchange their Contract(s) will have access to the Funds offered in The Hartford Leaders Series IV prospectus. These generally include all Funds currently offered under your existing Contract but also include a wide array of Funds managed by unaffiliated portfolio managers. Not all Funds currently offered in your existing Contract will be available in your replacement Contract. - Standard Guaranteed Minimum Death Benefits (22). Eligible Contract Owners electing to exchange their Contract(s) will automatically receive the standard Death Benefit. Differences between the standard Death Benefit offered under existing contracts and the standard Death Benefit provided in The Hartford Leaders Series IV are highlighted below:
CONTRACT STANDARD DEATH BENEFIT -------------------------------------------------------------------------------- Hartford Leaders The higher of Contract Value or total Premium Payments Series IV (23) adjusted for partial Surrenders. Opportunity I, II, Contracts issued before 5/1/97, Without Enhanced Death IV, V, Benefit Rider, OWNER OR ANNUITANT LESS THAN AGE 75 AT Opportunity+ DEATH,highest of: (A) Total Premiums less partial Surrenders; (B) Contract Value or (C) Contract Value on the last five-year Contract Anniversary before the earlier of the decedent's death or age 75, minus any partial Surrenders since that anniversary. Contracts issued after 5/1/97, With Enhanced Death Benefit Rider, OWNER OR ANNUITANT LESS THAN AGE 75 AT DEATH,highest of: (A) total Premiums less partial Surrenders, compounded annually at 3%, capped at 200% of total Premium minus partial Surrenders ("Rollup Amount"); (B) Contract Value or (C) Contract Value on the last five-year Contract Anniversary before death; minus any partial Surrenders since that anniversary. Contracts issued after 5/1/97, with Enhanced Death Benefit Rider, OWNER OF ANNUITANT AGE 75 OR OLDER AT DEATH,highest of: (A) The Rollup Amount on the earlier of the Contract Owner or Annuitant's 75th birthday plus any Premium Payments made since that birthday, minus partial Surrenders since that birthday; (B) Contract Value or (C) Contract Value on the last five-year Contract Anniversary before the decedent reached age 75; minus any partial Surrenders since that anniversary. Opportunity III The highest of: (A) total Premiums less partial Surrenders, (B) Contract Value or (C) Contract Value on the last five-year Contract Anniversary before the earlier of the decedent's death or age 75, minus any partial Surrenders since that anniversary. Masters I Contracts issued before 5/1/97 without the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT LESS THAN AGE 75 AT DEATH,the highest of: (A) total Premiums less partial Surrenders; (B) Contract Value adjusted for any applicable Market Value Adjustment or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary.
APP G-8 -------------------------------------------------------------------------------
CONTRACT STANDARD DEATH BENEFIT -------------------------------------------------------------------------------- Contracts issued after 5/1/97 with the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT LESS THAN AGE 75 AT DEATH,the highest of: (A) total Premiums less partial Surrenders, compounded annually at 3%, capped at 200% of Total Premium minus partial Surrenders; (B) Contract Value adjusted for any applicable Market Value Adjustment, or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary. Contracts issued after 5/1/97 with the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT AGE 75 OR OLDER AT DEATH,the highest of: (A) The Rollup Amount on the earlier of the Contract Owner or Annuitant's 75th birthday plus any Premium Payments made since that birthday, minus partial Surrenders since that birthday; (B) Contract Value adjusted for any applicable Market Value Adjustment; or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary. Masters+ Contracts issued before 5/1/97 without the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT WERE LESS THAN AGE 75 AT DEATH,the highest of: (A) total Premiums less partial Surrenders; (B) Contract Value adjusted for any applicable Market Value Adjustment; or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary. Contracts issued after 5/1/97 with the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT WERE LESS THAN AGE 75 AT DEATH,the highest of: (A) total Premiums less partial Surrenders, compounded annually at 5%, capped at 200% of total Premium minus partial Surrenders; (B) Contract Value adjusted for any applicable Market Value Adjustment; or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary. Contracts issued after 5/1/97 with the Enhanced Death Benefit Rider and the OWNER OR ANNUITANT AGE 75 OR OLDER AT DEATH,the highest of: (A) The Rollup Amount on the earlier of the Contract Owner or Annuitant's 75th birthday plus any Premium Payments made since that birthday, minus partial Surrenders since that birthday; (B) Contract Value adjusted for any applicable Market Value Adjustment; or (C) Contract Value on the last seven-year Contract Anniversary before the earlier of the date of death, or the Contract Owner or Annuitant's 75th birthday, adjusted for any applicable Market Value Adjustment, minus any partial Surrenders since that Seven Year Anniversary.
(17) Varies based on contract version. Maximum charge is shown. (18) Mortality and Expense Risk Charges for Hartford Leaders products are .10% higher than The Director products. Premium taxes (0 - 3.5%) and optional benefit fees excluded. (19) Annual Maintenance Fees are waived if the Contract Value is greater than or equal to $50,000 on any Contract Anniversary or upon Surrender. (20) Annual Maintenance Fees are waived if the Contract Value is greater than or equal to $25,000 on any Contract Anniversary or upon Surrender. (21) Taxable distributions (and certain deemed distributions) are subject to ordinary income tax, and if made prior to age 59 1/2 may also be subject to a 10% federal income tax penalty. (22) Death Benefits may be subject to ordinary income tax. (23) The standard Death Benefit is replaced by the Guaranteed Minimum Death Benefit upon election of The Hartford's Lifetime Income Foundation, The Hartford's Lifetime Income Builder, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects or The Hartford's Lifetime Income Builder Portfolios. - Other Differences. Some of the other differences include: X Partial Surrenders: Partial surrenders reduce Opportunity and Masters death benefits on a dollar-for-dollar basis, and reduce Opportunity+ and Masters+ death benefits on a proportionate basis and a Market Value Adjustment may be applicable, whereas in The Hartford Leaders Series IV, partial surrenders reduce death benefits on a proportionate basis. X Death Benefit Aggregate Limit: Death benefits are unlimited in Masters Contracts whereas death benefits are subject to aggregate limits of $500,000 (Opportunity) and in The Hartford Leaders Series IV, death benefits are limited to $5 million of Premium Payments (as reduced by an adjustment for Surrenders), or Contract Value plus $1 million. APP G-9 ------------------------------------------------------------------------------- X Miscellaneous. Hartford Leaders Series IV Contracts may also differ from your existing Contract in terms of (a) access to a Fixed Accumulation Feature; (b) AIR rates used for the variable Annuity Payout (subject to state variations); and (c) ability to allocate investments to earn guaranteed interest rates for predetermined guarantee periods (Masters only). - State Variations. The foregoing discussion does not take into consideration state variations, if any. III. HOW DOES THE EXCHANGE PROCESS WORK? - This exchange will constitute a full Surrender (replacement) of your Eligible Contract(s). You may Surrender more than one Eligible Contract(s) as part of this program. Partial Surrenders will not be permitted. - The Contract Value of your Eligible Contract(s) as of the exchange date will be considered to be the initial Premium payment for your replacement Hartford Leaders Series IV Contract. This amount will be used to establish your benefits under your replacement Hartford Leaders Series IV Contract. No exchange or transfer fees will be charged when electing to make this exchange. - The date that you comply with all requirements to exchange your Eligible Contract(s) ("exchange date") will be the date we use to set your benefits under your replacement Hartford Leaders Series IV Contract. We will use the exchange date for establishing your eligibility for this program and various age-sensitive optional riders under your replacement Hartford Leaders Series IV Contract. - We will credit you for the time that you owned your oldest Eligible Contract(s) for the purposes of establishing any CDSC applicable for any Premium Payments made on or as of the exchange date. Any Premium Payments made on or after the exchange date will be subject to the applicable CDSC schedule. YOUR REPLACEMENT, THE HARTFORD LEADERS SERIES IV CONTRACT, MAY HAVE A LONGER CDSC PERIOD THAN YOUR EXISTING CONTRACT. - Certain optional guaranteed minimum withdrawal benefits may ONLY be elected at the exchange date. - The Contract Owner(s) and Annuitant must be the same in your replacement Hartford Leaders Series IV Contract as they are in your Eligible Contract(s). - All Contract Owners must consent to this exchange. - Subject to the laws of your state, you may cancel your replacement Hartford Leaders Series IV Contract for any reason within ten (10) days of receipt of your Contract in accordance with the cancellation privileges described in your replacement Hartford Leaders Series IV prospectus. IV. WHAT OTHER THINGS SHOULD BE CONSIDERED? - YOUR STANDARD AND OPTIONAL DEATH AND WITHDRAWAL BENEFITS UNDER YOUR ELIGIBLE CONTRACT(S) WILL NOT CARRY OVER TO YOUR REPLACEMENT HARTFORD LEADERS SERIES IV CONTRACT. This can result in a diminution in death and/or withdrawal benefits. - SURRENDERING A REPLACEMENT HARTFORD LEADERS SERIES IV CONTRACT SOON AFTER BUYING IT MAY LEAVE YOU IN A WORSE FINANCIAL POSITION THAN IF YOU NEVER ACCEPTED THIS EXCHANGE OFFER. - You should discuss the merits of this exchange with your Registered Representative to be sure that a replacement Hartford Leaders Series IV Contract is suitable for you and your particular circumstances. You should discuss your particular circumstances and the tax consequences of this exchange with your tax advisor, as we make no representation regarding the tax consequences of an exchange. - The information provided is a summary of certain pertinent information. You should read the replacement Hartford Leaders Series IV prospectus and those of the underlying Funds before investing. These prospectuses contain other information including risks that you should carefully consider. Your Registered Representative can provide you with prospectuses or you can contact us to receive one. These variable annuities are underwritten and distributed by Hartford Securities Distribution Company, Inc. Member SIPC. - The foregoing discussion does not take into consideration state variations, if any. - We have no duty to offer exchange privileges if and once this offer is withdrawn or to extend these privileges to other contract variations. - Contracts issued by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract will be treated as a new contract for this purpose. To obtain a Statement of Additional Information, please complete the form below and mail to: The Hartford Attn: U.S. Wealth Management P.O. Box 5085 Hartford, Connecticut 06102-5085 Please send a Statement of Additional Information to me at the following address: ---------------------------------------------------------------- Name ---------------------------------------------------------------- Address ---------------------------------------------------------------- City/State Zip Code Contract Name Issue Date PART B STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information is not a prospectus. The information contained in this document should be read in conjunction with the prospectus. To obtain a prospectus, send a written request to The Hartford, Attn: U.S. Wealth Management, P.O. Box 5085, Hartford, CT 06102-5085. Date of Prospectus: May 1, 2008 Date of Statement of Additional Information: May 1, 2008 TABLE OF CONTENTS GENERAL INFORMATION 2 Safekeeping of Assets 2 Experts 2 Non-Participating 2 Misstatement of Age or Sex 2 Principal Underwriter 2 PERFORMANCE RELATED INFORMATION 5 Total Return for all Sub-Accounts 5 Yield for Sub-Accounts 5 Money Market Sub-Accounts 6 Additional Materials 6 Performance Comparisons 6 ACCUMULATION UNIT VALUES 6 FINANCIAL STATEMENTS SA-2
2 ------------------------------------------------------------------------------- GENERAL INFORMATION SAFEKEEPING OF ASSETS We hold title to the assets of the Separate Account. The assets are kept physically segregated and are held separate and apart from our general corporate assets. Records are maintained of all purchases and redemptions of the underlying fund shares held in each of the Sub-Accounts. EXPERTS The statutory basis balance sheets of Hartford Life and Annuity Insurance Company (the "Company") as of December 31, 2007 and 2006, and the related statutory basis statements of operations, changes in capital and surplus, and cash flows for each of the three years in the period ended December 31, 2007 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated March 27, 2008 and the statements of assets and liabilities of Hartford Life and Annuity Insurance Company Separate Account Seven (the "Account") as of December 31, 2007, and the related statements of operations and changes in net assets for the respective stated periods then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated February 20, 2008, which reports are both included in this Statement of Additional Information. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is city Place, 32nd Floor, 185 Asylum Street, Hartford, Connecticut 06103-3402. NON-PARTICIPATING The Contract is non-participating and we pay no dividends. MISSTATEMENT OF AGE OR SEX If an Annuitant's age or sex was misstated on the Contract, any Contract payments or benefits will be determined using the correct age and sex. If we have overpaid Annuity Payouts, an adjustment, including interest on the amount of the overpayment, will be made to the next Annuity Payout or Payouts. If we have underpaid due to a misstatement of age or sex, we will credit the next Annuity Payout with the amount we underpaid and credit interest. PRINCIPAL UNDERWRITER The Contracts, which are offered continuously, are distributed by Hartford Securities Distribution Company, Inc. ("HSD"). HSD serves as Principal Underwriter for the securities issued with respect to the Separate Account. HSD is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the National Association of Securities Dealers, Inc. HSD is an affiliate of ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial Services Group, Inc. The principal business address of HSD is the same as ours. We currently pay HSD underwriting commissions for its role as Principal Underwriter of all variable annuities associated with this Separate Account. For the past three years, the aggregate dollar amount of underwriting commissions paid to HSD in its role as Principal Underwriter has been: 2007: $355,689,241; 2006: $303,267,865; and 2005: $354,296,774. ADDITIONAL PAYMENTS TO FINANCIAL INTERMEDIARIES As stated in the prospectus, we (or our affiliates) pay Additional Payments to Financial Intermediaries. In addition to the Financial Intermediaries listed in the prospectus with whom we have an ongoing contractual arrangement to make Additional Payments, listed below are all Financial Intermediaries that received Additional Payments in 2007 of items such as sponsorship of meetings, education seminars, and travel and entertainment, whether or not an ongoing contractual relationship exists. 1st Discount Brokerage, Inc., AIM Distributors, Inc., A.P.P.S. Financial Group, Inc., Abacus Investments, Inc., ABN AMRO, Inc., Advantage Capital Corporation, Advisory Group Equity Services Ltd., AFA Financial Group LLC, AFS Brokerage, Inc., AIG Equity Sales Corp., AIG Financial Advisors Inc., AIG Retirement Advisors, Inc., AIG SunAmerica, Inc., Alexander Investment Services Co., Allegheny Investments, Ltd., Allen & Company LLC, Allen & Company of Florida, Inc., Allen Douglas Securities, Inc., Alliance Bank, AllianceBerstein Investments, Inc., AMCORE Investment Services, Inc., American Classic Securities Inc., American Diversified Financial Group LLC, American Funds & Trusts Inc., American Funds Distributors, Inc., American General Securities, Inc., American Investors Company, American Portfolios Financial Services, Inc., Ameriprise Financial, Inc., Ameritas Investment Corp., AMTrust Investment Services, Inc., AMVest Securities, Inc., Anderson & Strudwick, Inc., Andrew Garrett, Inc., Anthony Financial Management LLC, Arizona State Savings & Credit Union, Arvest Asset Management, Askar Corp., Asset Management Securities Corp., Associated Financial Services, Inc., Associated Investment Services, Inc., Associated Securities Corp., Atlantic Coast Securities Corp., AUL Equity Sales Corp., AXA Advisors LLC, AYRE Investments, Inc., B.C. Ziegler and Company, Banc of America Investment Services, Inc., BancNorth Investment Group, Inc., Bancorpsouth Investment Services, Inc., BancWest Investment Services, Inc., Bank Insurance & 3 ------------------------------------------------------------------------------- Securities Association, Bank Iowa, Bank of the West, Bankers & Investors Co., Banknorth, N.A., Bannon Ohanesian & Lecours, Inc., Banorte Securities International, Ltd., Bates Securities, Inc., BB&T Investment Services, Inc., BBVA Investments Inc., BCG Securities, Inc., Beaconsfield Financial Services, Inc., Bedrock Capital Management, Inc., Bernard Herold & Co., Inc., Berthel Fisher & Company Financial Services, Inc., BI Investments LLC, Bodell Overcash Anderson & Co., Inc., Boone County National Bank, BOSC, Inc., Brecek & Young Advisors, Inc., Brighton Securities Corp., Broker Dealer Financial Services Corp., Brokers International Financial, Brokers International Financial Services LLC, Brooke Securities, Inc., Brookstreet Securities Corporation, Brown Advisory Securities LLC, Brown Lisle Cummings, Inc., Bruce A. Lefavi Securities, Inc., Buckman Buckman & Reid, Inc., Butler Freeman Tally Financial Group LLC, Butler Wick & Co., Inc., Cadaret Grant & Co., Inc., Calton & Associates, Inc., Cambridge Investment Research, Inc., Cambridge Legacy Securities LLC, Cantella & Co., Inc., Cantella & Company, Capital Analysts, Inc., Capital Brokerage Corp., Capital Choice Financial Services, Capital City Bank, Capital Concepts Investment Corp., Capital Financial Services, Inc., Capital Growth Securities LLC, Capital Investment Group, Inc., Capital Investment Services, Inc., Capital Management Securities, Inc., Capital One Bank, Capital One Investments LLC, Capital Securities of America, Inc., Capital Select I Corp., Capitol Securities Management, Inc., Carey Thomas Hoover, & Breault, Inc., Carolinas Investment Consulting LLC, CBIZ Financial Solutions, Inc., CCF Investments, Inc., CCO Investment Services Corp., Cebert Wealth Management Group, Inc., Centaurus Financial, Inc., Centennial Securities Company LLC, Central Bank, Century Securities Associates, Inc., CFD Investments, Inc., CFG Financial Associates, Inc., Charter One Financial, Inc., Chase Investments Services, Corp., Chemical Bank & Trust Co., Chemical Bank West, Chicago Investment Group LLC, CIG Securities, Citicorp Financial Services Corporation, Citigroup Global Markets Inc., Citizens Bank, Citizens Financial Services FSB, Citizens Investment Services Corp., Citizens National Bank, City Bank, City Securities Corporation, Clearing Services of America, Inc., Coburn & Meredith, Inc., Colonial Brokerage, Inc., Comerica Securities, Commerce Brokerage Services, Inc., Commerce Capital Markets, Inc., Commonwealth Financial Network, Commonwealth Investment Services, Inc., Community Bank, Community Bankers Securities LLC, Community Investment Services, Inc., Community National Bank, Compak Securities, Inc., Compass Brokerage, Inc., Comprehensive Asset Management Servicing, Inc., Contemporary Financial Solutions, Coordinated Capital Securities, Inc., Cornerstone Financial Services, Inc., Country Club Financial Services, Inc., Countrywide Investment Services, Inc., Crews & Associates, Inc., Cri Securities LLC, Crowell, Weedon & Co., Crown Capital Securities LLP, CUE Financial Group, Inc., Cuna Brokerage Services, Inc., CUSO Financial Services LP, Cutter & Company, Inc., CW Securities LLC, D.A. Davidson & Co., Daiwa Securities America Inc., Davenport & Company LLC, David A. Noyes & Company, Delta Equity Services Corporation, Delta Trust Investments, Inc., Dempsey Financial Network, Inc., Deutsche Bank Securities Inc., DFC Investor Services, Diversified Securities, Inc., Dominion Investor Services, Inc., Dorn & Co., Inc., Dortch Securities & Investments, Inc., Dougherty & Company LLC, Duerr Financial Corporation, Eagle One Investments LLC, Economy Securities, Inc., EDI Financial, Inc., Edward Jones, Effingham State Bank, EK Riley Investments LLC, Emergent Financial Group, Inc., Emerson Equity LLC, Empire Financial Group, Inc., Empire Securities Corp., Ensemble Financial Services, Inc., EPlanning Securities, Inc., Equable Securities Corp., Equitas America LLC, Equity Services, Inc., Essex Financial Services, Inc., Essex National Securities, Inc., Essex Securities LLC, Excel Securities & Associates, Inc., Fairport Capital, Inc., Farmers National Bank, Feltl & Company, Fenwick Securities, Inc., Ferris, Baker, Watts, Inc., FFP Securities, Inc., Fidelity Bank, Fidelity Brokerage Services LLC, Fidelity Federal Bank & Trust, Fiducial Investments Advisors, Inc., Fifth Third Securities, Inc., Financial Design, Inc., Financial Network Investment Corp., Financial Planning Consultants, Inc., Financial Security Management, Inc., Financial Telesis, Inc., Financial West Group, Fintegra LLC, First Allied Securities, Inc., First American Bank, First Bank, First Bank & Trust, First Brokerage America, First Brokerage America LLC, First Busy Securities, Inc., First Citizens Bank, First Citizens Financial Plus, Inc., First Citizens Investor Services, Inc., First Citizens National Bank, First Coast Financial Advisors LLC, First Colonial Group Inc., First Community Bank, N.A., First Dallas Securities Inc., First Federal Bank, First Fidelity Securities, First Financial Equity Corp., First Global Securities, Inc., First Heartland Capital, Inc., First Independent Financial Services, Inc., First MidAmerica Investment Corp., First Montauk Securities Corp., First National Bank, First National Investment Services Company LLC, First Northern Bank, First Place Bank, First Security Bank, First Southeast Investor Services, Inc., First Southwest Company, First St.Louis Securities, Inc., First Tennessee Brokerage, Inc., First Wall Street Corp., First Western Securities, Inc., FirstMerit Securities, Inc., Fiserv Brokerage Services, Inc., Fiserv, Inc., Florida Investment Advisers, FNB Brokerage Services, Inc., FNIC FID Div., Focused Investments, Folger Nolan Fleming Douglas Inc., Foothill Securities, Inc., Foresters Equity Services, Inc., Fortune Financial Services, Inc., Founders Financial Securities LLC, Fox & Company Investments Inc., Franklin Templeton Financial Services Corp., Frost Brokerage Services, Inc., FSC Securities Corp., FSIC, Fulcrum Securities, Inc., G & W Equity Sales, Inc., GBS Financial Corp., Geneos Wealth Management, Inc., Genworth Financial Securities Corp., GIA Financial Group LLC, Girard Securities Inc., Glencrest Insurance Services, Global Brokerage Services, Inc., GMS Group LLC, Gold Coast Securities, Inc., Granite Securities LLC, Grant Bettingen, Inc., Great American Advisors, Inc., Great American Investors, Inc., Great Lakes Capital Financial Service Inc., Great Northern Financial Services, Gregory J. Schwartz & Co., Inc., Gunnallen Financial, Inc., GWN Securities, Inc., H&R Block Financial Advisors, Inc., H. Beck, Inc., H.D.Vest Investment Services., HAAS Financial Products, Inc., Hagar Financial Corporation, Hancock Bank, Hancock Investment Services, Inc., Harbor Financial Services LLC, Harbour Investments, Inc., Harger and Company, Inc., Harold Dance Investments, Harris Investor Services, Inc., Hartford Equity Sales Company Inc., Hartford Investment Financial Services LLC, Harvest Capital LLC, Hawthorne Securities Corporation, Hazard & Siegel, Inc., HBW Securities LLC, Heartland Bank, Heartland Investment Associates, Inc., Hefren-Tillotson, Inc., Heim Young & Associates, Inc., Heritage Bank, Hibernia National Bank, Home Savings Bank Hornor Townsend & Kent, Inc., Horwitz & 4 ------------------------------------------------------------------------------- Associates, Inc., HSBC Bank International, HSBC Securities (USA) Inc., Huntington Securities Corp., Huntington Investment Co., Huntington National Bank, Huntleigh Securities Corporation, IBC Bank, IBC Investments, IBN Financial Services, Inc., ICBA Financial Services Corporation, IFC Holdings, IFG Network Securities, Inc., IFMG Securities, Inc., IMS Securities, Inc., Independent Bank, Independent Financial Group LLC, Independent Financial Securities, Inc., INFINEX Investments, Inc., ING Financial Advisers LLC, ING Financial Partners, Inc., Innovative Solutions Insurance Services, Intercarolina Financial Services, Inc., Interlink Securities Corp., International Assets Advisory LLC, International Research Securities, Inc., Intersecurities, Inc., Intrust Brokerage Inc., Invesmart Securities LLC, Invest Financial Corporation, Investacorp, Inc., Investment Centers Of America, Inc., Investment Management Service, Inc., Investment Planners, Inc., Investment Professionals Inc., Investment Security Corporation, Investors Capital Corp., Investors Security Company, Inc., Iowa State Bank, Iron Street Securities, Inc., Ironstone Securities, Inc., J.B. Hanauer & Co., J.P. Morgan Securities, Inc., J.P. Turner & Company LLC, J.W. Cole Financial, Inc., Jack V. Butterfield Investment Company, James I. Black & Company, Janney Montgomery Scott LLC, Jefferson Pilot Securities Corporation, Jesup & Lamont Securities Corp., Joseph Stevens & Co., Inc., K.W. Brown Investments, Kalos Capital, Inc., Kaplan & Co., Securities Inc., KCD Financial, Inc., Key Investment Services LLC, Kinecta Financial & Insurance Services LLC, KMS Financial Services, Inc., Kovack Securities Inc., Lara, Shull & May, Ltd., Lasalle Financial Services, Inc., Lasalle St Securities LLC, Legacy Asset Securities, Inc., Legacy Financial Services, Inc., Legend Equities Corporation, Legg Mason Investor Services LLC, Leigh Baldwin & Co., LLC, Leonard & Company, Lesko Securities Inc., Lexington Investment Company, Inc., Liberty Group LLC, Lifemark Securities Corp., Lincoln Financial Advisors Corporation, Lincoln Investment Planning, Inc., Linsco/Private Ledger/Bank Div., Long Island Financial Group, Inc., Lord Abbett Distributor LLC, LPL Financial Corporation, M Holdings Securities, Inc., M&I Brokerage Services, Inc., M&T Securities, Inc., M. Griffith Investment Services, Inc., M.L. Stern & Co., LLC, Main Street Securities LLC, Manarin Securities Corporation, Marketing One Securities, Marquette Capital Partners, Inc., MBM Securities, Inc., McGinn, Smith & Co., Inc., McGrath Financial & Retirement Services, Inc., Means Investment Co., Inc., Medallion Investment Services, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Merrimac Corporate Securities, Inc., Merrimack Valley Investment, Inc., Mesirow Financial, Inc., Metlife Securities Inc., MFS Fund Distributors, Inc., Mid Atlantic Capital Corporation, MidAmerica Financial Services, Inc., Milestone Financial Services, Inc., Milkie/ Ferguson Investments, Inc., MML Investors Services, Inc., Maloney Securities Co., Inc., Money Concepts Capital Corp., Money Management Advisory, Inc., Moors & Cabot, Inc., Morgan Keegan & Company, Inc., Morgan Stanley & Co., Inc., Morris Group, Inc., MSCS Financial Services LLC, Multi-Financial Securities Corp., Multiple Financial Services, Inc., Mutual Funds Associates Inc., Mutual Of Omaha Investor Services, Inc., Mutual Securities, Inc., Mutual Services Corp., MWA Financial Services Inc., NAST, NatCity Investments, Inc., National Advisers Trust Company FSB, National Financial Services LLC, National Investor Service Corporation, National Planning Corporation, National Securities Corporation, Nations Financial Group, Inc., NAVA, Navy Federal Brokerage Services LLC, Navy Federal Credit Union, NBC Securities, Inc., Neidiger Tucker Bruner, Inc., Nelson Securities Inc., New England Securities, NewAlliance Investments, Inc., Newbridge Securities Corporation, Next Financial Group, Inc., NFB Investment Services Corp., NFP Securities, Inc., North Ridge Securities Corp., Northeast Securities, Inc., Northern Trust Securities, Inc., Northwestern Mutual Investment Services LLC, Nutmeg Securities, Ltd., O Bee Credit Union, Oak Tree Securities, Inc., Oberlin Financial Corporation, OFG Financial Services, Inc., Ogilvie Security Advisors Corporation, Ohio National Equities, Inc., Ohio Savings Securities, Inc., Olde Economie Financial Consultants, Ltd., Omega Securities, Inc., Omni Brokerage, Inc., ONE Investment Services, Inc., OneAmerica Securities, Inc., Online Brokerage Services, Oppenheimer & Co. Inc., Orange County Teachers Federal Credit Union, P & A Financial Securities, Inc., Pacific Financial Associates, Inc., Pacific West Securities, Inc., Packerland Brokerage Services, Inc., Park Avenue Securities LLC, Partners Investment Network, Inc., Partnervest Securities, Inc., Paulson Investment Company Inc., Paychex Securities Corporation, Penn Plaza Brokerage, Ltd., Pension Planners Securities, Inc., Pension Financial Services, Inc., Peoples Bank, Peoples Securities, Inc., Perryman Securities, Inc., Pershing LLC, PFIC Securities Corp., Planmember Securities Corp., Planned Investment Co., Inc., PMK Securities & Research Inc., PNC Investments LLC, Pointe Capital, Inc., Pratt, Kutzke & Associates LLP, Preferred Financial Group, Premier Credit Union, Prime Capital Services, Inc., Primesolutions Securities, Inc., Primevest Financial Services, Inc., Princor Financial, Service Corp., Private Consulting Group, Inc., ProEquities, Inc., Professional Asset Management, Inc., Prospera Financial Services, Inc., Protected Investors of America, Provident Bank, PTS Brokerage LLC, Purshe Kaplan Sterling Investments, Putnam Retail Management Limited Partnership, Pyramid Funds, Corp., QA3 Financial Corp., Quest Capital Strategies, Inc., Quest Securities, Inc., Questar Capital Corporation, R. Seelaus & Company Inc., R.M. Stark & Co., Inc., Raymond James & Associates, Inc., Raymond James FID Division, Raymond James Financial Services, Inc., RBC Centura Securities, Inc., RBC Dain Rauscher Inc., Regal Securities, Inc., Reliance Securities LLC, Resource Horizons Group LLC, Rhodes Securities, Inc., Rice Pontes Capital, Inc., Ridgeway & Conger, Inc., River City Bank, Riverstone Wealth Management, Inc., RNR Securities LLC, Robert B. Ausdal & Co., Inc., Robert W. Baird & Co. Inc., Robinson & Robinson, Inc., Rogan & Associates, Inc., Rogan, Rosenberg & Associates, Inc., Royal Alliance Associates, Inc., Royal Securities Company, Rydex Distributors, Inc., S.C. Parker & Co., Inc., S.G. Long & Company, Safe Credit Union, Sage, Rutty & Co., Inc., Sammons Securities Company LLC, San Mateo Credit Union, Sanders Morris Harris Group Inc., Saxony Securities, Inc., SCF Securities, Inc., Scott & Stringfellow, Inc., Seacoast Investor Services Inc., Securian Financial Services, Inc., Securities America, Inc., Securities Service Network, Inc., SEI Financial Services, Inc., Sentinel Securities, Inc., Sentra Securities Corp., Shepard & Vrbanac Sec., Inc., Shields & Company, SIG Brokerage, L.P., Sigma Financial Corporation, Signal Securities, Inc., Signator Investors Inc., Signature Bank, Signature Financial Group, Inc., SII Investments, Inc., Sisk Investment Services, Inc., Smith Hayes Financial Services Corp., Sorrento Pacific Financial LLC, Source Capital Group, Inc., South Valley Wealth Management, Southeast Investments, 5 ------------------------------------------------------------------------------- N.C., Inc., Southwest Securities, Inc., Spectrum Capital, Inc., Spelman & Co., Inc., Spina Financial, Stanford Group Company, Stephen A. Kohn & Associates, Ltd., Stephens, Inc., Sterling Savings Bank, Sterne Agee & Leach, Inc., Steven L. Falk & Assoc., Inc., Stifel Nicolaus & Co., Inc., Strand Atkinson Williams & York, Inc., Strategic Alliance Corp., Stuart Securities Corp., Summark Financial Services, Summit Bank, Summit Brokerage Services Inc., Summit Equities, Inc., Sunset Financial Services, Inc., SunStreet Securities LLC, SunTrust Investment Services, Inc., SWBC Investment Services LLC, SWS Financial Services, Symetra Investment Services Inc., Synergy Investment Group LLC, Synovus Securities, Inc., T.J. Raney & Sons, Inc., T.S. Phillips Investments, Inc., TD Ameritrade, Inc., Teckmeyer Financial Services LLC, TFS Securities, Inc., The Concord Equity Group LLC, The Huntington Investment Company, The O.N. Equity Sales Company, Thoroughbred Financial Services LLC, Thrasher & Company, Inc., Thrivent Investment Management Inc., Thurston Springer Miller, Herd & Titak, Inc., TimeCapital Securities Corp., Touchstone Financial Group LLC, Tower Square Securities, Inc., Traderight Securities, Inc., Transamerica Financial Advisors, Inc., Triad Advisors, Inc., Trustfirst, Trustmark Securities, Inc., Trustmont Financial Group, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services, Inc., UBS Financial Services, Inc., UBS International, Inc., UCB Investment Services, Inc., UMB Financial Services, Inc., Unified Financial Securities, Inc., Union Capital Company, UnionBanc Investment Services, UnionBanc Investment Services LLC, United Bank, United Brokerage Services, Inc., United Community Bank, United Financial Group, Ltd., United Global Securities, Inc., United Heritage Financial Group, United Planners' Financial Services of America A Limited Partner, United Securities Alliance, Inc., Univest Investments, Inc., USA Financial Securities, Corp., USLIFE Equity Sales, UVEST Financial Services Group, Inc., Valmark Securities, Inc., Van Kampen Funds, Inc., Vanderbilt Securities LLC, VBC Securities LLC, Venture Bank, Veritrust Financial LLC, VFinance Investments, Inc., Vision Investment Services, Inc., Vorpahl Wing Securities, VSR Financial Services, Inc., W. R. Taylor & Company LLC, Wachovia Securities LSG, Wachovia Securities LLC, Wadsworth Investment Co., Inc., Wall Street Financial Group, Inc., Wallstreet Electronica, Inc., Wamu Investments, Inc., Wasserman & Associates, Inc., Waterstone Financial Group, Inc., Waveland Capital Partners LLC, Wayne Hummer Investments LLC, Webster Bank, Webster Investment Services, Inc., Wedbush Morgan Securities, Inc., Weiss Capital Securities, Inc., Weitzel Financial Services, Inc., Wells Fargo Investments LLC, Wells Fargo Securities LLC, Wellstone Securities LLC, Wesbanco Securities, Inc., Wescom Financial Services, Western International Securities, Inc., Westminster Financial Securities, Inc., WFB Wealth Management Group, WFG Investments, Inc., WFP Securities, Whitney Securities LLC, Wiley Bros.-Aintree Capital LLC, William C. Burnside & Company, Inc., Wilmington Brokerage Services Company, Woodbury Financial Services, Inc., Woodlands Securities, Corp., Woodmen Financial Services, Inc., Woodstock Financial Group, Inc., Workman Securities, Corp., World Choice Securities, Inc., World Financial Group, Inc., World Group Securities, Inc., Worth Financial Group, Inc., WRP Investments, Inc., Wunderlich Securities, Inc., XCU Capital Corp., Inc., Zions Direct, Inc., Zions Investment Securities, Inc. PERFORMANCE RELATED INFORMATION The Separate Account may advertise certain performance-related information concerning the Sub-Accounts. Performance information about a Sub-Account is based on the Sub-Account's past performance only and is no indication of future performance. TOTAL RETURN FOR ALL SUB-ACCOUNTS When a Sub-Account advertises its standardized total return, it will usually be calculated from the later of the date of the inception of the Sub-Account or Separate Account for one, five and ten year periods or some other relevant periods if the Sub-Account has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. To calculate standardized total return, we use a hypothetical initial premium payment of $1,000.00 and deduct for the Total Annual Fund Operating Expenses, any Sales Charge, Separate Account Annual Expenses without any optional charge deductions and the Annual Maintenance Fee. The formula we use to calculate standardized total return is P(1+T) TO THE POWER OF n = ERV. In this calculation, "P" represents a hypothetical initial premium payment of $1,000.00, "T" represents the average annual total return, "n" represents the number of years and "ERV" represents the redeemable value at the end of the period. In addition to the standardized total return, the Sub-Account may advertise a non-standardized total return. These figures will usually be calculated from the later of the date of inception of the underlying fund or Separate Account for one, five and ten year periods or other relevant periods. Non-standardized total return is measured in the same manner as the standardized total return described above, except that non-standardized total return includes the impact of a minimum 1% sales charge, if applicable, and the Annual Maintenance Fee is not deducted. Therefore, non-standardized total return for a Sub-Account is higher than standardized total return for a Sub-Account. YIELD FOR SUB-ACCOUNTS If applicable, the Sub-Accounts may advertise yield in addition to total return. At any time in the future, yields may be higher or lower than past yields and past performance is no indication of future performance. The standardized yield will be computed for periods beginning with the inception of the Sub-Account in the following manner. The 6 ------------------------------------------------------------------------------- net investment income per Accumulation Unit earned during a one-month period is divided by the Accumulation Unit Value on the last day of the period. The formula we use to calculate yield is: YIELD = 2[(a - b/cd +1) TO THE POWER OF 6 - 1]. In this calculation, "a" represents the net investment income earned during the period by the underlying fund, "b" represents the expenses accrued for the period, "c" represents the average daily number of Accumulation Units outstanding during the period and "d" represents the maximum offering price per Accumulation Unit on the last day of the period. MONEY MARKET SUB-ACCOUNTS At any time in the future, current and effective yields may be higher or lower than past yields and past performance is no indication of future performance. Current yield of a money market fund Sub-Account is calculated for a seven-day period or the "base period" without taking into consideration any realized or unrealized gains or losses on shares of the underlying fund. The first step in determining yield is to compute the base period return. We take a hypothetical account with a balance of one Accumulation Unit of the Sub-Account and calculates the net change in its value from the beginning of the base period to the end of the base period. We then subtract an amount equal to the total deductions for the Contract and then divides that number by the value of the account at the beginning of the base period. The result is the base period return or "BPR." Once the base period return is calculated, we then multiply it by 365/7 to compute the current yield. Current yield is calculated to the nearest hundredth of one percent. The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A - B)/C. "A" is equal to the net change in value of a hypothetical account with a balance of one Accumulation Unit of the Sub-Account from the beginning of the base period to the end of the base period. "B" is equal to the amount that Hartford deducts for mortality and expense risk charge, any applicable administrative charge and the Annual Maintenance Fee. "C" represents the value of the Sub-Account at the beginning of the base period. Effective yield is also calculated using the base period return. The effective yield is calculated by adding 1 to the base period return and raising that result to a power equal to 365 divided by 7 and subtracting 1 from the result. The calculation we use is: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1. ADDITIONAL MATERIALS We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, dollar cost averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contracts and the characteristics of and market for any alternatives. PERFORMANCE COMPARISONS Each Sub-Account may from time to time include in advertisements the ranking of its performance figures compared with performance figures of other annuity contract's sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services. ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in this Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows all possible Accumulation Unit Values corresponding to all combinations of optional benefits. A table showing only the highest and lowest possible Accumulation Unit Values is shown in the prospectus, which assumes you select either no optional benefits or all optional benefits. There is no information for any of the Sub-Accounts because as of December 31, 2007, none of the Sub-Accounts had commenced operations. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE CONTRACT OWNERS OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN 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 Seven (the "Account"), as of December 31, 2007, and the related statements of operations and changes in net assets for the respective stated periods then ended. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2007, by correspondence with the mutual fund companies; where replies were not received from the mutual fund companies, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the individual Sub-Accounts constituting Hartford Life and Annuity Insurance Company Separate Account Seven as of December 31, 2007, the results of their operations and the changes in their net assets for the respective stated periods then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Hartford, Connecticut February 20, 2008 SA-1 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2007 -------------------------------------------------------------------------------
AIM V.I. CAPITAL AIM V.I. BASIC APPRECIATION AIM V.I. CORE VALUE FUND FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 18,338,339 3,951,206 11,664,952 ============== ============== ============== Cost $177,981,475 $91,012,449 $292,690,273 ============== ============== ============== Market Value $233,447,053 $116,047,052 $339,565,897 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 20,837 73,144 111,450 Other assets -- -- -- -------------- -------------- -------------- Total Assets 233,467,890 116,120,196 339,677,347 -------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 20,837 73,144 111,450 Payable for fund shares purchased -- -- -- Other liabilities 8 1,027 6,717 -------------- -------------- -------------- Total Liabilities 20,845 74,171 118,167 -------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $233,447,045 $116,046,025 $339,559,180 ============== ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-2 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. MID CAP AIM V.I. SMALL GOVERNMENT INTERNATIONAL CORE EQUITY CAP EQUITY SECURITIES FUND GROWTH FUND FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 65,033,075 6,713,115 26,861,576 7,159,370 ============== ============== ============== ============== Cost $789,813,940 $179,355,169 $312,880,266 $104,053,287 ============== ============== ============== ============== Market Value $783,648,552 $225,762,062 $391,373,152 $111,185,020 Due from Hartford Life and Annuity Insurance Company 796,229 502,974 85,458 315,130 Receivable from fund shares sold -- -- -- -- Other assets -- -- -- -- -------------- -------------- -------------- -------------- Total Assets 784,444,781 226,265,036 391,458,610 111,500,150 -------------- -------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 796,229 502,974 85,458 315,130 Other liabilities 60 12 42 1 -------------- -------------- -------------- -------------- Total Liabilities 796,289 502,986 85,500 315,131 -------------- -------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $783,648,492 $225,762,050 $391,373,110 $111,185,019 ============== ============== ============== ============== AIM V.I. AIM V.I. CAPITAL AMERICAN LARGE CAP DEVELOPMENT FUNDS GLOBAL GROWTH FUND FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- ------------------------------------------------- ASSETS: Investments: Number of Shares 3,776,879 3,814 7,756,743 ============= ========= ============= Cost $47,992,871 $75,392 $82,622,717 ============= ========= ============= Market Value $59,863,584 $71,893 $83,850,394 Due from Hartford Life and Annuity Insurance Company 6,940 603 495,956 Receivable from fund shares sold -- -- -- Other assets -- -- 1 ------------- --------- ------------- Total Assets 59,870,524 72,496 84,346,351 ------------- --------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- Payable for fund shares purchased 6,940 603 495,956 Other liabilities 282 -- -- ------------- --------- ------------- Total Liabilities 7,222 603 495,956 ------------- --------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $59,863,302 $71,893 $83,850,395 ============= ========= =============
(a) From inception, November 12, 2007 to December 31, 2007. SA-3 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
AMERICAN AMERICAN FUNDS FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET ALLOCATION INCOME AND INCOME FUND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 50,624,167 108,887,126 116,227,391 ============== ================ ================ Cost $561,460,936 $1,602,858,756 $1,037,299,043 ============== ================ ================ Market Value $594,833,964 $2,002,434,248 $1,330,803,623 Due from Hartford Life and Annuity Insurance Company 2,371,427 -- -- Receivable from fund shares sold -- 8,030 448,208 Other assets -- -- 161 -------------- ---------------- ---------------- Total Assets 597,205,391 2,002,442,278 1,331,251,992 -------------- ---------------- ---------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 8,030 448,208 Payable for fund shares purchased 2,371,427 -- -- Other liabilities 1 10 -- -------------- ---------------- ---------------- Total Liabilities 2,371,428 8,040 448,208 -------------- ---------------- ---------------- NET ASSETS: For Variable Annuity Contract Liabilities $594,833,963 $2,002,434,238 $1,330,803,784 ============== ================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-4 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS GROWTH-INCOME BOND FUND FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 112,684,552 33,597,000 67,664,796 106,643,817 ================ ============== ================ ================ Cost $1,224,725,054 $573,301,619 $3,398,213,041 $3,609,857,704 ================ ============== ================ ================ Market Value $1,242,910,606 $839,924,998 $4,514,595,184 $4,506,767,688 Due from Hartford Life and Annuity Insurance Company 310,265 349,524 889,723 1,093,661 Receivable from fund shares sold -- -- -- -- Other assets -- -- -- -- ---------------- -------------- ---------------- ---------------- Total Assets 1,243,220,871 840,274,522 4,515,484,907 4,507,861,349 ---------------- -------------- ---------------- ---------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 310,265 349,524 889,723 1,093,661 Other liabilities 4 4 -- 2 ---------------- -------------- ---------------- ---------------- Total Liabilities 310,269 349,528 889,723 1,093,663 ---------------- -------------- ---------------- ---------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,242,910,602 $839,924,994 $4,514,595,184 $4,506,767,686 ================ ============== ================ ================ AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL INTERNATIONAL AMERICAN FUNDS CAPITALIZATION FUND NEW WORLD FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares 56,019,983 21,808,338 24,043,959 ================ ============== ============== Cost $931,845,960 $349,674,866 $426,063,199 ================ ============== ============== Market Value $1,384,813,959 $560,474,262 $647,984,690 Due from Hartford Life and Annuity Insurance Company 351,032 489,137 183,187 Receivable from fund shares sold -- -- -- Other assets -- -- 1 ---------------- -------------- -------------- Total Assets 1,385,164,991 560,963,399 648,167,878 ---------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- Payable for fund shares purchased 351,032 489,137 183,187 Other liabilities 9 -- -- ---------------- -------------- -------------- Total Liabilities 351,041 489,137 183,187 ---------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,384,813,950 $560,474,262 $647,984,691 ================ ============== ==============
SA-5 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN LARGE DIVIDENDS FRANKLIN INCOME CAP GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 53,422,448 152,738,602 12,890,214 ================ ================ ============== Cost $962,393,955 $2,361,671,418 $185,430,596 ================ ================ ============== Market Value $1,029,450,557 $2,643,905,192 $222,356,187 Due from Hartford Life and Annuity Insurance Company 1,154,600 2,199,999 -- Receivable from fund shares sold -- -- 68,176 Other assets 7 -- -- ---------------- ---------------- -------------- Total Assets 1,030,605,164 2,646,105,191 222,424,363 ---------------- ---------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- 68,176 Payable for fund shares purchased 1,154,600 2,199,999 -- Other liabilities -- 11 2 ---------------- ---------------- -------------- Total Liabilities 1,154,600 2,200,010 68,178 ---------------- ---------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,029,450,564 $2,643,905,181 $222,356,185 ================ ================ ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-6 -------------------------------------------------------------------------------
FRANKLIN GLOBAL FRANKLIN SMALL- FRANKLIN SMALL FRANKLIN REAL ESTATE MID CAP GROWTH CAP VALUE STRATEGIC INCOME SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT (B) SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 876,061 17,162,472 42,104 56,639,270 ============= ============== ========== ============== Cost $15,335,413 $302,994,943 $719,028 $675,210,360 ============= ============== ========== ============== Market Value $21,875,241 $393,192,223 $719,986 $723,849,868 Due from Hartford Life and Annuity Insurance Company 13,367 4,229 15,562 453,399 Receivable from fund shares sold -- -- -- -- Other assets -- -- -- -- ------------- -------------- ---------- -------------- Total Assets 21,888,608 393,196,452 735,548 724,303,267 ------------- -------------- ---------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 13,367 4,229 15,562 453,399 Other liabilities -- 2 -- 7 ------------- -------------- ---------- -------------- Total Liabilities 13,367 4,231 15,562 453,406 ------------- -------------- ---------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $21,875,241 $393,192,221 $719,986 $723,849,861 ============= ============== ========== ============== TEMPLETON TEMPLETON MUTUAL SHARES DEVELOPING MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares 98,007,173 18,508,521 37,854,085 ================ ============== ============== Cost $1,588,641,692 $176,928,376 $519,709,362 ================ ============== ============== Market Value $1,978,764,809 $299,282,782 $766,545,213 Due from Hartford Life and Annuity Insurance Company 642,462 37,652 -- Receivable from fund shares sold -- -- 157,580 Other assets 3 -- -- ---------------- -------------- -------------- Total Assets 1,979,407,274 299,320,434 766,702,793 ---------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- 157,580 Payable for fund shares purchased 642,462 37,652 -- Other liabilities -- 2 11 ---------------- -------------- -------------- Total Liabilities 642,462 37,654 157,591 ---------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,978,764,812 $299,282,780 $766,545,202 ================ ============== ==============
(a) From inception, November 12, 2007 to December 31, 2007. (b) Formerly Franklin Real Estate Fund. Change effective May 1, 2007. SA-7 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON GLOBAL ASSET GROWTH MUTUAL DISCOVERY ALLOCATION FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 980,167 73,165,470 32,241,796 ============= ================ ============== Cost $17,179,910 $943,245,569 $610,033,727 ============= ================ ============== Market Value $14,232,032 $1,129,674,853 $763,808,131 Due from Hartford Life and Annuity Insurance Company -- 478,058 704,400 Receivable from fund shares sold 15,876 -- -- Other assets -- -- -- ------------- ---------------- -------------- Total Assets 14,247,908 1,130,152,911 764,512,531 ------------- ---------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 15,876 -- -- Payable for fund shares purchased -- 478,058 704,400 Other liabilities -- 7 -- ------------- ---------------- -------------- Total Liabilities 15,876 478,065 704,400 ------------- ---------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $14,232,032 $1,129,674,846 $763,808,131 ============= ================ ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-8 -------------------------------------------------------------------------------
FRANKLIN FLEX FRANKLIN LARGE HARTFORD CAP GROWTH CAP VALUE MONEY MARKET MFS CORE SECURITIES FUND SECURITIES FUND HLS FUND EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (C) ------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 4,767,768 2,470,514 645,114,362 2,530,797 ============= ============= ============== ============= Cost $53,261,754 $27,758,165 $645,114,362 $44,939,576 ============= ============= ============== ============= Market Value $60,646,009 $28,732,072 $645,114,362 $43,479,094 Due from Hartford Life and Annuity Insurance Company 126,030 -- -- -- Receivable from fund shares sold -- 7,934 3,234,565 1,051 Other assets 1 -- 500 -- ------------- ------------- -------------- ------------- Total Assets 60,772,040 28,740,006 648,349,427 43,480,145 ------------- ------------- -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 7,934 3,234,565 1,051 Payable for fund shares purchased 126,031 -- -- -- Other liabilities -- -- -- -- ------------- ------------- -------------- ------------- Total Liabilities 126,031 7,934 3,234,565 1,051 ------------- ------------- -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $60,646,009 $28,732,072 $645,114,862 $43,479,094 ============= ============= ============== ============= MFS EMERGING MFS GLOBAL MFS HIGH GROWTH SERIES EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------ ASSETS: Investments: Number of Shares 2,809,193 2,573,211 21,497,302 ============= ============= ============== Cost $67,279,715 $30,579,892 $201,802,926 ============= ============= ============== Market Value $70,257,927 $39,807,568 $204,654,315 Due from Hartford Life and Annuity Insurance Company 33,403 -- -- Receivable from fund shares sold -- 4,378 54,219 Other assets -- -- -- ------------- ------------- -------------- Total Assets 70,291,330 39,811,946 204,708,534 ------------- ------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 4,378 54,219 Payable for fund shares purchased 33,403 -- -- Other liabilities -- -- 1 ------------- ------------- -------------- Total Liabilities 33,403 4,378 54,220 ------------- ------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $70,257,927 $39,807,568 $204,654,314 ============= ============= ==============
(c) Formerly MFS Capital Opportunities Series. Change effective May 1, 2007. SA-9 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
MFS INVESTORS GROWTH STOCK MFS INVESTORS MFS MID CAP SERIES TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 8,140,321 22,316,401 17,332,699 ============= ============== ============== Cost $85,077,525 $409,420,823 $114,315,956 ============= ============== ============== Market Value $96,218,603 $524,881,734 $132,768,468 Due from Hartford Life and Annuity Insurance Company -- 239,427 -- Receivable from fund shares sold 17,751 -- 188,457 Other assets -- -- 1 ------------- -------------- -------------- Total Assets 96,236,354 525,121,161 132,956,926 ------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 17,751 -- 188,457 Payable for fund shares purchased -- 239,427 -- Other liabilities -- 10 -- ------------- -------------- -------------- Total Liabilities 17,751 239,437 188,457 ------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $96,218,603 $524,881,724 $132,768,469 ============= ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-10 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL MFS VALUE MFS RESEARCH DISCOVERY SERIES RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 18,930,863 70,946,087 18,031,781 7,726,485 ============== ================ ============== ============= Cost $279,167,740 $1,384,048,699 $237,094,437 $87,910,608 ============== ================ ============== ============= Market Value $314,820,242 $1,538,111,163 $274,984,653 $89,627,222 Due from Hartford Life and Annuity Insurance Company 5,644 506,893 531,796 244,680 Receivable from fund shares sold -- -- -- -- Other assets -- -- -- -- -------------- ---------------- -------------- ------------- Total Assets 314,825,886 1,538,618,056 275,516,449 89,871,902 -------------- ---------------- -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 5,644 506,893 531,796 244,680 Other liabilities 1 5 1 -- -------------- ---------------- -------------- ------------- Total Liabilities 5,645 506,898 531,797 244,680 -------------- ---------------- -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $314,820,241 $1,538,111,158 $274,984,652 $89,627,222 ============== ================ ============== ============= MFS RESEARCH INTERNATIONAL MFS RESEARCH BLACKROCK GLOBAL SERIES SERIES GROWTH V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 3,662,966 2,108,816 85,586 ============= ============= ============ Cost $53,546,243 $39,412,980 $909,157 ============= ============= ============ Market Value $59,047,010 $42,766,780 $1,542,262 Due from Hartford Life and Annuity Insurance Company 212,009 182,087 -- Receivable from fund shares sold -- -- 1,298 Other assets -- -- -- ------------- ------------- ------------ Total Assets 59,259,019 42,948,867 1,543,560 ------------- ------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- 1,298 Payable for fund shares purchased 212,008 182,087 -- Other liabilities -- -- -- ------------- ------------- ------------ Total Liabilities 212,008 182,087 1,298 ------------- ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $59,047,011 $42,766,780 $1,542,262 ============= ============= ============
SA-11 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
BLACKROCK INTERNATIONAL LARGE CAP GROWTH GROWTH U.S. MID V.I. FUND EQUITY CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 169,795 64,405 171,609 ============ ========== ============ Cost $1,467,102 $725,507 $3,378,841 ============ ========== ============ Market Value $2,158,102 $779,947 $3,267,435 Due from Hartford Life and Annuity Insurance Company -- -- 5,228 Receivable from fund shares sold 1,304 38 -- Other assets -- -- -- ------------ ---------- ------------ Total Assets 2,159,406 779,985 3,272,663 ------------ ---------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 1,304 38 -- Payable for fund shares purchased -- -- 5,228 Other liabilities -- -- -- ------------ ---------- ------------ Total Liabilities 1,304 38 5,228 ------------ ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $2,158,102 $779,947 $3,267,435 ============ ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-12 -------------------------------------------------------------------------------
CAPITAL DEVELOPING FOCUS GROWTH OPPORTUNITIES GROWTH FLEXIBLE INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 38,666 243,341 20,577 124,634 ========== ============ ========== ========== Cost $731,278 $3,157,999 $585,169 $900,923 ========== ============ ========== ========== Market Value $810,822 $3,599,010 $651,659 $884,903 Due from Hartford Life and Annuity Insurance Company -- 11,349 -- -- Receivable from fund shares sold 124 -- 357 121 Other assets -- -- -- -- ---------- ------------ ---------- ---------- Total Assets 810,946 3,610,359 652,016 885,024 ---------- ------------ ---------- ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 124 -- 357 121 Payable for fund shares purchased -- 11,349 -- -- Other liabilities -- -- -- -- ---------- ------------ ---------- ---------- Total Liabilities 124 11,349 357 121 ---------- ------------ ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $810,822 $3,599,010 $651,659 $884,903 ========== ============ ========== ========== JENNISON 20/20 DIVIDEND GROWTH GLOBAL EQUITY FOCUS PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- ASSETS: Investments: Number of Shares 23,779 32,548 39,960 ========== ========== ========== Cost $423,505 $600,918 $450,895 ========== ========== ========== Market Value $442,520 $604,421 $630,577 Due from Hartford Life and Annuity Insurance Company -- 290 -- Receivable from fund shares sold 24,079 -- 78 Other assets -- -- -- ---------- ---------- ---------- Total Assets 466,599 604,711 630,655 ---------- ---------- ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 24,079 -- 78 Payable for fund shares purchased -- 290 -- Other liabilities -- -- -- ---------- ---------- ---------- Total Liabilities 24,079 290 78 ---------- ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $442,520 $604,421 $630,577 ========== ========== ==========
SA-13 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
PRUDENTIAL SERIES JENNISON PRUDENTIAL INTERNATIONAL PORTFOLIO VALUE PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (D)(E) -------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 6,603 17,709 -- ========== ========== ==== Cost $142,701 $320,510 $ -- ========== ========== ==== Market Value $153,002 $416,338 $ -- Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 9 21 -- Other assets -- -- -- ---------- ---------- ---- Total Assets 153,011 416,359 -- ---------- ---------- ---- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 9 21 -- Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ---------- ---------- ---- Total Liabilities 9 21 -- ---------- ---------- ---- NET ASSETS: For Variable Annuity Contract Liabilities $153,002 $416,338 $ -- ========== ========== ====
(d) Formerly SP William Blair International Growth Portfolio. Change effective January 31, 2007. (e) Sub-Account option not funded at December 31, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-14 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT GROWTH AND ASSET ALLOCATION TOTAL RETURN INCOME COMSTOCK FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 551,755 289,674 146,522 753,090 ============= ============ ============ ============ Cost $11,824,779 $4,180,346 $1,852,445 $7,605,021 ============= ============ ============ ============ Market Value $11,757,904 $3,997,505 $2,145,075 $7,485,715 Due from Hartford Life and Annuity Insurance Company 31,160 -- -- 775 Receivable from fund shares sold -- 33,807 114 -- Other assets -- -- -- 87 ------------- ------------ ------------ ------------ Total Assets 11,789,064 4,031,312 2,145,189 7,486,577 ------------- ------------ ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 33,807 114 -- Payable for fund shares purchased 31,160 -- -- 775 Other liabilities -- -- -- -- ------------- ------------ ------------ ------------ Total Liabilities 31,160 33,807 114 775 ------------- ------------ ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $11,757,904 $3,997,505 $2,145,075 $7,485,802 ============= ============ ============ ============ WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT EQUITY INCOME C&B LARGE CAP LARGE COMPANY FUND VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares 176,698 115,078 21,100 ============ ============ ========== Cost $2,983,203 $1,174,187 $311,638 ============ ============ ========== Market Value $3,311,325 $1,264,708 $336,762 Due from Hartford Life and Annuity Insurance Company 842 -- -- Receivable from fund shares sold -- 430 18 Other assets -- -- -- ------------ ------------ ---------- Total Assets 3,312,167 1,265,138 336,780 ------------ ------------ ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 430 18 Payable for fund shares purchased 842 -- -- Other liabilities -- -- -- ------------ ------------ ---------- Total Liabilities 842 430 18 ------------ ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $3,311,325 $1,264,708 $336,762 ============ ============ ==========
SA-15 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTERNATIONAL CORE LARGE COMPANY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 299,972 358,775 ============ ============ Cost $2,585,616 $3,095,064 ============ ============ Market Value $3,107,713 $3,702,563 Due from Hartford Life and Annuity Insurance Company 756 363 Receivable from fund shares sold -- -- Other assets -- -- ------------ ------------ Total Assets 3,108,469 3,702,926 ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- Payable for fund shares purchased 756 363 Other liabilities -- -- ------------ ------------ Total Liabilities 756 363 ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $3,107,713 $3,702,563 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-16 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT WELLS FARGO MONEY MARKET SMALL CAP ADVANTAGE VT FUND GROWTH FUND DISCOVERY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 3,310,149 362,068 40,177 ============ ============ ========== Cost $3,310,149 $3,059,171 $684,795 ============ ============ ========== Market Value $3,310,614 $3,508,436 $807,953 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 98 99 42 Other assets -- -- -- ------------ ------------ ---------- Total Assets 3,310,712 3,508,535 807,995 ------------ ------------ ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 98 99 42 Payable for fund shares purchased -- -- -- Other liabilities 461 -- -- ------------ ------------ ---------- Total Liabilities 559 99 42 ------------ ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $3,310,153 $3,508,436 $807,953 ============ ============ ========== WELLS FARGO ADVANTAGE VT WELLS FARGO SMALL/MID CAP ADVANTAGE VT VALUE FUND OPPORTUNITY FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------- ASSETS: Investments: Number of Shares 79,132 2,467 ============ ========= Cost $1,050,185 $58,577 ============ ========= Market Value $876,782 $54,346 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 44 3 Other assets -- -- ------------ --------- Total Assets 876,826 54,349 ------------ --------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 44 3 Payable for fund shares purchased -- -- Other liabilities -- -- ------------ --------- Total Liabilities 44 3 ------------ --------- NET ASSETS: For Variable Annuity Contract Liabilities $876,782 $54,346 ============ =========
SA-17 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION PERIOD (BY SUB-ACCOUNT): AIM V.I. Basic Value Fund -- Class S1 158,970,637 $1.415834 to $1.555421 $233,322,673 AIM V.I. Capital Appreciation Fund -- Class S1 76,607,050 1.462664 to 1.606895 115,964,221 AIM V.I. Core Equity Fund -- Class S1 27,258,379 12.230262 to 12.834710 339,365,934 AIM V.I. Government Securities Fund -- Class S1 689,321,895 1.094766 to 1.202707 783,296,921 AIM V.I. International Growth Fund -- Class S1 97,624,630 2.219333 to 2.438012 225,620,466 AIM V.I. Mid Cap Core Equity Fund -- Class S1 224,777,977 1.676212 to 1.841460 391,230,719 AIM V.I. Small Cap Equity Fund -- Class S1 7,603,058 14.206294 to 15.190835 111,171,804 AIM V.I. Large Cap Growth Fund -- Class S1 4,645,128 1.298570 to 13.278265 59,843,946 AIM V.I. Capital Development Fund -- Class S1 7,359 9.765867 to 9.802841 71,893 American Funds Global Bond Fund -- Class 2 7,657,245 10.836338 to 11.067360 83,816,449 American Funds Global Growth and Income Fund -- Class 2 49,235,681 11.888755 to 12.245550 594,676,971 American Funds Asset Allocation Fund -- Class 2 141,984,532 13.225208 to 15.800420 2,001,528,029 American Funds Blue Chip Income and Growth Fund -- Class 2 1,110,731,693 1.145462 to 1.294501 1,330,330,423 American Funds Bond Fund -- Class 2 90,385,321 12.828250 to 14.978942 1,242,356,154 American Funds Global Growth Fund -- Class 2 53,007,937 11.950746 to 18.321256 839,529,973 American Funds Growth Fund -- Class 2 337,270,716 10.427125 to 17.055820 4,512,821,153 American Funds Growth-Income Fund -- Class 2 310,976,529 13.579092 to 16.732187 4,504,061,478 American Funds International Fund -- Class 2 82,727,073 12.656410 to 19.487761 1,384,359,837 American Funds New World Fund -- Class 2 20,324,398 25.310667 to 31.290989 560,438,213 American Funds Global Small Capitalization Fund -- Class 2 30,050,469 17.296552 to 25.466973 647,846,006 Franklin Rising Dividends Securities Fund -- Class 2 70,042,455 14.200576 to 15.286933 1,029,241,205 Franklin Income Securities Fund -- Class 2 167,741,494 15.145488 to 16.906515 2,641,999,613 Franklin Large Cap Growth Securities Fund -- Class 2 18,116,566 11.848456 to 12.929961 222,265,433 Franklin Global Real Estate Securities Fund -- Class 2 1,025,277 18.884833 to 26.430064 21,856,828 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 35,526,069 7.996026 to 14.893018 393,042,004 Franklin Small Cap Value Securities Fund -- Class 2 77,925 9.231379 to 9.266350 719,986 Franklin Strategic Income Securities Fund -- Class 1 46,394,086 14.668907 to 17.207347 723,516,645 Mutual Shares Securities Fund -- Class 2 114,112,381 16.064485 to 20.466750 1,978,006,925 Templeton Developing Markets Securities Fund -- Class 1 10,786,580 24.519357 to 31.103787 299,147,918 Templeton Foreign Securities Fund -- Class 2 50,758,434 14.128636 to 16.996920 766,018,374 Templeton Global Asset Allocation Fund -- Class 2 821,585 15.895323 to 18.832232 14,229,317 Templeton Growth Securities Fund -- Class 2 71,999,873 14.495551 to 17.732277 1,129,393,620 Mutual Discovery Securities Fund -- Class 2 35,031,185 21.030000 to 22.904210 763,439,509 Franklin Flex Cap Growth Securities Fund -- Class 2 5,008,284 11.858630 to 12.444192 60,642,829 Franklin Large Cap Value Securities Fund -- Class 2 2,498,184 11.245329 to 11.800600 28,732,072 Hartford Money Market HLS Fund -- Class IA 583,103,156 1.034643 to 1.202293 644,774,168 MFS Core Equity Series -- Class INIT 4,624,263 7.322856 to 11.440100 43,451,859 MFS Emerging Growth Series -- Class INIT 8,188,139 6.398442 to 10.675267 70,246,240 MFS Global Equity Series -- Class INIT 2,505,186 14.258638 to 18.200638 39,787,634 MFS High Income Series -- Class INIT 16,199,558 12.139484 to 13.721501 204,512,619 MFS Investors Growth Stock Series -- Class INIT 11,529,985 6.847257 to 10.027472 96,135,034
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-18 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- MFS Investors Trust Series -- Class INIT 50,009,326 $9.957578 to $12.459472 $524,693,000 MFS Mid Cap Growth Series -- Class INIT 20,106,363 6.201280 to 6.980478 132,693,463 MFS New Discovery Series -- Class INIT 27,745,514 8.740299 to 15.853017 314,529,418 MFS Total Return Series -- Class INIT 107,413,096 13.170810 to 16.421375 1,537,090,478 MFS Value Series -- Class INIT 15,107,104 17.585857 to 18.930846 274,933,310 MFS Research Bond Series -- Class INIT 8,562,144 10.244550 to 10.746443 89,523,401 MFS Research International Series -- Class INIT 3,617,570 16.005105 to 16.749135 59,047,011 MFS Research Series -- Class INIT 3,333,539 12.491769 to 13.109180 42,766,780 BlackRock Global Growth V.I. Fund -- Class I 88,561 15.208557 to 19.680286 1,542,262 BlackRock Large Cap Growth V.I. Fund -- Class I 181,577 10.242180 to 12.955864 2,158,102 International Growth Equity -- Class II 59,567 13.013987 to 13.181607 779,947 U.S. Mid Cap Value -- Class II 253,970 12.008550 to 13.831448 3,267,435 Focus Growth -- Class Y 96,139 8.152510 to 8.525023 810,822 Capital Opportunities -- Class Y 673,776 5.185166 to 5.422083 3,599,010 Developing Growth -- Class Y 57,697 10.998815 to 11.462786 651,659 Flexible Income -- Class Y 74,873 11.445540 to 11.968451 884,903 Dividend Growth -- Class Y 34,456 12.494023 to 13.021131 442,520 Global Equity -- Class Y 49,293 11.975692 to 12.522786 604,421 Jennison 20/20 Focus Portfolio -- Class II 414,492 1.486316 to 1.533635 630,577 Jennison Portfolio -- Class II 154,205 0.972493 to 1.015125 153,002 Prudential Value Portfolio -- Class II 301,653 1.358682 to 1.390767 416,338 Prudential Series International Growth -- Class II -- 1.315240 to 1.408201 -- Growth and Income -- Class II 694,007 16.476878 to 17.229559 11,757,904 Comstock -- Class II 247,434 15.738155 to 16.364834 3,997,505 Wells Fargo Advantage VT Asset Allocation Fund 1,587,638 1.318773 to 1.401139 2,145,075 Wells Fargo Advantage VT Total Return Bond Fund 6,240,535 1.169807 to 1.242914 7,485,802 Wells Fargo Advantage VT Equity Income Fund 2,389,664 1.340829 to 1.424572 3,311,325 Wells Fargo Advantage VT C&B Large Cap Value Fund 1,011,605 1.214070 to 1.289885 1,264,708 Wells Fargo Advantage VT Large Company Core Fund 307,104 1.069914 to 1.129967 336,762 Wells Fargo Advantage VT International Core Fund 1,979,629 1.518073 to 1.612897 3,107,713 Wells Fargo Advantage VT Large Company Growth Fund 3,370,444 1.068652 to 1.135401 3,702,563 Wells Fargo Advantage VT Money Market Fund 3,211,047 0.996925 to 1.059206 3,310,153 Wells Fargo Advantage VT Small Cap Growth Fund 2,287,632 1.486979 to 1.579875 3,508,436 Wells Fargo Advantage VT Discovery Fund 53,343 15.030356 to 15.364252 807,953 Wells Fargo Advantage VT Small/Mid Cap Value Fund 65,624 13.139235 to 13.535596 876,782 Wells Fargo Advantage VT Opportunity Fund 4,347 12.366753 to 12.641519 54,346 ANNUITY CONTRACTS IN THE ANNUITY PERIOD (BY SUB-ACCOUNT): AIM V.I. Basic Value Fund -- Class S1 82,299 1.483873 to 1.555421 124,372 AIM V.I. Capital Appreciation Fund -- Class S1 51,937 1.562107 to 1.606895 81,804 AIM V.I. Core Equity Fund -- Class S1 15,308 12.546644 to 12.653902 193,246 AIM V.I. Government Securities Fund -- Class S1 300,618 1.147407 to 1.202707 351,571 AIM V.I. International Growth Fund -- Class S1 59,581 2.325936 to 2.379485 141,584 AIM V.I. Mid Cap Core Equity Fund -- Class S1 80,073 1.756771 to 1.841460 142,391 AIM V.I. Small Cap Equity Fund -- Class S1 870 15.190835 to 15.190835 13,215 AIM V.I. Large Cap Growth Fund -- Class S1 7,719 1.372811 to 13.091210 19,356 American Funds Global Bond Fund -- Class 2 3,086 10.998917 to 10.998917 33,946
SA-19 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- American Funds Global Growth and Income Fund -- Class 2 12,933 $12.065842 to $12.224275 $156,992 American Funds Asset Allocation Fund -- Class 2 62,384 13.836431 to 15.800420 906,209 American Funds Blue Chip Income and Growth Fund -- Class 2 388,710 1.201428 to 1.261333 473,361 American Funds Bond Fund -- Class 2 38,896 13.481566 to 14.978942 554,448 American Funds Global Growth Fund -- Class 2 23,519 13.691482 to 18.321256 395,021 American Funds Growth Fund -- Class 2 120,347 10.917173 to 17.055820 1,774,031 American Funds Growth-Income Fund -- Class 2 180,178 14.206709 to 16.732187 2,706,208 American Funds International Fund -- Class 2 26,656 14.549325 to 19.459913 454,113 American Funds New World Fund -- Class 2 1,295 26.599359 to 30.412135 36,049 American Funds Global Small Capitalization Fund -- Class 2 5,721 18.415499 to 25.430467 138,685 Franklin Rising Dividends Securities Fund -- Class 2 14,071 14.760825 to 15.218488 209,359 Franklin Income Securities Fund -- Class 2 118,604 15.839475 to 16.527450 1,905,568 Franklin Large Cap Growth Securities Fund -- Class 2 7,230 12.391579 to 12.646295 90,752 Franklin Global Real Estate Securities Fund -- Class 2 830 22.193451 to 22.193451 18,413 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 13,188 8.441157 to 14.871642 150,217 Franklin Strategic Income Securities Fund -- Class 1 20,906 15.323642 to 17.207347 333,216 Mutual Shares Securities Fund -- Class 2 40,478 16.781561 to 20.466750 757,887 Templeton Developing Markets Securities Fund -- Class 1 4,625 25.652295 to 30.230111 134,862 Templeton Foreign Securities Fund -- Class 2 32,656 14.848232 to 16.519366 526,828 Templeton Global Asset Allocation Fund -- Class 2 154 17.633846 to 17.633846 2,715 Templeton Growth Securities Fund -- Class 2 17,028 15.582668 to 17.732277 281,226 Mutual Discovery Securities Fund -- Class 2 16,727 21.859465 to 22.638429 368,622 Franklin Flex Cap Growth Securities Fund -- Class 2 259 12.269046 to 12.269046 3,180 Hartford Money Market HLS Fund -- Class IA 291,571 1.145485 to 1.170091 340,694 MFS Core Equity Series -- Class INIT 2,610 10.433334 to 10.433334 27,235 MFS Emerging Growth Series -- Class INIT 1,140 10.254739 to 10.254739 11,687 MFS Global Equity Series -- Class INIT 1,330 14.984782 to 14.984782 19,934 MFS High Income Series -- Class INIT 10,934 12.700434 to 13.721501 141,695 MFS Investors Growth Stock Series -- Class INIT 8,793 9.316867 to 9.745673 83,569 MFS Investors Trust Series -- Class INIT 16,177 10.402183 to 12.109375 188,724 MFS Mid Cap Growth Series -- Class INIT 11,478 6.479096 to 6.637575 75,006 MFS New Discovery Series -- Class INIT 20,559 9.185641 to 15.407442 290,823 MFS Total Return Series -- Class INIT 67,506 13.758760 to 16.421375 1,020,680 MFS Value Series -- Class INIT 2,765 18.279450 to 18.580629 51,342 MFS Research Bond Series -- Class INIT 9,804 10.492523 to 10.596343 103,821
# Rounded unit values THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-20 ------------------------------------------------------------------------------- [This page intentionally left blank] SA-21 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AIM V.I. CAPITAL AIM V.I. BASIC APPRECIATION AIM V.I. CORE VALUE FUND FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,450,296 $ -- $3,832,011 -------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (4,936,050) (2,160,312) (6,906,810) -------------- ------------- ------------- Net investment income (loss) (3,485,754) (2,160,312) (3,074,799) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 12,379,431 2,142,646 6,403,776 Net realized gain on distributions 13,519,881 -- -- Net unrealized appreciation (depreciation) of investments during the year (22,291,140) 10,213,085 18,174,798 -------------- ------------- ------------- Net gain (loss) on investments 3,608,172 12,355,731 24,578,574 -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $122,418 $10,195,419 $21,503,775 ============== ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-22 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. MID CAP AIM V.I. SMALL GOVERNMENT INTERNATIONAL CORE EQUITY CAP EQUITY SECURITIES FUND GROWTH FUND FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $30,690,596 $882,217 $869,086 $45,816 -------------- ------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (13,017,062) (2,880,829) (7,492,009) (1,624,648) -------------- ------------- ------------- ------------- Net investment income (loss) 17,673,534 (1,998,612) (6,622,923) (1,578,832) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 74,323 221,106 5,917,988 15,571 Net realized gain on distributions -- -- 5,668,993 3,065,634 Net unrealized appreciation (depreciation) of investments during the year 13,331,907 16,505,105 23,071,586 56,372 -------------- ------------- ------------- ------------- Net gain (loss) on investments 13,406,230 16,726,211 34,658,567 3,137,577 -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $31,079,764 $14,727,599 $28,035,644 $1,558,745 ============== ============= ============= ============= AIM V.I. AIM V.I. CAPITAL AMERICAN LARGE CAP DEVELOPMENT FUNDS GLOBAL GROWTH FUND FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- -------------------------------------------------------------- INVESTMENT INCOME: Dividends $17,461 $ -- $2,146,091 ------------- -------- ------------ EXPENSES: Mortality and Expense Risk and Administrative Charges (1,001,417) (155) (623,188) ------------- -------- ------------ Net investment income (loss) (983,956) (155) 1,522,903 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 904,669 (2,467) 19,201 Net realized gain on distributions -- 6,479 -- Net unrealized appreciation (depreciation) of investments during the year 6,730,160 (3,499) 1,261,676 ------------- -------- ------------ Net gain (loss) on investments 7,634,829 513 1,280,877 ------------- -------- ------------ Net increase (decrease) in net assets resulting from operations $6,650,873 $358 $2,803,780 ============= ======== ============
(a) From inception, November 12, 2007 to December 31, 2007. SA-23 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AMERICAN AMERICAN FUNDS FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET ALLOCATION INCOME AND INCOME FUND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $9,120,408 $43,458,769 $35,273,934 ------------- -------------- -------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (6,537,490) (34,492,245) (24,798,016) ------------- -------------- -------------- Net investment income (loss) 2,582,918 8,966,524 10,475,918 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (42,340) 18,360,226 26,182,204 Net realized gain on distributions 18,217,851 65,857,700 43,866,344 Net unrealized appreciation (depreciation) of investments during the year 15,626,762 (4,327,921) (74,994,862) ------------- -------------- -------------- Net gain (loss) on investments 33,802,273 79,890,005 (4,946,314) ------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $36,385,191 $88,856,529 $5,529,604 ============= ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-24 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS GROWTH-INCOME BOND FUND FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $91,096,132 $21,463,926 $34,543,512 $69,584,519 ------------- ------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (20,992,492) (13,618,292) (78,535,797) (79,827,481) ------------- ------------- ------------- ------------- Net investment income (loss) 70,103,640 7,845,634 (43,992,285) (10,242,962) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,545,336 15,692,080 75,969,824 64,424,315 Net realized gain on distributions -- 31,836,893 296,855,337 147,876,597 Net unrealized appreciation (depreciation) of investments during the year (54,422,607) 38,029,655 87,902,270 (64,307,657) ------------- ------------- ------------- ------------- Net gain (loss) on investments (52,877,271) 85,558,628 460,727,431 147,993,255 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $17,226,369 $93,404,262 $416,735,146 $137,750,293 ============= ============= ============= ============= AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL INTERNATIONAL AMERICAN FUNDS CAPITALIZATION FUND NEW WORLD FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------- INVESTMENT INCOME: Dividends $19,497,630 $15,004,931 $17,849,260 ------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (22,863,683) (8,086,453) (10,975,534) ------------- ------------- ------------- Net investment income (loss) (3,366,053) 6,918,478 6,873,726 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 22,952,807 2,986,011 9,838,761 Net realized gain on distributions 61,815,411 28,364,928 46,005,686 Net unrealized appreciation (depreciation) of investments during the year 126,057,449 78,626,946 35,747,741 ------------- ------------- ------------- Net gain (loss) on investments 210,825,667 109,977,885 91,592,188 ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $207,459,614 $116,896,363 $98,465,914 ============= ============= =============
SA-25 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN LARGE DIVIDENDS FRANKLIN INCOME CAP GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $23,644,812 $82,206,372 $1,787,042 -------------- -------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (18,174,375) (44,240,546) (4,400,869) -------------- -------------- ------------- Net investment income (loss) 5,470,437 37,965,826 (2,613,827) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 3,495,250 5,939,541 2,602,976 Net realized gain on distributions 14,502,343 15,245,447 1,759,400 Net unrealized appreciation (depreciation) of investments during the year (73,621,219) (28,112,988) 8,121,955 -------------- -------------- ------------- Net gain (loss) on investments (55,623,626) (6,928,000) 12,484,331 -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $(50,153,189) $31,037,826 $9,870,504 ============== ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-26 -------------------------------------------------------------------------------
FRANKLIN GLOBAL FRANKLIN SMALL- FRANKLIN SMALL FRANKLIN REAL ESTATE MID CAP GROWTH CAP VALUE STRATEGIC INCOME SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT (B) SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $691,172 $ -- $ -- $34,752,389 -------------- ------------- ------ -------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (489,067) (7,286,452) (823) (12,238,803) -------------- ------------- ------ -------------- Net investment income (loss) 202,105 (7,286,452) (823) 22,513,586 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 2,199,326 9,378,068 26 642,873 Net realized gain on distributions 2,142,787 28,535,333 -- 1,908,014 Net unrealized appreciation (depreciation) of investments during the year (11,586,300) 2,360,921 958 2,401,769 -------------- ------------- ------ -------------- Net gain (loss) on investments (7,244,187) 40,274,322 984 4,952,656 -------------- ------------- ------ -------------- Net increase (decrease) in net assets resulting from operations $(7,042,082) $32,987,870 $161 $27,466,242 ============== ============= ====== ============== TEMPLETON TEMPLETON MUTUAL SHARES DEVELOPING MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $27,741,414 $6,175,867 $14,761,826 -------------- ------------- -------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (35,268,632) (4,632,351) (13,934,066) -------------- ------------- -------------- Net investment income (loss) (7,527,218) 1,543,516 827,760 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 17,589,365 4,401,546 12,014,316 Net realized gain on distributions 67,919,883 18,519,844 33,669,939 Net unrealized appreciation (depreciation) of investments during the year (56,002,504) 33,364,764 45,516,798 -------------- ------------- -------------- Net gain (loss) on investments 29,506,744 56,286,154 91,201,053 -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $21,979,526 $57,829,670 $92,028,813 ============== ============= ==============
(a) From inception, November 12, 2007 to December 31, 2007. (b) Formerly Franklin Real Estate Fund. Change effective May 1, 2007. SA-27 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON GLOBAL ASSET GROWTH MUTUAL DISCOVERY ALLOCATION FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $2,686,064 $14,490,907 $9,524,913 ------------- -------------- -------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (232,250) (20,195,415) (11,789,300) ------------- -------------- -------------- Net investment income (loss) 2,453,814 (5,704,508) (2,264,387) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 177,350 4,962,253 737,797 Net realized gain on distributions 3,522,136 46,236,071 7,835,462 Net unrealized appreciation (depreciation) of investments during the year (4,923,068) (44,152,963) 48,800,901 ------------- -------------- -------------- Net gain (loss) on investments (1,223,582) 7,045,361 57,374,160 ------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $1,230,232 $1,340,853 $55,109,773 ============= ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-28 -------------------------------------------------------------------------------
FRANKLIN FLEX FRANKLIN LARGE HARTFORD CAP GROWTH CAP VALUE MONEY MARKET MFS CORE SECURITIES FUND SECURITIES FUND HLS FUND EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (C) -------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $52,695 $465,153 $24,566,717 $168,153 ------------ ----------- ------------- ------------ EXPENSES: Mortality and Expense Risk and Administrative Charges (865,215) (430,026) (9,511,949) (800,045) ------------ ----------- ------------- ------------ Net investment income (loss) (812,520) 35,127 15,054,768 (631,892) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 316,804 1,113 -- (453,515) Net realized gain on distributions -- 13,741 -- -- Net unrealized appreciation (depreciation) of investments during the year 5,360,690 (758,521) -- 5,526,472 ------------ ----------- ------------- ------------ Net gain (loss) on investments 5,677,494 (743,667) -- 5,072,957 ------------ ----------- ------------- ------------ Net increase (decrease) in net assets resulting from operations $4,864,974 $(708,540) $15,054,768 $4,441,065 ============ =========== ============= ============ MFS EMERGING MFS GLOBAL MFS HIGH GROWTH SERIES EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- -------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $809,575 $16,081,578 ------------- ------------ -------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (1,026,042) (742,075) (4,212,229) ------------- ------------ -------------- Net investment income (loss) (1,026,042) 67,500 11,869,349 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,125,030) 532,451 648,484 Net realized gain on distributions -- 2,542,995 -- Net unrealized appreciation (depreciation) of investments during the year 11,854,253 (453,093) (12,758,435) ------------- ------------ -------------- Net gain (loss) on investments 10,729,223 2,622,353 (12,109,951) ------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations $9,703,181 $2,689,853 $(240,602) ============= ============ ==============
(c) Formerly MFS Capital Opportunities Series. Change effective May 1, 2007. SA-29 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
MFS INVESTORS GROWTH STOCK MFS INVESTORS MFS MID CAP SERIES TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $340,414 $3,924,103 $277,776 ------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (1,763,359) (9,069,170) (2,744,875) ------------- ------------- ------------- Net investment income (loss) (1,422,945) (5,145,067) (2,467,099) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 2,446,119 3,628,323 5,314,659 Net realized gain on distributions -- 3,980,082 5,912,068 Net unrealized appreciation (depreciation) of investments during the year 8,190,650 35,658,612 2,875,988 ------------- ------------- ------------- Net gain (loss) on investments 10,636,769 43,267,017 14,102,715 ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $9,213,824 $38,121,950 $11,635,616 ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-30 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL MFS VALUE MFS RESEARCH DISCOVERY SERIES RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $37,571,551 $1,997,934 $1,530,120 -------------- -------------- ------------- ------------- EXPENSES: Mortality and Expense Risk and Administrative Charges (6,211,869) (27,017,843) (4,101,943) (1,082,756) -------------- -------------- ------------- ------------- Net investment income (loss) (6,211,869) 10,553,708 (2,104,009) 447,364 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 3,393,656 9,822,519 395,831 31,947 Net realized gain on distributions 23,026,480 35,922,871 3,421,567 -- Net unrealized appreciation (depreciation) of investments during the year (19,049,833) (24,341,825) 9,416,766 1,135,122 -------------- -------------- ------------- ------------- Net gain (loss) on investments 7,370,303 21,403,565 13,234,164 1,167,069 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $1,158,434 $31,957,273 $11,130,155 $1,614,433 ============== ============== ============= ============= MFS RESEARCH INTERNATIONAL MFS RESEARCH BLACKROCK GLOBAL SERIES SERIES GROWTH V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $156,140 $14,663 ------------ ------------ ---------- EXPENSES: Mortality and Expense Risk and Administrative Charges (598,620) (443,182) (24,933) ------------ ------------ ---------- Net investment income (loss) (598,620) (287,042) (10,270) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 38,899 332,758 345,595 Net realized gain on distributions 262,232 -- -- Net unrealized appreciation (depreciation) of investments during the year 3,141,585 2,555,722 67,617 ------------ ------------ ---------- Net gain (loss) on investments 3,442,716 2,888,480 413,212 ------------ ------------ ---------- Net increase (decrease) in net assets resulting from operations $2,844,096 $2,601,438 $402,942 ============ ============ ==========
SA-31 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
BLACKROCK LARGE CAP GROWTH INTERNATIONAL U.S. MID V.I. FUND GROWTH EQUITY CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $6,189 $1,087 $12,486 ---------- --------- ----------- EXPENSES: Mortality and Expense Risk and Administrative Charges (44,893) (8,551) (37,400) ---------- --------- ----------- Net investment income (loss) (38,704) (7,464) (24,914) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 267,421 (1,856) (2,604) Net realized gain on distributions -- 16,140 216,752 Net unrealized appreciation (depreciation) of investments during the year (74,886) 46,742 (163,965) ---------- --------- ----------- Net gain (loss) on investments 192,535 61,026 50,183 ---------- --------- ----------- Net increase (decrease) in net assets resulting from operations $153,831 $53,562 $25,269 ========== ========= ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-32 -------------------------------------------------------------------------------
CAPITAL DEVELOPING FOCUS GROWTH OPPORTUNITIES GROWTH FLEXIBLE INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $ -- $ -- $470 $44,017 --------- ---------- --------- --------- EXPENSES: Mortality and Expense Risk and Administrative Charges (6,268) (41,156) (6,202) (11,923) --------- ---------- --------- --------- Net investment income (loss) (6,268) (41,156) (5,732) 32,094 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 697 7,939 (689) 12 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 72,561 402,587 58,421 (18,703) --------- ---------- --------- --------- Net gain (loss) on investments 73,258 410,526 57,732 (18,691) --------- ---------- --------- --------- Net increase (decrease) in net assets resulting from operations $66,990 $369,370 $52,000 $13,403 ========= ========== ========= ========= JENNISON 20/20 DIVIDEND GROWTH GLOBAL EQUITY FOCUS PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------- INVESTMENT INCOME: Dividends $4,153 $1,990 $741 -------- --------- --------- EXPENSES: Mortality and Expense Risk and Administrative Charges (7,460) (8,865) (11,578) -------- --------- --------- Net investment income (loss) (3,307) (6,875) (10,837) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (4,051) (4,371) 19,099 Net realized gain on distributions -- 63,354 58,596 Net unrealized appreciation (depreciation) of investments during the year 9,414 (4,614) (17,104) -------- --------- --------- Net gain (loss) on investments 5,363 54,369 60,591 -------- --------- --------- Net increase (decrease) in net assets resulting from operations $2,056 $47,494 $49,754 ======== ========= =========
SA-33 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
PRUDENTIAL SERIES JENNISON PRUDENTIAL INTERNATIONAL PORTFOLIO VALUE PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (D)(E) ------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $ -- $4,331 $ -- --------- --------- -------- EXPENSES: Mortality and Expense Risk and Administrative Charges (3,078) (8,202) (25) --------- --------- -------- Net investment income (loss) (3,078) (3,871) (25) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 43,675 14,998 1,245 Net realized gain on distributions -- 49,119 -- Net unrealized appreciation (depreciation) of investments during the year (26,645) (53,235) (1,395) --------- --------- -------- Net gain (loss) on investments 17,030 10,882 (150) --------- --------- -------- Net increase (decrease) in net assets resulting from operations $13,952 $7,011 $(175) ========= ========= ========
(d) Formerly SP William Blair International Growth Portfolio. Change effective January 31, 2007. (e) Sub-Account option not funded at December 31, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-34 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT GROWTH AND ASSET ALLOCATION TOTAL RETURN INCOME COMSTOCK FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $81,682 $40,285 $47,100 $312,378 ----------- ----------- ---------- ----------- EXPENSES: Mortality and Expense Risk and Administrative Charges (147,239) (56,673) (41,207) (136,457) ----------- ----------- ---------- ----------- Net investment income (loss) (65,557) (16,388) 5,893 175,921 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (9,830) (7,860) 4,253 (9,522) Net realized gain on distributions 219,984 56,068 32,387 -- Net unrealized appreciation (depreciation) of investments during the year (253,414) (263,277) 67,148 116,118 ----------- ----------- ---------- ----------- Net gain (loss) on investments (43,260) (215,069) 103,788 106,596 ----------- ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations $(108,817) $(231,457) $109,681 $282,517 =========== =========== ========== =========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT EQUITY INCOME C&B LARGE CAP LARGE COMPANY FUND VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------- INVESTMENT INCOME: Dividends $51,202 $13,171 $ -- ----------- --------- -------- EXPENSES: Mortality and Expense Risk and Administrative Charges (62,438) (25,343) (4,196) ----------- --------- -------- Net investment income (loss) (11,236) (12,172) (4,196) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 12,992 38,463 583 Net realized gain on distributions 227,559 -- -- Net unrealized appreciation (depreciation) of investments during the year (207,589) (67,769) (2,433) ----------- --------- -------- Net gain (loss) on investments 32,962 (29,306) (1,850) ----------- --------- -------- Net increase (decrease) in net assets resulting from operations $21,726 $(41,478) $(6,046) =========== ========= ========
SA-35 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTERNATIONAL CORE LARGE COMPANY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $413 $ -- ---------- ---------- EXPENSES: Mortality and Expense Risk and Administrative Charges (57,279) (75,074) ---------- ---------- Net investment income (loss) (56,866) (75,074) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 24,619 60,504 Net realized gain on distributions 226,770 -- Net unrealized appreciation (depreciation) of investments during the year 109,050 221,642 ---------- ---------- Net gain (loss) on investments 360,439 282,146 ---------- ---------- Net increase (decrease) in net assets resulting from operations $303,573 $207,072 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-36 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT MONEY MARKET SMALL CAP FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $113,233 $ -- ---------- ----------- EXPENSES: Mortality and Expense Risk and Administrative Charges (45,673) (62,469) ---------- ----------- Net investment income (loss) 67,560 (62,469) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions -- 32,132 Net realized gain on distributions -- 515,879 Net unrealized appreciation (depreciation) of investments during the year 465 (151,782) ---------- ----------- Net gain (loss) on investments 465 396,229 ---------- ----------- Net increase (decrease) in net assets resulting from operations $68,025 $333,760 ========== =========== WELLS FARGO WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT SMALL/MID CAP ADVANTAGE VT DISCOVERY FUND VALUE FUND OPPORTUNITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $169 $286 ---------- ----------- -------- EXPENSES: Mortality and Expense Risk and Administrative Charges (10,860) (15,865) (799) ---------- ----------- -------- Net investment income (loss) (10,860) (15,696) (513) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,712 4,159 60 Net realized gain on distributions -- 141,462 6,708 Net unrealized appreciation (depreciation) of investments during the year 105,240 (150,863) (4,229) ---------- ----------- -------- Net gain (loss) on investments 106,952 (5,242) 2,539 ---------- ----------- -------- Net increase (decrease) in net assets resulting from operations $96,092 $(20,938) $2,026 ========== =========== ========
SA-37 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AIM V.I. CAPITAL AIM V.I. BASIC APPRECIATION AIM V.I. CORE VALUE FUND FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(3,485,754) $(2,160,312) $(3,074,799) Net realized gain (loss) on security transactions 12,379,431 2,142,646 6,403,776 Net realized gain on distributions 13,519,881 -- -- Net unrealized appreciation (depreciation) of investments during the year (22,291,140) 10,213,085 18,174,798 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 122,418 10,195,419 21,503,775 ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 12,569,626 6,101,505 8,173,565 Net transfers (23,986,907) (3,045,460) (22,262,060) Surrenders for benefit payments and fees (30,786,750) (14,625,309) (30,489,552) Net annuity transactions 82,798 59,801 65,965 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (42,121,233) (11,509,463) (44,512,082) ------------ ------------ ------------ Net increase (decrease) in net assets (41,998,815) (1,314,044) (23,008,307) NET ASSETS: Beginning of year 275,445,860 117,360,069 362,567,487 ------------ ------------ ------------ End of year $233,447,045 $116,046,025 $339,559,180 ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-38 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. MID CAP AIM V.I. SMALL GOVERNMENT INTERNATIONAL CORE EQUITY CAP EQUITY SECURITIES FUND GROWTH FUND FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $17,673,534 $(1,998,612) $(6,622,923) $(1,578,832) Net realized gain (loss) on security transactions 74,323 221,106 5,917,988 15,571 Net realized gain on distributions -- -- 5,668,993 3,065,634 Net unrealized appreciation (depreciation) of investments during the year 13,331,907 16,505,105 23,071,586 56,372 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 31,079,764 14,727,599 28,035,644 1,558,745 ------------ ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 118,031,004 66,016,983 24,800,715 30,679,857 Net transfers 93,479,563 54,482,729 2,893,857 14,960,292 Surrenders for benefit payments and fees (60,488,637) (11,945,647) (40,940,962) (6,840,056) Net annuity transactions 161,816 129,666 81,920 (2,334) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 151,183,746 108,683,731 (13,164,470) 38,797,759 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets 182,263,510 123,411,330 14,871,174 40,356,504 NET ASSETS: Beginning of year 601,384,982 102,350,720 376,501,936 70,828,515 ------------ ------------ ------------ ------------ End of year $783,648,492 $225,762,050 $391,373,110 $111,185,019 ============ ============ ============ ============ AIM V.I. AIM V.I. CAPITAL AMERICAN LARGE CAP DEVELOPMENT FUNDS GLOBAL GROWTH FUND FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- ------------------------------------------------------ OPERATIONS: Net investment income (loss) $(983,956) $(155) $1,522,903 Net realized gain (loss) on security transactions 904,669 (2,467) 19,201 Net realized gain on distributions -- 6,479 -- Net unrealized appreciation (depreciation) of investments during the year 6,730,160 (3,499) 1,261,676 ----------- ------- ----------- Net increase (decrease) in net assets resulting from operations 6,650,873 358 2,803,780 ----------- ------- ----------- UNIT TRANSACTIONS: Purchases 3,033,964 8,625 21,060,985 Net transfers 4,254,797 64,353 54,506,741 Surrenders for benefit payments and fees (5,737,945) (1,443) (2,587,846) Net annuity transactions (1,931) -- 32,073 ----------- ------- ----------- Net increase (decrease) in net assets resulting from unit transactions 1,548,885 71,535 73,011,953 ----------- ------- ----------- Net increase (decrease) in net assets 8,199,758 71,893 75,815,733 NET ASSETS: Beginning of year 51,663,544 -- 8,034,662 ----------- ------- ----------- End of year $59,863,302 $71,893 $83,850,395 =========== ======= ===========
(a) From inception, November 12, 2007 to December 31, 2007. SA-39 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
AMERICAN AMERICAN FUNDS FUNDS GLOBAL AMERICAN FUNDS BLUE CHIP GROWTH AND ASSET ALLOCATION INCOME AND INCOME FUND FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,582,918 $8,966,524 $10,475,918 Net realized gain (loss) on security transactions (42,340) 18,360,226 26,182,204 Net realized gain on distributions 18,217,851 65,857,700 43,866,344 Net unrealized appreciation (depreciation) of investments during the year 15,626,762 (4,327,921) (74,994,862) -------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 36,385,191 88,856,529 5,529,604 -------------- ---------------- ---------------- UNIT TRANSACTIONS: Purchases 180,698,905 140,108,093 94,018,302 Net transfers 186,242,144 73,582,056 (19,419,192) Surrenders for benefit payments and fees (18,137,698) (185,172,324) (135,146,446) Net annuity transactions 131,911 134,450 48,811 -------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 348,935,262 28,652,275 (60,498,525) -------------- ---------------- ---------------- Net increase (decrease) in net assets 385,320,453 117,508,804 (54,968,921) NET ASSETS: Beginning of year 209,513,510 1,884,925,434 1,385,772,705 -------------- ---------------- ---------------- End of year $594,833,963 $2,002,434,238 $1,330,803,784 ============== ================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-40 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS GROWTH-INCOME BOND FUND FUND GROWTH FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $70,103,641 $7,845,634 $(43,992,284) $(10,242,962) Net realized gain (loss) on security transactions 1,545,335 15,692,080 75,969,824 64,424,315 Net realized gain on distributions -- 31,836,893 296,855,336 147,876,597 Net unrealized appreciation (depreciation) of investments during the year (54,422,607) 38,029,655 87,902,270 (64,307,657) ---------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 17,226,369 93,404,262 416,735,146 137,750,293 ---------------- -------------- ---------------- ---------------- UNIT TRANSACTIONS: Purchases 99,862,224 76,124,822 466,759,159 439,563,750 Net transfers 146,892,859 21,359,371 527,203 37,863,073 Surrenders for benefit payments and fees (120,414,933) (70,437,814) (401,245,009) (422,808,359) Net annuity transactions 40,401 53,278 236,187 84,331 ---------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 126,380,551 27,099,657 66,277,540 54,702,795 ---------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets 143,606,920 120,503,919 483,012,686 192,453,088 NET ASSETS: Beginning of year 1,099,303,682 719,421,075 4,031,582,498 4,314,314,598 ---------------- -------------- ---------------- ---------------- End of year $1,242,910,602 $839,924,994 $4,514,595,184 $4,506,767,686 ================ ============== ================ ================ AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL INTERNATIONAL AMERICAN FUNDS CAPITALIZATION FUND NEW WORLD FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(3,366,053) $6,918,478 $6,873,726 Net realized gain (loss) on security transactions 22,952,807 2,986,011 9,838,761 Net realized gain on distributions 61,815,411 28,364,928 46,005,686 Net unrealized appreciation (depreciation) of investments during the year 126,057,449 78,626,946 35,747,741 ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 207,459,614 116,896,363 98,465,914 ---------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 139,178,445 69,584,747 69,875,788 Net transfers 9,397,135 44,731,030 20,288,542 Surrenders for benefit payments and fees (108,673,098) (34,838,148) (53,850,509) Net annuity transactions 79,913 (5,154) (5,716) ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 39,982,395 79,472,475 36,308,105 ---------------- -------------- -------------- Net increase (decrease) in net assets 247,442,009 196,368,838 134,774,019 NET ASSETS: Beginning of year 1,137,371,941 364,105,424 513,210,672 ---------------- -------------- -------------- End of year $1,384,813,950 $560,474,262 $647,984,691 ================ ============== ==============
SA-41 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
FRANKLIN RISING FRANKLIN LARGE DIVIDENDS FRANKLIN INCOME CAP GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $5,470,437 $37,965,826 $(2,613,827) Net realized gain (loss) on security transactions 3,495,250 5,939,541 2,602,976 Net realized gain on distributions 14,502,343 15,245,447 1,759,400 Net unrealized appreciation (depreciation) of investments during the year (73,621,219) (28,112,988) 8,121,955 ---------------- ---------------- -------------- Net increase (decrease) in net assets resulting from operations (50,153,189) 31,037,826 9,870,504 ---------------- ---------------- -------------- UNIT TRANSACTIONS: Purchases 215,997,328 474,365,207 22,854,102 Net transfers 54,376,368 255,867,822 (5,655,972) Surrenders for benefit payments and fees (70,375,785) (172,861,101) (17,042,167) Net annuity transactions 102,483 869,172 63,991 ---------------- ---------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 200,100,394 558,241,100 219,954 ---------------- ---------------- -------------- Net increase (decrease) in net assets 149,947,205 589,278,926 10,090,458 NET ASSETS: Beginning of year 879,503,359 2,054,626,255 212,265,727 ---------------- ---------------- -------------- End of year $1,029,450,564 $2,643,905,181 $222,356,185 ================ ================ ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-42 -------------------------------------------------------------------------------
FRANKLIN GLOBAL FRANKLIN SMALL- FRANKLIN SMALL FRANKLIN REAL ESTATE MID CAP GROWTH CAP VALUE STRATEGIC INCOME SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT (B) SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $202,105 $(7,286,452) $(823) $22,513,586 Net realized gain (loss) on security transactions 2,199,326 9,378,068 26 642,873 Net realized gain on distributions 2,142,787 28,535,333 -- 1,908,014 Net unrealized appreciation (depreciation) of investments during the year (11,586,300) 2,360,921 958 2,401,769 -------------- -------------- ---------- -------------- Net increase (decrease) in net assets resulting from operations (7,042,082) 32,987,870 161 27,466,242 -------------- -------------- ---------- -------------- UNIT TRANSACTIONS: Purchases 84,291 37,371,231 472,247 75,682,169 Net transfers (3,367,490) (7,161,531) 248,949 82,194,669 Surrenders for benefit payments and fees (4,471,202) (40,855,706) (1,371) (63,236,779) Net annuity transactions 7,911 28,953 -- 70,534 -------------- -------------- ---------- -------------- Net increase (decrease) in net assets resulting from unit transactions (7,746,490) (10,617,053) 719,825 94,710,593 -------------- -------------- ---------- -------------- Net increase (decrease) in net assets (14,788,572) 22,370,817 719,986 122,176,835 NET ASSETS: Beginning of year 36,663,813 370,821,404 -- 601,673,026 -------------- -------------- ---------- -------------- End of year $21,875,241 $393,192,221 $719,986 $723,849,861 ============== ============== ========== ============== TEMPLETON TEMPLETON MUTUAL SHARES DEVELOPING MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(7,527,218) $1,543,515 $827,760 Net realized gain (loss) on security transactions 17,589,365 4,401,546 12,014,316 Net realized gain on distributions 67,919,883 18,519,845 33,669,939 Net unrealized appreciation (depreciation) of investments during the year (56,002,504) 33,364,764 45,516,798 ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 21,979,526 57,829,670 92,028,813 ---------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 262,861,722 27,959,406 60,544,586 Net transfers 106,686,735 12,662,544 (24,488,524) Surrenders for benefit payments and fees (160,088,605) (20,744,347) (61,039,461) Net annuity transactions 124,249 27,757 101,104 ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 209,584,101 19,905,360 (24,882,295) ---------------- -------------- -------------- Net increase (decrease) in net assets 231,563,627 77,735,030 67,146,518 NET ASSETS: Beginning of year 1,747,201,185 221,547,750 699,398,684 ---------------- -------------- -------------- End of year $1,978,764,812 $299,282,780 $766,545,202 ================ ============== ==============
(a) From inception, November 12, 2007 to December 31, 2007. (b) Formerly Franklin Real Estate Fund. Change effective May 1, 2007. SA-43 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON GLOBAL ASSET GROWTH MUTUAL DISCOVERY ALLOCATION FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,453,814 $(5,704,508) $(2,264,387) Net realized gain (loss) on security transactions 177,350 4,962,253 737,797 Net realized gain on distributions 3,522,136 46,236,071 7,835,462 Net unrealized appreciation (depreciation) of investments during the year (4,923,068) (44,152,963) 48,800,901 ------------- ---------------- -------------- Net increase (decrease) in net assets resulting from operations 1,230,232 1,340,853 55,109,773 ------------- ---------------- -------------- UNIT TRANSACTIONS: Purchases 88,805 166,210,370 137,229,001 Net transfers (214,769) 49,525,301 96,022,257 Surrenders for benefit payments and fees (2,454,190) (75,620,030) (38,136,660) Net annuity transactions (266) 45,851 273,653 ------------- ---------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (2,580,420) 140,161,492 195,388,251 ------------- ---------------- -------------- Net increase (decrease) in net assets (1,350,188) 141,502,345 250,498,024 NET ASSETS: Beginning of year 15,582,220 988,172,501 513,310,107 ------------- ---------------- -------------- End of year $14,232,032 $1,129,674,846 $763,808,131 ============= ================ ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-44 -------------------------------------------------------------------------------
FRANKLIN FLEX FRANKLIN LARGE HARTFORD CAP GROWTH CAP VALUE MONEY MARKET MFS CORE SECURITIES FUND SECURITIES FUND HLS FUND EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (C) ---------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(812,520) $35,127 $15,054,768 $(631,892) Net realized gain (loss) on security transactions 316,804 1,113 -- (453,515) Net realized gain on distributions -- 13,741 -- -- Net unrealized appreciation (depreciation) of investments during the year 5,360,690 (758,521) -- 5,526,472 ------------- ------------- --------------- -------------- Net increase (decrease) in net assets resulting from operations 4,864,974 (708,540) 15,054,768 4,441,065 ------------- ------------- --------------- -------------- UNIT TRANSACTIONS: Purchases 11,226,134 9,042,361 141,940,510 361,288 Net transfers 12,526,736 4,056,747 453,038,257 (3,752,372) Surrenders for benefit payments and fees (2,479,884) (1,576,892) (341,311,221) (7,612,370) Net annuity transactions 3,020 -- (71,010) (1,810) ------------- ------------- --------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 21,276,006 11,522,216 253,596,536 (11,005,264) ------------- ------------- --------------- -------------- Net increase (decrease) in net assets 26,140,980 10,813,676 268,651,304 (6,564,199) NET ASSETS: Beginning of year 34,505,029 17,918,396 376,463,558 50,043,293 ------------- ------------- --------------- -------------- End of year $60,646,009 $28,732,072 $645,114,862 $43,479,094 ============= ============= =============== ============== MFS EMERGING MFS GLOBAL MFS HIGH GROWTH SERIES EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,026,042) $67,500 $11,869,349 Net realized gain (loss) on security transactions (1,125,030) 532,451 648,484 Net realized gain on distributions -- 2,542,995 -- Net unrealized appreciation (depreciation) of investments during the year 11,854,253 (453,093) (12,758,435) ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 9,703,181 2,689,853 (240,602) ------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 4,048,348 4,066,652 14,425,372 Net transfers 8,847,617 (1,219,797) (12,467,810) Surrenders for benefit payments and fees (6,991,720) (4,064,109) (25,704,583) Net annuity transactions (1,868) (7,043) 25,269 ------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 5,902,377 (1,224,297) (23,721,752) ------------- ------------- -------------- Net increase (decrease) in net assets 15,605,558 1,465,556 (23,962,354) NET ASSETS: Beginning of year 54,652,369 38,342,012 228,616,668 ------------- ------------- -------------- End of year $70,257,927 $39,807,568 $204,654,314 ============= ============= ==============
(c) Formerly MFS Capital Opportunities Series. Change effective May 1, 2007. SA-45 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
MFS INVESTORS GROWTH STOCK MFS INVESTORS MFS MID CAP SERIES TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,422,945) $(5,145,067) $(2,467,099) Net realized gain (loss) on security transactions 2,446,119 3,628,323 5,314,659 Net realized gain on distributions -- 3,980,082 5,912,068 Net unrealized appreciation (depreciation) of investments during the year 8,190,650 35,658,612 2,875,988 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 9,213,824 38,121,950 11,635,616 -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 1,918,805 65,525,263 8,099,718 Net transfers (6,358,890) 17,118,547 (11,883,353) Surrenders for benefit payments and fees (14,011,829) (40,772,773) (17,524,344) Net annuity transactions 33,852 72,941 63,972 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (18,418,062) 41,943,978 (21,244,007) -------------- -------------- -------------- Net increase (decrease) in net assets (9,204,238) 80,065,928 (9,608,391) NET ASSETS: Beginning of year 105,422,841 444,815,796 142,376,860 -------------- -------------- -------------- End of year $96,218,603 $524,881,724 $132,768,469 ============== ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-46 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL MFS VALUE MFS RESEARCH DISCOVERY SERIES RETURN SERIES SERIES BOND SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(6,211,869) $10,553,708 $(2,104,009) $447,364 Net realized gain (loss) on security transactions 3,393,656 9,822,519 395,831 31,947 Net realized gain on distributions 23,026,480 35,922,871 3,421,567 -- Net unrealized appreciation (depreciation) of investments during the year (19,049,833) (24,341,825) 9,416,766 1,135,122 ------------- --------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations 1,158,434 31,957,273 11,130,155 1,614,433 ------------- --------------- ------------- ------------ UNIT TRANSACTIONS: Purchases 39,844,238 175,494,958 55,721,816 22,609,883 Net transfers (15,027,646) 59,725,255 47,069,209 33,670,778 Surrenders for benefit payments and fees (28,444,007) (139,660,661) (15,488,544) (3,532,613) Net annuity transactions 81,049 338,503 8,825 (42,357) ------------- --------------- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (3,546,366) 95,898,055 87,311,306 52,705,691 ------------- --------------- ------------- ------------ Net increase (decrease) in net assets (2,387,932) 127,855,328 98,441,461 54,320,124 NET ASSETS: Beginning of year 317,208,173 1,410,255,830 176,543,191 35,307,098 ------------- --------------- ------------- ------------ End of year $314,820,241 $1,538,111,158 $274,984,652 $89,627,222 ============= =============== ============= ============ MFS RESEARCH INTERNATIONAL MFS RESEARCH BLACKROCK GLOBAL SERIES SERIES GROWTH V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(598,620) $(287,042) $(10,270) Net realized gain (loss) on security transactions 38,899 332,758 345,595 Net realized gain on distributions 262,232 -- -- Net unrealized appreciation (depreciation) of investments during the year 3,141,585 2,555,722 67,617 ------------ ------------ ----------- Net increase (decrease) in net assets resulting from operations 2,844,096 2,601,438 402,942 ------------ ------------ ----------- UNIT TRANSACTIONS: Purchases 17,758,435 8,435,384 308 Net transfers 17,152,859 18,379,042 254,129 Surrenders for benefit payments and fees (1,649,867) (780,751) (542,424) Net annuity transactions -- -- -- ------------ ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions 33,261,427 26,033,675 (287,987) ------------ ------------ ----------- Net increase (decrease) in net assets 36,105,523 28,635,113 114,955 NET ASSETS: Beginning of year 22,941,488 14,131,667 1,427,307 ------------ ------------ ----------- End of year $59,047,011 $42,766,780 $1,542,262 ============ ============ ===========
SA-47 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
BLACKROCK LARGE CAP GROWTH INTERNATIONAL U.S. MID V.I. FUND GROWTH EQUITY CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(38,704) $(7,464) $(24,914) Net realized gain (loss) on security transactions 267,421 (1,856) (2,604) Net realized gain on distributions -- 16,140 216,752 Net unrealized appreciation (depreciation) of investments during the year (74,886) 46,742 (163,965) ------------ ---------- ------------ Net increase (decrease) in net assets resulting from operations 153,831 53,562 25,269 ------------ ---------- ------------ UNIT TRANSACTIONS: Purchases 4,058 408,831 2,073,046 Net transfers (45,714) 229,708 505,661 Surrenders for benefit payments and fees (552,064) (1,742) (74,178) Net annuity transactions -- -- -- ------------ ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions (593,720) 636,797 2,504,529 ------------ ---------- ------------ Net increase (decrease) in net assets (439,889) 690,359 2,529,798 NET ASSETS: Beginning of year 2,597,991 89,588 737,637 ------------ ---------- ------------ End of year $2,158,102 $779,947 $3,267,435 ============ ========== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-48 -------------------------------------------------------------------------------
CAPITAL DEVELOPING FOCUS GROWTH OPPORTUNITIES GROWTH FLEXIBLE INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(6,268) $(41,156) $(5,732) $32,094 Net realized gain (loss) on security transactions 697 7,939 (689) 12 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 72,561 402,587 58,421 (18,703) ---------- ------------ ---------- ---------- Net increase (decrease) in net assets resulting from operations 66,990 369,370 52,000 13,403 ---------- ------------ ---------- ---------- UNIT TRANSACTIONS: Purchases 432,537 1,753,734 457,885 139,742 Net transfers 152,852 371,417 13,259 260,560 Surrenders for benefit payments and fees (3,933) (36,413) (24,487) (5,311) Net annuity transactions -- -- -- -- ---------- ------------ ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 581,456 2,088,738 446,657 394,991 ---------- ------------ ---------- ---------- Net increase (decrease) in net assets 648,446 2,458,108 498,657 408,394 NET ASSETS: Beginning of year 162,376 1,140,902 153,002 476,509 ---------- ------------ ---------- ---------- End of year $810,822 $3,599,010 $651,659 $884,903 ========== ============ ========== ========== JENNISON 20/20 DIVIDEND GROWTH GLOBAL EQUITY FOCUS PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(3,307) $(6,875) $(10,837) Net realized gain (loss) on security transactions (4,051) (4,371) 19,099 Net realized gain on distributions -- 63,354 58,596 Net unrealized appreciation (depreciation) of investments during the year 9,414 (4,614) (17,104) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 2,056 47,494 49,754 ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases 195,275 380,107 30,644 Net transfers (75,400) (43,742) (46,288) Surrenders for benefit payments and fees (26,064) (6,507) (47,317) Net annuity transactions -- -- -- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 93,811 329,858 (62,961) ---------- ---------- ---------- Net increase (decrease) in net assets 95,867 377,352 (13,207) NET ASSETS: Beginning of year 346,653 227,069 643,784 ---------- ---------- ---------- End of year $442,520 $604,421 $630,577 ========== ========== ==========
SA-49 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
PRUDENTIAL SERIES JENNISON PRUDENTIAL INTERNATIONAL PORTFOLIO VALUE PORTFOLIO GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (D)(E) ---------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(3,078) $(3,871) $(25) Net realized gain (loss) on security transactions 43,675 14,998 1,245 Net realized gain on distributions -- 49,119 -- Net unrealized appreciation (depreciation) of investments during the year (26,645) (53,235) (1,395) ---------- ---------- -------- Net increase (decrease) in net assets resulting from operations 13,952 7,011 (175) ---------- ---------- -------- UNIT TRANSACTIONS: Purchases -- 5 -- Net transfers 907 (33,634) (8,026) Surrenders for benefit payments and fees (25,483) (21,941) -- Net annuity transactions -- -- -- ---------- ---------- -------- Net increase (decrease) in net assets resulting from unit transactions (24,576) (55,570) (8,026) ---------- ---------- -------- Net increase (decrease) in net assets (10,624) (48,559) (8,201) NET ASSETS: Beginning of year 163,626 464,897 8,201 ---------- ---------- -------- End of year $153,002 $416,338 $ -- ========== ========== ========
(d) Formerly SP William Blair International Growth Portfolio. Change effective January 31, 2007. (e) Sub-Account option not funded at December 31, 2007. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-50 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT GROWTH AND ASSET ALLOCATION TOTAL RETURN INCOME COMSTOCK FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(65,557) $(16,388) $5,893 $175,921 Net realized gain (loss) on security transactions (9,830) (7,860) 4,253 (9,522) Net realized gain on distributions 219,984 56,068 32,387 -- Net unrealized appreciation (depreciation) of investments during the year (253,414) (263,277) 67,148 116,118 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations (108,817) (231,457) 109,681 282,517 ------------ ----------- ----------- ----------- UNIT TRANSACTIONS: Purchases 4,699,898 1,928,314 9,292 256,071 Net transfers 3,250,227 859,191 172,160 1,464,412 Surrenders for benefit payments and fees (217,213) (96,939) (64,666) (475,628) Net annuity transactions -- -- -- -- ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from unit transactions 7,732,912 2,690,566 116,786 1,244,855 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets 7,624,095 2,459,109 226,467 1,527,372 NET ASSETS: Beginning of year 4,133,809 1,538,396 1,918,608 5,958,430 ------------ ----------- ----------- ----------- End of year $11,757,904 $3,997,505 $2,145,075 $7,485,802 ============ =========== =========== =========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT EQUITY INCOME C&B LARGE CAP LARGE COMPANY FUND VALUE FUND CORE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- OPERATIONS: Net investment income (loss) $(11,236) $(12,172) $(4,196) Net realized gain (loss) on security transactions 12,992 38,463 583 Net realized gain on distributions 227,559 -- -- Net unrealized appreciation (depreciation) of investments during the year (207,589) (67,769) (2,433) ----------- ----------- --------- Net increase (decrease) in net assets resulting from operations 21,726 (41,478) (6,046) ----------- ----------- --------- UNIT TRANSACTIONS: Purchases 217,785 344,134 2,535 Net transfers 258,322 128,085 174,965 Surrenders for benefit payments and fees (242,068) (131,008) (4,561) Net annuity transactions -- -- -- ----------- ----------- --------- Net increase (decrease) in net assets resulting from unit transactions 234,039 341,211 172,939 ----------- ----------- --------- Net increase (decrease) in net assets 255,765 299,733 166,893 NET ASSETS: Beginning of year 3,055,560 964,975 169,869 ----------- ----------- --------- End of year $3,311,325 $1,264,708 $336,762 =========== =========== =========
SA-51 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTERNATIONAL CORE LARGE COMPANY FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(56,866) $(75,074) Net realized gain (loss) on security transactions 24,619 60,504 Net realized gain on distributions 226,770 -- Net unrealized appreciation (depreciation) of investments during the year 109,050 221,642 ------------ ------------ Net increase (decrease) in net assets resulting from operations 303,573 207,072 ------------ ------------ UNIT TRANSACTIONS: Purchases 201,923 119,680 Net transfers 43,189 29,766 Surrenders for benefit payments and fees (194,874) (247,048) Net annuity transactions -- -- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 50,238 (97,602) ------------ ------------ Net increase (decrease) in net assets 353,811 109,470 NET ASSETS: Beginning of year 2,753,902 3,593,093 ------------ ------------ End of year $3,107,713 $3,702,563 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-52 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT WELLS FARGO MONEY MARKET SMALL CAP ADVANTAGE VT FUND GROWTH FUND DISCOVERY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $67,560 $(62,469) $(10,860) Net realized gain (loss) on security transactions -- 32,132 1,712 Net realized gain on distributions -- 515,879 -- Net unrealized appreciation (depreciation) of investments during the year 465 (151,782) 105,240 ------------ ------------ ---------- Net increase (decrease) in net assets resulting from operations 68,025 333,760 96,092 ------------ ------------ ---------- UNIT TRANSACTIONS: Purchases 1,036,004 467,204 87,802 Net transfers 1,263,145 75,635 216,318 Surrenders for benefit payments and fees (120,104) (220,514) (13,824) Net annuity transactions -- -- -- ------------ ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions 2,179,045 322,325 290,296 ------------ ------------ ---------- Net increase (decrease) in net assets 2,247,070 656,085 386,388 NET ASSETS: Beginning of year 1,063,083 2,852,351 421,565 ------------ ------------ ---------- End of year $3,310,153 $3,508,436 $807,953 ============ ============ ========== WELLS FARGO ADVANTAGE VT WELLS FARGO SMALL/MID CAP ADVANTAGE VT VALUE FUND OPPORTUNITY FUND SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------- OPERATIONS: Net investment income (loss) $(15,696) $(513) Net realized gain (loss) on security transactions 4,159 60 Net realized gain on distributions 141,462 6,708 Net unrealized appreciation (depreciation) of investments during the year (150,863) (4,229) ----------- --------- Net increase (decrease) in net assets resulting from operations (20,938) 2,026 ----------- --------- UNIT TRANSACTIONS: Purchases 86,847 17,881 Net transfers (78,206) 6,672 Surrenders for benefit payments and fees (12,808) (315) Net annuity transactions -- -- ----------- --------- Net increase (decrease) in net assets resulting from unit transactions (4,167) 24,238 ----------- --------- Net increase (decrease) in net assets (25,105) 26,264 NET ASSETS: Beginning of year 901,887 28,082 ----------- --------- End of year $876,782 $54,346 =========== =========
SA-53 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
AIM V.I. CAPITAL AIM V.I. BASIC APPRECIATION AIM V.I. CORE VALUE FUND FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT (A)(B) SUB-ACCOUNT (C) ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(4,132,394) $(2,233,647) $(1,092,558) Net realized gain (loss) on security transactions 8,811,725 18,669,947 46,451,982 Net realized gain on distributions 11,554,497 3,457,086 -- Net unrealized appreciation (depreciation) of investments during the year 12,221,275 (13,382,531) (3,146,279) -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 28,455,103 6,510,855 42,213,145 -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 18,468,044 9,006,413 36,564,893 Net transfers (21,293,684) (3,804,817) (11,299,509) Surrenders for benefit payments and fees (30,433,366) (15,030,180) (25,021,770) Net annuity transactions 2,246 (5,139) 49,518 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (33,256,760) (9,833,723) 293,132 -------------- -------------- -------------- Net increase (decrease) in net assets (4,801,657) (3,322,868) 42,506,277 NET ASSETS: Beginning of year 280,247,517 120,682,937 320,061,210 -------------- -------------- -------------- End of year $275,445,860 $117,360,069 $362,567,487 ============== ============== ==============
(a) Effective April 28, 2006, AIM V.I. Aggressive Growth merged with AIM V.I. Capital Appreciation Fund. (b) Effective November 6, 2006 AIM V.I. Demographic Trends Fund merged with AIM V.I. Capital Appreciation Fund. (c) Effective April 28, 2006, AIM V.I. Premier Equity Fund and AIM V.I. Core Stock Fund merged with AIM V.I. Core Equity Fund. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-54 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. MID CAP AIM V.I. SMALL GOVERNMENT INTERNATIONAL CORE EQUITY CAP EQUITY SECURITIES FUND GROWTH FUND FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $13,240,166 $(511,130) $(3,634,652) $(953,898) Net realized gain (loss) on security transactions (147,783) 498,940 5,020,245 138,023 Net realized gain on distributions -- -- 37,090,646 2,729,630 Net unrealized appreciation (depreciation) of investments during the year (3,683,613) 17,211,863 (6,021,746) 3,906,465 -------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 9,408,770 17,199,673 32,454,493 5,820,220 -------------- -------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 130,724,882 21,025,660 29,452,877 15,296,372 Net transfers 10,475,452 12,276,013 (26,355,604) 22,882,032 Surrenders for benefit payments and fees (49,999,199) (6,678,319) (39,204,610) (3,635,951) Net annuity transactions 71,559 7,378 (8,301) (2,299) -------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 91,272,694 26,630,732 (36,115,638) 34,540,154 -------------- -------------- -------------- ------------- Net increase (decrease) in net assets 100,681,464 43,830,405 (3,661,145) 40,360,374 NET ASSETS: Beginning of year 500,703,518 58,520,315 380,163,081 30,468,141 -------------- -------------- -------------- ------------- End of year $601,384,982 $102,350,720 $376,501,936 $70,828,515 ============== ============== ============== ============= AMERICAN AIM V.I. AMERICAN FUNDS GLOBAL LARGE CAP FUNDS GLOBAL GROWTH AND GROWTH FUND BOND FUND INCOME FUND SUB-ACCOUNT (D) SUB-ACCOUNT (E) SUB-ACCOUNT (E) ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(805,173) $26,777 $(68,686) Net realized gain (loss) on security transactions 7,207,302 417 13,431 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year (3,026,882) (34,000) 17,746,266 ------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations 3,375,247 (6,806) 17,691,011 ------------- ------------ -------------- UNIT TRANSACTIONS: Purchases 7,177,258 1,445,558 80,738,073 Net transfers (5,949,496) 6,656,214 113,452,886 Surrenders for benefit payments and fees (6,486,066) (60,304) (2,383,008) Net annuity transactions 7,650 -- 14,548 ------------- ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions (5,250,654) 8,041,468 191,822,499 ------------- ------------ -------------- Net increase (decrease) in net assets (1,875,407) 8,034,662 209,513,510 NET ASSETS: Beginning of year 53,538,951 -- -- ------------- ------------ -------------- End of year $51,663,544 $8,034,662 $209,513,510 ============= ============ ==============
(d) Effective June 12, 2006, AIM V.I. Blue Chip Fund merged with AIM V.I. Large Cap Growth Fund. (e) From inception, November 6, 2006 to December 31, 2006. SA-55 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS BLUE CHIP ASSET ALLOCATION INCOME AND AMERICAN FUNDS FUND GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $8,868,180 $(8,040,869) $21,645,331 Net realized gain (loss) on security transactions 13,437,688 21,790,661 1,136,137 Net realized gain on distributions 22,840,439 67,075,912 -- Net unrealized appreciation (depreciation) of investments during the year 163,522,405 104,308,570 29,599,848 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 208,668,712 185,134,274 52,381,316 ---------------- ---------------- ---------------- UNIT TRANSACTIONS: Purchases 147,631,462 102,616,695 92,716,522 Net transfers 71,103,923 6,816,189 64,336,947 Surrenders for benefit payments and fees (161,850,223) (139,966,849) (108,915,234) Net annuity transactions 67,211 40,369 (63,071) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 56,952,373 (30,493,596) 48,075,164 ---------------- ---------------- ---------------- Net increase (decrease) in net assets 265,621,085 154,640,678 100,456,480 NET ASSETS: Beginning of year 1,619,304,349 1,231,132,027 998,847,202 ---------------- ---------------- ---------------- End of year $1,884,925,434 $1,385,772,705 $1,099,303,682 ================ ================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-56 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS GROWTH-INCOME INTERNATIONAL FUND GROWTH FUND FUND FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(5,594,078) $(37,604,496) $(7,009,345) $(706,331) Net realized gain (loss) on security transactions 12,207,672 68,863,741 41,757,990 11,039,499 Net realized gain on distributions -- 23,262,480 93,169,693 8,938,448 Net unrealized appreciation (depreciation) of investments during the year 101,917,827 245,388,233 366,448,781 135,649,909 --------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 108,531,421 299,909,958 494,367,119 154,921,525 --------------- ---------------- ---------------- ---------------- UNIT TRANSACTIONS: Purchases 73,517,204 492,605,516 458,151,203 151,555,381 Net transfers 33,512,521 37,859,047 38,442,907 53,512,995 Surrenders for benefit payments and fees (61,728,295) (356,775,732) (361,885,629) (77,565,004) Net annuity transactions 42,537 150,060 157,448 59,913 --------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 45,343,967 173,838,891 134,865,929 127,563,285 --------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets 153,875,388 473,748,849 629,233,048 282,484,810 NET ASSETS: Beginning of year 565,545,687 3,557,833,649 3,685,081,550 854,887,131 --------------- ---------------- ---------------- ---------------- End of year $719,421,075 $4,031,582,498 $4,314,314,598 $1,137,371,941 =============== ================ ================ ================ AMERICAN FUNDS GLOBAL SMALL FRANKLIN RISING AMERICAN FUNDS CAPITALIZATION DIVIDENDS NEW WORLD FUND FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(880,199) $(6,321,465) $(5,628,756) Net realized gain (loss) on security transactions (201,446) 4,032,870 565,416 Net realized gain on distributions 2,181,952 23,202,103 3,383,531 Net unrealized appreciation (depreciation) of investments during the year 73,771,120 65,886,376 97,586,438 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations 74,871,427 86,799,884 95,906,629 ---------------- ---------------- ---------------- UNIT TRANSACTIONS: Purchases 56,007,043 64,590,023 178,524,200 Net transfers 30,879,361 12,682,244 100,187,272 Surrenders for benefit payments and fees (22,071,338) (36,371,908) (38,101,970) Net annuity transactions 8,908 (32,447) 62,352 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 64,823,974 40,867,912 240,671,854 ---------------- ---------------- ---------------- Net increase (decrease) in net assets 139,695,401 127,667,796 336,578,483 NET ASSETS: Beginning of year 224,410,023 385,542,876 542,924,876 ---------------- ---------------- ---------------- End of year $364,105,424 $513,210,672 $879,503,359 ================ ================ ================
SA-57 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
FRANKLIN LARGE FRANKLIN INCOME CAP GROWTH FRANKLIN REAL SECURITIES FUND SECURITIES FUND ESTATE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $27,358,056 $(2,131,733) $147,395 Net realized gain (loss) on security transactions 2,783,545 239,931 2,615,285 Net realized gain on distributions 7,841,096 -- 2,872,463 Net unrealized appreciation (depreciation) of investments during the year 215,888,560 18,341,329 498,843 ---------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 253,871,257 16,449,527 6,133,986 ---------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 365,077,760 35,440,866 150,530 Net transfers 168,338,395 12,513,079 (4,674,590) Surrenders for benefit payments and fees (117,118,338) (11,389,101) (3,979,944) Net annuity transactions 547,027 17,571 (15,401) ---------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 416,844,844 36,582,415 (8,519,405) ---------------- -------------- ------------- Net increase (decrease) in net assets 670,716,101 53,031,942 (2,385,419) NET ASSETS: Beginning of year 1,383,910,154 159,233,785 39,049,232 ---------------- -------------- ------------- End of year $2,054,626,255 $212,265,727 $36,663,813 ================ ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-58 -------------------------------------------------------------------------------
FRANKLIN SMALL- FRANKLIN FRANKLIN FLEX FRANKLIN LARGE MID CAP GROWTH STRATEGIC INCOME CAP GROWTH CAP VALUE SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(6,762,490) $16,469,851 $(517,498) $17,605 Net realized gain (loss) on security transactions 7,611,144 609,722 262,486 89,635 Net realized gain on distributions -- 3,483,280 -- 29,283 Net unrealized appreciation (depreciation) of investments during the year 22,189,789 14,360,716 1,246,859 1,601,055 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 23,038,443 34,923,569 991,847 1,737,578 -------------- -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 34,872,025 68,615,655 13,013,886 6,085,837 Net transfers (117,504) 53,473,158 6,169,423 5,399,536 Surrenders for benefit payments and fees (33,988,285) (50,666,630) (1,082,168) (712,988) Net annuity transactions 9,679 45,209 -- -- -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 775,915 71,467,392 18,101,141 10,772,385 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets 23,814,358 106,390,961 19,092,988 12,509,963 NET ASSETS: Beginning of year 347,007,046 495,282,065 15,412,041 5,408,433 -------------- -------------- ------------- ------------- End of year $370,821,404 $601,673,026 $34,505,029 $17,918,396 ============== ============== ============= ============= TEMPLETON TEMPLETON MUTUAL SHARES DEVELOPING MARKETS FOREIGN SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(8,503,770) $(1,197,339) $(4,035,936) Net realized gain (loss) on security transactions 10,769,769 (432,957) 4,177,298 Net realized gain on distributions 49,104,338 -- -- Net unrealized appreciation (depreciation) of investments during the year 178,005,723 43,003,730 107,021,939 ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 229,376,060 41,373,434 107,163,301 ---------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 216,144,303 31,415,861 94,100,976 Net transfers 113,622,877 11,149,729 15,261,599 Surrenders for benefit payments and fees (125,438,875) (15,069,234) (40,807,501) Net annuity transactions 48,155 (9,407) 57,998 ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 204,376,460 27,486,949 68,613,072 ---------------- -------------- -------------- Net increase (decrease) in net assets 433,752,520 68,860,383 175,776,373 NET ASSETS: Beginning of year 1,313,448,665 152,687,367 523,622,311 ---------------- -------------- -------------- End of year $1,747,201,185 $221,547,750 $699,398,684 ================ ============== ==============
SA-59 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
TEMPLETON TEMPLETON GLOBAL ASSET GROWTH MUTUAL DISCOVERY ALLOCATION FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $825,954 $(4,679,872) $(3,174,408) Net realized gain (loss) on security transactions 255,968 2,878,515 181,363 Net realized gain on distributions 941,190 29,642,538 13,963,559 Net unrealized appreciation (depreciation) of investments during the year 596,987 121,008,941 62,966,231 ------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 2,620,099 148,850,122 73,936,745 ------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 94,816 154,157,425 96,528,741 Net transfers (91,349) 62,964,824 90,405,182 Surrenders for benefit payments and fees (1,426,611) (52,999,420) (20,963,348) Net annuity transactions (265) (16,476) 32,298 ------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (1,423,409) 164,106,353 166,002,873 ------------- -------------- -------------- Net increase (decrease) in net assets 1,196,690 312,956,475 239,939,618 NET ASSETS: Beginning of year 14,385,530 675,216,026 273,370,489 ------------- -------------- -------------- End of year $15,582,220 $988,172,501 $513,310,107 ============= ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-60 -------------------------------------------------------------------------------
HARTFORD MFS CAPITAL MONEY MARKET OPPORTUNITIES MFS EMERGING MFS GLOBAL HLS FUND SERIES GROWTH SERIES EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $9,734,527 $(619,292) $(956,225) $(427,039) Net realized gain (loss) on security transactions -- (1,434,702) (2,582,028) 335,700 Net realized gain on distributions -- -- -- 2,169,421 Net unrealized appreciation (depreciation) of investments during the year -- 7,694,931 6,516,484 4,199,178 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 9,734,527 5,640,937 2,978,231 6,277,260 --------------- -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 109,494,209 550,814 3,844,895 3,493,698 Net transfers 206,961,614 (5,050,057) (3,281,456) 7,342,988 Surrenders for benefit payments and fees (217,395,957) (6,008,450) (5,534,826) (3,310,997) Net annuity transactions 175,094 (1,721) (1,681) (6,245) --------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 99,234,960 (10,509,414) (4,973,068) 7,519,444 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets 108,969,487 (4,868,477) (1,994,837) 13,796,704 NET ASSETS: Beginning of year 267,494,071 54,911,770 56,647,206 24,545,308 --------------- -------------- ------------- ------------- End of year $376,463,558 $50,043,293 $54,652,369 $38,342,012 =============== ============== ============= ============= MFS INVESTORS MFS HIGH GROWTH STOCK MFS INVESTORS INCOME SERIES SERIES TRUST SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- OPERATIONS: Net investment income (loss) $13,431,193 $(1,924,249) $(5,417,400) Net realized gain (loss) on security transactions 440,762 32,138 1,749,491 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,896,217 7,797,206 45,158,834 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 17,768,172 5,905,095 41,490,925 -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 13,051,847 3,043,979 71,081,541 Net transfers (4,867,689) (7,392,294) 18,625,169 Surrenders for benefit payments and fees (26,659,327) (12,867,332) (29,783,710) Net annuity transactions (18,331) (28,526) 68,243 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (18,493,500) (17,244,173) 59,991,243 -------------- -------------- -------------- Net increase (decrease) in net assets (725,328) (11,339,078) 101,482,168 NET ASSETS: Beginning of year 229,341,996 116,761,919 343,333,628 -------------- -------------- -------------- End of year $228,616,668 $105,422,841 $444,815,796 ============== ============== ==============
SA-61 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
MFS MID CAP MFS NEW MFS TOTAL GROWTH SERIES DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,845,246) $(4,778,360) $6,157,751 Net realized gain (loss) on security transactions 3,038,637 1,401,561 5,446,945 Net realized gain on distributions 5,214,620 4,134,777 39,890,892 Net unrealized appreciation (depreciation) of investments during the year (4,689,850) 28,311,686 73,133,469 -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from operations 718,161 29,069,664 124,629,057 -------------- -------------- ---------------- UNIT TRANSACTIONS: Purchases 8,279,601 63,339,662 177,410,185 Net transfers (14,686,419) 30,722,958 9,166,148 Surrenders for benefit payments and fees (15,759,129) (19,407,198) (118,257,459) Net annuity transactions (675) (15,210) (21,308) -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (22,166,622) 74,640,212 68,297,566 -------------- -------------- ---------------- Net increase (decrease) in net assets (21,448,461) 103,709,876 192,926,623 NET ASSETS: Beginning of year 163,825,321 213,498,297 1,217,329,207 -------------- -------------- ---------------- End of year $142,376,860 $317,208,173 $1,410,255,830 ============== ============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-62 -------------------------------------------------------------------------------
MFS RESEARCH MFS VALUE MFS RESEARCH INTERNATIONAL MFS RESEARCH SERIES BOND SERIES SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,118,050) $140,085 $(43,431) $(93,264) Net realized gain (loss) on security transactions 161,763 16,894 (51,072) 156,779 Net realized gain on distributions 2,996,193 56,735 402,777 -- Net unrealized appreciation (depreciation) of investments during the year 19,592,873 534,254 2,052,221 723,609 -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 21,632,779 747,968 2,360,495 787,124 -------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 36,374,214 14,260,594 5,686,884 3,858,696 Net transfers 39,937,262 12,897,729 11,944,557 7,511,216 Surrenders for benefit payments and fees (7,678,419) (1,613,727) (817,304) (383,654) Net annuity transactions (3,858) (40,825) -- -- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 68,629,199 25,503,771 16,814,137 10,986,258 -------------- ------------- ------------- ------------- Net increase (decrease) in net assets 90,261,978 26,251,739 19,174,632 11,773,382 NET ASSETS: Beginning of year 86,281,213 9,055,359 3,766,856 2,358,285 -------------- ------------- ------------- ------------- End of year $176,543,191 $35,307,098 $22,941,488 $14,131,667 ============== ============= ============= ============= BLACKROCK BLACKROCK GLOBAL LARGE CAP GROWTH INTERNATIONAL GROWTH V.I. FUND V.I. FUND GROWTH EQUITY SUB-ACCOUNT (F) SUB-ACCOUNT (G) SUB-ACCOUNT (H) ----------------------------- ------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(14,068) $(42,059) $(317) Net realized gain (loss) on security transactions 62,405 143,117 9 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 201,313 36,028 7,698 ----------- ------------ --------- Net increase (decrease) in net assets resulting from operations 249,650 137,086 7,390 ----------- ------------ --------- UNIT TRANSACTIONS: Purchases 3,172 17,253 59,438 Net transfers 6,214 (182,797) 22,792 Surrenders for benefit payments and fees (133,573) (175,686) (32) Net annuity transactions -- -- -- ----------- ------------ --------- Net increase (decrease) in net assets resulting from unit transactions (124,187) (341,230) 82,198 ----------- ------------ --------- Net increase (decrease) in net assets 125,463 (204,144) 89,588 NET ASSETS: Beginning of year 1,301,844 2,802,135 -- ----------- ------------ --------- End of year $1,427,307 $2,597,991 $89,588 =========== ============ =========
(f) Formerly Mercury Global Growth V.I. Fund. Change effective October 2, 2006 (g) Formerly Mercury Large Cap Growth V.I. Fund. Change effective October 2, 2006 (h) From inception, August 14, 2006 to December 31, 2006. SA-63 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
U.S. MID CAPITAL CAP VALUE FOCUS GROWTH OPPORTUNITIES SUB-ACCOUNT (H) SUB-ACCOUNT (H) SUB-ACCOUNT (H) -------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,678) $(555) $(3,630) Net realized gain (loss) on security transactions 17 232 99 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 52,559 6,983 38,424 ---------- ---------- ------------ Net increase (decrease) in net assets resulting from operations 49,898 6,660 34,893 ---------- ---------- ------------ UNIT TRANSACTIONS: Purchases 561,442 155,939 960,494 Net transfers 126,740 -- 147,997 Surrenders for benefit payments and fees (443) (223) (2,482) Net annuity transactions -- -- -- ---------- ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions 687,739 155,716 1,106,009 ---------- ---------- ------------ Net increase (decrease) in net assets 737,637 162,376 1,140,902 NET ASSETS: Beginning of year -- -- -- ---------- ---------- ------------ End of year $737,637 $162,376 $1,140,902 ========== ========== ============
(h) From inception, August 14, 2006 to December 31, 2006. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-64 -------------------------------------------------------------------------------
DEVELOPING GROWTH FLEXIBLE INCOME DIVIDEND GROWTH GLOBAL EQUITY SUB-ACCOUNT (H) SUB-ACCOUNT (H) SUB-ACCOUNT (H) SUB-ACCOUNT (H) --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(547) $3,194 $6 $(618) Net realized gain (loss) on security transactions 12 4 9 7 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 8,069 2,683 9,601 8,117 ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 7,534 5,881 9,616 7,506 ---------- ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases 114,258 372,778 249,541 119,243 Net transfers 31,324 98,060 87,494 100,960 Surrenders for benefit payments and fees (114) (210) 2 (640) Net annuity transactions -- -- -- -- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 145,468 470,628 337,037 219,563 ---------- ---------- ---------- ---------- Net increase (decrease) in net assets 153,002 476,509 346,653 227,069 NET ASSETS: Beginning of year -- -- -- -- ---------- ---------- ---------- ---------- End of year $153,002 $476,509 $346,653 $227,069 ========== ========== ========== ========== JENNISON 20/20 JENNISON PRUDENTIAL FOCUS PORTFOLIO PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(10,996) $(3,830) $(3,757) Net realized gain (loss) on security transactions 3,557 8,632 31,008 Net realized gain on distributions 36,425 -- 14,874 Net unrealized appreciation (depreciation) of investments during the year 38,776 (5,193) 27,665 ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 67,762 (391) 69,790 ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers 37,520 (530) (6,359) Surrenders for benefit payments and fees (32,506) (97,202) (37,167) Net annuity transactions -- -- -- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 5,014 (97,732) (43,526) ---------- ---------- ---------- Net increase (decrease) in net assets 72,776 (98,123) 26,264 NET ASSETS: Beginning of year 571,008 261,749 438,633 ---------- ---------- ---------- End of year $643,784 $163,626 $464,897 ========== ========== ==========
(h) From inception, August 14, 2006 to December 31, 2006. SA-65 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
SP WILLIAM BLAIR INTERNATIONAL GROWTH AND GROWTH PORTFOLIO INCOME COMSTOCK SUB-ACCOUNT (I) SUB-ACCOUNT (H) SUB-ACCOUNT (H) --------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(68) $(13,282) $(6,033) Net realized gain (loss) on security transactions 6 478 482 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,395 186,539 80,436 ------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 1,333 173,735 74,885 ------- ------------ ------------ UNIT TRANSACTIONS: Purchases -- 3,256,268 1,252,817 Net transfers 6,867 719,762 212,852 Surrenders for benefit payments and fees 1 (15,956) (2,158) Net annuity transactions -- -- -- ------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 6,868 3,960,074 1,463,511 ------- ------------ ------------ Net increase (decrease) in net assets 8,201 4,133,809 1,538,396 NET ASSETS: Beginning of year -- -- -- ------- ------------ ------------ End of year $8,201 $4,133,809 $1,538,396 ======= ============ ============
(i) From inception, June 21, 2006 to December 31, 2006. (h) From inception, August 14, 2006 to December 31, 2006. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-66 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ASSET ALLOCATION TOTAL RETURN EQUITY INCOME C&B LARGE CAP FUND BOND FUND FUND VALUE FUND SUB-ACCOUNT (J) SUB-ACCOUNT (K) SUB-ACCOUNT (L) SUB-ACCOUNT (M) ------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $5,947 $129,609 $(8,821) $(2,883) Net realized gain (loss) on security transactions 11,585 (8,251) 14,030 3,452 Net realized gain on distributions 19,873 -- 6,012 -- Net unrealized appreciation (depreciation) of investments during the year 133,477 (16,739) 393,812 129,488 ------------ ------------ ------------ ---------- Net increase (decrease) in net assets resulting from operations 170,882 104,619 405,033 130,057 ------------ ------------ ------------ ---------- UNIT TRANSACTIONS: Purchases 117,303 743,854 518,078 239,896 Net transfers (160,206) 420,205 56,590 166,491 Surrenders for benefit payments and fees (86,736) (311,744) (109,650) (5,653) Net annuity transactions -- -- -- -- ------------ ------------ ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions (129,639) 852,315 465,018 400,734 ------------ ------------ ------------ ---------- Net increase (decrease) in net assets 41,243 956,934 870,051 530,791 NET ASSETS: Beginning of year 1,877,365 5,001,496 2,185,509 434,184 ------------ ------------ ------------ ---------- End of year $1,918,608 $5,958,430 $3,055,560 $964,975 ============ ============ ============ ========== WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT LARGE COMPANY INTERNATIONAL CORE LARGE COMPANY CORE FUND FUND GROWTH FUND SUB-ACCOUNT (N) SUB-ACCOUNT (O) SUB-ACCOUNT (P) -------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,702) $(340) $(71,905) Net realized gain (loss) on security transactions 723 9,423 22,801 Net realized gain on distributions -- 90,682 -- Net unrealized appreciation (depreciation) of investments during the year 21,345 279,028 70,893 ---------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 20,366 378,793 21,789 ---------- ------------ ------------ UNIT TRANSACTIONS: Purchases 20,796 517,405 331,317 Net transfers 4,755 186,157 (82,413) Surrenders for benefit payments and fees (8,644) (103,136) (179,173) Net annuity transactions -- -- -- ---------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 16,907 600,426 69,731 ---------- ------------ ------------ Net increase (decrease) in net assets 37,273 979,219 91,520 NET ASSETS: Beginning of year 132,596 1,774,683 3,501,573 ---------- ------------ ------------ End of year $169,869 $2,753,902 $3,593,093 ========== ============ ============
(j) Formerly Wells Fargo Advantage Asset Allocation Fund. Change effective May 1, 2006. (k) Formerly Wells Fargo Advantage Total Return Bond Fund. Change effective May 1, 2006. (l) Formerly Wells Fargo Advantage Equity Income Fund. Change effective May 1, 2006. (m) Formerly Wells Fargo Advantage C&B Large Cap Value Fund. Change effective May 1, 2006. (n) Formerly Wells Fargo Advantage Large Company Core Fund. Change effective May 1, 2006. (o) Formerly Wells Fargo Advantage International Core Fund. Change effective May 1, 2006. (p) Formerly Wells Fargo Advantage Large Company Growth Fund. Change effective May 1, 2006. SA-67 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND SUB-ACCOUNT (Q) ------------------------------------------------------ OPERATIONS: Net investment income (loss) $29,278 Net realized gain (loss) on security transactions -- Net realized gain on distributions -- Net unrealized appreciation (depreciation) of investments during the year -- ------------ Net increase (decrease) in net assets resulting from operations 29,278 ------------ UNIT TRANSACTIONS: Purchases 97,072 Net transfers 128,578 Surrenders for benefit payments and fees (166,447) Net annuity transactions -- ------------ Net increase (decrease) in net assets resulting from unit transactions 59,203 ------------ Net increase (decrease) in net assets 88,481 NET ASSETS: Beginning of year 974,602 ------------ End of year $1,063,083 ============
(q) Formerly Wells Fargo Advantage Money Market Fund. Change effective May 1, 2006. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-68 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT WELLS FARGO SMALL CAP ADVANTAGE VT SMALL/MID CAP ADVANTAGE VT GROWTH FUND DISCOVERY FUND VALUE FUND OPPORTUNITY FUND SUB-ACCOUNT (R) SUB-ACCOUNT (S) SUB-ACCOUNT (T) SUB-ACCOUNT (U) ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(44,641) $(3,163) $(10,053) $(421) Net realized gain (loss) on security transactions 15,530 1,348 288 36 Net realized gain on distributions 57,130 -- 80,946 2,930 Net unrealized appreciation (depreciation) of investments during the year 382,483 17,904 (22,541) (37) ------------ ---------- ---------- --------- Net increase (decrease) in net assets resulting from operations 410,502 16,089 48,640 2,508 ------------ ---------- ---------- --------- UNIT TRANSACTIONS: Purchases 364,333 253,261 146,408 12,039 Net transfers 425,454 144,749 719,260 -- Surrenders for benefit payments and fees (90,658) (2,530) (12,421) (455) Net annuity transactions -- -- -- -- ------------ ---------- ---------- --------- Net increase (decrease) in net assets resulting from unit transactions 699,129 395,480 853,247 11,584 ------------ ---------- ---------- --------- Net increase (decrease) in net assets 1,109,631 411,569 901,887 14,092 NET ASSETS: Beginning of year 1,742,720 9,996 -- 13,990 ------------ ---------- ---------- --------- End of year $2,852,351 $421,565 $901,887 $28,082 ============ ========== ========== =========
(r) Formerly Wells Fargo Advantage Small Cap Growth Fund. Change effective May 1, 2006. (s) Formerly Wells Fargo Advantage Discovery Fund. Change effective May 1, 2006. (t) Funded as of January 31, 2006. (u) Formerly Wells Fargo Advantage Opportunity Fund. Change effective May 1, 2006. SA-69 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007 ------------------------------------------------------------------------------- 1. ORGANIZATION: Separate Account Seven (the "Account") is a separate investment account within Hartford Life and Annuity Insurance Company (the "Company") and is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940, as amended. Both the Company and the Account are subject to supervision and regulation by the Department of Insurance of the State of Connecticut and the SEC. The Account invests deposits by variable annuity contract owners of the Company in various mutual funds (the "Funds") as directed by the contract owners. The Account invests in the following sub-accounts (collectively, the "Sub-Accounts"): the AIM V.I. Basic Value Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Core Equity Fund, AIM V.I. Government Securities Fund, AIM V.I. International Growth Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Small Cap Equity Fund, AIM V.I. Large Cap Growth Fund, AIM V.I. Capital Development Fund, American Funds Global Bond Fund, American Funds Global Growth and Income Fund, American Funds Asset Allocation Fund, American Funds Blue Chip Income and Growth Fund, American Funds Bond Fund, American Funds Global Growth Fund, American Funds Growth Fund, American Funds Growth-Income Fund, American Funds International Fund, American Funds New World Fund, American Funds Global Small Capitalization Fund, Franklin Rising Dividends Securities Fund, Franklin Income Securities Fund, Franklin Large Cap Growth Securities Fund, Franklin Global Real Estate Securities Fund, Franklin Small-Mid Cap Growth Securities Fund, Franklin Small Cap Value Securities Fund, Franklin Strategic Income Securities Fund, Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund, Templeton Foreign Securities Fund, Templeton Global Asset Allocation Fund, Templeton Growth Securities Fund, Mutual Discovery Securities Fund, Franklin Flex Cap Growth Securities Fund, Franklin Large Cap Value Securities Fund, Hartford Money Market HLS Fund, MFS Core Equity Series, MFS Emerging Growth Series, MFS Global Equity Series, MFS High Income Series, MFS Investors Growth Stock Series, MFS Investors Trust Series, MFS Mid Cap Growth Series, MFS New Discovery Series, MFS Total Return Series, MFS Value Series, MFS Research Bond Series, MFS Research International Series, MFS Research Series, BlackRock Global Growth V.I. Fund, BlackRock Large Cap Growth V.I. Fund, International Growth Equity, U.S. Mid Cap Value, Focus Growth, Capital Opportunities, Developing Growth, Flexible Income, Dividend Growth, Global Equity, Jennison 20/20 Focus Portfolio, Jennison Portfolio, Prudential Value Portfolio, Prudential Series International Growth, Growth and Income, Comstock, Wells Fargo Advantage VT Asset Allocation Fund, Wells Fargo Advantage VT Total Return Bond Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT Large Company Core Fund, Wells Fargo Advantage VT International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund, Wells Fargo Advantage VT Money Market Fund, Wells Fargo Advantage VT Small Cap Growth Fund, Wells Fargo Advantage VT Discovery Fund, Wells Fargo Advantage VT Small/Mid Cap Value Fund and Wells Fargo Advantage VT Opportunity Fund. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant accounting policies of the Account, which are in accordance with accounting principles generally accepted in the United States of America: a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sales of securities are computed using the last in first out method. Dividend and net realized gain on distributions income is accrued as of the ex-dividend date. Net realized gain on distributions income represents dividends from the Funds which are characterized as capital gains under tax regulations. b) SECURITY VALUATION -- The investment in shares of the Funds are valued at the closing net asset value per share as determined by the appropriate Fund as of December 31, 2007. c) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values calculated at the close of the business day. d) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and are taxed with, the total operations of the Company, which is taxed as an insurance company under the Internal Revenue Code. Under current law, no Federal income taxes are payable with respect to the operations of the Account. e) USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported SA-70 ------------------------------------------------------------------------------- amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management's estimates. f) MORTALITY RISK -- Net assets allocated to contracts in the annuity period are computed according to the 1983a Individual Annuitant Mortality Table and the Annuity 2000 Table. The Mortality Risk is fully borne by the Company and may result in additional amounts being transferred into the variable annuity account by the Company to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Company. g) RECLASSIFICATIONS -- Certain reclassifications have been made to the December 31, 2006 Statements of Changes in Net Assets to conform to the current year presentation. h) FAIR VALUE MEASUREMENTS -- In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). This statement defines fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States, and enhances disclosures about fair value measurements. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price). SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. SFAS 157 is effective for fiscal years beginning after November 15, 2007, with earlier application encouraged only in the initial quarter of an entity's fiscal year. The Account will adopt SFAS 157 on January 1, 2008. Adoption of this statement is not expected to have a material impact on the Account's financial statements. i) ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, AN INTERPRETATION OF FASB STATEMENT NO. 109 -- In July 2006, the FASB released "Accounting for Uncertainty in Income Taxes" ("FIN 48") to clarify accounting for income taxes recognized in the financial statements in accordance with FASB 109, "Accounting for Income Taxes." FIN 48 is effective for fiscal years beginning after December 15, 2006 and prescribes a comprehensive model for how an entity should recognize, measure, present and disclose in its financial statements uncertain tax positions that the entity has taken or expect to take on a tax return. Upon adoption, as of the first quarter of 2007, FIN 48 did not have an effect on the Account's financial condition. 3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES: Certain amounts are deducted from the contracts, as described below: a) MORTALITY AND EXPENSE RISK CHARGES -- The Company, as issuer of variable annuity contracts, provides the mortality and expense undertakings and, with respect to the Account, receives a maximum annual fee of 1.55% of the Account's average daily net assets. b) TAX EXPENSE CHARGE -- If applicable, the Company will make deductions at a maximum rate of 3.5% of the contract's value to meet premium tax requirements. An additional tax charge based on a percentage of the contract's value may be assessed on partial withdrawals or surrenders. These expenses are included in surrenders for benefit payments and fees on the accompanying statements of changes in net assets. c) ADMINISTRATIVE CHARGE -- The Company will charge an expense to cover administrative expenses at a maximum annual rate of 0.20% of the contract's value. d) ANNUAL MAINTENANCE FEE -- An annual maintenance fee in the amount of $30 may be charged to the contract's value each contract year. However, this fee is not applicable to contracts with values of $50,000 or more, as determined on the most recent contract anniversary. These expenses are included in surrenders for benefit payments and fees on the accompanying statements of changes in net assets. SA-71 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 ------------------------------------------------------------------------------- 4. PURCHASES AND SALES OF INVESTMENTS: The cost of purchases and proceeds from sales of investments for the year ended December 31, 2007 were as follows:
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- AIM V.I. Basic Value Fund $34,242,011 $66,329,434 AIM V.I. Capital Appreciation Fund 26,314,780 39,984,115 AIM V.I. Core Equity Fund 14,499,082 62,096,351 AIM V.I. Government Securities Fund 274,012,753 105,155,827 AIM V.I. International Growth Fund 134,397,337 27,713,178 AIM V.I. Mid Cap Core Equity Fund 86,396,163 100,514,364 AIM V.I. Small Cap Equity Fund 63,452,825 23,167,803 AIM V.I. Large Cap Growth Fund 15,840,313 15,282,471 AIM V.I. Capital Development Fund 121,679 43,820 American Funds Global Bond Fund 83,832,198 9,297,345 American Funds Global Growth and Income Fund 389,467,605 19,731,629 American Funds Asset Allocation Fund 325,992,003 222,517,487 American Funds Blue Chip Income and Growth 206,188,185 212,342,799 Fund American Funds Bond Fund 338,301,921 141,817,227 American Funds Global Growth Fund 165,864,329 99,083,731 American Funds Growth Fund 798,651,237 479,514,100 American Funds Growth-Income Fund 666,448,431 474,111,631 American Funds International Fund 260,967,785 162,541,967 American Funds New World Fund 202,435,593 87,680,352 American Funds Global Small Capitalization 206,827,585 117,641,465 Fund Franklin Rising Dividends Securities Fund 306,997,764 86,926,021 Franklin Income Securities Fund 751,440,592 139,993,058 Franklin Large Cap Growth Securities Fund 49,170,374 49,806,666 Franklin Global Real Estate Securities Fund 4,421,668 9,823,243 Franklin Small-Mid Cap Growth Securities 103,708,964 93,076,611 Fund Franklin Small Cap Value Securities Fund 720,015 1,013 Franklin Strategic Income Securities Fund 194,892,617 75,760,402 Mutual Shares Securities Fund 456,123,768 186,151,564 Templeton Developing Markets Securities Fund 99,127,528 59,157,813 Templeton Foreign Securities Fund 135,091,154 125,479,074 Templeton Global Asset Allocation Fund 7,264,822 3,869,179 Templeton Growth Securities Fund 282,129,807 101,441,011 Mutual Discovery Securities Fund 267,394,122 66,437,825 Franklin Flex Cap Growth Securities Fund 37,517,366 17,054,578 Franklin Large Cap Value Securities Fund 16,782,527 5,211,070 Hartford Money Market HLS Fund 851,156,055 582,465,526 MFS Core Equity Series 3,658,786 15,295,667 MFS Emerging Growth Series 24,414,384 19,538,389 MFS Global Equity Series 18,307,676 16,922,388 MFS High Income Series 56,018,391 67,870,802 MFS Investors Growth Stock Series 8,633,141 28,473,967 MFS Investors Trust Series 95,875,006 55,098,017 MFS Mid Cap Growth Series 48,308,805 66,106,739 MFS New Discovery Series 84,688,350 71,420,967 MFS Total Return Series 300,048,807 157,677,395
SA-72 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- MFS Value Series $113,040,909 $24,413,820 MFS Research Bond Series 65,151,375 11,998,319 MFS Research International Series 41,889,884 8,964,863 MFS Research Series 36,212,667 10,466,038 BlackRock Global Growth V.I. Fund 675,848 974,111 BlackRock Large Cap Growth V.I. Fund 289,027 921,452 International Growth Equity 672,629 27,156 U.S. Mid Cap Value 3,057,175 360,808 Focus Growth 643,382 68,194 Capital Opportunities 2,469,903 422,321 Developing Growth 574,707 133,782 Flexible Income 444,187 17,102 Dividend Growth 271,785 181,281 Global Equity 568,013 181,676 Jennison 20/20 Focus Portfolio 101,741 116,927 Jennison Portfolio 92,057 119,690 Prudential Value Portfolio 58,251 68,581 Prudential Series International Growth -- 8,051 Growth and Income 8,780,569 893,229 Comstock 3,093,292 363,046 Wells Fargo Advantage VT Asset Allocation 307,644 152,573 Fund Wells Fargo Advantage VT Total Return Bond 2,083,430 662,384 Fund Wells Fargo Advantage VT Equity Income Fund 885,851 435,511 Wells Fargo Advantage VT C&B Large Cap Value 850,023 521,009 Fund Wells Fargo Advantage VT Large Company Core 241,755 72,978 Fund Wells Fargo Advantage VT International Core 757,217 537,093 Fund Wells Fargo Advantage VT Large Company 477,798 650,477 Growth Fund Wells Fargo Advantage VT Money Market Fund 4,645,733 2,398,538 Wells Fargo Advantage VT Small Cap Growth 1,534,874 759,152 Fund Wells Fargo Advantage VT Discovery Fund 329,674 50,235 Wells Fargo Advantage VT Small/Mid Cap Value 359,107 237,517 Fund Wells Fargo Advantage VT Opportunity Fund 31,538 1,112 ---------------- ---------------- $8,788,738,349 $4,634,805,107 ================ ================
SA-73 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 ------------------------------------------------------------------------------- 5. CHANGES IN UNITS OUTSTANDING: The changes in units outstanding for the year ended December 31, 2007 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- AIM V.I. Basic Value Fund 13,614,239 41,669,697 (28,055,458) AIM V.I. Capital Appreciation 18,171,342 26,670,331 (8,498,989) Fund AIM V.I. Core Equity Fund 955,987 4,572,806 (3,616,819) AIM V.I. Government Securities 228,334,416 92,026,416 136,308,000 Fund AIM V.I. International Growth 60,002,002 12,360,873 47,641,129 Fund AIM V.I. Mid Cap Core Equity 47,520,448 55,637,055 (8,116,607) Fund AIM V.I. Small Cap Equity Fund 4,128,785 1,536,003 2,592,782 AIM V.I. Large Cap Growth Fund 1,316,390 1,229,545 86,845 AIM V.I. Capital Development 11,827 4,468 7,359 Fund American Funds Global Bond 7,736,663 864,354 6,872,309 Fund American Funds Global Growth 31,639,610 1,628,010 30,011,600 and Income Fund American Funds Asset 16,301,585 14,648,353 1,653,232 Allocation Fund American Funds Blue Chip 110,534,059 160,438,375 (49,904,316) Income and Growth Fund American Funds Bond Fund 18,827,193 9,780,460 9,046,733 American Funds Global Growth 7,974,678 6,197,076 1,777,602 Fund American Funds Growth Fund 38,678,607 34,983,117 3,695,490 American Funds Growth-Income 32,287,576 29,968,499 2,319,077 Fund American Funds International 12,463,755 9,773,276 2,690,479 Fund American Funds New World Fund 6,719,247 3,573,298 3,145,949 American Funds Global Small 7,076,831 5,391,049 1,685,782 Capitalization Fund Franklin Rising Dividends 18,065,278 5,319,686 12,745,592 Securities Fund Franklin Income Securities 42,827,578 8,216,107 34,611,471 Fund Franklin Large Cap Growth 3,874,967 3,810,403 64,564 Securities Fund Franklin Global Real Estate 60,621 372,294 (311,673) Securities Fund Franklin Small-Mid Cap Growth 6,945,075 8,045,182 (1,100,107) Securities Fund Franklin Small Cap Value 79,291 1,366 77,925 Securities Fund Franklin Strategic Income 10,770,956 4,688,590 6,082,366 Securities Fund Mutual Shares Securities Fund 20,940,692 10,036,859 10,903,833 Templeton Developing Markets 3,006,688 2,394,009 612,679 Securities Fund Templeton Foreign Securities 6,574,206 8,437,278 (1,863,072) Fund Templeton Global Asset 64,249 217,165 (152,916) Allocation Fund Templeton Growth Securities 14,327,754 5,990,593 8,337,161 Fund Mutual Discovery Securities 12,106,390 3,005,705 9,100,685 Fund Franklin Flex Cap Growth 3,254,982 1,445,832 1,809,150 Securities Fund Franklin Large Cap Value 1,397,826 426,441 971,385 Securities Fund Hartford Money Market HLS Fund 762,389,777 529,313,116 233,076,661 MFS Core Equity Series 397,450 1,616,449 (1,218,999) MFS Emerging Growth Series 3,070,069 2,401,839 668,230 MFS Global Equity Series 1,000,712 1,084,679 (83,967) MFS High Income Series 3,238,801 5,125,991 (1,887,190) MFS Investors Growth Stock 1,106,323 3,448,966 (2,342,643) Series MFS Investors Trust Series 9,049,831 5,123,517 3,926,314 MFS Mid Cap Growth Series 6,717,155 9,856,323 (3,139,168) MFS New Discovery Series 5,407,204 5,848,510 (441,306) MFS Total Return Series 16,383,582 10,331,646 6,051,936
SA-74 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- MFS Value Series 6,114,985 1,303,445 4,811,540 MFS Research Bond Series 6,267,990 1,152,526 5,115,464 MFS Research International 2,637,740 577,934 2,059,806 Series MFS Research Series 2,964,228 860,014 2,104,214 BlackRock Global Growth V.I. 43,734 61,666 (17,932) Fund BlackRock Large Cap Growth 24,255 75,424 (51,169) V.I. Fund International Growth Equity 53,497 1,615 51,882 U.S. Mid Cap Value 217,505 24,616 192,889 Focus Growth 80,800 7,749 73,051 Capital Opportunities 501,988 78,122 423,866 Developing Growth 54,187 12,872 41,315 Flexible Income 34,348 450 33,898 Dividend Growth 20,583 13,750 6,833 Global Equity 43,697 15,635 28,062 Jennison 20/20 Focus Portfolio 28,114 71,758 (43,644) Jennison Portfolio 95,448 120,682 (25,234) Prudential Value Portfolio 3,670 42,439 (38,769) Prudential Series -- 6,959 (6,959) International Growth Growth and Income 496,518 47,921 448,597 Comstock 174,753 18,764 155,989 Wells Fargo Advantage VT Asset 175,719 85,178 90,541 Allocation Fund Wells Fargo Advantage VT Total 1,528,437 471,438 1,056,999 Return Bond Fund Wells Fargo Advantage VT 434,414 277,713 156,701 Equity Income Fund Wells Fargo Advantage VT C&B 643,483 383,973 259,510 Large Cap Value Fund Wells Fargo Advantage VT Large 209,954 58,590 151,364 Company Core Fund Wells Fargo Advantage VT 349,220 316,217 33,003 International Core Fund Wells Fargo Advantage VT Large 446,796 534,828 (88,032) Company Growth Fund Wells Fargo Advantage VT Money 4,479,543 2,328,793 2,150,750 Market Fund Wells Fargo Advantage VT Small 676,943 473,256 203,687 Cap Growth Fund Wells Fargo Advantage VT 22,976 3,040 19,936 Discovery Fund Wells Fargo Advantage VT 15,830 16,108 (278) Small/Mid Cap Value Fund Wells Fargo Advantage VT 2,010 24 1,986 Opportunity Fund
SA-75 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 ------------------------------------------------------------------------------- The changes in units outstanding for the year ended December 31, 2006 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------- AIM V.I. Basic Value Fund 18,457,770 42,969,547 (24,511,777) AIM V.I. Capital Appreciation Fund 77,559,769 85,890,370 (8,330,601) AIM V.I. Core Equity Fund 62,231,004 334,483,712 (272,252,708) AIM V.I. Government Securities Fund 157,557,267 72,846,300 84,710,967 AIM V. I. International Growth Fund 30,448,605 16,508,767 13,939,838 AIM V.I. Mid Cap Core Equity Fund 25,010,306 49,036,213 (24,025,907) AIM V.I. Small Cap Equity Fund 3,657,580 1,132,481 2,525,099 AIM V.I. Large Cap Growth Fund 11,609,333 53,116,357 (41,507,024) American Funds Global Bond Fund 797,043 9,021 788,022 American Funds Capital World Growth and 19,479,002 241,989 19,237,013 Income Fund American Funds Asset Allocation Fund 16,566,747 12,262,843 4,303,904 American Funds Blue Chip Income and 133,021,937 162,677,839 (29,655,902) Growth Fund American Funds Bond Fund 12,328,844 8,766,444 3,562,400 American Funds Global Growth Fund 8,887,757 5,561,881 3,325,876 American Funds Growth Fund 44,516,601 31,584,966 12,931,635 American Funds Growth-Income Fund 35,052,095 25,644,007 9,408,088 American Funds International Fund 16,805,503 7,085,797 9,719,706 American Funds New World Fund 6,855,933 3,490,982 3,364,951 American Funds Global Small 7,711,730 5,258,198 2,453,532 Capitalization Fund Franklin Rising Dividends Securities 19,415,305 2,831,919 16,583,386 Fund Franklin Income Securities Fund 34,816,860 5,912,393 28,904,467 Franklin Large Cap Growth Securities 5,080,791 1,776,800 3,303,991 Fund Franklin Real Estate Fund 79,823 434,136 (354,313) Franklin Small-Mid Cap Growth Securities 6,532,480 6,833,618 (301,138) Fund Franklin Strategic Income Securities 8,588,399 3,674,466 4,913,933 Fund Franklin Flex Cap Growth Securities Fund 2,607,150 884,912 1,722,238 Franklin Large Cap Value Securities Fund 1,631,617 630,947 1,000,670 Mutual Shares Securities Fund 18,976,514 6,435,543 12,540,971 Templeton Developing Markets Securities 4,319,429 3,048,671 1,270,758 Fund Templeton Foreign Securities Fund 11,312,730 5,754,579 5,558,151 Templeton Global Asset Allocation Fund 71,738 172,230 (100,492) Templeton Growth Securities Fund 14,898,565 3,450,263 11,448,302 Mutual Discovery Securities Fund 11,155,513 1,934,931 9,220,582 Hartford Money Market HLS Fund 509,345,352 415,584,280 93,761,072 MFS Capital Opportunities Series 289,458 1,647,758 (1,358,300) MFS Emerging Growth Series 1,521,245 2,257,508 (736,263) MFS Global Equity Series 1,297,524 739,109 558,415 MFS High Income Series 3,638,766 5,215,489 (1,576,723) MFS Investors Growth Stock Series 1,644,140 4,085,881 (2,441,741) MFS Investors Trust Series 10,925,206 4,412,418 6,512,788 MFS Mid Cap Growth Series 2,969,214 6,629,986 (3,660,772) MFS New Discovery Series 11,217,708 4,152,527 7,065,181 MFS Total Return Series 15,051,302 10,185,669 4,865,633 MFS Value Series 5,176,897 855,909 4,320,988 MFS Research Bond Series 2,941,233 390,495 2,550,738 MFS Research International Series 1,809,048 566,568 1,242,480
SA-76 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) ------------------------------------------------------------------------------------------- MFS Research Series 1,589,622 583,125 1,006,497 BlackRock Global Growth V.I. Fund 6,132 15,380 (9,248) BlackRock Large Cap Growth V. I. Fund 24,130 57,725 (33,595) International Growth Equity 7,685 -- 7,685 U.S. Mid Cap Value 61,446 365 61,081 Focus Growth 27,634 4,546 23,088 Capital Opportunities 252,110 2,200 249,910 Developing Growth 16,394 12 16,382 Flexible Income 41,090 115 40,975 Dividend Growth 27,623 -- 27,623 Global Equity 21,284 53 21,231 Jennison 20/20 Focus Portfolio 62,222 57,494 4,728 Jennison Portfolio 190 105,240 (105,050) Prudential Value Portfolio 30,149 66,878 (36,729) SP William Blair International Growth 6,959 -- 6,959 Portfolio Growth and Income 251,409 5,999 245,410 Comstock 98,343 6,898 91,445 Wells Fargo Advantage VT Asset 174,317 288,856 (114,539) Allocation Fund Wells Fargo Advantage VT Total Return 1,357,389 607,696 749,693 Bond Fund Wells Fargo Advantage VT Equity Income 808,290 434,652 373,638 Fund Wells Fargo Advantage VT C&B Large Cap 379,197 33,887 345,310 Value Fund Wells Fargo Advantage VT Large Company 27,123 9,581 17,542 Core Fund Wells Fargo Advantage VT International 727,347 269,545 457,802 Core Fund Wells Fargo Advantage VT Large Company 786,850 715,120 71,730 Growth Fund Wells Fargo Advantage VT Money Market 1,224,578 1,162,406 62,172 Fund Wells Fargo Advantage VT Small Cap 786,416 236,759 549,657 Growth Fund Wells Fargo Advantage VT Discovery Fund 35,865 3,349 32,516 Wells Fargo Advantage VT Small/Mid Cap 67,385 1,483 65,902 Value Fund Wells Fargo Advantage VT Opportunity 1,109 42 1,067 Fund
SA-77 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 ------------------------------------------------------------------------------- 6. FINANCIAL HIGHLIGHTS: The following is a summary of units, unit fair value, contract owners' equity, expense ratios, investment income ratios, and total return showing the minimum and maximum contract charges for which a series of each Sub-Account has outstanding units.
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AIM V.I. BASIC VALUE FUND 2007 Lowest contract charges 1,750,617 $1.539735 $2,695,486 Highest contract charges 394,205 1.415834 558,128 Remaining contract charges 156,908,114 -- 230,193,431 2006 Lowest contract charges 1,650,167 1.529265 2,523,543 Highest contract charges 119,806 1.430310 171,360 Remaining contract charges 185,338,421 -- 272,750,957 2005 Lowest contract charges 550,287 1.362431 749,728 Highest contract charges 66,457 1.296106 86,135 Remaining contract charges 211,003,427 -- 279,411,654 2004 Lowest contract charges 1,518,236 1.316677 1,999,026 Highest contract charges 20,775 1.257441 26,124 Remaining contract charges 223,647,591 -- 285,485,629 2003 Lowest contract charges 1,198,408 1.196762 1,434,209 Highest contract charges 1,617,228 1.161366 1,878,194 Remaining contract charges 164,358,770 -- 192,671,189 AIM V.I. CAPITAL APPRECIATION FUND 2007 Lowest contract charges 240,838 1.590673 383,095 Highest contract charges 166,005 1.462664 242,810 Remaining contract charges 76,252,144 -- 115,420,120 2006 Lowest contract charges 152,187 1.432186 217,946 Highest contract charges 166,658 1.339498 223,238 Remaining contract charges 84,839,131 -- 116,918,885 2005 Lowest contract charges 18,096 1.358807 24,589 Highest contract charges 22,308 1.292664 28,837 Remaining contract charges 37,821,577 -- 49,972,771 2004 Lowest contract charges 392,765 1.275804 501,092 Highest contract charges 5,809 1.218395 7,078 Remaining contract charges 38,172,286 -- 47,219,088 2003 Lowest contract charges 341,648 1.207936 412,689 Highest contract charges 248,132 1.172191 290,858 Remaining contract charges 30,293,982 -- 35,845,030 AIM V.I. CORE EQUITY FUND 2007 Lowest contract charges 28,980 12.834710 371,955 Highest contract charges 12,097 12.230262 147,944 Remaining contract charges 27,232,610 -- 339,039,281 2006 Lowest contract charges 21,401 11.972479 256,224 Highest contract charges 4,234 11.604187 49,137 Remaining contract charges 30,864,871 -- 362,262,126 2005 Lowest contract charges 47 10.346561 484 Highest contract charges 260 10.204436 2,651 Remaining contract charges 127,941 -- 1,311,968 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AIM V.I. BASIC VALUE FUND 2007 Lowest contract charges 0.85% 0.60% 0.69% Highest contract charges 2.53% 1.23% (1.01)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.55% 12.25% Highest contract charges 2.55% 0.50% 10.35% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.30% 9.20% Highest contract charges 2.51% 0.22% 3.08% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 10.02% Highest contract charges 2.50% -- 8.27% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.04% 32.36% Highest contract charges 2.38% 0.05% 30.46% Remaining contract charges -- -- -- AIM V.I. CAPITAL APPRECIATION FUND 2007 Lowest contract charges 0.85% -- 11.07% Highest contract charges 2.54% -- 9.20% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.12% 5.40% Highest contract charges 2.52% 0.21% 3.62% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.18% 15.56% Highest contract charges 2.51% 0.10% 6.10% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 5.62% Highest contract charges 2.45% -- 3.94% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% -- 28.30% Highest contract charges 2.38% -- 26.45% Remaining contract charges -- -- -- AIM V.I. CORE EQUITY FUND 2007 Lowest contract charges 0.85% 1.27% 7.20% Highest contract charges 2.51% 2.58% 5.40% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.84% 1.02% 15.72% Highest contract charges 2.53% 0.83% 13.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.80% 1.05% 7.33% Highest contract charges 2.44% 4.78% 6.16% Remaining contract charges -- -- --
SA-78 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AIM V.I. GOVERNMENT SECURITIES FUND 2007 Lowest contract charges 6,675,375 $1.190613 $7,947,789 Highest contract charges 455,288 1.094766 498,434 Remaining contract charges 682,491,850 -- 775,202,269 2006 Lowest contract charges 1,457,536 1.129202 1,645,852 Highest contract charges 53,598 1.056100 56,605 Remaining contract charges 551,803,378 -- 599,682,525 2005 Lowest contract charges 215,688 1.099804 237,215 Highest contract charges 99,525 1.046223 104,125 Remaining contract charges 468,288,332 -- 500,362,178 2004 Lowest contract charges 1,769,004 1.105472 1,955,584 Highest contract charges 72,196 1.055721 76,219 Remaining contract charges 345,692,677 -- 370,398,600 2003 Lowest contract charges 1,960,167 1.088130 2,132,916 Highest contract charges 2,199,782 1.055918 2,322,789 Remaining contract charges 231,306,108 -- 246,605,138 AIM V.I. INTERNATIONAL GROWTH FUND 2007 Lowest contract charges 1,388,135 2.413489 3,350,249 Highest contract charges 78,264 2.219333 173,693 Remaining contract charges 96,217,812 -- 222,238,108 2006 Lowest contract charges 287,193 2.121749 609,349 Highest contract charges 8,560 1.984479 16,988 Remaining contract charges 49,747,329 -- 101,724,383 2005 Lowest contract charges 40,858 1.668706 68,180 Highest contract charges 8,851 1.587486 14,052 Remaining contract charges 36,053,535 -- 58,438,083 2004 Lowest contract charges 88,480 1.445927 127,935 Highest contract charges 9,171 1.380892 12,665 Remaining contract charges 17,817,045 -- 24,973,192 2003 Lowest contract charges 67,870 1.177149 79,893 Highest contract charges 59,552 1.142322 68,027 Remaining contract charges 8,198,597 -- 9,444,551 AIM V.I. MID CAP CORE EQUITY FUND 2007 Lowest contract charges 5,725,501 1.822898 10,437,004 Highest contract charges 239,053 1.676212 400,704 Remaining contract charges 218,893,496 -- 380,535,402 2006 Lowest contract charges 1,809,505 1.678202 3,036,714 Highest contract charges 92,894 1.569599 145,807 Remaining contract charges 231,072,258 -- 373,319,415 2005 Lowest contract charges 320,680 1.521487 487,911 Highest contract charges 43,428 1.447415 62,858 Remaining contract charges 256,636,456 -- 379,612,312 2004 Lowest contract charges 2,997,792 1.444712 4,330,946 Highest contract charges 33,815 1.379716 46,655 Remaining contract charges 230,251,882 -- 322,495,930 2003 Lowest contract charges 2,083,091 1.281424 2,669,322 Highest contract charges 1,598,816 1.243511 1,988,146 Remaining contract charges 159,772,104 -- 200,501,774 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AIM V.I. GOVERNMENT SECURITIES FUND 2007 Lowest contract charges 0.84% 6.62% 5.44% Highest contract charges 2.52% 9.25% 3.66% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.86% 9.11% 2.67% Highest contract charges 2.57% 3.89% 0.94% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 13.42% 0.59% Highest contract charges 2.54% 4.07% 0.90% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 3.88% 1.59% Highest contract charges 2.48% 13.47% 0.02% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 2.16% 0.11% Highest contract charges 2.39% 2.92% 1.33% Remaining contract charges -- -- -- AIM V.I. INTERNATIONAL GROWTH FUND 2007 Lowest contract charges 0.84% 0.68% 13.75% Highest contract charges 2.51% 1.21% 11.84% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.77% 27.15% Highest contract charges 2.55% 1.02% 25.01% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 2.39% 19.32% Highest contract charges 2.54% 0.66% 14.96% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.72% 22.83% Highest contract charges 2.45% 2.94% 20.89% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.94% 0.66% 27.84% Highest contract charges 2.39% 0.47% 26.01% Remaining contract charges -- -- -- AIM V.I. MID CAP CORE EQUITY FUND 2007 Lowest contract charges 0.84% 0.33% 8.62% Highest contract charges 2.53% 0.38% 6.79% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.71% 10.30% Highest contract charges 2.54% 1.97% 8.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 1.76% 9.01% Highest contract charges 2.54% 0.57% 4.91% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.18% 12.74% Highest contract charges 2.51% 0.49% 10.95% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.94% -- 26.11% Highest contract charges 2.38% -- 24.30% Remaining contract charges -- -- --
SA-79 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AIM V.I. SMALL CAP EQUITY FUND 2007 Lowest contract charges 29,940 $15.150787 $453,609 Highest contract charges 17,619 14.206294 250,300 Remaining contract charges 7,556,369 -- 110,481,110 2006 Lowest contract charges 17,931 14.526546 260,478 Highest contract charges 11,508 13.854438 159,432 Remaining contract charges 4,981,707 -- 70,408,605 2005 Lowest contract charges 1,058 12.475035 13,199 Highest contract charges 2,538 12.101844 30,717 Remaining contract charges 2,482,451 -- 30,424,225 2004 Lowest contract charges 7,059 11.703215 82,611 Highest contract charges 28,440 11.488515 326,730 Remaining contract charges 1,640,742 -- 18,970,224 2003 Lowest contract charges 622 10.799031 6,716 Highest contract charges 14,360 10.767619 154,621 Remaining contract charges 102,491 -- 1,104,648 AIM V.I. LARGE CAP GROWTH FUND 2007 Lowest contract charges 35,007 13.278265 464,831 Highest contract charges 27,813 12.652975 351,920 Remaining contract charges 4,590,027 -- 59,046,551 2006 Lowest contract charges 16,181 11.580025 187,402 Highest contract charges 11,533 11.223754 129,438 Remaining contract charges 4,538,289 -- 51,346,704 2005 Lowest contract charges 1,438 10.809125 15,543 Highest contract charges 462 10.656209 4,927 Remaining contract charges 278,450 -- 2,980,691 AIM V.I. CAPITAL DEVELOPMENT FUND 2007 Lowest contract charges 33 9.802841 325 Highest contract charges 4,650 9.765867 45,409 Remaining contract charges 2,676 -- 26,159 AMERICAN FUNDS GLOBAL BOND FUND 2007 Lowest contract charges 606,229 11.067360 6,709,350 Highest contract charges 1,798 10.836338 19,485 Remaining contract charges 7,052,304 -- 77,121,560 2006 Lowest contract charges 15,186 10.218971 155,184 Highest contract charges 1,567 10.178409 15,952 Remaining contract charges 771,269 -- 7,863,526 AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2007 Lowest contract charges 6,273,176 12.245550 76,818,487 Highest contract charges 6,427 11.888755 76,405 Remaining contract charges 42,969,011 -- 517,939,071 2006 Lowest contract charges 1,477,347 10.961310 16,193,660 Highest contract charges 334,964 10.828350 3,627,102 Remaining contract charges 17,424,702 -- 189,692,748 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AIM V.I. SMALL CAP EQUITY FUND 2007 Lowest contract charges 0.85% 0.05% 4.30% Highest contract charges 2.54% 0.05% 2.54% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 16.45% Highest contract charges 2.53% -- 14.48% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 15.28% Highest contract charges 2.48% -- 5.39% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.01% 8.37% Highest contract charges 2.46% 0.01% 6.71% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.19% 0.01% 7.99% Highest contract charges 0.45% 0.05% 7.68% Remaining contract charges -- -- -- AIM V.I. LARGE CAP GROWTH FUND 2007 Lowest contract charges 0.84% 0.05% 14.67% Highest contract charges 2.53% 0.06% 12.73% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.29% 7.13% Highest contract charges 2.51% 0.92% 5.33% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.82% -- 14.21% Highest contract charges 2.30% -- 12.93% Remaining contract charges -- -- -- AIM V.I. CAPITAL DEVELOPMENT FUND 2007 Lowest contract charges -- -- 2.54% Highest contract charges 0.61% -- 2.35% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL BOND FUND 2007 Lowest contract charges 0.84% 6.87% 8.30% Highest contract charges 2.50% 20.18% 6.48% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.21% 1.34% 1.86% Highest contract charges 0.58% 2.08% 1.61% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH AND INCOME FUND 2007 Lowest contract charges 0.84% 2.65% 11.72% Highest contract charges 2.53% 3.47% 9.83% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.63% 1.42% 9.68% Highest contract charges 1.85% 1.13% 8.48% Remaining contract charges -- -- --
SA-80 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AMERICAN FUNDS ASSET ALLOCATION FUND 2007 Lowest contract charges 1,645 $15.459201 $25,446 Highest contract charges 63,959 13.442506 859,763 Remaining contract charges 141,981,312 -- 2,001,549,029 2006 Lowest contract charges 9,934 14.588461 144,909 Highest contract charges 38,048 12.941607 492,406 Remaining contract charges 140,345,702 -- 1,884,288,119 2005 Lowest contract charges 10,469 12.793383 133,928 Highest contract charges 8,647 11.578387 100,122 Remaining contract charges 136,070,664 -- 1,619,070,299 2004 Lowest contract charges 10,465 11.786704 123,350 Highest contract charges 1,641 10.882712 17,854 Remaining contract charges 125,182,467 -- 1,386,250,608 2003 Lowest contract charges 8,998 10.939269 98,427 Highest contract charges 491,001 10.304308 5,059,430 Remaining contract charges 89,897,670 -- 934,005,453 AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2007 Lowest contract charges 10,381 1.294501 13,438 Highest contract charges 1,056,985 1.145462 1,210,736 Remaining contract charges 1,110,053,037 -- 1,329,579,610 2006 Lowest contract charges 10,380 1.275794 13,244 Highest contract charges 748,207 1.151721 861,725 Remaining contract charges 1,160,266,131 -- 1,384,897,736 2005 Lowest contract charges 14,032 1.092544 15,330 Highest contract charges 187,591 1.006214 188,757 Remaining contract charges 1,190,478,997 -- 1,230,927,940 2004 Lowest contract charges 14,037 1.024433 14,380 Highest contract charges 36,346 0.962536 34,985 Remaining contract charges 1,131,890,853 -- 1,110,725,400 2003 Lowest contract charges 35,666 0.938623 33,477 Highest contract charges 6,852,958 0.899720 6,165,744 Remaining contract charges 846,995,529 -- 771,349,895 AMERICAN FUNDS BOND FUND 2007 Lowest contract charges 1,962 14.812776 29,072 Highest contract charges 90,503 12.828250 1,160,991 Remaining contract charges 90,331,752 -- 1,241,720,539 2006 Lowest contract charges 4,104 14.414680 59,159 Highest contract charges 58,187 12.735633 741,051 Remaining contract charges 81,315,193 -- 1,098,503,472 2005 Lowest contract charges 2,141 13.547855 29,012 Highest contract charges 19,542 12.211532 238,633 Remaining contract charges 77,793,401 -- 998,579,557 2004 Lowest contract charges 2,141 13.409593 28,716 Highest contract charges 7,194 12.331092 88,704 Remaining contract charges 72,017,916 -- 926,234,643 2003 Lowest contract charges 2,141 12.754482 27,313 Highest contract charges 474,929 11.965616 5,682,815 Remaining contract charges 58,397,494 -- 723,795,515 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AMERICAN FUNDS ASSET ALLOCATION FUND 2007 Lowest contract charges 0.55% 0.94% 5.97% Highest contract charges 2.53% 2.83% 3.87% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 2.19% 14.03% Highest contract charges 2.54% 3.44% 11.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 2.24% 8.54% Highest contract charges 2.51% 3.69% 6.39% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 2.11% 7.75% Highest contract charges 2.52% 3.02% 5.61% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 2.39% 21.07% Highest contract charges 2.39% 2.97% 18.86% Remaining contract charges -- -- -- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2007 Lowest contract charges 0.55% 2.52% 1.47% Highest contract charges 2.54% 2.77% (0.54)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 1.24% 16.77% Highest contract charges 2.54% 1.00% 14.46% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 0.99% 6.65% Highest contract charges 2.52% 0.66% 4.54% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 0.70% 9.14% Highest contract charges 2.52% 0.84% 6.98% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% -- 30.01% Highest contract charges 2.39% -- 27.63% Remaining contract charges -- -- -- AMERICAN FUNDS BOND FUND 2007 Lowest contract charges 0.55% 6.62% 2.76% Highest contract charges 2.54% 8.48% 0.73% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 3.05% 6.40% Highest contract charges 2.55% 3.26% 4.29% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 3.79% 1.03% Highest contract charges 2.53% 3.41% 0.97% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 3.57% 5.14% Highest contract charges 2.52% 3.53% 3.06% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 3.90% 12.18% Highest contract charges 2.39% 3.74% 10.12% Remaining contract charges -- -- --
SA-81 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH FUND 2007 Lowest contract charges 662 $16.622894 $11,005 Highest contract charges 28,340 11.950746 338,680 Remaining contract charges 53,002,454 -- 839,575,309 2006 Lowest contract charges 661 14.553542 9,636 Highest contract charges 2,678 10.674307 28,584 Remaining contract charges 51,250,515 -- 719,382,855 2005 Lowest contract charges 3,327 12.151586 40,432 Highest contract charges 7,732 9.092566 70,308 Remaining contract charges 47,916,919 -- 565,434,947 2004 Lowest contract charges 3,328 10.711021 35,645 Highest contract charges 5,074 8.176466 41,484 Remaining contract charges 42,232,422 -- 443,900,130 2003 Lowest contract charges 3,984 9.490163 37,812 Highest contract charges 258,056 8.056988 2,079,153 Remaining contract charges 30,808,949 -- 291,078,416 AMERICAN FUNDS GROWTH FUND 2007 Lowest contract charges 3,371 12.990526 43,792 Highest contract charges 289,804 10.427125 3,021,825 Remaining contract charges 337,097,888 -- 4,511,529,567 2006 Lowest contract charges 3,371 11.626464 39,192 Highest contract charges 185,668 9.520749 1,767,698 Remaining contract charges 333,506,534 -- 4,029,775,608 2005 Lowest contract charges 8,525 10.606836 90,419 Highest contract charges 65,623 8.861284 581,508 Remaining contract charges 320,689,791 -- 3,557,161,722 2004 Lowest contract charges 9,193 9.179128 84,386 Highest contract charges 32,993 7.823331 258,116 Remaining contract charges 292,097,787 -- 2,824,395,891 2003 Lowest contract charges 9,172 8.204458 75,251 Highest contract charges 1,569,124 7.107056 11,151,851 Remaining contract charges 215,191,705 -- 1,876,242,213 AMERICAN FUNDS GROWTH-INCOME FUND 2007 Lowest contract charges 3,659 15.716464 57,513 Highest contract charges 220,553 13.885894 3,062,571 Remaining contract charges 310,932,495 -- 4,503,647,602 2006 Lowest contract charges 7,603 15.044453 114,382 Highest contract charges 97,795 13.560686 1,326,171 Remaining contract charges 308,732,232 -- 4,312,874,045 2005 Lowest contract charges 14,103 13.131137 185,184 Highest contract charges 56,514 12.075123 682,419 Remaining contract charges 299,358,925 -- 3,684,213,947 2004 Lowest contract charges 14,880 12.475956 185,646 Highest contract charges 22,931 11.704328 268,390 Remaining contract charges 268,887,815 -- 3,177,391,559 2003 Lowest contract charges 13,123 11.365643 149,154 Highest contract charges 1,124,389 10.721995 12,055,696 Remaining contract charges 198,046,354 -- 2,155,493,450 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH FUND 2007 Lowest contract charges 0.55% 2.70% 14.22% Highest contract charges 2.48% 4.76% 11.96% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 1.21% 19.77% Highest contract charges 2.55% 0.92% 17.40% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 0.67% 13.45% Highest contract charges 2.53% 0.52% 11.20% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 0.44% 12.86% Highest contract charges 2.52% 0.52% 10.63% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 0.49% 34.53% Highest contract charges 2.39% 0.43% 32.07% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH FUND 2007 Lowest contract charges 0.55% 0.79% 11.73% Highest contract charges 2.54% 0.99% 9.52% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 0.50% 9.61% Highest contract charges 2.54% 1.12% 7.44% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 0.70% 15.55% Highest contract charges 2.53% 0.92% 13.27% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 0.18% 11.88% Highest contract charges 2.53% 0.28% 9.67% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 0.13% 36.06% Highest contract charges 2.38% 0.15% 33.57% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH-INCOME FUND 2007 Lowest contract charges 0.55% 1.10% 4.47% Highest contract charges 2.53% 2.35% 2.40% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 1.16% 14.57% Highest contract charges 2.55% 1.85% 12.30% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 1.34% 5.25% Highest contract charges 2.52% 2.16% 3.17% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 0.89% 9.77% Highest contract charges 2.52% 1.44% 7.60% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 1.20% 31.70% Highest contract charges 2.38% 1.36% 29.29% Remaining contract charges -- -- --
SA-82 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- AMERICAN FUNDS INTERNATIONAL FUND 2007 Lowest contract charges 1,573 $17.738385 $27,882 Highest contract charges 50,789 12.656410 642,813 Remaining contract charges 82,701,367 -- 1,384,143,255 2006 Lowest contract charges 2,147 14.860722 31,912 Highest contract charges 31,531 10.817275 341,074 Remaining contract charges 80,029,572 -- 1,136,998,955 2005 Lowest contract charges 3,909 12.559161 49,090 Highest contract charges 12,018 9.326581 112,088 Remaining contract charges 70,327,617 -- 854,725,953 2004 Lowest contract charges 4,397 10.393491 45,696 Highest contract charges 10,641 7.874120 83,791 Remaining contract charges 58,012,272 -- 590,047,576 2003 Lowest contract charges 4,397 8.758771 38,515 Highest contract charges 328,812 7.405010 2,434,853 Remaining contract charges 35,593,956 -- 312,294,184 AMERICAN FUNDS NEW WORLD FUND 2007 Lowest contract charges 1,231 30.581586 37,661 Highest contract charges 5,729 25.310667 145,011 Remaining contract charges 20,318,733 -- 560,291,590 2006 Lowest contract charges 2,641 23.258443 61,441 Highest contract charges 867 19.638252 17,028 Remaining contract charges 17,176,235 -- 364,026,955 2005 Lowest contract charges 2,642 17.637753 46,593 Highest contract charges 890 15.193093 13,522 Remaining contract charges 13,811,260 -- 224,349,908 2004 Lowest contract charges 2,978 14.688942 43,742 Highest contract charges 65 12.908373 840 Remaining contract charges 9,311,198 -- 127,484,428 2003 Lowest contract charges 2,978 12.432788 37,024 Highest contract charges 23,564 11.146365 262,655 Remaining contract charges 6,166,812 -- 72,567,224 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2007 Lowest contract charges 805,280 24.253651 19,530,981 Highest contract charges 15,547 17.296552 268,916 Remaining contract charges 29,235,363 -- 628,184,794 2006 Lowest contract charges 383,602 20.144150 7,727,336 Highest contract charges 2,742 14.612053 40,060 Remaining contract charges 27,984,064 -- 505,443,276 2005 Lowest contract charges 82,700 16.376893 1,354,370 Highest contract charges 1,303 12.083008 15,738 Remaining contract charges 25,832,873 -- 384,172,768 2004 Lowest contract charges 471,158 13.406321 6,316,499 Highest contract charges 365 9.888098 3,606 Remaining contract charges 20,236,417 -- 243,974,997 2003 Lowest contract charges 316,816 11.196332 3,547,180 Highest contract charges 105,773 8.501150 899,196 Remaining contract charges 13,325,715 -- 135,972,551 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- AMERICAN FUNDS INTERNATIONAL FUND 2007 Lowest contract charges 0.55% 1.41% 19.36% Highest contract charges 2.54% 2.07% 17.00% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 1.22% 18.33% Highest contract charges 2.56% 3.88% 15.98% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 1.51% 20.84% Highest contract charges 2.54% 1.52% 18.45% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 1.34% 18.66% Highest contract charges 2.51% 2.43% 16.32% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 1.59% 34.11% Highest contract charges 2.38% 1.99% 31.66% Remaining contract charges -- -- -- AMERICAN FUNDS NEW WORLD FUND 2007 Lowest contract charges 0.55% 2.60% 31.49% Highest contract charges 2.50% 3.71% 28.89% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 1.54% 31.87% Highest contract charges 2.55% 1.55% 29.26% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 1.21% 20.08% Highest contract charges 2.52% 0.21% 17.70% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 1.98% 18.15% Highest contract charges 2.52% -- 15.81% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 1.88% 38.41% Highest contract charges 2.39% 1.93% 35.88% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2007 Lowest contract charges 0.85% 3.18% 20.40% Highest contract charges 2.51% 4.16% 18.37% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.45% 23.00% Highest contract charges 2.56% 0.43% 20.93% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.33% 24.21% Highest contract charges 2.54% 0.52% 22.20% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 19.74% Highest contract charges 2.53% -- 17.84% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.59% 52.08% Highest contract charges 2.38% 0.51% 49.89% Remaining contract charges -- -- --
SA-83 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- FRANKLIN RISING DIVIDENDS SECURITIES FUND 2007 Lowest contract charges 2,265,784 $15.218488 $34,481,810 Highest contract charges 32,174 14.200576 456,892 Remaining contract charges 67,758,568 -- 994,511,862 2006 Lowest contract charges 1,203,344 15.772306 18,979,513 Highest contract charges 24,105 14.969769 360,840 Remaining contract charges 56,083,485 -- 860,163,006 2005 Lowest contract charges 295,756 13.581424 4,016,791 Highest contract charges 16,010 13.111329 209,916 Remaining contract charges 40,415,782 -- 538,698,169 2004 Lowest contract charges 550,441 13.343129 7,344,611 Highest contract charges 581,258 13.010868 7,562,677 Remaining contract charges 25,896,626 -- 339,993,076 2003 Lowest contract charges 58,295 12.135710 707,455 Highest contract charges 16,619 12.018369 199,732 Remaining contract charges 7,202,430 -- 86,861,474 FRANKLIN INCOME SECURITIES FUND 2007 Lowest contract charges 1,786 16.906515 30,193 Highest contract charges 59,907 15.145488 907,319 Remaining contract charges 167,798,405 -- 2,642,967,669 2006 Lowest contract charges 3,241 16.384241 53,100 Highest contract charges 39,490 14.974072 591,333 Remaining contract charges 133,205,895 -- 2,053,981,822 2005 Lowest contract charges 1,455 13.933173 20,273 Highest contract charges 22,353 12.991094 290,384 Remaining contract charges 104,320,354 -- 1,383,599,497 2004 Lowest contract charges 863,574 13.642332 11,781,159 Highest contract charges 861,993 13.122761 11,311,726 Remaining contract charges 65,655,124 -- 872,856,079 2003 Lowest contract charges 176,401 12.096560 2,133,848 Highest contract charges 145,929 11.817583 1,724,527 Remaining contract charges 31,101,309 -- 370,332,263 FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 180,106 12.827021 2,310,220 Highest contract charges 10,283 11.848456 121,833 Remaining contract charges 17,933,407 -- 219,924,132 2006 Lowest contract charges 114,705 12.177757 1,396,849 Highest contract charges 3,973 11.441566 45,458 Remaining contract charges 17,940,554 -- 210,823,420 2005 Lowest contract charges 27,069 11.074918 299,782 Highest contract charges 3,130 10.583797 33,128 Remaining contract charges 14,725,042 -- 158,900,875 2004 Lowest contract charges 26,893 11.174616 300,520 Highest contract charges 1,209 10.743408 12,994 Remaining contract charges 9,246,790 -- 100,640,664 2003 Lowest contract charges 5,317 10.452055 55,576 Highest contract charges 21,282 10.210816 217,310 Remaining contract charges 2,553,237 -- 26,271,482 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- FRANKLIN RISING DIVIDENDS SECURITIES FUND 2007 Lowest contract charges 0.85% 2.26% (3.51)% Highest contract charges 2.54% 2.06% (5.14)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.97% 16.13% Highest contract charges 2.55% 1.04% 14.17% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.18% 5.93% Highest contract charges 2.48% -- 0.82% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.57% 9.95% Highest contract charges 2.47% 0.59% 8.26% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.63% 0.12% 21.36% Highest contract charges 1.60% 0.44% 20.18% Remaining contract charges -- -- -- FRANKLIN INCOME SECURITIES FUND 2007 Lowest contract charges 0.55% 2.85% 3.19% Highest contract charges 2.54% 2.79% 1.15% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 2.59% 17.59% Highest contract charges 2.55% 3.36% 15.26% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 3.89% 1.05% Highest contract charges 2.47% 2.41% 0.95% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 2.87% 12.78% Highest contract charges 2.48% 2.81% 11.05% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.94% 4.46% 30.47% Highest contract charges 2.38% 5.57% 28.60% Remaining contract charges -- -- -- FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 0.85% 0.74% 5.33% Highest contract charges 2.53% 0.46% 3.56% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.71% 9.96% Highest contract charges 2.55% 0.79% 8.11% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 4.27% Highest contract charges 2.52% 0.46% 1.49% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.46% 6.91% Highest contract charges 2.48% 0.23% 5.22% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.79% 25.75% Highest contract charges 2.39% 0.78% 23.94% Remaining contract charges -- -- --
SA-84 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2007 Lowest contract charges 18,237 $26.430064 $482,022 Highest contract charges 8,193 18.884833 154,718 Remaining contract charges 999,677 -- 21,238,501 2006 Lowest contract charges 21,593 33.716717 728,059 Highest contract charges 8,252 24.480398 202,010 Remaining contract charges 1,307,936 -- 35,733,744 2005 Lowest contract charges 31,171 28.226888 879,850 Highest contract charges 504 20.824893 10,496 Remaining contract charges 1,660,419 -- 38,158,886 2004 Lowest contract charges 32,236 25.112355 809,528 Highest contract charges 12,414 18.854076 234,060 Remaining contract charges 1,975,381 -- 40,655,416 2003 Lowest contract charges 35,846 19.234925 689,501 Highest contract charges 5,926 14.652183 86,832 Remaining contract charges 2,213,016 -- 35,058,059 FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 242,924 14.408266 3,500,098 Highest contract charges 52,838 7.996026 422,497 Remaining contract charges 35,243,495 -- 389,269,626 2006 Lowest contract charges 139,855 13.062801 1,826,906 Highest contract charges 14,304 7.373627 105,471 Remaining contract charges 36,485,205 -- 368,889,027 2005 Lowest contract charges 44,613 12.120647 540,744 Highest contract charges 12,357 6.959172 85,996 Remaining contract charges 36,883,532 -- 346,380,306 2004 Lowest contract charges 199,676 11.869463 2,370,052 Highest contract charges 9,454 6.812757 64,408 Remaining contract charges 38,719,405 -- 350,044,426 2003 Lowest contract charges 178,290 10.749301 1,916,495 Highest contract charges 478,168 6.297494 3,011,262 Remaining contract charges 32,031,044 -- 262,786,535 FRANKLIN SMALL CAP VALUE SECURITIES FUND 2007 Lowest contract charges 1,818 9.266350 16,846 Highest contract charges 34,139 9.231379 315,147 Remaining contract charges 41,968 -- 387,993 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2007 Lowest contract charges 0.95% 2.28% (21.61)% Highest contract charges 2.55% 2.26% (22.86)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% 2.09% 19.45% Highest contract charges 2.56% 0.63% 17.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 1.40% 12.40% Highest contract charges 2.51% -- 10.62% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 1.93% 30.56% Highest contract charges 2.39% 1.96% 28.68% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 2.47% 34.47% Highest contract charges 2.37% 2.54% 32.53% Remaining contract charges -- -- -- FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 0.85% -- 10.30% Highest contract charges 2.53% -- 8.44% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 7.77% Highest contract charges 2.55% -- 5.96% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 15.29% Highest contract charges 2.54% -- 2.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 10.42% Highest contract charges 2.53% -- 8.67% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% -- 35.95% Highest contract charges 2.38% -- 34.00% Remaining contract charges -- -- -- FRANKLIN SMALL CAP VALUE SECURITIES FUND 2007 Lowest contract charges 0.15% -- 0.06% Highest contract charges 0.57% -- (0.12)% Remaining contract charges -- -- --
SA-85 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------- FRANKLIN STRATEGIC INCOME SECURITIES FUND 2007 Lowest contract charges 1,355,486 $16.963013 $22,993,124 Highest contract charges 28,608 14.676700 419,865 Remaining contract charges 45,030,898 -- 700,436,872 2006 Lowest contract charges 552,158 16.108811 8,894,602 Highest contract charges 27,181 14.176524 385,337 Remaining contract charges 39,753,287 -- 592,393,087 2005 Lowest contract charges 150,979 14.972815 2,260,587 Highest contract charges 9,980 13.402661 133,754 Remaining contract charges 35,257,734 -- 492,887,724 2004 Lowest contract charges 366,668 15.102795 5,537,709 Highest contract charges 1,721 13.514956 23,264 Remaining contract charges 26,903,181 -- 376,103,302 2003 Lowest contract charges 219,517 13.859065 3,042,300 Highest contract charges 174,848 12.519934 2,189,091 Remaining contract charges 19,209,229 -- 248,585,991 FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 172,698 12.444192 2,149,095 Highest contract charges 419 11.858630 4,966 Remaining contract charges 4,835,426 -- 58,491,948 2006 Lowest contract charges 124,377 10.978096 1,365,434 Highest contract charges 3,918 10.640852 41,687 Remaining contract charges 3,071,098 -- 33,097,908 2005 Lowest contract charges 28,326 10.524182 298,107 Highest contract charges 37,449 10.380183 388,732 Remaining contract charges 1,411,380 -- 14,725,202 FRANKLIN LARGE CAP VALUE SECURITIES FUND 2007 Lowest contract charges 163,353 11.800600 1,927,666 Highest contract charges 10,846 11.245329 121,963 Remaining contract charges 2,323,985 -- 26,682,443 2006 Lowest contract charges 110,926 11.932502 1,323,618 Highest contract charges 892 11.566035 10,321 Remaining contract charges 1,414,981 -- 16,584,457 2005 Lowest contract charges 29,922 10.357740 309,923 Highest contract charges 14,570 10.215971 148,845 Remaining contract charges 481,637 -- 4,949,665 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** ------------------------------ ---------------------------------------------------- FRANKLIN STRATEGIC INCOME SECURITIES FUND 2007 Lowest contract charges 0.84% 4.87% 5.30% Highest contract charges 2.54% 5.18% 3.53% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 4.25% 7.59% Highest contract charges 2.55% 4.58% 5.77% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 1.02% 2.59% Highest contract charges 2.50% 2.12% 0.83% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 3.12% 8.97% Highest contract charges 2.50% 1.66% 7.25% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.94% 2.51% 19.22% Highest contract charges 2.39% 2.82% 17.50% Remaining contract charges -- -- -- FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2007 Lowest contract charges 0.85% 0.12% 13.36% Highest contract charges 2.56% 0.16% 11.44% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.01% 4.31% Highest contract charges 2.54% 0.01% 2.55% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.29% 11.76% Highest contract charges 2.46% 0.23% 10.55% Remaining contract charges -- -- -- FRANKLIN LARGE CAP VALUE SECURITIES FUND 2007 Lowest contract charges 0.85% 1.84% (1.11)% Highest contract charges 2.51% 3.71% (2.77)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.99% 15.20% Highest contract charges 2.53% 1.48% 13.26% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.82% 2.27% 6.61% Highest contract charges 2.44% 2.19% 5.44% Remaining contract charges -- -- --
SA-86 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MUTUAL SHARES SECURITIES FUND 2007 Lowest contract charges 1,651 $18.115531 $29,900 Highest contract charges 97,406 16.597302 1,616,678 Remaining contract charges 114,053,802 -- 1,977,118,234 2006 Lowest contract charges 1,574 17.629377 27,748 Highest contract charges 49,495 16.453485 814,361 Remaining contract charges 103,197,957 -- 1,746,359,076 2005 Lowest contract charges 1,273 15.111786 19,239 Highest contract charges 26,740 14.257743 381,253 Remaining contract charges 90,680,042 -- 1,313,048,173 2004 Lowest contract charges 1,316 13.744675 18,091 Highest contract charges 20,101 13.229769 265,933 Remaining contract charges 73,985,912 -- 983,776,433 2003 Lowest contract charges 1,366 12.270479 16,757 Highest contract charges 422,809 11.592760 4,901,518 Remaining contract charges 51,450,646 -- 617,781,417 TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2007 Lowest contract charges 130,970 30.661983 4,015,834 Highest contract charges 4,194 26.042533 109,212 Remaining contract charges 10,656,041 -- 295,157,734 2006 Lowest contract charges 85,986 23.955722 2,059,862 Highest contract charges 1,373 20.695292 28,417 Remaining contract charges 10,091,166 -- 219,459,471 2005 Lowest contract charges 13,107 18.811427 246,563 Highest contract charges 1,887 16.529708 31,194 Remaining contract charges 8,892,773 -- 152,409,610 2004 Lowest contract charges 48,759 15.109178 736,710 Highest contract charges 594 13.272221 7,881 Remaining contract charges 5,274,548 -- 72,232,825 2003 Lowest contract charges 28,735 12.218910 351,112 Highest contract charges 16,178 12.302650 199,029 Remaining contract charges 3,195,896 -- 35,452,792 TEMPLETON FOREIGN SECURITIES FUND 2007 Lowest contract charges 574,387 16.755358 9,624,063 Highest contract charges 28,114 14.128636 397,214 Remaining contract charges 50,188,589 -- 756,523,925 2006 Lowest contract charges 300,884 14.636053 4,403,749 Highest contract charges 3,538 12.553109 44,416 Remaining contract charges 52,349,740 -- 694,950,519 2005 Lowest contract charges 95,831 12.154452 1,164,773 Highest contract charges 10,268 10.603352 108,873 Remaining contract charges 46,989,912 -- 522,348,665 2004 Lowest contract charges 253,723 11.321045 2,872,413 Highest contract charges 8,289 9.873173 81,842 Remaining contract charges 34,440,721 -- 353,186,213 2003 Lowest contract charges 124,710 9.642470 1,202,509 Highest contract charges 124,575 8.544872 1,064,480 Remaining contract charges 12,246,457 -- 107,646,951 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MUTUAL SHARES SECURITIES FUND 2007 Lowest contract charges 0.70% 1.40% 2.76% Highest contract charges 2.54% 1.12% 0.87% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.70% 1.31% 17.55% Highest contract charges 2.54% 1.26% 15.40% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 0.88% 9.95% Highest contract charges 2.53% 0.88% 7.77% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 0.77% 12.01% Highest contract charges 2.52% 0.50% 9.80% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 1.01% 24.46% Highest contract charges 2.39% 1.08% 22.18% Remaining contract charges -- -- -- TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2007 Lowest contract charges 0.85% 2.31% 27.99% Highest contract charges 2.51% 1.63% 25.84% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.28% 27.35% Highest contract charges 2.55% 1.30% 25.20% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.20% 27.62% Highest contract charges 2.53% 0.65% 24.54% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 1.78% 23.65% Highest contract charges 2.52% -- 21.69% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 1.23% 52.29% Highest contract charges 2.39% 1.31% 50.10% Remaining contract charges -- -- -- TEMPLETON FOREIGN SECURITIES FUND 2007 Lowest contract charges 0.85% 1.84% 14.48% Highest contract charges 2.52% 0.76% 12.55% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.18% 20.42% Highest contract charges 2.55% 1.30% 18.39% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.22% 12.21% Highest contract charges 2.54% 1.28% 7.40% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.97% 17.41% Highest contract charges 2.50% 0.27% 15.55% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 1.62% 30.96% Highest contract charges 2.39% 1.70% 29.08% Remaining contract charges -- -- --
SA-87 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- TEMPLETON GLOBAL ASSET ALLOCATION FUND 2007 Lowest contract charges 45,246 $18.832232 $852,076 Highest contract charges 2,637 16.500507 43,512 Remaining contract charges 773,856 -- 13,336,444 2006 Lowest contract charges 47,770 17.281807 825,542 Highest contract charges 2,013 15.355498 30,913 Remaining contract charges 924,873 -- 14,725,765 2005 Lowest contract charges 52,513 14.405588 756,480 Highest contract charges 2,357 12.980266 30,598 Remaining contract charges 1,020,278 -- 13,598,452 2004 Lowest contract charges 65,767 14.043980 923,633 Highest contract charges 2,738 12.832838 35,141 Remaining contract charges 1,123,966 -- 14,680,562 2003 Lowest contract charges 75,891 12.252158 929,831 Highest contract charges 367 11.353314 4,161 Remaining contract charges 1,219,639 -- 14,004,942 TEMPLETON GROWTH SECURITIES FUND 2007 Lowest contract charges 3,197,772 17.480379 55,898,276 Highest contract charges 55,140 14.495551 799,279 Remaining contract charges 68,763,989 -- 1,072,977,291 2006 Lowest contract charges 1,508,979 17.225283 25,992,594 Highest contract charges 54,456 14.528955 791,187 Remaining contract charges 62,116,306 -- 961,388,720 2005 Lowest contract charges 327,924 14.262017 4,676,861 Highest contract charges 19,939 12.235707 243,969 Remaining contract charges 51,883,575 -- 670,295,196 2004 Lowest contract charges 333,523 13.443331 4,483,660 Highest contract charges 779,824 11.535531 8,995,682 Remaining contract charges 32,731,295 -- 395,432,347 2003 Lowest contract charges 112,053 11.697022 1,310,692 Highest contract charges 95,900 10.427189 999,965 Remaining contract charges 16,723,197 -- 177,479,980 MUTUAL DISCOVERY SECURITIES FUND 2007 Lowest contract charges 937 22.904210 21,444 Highest contract charges 41,910 21.030000 881,367 Remaining contract charges 35,005,065 -- 762,905,320 2006 Lowest contract charges 936 20.621663 19,308 Highest contract charges 35,700 19.287666 688,563 Remaining contract charges 25,910,591 -- 512,602,236 2005 Lowest contract charges 1,392 16.943447 23,589 Highest contract charges 21,916 16.078683 352,384 Remaining contract charges 16,703,338 -- 272,994,516 2004 Lowest contract charges 1,052 14.691110 15,450 Highest contract charges 220,966 14.229936 3,144,325 Remaining contract charges 7,107,621 -- 102,058,758 2003 Lowest contract charges 2,096 12.464859 26,124 Highest contract charges 4,506 12.344283 55,625 Remaining contract charges 2,002,336 -- 24,800,147 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ TEMPLETON GLOBAL ASSET ALLOCATION FUND 2007 Lowest contract charges 0.95% 17.44% 8.97% Highest contract charges 2.34% 16.38% 7.46% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% 7.12% 19.97% Highest contract charges 2.35% 6.75% 18.30% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 3.79% 2.58% Highest contract charges 2.34% 3.52% 1.15% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 2.78% 14.63% Highest contract charges 2.33% 2.60% 13.03% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 2.59% 30.71% Highest contract charges 2.26% -- 28.89% Remaining contract charges -- -- -- TEMPLETON GROWTH SECURITIES FUND 2007 Lowest contract charges 0.85% 1.27% 1.48% Highest contract charges 2.54% 1.36% (0.23)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.18% 20.78% Highest contract charges 2.54% 1.32% 18.74% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 0.19% 9.79% Highest contract charges 2.50% 1.10% 6.12% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 1.08% 14.93% Highest contract charges 2.45% 0.79% 13.16% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 1.58% 30.89% Highest contract charges 2.39% 1.62% 29.01% Remaining contract charges -- -- -- MUTUAL DISCOVERY SECURITIES FUND 2007 Lowest contract charges 0.70% 1.44% 11.07% Highest contract charges 2.54% 1.40% 9.03% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.74% -- 22.20% Highest contract charges 2.55% 1.07% 19.96% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 1.32% 15.33% Highest contract charges 2.49% 0.97% 13.05% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.54% 1.26% 17.55% Highest contract charges 2.43% 0.47% 15.28% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.63% 0.70% 24.65% Highest contract charges 1.60% 0.30% 23.44% Remaining contract charges -- -- --
SA-88 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- HARTFORD MONEY MARKET HLS FUND 2007 Lowest contract charges 3,141,794 $1.185236 $3,723,765 Highest contract charges 167,210 1.034643 173,002 Remaining contract charges 580,085,723 -- 641,218,095 2006 Lowest contract charges 923 1.122600 1,036 Highest contract charges 121,155 1.011338 122,529 Remaining contract charges 350,195,987 -- 376,339,993 2005 Lowest contract charges 452,963 1.097140 496,964 Highest contract charges 44,659 0.990846 44,250 Remaining contract charges 256,059,371 -- 266,952,857 2004 Lowest contract charges 550,277 1.094675 602,374 Highest contract charges 21,189 0.988311 20,941 Remaining contract charges 215,522,157 -- 223,216,098 2003 Lowest contract charges 1,099,599 1.094789 1,203,829 Highest contract charges 1,686,673 1.004366 1,694,037 Remaining contract charges 227,158,892 -- 237,434,215 MFS CORE EQUITY SERIES 2007 Lowest contract charges 144,880 11.440100 1,657,443 Highest contract charges 4,575 7.322856 33,504 Remaining contract charges 4,477,418 -- 41,788,147 2006 Lowest contract charges 177,574 10.390804 1,845,139 Highest contract charges 17,958 6.768617 121,551 Remaining contract charges 5,650,340 -- 48,076,603 2005 Lowest contract charges 203,763 9.217904 1,878,265 Highest contract charges 17,671 6.098386 107,764 Remaining contract charges 6,982,738 -- 52,925,741 2004 Lowest contract charges 217,101 9.151640 1,986,831 Highest contract charges 6,115 6.149111 37,600 Remaining contract charges 8,500,566 -- 64,305,183 2003 Lowest contract charges 191,756 8.215084 1,575,292 Highest contract charges 44,326 5.630022 249,554 Remaining contract charges 9,290,932 -- 63,566,372 MFS EMERGING GROWTH SERIES 2007 Lowest contract charges 18,087 10.523433 190,331 Highest contract charges 34,717 6.418030 222,816 Remaining contract charges 8,136,475 -- 69,844,780 2006 Lowest contract charges 9,761 8.758777 85,497 Highest contract charges 9,758 5.433347 53,019 Remaining contract charges 7,501,530 -- 54,513,853 2005 Lowest contract charges 2,001 8.187316 16,384 Highest contract charges 2,840 5.165968 14,670 Remaining contract charges 8,252,471 -- 56,616,152 2004 Lowest contract charges 166,739 7.694402 1,282,957 Highest contract charges 749 4.853345 3,636 Remaining contract charges 8,820,166 -- 56,173,389 2003 Lowest contract charges 186,039 6.876662 1,279,328 Highest contract charges 168,777 4.367772 737,179 Remaining contract charges 9,165,413 -- 52,970,434 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ HARTFORD MONEY MARKET HLS FUND 2007 Lowest contract charges 0.85% 4.77% 4.06% Highest contract charges 2.54% 4.83% 2.30% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.25% 2.57% 4.13% Highest contract charges 2.55% 4.85% 2.07% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 3.34% 1.54% Highest contract charges 2.52% 2.94% 0.26% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.96% 0.97% 0.01% Highest contract charges 2.47% 1.43% 1.60% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.77% 0.20% Highest contract charges 2.38% 0.70% 1.64% Remaining contract charges -- -- -- MFS CORE EQUITY SERIES 2007 Lowest contract charges 0.95% 0.36% 10.10% Highest contract charges 2.44% -- 8.35% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.95% 0.45% 12.72% Highest contract charges 2.50% 0.51% 10.99% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.95% 0.76% 0.72% Highest contract charges 2.49% 0.76% 0.83% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.35% 11.40% Highest contract charges 2.49% 0.46% 9.69% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.23% 26.18% Highest contract charges 2.39% 0.15% 24.37% Remaining contract charges -- -- -- MFS EMERGING GROWTH SERIES 2007 Lowest contract charges 0.84% -- 20.15% Highest contract charges 2.53% -- 18.12% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 6.98% Highest contract charges 2.55% -- 5.18% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 18.67% Highest contract charges 2.53% -- 6.44% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 11.89% Highest contract charges 2.53% -- 10.12% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% -- 29.00% Highest contract charges 2.38% -- 27.14% Remaining contract charges -- -- --
SA-89 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS GLOBAL EQUITY SERIES 2007 Lowest contract charges 42,827 $17.942006 $768,410 Highest contract charges 456 14.258638 6,502 Remaining contract charges 2,463,233 -- 39,032,656 2006 Lowest contract charges 32,757 16.571538 542,831 Highest contract charges 51,951 13.415376 696,942 Remaining contract charges 2,505,774 -- 37,102,239 2005 Lowest contract charges 6,971 13.434136 93,646 Highest contract charges 39,153 11.056369 432,885 Remaining contract charges 1,985,943 -- 24,018,777 2004 Lowest contract charges 25,536 12.802636 326,926 Highest contract charges 61,078 10.528057 643,034 Remaining contract charges 1,829,028 -- 20,841,731 2003 Lowest contract charges 25,087 10.927292 274,129 Highest contract charges 8,027 9.126212 73,255 Remaining contract charges 1,349,232 -- 13,210,548 MFS HIGH INCOME SERIES 2007 Lowest contract charges 81,314 13.526642 1,099,904 Highest contract charges 17,392 12.205674 212,278 Remaining contract charges 16,111,786 -- 203,342,132 2006 Lowest contract charges 35,190 13.404996 471,719 Highest contract charges 12,812 12.303290 157,633 Remaining contract charges 18,049,680 -- 227,987,316 2005 Lowest contract charges 690 13.430445 9,262 Highest contract charges 3,307 11.434854 37,817 Remaining contract charges 19,670,408 -- 229,294,917 2004 Lowest contract charges 655 13.219296 8,658 Highest contract charges 124 11.482449 1,427 Remaining contract charges 21,270,027 -- 247,353,788 2003 Lowest contract charges 661 12.177952 8,053 Highest contract charges 147,107 10.791577 1,587,517 Remaining contract charges 18,874,552 -- 205,009,747 MFS INVESTORS GROWTH STOCK SERIES 2007 Lowest contract charges 18,176 9.884952 179,669 Highest contract charges 4,336 7.001540 30,357 Remaining contract charges 11,516,266 -- 96,008,577 2006 Lowest contract charges 11,915 8.952472 106,664 Highest contract charges 111,400 6.459470 719,585 Remaining contract charges 13,758,106 -- 104,596,592 2005 Lowest contract charges 6,162 8.393066 51,722 Highest contract charges 88,490 6.156607 544,799 Remaining contract charges 16,228,510 -- 116,165,398 2004 Lowest contract charges 190,227 8.242582 1,567,963 Highest contract charges 45,826 6.041268 276,846 Remaining contract charges 17,380,879 -- 120,967,974 2003 Lowest contract charges 222,636 7.621247 1,696,765 Highest contract charges 76,918 5.514903 424,197 Remaining contract charges 16,911,344 -- 110,485,936 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS GLOBAL EQUITY SERIES 2007 Lowest contract charges 0.85% 1.92% 8.27% Highest contract charges 2.49% -- 6.45% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.38% 23.35% Highest contract charges 2.50% 0.48% 21.34% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 10.31% Highest contract charges 2.51% 0.45% 5.02% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% 0.34% 17.16% Highest contract charges 2.48% 0.03% 15.36% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% 0.06% 26.64% Highest contract charges 2.38% 0.02% 24.81% Remaining contract charges -- -- -- MFS HIGH INCOME SERIES 2007 Lowest contract charges 0.85% 5.16% 0.91% Highest contract charges 2.54% 6.26% (0.79)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 6.77% 9.44% Highest contract charges 2.53% 6.00% 7.60% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.56% 6.59% 1.60% Highest contract charges 2.51% 2.82% 0.42% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.54% 4.76% 8.55% Highest contract charges 2.53% 2.48% 6.40% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 3.87% 17.31% Highest contract charges 2.38% 2.97% 15.16% Remaining contract charges -- -- -- MFS INVESTORS GROWTH STOCK SERIES 2007 Lowest contract charges 0.85% 0.29% 10.42% Highest contract charges 2.47% -- 8.56% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% -- 6.67% Highest contract charges 2.50% -- 4.92% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.84% -- 10.49% Highest contract charges 2.49% 0.31% 1.91% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.95% -- 8.15% Highest contract charges 2.47% -- 6.49% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.95% -- 21.86% Highest contract charges 2.39% -- 20.11% Remaining contract charges -- -- --
SA-90 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS INVESTORS TRUST SERIES 2007 Lowest contract charges 1,985 $11.499748 $22,833 Highest contract charges 40,789 10.111297 412,429 Remaining contract charges 49,982,729 -- 524,446,462 2006 Lowest contract charges 1,955 10.498556 20,526 Highest contract charges 5,110 9.403315 48,050 Remaining contract charges 46,092,124 -- 444,747,220 2005 Lowest contract charges 1,925 9.356527 18,015 Highest contract charges 9,459 8.536892 80,747 Remaining contract charges 39,575,017 -- 343,234,866 2004 Lowest contract charges 1,910 8.780130 16,768 Highest contract charges 5,534 8.160518 45,159 Remaining contract charges 29,308,221 -- 241,278,971 2003 Lowest contract charges 1,854 7.940149 14,722 Highest contract charges 62,425 7.359018 459,389 Remaining contract charges 16,642,168 -- 125,681,276 MFS MID CAP GROWTH SERIES 2007 Lowest contract charges 2,131 6.946753 14,802 Highest contract charges 46,854 6.642002 311,204 Remaining contract charges 20,068,856 -- 132,442,463 2006 Lowest contract charges 2,170 6.369800 13,821 Highest contract charges 15,371 6.204074 95,364 Remaining contract charges 23,239,468 -- 142,267,675 2005 Lowest contract charges 1,557 6.305593 9,818 Highest contract charges 10,664 6.206393 66,184 Remaining contract charges 26,905,560 -- 163,749,319 2004 Lowest contract charges 1,539 6.149285 9,465 Highest contract charges 496 6.174799 3,064 Remaining contract charges 28,195,561 -- 169,889,204 2003 Lowest contract charges 1,484 5.397197 8,009 Highest contract charges 371,854 5.529101 2,056,021 Remaining contract charges 24,049,972 -- 129,067,190 MFS NEW DISCOVERY SERIES 2007 Lowest contract charges 1,133 11.223146 12,719 Highest contract charges 32,858 8.740299 287,190 Remaining contract charges 27,732,082 -- 314,520,332 2006 Lowest contract charges 1,133 11.007986 12,475 Highest contract charges 5,672 8.745989 49,607 Remaining contract charges 28,200,574 -- 317,146,091 2005 Lowest contract charges 1,133 9.776690 11,080 Highest contract charges 4,645 7.924706 36,808 Remaining contract charges 21,136,420 -- 213,450,409 2004 Lowest contract charges 1,133 9.340625 10,586 Highest contract charges 11,227 7.724119 86,715 Remaining contract charges 16,993,961 -- 164,835,481 2003 Lowest contract charges 1,133 8.817375 9,993 Highest contract charges 146,875 7.438770 1,092,568 Remaining contract charges 10,923,964 -- 100,400,321 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS INVESTORS TRUST SERIES 2007 Lowest contract charges 0.70% 0.81% 9.54% Highest contract charges 2.52% 0.30% 7.53% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.70% 0.49% 12.21% Highest contract charges 2.55% 0.43% 10.15% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.70% 0.54% 6.57% Highest contract charges 2.53% 0.56% 4.61% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.70% 0.63% 10.58% Highest contract charges 2.49% 0.13% 8.55% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.70% 0.65% 21.30% Highest contract charges 2.38% 0.40% 19.25% Remaining contract charges -- -- -- MFS MID CAP GROWTH SERIES 2007 Lowest contract charges 0.70% 0.17% 9.06% Highest contract charges 2.53% 0.11% 7.06% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.70% -- 1.83% Highest contract charges 2.55% -- 0.04% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% -- 2.54% Highest contract charges 2.52% -- 0.51% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% -- 13.94% Highest contract charges 2.55% -- 11.68% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% -- 36.28% Highest contract charges 2.38% -- 33.78% Remaining contract charges -- -- -- MFS NEW DISCOVERY SERIES 2007 Lowest contract charges 0.55% -- 1.96% Highest contract charges 2.52% -- (0.07)% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% -- 12.59% Highest contract charges 2.55% -- 10.36% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% -- 4.67% Highest contract charges 2.55% -- 2.60% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% -- 5.93% Highest contract charges 2.53% -- 3.84% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% -- 32.98% Highest contract charges 2.39% -- 30.55% Remaining contract charges -- -- --
SA-91 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS TOTAL RETURN SERIES 2007 Lowest contract charges 1,537 $14.736831 $22,655 Highest contract charges 66,219 13.955001 924,086 Remaining contract charges 107,412,846 -- 1,537,164,417 2006 Lowest contract charges 1,537 14.218784 21,857 Highest contract charges 21,901 13.736415 300,845 Remaining contract charges 101,405,228 -- 1,409,933,128 2005 Lowest contract charges 2,274 12.777422 29,052 Highest contract charges 13,725 12.593284 172,837 Remaining contract charges 96,547,041 -- 1,217,127,318 2004 Lowest contract charges 2,250 12.495591 28,115 Highest contract charges 10,033 12.564284 126,057 Remaining contract charges 80,749,478 -- 1,005,949,097 2003 Lowest contract charges 4,316 11.286721 48,715 Highest contract charges 327,395 10.861973 3,556,151 Remaining contract charges 59,585,533 -- 678,191,401 MFS VALUE SERIES 2007 Lowest contract charges 606,166 18.846102 11,423,872 Highest contract charges 12,133 17.585857 213,367 Remaining contract charges 14,491,570 -- 263,347,413 2006 Lowest contract charges 335,011 17.614057 5,900,899 Highest contract charges 3,238 16.717946 54,141 Remaining contract charges 9,960,080 -- 170,588,151 2005 Lowest contract charges 97,847 14.700660 1,438,414 Highest contract charges 1,072 14.191889 15,213 Remaining contract charges 5,878,422 -- 84,827,586 2004 Lowest contract charges 43,978 14.004824 615,902 Highest contract charges 36,502 13.656146 498,477 Remaining contract charges 3,418,374 -- 47,102,002 2003 Lowest contract charges 11,228 12.275213 137,822 Highest contract charges 12,764 12.156508 155,161 Remaining contract charges 1,205,439 -- 14,701,082 MFS RESEARCH BOND SERIES 2007 Lowest contract charges 61,019 10.746443 655,732 Highest contract charges 16,572 10.244550 169,773 Remaining contract charges 8,494,357 -- 88,801,717 2006 Lowest contract charges 31,625 10.400575 328,908 Highest contract charges 5,458 10.084786 55,046 Remaining contract charges 3,419,402 -- 34,923,144 2005 Lowest contract charges 8,374 10.081408 84,419 Highest contract charges 6,494 9.946956 64,591 Remaining contract charges 890,879 -- 8,906,349 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS TOTAL RETURN SERIES 2007 Lowest contract charges 0.55% 2.51% 3.64% Highest contract charges 2.52% 2.00% 1.59% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.55% 2.57% 11.28% Highest contract charges 2.55% 2.43% 9.08% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.55% 1.99% 2.26% Highest contract charges 2.54% 1.03% 0.23% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.55% 2.04% 10.71% Highest contract charges 2.52% 0.29% 8.52% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.55% 1.83% 15.69% Highest contract charges 2.39% 1.48% 13.57% Remaining contract charges -- -- -- MFS VALUE SERIES 2007 Lowest contract charges 0.85% 0.85% 7.00% Highest contract charges 2.53% 0.73% 5.19% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.82% 19.82% Highest contract charges 2.54% 1.01% 17.80% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 6.68% Highest contract charges 2.49% -- 3.98% Remaining contract charges -- -- -- 2004 Lowest contract charges 0.94% 0.44% 14.09% Highest contract charges 2.47% 0.26% 12.34% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.63% -- 22.75% Highest contract charges 1.61% -- 21.57% Remaining contract charges -- -- -- MFS RESEARCH BOND SERIES 2007 Lowest contract charges 0.85% 2.73% 3.33% Highest contract charges 2.53% 2.40% 1.58% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 3.58% 3.17% Highest contract charges 2.47% -- 1.43% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 0.91% Highest contract charges 2.46% -- 0.19% Remaining contract charges -- -- --
SA-92 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- MFS RESEARCH INTERNATIONAL SERIES 2007 Lowest contract charges 67,653 $16.749135 $1,133,110 Highest contract charges 5,912 16.005105 94,627 Remaining contract charges 3,544,005 -- 57,819,274 2006 Lowest contract charges 44,428 14.972071 665,191 Highest contract charges 20,271 14.564440 295,229 Remaining contract charges 1,493,065 -- 21,981,068 2005 Lowest contract charges 5,002 12.025883 60,148 Highest contract charges 5,067 11.893036 60,262 Remaining contract charges 305,215 -- 3,646,446 MFS RESEARCH SERIES 2007 Lowest contract charges 880,739 13.109180 11,545,772 Highest contract charges 1,453 12.491769 18,150 Remaining contract charges 2,451,347 -- 31,202,858 2006 Lowest contract charges 220,125 11.678964 2,570,827 Highest contract charges 278 11.319683 3,151 Remaining contract charges 1,008,922 -- 11,557,689 2005 Lowest contract charges 15,083 10.661651 160,811 Highest contract charges 8,331 10.515260 87,603 Remaining contract charges 199,414 -- 2,109,871 BLACKROCK GLOBAL GROWTH V.I. FUND 2007 Lowest contract charges 26,469 15.610518 413,201 Highest contract charges 352 18.866608 6,647 Remaining contract charges 61,740 -- 1,122,414 2006 Lowest contract charges 14,048 11.564831 162,465 Highest contract charges 575 14.117388 8,112 Remaining contract charges 91,870 -- 1,256,730 2005 Lowest contract charges 13,613 9.612095 130,845 Highest contract charges 830 11.851536 9,841 Remaining contract charges 101,298 -- 1,161,158 2004 Lowest contract charges 22,753 8.471165 192,741 Highest contract charges 853 10.549693 9,003 Remaining contract charges 108,121 -- 1,098,279 2003 Lowest contract charges 27,635 7.455626 206,034 Highest contract charges 854 9.378222 8,009 Remaining contract charges 98,302 -- 877,122 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ MFS RESEARCH INTERNATIONAL SERIES 2007 Lowest contract charges 0.85% -- 11.87% Highest contract charges 2.51% -- 9.98% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 1.45% 24.50% Highest contract charges 2.50% 1.31% 22.46% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% 1.94% 20.03% Highest contract charges 2.44% 1.78% 18.72% Remaining contract charges -- -- -- MFS RESEARCH SERIES 2007 Lowest contract charges 0.84% 0.46% 12.25% Highest contract charges 2.54% 0.25% 10.35% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.85% 0.15% 9.54% Highest contract charges 2.57% 0.65% 7.70% Remaining contract charges -- -- -- 2005 Lowest contract charges 0.83% -- 12.46% Highest contract charges 2.43% -- 11.23% Remaining contract charges -- -- -- BLACKROCK GLOBAL GROWTH V.I. FUND 2007 Lowest contract charges 1.39% 1.54% 34.98% Highest contract charges 2.40% 0.85% 33.64% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.95% 20.32% Highest contract charges 2.40% 0.82% 19.12% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 1.07% 13.47% Highest contract charges 2.39% 1.21% 12.34% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 1.51% 13.62% Highest contract charges 2.39% 1.66% 12.49% Remaining contract charges -- -- -- 2003 Lowest contract charges 1.40% 1.07% 31.70% Highest contract charges 2.39% 1.20% 30.39% Remaining contract charges -- -- --
SA-93 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- BLACKROCK LARGE CAP GROWTH V.I. FUND 2007 Lowest contract charges 28,308 $10.714235 $303,292 Highest contract charges 3,169 12.420009 39,365 Remaining contract charges 150,100 -- 1,815,445 2006 Lowest contract charges 33,653 10.024557 337,351 Highest contract charges 6,563 11.737302 77,029 Remaining contract charges 192,530 -- 2,183,611 2005 Lowest contract charges 37,011 9.482120 350,939 Highest contract charges 9,784 11.213779 109,712 Remaining contract charges 219,546 -- 2,341,484 2004 Lowest contract charges 41,165 8.690929 357,763 Highest contract charges 9,146 10.381336 94,951 Remaining contract charges 243,325 -- 2,396,002 2003 Lowest contract charges 58,799 8.219869 483,316 Highest contract charges 9,107 9.917343 90,313 Remaining contract charges 270,478 -- 2,507,255 INTERNATIONAL GROWTH EQUITY 2007 Lowest contract charges 2,874 13.181607 37,881 Highest contract charges 4,526 13.013987 58,907 Remaining contract charges 52,167 -- 683,159 2006 Lowest contract charges 2,266 11.675262 26,458 Highest contract charges 2,238 11.642783 26,059 Remaining contract charges 3,181 -- 37,071 U.S. MID CAP VALUE 2007 Lowest contract charges 50,309 13.831448 695,851 Highest contract charges 3,139 12.008550 37,690 Remaining contract charges 200,522 -- 2,533,894 2006 Lowest contract charges 10,884 13.011816 141,625 Highest contract charges 263 11.427560 3,002 Remaining contract charges 49,934 -- 593,010 FOCUS GROWTH 2007 Lowest contract charges 35,329 8.525023 301,189 Highest contract charges 1,679 8.152510 13,685 Remaining contract charges 59,131 -- 495,948 2006 Lowest contract charges 15,943 7.054447 112,475 Highest contract charges 494 6.826646 3,371 Remaining contract charges 6,651 -- 46,530 CAPITAL OPPORTUNITIES 2007 Lowest contract charges 159,138 5.422083 862,854 Highest contract charges 2,366 5.185166 12,270 Remaining contract charges 512,272 -- 2,723,886 2006 Lowest contract charges 69,756 4.615129 321,935 Highest contract charges 1,901 4.464517 8,487 Remaining contract charges 178,253 -- 810,480 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ BLACKROCK LARGE CAP GROWTH V.I. FUND 2007 Lowest contract charges 1.40% 0.26% 6.88% Highest contract charges 2.40% 0.20% 5.82% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.40% 0.28% 5.72% Highest contract charges 2.40% 0.28% 4.67% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.40% 0.18% 9.10% Highest contract charges 2.39% 0.20% 8.02% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.40% 0.04% 5.73% Highest contract charges 2.40% 0.24% 4.68% Remaining contract charges -- -- -- 2003 Lowest contract charges 1.40% 0.62% 32.88% Highest contract charges 2.39% 0.73% 31.56% Remaining contract charges -- -- -- INTERNATIONAL GROWTH EQUITY 2007 Lowest contract charges 1.34% 0.18% 12.73% Highest contract charges 2.18% 0.18% 11.78% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.84% 0.22% 13.79% Highest contract charges 1.12% 0.24% 13.55% Remaining contract charges -- -- -- U.S. MID CAP VALUE 2007 Lowest contract charges 1.34% 0.67% 6.30% Highest contract charges 2.48% 0.50% 5.08% Remaining contract charges -- -- -- 2006 Lowest contract charges 0.69% -- 16.13% Highest contract charges 1.39% -- 15.62% Remaining contract charges -- -- -- FOCUS GROWTH 2007 Lowest contract charges 1.34% -- 20.85% Highest contract charges 2.48% -- 19.47% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% -- 12.35% Highest contract charges 2.17% -- 11.99% Remaining contract charges -- -- -- CAPITAL OPPORTUNITIES 2007 Lowest contract charges 1.34% -- 17.49% Highest contract charges 2.49% -- 16.14% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% -- 13.36% Highest contract charges 2.54% -- 12.87% Remaining contract charges -- -- --
SA-94 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- DEVELOPING GROWTH 2007 Lowest contract charges 20,510 $11.462786 $235,115 Highest contract charges 12,240 10.998815 134,623 Remaining contract charges 24,947 -- 281,921 2006 Lowest contract charges 878 9.473026 8,325 Highest contract charges 4,653 9.167156 42,652 Remaining contract charges 10,851 -- 102,025 FLEXIBLE INCOME 2007 Lowest contract charges 29,963 11.968451 358,613 Highest contract charges 5,310 11.445540 60,776 Remaining contract charges 39,600 -- 465,514 2006 Lowest contract charges 19,362 11.704959 226,631 Highest contract charges 884 11.323008 10,005 Remaining contract charges 20,730 -- 239,873 DIVIDEND GROWTH 2007 Lowest contract charges 11,197 13.021131 145,797 Highest contract charges 4,782 12.494023 59,750 Remaining contract charges 18,477 -- 236,973 2006 Lowest contract charges 10,595 12.696125 134,511 Highest contract charges 4,782 12.286164 58,756 Remaining contract charges 12,246 -- 153,386 GLOBAL EQUITY 2007 Lowest contract charges 10,090 12.522786 126,355 Highest contract charges 7,466 11.975692 89,406 Remaining contract charges 31,737 -- 388,660 2006 Lowest contract charges 3,521 10.928082 38,475 Highest contract charges 3,678 10.571502 38,879 Remaining contract charges 14,032 -- 149,715 JENNISON 20/20 FOCUS PORTFOLIO 2007 Lowest contract charges 280,099 1.533635 429,569 Highest contract charges 75,095 1.486316 111,615 Remaining contract charges 59,298 -- 89,393 2006 Lowest contract charges 278,112 1.416570 393,967 Highest contract charges 101,311 1.379746 139,783 Remaining contract charges 78,713 -- 110,034 2005 Lowest contract charges 268,222 1.268243 340,170 Highest contract charges 92,945 1.241466 115,388 Remaining contract charges 92,241 -- 115,450 2004 Lowest contract charges 252,780 1.063806 268,908 Highest contract charges 83,835 1.046563 87,738 Remaining contract charges 62,792 -- 66,197 2003 Lowest contract charges 275,927 0.937825 258,772 Highest contract charges 40,566 0.927249 37,615 Remaining contract charges 57,663 -- 53,710 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ DEVELOPING GROWTH 2007 Lowest contract charges 1.34% 0.17% 21.00% Highest contract charges 2.19% 0.10% 19.98% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.33% -- 15.63% Highest contract charges 2.24% -- 15.26% Remaining contract charges -- -- -- FLEXIBLE INCOME 2007 Lowest contract charges 1.35% 6.04% 2.25% Highest contract charges 2.48% 6.47% 1.08% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% 5.09% 3.19% Highest contract charges 2.49% 4.40% 2.74% Remaining contract charges -- -- -- DIVIDEND GROWTH 2007 Lowest contract charges 1.35% 0.94% 2.56% Highest contract charges 2.19% 0.93% 1.69% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.36% 1.64% 10.04% Highest contract charges 2.28% 3.10% 9.69% Remaining contract charges -- -- -- GLOBAL EQUITY 2007 Lowest contract charges 1.34% 0.48% 14.59% Highest contract charges 2.48% 0.48% 13.28% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.37% -- 14.69% Highest contract charges 2.51% -- 14.19% Remaining contract charges -- -- -- JENNISON 20/20 FOCUS PORTFOLIO 2007 Lowest contract charges 1.70% 0.12% 8.26% Highest contract charges 2.20% 0.11% 7.72% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 11.70% Highest contract charges 2.20% -- 11.14% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% -- 19.22% Highest contract charges 2.18% -- 18.62% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% -- 13.43% Highest contract charges 2.19% -- 12.87% Remaining contract charges -- -- -- 2003 Lowest contract charges 1.70% -- 26.63% Highest contract charges 2.19% -- 26.00% Remaining contract charges -- -- --
SA-95 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- JENNISON PORTFOLIO 2007 Lowest contract charges 40,296 $1.015125 $40,906 Highest contract charges 9,548 0.972493 9,285 Remaining contract charges 104,361 -- 102,811 2006 Lowest contract charges 48,769 0.925569 45,138 Highest contract charges 8,437 0.898869 7,584 Remaining contract charges 122,233 -- 110,904 2005 Lowest contract charges 92,522 0.928754 85,930 Highest contract charges 9,438 0.906942 8,559 Remaining contract charges 182,529 -- 167,260 2004 Lowest contract charges 103,873 0.828484 86,057 Highest contract charges 9,055 0.813488 7,366 Remaining contract charges 282,331 -- 231,669 2003 Lowest contract charges 133,812 0.771563 103,244 Highest contract charges 34,808 0.761765 26,516 Remaining contract charges 819,733 -- 628,580 PRUDENTIAL VALUE PORTFOLIO 2007 Lowest contract charges 182,958 1.390767 254,453 Highest contract charges 84,887 1.358682 115,334 Remaining contract charges 33,808 -- 46,551 2006 Lowest contract charges 197,573 1.375746 271,810 Highest contract charges 12,093 1.340654 16,212 Remaining contract charges 130,756 -- 176,875 2005 Lowest contract charges 182,964 1.171723 214,383 Highest contract charges 13,142 1.147543 15,081 Remaining contract charges 181,045 -- 209,169 2004 Lowest contract charges 182,967 1.025520 187,636 Highest contract charges 170,039 1.009386 171,635 Remaining contract charges 256,404 -- 259,917 2003 Lowest contract charges 184,611 0.900515 166,245 Highest contract charges 193,769 0.890789 172,607 Remaining contract charges 260,387 -- 232,508 PRUDENTIAL SERIES INTERNATIONAL GROWTH 2007 Lowest contract charges -- 1.408201 -- Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 6,959 1.178551 8,201 Highest contract charges -- -- -- Remaining contract charges -- -- -- GROWTH AND INCOME 2007 Lowest contract charges 142,453 17.229559 2,454,422 Highest contract charges 13,046 16.476878 214,953 Remaining contract charges 538,508 -- 9,088,529 2006 Lowest contract charges 67,735 17.033843 1,153,807 Highest contract charges 2,202 16.478091 36,278 Remaining contract charges 175,473 -- 2,943,724 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ JENNISON PORTFOLIO 2007 Lowest contract charges 1.70% -- 9.68% Highest contract charges 2.22% -- 8.91% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 0.34% Highest contract charges 2.25% -- 0.89% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% -- 12.10% Highest contract charges 2.24% -- 11.49% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 0.04% 7.38% Highest contract charges 2.29% 0.03% 6.79% Remaining contract charges -- -- -- 2003 Lowest contract charges 1.70% -- 27.43% Highest contract charges 2.24% -- 26.73% Remaining contract charges -- -- -- PRUDENTIAL VALUE PORTFOLIO 2007 Lowest contract charges 1.70% 0.99% 1.09% Highest contract charges 2.05% 0.98% 0.74% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% 1.05% 17.41% Highest contract charges 2.20% 0.98% 16.83% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.70% 0.79% 14.26% Highest contract charges 2.20% 0.89% 13.69% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.70% 0.96% 13.88% Highest contract charges 2.20% 0.91% 13.31% Remaining contract charges -- -- -- 2003 Lowest contract charges 1.70% 1.04% 25.48% Highest contract charges 2.19% 1.27% 24.86% Remaining contract charges -- -- -- PRUDENTIAL SERIES INTERNATIONAL GROWTH 2007 Lowest contract charges -- -- -- Highest contract charges -- -- -- Remaining contract charges -- -- -- 2006 Lowest contract charges 1.70% -- 18.46% Highest contract charges -- -- -- Remaining contract charges -- -- -- GROWTH AND INCOME 2007 Lowest contract charges 1.34% 1.05% 1.15% Highest contract charges 2.47% 0.77% (0.01)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 11.24% Highest contract charges 2.51% -- 10.75% Remaining contract charges -- -- --
SA-96 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- COMSTOCK 2007 Lowest contract charges 47,232 $16.364834 $772,953 Highest contract charges 2,977 15.738155 46,847 Remaining contract charges 197,225 -- 3,177,705 2006 Lowest contract charges 17,638 16.982646 299,538 Highest contract charges 1,726 16.521234 28,517 Remaining contract charges 72,081 -- 1,210,341 WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND 2007 Lowest contract charges 79,356 1.401139 111,189 Highest contract charges 9,821 1.318773 12,951 Remaining contract charges 1,498,461 -- 2,020,935 2006 Lowest contract charges 83,812 1.319922 110,626 Highest contract charges 7,826 1.256694 9,835 Remaining contract charges 1,405,459 -- 1,798,147 2005 Lowest contract charges 54,002 1.193027 64,425 Highest contract charges 53,092 1.149019 61,004 Remaining contract charges 1,504,542 -- 1,751,936 2004 Lowest contract charges 57,473 1.151803 66,197 Highest contract charges 52,184 1.122137 58,558 Remaining contract charges 1,468,482 -- 1,661,161 2003 Lowest contract charges 34,431 1.067708 36,763 Highest contract charges 6,843 1.052236 7,201 Remaining contract charges 398,528 -- 421,330 WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2007 Lowest contract charges 513,824 1.242914 638,640 Highest contract charges 94,812 1.169807 110,912 Remaining contract charges 5,631,899 -- 6,736,250 2006 Lowest contract charges 212,602 1.186333 252,216 Highest contract charges 126,709 1.129473 143,115 Remaining contract charges 4,844,225 -- 5,563,099 2005 Lowest contract charges 152,202 1.157855 176,228 Highest contract charges 229,153 1.115105 255,530 Remaining contract charges 4,052,488 -- 4,569,738 2004 Lowest contract charges 109,558 1.151424 126,148 Highest contract charges 103,365 1.121743 115,949 Remaining contract charges 3,074,655 -- 3,468,812 2003 Lowest contract charges 47,933 1.111298 53,267 Highest contract charges 308,509 1.101736 339,895 Remaining contract charges 524,132 -- 578,941 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ COMSTOCK 2007 Lowest contract charges 1.34% 1.17% (3.64)% Highest contract charges 2.48% 1.30% (4.74)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.34% -- 11.38% Highest contract charges 2.49% -- 10.90% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND 2007 Lowest contract charges 1.35% 2.23% 6.15% Highest contract charges 2.49% 2.30% 4.94% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.33% 10.64% Highest contract charges 2.51% 2.09% 9.37% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.35% 2.05% 3.58% Highest contract charges 2.49% 2.07% 2.40% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.35% 2.14% 7.88% Highest contract charges 2.49% 3.08% 6.64% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.52% 0.64% 11.20% Highest contract charges 0.91% 0.87% 10.77% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2007 Lowest contract charges 1.34% 4.57% 4.77% Highest contract charges 2.49% 4.56% 3.57% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 4.40% 2.46% Highest contract charges 2.50% 4.32% 1.29% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 3.68% 0.56% Highest contract charges 2.48% 3.69% 0.59% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.33% 3.38% 2.99% Highest contract charges 2.47% 3.39% 1.82% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.63% 1.16% 2.64% Highest contract charges 0.90% 1.22% 2.38% Remaining contract charges -- -- --
SA-97 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND 2007 Lowest contract charges 387,540 $1.424572 $552,080 Highest contract charges 46,394 1.340829 62,207 Remaining contract charges 1,955,730 -- 2,697,038 2006 Lowest contract charges 201,352 1.404613 282,821 Highest contract charges 77,220 1.337330 103,269 Remaining contract charges 1,954,391 -- 2,669,470 2005 Lowest contract charges 94,335 1.200923 113,289 Highest contract charges 33,350 1.156619 38,573 Remaining contract charges 1,731,640 -- 2,033,647 2004 Lowest contract charges 42,053 1.155148 48,578 Highest contract charges 15,035 1.125397 16,920 Remaining contract charges 886,895 -- 1,004,749 2003 Lowest contract charges 3,571 1.047810 3,741 Highest contract charges 78,150 1.038773 81,180 Remaining contract charges 159,119 -- 165,712 WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND 2007 Lowest contract charges 112,249 1.289885 144,788 Highest contract charges 10,353 1.214070 12,569 Remaining contract charges 889,003 -- 1,107,351 2006 Lowest contract charges 15,081 1.322927 19,952 Highest contract charges 10,659 1.259570 13,425 Remaining contract charges 726,355 -- 931,598 2005 Lowest contract charges 3,001 1.098040 3,295 Highest contract charges 4,182 1.057533 4,423 Remaining contract charges 399,602 -- 426,466 2004 Lowest contract charges 3,008 1.079439 3,247 Highest contract charges 130,201 1.053230 137,131 Remaining contract charges 102,555 -- 108,377 2003 Lowest contract charges 31,340 0.971940 30,461 Highest contract charges 114,717 0.969458 111,213 Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND 2007 Lowest contract charges 33,574 1.129967 37,937 Highest contract charges 28,703 1.069914 30,710 Remaining contract charges 244,827 -- 268,115 2006 Lowest contract charges 31,167 1.119493 34,891 Highest contract charges 28,708 1.070649 30,736 Remaining contract charges 95,866 -- 104,242 2005 Lowest contract charges 14,665 0.981243 14,390 Highest contract charges 28,713 0.947863 27,216 Remaining contract charges 94,820 -- 90,990 2004 Lowest contract charges 12,310 1.007804 12,406 Highest contract charges 28,719 0.992631 28,507 Remaining contract charges 65,555 -- 65,554 2003 Lowest contract charges 2,308 0.945828 2,183 Highest contract charges 5,317 0.937667 4,986 Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND 2007 Lowest contract charges 1.34% 1.64% 1.42% Highest contract charges 2.50% 1.40% 0.26% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 1.70% 16.96% Highest contract charges 2.50% 1.68% 15.62% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 1.60% 3.96% Highest contract charges 2.48% 1.57% 2.77% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.32% 2.47% 9.59% Highest contract charges 2.45% 2.69% 8.34% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.51% 0.48% 11.70% Highest contract charges 0.89% 1.00% 11.41% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND 2007 Lowest contract charges 1.33% 1.42% (2.50)% Highest contract charges 2.49% 1.06% (3.61)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.19% 20.48% Highest contract charges 2.49% 1.97% 19.11% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.78% 1.72% Highest contract charges 2.47% 0.83% 0.56% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.34% 1.67% 9.73% Highest contract charges 2.35% 1.61% 8.64% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.77% 1.00% 11.81% Highest contract charges 0.88% 1.10% 11.68% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND 2007 Lowest contract charges 1.35% -- 0.94% Highest contract charges 2.34% -- (0.07)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 0.84% 14.09% Highest contract charges 2.35% 0.73% 12.95% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.32% 1.29% 3.55% Highest contract charges 2.34% 0.57% 4.51% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.69% -- 6.55% Highest contract charges 2.33% -- 5.86% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.56% -- 10.77% Highest contract charges 0.77% -- 10.49% Remaining contract charges -- -- --
SA-98 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND 2007 Lowest contract charges 354,945 $1.612897 $572,491 Highest contract charges 68,734 1.518073 104,343 Remaining contract charges 1,555,950 -- 2,430,879 2006 Lowest contract charges 215,217 1.451008 312,279 Highest contract charges 98,715 1.381485 136,374 Remaining contract charges 1,632,694 -- 2,305,249 2005 Lowest contract charges 111,770 1.217401 136,068 Highest contract charges 61,698 1.172478 72,340 Remaining contract charges 1,315,356 -- 1,566,275 2004 Lowest contract charges 50,434 1.125003 56,739 Highest contract charges 25,606 1.096017 28,064 Remaining contract charges 485,323 -- 535,423 2003 Lowest contract charges 2,520 1.033934 2,605 Highest contract charges 16,662 1.025020 17,079 Remaining contract charges 69,417 -- 71,338 WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND 2007 Lowest contract charges 315,284 1.135401 357,975 Highest contract charges 53,113 1.068652 56,759 Remaining contract charges 3,002,047 -- 3,287,829 2006 Lowest contract charges 218,420 1.069429 233,586 Highest contract charges 77,986 1.018189 79,404 Remaining contract charges 3,162,071 -- 3,280,103 2005 Lowest contract charges 142,314 1.059100 150,725 Highest contract charges 75,336 1.020021 76,844 Remaining contract charges 3,169,096 -- 3,274,004 2004 Lowest contract charges 104,399 1.015612 106,029 Highest contract charges 63,388 0.989443 62,719 Remaining contract charges 2,655,650 -- 2,644,771 2003 Lowest contract charges 20,126 0.991033 19,945 Highest contract charges 134,488 0.982513 132,136 Remaining contract charges 482,547 -- 475,326 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND 2007 Lowest contract charges 1.34% 0.01% 11.16% Highest contract charges 2.49% 0.01% 9.89% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 2.17% 19.19% Highest contract charges 2.50% 1.97% 17.83% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 2.68% 8.21% Highest contract charges 2.48% 2.63% 6.98% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.32% 0.01% 8.16% Highest contract charges 2.45% 0.31% 6.93% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.67% -- 20.36% Highest contract charges 0.87% -- 20.05% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND 2007 Lowest contract charges 1.34% -- 6.17% Highest contract charges 2.50% -- 4.96% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 0.98% Highest contract charges 2.50% -- 0.18% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 0.18% 4.28% Highest contract charges 2.49% 0.18% 3.09% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.33% -- 1.87% Highest contract charges 2.48% -- 0.71% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.65% -- 9.25% Highest contract charges 0.88% -- 8.97% Remaining contract charges -- -- --
SA-99 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT MONEY MARKET FUND 2007 Lowest contract charges 212,474 $1.059206 $225,052 Highest contract charges 11,651 0.996925 11,616 Remaining contract charges 2,986,922 -- 3,073,485 2006 Lowest contract charges 41,036 1.026287 42,115 Highest contract charges 11,651 0.977112 11,385 Remaining contract charges 1,007,610 -- 1,009,583 2005 Lowest contract charges 40,446 0.996039 40,285 Highest contract charges 11,651 0.959281 11,177 Remaining contract charges 946,028 -- 923,140 2004 Lowest contract charges 6,940 0.984231 6,830 Highest contract charges 382,052 0.962494 367,723 Remaining contract charges 1,106,857 -- 1,074,235 2003 Lowest contract charges 339,445 0.978814 332,253 Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2007 Lowest contract charges 386,686 1.579875 610,915 Highest contract charges 56,091 1.486979 83,406 Remaining contract charges 1,844,855 -- 2,814,115 2006 Lowest contract charges 198,324 1.407013 279,043 Highest contract charges 76,708 1.339585 102,757 Remaining contract charges 1,808,913 -- 2,470,551 2005 Lowest contract charges 127,662 1.161789 148,317 Highest contract charges 47,882 1.118912 53,576 Remaining contract charges 1,358,744 -- 1,540,827 2004 Lowest contract charges 73,515 1.108382 81,482 Highest contract charges 38,102 1.079819 41,143 Remaining contract charges 821,307 -- 892,914 2003 Lowest contract charges 19,545 0.981616 19,186 Highest contract charges 43,499 0.973154 42,331 Remaining contract charges 136,038 -- 132,731 WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2007 Lowest contract charges 6,357 15.364252 97,673 Highest contract charges 19,993 15.030356 300,495 Remaining contract charges 26,993 -- 409,785 2006 Lowest contract charges 1,515 12.730894 19,293 Highest contract charges 9,817 12.560463 123,302 Remaining contract charges 22,075 -- 278,970 2005 Lowest contract charges 891 11.222685 9,996 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ WELLS FARGO ADVANTAGE VT MONEY MARKET FUND 2007 Lowest contract charges 1.29% 4.34% 3.21% Highest contract charges 2.49% 4.49% 2.03% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% 4.43% 3.04% Highest contract charges 2.50% 4.34% 1.86% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% 2.71% 1.20% Highest contract charges 2.48% 2.71% 0.04% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.35% 0.53% 0.65% Highest contract charges 2.06% 0.83% 1.49% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.76% 0.14% 0.65% Highest contract charges -- -- -- Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2007 Lowest contract charges 1.34% -- 12.29% Highest contract charges 2.50% -- 11.00% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 21.11% Highest contract charges 2.50% -- 19.72% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.34% -- 4.82% Highest contract charges 2.49% -- 3.62% Remaining contract charges -- -- -- 2004 Lowest contract charges 1.33% -- 12.24% Highest contract charges 2.46% -- 10.96% Remaining contract charges -- -- -- 2003 Lowest contract charges 0.62% -- 20.05% Highest contract charges 0.88% -- 19.74% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2007 Lowest contract charges 1.34% -- 20.69% Highest contract charges 2.18% -- 19.66% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.35% -- 13.11% Highest contract charges 2.20% -- 12.15% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.76% -- 6.69% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-100 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY ----------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND 2007 Lowest contract charges 4,045 $13.535596 $54,749 Highest contract charges 997 13.139235 13,097 Remaining contract charges 60,582 -- 808,936 2006 Lowest contract charges 12,987 13.749766 178,569 Highest contract charges 22,683 13.630438 309,177 Remaining contract charges 30,232 -- 414,141 WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND 2007 Lowest contract charges 1,377 12.641519 17,400 Highest contract charges 972 12.366753 12,016 Remaining contract charges 1,998 -- 24,930 2006 Lowest contract charges 918 11.921222 10,943 Highest contract charges 885 11.855245 10,493 Remaining contract charges 558 -- 6,646 2005 Lowest contract charges 918 10.821546 9,934 Highest contract charges 376 10.799381 4,056 Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND 2007 Lowest contract charges 1.34% 0.03% (2.02)% Highest contract charges 2.49% -- (3.14)% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.65% -- 13.83% Highest contract charges 2.20% -- 13.21% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND 2007 Lowest contract charges 1.33% 0.73% 5.21% Highest contract charges 2.19% 0.60% 4.32% Remaining contract charges -- -- -- 2006 Lowest contract charges 1.85% -- 10.16% Highest contract charges 2.20% -- 9.78% Remaining contract charges -- -- -- 2005 Lowest contract charges 1.76% -- 4.81% Highest contract charges 2.16% -- 4.63% Remaining contract charges -- -- --
* This represents the annualized contract expenses of the Sub-Account for the year indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the Funds and charges made directly to contract owner accounts through the redemption of units. ** These amounts represent the dividends, excluding distributions of capital gains received by the Sub-Account from the Fund, net of management fees assessed by the Fund's manager, divided by the average net assets. These ratios exclude those expenses, such as Mortality and Expense Risk Charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the Fund in which the Sub-Accounts invest. *** This represents the total return for the year indicated and reflects a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the year indicated or from the effective date through the end of the reporting period. # Rounded unit values Summary of the Account's expense charges, including Mortality and Expense Risk Charges, Administrative Charges, Riders (if applicable) and Annual Maintenance Fees assessed. These fees are either assessed as a direct reduction in unit values or through a redemption of units for all contracts contained within the Account. MORTALITY AND EXPENSE RISK CHARGES: The Company will charge an expense ranging from 0.40% to 1.55% of the contract's value for mortality and expense risks undertaken by the Company. These charges are a reduction in unit values. ADMINISTRATIVE CHARGES: The Company will charge an expense ranging from 0.15% to 0.20% of the contract's value for administrative services provided by the Company. These charges are a reduction in unit values. RIDERS: The Company will charge an expense for various Rider charges, such as Optional Death Benefit Charge, Earnings Protection Benefit Charge, Principal First Charge, Principal First Preferred Charge, MAV/EPB Death Benefit Charge, SA-101 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 2007 ------------------------------------------------------------------------------- and MAV 70 Death Benefit Charge. These deductions range from 0.15% to 0.85%. These charges are a redemption of units. The Company will also charge an expense for Rider charges related to The Hartford's Income Foundation, The Hartford's Lifetime Income Builder, and The Hartford's Lifetime Income Builder II. The Company initially makes deductions of 0.30%, 0.40%, and 0.40%, respectively. The Company has the right to increase both the Lifetime Income Builder and Lifetime Income Builder II to a maximum charge of 0.75%. This charge is a redemption of units. ANNUAL MAINTENANCE FEE: An annual maintenance fee in the amount of $30 may be charged against the contract's value each contract year. However, this fee is not applicable to contracts with values of $50,000 or more, as determined on the most recent contract anniversary. These expenses are included in surrenders for benefit payments and fees in the accompanying statements of changes in net assets. These charges are a redemption of units. SA-102 ------------------------------------------------------------------------------- [This page intentionally left blank] SA-103 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS -- STATUTORY BASIS As of December 31, 2007 and 2006 and for the Years Ended December 31, 2007, 2006 and 2005 Supplemental Schedules Year Ended December 31, 2007 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY CONTENTS
PAGE: -------------------------------------------------------------------------------- Independent Auditors' Report F-2 Financial Statements Statutory Basis: Admitted Assets, Liabilities and Surplus F-4 Statements of Operations F-5 Statements of Changes in Capital and Surplus F-6 Statements of Cash Flows F-7 Notes to Financial Statements F-8 Supplementary Information Schedule I -- Selected Financial Data F-28 Schedule II -- Summary Investment Schedule F-31 Schedule III -- Investment Risks Interrogatories F-32
F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Hartford Life and Annuity Insurance Company Hartford, Connecticut We have audited the accompanying statutory-basis statements of admitted assets, liabilities, and surplus of Hartford Life and Annuity Insurance Company (the "Company") as of December 31, 2007 and 2006, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flows for the three years ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described more fully in Note 2 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Insurance Department of the State of Connecticut, and such practices differ from accounting principles generally accepted in the United States of America. The effects on such financial statements of the differences between the statutory basis of accounting and accounting principles generally accepted in the United States of America are also described in Note 2. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the statutory-basis financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2007 or 2006, or the results of its operations or its cash flows for the three years ended December 31, 2007. However, in our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities, and surplus of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the three years ended December 31, 2007, on the basis of accounting described in Note 2. Our 2007 audit was conducted for the purpose of forming an opinion on the basic 2007 statutory-basis financial statements taken as a whole. The supplemental schedule of selected financial data, the summary investment schedule, and the schedule of investment risk interrogatories as of and for the year ended December 31, 2007 are presented for purposes of additional analysis and are not a required part of the basic 2007 statutory-basis financial statements. These schedules are the responsibility of the Company's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 2007 statutory-basis financial statements. The effects on these schedules of the differences between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Accordingly, in our opinion, such schedules do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the information shown therein. However, in our opinion, such schedules are fairly stated in all material respects when considered in relation to the basic 2007 statutory-basis financial statements taken as a whole. F-2 As discussed in Note 2 to the financial statements, the Company received approval from the State of Connecticut Insurance Department to change from the continous CARVM to the curtate CARVM reserving methodology. The change resulted in a basis change which decreased reserves by $236 million and was reported as a direct increase to surplus. /s/ Deloitte & Touche LLP Hartford, Connecticut March 27, 2008 F-3 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ADMITTED ASSETS, LIABILITIES AND SURPLUS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
AS OF DECEMBER 31, 2007 2006 -------------------------------------------------------------------------------- ADMITTED ASSETS Bonds $5,605,630 $5,036,594 Common and Preferred Stocks 316,558 245,850 Mortgage Loans 350,528 160,595 Real Estate 27,569 25,667 Policy Loans 343,773 324,631 Cash and Short-Term Investments 565,283 467,648 Other Invested Assets 629,835 245,454 -------------- -------------- TOTAL CASH AND INVESTED ASSETS 7,839,176 6,506,439 -------------- -------------- Investment Income Due and Accrued 77,351 66,244 Federal Income Taxes Recoverable 24,162 -- Deferred Tax Asset 145,516 91,537 Other Assets 189,180 104,023 Separate Account Assets 81,072,392 76,317,895 -------------- -------------- TOTAL ADMITTED ASSETS $89,347,777 $83,086,138 -------------- -------------- LIABILITIES Aggregate Reserves for Life and Accident and Health Policies $5,976,074 $6,422,847 Liability for Deposit Type Contracts 73,736 80,785 Policy and Contract Claim Liabilities 31,281 32,635 Asset Valuation Reserve 46,855 41,544 Payable to Parents, Subsidiaries or Affiliates 41,011 30,498 Accrued Expense Allowances and Other Amounts Due From Separate Accounts (2,471,367) (2,438,731) Other Liabilities 2,021,207 930,986 Separate Account Liabilities 81,072,392 76,317,895 -------------- -------------- TOTAL LIABILITIES 86,791,189 81,418,459 -------------- -------------- CAPITAL AND SURPLUS Common Stock -- 3,000 Shares Authorized, 2,000 Shares Issued and Outstanding 2,500 2,500 Gross Paid-In and Contributed Surplus 1,483,869 1,376,953 Aggregate Write-Ins for Other Than Special Surplus Funds 194,430 -- Unassigned Funds 875,789 288,226 -------------- -------------- TOTAL CAPITAL AND SURPLUS 2,556,588 1,667,679 -------------- -------------- TOTAL LIABILITIES, CAPITAL AND SURPLUS $89,347,777 $83,086,138 -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS. F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
FOR THE YEARS ENDED DECEMBER 31, 2007 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- REVENUES Premiums and Annuity Considerations $10,313,501 $9,842,305 $9,152,337 Net Investment Income 348,437 339,347 326,928 Commissions and Expense Allowances on Reinsurance Ceded 333,674 94,873 84,961 Reserve Adjustment on Reinsurance Ceded (1,710,405) (1,659,418) (1,552,540) Fee Income 1,786,396 1,650,017 1,369,610 Other Revenues 83,752 15,635 107,757 -------------- -------------- ------------- TOTAL REVENUES 11,155,355 10,282,759 9,489,053 -------------- -------------- ------------- BENEFITS AND EXPENSES Death and Annuity Benefits 341,654 280,782 265,994 Disability and Other Benefits 7,588 18,311 14,118 Surrenders and Other Fund Withdrawals 9,528,808 9,054,230 6,974,564 Commissions 962,917 864,564 783,178 (Decrease) Increase in Aggregate Reserves for Life and Accident and Health Policies (70,821) 274,407 (11,074) General Insurance Expenses 532,485 528,545 449,607 Net Transfers (from) to Separate Accounts (237,153) (675,124) 1,192,568 Modified Coinsurance Adjustment on Reinsurance Assumed (509,774) (530,122) (483,138) Other Expenses 144,927 55,838 41,735 -------------- -------------- ------------- TOTAL BENEFITS AND EXPENSES 10,700,631 9,871,431 9,227,552 -------------- -------------- ------------- Net gain from operations before federal income tax expense 454,724 411,328 261,501 Federal income tax expense 88,449 31,961 42,463 -------------- -------------- ------------- NET GAIN FROM OPERATIONS 366,275 379,367 219,038 -------------- -------------- ------------- Net realized capital (losses) gains, after tax (81,759) (40,656) 54 -------------- -------------- ------------- NET INCOME $284,516 $338,711 $219,092 -------------- -------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. F-5 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31, 2007 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK -- 3,000 SHARES AUTHORIZED, 2,000 SHARES ISSUED AND OUTSTANDING Balance, Beginning and End of Year $2,500 $2,500 $2,500 ------------- ------------- ------------- GROSS PAID-IN AND CONTRIBUTED SURPLUS, Beginning of Year 1,376,953 1,371,883 1,371,883 Capital Contribution 106,916 5,070 -- ------------- ------------- ------------- BALANCE, END OF YEAR 1,483,869 1,376,953 1,371,883 ------------- ------------- ------------- AGGREGATE WRITE-INS FOR OTHER THAN SPECIAL SURPLUS FUNDS Beginning of Year -- -- -- Gain on Inforce Reinsurance 194,430 -- -- ------------- ------------- ------------- BALANCE, END OF YEAR 194,430 -- -- ------------- ------------- ------------- UNASSIGNED FUNDS Balance, Beginning of Year 288,226 115,883 (66,391) Net Income 284,516 338,711 219,092 Change in Net Unrealized Capital Losses on Common Stocks and Other Invested Assets 262,434 (35,674) (7,075) Change in Net Unrealized Foreign Exchange Capital Losses (5,386) 2,957 (495) Change in Net Deferred Income Tax (82,891) 30,476 82,268 Change in Asset Valuation Reserve (5,311) (6,795) (4,632) Change in Non-Admitted Assets 100,351 (42,153) (106,914) Change in Reserve on Account of Change in Valuation Basis 236,861 -- -- Change in Liability for Reinsurance in Unauthorized Companies (198) (179) 30 Correction of Reserves and Tax Liabilities 4,187 -- -- Dividends to Stockholder (207,000) (115,000) -- ------------- ------------- ------------- BALANCE, END OF YEAR 875,789 288,226 115,883 ------------- ------------- ------------- CAPITAL AND SURPLUS, End of year $2,556,588 $1,667,679 $1,490,266 ------------- ------------- -------------
SEE NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS. F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CASH FLOWS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
FOR THE YEARS ENDED DECEMBER 31, 2007 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Premiums and Annuity Considerations $10,306,169 $9,836,688 $9,145,844 Net Investment Income 378,000 383,972 369,012 Miscellaneous Income 493,502 98,373 1,909 --- --- --- Total Income 11,177,671 10,319,033 9,516,765 --- --- --- Benefits Paid 10,132,212 9,346,769 7,273,337 Federal Income Tax Payments (Recoveries) 71,171 (103,806) 71,607 Net Transfers (from) to Separate Accounts (204,517) (188,413) 1,240,273 Other Expenses 332,141 1,011,284 826,693 --- --- --- Total Benefits and Expenses 10,331,007 10,065,834 9,411,910 --- --- --- NET CASH PROVIDED BY OPERATING ACTIVITIES 846,664 253,199 104,855 --- --- --- INVESTING ACTIVITIES PROCEEDS FROM INVESTMENTS SOLD AND MATURED Bonds 1,526,875 1,959,478 2,572,479 Common and Preferred Stocks 149,356 24,070 -- Mortgage Loans 63,357 8,746 11,039 Other (32,175) (16,109) 50,196 --- --- --- Total Investment Proceeds 1,707,413 1,976,185 2,633,714 --- --- --- COST OF INVESTMENTS ACQUIRED Bonds 2,269,295 1,682,961 2,708,647 Common and Preferred Stocks 214,967 140,727 13,467 Mortgage Loans 253,365 70,991 40,175 Real Estate 2,781 1,125 116 Other 384,420 109,533 134,301 --- --- --- Total Investments Acquired 3,124,828 2,005,337 2,896,706 --- --- --- Net Increase in Policy Loans 19,142 720 13,391 --- --- --- NET CASH USED FOR INVESTING ACTIVITIES (1,436,557) (29,872) (276,383) --- --- --- FINANCING AND MISCELLANEOUS ACTIVITIES Capital Contribution 100,000 -- -- Dividends to Stockholder (57,726) (115,000) -- Funds Held Under Reinsurance Treaties with Unauthorized Reinsurers 646,001 -- -- Net Other Cash (Used) Provided (747) 13,463 85,968 --- --- --- NET CASH PROVIDED BY (USED FOR) FINANCING AND MISCELLANEOUS ACTIVITIES 687,528 (101,537) 85,968 --- --- --- Net Increase (Decrease) in Cash and Short-Term Investments 97,635 121,790 (85,560) Cash and Short-Term Investments, Beginning of Year 467,648 345,858 431,418 --- --- --- CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $565,283 $467,648 $345,858 --- --- --- Note: Supplemental disclosures of cash flow information for non-cash transactions: Capital contribution from parent to settle intercompany balances related to stock compensation 6,916 5,070 -- Dividend of Assets to Affiliate Champlain Life Reinsurance Company 149,274 -- --
SEE NOTES TO FINANCIAL STATEMENTS. F-7 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS (STATUTORY BASIS) (IN THOUSANDS) -------------------------------------------------------------------------------- 1. ORGANIZATION AND DESCRIPTION OF BUSINESS: Hartford Life and Annuity Insurance Company (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"). The Company offers a complete line of fixed and variable annuities, as well as variable, universal and traditional individual life insurance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BASIS OF PRESENTATION The accompanying statutory basis financial statements 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 Connecticut for determining and reporting the financial condition and results of operations of an insurance company and for determining solvency under 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 Connecticut. A difference prescribed by Connecticut state law, allows the Company to obtain a reinsurance reserve credit for a reinsurance treaty which 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. The preparation of financial statements in conformity with statutory accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The most significant estimates include those used in determining the liability for aggregate reserves for life and accident and health policies, evaluation of other-than-temporary impairments and valuation of derivatives. Although some variability is inherent in these estimates, management believes the amounts provided are adequate. Certain reclassifications have been made to prior year financial information to conform to current year presentation. STATUTORY ACCOUNTING VERSUS ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ("GAAP") Statutory accounting principles and GAAP differ in certain significant respects. These differences principally involve: (1) treatment of policy acquisition costs (commissions, underwriting and selling expenses, etc.) and sales inducements which are charged to expense when incurred for statutory purposes rather than capitalized and amortized on a pro-rata basis over the expected life and gross profit stream of the policies 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 NAIC, which may vary considerably from interest and mortality assumptions used under GAAP. Additionally for GAAP, reserves for guaranteed minimum death benefits 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) excluding certain assets designated as non-admitted assets (e.g., negative Interest Maintenance Reserve, and past due agents' balances) from the admitted assets, liabilities and surplus statement for statutory purposes by directly charging surplus; F-8 (5) the calculation of post-retirement 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, whereas, for statutory accounting, the obligation is being recognized ratably over a 20 year period; (6) establishing a formula reserve for realized and unrealized losses due to default and equity risk associated with certain invested assets (Asset Valuation Reserve) 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) 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) the reporting of fixed maturities at amortized cost for NAIC classes 1-5 and the lower of amortized cost or fair value for NAIC class 6 for statutory purposes, whereas GAAP requires that fixed maturities be classified as "held-to-maturity", "available-for-sale" or "trading", based on the Company's intentions with respect to the ultimate disposition of the security and its ability to affect those intentions. The Company's bonds were classified on a GAAP basis as "available-for-sale" and accordingly, those investments and common stocks were reflected at fair value with the corresponding impact included as a 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 the separate account on the statutory basis admitted assets, liabilities and surplus statement, with changes reflected in the statutory basis results 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 accounts assets and liabilities are based upon the fair value of the underlying assets; (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 and are charged as a component of net income; (12) comprehensive income and its components are not presented in statutory 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, 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 accounting 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 and reported separately. F-9 As of and for the years ended December 31, the significant differences between Statutory and GAAP basis net income and capital and surplus for the Company are as follows:
2007 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- GAAP Net Income $348,883 $312,900 $288,133 Deferral and amortization of policy acquisition costs, net (583,420) (69,341) (252,771) Change in unearned revenue reserve 205,884 120,820 120,513 Deferred taxes 76,671 (57,573) (63,142) Separate account expense allowance 382,281 143,649 25,180 Benefit reserve adjustment (328,431) (91,421) 73,673 Prepaid reinsurance adjustment 3,703 615 (1,861) Sales inducements (30,167) (21,576) (32,256) Derivatives 263,627 60,110 (211,904) Other, net (54,515) (59,472) 273,527 ------------- ------------- ------------- STATUTORY NET INCOME $284,516 $338,711 $219,092 ------------- ------------- ------------- GAAP Stockholder's Equity $4,153,194 $3,916,947 $3,672,466 Deferred policy acquisition costs (5,187,834) (4,583,199) (4,508,206) Unearned revenue reserve 861,421 648,448 524,372 Deferred taxes 475,659 383,837 383,486 Separate account expense allowance 2,473,554 2,089,536 1,946,328 Unrealized gains on investments 56,340 (117,113) (46,341) Benefit reserve adjustment (44,469) (274,921) (46,363) Asset valuation reserve (46,855) (41,544) (34,749) Interest maintenance reserve -- -- (17,845) Prepaid reinsurance premium (40,877) (33,931) (27,377) Goodwill (170,100) (170,100) (170,100) Reinsurance ceded (569) (200,371) (200,192) Other, net 27,124 50,090 14,787 ------------- ------------- ------------- STATUTORY CAPITAL AND SURPLUS $2,556,588 $1,667,679 $1,490,266 ------------- ------------- -------------
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 1958, 1980 and 2001 Commissioner's Standard Ordinary Mortality Tables and various valuation rates ranging from 2.25% to 6%. 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"). 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. During 2007, the State of Connecticut Insurance Department approved changes to certain reserving methodologies. The reserve valuation basis for variable annuities was changed from "continuous" CARVM to "curtate" CARVM. The change resulted in a basis change which lowered reserves by $236,861 and was reported as a direct increase to surplus. As of December 31, 2007 and 2006, the Company had $10,136,370 and $8,037,610, 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, 2007 and 2006 totaled $31,284 and $22,702, 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 statutory basis statements of operations. F-10 An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal Characteristics as of December 31, 2007 (including general and separate account liabilities) are as follows
% OF SUBJECT TO DISCRETIONARY WITHDRAWAL: AMOUNT TOTAL -------------------------------------------------------------------------------- With market value adjustment: In a lump sum reflecting changes in interest rates or asset values $1,367 0.00% In installments over 5 years or more, with or w/o reduction in interest rates -- 0.00% At book value, less current surrender charge of 5% or more 783,940 1.01% At market value 74,427,327 95.67% -------------- -------- TOTAL WITH ADJUSTMENT OR AT MARKET VALUE 75,212,634 96.68% -------------- -------- At book value without adjustment (minimal or no charge or adjustment): In a lump sum without adjustment 315,526 0.41% Installments over less than 5 years -- 0.00% In a lump sum subject to a fixed surrender charge of less than 5% 1,918,148 2.47% In a lump sum subject to a surrender charge -- 0.00% All others -- 0.00% Not subject to discretionary withdrawal 346,876 0.45% -------------- -------- TOTAL, GROSS 77,793,184 100.00% Reinsurance ceded -- 0.00% -------------- -------- TOTAL, NET $ 77,793,184 100.00% -------------- -------- Reconciliation of total annuity actuarial reserves and deposit fund liabilities: Life and Accident & Health Annual Statement: Exhibit 5, Annuities Section, Total (net) $3,167,850 Exhibit 5, Supplementary Contract Section, Total (net) 5,215 Exhibit 7, Deposit-Type Contracts Section, Column 1, Line 14 73,736 -------------- Subtotal 3,246,802 Separate Account Annual Statement Exhibit 3, Column 2, Line 0299999 74,546,383 Exhibit 3, Column 2, Line 0399999 -- Policyholder dividend and coupon accumulations -- Policyholder premiums -- Guaranteed interest contracts -- Other contract deposit funds --
INVESTMENTS Investments in bonds are carried at amortized cost except for those securities that are deemed ineligible to be held at amortized cost by the NAIC Securities Valuation Office ("SVO"), which 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, which approximates fair value. Unaffiliated common stocks are carried at fair value with the change in the difference from cost 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 NAIC market values depending on the assigned credit rating and whether the preferred stock is redeemable or non-redeemable. Investments in common and preferred stocks of subsidiaries and affiliates of the Company are carried in accordance with Statement of Statutory Accounting Principles ("SSAP") No. 97 (Investment in Subsidiary, Controlled, and Affiliated Entities, a replacement of SSAP No. 88) based on their underlying equity generally adjusted to a statutory basis. Mortgage loans on real estate are stated at the outstanding principal balance. Policy loans are carried at outstanding balance, which approximates fair value. Interest income on bonds and mortgage loans is recognized when earned on the constant effective yield method based on estimated principal repayments, if applicable. For bonds subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future principal repayments. The new effective yields used for fixed rate and variable rate loan-backed securities are recalculated on a retrospective and prospective basis, respectively. The Company has not elected 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 interest only securities is determined using the prospective method. Prepayment fees on bonds and mortgage loans are recorded in net investment income when earned. Dividends are recorded as earned on the ex-dividend date. For bond investments, other than loan-backed securities, that have had an other-than-temporary impairment loss, income is earned on the effective yield method based upon the new cost basis and the amount and timing of future estimated cash flows. F-11 Due and accrued investment income amounts over 90 days past due are non-admitted. There was no investment income due and accrued excluded from surplus at December 31, 2007 and 2006. Net realized gains and losses from investment sales are 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 Asset Valuation Reserve ("AVR") is designed to provide a standardized reserving process for realized and unrealized losses due to default and equity risks associated with invested assets. The AVR balances were $46,855 and $41,544 as of December 31, 2007, 2006 respectively. Additionally, the Interest Maintenance Reserve ("IMR") captures net realized capital gains and losses, net of applicable income taxes, resulting from changes in interest rates and amortizes these gains or losses into income over the life of the bond, preferred stock or mortgage loan sold. The IMR balances as of December 31, 2007 and 2006 were $(10,988), and $(525) respectively. The 2007 and 2006 IMR balances were asset balances and were reflected as a component of non-admitted assets in Unassigned Funds in accordance with statutory accounting practices. The net capital losses captured in the IMR, net of taxes, in 2007, 2006 and 2005 were $(10,549), $(15,707) and $(2,530), respectively. The amount of (expense) or income amortized from the IMR net of taxes in 2007, 2006 and 2005 included in the Company's Statements of Operations, was $(86), $2,664 and $7,879, respectively. Realized capital gains and losses, net of taxes, not included in the IMR are reported in the Statement of Operations. The Company's accounting policy requires that a decline in the value of a bond or equity security, that is not subject to SSAP No. 43 (Loan-backed and Structured Securities), below its cost or amortized cost basis be assessed to determine if the decline is other-than-temporary. 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. In addition, for securities expected to be sold, an other-than-temporary impairment charge is recognized if the Company does not expect the fair value of a security to recover to its cost or amortized cost basis prior to the expected date of sale. The fair 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 other-than-temporary impairment is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether a decline in value for securities not subject to SSAP No. 43 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) the financial condition, credit rating and near-term prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. Once an impairment charge has been recorded, the Company continues to review the other-than-temporarily impaired securities for further other-than-temporary impairments on an ongoing basis. Additionally, for certain securitized financial assets with contractual cash flows (including asset-backed securities), SSAP No. 43 requires the Company to periodically update their best estimate of cash flows over the life of the security. If management determines that the estimated undiscounted cash flows of a security are less than its amortized cost then an other-than-temporary impairment charge is recognized equal to the difference between the amortized cost and estimated undiscounted cash flows of the security. The estimated undiscounted cash flows of the impaired investment become 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. In addition, projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. Net realized capital losses resulting from write-downs for other-than-temporary impairments on corporate and asset-backed fixed maturities was $560, $0 and $2,219 for the years ended December 31, 2007, 2006 and 2005. Net realized capital losses resulting from write-downs for other-than-temporary impairments on equities was $1,664, $0 and $0 for the years ended December 31, 2007, 2006 and 2005, respectively. 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 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. Changes in valuation allowances are recorded in net realized capital gains and losses. The Company does not have a valuation reserve as of December 31, 2007, 2006 and 2005, respectively. F-12 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 being held for hedging (fair value, cash flow, or net investment in a foreign operation), replication, income generation, or other investment and/or risk management activities, which primarily involve managing asset or liability related risks which do not qualify for hedge accounting under Statement of Statutory Accounting Principles ("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 derivatives use plan required by the State of Connecticut insurance 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 Statements of Admitted Assets, Liabilities and Surplus as an asset or liability, respectively, and amortized through net investment income over the term of the hedged item. Periodic cash flows and accruals of income/expense are recorded in a manner consistent with the hedged item. Upon termination of the derivative, any gain or loss is adjusted into the basis of the hedged item. 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 Statement of Admitted Assets, Liabilities and Surplus as a derivative asset or liability, respectively, and amortized through net investment income over the term of the derivative. 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 recorded as a realized 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 Statement of Admitted Assets, Liabilities and Surplus as a derivative liability and amortized through net investment income over the term of the derivative. Upon termination, any remaining derivative liability, along with any disposition payments are recorded as realized capital gain or loss. Derivatives held for other investment and/or risk management activities receive fair value accounting. The derivatives are carried on the Statement of Admitted Assets, Liabilities and Surplus at fair value and the changes in fair value are recorded in capital and surplus as 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 SSAP NO. 97 -- INVESTMENTS IN SUBSIDIARY, CONTROLLED AND AFFILIATED ENTITIES (SSAP No. 97), was issued by the Statutory Accounting Issues Working Group of the NAIC's Accounting Practice and Procedures Task force during 2007. SSAP No. 97 defines the appropriate valuation for subsidiaries and affiliates of insurance companies. It was effective on January 1, 2008, and did not have a material impact on the Company's financial statements. 3. INVESTMENTS: For the years ended December 31, (A) COMPONENTS OF NET INVESTMENT INCOME
2007 2006 2005 -------------------------------------------------------------------------------- Interest income from bonds and short-term investments $335,302 $306,123 $301,532 Interest income from policy loans 21,532 21,199 22,418 Interest income from mortgage loans 17,414 9,591 4,933 Interest and dividends from other investments 9,101 9,577 4,968 ----------- ---------- ----------- Gross investment income 383,349 346,490 333,851 Less: investment expenses 34,912 7,143 6,923 ----------- ---------- ----------- NET INVESTMENT INCOME $348,437 $339,347 $326,928 ----------- ---------- -----------
(B) COMPONENTS OF NET UNREALIZED CAPITAL LOSSES ON BONDS
2007 2006 2005 -------------------------------------------------------------------------------- Gross unrealized capital gains $86,420 $95,839 $108,881 Gross unrealized capital losses (152,307) (62,923) (67,624) ----------- --------- ----------- Net unrealized capital (losses) gains (65,887) 32,916 41,257 Balance, beginning of year 32,916 41,257 221,650 ----------- --------- ----------- CHANGE IN NET UNREALIZED CAPITAL LOSSES ON BONDS AND SHORT-TERM INVESTMENTS $(98,803) $(8,341) $(180,393) ----------- --------- -----------
F-13 (C) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS AND PREFERRED STOCKS
2007 2006 2005 -------------------------------------------------------------------------------- Gross unrealized capital gains $1,751 $3,778 $1,002 Gross unrealized capital losses (56,041) (36,376) (31,971) --------- --------- --------- Net unrealized capital losses (54,290) (32,598) (30,969) Balance, beginning of year (32,598) (30,969) (30,975) --------- --------- --------- CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS AND PREFERRED STOCKS $(21,692) $(1,629) $6 --------- --------- ---------
(D) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
2007 2006 2005 -------------------------------------------------------------------------------- Bonds and short-term investments $(13,496) $(19,176) $(912) Common stocks (11) 43 -- Preferred stocks (2,546) (502) -- Other invested assets (72,007) (40,976) (7,003) --------- --------- -------- Realized capital losses (88,060) (60,611) (7,915) Capital gains tax benefit 4,248 (4,248) (5,439) --------- --------- -------- Net realized capital losses, after tax (92,308) (56,363) (2,476) Less: amounts transferred to IMR (10,549) (15,707) (2,530) --------- --------- -------- NET REALIZED CAPITAL (LOSSES) GAINS, AFTER TAX $(81,759) $(40,665) $54 --------- --------- --------
For the years ended December 31, 2007, 2006 and 2005, sales of unaffiliated bonds and short-term investments resulted in proceeds of $1,478,584, $1,771,232 and $2,440,767, gross realized capital gains of $13,287, $9,836 and $18,351, and gross realized capital losses of $26,224, $29,012 and $19,087 respectively, before transfers to the IMR. For the years ended December 31, 2007, 2006 and 2005, sales of common and preferred stocks resulted in proceeds of $149,356, $24,070 and $0, gross realized capital gains of $62, $43 and $0, and gross realized capital losses of $955, $502 and $0, respectively. (E) INVESTMENTS -- DERIVATIVE INSTRUMENTS OVERVIEW The Company may at any time use derivative instruments, including swaps, caps, floors, options, forwards and futures, in order to achieve one of four Company approved objectives: to hedge risk arising from interest rate, price, credit spread including issuer default, equity market, or 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 involve 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 derivatives use plan required by the State of Connecticut insurance department. Interest rate swaps, index and total return swaps, and volatility swaps involve the periodic exchange of cash flows with other parties, at specified intervals, calculated using the agreed upon rates, indices, or other financial variables, 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 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 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. 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, and changes in the futures' contract values are settled daily in cash. F-14 Option contracts grant the purchaser, in return 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. 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 strategy discussion below. During the years 2007 and 2006, the Company did not transact in or hold any positions related to net investment hedges in a foreign operation, fair value hedges, 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. Notional amounts pertaining to derivative instruments held at December 31, 2007 and 2006, were $17,006,125 and $8,246,014, respectively. The fair value of derivative instruments is based upon widely accepted pricing valuation models which utilize independent third party data as inputs or independent broker quotations. The fair value of derivative instruments held at December 31, 2007 and 2006, were $472,283 and $212,798, respectively. As of December 31, 2007 and 2006, the average fair value for derivatives held for other investment and/or risk management activities was $314,434 and $169,198, respectively. As of December 31, 2007 and 2006, the carrying value of derivative instruments was $466,251 and $235,338, respectively. During the reporting period, the Company did not have any gains or losses recognized in unrealized gains or losses due to either a component of derivative gains or losses excluded from hedge effectiveness or due to derivatives no longer qualifying for hedge accounting. CASH-FLOW HEDGES Interest rate swaps: Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed maturity investments to fixed rate cash flows. The Company did not hedge forecasted transactions other than the interest payments on floating-rate securities. There were no gains and losses 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. As of December 31, 2007 and 2006, interest rate swaps used in cash flow hedge relationships had a notional value of $150,000 and $195,000, respectively, a fair value of $(341) and $(2,860), respectively, and a carrying value of $0. Foreign currency swaps: Foreign currency swaps are used to convert foreign denominated cash flows associated with certain foreign denominated fixed maturity investments to U.S. dollars. The foreign fixed maturities are primarily denominated in Euros and are hedged to minimize cash flow fluctuations due to changes in currency rates. As of December 31, 2007 and 2006, foreign currency swaps used in cash flow hedge relationships had a notional value of $192,393 and $159,723, respectively, a fair value of $(23,535) and $(19,605), respectively, and a carrying value of $(29,875) and $0, respectively. REPLICATION TRANSACTIONS Credit Default Swaps: The Company periodically enters into credit default swaps as part of replication transactions. Credit default swaps used in replication transactions had a notional value at December 31, 2007 and 2006, of $7,500, a fair value of $33 and $(75), respectively, and a carrying value of $0. OTHER INVESTMENT AND RISK MANAGEMENT ACTIVITIES Interest rate caps and swaptions: The Company is exposed to policyholder surrenders during a rising interest rate environment. Interest rate cap and swaption contracts are used to mitigate the Company's loss in a rising interest rate environment. The increase in yield from the cap and swaption 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. As of December 31, 2007 and 2006, interest rate caps and swaptions used to mitigate risk in a rising interest rate environment had a notional value of $580,767 and $1,054,077, respectively, a fair value of $2,435 and $2,594, respectively, and a carrying value of $2,435 and $2,594, respectively. For the years ended December 31, 2007 and 2006, derivative contracts in this strategy reported a loss of $(6,239) and $(235), respectively, in realized capital gains and losses. During the year 2005, there were no realized gains and losses. 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. As of December 31, 2007 and 2006, credit default swaps had a notional value of $447,700 and $88,000, respectively, a fair value of $3,597 and $(379), respectively, and a carrying value of $3,597 and $(379), respectively. For the years ended December 31, 2007, 2006 and 2005, credit derivatives reported a gain of $1,453, a loss of $(19) and a gain of $641, respectively, in realized capital gains and losses. F-15 Futures contracts, equity index options, total return index, and interest rate swap contracts: The Company enters into interest rate futures, S&P 500 and NASDAQ index futures contracts and put and call options, as well as interest rate, total return Europe, Australasia, and Far East ("EAFE") and equity volatility and dividend swap contracts to hedge exposure to the volatility associated with the portion of the guaranteed minimum withdrawal benefit ("GMWB") liabilities which are not reinsured and to periodically hedge anticipated GMWB new business. In 2007, the Company entered into a customized swap contract to hedge certain risk components for the remaining term of certain blocks of non-reinsured GMWB riders. As of December 31, 2007 and 2006, derivative contracts in this strategy had a notional value of $14,946,569 and $5,708,864, respectively, a fair value of $495,575 and $235,076, respectively, and a carrying value of $495,575 and $235,076, respectively. For the years ended December 31, 2007, 2006 and 2005, derivative contracts in this strategy reported a loss of $(48,528), $(25,898) and $(753), respectively, in realized capital gains and losses. Interest rate swaps: The Company enters into interest rates swaps to terminate existing swaps in hedging relationships, and thereby offsetting the changes in value in the original swap. In addition, interest rate swaps are used to manage duration risk between assets and liabilities. As of December 31, 2007 and 2006, interest rate swaps had a notional value of $636,500 and $616,500, respectively, a fair value of $(1,777) and $(2,941), respectively, and a carrying value of $(1,777) and $(2,941), respectively. For the years ended December 31, 2007 and 2006, derivative contracts in this strategy reported a gain of $447 and $772, respectively, in realized capital gains and losses. During the year 2005, there were no realized gains and losses. Equity index options: The Company purchases S&P 500 options contracts to economically hedge the statutory reserve impact due to a decline in the equity markets. As of December 31, 2007 and 2006, derivative contracts in this strategy had a notional value $0 and $375,850, respectively, a fair value of $0 and $1,271, respectively, and a carrying value of $0 and $1,271, respectively. For the years ended December 31, 2007 and 2006, derivative contracts in this strategy reported a loss of $(16,876) and $(6,573), respectively, in realized capital gains and losses. During the year 2005, there were no realized gains and losses. Foreign currency swaps: The Company enters into foreign currency swaps to hedge the foreign currency exposures in certain of its foreign fixed maturity investments. As of December 31, 2007 and 2006, foreign currency swaps had a notional value of $44,196 and $40,000, respectively, a fair value of $(3,756) and $(283), respectively, and a carrying value of $(3,756) and $(283), respectively. For the years ended December 31, 2007, 2006 and 2005, derivative contracts in this strategy reported a gain of $559, a loss of $(805) and $(1,788), respectively, in realized capital gains and losses. Warrants: During 2003, the Company received warrant contracts as part of a reinsurance treaty settlement. As of December 31, 2007 and 2006, the warrants had a notional value of $500, a fair value of $52 and $0, respectively, and a carrying value of $52 and $0, respectively. There were no realized gains and losses during the years 2007, 2006 and 2005. CREDIT RISK The Company's derivatives counterparty exposure policy establishes market-based credit limits, favors long-term financial stability and creditworthiness, and typically requires credit enhancement/credit risk reducing agreements. Credit risk is measured as the amount owed to the Company based on current market conditions and potential payment obligations between the Company and its counterparties. Credit exposures are generally quantified daily, netted by counterparty for each legal entity of the Company, and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of derivatives exceeds the exposure policy thresholds which do not exceed $10,000. The Company also minimizes the credit risk in derivative instruments by entering into transactions with high quality counterparties rated A2/A or better, which are monitored by the Company's internal compliance unit and reviewed frequently by senior management. In addition, the compliance unit monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company also maintains a policy of requiring that derivative contracts, other than exchange traded contracts and 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. To date, the Company has not incurred any 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. The Company is not exposed to any concentration of credit risk of a single issuer greater than 10% of the Company's capital and surplus other than U.S. government, certain U.S. government agencies and short term investment pool as of December 31, 2007 and 2006. F-16 (G) BONDS, SHORT-TERM INVESTMENTS, COMMON STOCKS AND PREFERRED STOCKS
DECEMBER 31, 2007 GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS U.S. government and government agencies and authorities: -- Guaranteed and sponsored $21,766 $489 $ -- $22,255 -- Guaranteed and sponsored -- asset-backed 610,221 8,476 (3,611) 615,086 States, municipalities and political subdivisions 36,155 -- (1,693) 34,462 International governments 16,739 439 (102) 17,076 Public utilities 467,158 3,364 (11,666) 458,856 All other corporate -- excluding asset-backed 2,156,711 47,235 (40,854) 2,163,092 All other corporate -- asset-backed 2,296,880 26,417 (94,381) 2,228,916 Short-term investments 476,505 -- -- 476,505 ------------- --------- ------------ ------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $6,082,135 $86,420 $(152,307) $6,016,248 ------------- --------- ------------ -------------
DECEMBER 31, 2007 GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS Common stock -- unaffiliated $6,662 $1,425 $(3) $8,084 Common stock -- affiliated 36,884 -- (30,221) 6,663 ------------- --------- ------------ ------------- TOTAL COMMON STOCKS $43,546 $1,425 $(30,224) $14,747 ------------- --------- ------------ -------------
DECEMBER 31, 2007 GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS Preferred stock -- unaffiliated $301,811 $326 $(25,817) $276,320 ------------- --------- ------------ ------------- TOTAL PREFERRED STOCKS $301,811 $326 $(25,817) $276,320 ------------- --------- ------------ -------------
DECEMBER 31, 2006 GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS U.S. government and government agencies and authorities: -- Guaranteed and sponsored $24,639 $2 $(172) $24,469 -- Guaranteed and sponsored -- asset-backed 669,419 5,876 (7,797) 667,498 States, municipalities and political subdivisions 36,164 -- (1,267) 34,897 International governments 37,345 1,704 (447) 38,602 Public utilities 450,849 7,852 (8,749) 449,952 All other corporate -- excluding asset-backed 2,118,796 56,768 (29,167) 2,146,397 All other corporate -- asset-backed 1,672,157 23,637 (15,324) 1,680,470 Short-term investments 395,954 -- -- 395,954 Parents, subsidiaries and affiliates 27,225 -- -- 27,225 ------------- --------- ------------ ------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $5,432,548 $95,839 $(62,923) $5,465,464 ------------- --------- ------------ -------------
DECEMBER 31, 2006 GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS Common stock -- unaffiliated $5,922 $1,448 $(9) $7,361 Common stock -- affiliated 36,884 -- (31,069) 5,815 ------------- --------- ------------ ------------- TOTAL COMMON STOCKS $42,806 $1,448 $(31,078) $13,176 ------------- --------- ------------ -------------
F-17
DECEMBER 31, 2006 GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS Preferred stock -- unaffiliated $232,674 $2,330 $(5,298 ) $229,706 ------------- --------- ------------ --- ------------- TOTAL PREFERRED STOCKS $232,674 $2,330 $(5,298 ) $229,706 ------------- --------- ------------ --- -------------
The statement value and estimated fair value of bonds at December 31, 2007 by estimated maturity year are shown below. Estimated 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 $794,682 $790,941 Due after one year through five years 1,960,800 1,937,752 Due after five years through ten years 2,005,158 1,981,594 Due after ten years 1,321,495 1,305,961 ------------ ------------ TOTAL $6,082,135 $6,016,248 ------------ ------------
At December 31, 2007 and 2006, securities with a statement value of $3,805 and $3,509, respectively, were on deposit with government agencies as required by law in various jurisdictions in which the Company conducts business. (H) MORTGAGE LOANS The maximum and minimum lending rates for the Company's mortgage loans outstanding were 9.38% and 5.26% during 2007 and 2006. During 2007 and 2006, the Company did not reduce interest rates on any outstanding mortgage loans. For loans held at December 31, 2007 and 2006, 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 79.23%. There were no taxes, assessments or amounts advanced and not included in the mortgage loan total. As of December 31, 2007 and 2006, the Company did not hold mortgages with interest more than 180 days past due. There were no impaired mortgage loans as of December 31, 2007 and 2006. (I) RESTRUCTURED DEBT IN WHICH THE COMPANY IS A CREDITOR The Company did not have investments in restructured loans as of December 31, 2007, 2006 and 2005. (J) FAIR VALUE OF FINANCIAL INSTRUMENTS
2007 2006 STATEMENT ESTIMATED STATEMENT ESTIMATED VALUE FAIR VALUE VALUE FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- ADMITTED ASSETS Bonds and short-term investments $6,082,135 6,016,248 $5,432,548 5,465,464 Preferred stocks 301,811 276,320 232,674 229,706 Common stocks 14,747 14,747 13,176 13,176 Mortgage loans 350,528 351,604 160,595 159,537 Derivative related assets (1) 473,685 479,381 244,422 244,422 Policy loans 343,773 343,773 324,631 324,631 Other invested assets 183,719 183,719 26,759 26,759 LIABILITIES Liability for deposit type contracts $73,736 $73,736 $80,785 $80,785 Derivative related liabilities (1) 7,434 6,790 9,084 9,084 ------------ ------------ ------------ ------------
(1) Included derivatives held for other investment and risk management activities as of December 31, 2007 and 2006, with a fair value asset position of $490,565 and $244,422, respectively, and a liability position of $5,561 and $9,084, respectively. Excludes derivative contracts that receive hedge accounting and have a zero statement value at December 31, 2007 and 2006. These derivatives are not reported on the balance sheet and have a fair value as of December 31, 2007 and 2006, of $(308) and ($22,540), respectively. F-18 The following methods and assumptions were used to estimate the fair value of each class of financial instruments: the fair value for bonds, preferred stocks and common stocks are published by the NAIC or are determined by independent third party pricing service market quotations, independent broker quotations, or pricing matrices that use data provided by external sources; the amortized cost of short-term investments approximate fair value; the fair values of mortgage loans are estimated using discounted cash flow calculations based on current incremental lending rates for similar type loans; policy loans carrying amounts approximate fair value; the fair value of derivative instruments is based upon either independent market quotations for exchange traded derivative contracts and independent third party pricing sources or pricing valuation models which utilize independent third party data as inputs; and the fair value of liabilities on deposit funds and other benefits is determined by forecasting future cash flows and discounting the forecasted cash flows at current market rates. (K) SECURITIES LENDING AND COLLATERAL ARRANGEMENTS The Company participates in a securities lending program to generate additional income, whereby certain domestic fixed income securities are loaned for a specified period of time from the Company's investment portfolio to qualifying third parties, via a lending agent. Borrowers of these securities provide collateral of 102% of the market value of the loaned securities. Acceptable collateral may be in the form of cash or U.S. Government securities. The market value of the loaned securities is monitored and additional collateral is obtained if the market value of the collateral falls below 100% of the market value of the loaned securities. Under the terms of the securities lending program, the lending agent indemnifies the Company against borrower defaults. As of December 31, 2007 and 2006, the statement value of the loaned securities was approximately $388,666 and $75,823, respectively, and was included in bonds in the Statements of Admitted Assets, Liabilities and Surplus. The Company earns income from the cash collateral or receives a fee from the borrower. The Company recorded before-tax income from securities lending transactions, net of lending fees, of $489, $192 and $159 for the years ended December 31, 2007, 2006 and 2005, respectively, which was included in net investment income. 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, 2007 and 2006, collateral pledged of $10,939 and $7,889, respectively, was included in bonds, on the Statements of Admitted Assets, Liabilities and Surplus. As of December 31, 2007 and 2006, the Company had accepted collateral relating to the securities lending program and derivative instruments consisting of cash, U.S. Government and U.S. Government agency securities with a statement value of $799,664 and $217,287, respectively. At December 31, 2007 and 2006, cash collateral of $667,016 and $172,047, respectively, was invested and recorded in the Statements of Admitted Assets, Liabilities and Surplus in bonds and cash and short-term investments securities with a corresponding amount recorded in other liabilities. 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, 2007 and 2006. As of December 31, 2007 and 2006, all collateral accepted was held in separate custodial accounts. (1) 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 other-than-temporary impairment policy, see Note No. 2, Summary of Significant Accounting Policies. Due to the issuers' continued satisfaction of the securities' obligations in accordance with their contractual terms and the expectation that they will continue to do so, management's intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in market value, as well as the evaluation of the fundamentals of the issuers' financial condition and other objective evidence, the Company believes that the prices of the securities in the sectors identified in the tables below were temporarily depressed as of December 31, 2007 and 2006. 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, 2007:
LESS THAN 12 MONTHS 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED AMORTIZED FAIR COST VALUE LOSSES COST VALUE --------------------------------------------------------------------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $ -- $ -- $ -- $110 $110 -- guaranteed & sponsored - - asset-backed 44,618 44,107 (511) 190,627 187,527 States, municipalities & political subdivisions 35,000 33,354 (1,646) 1,155 1,108 International Governments -- -- -- 14,074 13,972 Public utilities 172,959 166,639 (6,320) 111,623 106,277 All other corporate including international 627,727 609,966 (17,761) 477,236 454,143 All other corporate-asset-backed 1,053,508 974,477 (79,031) 475,498 460,148 ----------- ----------- ----------- ----------- ----------- TOTAL FIXED MATURITIES 1,933,812 1,828,543 (105,269) 1,270,323 1,223,285 Common stock -- unaffiliated -- -- -- 3 -- Common stock -- affiliated -- -- -- 36,884 6,663 Preferred stock -- unaffiliated 207,806 188,684 (19,122) 69,480 62,785 ----------- ----------- ----------- ----------- ----------- TOTAL EQUITY 207,806 188,684 (19,122) 106,367 69,448 ----------- ----------- ----------- ----------- ----------- TOTAL SECURITIES $2,141,618 $2,017,227 $(124,391) $1,376,690 $1,292,733 ----------- ----------- ----------- ----------- ----------- 12 MONTHS OR MORE TOTAL UNREALIZED AMORTIZED FAIR UNREALIZED LOSSES COST VALUE LOSSES ------------------------ ------------------------------------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $ -- $110 $110 $ -- -- guaranteed & sponsored - - asset-backed (3,100) 235,245 231,634 (3,611) States, municipalities & political subdivisions (47) 36,155 34,462 (1,693) International Governments (102) 14,074 13,972 (102) Public utilities (5,346) 284,582 272,916 (11,666) All other corporate including international (23,093) 1,104,963 1,064,109 (40,854) All other corporate-asset-backed (15,350) 1,529,006 1,434,625 (94,381) ---------- ----------- ----------- ----------- TOTAL FIXED MATURITIES (47,038) 3,204,135 3,051,828 (152,307) Common stock -- unaffiliated (3) 3 -- (3) Common stock -- affiliated (30,221) 36,884 6,663 (30,221) Preferred stock -- unaffiliated (6,695) 277,286 251,469 (25,817) ---------- ----------- ----------- ----------- TOTAL EQUITY (36,919) 314,173 258,132 (56,041) ---------- ----------- ----------- ----------- TOTAL SECURITIES $(83,957) $3,518,308 $3,309,960 $(208,348) ---------- ----------- ----------- -----------
F-19 The following discussion refers to the data presented in the table above, excluding affiliated 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 items non-admitted for U.S. Statutory rules if applicable. The Company does not have any current plans to dispose of this investment. As of December 31, 2007, fixed maturities, comprised of approximately 590 securities, accounted for approximately 86% of the Company's total unrealized loss amount. The remaining 14% primarily consisted of non-redeemable preferred stock in the financial services sector, the majority of which were in an unrealized loss position for less than twelve months. There were no fixed maturities or equity securities as of December 31, 2007, with a fair value less than 80% of the security's amortized cost for more than six continuous months other than certain asset backed securities ("ABS") and collateralized mortgage backed securities ("CMBS") accounted for under SSAP No. 43. Based on management's best estimate of future cash flows, there were no such ABS and CMBS in an unrealized loss position as of December 31, 2007 that were deemed to be other-than-temporarily impaired. Fixed maturity securities in an unrealized loss position for less than twelve months were comprised of approximately 245 securities. The majority of these securities are investment grade fixed maturities depressed due to changes in credit spreads from the date of purchase. As of December 31, 2007, 85% were securities priced at or greater than 85% of amortized cost. The remaining securities were primarily composed of CMBS, ABS, and other corporate securities in the financial services sector, of which 75% had a credit rating of BBB or above as of December 31, 2007. The severity of the depression resulted from credit spread widening due to tightened lending conditions and the market's flight to quality securities. Fixed maturity securities depressed for twelve months or more as of December 31, 2007 were comprised of approximately 350 securities, with the majority of the unrealized loss amount relating to CMBS, corporate fixed maturities within the industrial and financial services sector and ABS. The CMBS in an unrealized loss position for twelve months or more as of December 31, 2007 were primarily the results of credit spreads widening from the security purchase date. The recent price depression resulted from widening credit spreads primarily due to tightened lending conditions and the market's flight to quality securities. However, commercial real estate fundamentals still appear strong with delinquencies, defaults and losses holding to relatively low levels. Substantially all of these securities are investment grade securities with an average price of 95% of amortized cost as of December 31, 2007. Future changes in fair value of these securities are primarily dependent on sector fundamentals, credit spread movements and changes in interest rates. Corporate securities in an unrealized loss position for twelve months or more as of December 31, 2007 were primarily the result of credit spreads widening from the security purchase date primarily due to tightened lending conditions and the market's flight to quality securities. Substantially all of these securities are investment grade with an average price of 95% of amortized cost. Future changes in fair value of these securities are primarily dependent on the extent of future issuer credit losses, return of liquidity, and changes in general market conditions, including interest rates and credit spread movements. 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, 2006.
LESS THAN 12 MONTHS 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED AMORTIZED FAIR COST VALUE LOSSES COST VALUE ---------------------------------------------------------------------------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $7,988 $7,967 $(21) $11,657 $11,506 -- guaranteed & sponsored -- asset- backed 57,489 56,968 (521) 302,471 295,195 States, municipalities & political subdivisions 26,164 25,591 (573) 10,000 9,306 International Governments -- -- -- 14,663 14,216 Public utilities 99,646 98,353 (1,293) 171,165 163,709 All other corporate including international 465,006 459,063 (5,943) 671,415 648,191 All other corporate -- asset-backed 317,346 314,913 (2,433) 561,586 548,695 ----------- ----------- ---------- ----------- ----------- TOTAL FIXED MATURITIES 973,639 962,855 (10,784) 1,742,957 1,690,818 Common stock -- unaffiliated -- -- -- 516 507 Common stock -- affiliated -- -- -- 36,884 5,815 Preferred stock -- unaffiliated 83,674 82,501 (1,173) 99,048 94,923 ----------- ----------- ---------- ----------- ----------- TOTAL EQUITY 83,674 82,501 (1,173) 136,448 101,245 ----------- ----------- ---------- ----------- ----------- TOTAL SECURITIES $1,057,313 $1,045,356 $(11,957) $1,879,405 $1,792,063 ----------- ----------- ---------- ----------- ----------- 12 MONTHS OR MORE TOTAL UNREALIZED AMORTIZED FAIR UNREALIZED LOSSES COST VALUE LOSSES ------------------------ ------------------------------------------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $(151) $19,645 $19,473 $(172) -- guaranteed & sponsored -- asset- backed (7,276) 359,960 352,163 (7,797) States, municipalities & political subdivisions (694) 36,164 34,897 (1,267) International Governments (447) 14,663 14,216 (447) Public utilities (7,456) 270,811 262,062 (8,749) All other corporate including international (23,224) 1,136,421 1,107,254 (29,167) All other corporate -- asset-backed (12,891) 878,932 863,608 (15,324) ---------- ------------- ------------- ------------- TOTAL FIXED MATURITIES (52,139) 2,716,596 2,653,673 (62,923) Common stock -- unaffiliated (9) 516 507 (9) Common stock -- affiliated (31,069) 36,884 5,815 (31,069) Preferred stock -- unaffiliated (4,125) 182,722 177,424 (5,298) ---------- ------------- ------------- ------------- TOTAL EQUITY (35,203) 220,122 183,746 (36,376) ---------- ------------- ------------- ------------- TOTAL SECURITIES $(87,342) $2,936,718 $2,837,419 $(99,299) ---------- ------------- ------------- -------------
The Company holds 100% of the common stock of a foreign insurance subsidiary which is stated at GAAP carrying value adjusted for certain items non-admitted for U.S. Statutory rules if applicable in the Statements of Admitted Assets, Liabilities and Surplus. The Company does not have any current plans to dispose of this investment. F-20 As of December 31, 2006, fixed maturities represented approximately 63% of the Company's total unrealized loss amount which was comprised of approximately 590 different securities. Approximately 90% of the total unrealized loss amount was comprised of securities with fair value to amortized cost ratios as of December 31, 2005 greater than 90%. The Company held no securities as of December 31, 2005 that were in an unrealized loss position in excess of $2,359. Securities in an unrealized loss position for less than twelve months were comprised of approximately 190 securities of which 96%, or $10,407, were comprised of securities with fair value to amortized cost ratios at or greater than 85%. The majority of these securities are investment grade securities depressed due to changes in interest rates from the date of purchase. The securities depressed for twelve months or more as of December 31, 2006 were comprised of approximately 400 securities. Of the twelve months or more unrealized loss amount 91%, or $47,628, was comprised of securities with fair value to amortized cost ratios as of December 31, 2006 greater than 90%. The majority of the securities depressed for twelve months or more are investment grade securities depressed primarily due to changes in interest rates from the date of purchase. The evaluation for other-than-temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other-than-temporary. The risks and uncertainties include changes in general economic conditions, the issuer's financial condition or near term recovery prospects and the effects of changes in interest rates. 4. INCOME TAXES: The Company and The Hartford have entered into a tax sharing agreement under which each member of the consolidated U.S. Federal income tax return will make payments between them such that, with respect to any period, the amount of taxes to be paid by the Company, subject to certain adjustments, generally will be determined as though the Company was filing a separate Federal income tax return. (a) The components of the net deferred tax asset/(liability) as of December 31, are as follows:
2007 2006 -------------------------------------------------------------------------------- Total of all deferred tax assets (admitted and non-admitted) $610,815 $598,106 Total of all deferred tax liabilities (116,655) (44,644) ------------ ---------- Net deferred assets (admitted and non-admitted) 494,160 553,462 Net admitted deferred assets 145,516 91,537 ------------ ---------- Total deferred tax assets non-admitted $348,644 $461,925 Increase in deferred taxes non-admitted $(113,281) $46,114 ------------ ----------
(b) There were no unrecognized deferred tax liabilities. (c) The components of incurred income tax expense and the change in deferred tax assets and deferred tax liabilities as of December 31, are as follows:
2007 2006 2005 -------------------------------------------------------------------------------- Federal $88,449 $31,961 $42,463 Federal income tax on capital gains 4,248 (4,248) (5,439) --------- --------- --------- CURRENT INCOME TAXES INCURRED $92,697 $27,713 $37,024 --------- --------- ---------
The changes in the main components of deferred tax assets and deferred tax liabilities are as follows: Deferred tax assets resulting from book/tax difference:
2007 2006 CHANGE -------------------------------------------------------------------------------- Reserves $25,989 $50,141 $(24,152) Tax DAC 283,943 266,428 17,515 Unrealized Losses 54,684 28,465 26,219 Bonds and Other Investments 53,588 30,220 23,368 Minimum Tax Credit/Foreign Tax Credits 164,056 184,765 (20,709) Other 28,555 38,087 (9,532) ----------- ----------- ------------ TOTAL DEFERRED TAX ASSETS $610,815 $598,106 $12,709 ----------- ----------- ------------ DEFERRED TAX ASSETS NON-ADMITTED $348,644 $461,925 $(113,281) ----------- ----------- ------------
F-21 Deferred tax liabilities resulting from book/tax difference:
2007 2006 CHANGE -------------------------------------------------------------------------------- Bonds and Other Investments $ -- $(21,397) $21,397 Accrued Deferred Compensation (2,153) (4,627) 2,474 Reserves (87,097) -- (87,097) Deferred and Uncollected (19,853) (17,661) (2,192) Other (7,552) (959) (6,593) ------------ ---------- ---------- TOTAL DEFERRED TAX LIABILITIES $(116,655) $(44,644) $(72,011) ------------ ---------- ---------- TOTAL ADMITTED DEFERRED TAX ASSETS $145,516 $91,537 $53,979 ------------ ---------- ----------
2007 2006 CHANGE -------------------------------------------------------------------------------- Total deferred tax assets $610,815 $598,106 $12,709 Total deferred tax liabilities (116,655) (44,644) (72,011) ----------- ---------- --------- Net deferred tax asset (liability) $494,160 $553,462 $(59,302) Adjust for stock compensation transfer 2,630 Adjust for change in deferred tax on unrealized gains (losses) (26,219) --------- Adjustment change in net deferred income tax $(82,891) ---------
(d) The Company's income tax expense and change in deferred tax assets and deferred tax liabilities as of December 31, differs from the amount obtained by applying the Federal statutory rate of 35% to the Net Gain from Operations Before Federal Income Tax Expense for the following reasons:
EFFECTIVE EFFECTIVE EFFECTIVE 2007 TAX RATE 2006 TAX RATE 2005 TAX RATE ------------------------------------------------------------------------------------------------------------------------------------ Tax provision at statutory rate $132,025 35.0% $128,249 35.0% $89,641 35.0% Tax preferred investments (100,000) (26.5)% (107,070) (29.2)% (114,783) (44.8)% IMR adjustment (3,662) (1.0)% (6,430) (1.8)% (3,643) (1.4)% Gain on reinsurance booked to surplus 68,051 18.0% -- -- -- -- Correction of deferred balances 8,698 2.3% -- -- -- -- 2005 Tax Return true up adjustment -- -- (3,636) (1.0)% -- -- Foreign Tax Credits (12,692) (3.3)% (11,157) (3.0)% -- -- Change in basis of reserves booked to surplus 82,901 22.0% -- -- -- -- Other 267 0.1% (2,719) (0.7)% (1,526) (0.6)% ----------- ------ ----------- ------ ----------- ------ TOTAL $175,588 46.6% $(2,763) (0.7)% $(30,311) (11.8)% ----------- ------ ----------- ------ ----------- ------
EFFECTIVE EFFECTIVE EFFECTIVE 2007 TAX RATE 2006 TAX RATE 2005 TAX RATE --------------------------------------------------------------------------------------------------------------------------------- Federal and foreign income tax incurred $92,697 24.6% $27,713 6.8% $37,025 14.4% Adjusted change in net deferred income taxes 82,891 22.0% (30,476) (7.5)% (67,336) (26.2)% ----------- ----- ---------- ----- ---------- ------ TOTAL STATUTORY INCOME TAXES $175,588 46.6% $(2,763) (0.7)% $(30,311) (11.8)% ----------- ----- ---------- ----- ---------- ------
(e) As of December 31, 2007, the Company had no operating loss carry forward and no foreign tax credit carryforward. The following are year to date income taxes incurred in the current and prior years that will be available for recoupment in the event of future net losses: 2007 $66,530 2006 $61,303 2005 $41,532
(f) The Company's Federal income tax return is consolidated within The Hartford Financial Services Group, Inc. consolidated Federal income tax return. The method of allocation between the companies is subject to written agreement, approved by the Board of Directors. Allocation is based upon separate return calculations with current credit for net losses, to the extent the losses provide a benefit in the consolidated return. Intercompany tax balances are settled quarterly. F-22 5. REINSURANCE: The Company has a reinsurance agreement under which the reinsurer has a limited right to unilaterally cancel any reinsurance for reasons other than for nonpayment of premium or other similar credits. The estimated amount of aggregate reduction in 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 $248,182 in 2007, an increase of $7,492 from the 2006 balance of $240,690. The total amount of reinsurance credits taken for this agreement is $381,819 in 2007, an increase of $11,527 from the 2006 balance of $370,292. Effective August 31, 2005, the Company entered into a reinsurance agreement with Hartford Life Insurance K.K. ("HLIKK") (the "Reinsurance Agreement"). Through the Reinsurance Agreement, HLIKK agreed to cede and the Company agreed to reinsure 100% of the risks associated with the in-force and prospective guaranteed minimum income benefits ("GMIB") riders issued by HLIKK on its variable annuity business. In connection with accepting the GMIB risk for the in-force riders, on the effective date the Company received premiums collected since inception by HLIKK related to the in-force riders of $25,466. Effective July 31, 2006, the Reinsurance Agreement was modified to include the guaranteed minimum death benefits ("GMDB") on covered contracts that have an associated GMIB rider. The modified reinsurance agreement applies to all contracts, GMIB riders and GMDB riders in-force and issued as of July 31, 2006 and prospectively, except for policies and GMIB riders issued prior to April 1, 2005, which were recaptured. Additionally, a tiered premium structure was implemented. On the date of the recapture, the Company forgave the reinsurance premiums collected since inception on all GMIB riders issued prior to April 1, 2005 and paid HLIKK $38,354. GMIB riders issued by HLIKK subsequent to April 1, 2005 continue to be reinsured by the Company. In connection with the Reinsurance Agreement, the Company collected premiums of $47,999 as of December 31, 2007, and $5,313, net of the recaptured premiums, as of December 31, 2006 and holds reserves of $66,677 and $28,863 at December 31, 2007 and 2006, respectively. Effective September 30, 2007, the Company entered into another reinsurance agreement where HLIKK agreed to cede and the Company agreed to reinsure 100% of the risks associated with the in-force and prospective guaranteed minimum accumulation benefits ("GMAB"), GMIB and GMDB riders issued by HLIKK on certain of its variable annuity business. In connection with this agreement, the Company collected premiums of $8,416 as of December 31, 2007 and holds reserves of $8,429 at December 31, 2007. The amount of reinsurance recoverables from reinsurers was $27,577 and $11,213 at December 31, 2007 and 2006, respectively. The effect of reinsurance as of and for the years ended December 31, is summarized as follows:
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2007 Aggregate Reserves for Life and Accident and Health Policies $6,974,834 $1,050,543 $(2,049,303) $5,976,074 Policy and Contract Claim Liabilities $47,256 $14,423 $(30,399) $31,281 Premium and Annuity Considerations $11,045,000 $241,808 $(973,307) $10,313,501 Death, Annuity, Disability and Other Benefits $334,482 $115,945 $(101,185) $349,242 Surrenders and Other Fund Withdrawals $10,633,115 $624,725 $(1,729,032) $9,528,808
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2006 Aggregate Reserves for Life and Accident and Health Policies $6,189,958 $1,385,824 $(1,152,935) $6,422,847 Policy and Contract Claim Liabilities $51,900 $13,508 $(32,773) $32,635 Premium and Annuity Considerations $9,936,139 $210,011 $(303,845) $9,842,305 Death, Annuity, Disability and Other Benefits $275,788 $106,626 $(83,321) $299,093 Surrenders and Other Fund Withdrawals $10,086,669 $673,938 $(1,706,377) $9,054,230
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2005 Aggregate Reserves for Life and Accident and Health Policies $5,709,495 $1,474,084 $(1,033,127) $6,150,452 Policy and Contract Claim Liabilities $21,717 $9,087 $(5,885) $24,919 Premium and Annuity Considerations $9,133,178 $270,423 $(251,264) $9,152,337 Death, Annuity, Disability and Other Benefits $214,103 $115,716 $(49,707) $280,112 Surrenders and Other Fund Withdrawals $7,991,353 $624,025 $(1,640,814) $6,974,564
F-23 6. PREMIUM AND ANNUITY CONSIDERATIONS (DEFERRED AND UNCOLLECTED) The following presents premium and annuity considerations (deferred and uncollected) as of December 31,
2007 GROSS NET OF LOADING -------------------------------------------------------------------------------- TYPE Ordinary New Business $3,418 $3,775 Ordinary Renewal 45,181 52,893 Group Life 30 56 --------- --------- TOTAL $48,629 $56,724 --------- ---------
2006 GROSS NET OF LOADING -------------------------------------------------------------------------------- TYPE Ordinary New Business $4,060 $4,785 Ordinary Renewal 38,012 45,615 Group Life 32 60 --------- --------- TOTAL $42,104 $50,460 --------- ---------
7. RELATED PARTY TRANSACTIONS: Transactions between the Company and its affiliates, relate principally to tax settlements, reinsurance, insurance coverages, rental and service fees, capital contributions and payments of dividends. Investment management fees were allocated by Hartford Investment Management Company 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 The Hartford. 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. During 2006 the Company revised its method of allocating certain indirect expenses. The Company has also invested in bonds of its indirect affiliate, HL Investment Advisors, Inc., and common stock of its subsidiary, Hartford Life, Ltd. The HL Investment Advisors, Inc. bond was sold in December 2007. Effective November 1, 2007, the Company has entered into a coinsurance with funds withheld and a modified coinsurance reinsurance agreement with Champlain Life Reinsurance Company, an affiliated reinsurance company domiciled in Vermont. The reinsurer is unauthorized in the State of Connecticut. This Agreement takes into account State of Vermont prescribed practice that allows a letter of credit to back a certain portion of statutory reserves and a prescribed practice for the reinsurer to recognize a net liability for inuring YRT reinsurance contracted by the ceding company. The letter of credit held by the affiliated reinsurer has been assigned to the Company and as such also provides collateral for the unauthorized reinsurance. The increase in surplus, net of federal income tax, resulting from the reinsurance agreement is $194,430 and is identified separately on the Admitted Assets, Liabilities and Surplus statement. 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 zero impact to surplus. At December 31, 2007 and 2006, the Company reported $32,272 and $10,339, respectively, as a receivable from and $41,011 and $30,498, respectively, as a payable to parents, subsidiaries and affiliates. The terms of the written settlement agreement 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 4, 5, 8 and 11. 8. PENSION, RETIREMENT, AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS: All employees hired by The Hartford's life insurance companies are included in The Hartford's non-contributory defined benefit pension plans. These plans provide pension benefits that are based on years of service and the employee's compensation during the last ten years of employment. The Hartford's funding policy is to contribute annually an amount between the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, as amended, and the maximum amount that can be deducted for U.S. Federal income tax purposes. Generally, pension costs are funded through the purchase of group pension contracts sold by affiliates. The costs that were allocated to the Company for pension related expenses were $12,807, $10,717 and $8,226 for 2007, 2006 and 2005, respectively. Employees of The Hartford's life insurance companies are also provided, through The Hartford, certain health care and life insurance benefits for eligible retired employees. The contribution for health care benefits depends on the retiree's date of retirement and years of service. In addition, this benefit plan has a defined dollar cap, which limits average company F-24 contributions. The Hartford has prefunded a portion of the health care and life insurance obligations through trust funds where such prefunding can be accomplished on a tax effective basis. Postretirement health care and life insurance benefits expense allocated to the Company was not material to the results of operations for 2007, 2006 or 2005. Substantially all employees of the Company are eligible to participate in the Hartford's Investment and Savings Plan under which designated contributions may be invested in common stock of The Hartford or certain other investments. These contributions are matched, up to 3% of compensation, by the Company. In addition, the Company allocates 1.5% of base salary to the plan for each eligible employee earning less than $100,000 and 0.5% of base salary for all other eligible employees. The cost allocated to the Company for the years ended December 31, 2007 and 2006 and 2005 was $5,528 and $4,113 and $3,326, respectively. 9. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS: The maximum amount of dividends which can be paid to shareholders by Connecticut domiciled insurance companies, without prior approval, 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 Connecticut Insurance Commissioner. Dividends are paid as determined by the Board of Directors and are not cumulative. In 2007 and 2006, dividends of $207,000 and $115,000, respectively, were paid. In 2005, no dividends were paid or declared. The amount available for dividends in 2008 is approximately $366,275. The portion of unassigned funds (surplus) represented or reduced by cumulative unrealized gains and losses is $114,240. 10. SEPARATE ACCOUNTS: The Company maintained separate account assets totaling $81,072,392 and $76,317,895 as of December 31, 2007 and 2006, respectively. Separate account assets are segregated from other investments and reported at fair value. 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 to 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 statutory statements of operations. Separate account fees, net of minimum guarantees, were $1,542,870, $1,378,577 and $1,369,610 for the years ended December 31, 2007, 2006 and 2005, respectively, and are recorded as a component of fee income on the Company's statutory basis Statements of Operations. F-25 An analysis of the Separate Accounts as of December 31, 2007 is as follows:
NONINDEXED GUARANTEED NON- LESS THAN NONINDEXED GUARANTEED OR EQUAL GUARANTEED SEPARATE TO 4% MORE THAN 4% ACCOUNTS TOTAL --------------------------------------------------------------------------------------------------------------------------------- 1. Premiums considerations or deposits for the year ended 2006 $ -- $ -- $7,121,542 $7,121,542 2. Reserves @ year end -- -- -- -- I. For accounts with assets at: -- -- -- -- a. Market value -- -- 78,639,797 78,639,797 b. Amortized cost -- -- -- -- ---- ---- -------------- -------------- c. Total reserves $ -- $ -- $78,639,797 $78,639,797 ---- ---- -------------- -------------- II. By withdrawal characteristics: a. Subject to discretionary withdrawal $ -- $ -- $ -- $ -- b. With MVA adjustment -- -- -- -- c. @ BV without MV adjustment and with surrender charge of 5% or more -- -- -- -- d. @ Market value -- -- 78,520,741 78,520,741 e. @ BV without MV adjustment and with surrender charge less than 5% -- -- -- -- ---- ---- -------------- -------------- f. Subtotal $ -- $ -- $78,520,741 $78,520,741 g. Not subject to discretionary withdrawal -- -- 119,056 119,056 ---- ---- -------------- -------------- h. Total $ -- $ -- $78,639,797 $78,639,797 ---- ---- -------------- --------------
Below is the reconciliation of Net Transfers (from) to Separate Accounts as of December 31,
2007 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- Transfer to Separate Accounts $7,121,542 $6,907,635 $6,181,003 Transfer from Separate Accounts (7,340,251) (7,637,822) (5,041,408) ------------- ------------- ------------- Net Transfer (from) to Separate Accounts (218,708) (730,187) 1,139,595 Internal Exchanges & Other Separate Account Activity (18,445) 55,063 52,973 ------------- ------------- ------------- Transfer (from) to Separate Accounts on the Statement of Operations $(237,153) $(675,124) $1,192,568 ------------- ------------- -------------
11. CORRECTION OF ERRORS: During an analysis of reserving systems in 2007, the Company discovered an error in the reserves for certain individual annuity products. These annuity products have a 4 year surrender charge, however, they were coded in the reserving system with a 7 year surrender charge. As a result reported reserves have been understated and surplus has been overstated. The correction related to prior years was booked directly to reserves and surplus in the amount of $32,469. During an analysis of federal income taxes in 2007, the Company discovered an error in the liability relating to prior years. A portion of total taxes has been inadvertently misclassified between current and deferred taxes, and inadvertently misallocated among certain affiliates. As a result, the reported current federal income tax recoverable and surplus have been understated. The correction was booked directly to federal income tax recoverable and surplus in the amount of $36,656. The net admitted deferred tax asset is unaffected, as the adjustment to the total deferred tax asset is offset by a change in the nonadmitted portion. 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 consolidated financial condition of the Company. On July 23, 2007, The Hartford entered into an agreement (the "Agreement") with the New York Attorney General's Office, the Connecticut Attorney General's Office, and the Illinois Attorney General's Office to resolve (i) the previously disclosed investigations by these Attorneys General regarding, among other things, The Hartford's compensation agreements with brokers, alleged participation in arrangements to submit inflated bids, sale of fixed and individual annuities used to fund structured settlements, and marketing and sale of individual and group variable annuity products and (ii) the previously disclosed investigation by the New York Attorney General's Office of aspects of The Hartford's variable annuity and mutual F-26 fund operations related to market timing. In light of the Agreement, the Staff of the Securities and Exchange Commission has informed The Hartford that it has determined to conclude its previously disclosed investigation into market timing without taking any action. Under the terms of the Agreement, The Hartford paid $115 million, of which $84 million represents restitution for market timing, $5 million represents restitution for issues relating to the compensation of brokers, and $26 million is a civil penalty. Hartford Life & Annuity recorded charges of $50 million, after-tax, in the aggregate through the second quarter of 2007 to establish a reserve for the market timing matters. (B) GUARANTY FUNDS Under insurance guaranty fund laws in each state, the District of Columbia and Puerto Rico, insurers licensed to do business can be assessed by state insurance guaranty association 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 $519, $308 and $1,450 in 2007, 2006 and 2005, respectively, of which $480, $279 and $1,020 in 2007, 2006 and 2005, respectively, increased the creditable amount against premium taxes. The Company has a guaranty fund receivable of $3,881 and $3,914 as of December 31, 2007 and 2006, respectively. (C) LEASES As discussed in Note 7, transactions with The Hartford include rental of facilities and equipment. The rent paid by the Company to Hartford Fire for space occupied was $12,104, $15,719 and $16,470 in 2007, 2006 and 2005, respectively. Future minimum rental commitments are as follows: 2008 7,870 2009 5,068 2010 3,654 2011 2,246 Thereafter 1,482 --------- Total $20,320 ---------
The principal executive office of the Company, together with its parent and other life insurance affiliates, is located in Simsbury, Connecticut. The Company's allocated rental expense is recognized over the term of the primary sublease for the facility located in Simsbury, Connecticut, which expires on December 31, 2010, and amounted to $4,953, $4,891 and $12,860 in 2007, 2006 and 2005, respectively. (D) TAX MATTERS The Company's federal income tax returns are routinely audited by the Internal Revenue Service ("IRS"). The IRS began its audit of the 2002-2003 tax years in 2005 and the Company expects the audit to be concluded in early 2008. The 2004 through 2006 examination will begin in 2008. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years. The separate account dividends received deduction ("DRD") is estimated for the current year using information from the prior year-end, adjusted for current year equity market performance. The estimated DRD is generally updated in the third quarter for the provision-to-filed-return adjustments, and in the fourth quarter based on current year ultimate mutual fund distributions and fee income from the Company's variable insurance products. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received by the mutual funds, amounts of distributions from these mutual funds, amounts of short-term capital gains at the mutual fund level and the Company's taxable income before the DRD. The Company receives a foreign tax credit ("FTC") against its U.S. tax liability for foreign taxes paid by the Company including payments from its separate account assets. The separate account FTC is estimated for the current year using information from the most recent filed return, adjusted for the change in the allocation of separate account investments to the international equity markets during the current year. The actual current year FTC can vary from the estimates due to the actual FTC's passed through by the mutual funds. (E) FUNDING OBLIGATION At December 31, 2007, the Company had an outstanding commitment totaling $16,373, of which $10,532 related to funding limited partnership investments and $5,841 related to a mortgage loan funding that has commitment period that expires in less than one year. ***** F-27 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SCHEDULE I -- SELECTED FINANCIAL DATA DECEMBER 31, 2007 (AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED) INVESTMENT INCOME EARNED: U.S. Government Bonds $2,359 Bonds Exempt from U.S. Tax 45 Other Bonds (unaffiliated) 311,409 Bonds of Affiliates 910 Preferred Stocks (unaffiliated) 15,327 Preferred Stocks of affiliates -- Common Stocks (unaffiliated) 748 Common Stocks of affiliates -- Mortgage Loans 17,414 Real Estate 1,805 Contract loans 21,532 Cash/short-term Investments 20,579 Derivative Instruments (16,152) Other Invested Assets -- Aggregate Write-ins for Investment Income 7,373 ------------- GROSS INVESTMENT INCOME 383,349 Less: Investment Expenses 34,912 ------------- NET INVESTMENT INCOME $348,437 ------------- REAL ESTATE OWNED -- BOOK VALUE LESS ENCUMBRANCES: $27,569 ------------- MORTGAGE LOANS -- BOOK VALUE: Farm Mortgages $14,319 Residential Mortgages -- Commercial Mortgages 336,209 TOTAL MORTGAGE LOANS $350,528 ------------- MORTGAGE LOANS BY STANDING -- BOOK VALUE: Good Standing $350,528 Good Standing with Restructured Terms -- Interest Overdue More Than 90 Days -- Not In Foreclosure -- Foreclosure In Process -- OTHER LONG TERM ASSETS -- STATEMENT VALUE: $9,672 ------------- COLLATERAL LOANS $ -- ------------- BONDS AND STOCKS OF PARENTS, SUBSIDIARIES AND AFFILIATES -- BOOK VALUE: Bonds $ -- Preferred Stocks -- Common Stocks 6,663 BONDS AND SHORT-TERM INVESTMENTS BY MATURITY AND CLASS: By Maturity -- Statement Value Due within one year or less $794,682 Over 1 year through 5 years 1,960,800 Over 5 years through 10 years 2,005,158 Over 10 years through 20 years 617,377 Over 20 years 704,118 ------------- TOTAL BY MATURITY $6,082,135 ------------- By Class -- Statement Value Class 1 $4,518,111 Class 2 1,377,489 Class 3 163,975 Class 4 17,394 Class 5 4,286 Class 6 880 ------------- TOTAL BY CLASS $6,082,135 -------------
F-28 Total Publicly Traded $4,285,074 Total Privately Placed 1,797,061 ------------- TOTAL BY MAJOR TYPE $6,082,135 ------------- INVESTMENT BALANCES: Preferred Stocks -- Statement Value $301,811 Common Stocks -- Market Value 14,747 Short-Term Investments -- Book Value 476,505 Options, Caps, and Floors Owned -- Statement Value 404,762 Options, Caps, and Floors Written and Inforce -- Statement Value -- Collar, Swap, and Forward Agreements Open -- Statement Value 61,489 Financial Futures Contracts Open -- Current Value 399,820 Cash on Deposit 71,359 Cash Equivalents 17,419 LIFE INSURANCE IN FORCE: Industrial $ -- Ordinary 79,464,073 Credit Life -- Group Life 197,838 AMOUNT OF ACCIDENTAL DEATH INSURANCE IN FORCE UNDER: Ordinary Policies $52,276 POLICIES WITH DISABILITY PROVISIONS IN FORCE: Industrial $ -- Ordinary 5,347,444 Credit Life -- Group Life 5,670 SUPPLEMENTARY CONTRACTS IN FORCE: Ordinary -- Not Involving Life Contingencies Amount on Deposit $ -- Income Payable -- Ordinary -- Involving Life Contingencies Amount on Deposit $1 Income Payable 3,390 Group -- Not Involving Life Contingencies Amount on Deposit $ -- Income Payable -- Group -- Involving Life Contingencies Amount on Deposit $ -- Income Payable -- ANNUITIES: Ordinary: Immediate -- Amount of Income Payable $45,960 Deferred -- Fully Paid Account Balance 80,673,716 Deferred -- Not Fully Paid -- Account Balance 95,478 Group: Amount of Income Payable $79 Fully Paid Account Balance 355,682 Not Fully Paid -- Account Balance -- ACCIDENT AND HEALTH INSURANCE -- PREMIUMS IN FORCE: Group $ -- Credit -- Ordinary 1,127 DEPOSIT FUNDS AND DIVIDEND ACCUMULATIONS: Deposit Funds -- Account Balance $39,202 Dividend Accumulations -- Account Balance 129
F-29 CLAIM PAYMENTS: Group Accident & Health 2007 $ -- 2006 -- 2005 -- 2004 -- 2003 -- Prior -- Other Accident & Health 2007 $563 2006 257 2005 112 2004 33 2003 145 Prior 766 Other Coverages that use Development Methods to Calculate Claim Reserves 2007 $ -- 2006 -- 2005 -- 2004 -- 2003 -- Prior --
F-30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SCHEDULE II -- SUMMARY INVESTMENT SCHEDULE DECEMBER 31, 2007 (AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
ADMITTED ASSETS AS GROSS INVESTMENT REPORTED IN THE HOLDINGS ANNUAL STATEMENT INVESTMENTCATEGORIES AMOUNT PERCENTAGE AMOUNT PERCENTAGE --------------------------------------------------------------------------------------------------------------------------------- 1. Bonds: 1.1 U.S. treasury securities $21,767 0.3 $21,767 0.3 1.2 U.S. government agency obligations (excluding mortgage-backed securities): 1.21 issued by U.S. government agencies -- -- -- -- 1.22 issued by U.S. government sponsored agencies -- -- -- -- 1.3 Foreign government (including Canada, excluding 5,071 0.1 5,071 0.1 mortgage-backed securities) 1.4 Securities issued by states, territories and possessions and political subdivisions in the U.S: 1.41 State, territories, and possessions general 1,155 -- 1,155 -- obligations 1.42 Political subdivisions of states, territories -- -- -- -- & possessions & political subdivisions general obligations 1.43 Revenue and assessment obligations 35,000 0.4 35,000 0.4 1.41 Industrial development and similar obligations -- -- -- -- 1.5 Mortgage-backed securities (includes residential and commercial MBS): 1.51 Pass-through securities: 1.511 Issued or guaranteed by GNMA 18,344 0.2 18,344 0.2 1.512 Issued or guaranteed bly FNMA and FHLMC 377,186 4.8 377,186 4.8 1.513 All other -- -- -- -- 1.52 CMOs and REMICs: 1.521 Issued or guaranteed by GNMA, FNMA, and 148,490 1.9 148,490 1.9 FHLMC or VA 1.522 Issued by non-U.S. Government issuers and -- -- -- -- collateralized by MBS issued or guaranteed by GNMA, FNMA, FHLMC or VA 1.523 All other 2,089,693 26.7 2,089,693 26.7 2. Other debt and other fixed income securities (excluding short-term): 2.1 Unaffiliated domestic securities (includes credit 1,821,585 23.2 1,821,585 23.2 tenant loans rated by the SVO) 2.2 Unaffiliated foreign securities 1,087,341 13.9 1,087,341 13.9 2.3 Affiliated securities -- -- -- -- 3. Equity Interests: 3.1 Investment in mutual funds 8,084 0.1 8,084 0.1 3.2 Preferred stocks: 3.21 Affiliated -- -- -- -- 3.22 Unaffiliated 301,811 3.9 301,811 3.9 3.3 Publicly traded securities (excluding preferred stocks): 3.31 Affiliated -- -- -- -- 3.32 Unaffiliated -- -- -- -- 3.4 Other equity securities: 3.41 Affiliated 6,663 0.1 6,663 0.1 3.42 Unaffiliated -- -- -- -- 3.5 Other equity securities including tangible personal property under lease: 3.51 Affiliated -- -- -- -- 3.52 Unaffiliated -- -- -- -- 4. Mortgage loans: 4.1 Construction and land development -- -- -- -- 4.2 Agricultural -- -- -- -- 4.3 Single family residential properties -- -- -- -- 4.4 Multifamily residential properties -- -- -- -- 4.5 Commercial loans 350,528 4.5 350,528 4.5 4.6 Mezzanine real estate loans -- -- -- -- 5. Real estate investments 5.1 Property occupied by company 27,569 0.4 27,569 0.4 5.2 Property held for production of income -- -- -- -- 5.3 Property held for sale -- -- -- -- 6. Policy Loans 343,773 4.4 343,773 4.4 7. Receivables for securities 146,476 1.9 146,476 1.9 8. Cash and short-term investments 565,283 7.2 565,283 7.2 9. Other invested assets 483,357 6.2 483,357 6.2 ------------ ------ ----------- ------ 10. TOTAL INVESTED ASSETS $7,839,176 100.0 $7,839,176 100.0 ------------ ------ ----------- ------
F-31 SCHEDULE III -- INVESTMENT RISKS INTERROGATORIES Due April 1 For the year ended December 31, 2007 Of HARTFORD LIFE AND ANNUITY INSURANCE COMPANY Address (City, State, Zip Code): SIMSBURY CT 06089 NAIC Group Code 0091 NAIC Company Code 71153 Employer's ID Number 39-1052598
The Investment Risks Interrogatories are to be filed by April 1. They are also to be included with the Audited Statutory Financial Statements. Answer the following interrogatories by reporting the applicable U.S. dollar amounts and percentages of the reporting entity's total admitted assets held in that category of investments. 1. Reporting entity's total admitted assets as reported on $8,275,384,866 Page 2 of this annual statement.
2. Ten largest exposures to a single issuer/borrower/investment.
4 PERCENTAGE 2 OF TOTAL 1 DESCRIPTION 3 ADMITTED ISSUER OF EXPOSURE AMOUNT ASSETS --------------------------------------------------------------------------------------------------------------------------------- 2.01 SHORT TERM INVESTMENT POOL (STIP) BOND $297,454,961 3.594 % 2.02 GOLDENTREE LOAN OPPORTUNITIES BOND $125,000,000 1.511 % 2.03 JP MORGAN TREASURY PLUS BOND $79,293,511 0.958 % 2.04 NORTHWOODS CAPITAL LTD WOODS_07-8A BOND $75,000,000 0.906 % 2.05 BANK OF NEW YORK CASH RESERVE ACCT BOND $62,599,084 0.756 % 2.06 HTFD REGENCY CENTERS FIXED LIFE MORTGAGE LOAN $60,000,000 0.725 % 2.07 UNION PACIFIC CORPORATION BOND $60,000,000 0.725 % 2.08 HUTCHISON WHAMPOA LIMITED BOND $56,650,421 0.685 % 2.09 CBS CORP BOND $55,160,453 0.667 % 2.10 PARCS LTD BOND $49,825,283 0.602 %
3. Amounts and percentages of the reporting entity's total admitted assets held in bonds and preferred stocks by NAIC rating.
BONDS 1 2 --------------------------------------------------------------------------------------------------------------------------------- 3.01 NAIC-1 $4,518,110,874 54.597 % 3.02 NAIC-2 $1,377,489,022 16.646 % 3.03 NAIC-3 $163,975,331 1.981 % 3.04 NAIC-4 $17,394,081 0.210 % 3.05 NAIC-5 $4,285,823 0.052 % 3.06 NAIC-6 $880,000 0.011 %
PREFERRED STOCKS 3 4 --------------------------------------------------------------------------------------------------------------------------------- 3.07 P/RP-1 $147,902,029 1.787 % 3.08 P/RP-2 $122,237,327 1.477 % 3.09 P/RP-3 $31,362,160 0.379 % 3.10 P/RP-4 $ 0.000 % 3.11 P/RP-5 $309,220 0.004 % 3.12 P/RP-6 $ 0.000 %
F-32 4. Assets held in foreign investments: 4.01 Are assets held in foreign Yes / / No x investments less than 2.5% of the reporting entity's total admitted assets? 4.02 Total admitted assets held in $1,074,069,210 12.979% foreign investments 4.03 Foreign-currency-denominated $248,406,483 3.002% investments 4.04 Insurance liabilities denominated $ 0.000% in that same foreign currency If response to 4.01 above is yes, responses are not required for interrogatories 5-10.
5. Aggregate foreign investment exposure categorized by NAIC sovereign rating:
1 2 --------------------------------------------------------------------------------------------------------------------------------- 5.01 Countries rated NAIC-1 $1,074,069,210 12.979% 5.02 Countries rated NAIC-2 $ 0.000% 5.03 Countries rated NAIC-3 or below $ 0.000%
6. Two largest foreign investment exposures to a single country, categorized by the country's NAIC sovereign rating: 1 2 --------------------------------------- -------------- Countries rated NAIC-1: 6.01 Country: CAYMAN ISLANDS $289,516,077 3.499% 6.02 Country: UNITED KINGDOM $168,863,880 2.041% Countries rated NAIC-2: 6.03 Country: $ 0.000% 6.04 Country: $ 0.000% Countries rated NAIC-3 or below: 6.05 Country: $ 0.000% 6.06 Country: $ 0.000%
1 2 --------------------------------------------------------------------------------------------------------------------------------- 7. Aggregate unhedged foreign currency exposure: $ 0.000%
8. Aggregate unhedged foreign currency exposure categorized by NAIC sovereign rating: 8.01 Countries rated NAIC-1 $ 0.000% 8.02 Countries rated NAIC-2 $ 0.000% 8.03 Countries rated NAIC-3 or below $ 0.000%
9. Two largest unhedged foreign currency exposures to a single country, categorized by the country's NAIC sovereign rating:
1 2 --------------------------------------------------------------------------------------------------------------------------------- Countries rated NAIC-1: 9.01 Country: $ 0.000% 9.02 Country: $ 0.000% Countries rated NAIC-2: 9.03 Country: $ 0.000% 9.04 Country: $ 0.000% Countries rated NAIC-3 or below: 9.05 Country: $ 0.000% 9.06 Country: $ 0.000%
F-33 10. Ten largest non-sovereign (i.e. non-governmental) foreign issues:
1 2 ISSUER NAIC RATING 3 4 ------------------------------------------------------------------------------------------------ 10.01 GOLDENTREE LOAN 1FE $125,000,000 1.511% OPPORTUNITIES 10.02 NORTHWOODS CAPITAL LTD 1FE $75,000,000 0.906% WOODS_07-8A 10.03 HUTCHISON WHAMPOA LIMITED 1FE $56,650,421 0.685% 10.04 TELECOM ITALIA S.P.A 2FE $36,039,407 0.436% 10.05 COCA-COLA AMATIL LIMITED 1 $34,632,536 0.419% 10.06 EDIZIONE HOLDING 1FE $29,241,006 0.353% 10.07 LLOYDS TSB GROUP PLC PIA $27,478,825 0.332% 10.08 CENT CDO 14 LTD IFE $25,200,000 0.305% 10.09 FRANCE TELECOM IFE $24,303,826 0.294% 10.10 CREDIT AGRICOLE SA PILFE $20,000,000 0.242%
11. Amounts and percentages of the reporting entity's total admitted assets held in Canadian investments and unhedged Canadian currency exposure: 11.01 Are assets held in Canadian Yes / / No x investments less than 2.5% of the reporting entity's total admitted assets? If response to 11.01 is yes, detail is not required for the remainder of Interrogatory 11.
11.02 Total admitted assets held in $209,209,163 2.528% Canadian Investments 11.03 Canadian currency-denominated $12,827,398 0.155% investments 11.04 Canadian-denominated insurance $ 0.000% liabilities 11.05 Unhedged Canadian currency exposure $ 0.000%
12. Report aggregate amounts and percentages of the reporting entity's total admitted assets held in investments with contractual sales restrictions. 12.01 Are assets held in investments with Yes x No / / contractual sales restrictions less than 2.5% of the reporting entity's total admitted assets?
If response to 12.01 is yes, responses are not required for the remainder of Interrogatory 12.
1 2 3 ------------------------------------------------------------------------------------------------------ 12.02 Aggregate statement value of $ 0.000% investments with contractual sales restrictions: Largest 3 investments with contractual sales restrictions: 12.03 $ 0.000% 12.04 $ 0.000% 12.05 $ 0.000%
13. Amounts and percentages of admitted assets held in the largest 10 equity interests: 13.01 Are assets held in equity interest less than 2.5% of Yes / / No the reporting entity's total admitted assets? x If response to 13.01 above is yes, responses are not required for the remainder of Interrogatory 13.
1 NAME OF ISSUER 2 3 --------------------------------------------------------------------------------------------------------- 13.02 LLOYDS TSB GROUP PLC $27,478,825 0.332% 13.03 GOLDMAN SACHS GROUP INC $27,459,000 0.332% 13.04 CREDIT AGRICOLE SA $20,000,000 0.242% 13.05 CHUBB CORPORATION (THE) $19,981,421 0.241% 13.06 BANCO BILBAO VIZCAYA ARGENTARIA $19,792,200 0.239% S.A. 13.07 BNP PARIBAS $19,000,000 0.230% 13.08 TORONTO-DOMINION BANK (THE) $14,578,000 0.176% 13.09 RESONA HOLDINGS INC $14,089,908 0.170% 13.10 NIB CAPITAL NV $13,847,931 0.167% 13.11 SOCIETE GENERALE $12,600,000 0.152%
F-34 14. Amounts and percentages of the reporting entity's total admitted assets held in nonaffiliated, privately placed equities: 14.01 Are assets held in nonaffiliated, Yes x No / / privately placed equities less than 2.5% of the reporting entity's total admitted assets? If response to 14.01 above is yes, responses are not required for the remainder of Interrogatory 14.
1 2 3 --------------------------------------------------------------------------------------- 14.02 Aggregate statement value of $ 0.000% investments held in nonaffiliated, privately placed equities: Largest 3 investments held in nonaffiliated, privately placed equities: 14.03 $ 0.000% 14.04 $ 0.000% 14.05 $ 0.000%
15. Amounts and percentages of the reporting entity's total admitted assets held in general partnership interests: 15.01 Are assets held in general Yes x No / / partnership interests less than 2.5% of the reporting entity's total admitted assets? If response to 15.01 above is yes, responses are not required for the remainder of Interrogatory 15.
1 2 3 --------------------------------------------------------------------------------------- 15.02 Aggregate statement value of $ 0.000% investments held in general partnership interests: Largest 3 investments in general partnership interests: 15.03 $ 0.000% 15.04 $ 0.000% 15.05 $ 0.000%
16. Amounts and percentages of the reporting entity's total admitted assets held in mortgage loans: 16.01 Are mortgage loans reported in Yes / / No x Schedule B less than 2.5% of the reporting entity's total admitted assets? If response to 16.01 above is yes, responses are not required for the remainder of Interrogatory 16 and Interrogatory 17.
1 TYPE (RESIDENTIAL, COMMERCIAL, AGRICULTURAL) 2 3 --------------------------------------------------------------------------------------- 16.02 HTFD REGENCY CENTERS FIXED LIFE $60,000,000 0.725% 16.03 WACHOVIA MONTCLAIR PLAZA PN 2006 $49,621,270 0.600% 16.04 FORTIS $41,740,409 0.504% 16.05 HTFD_1880 CENTURY PARK EAST WHLN 06 $35,000,000 0.423% 16.06 JPMC DRA PORTFOLIO PNO5 $35,000,000 0.423% 16.07 HTFD ESTATE ON QUARRY LAKES WHLN 2007 $23,527,504 0.284% 16.08 HTFD CHANNEL ISLANDS WHLN 2007 $18,753,334 0.227% 16.09 HTFD ST. JOHNS PROP. HQ BLDG. WHLN 06 $11,431,811 0.138% 16.10 PRINCIPAL SANDS POINT PN 06 $11,427,989 0.138% 16.11 KB FISERVE BLDG WHLN 06 $7,849,189 0.095%
Amount and percentage of the reporting entity's total admitted assets held in the following categories of mortgage loans:
LOANS --------------------------------------------------------------------------------------- 16.12 Construction loans $ 0.000% 16.13 Mortgage loans over 90 days past due $ 0.000% 16.14 Mortgage loans in the process of $ 0.000% foreclosure 16.15 Mortgage loans foreclosed $ 0.000% 16.16 Restructured mortgage loans $ 0.000%
F-35 17. Aggregate mortgage loans having the following loan-to-value ratios as determined from the most current appraisal as of the annual statement date:
RESIDENTIAL COMMERCIAL AGRICULTURAL LOAN-TO-VALUE 1 2 3 4 5 6 -------------------------------------------------------------------------------------------------------------------------------- 17.01 above 95% $ 0.000% $ 0.000% $ 0.000% 17.02 91% to 95% $ 0.000% $ 0.000% $ 0.000% 17.03 81% to 90% $ 0.000% $ 0.000% $ 0.000% 17.04 71% to 80% $ 0.000% $107,080,645 1.294% $ 0.000% 17.05 below 70% $ 0.000% $195,624,239 2.364% $14,319,074 0.173%
18. Amounts and percentages of the reporting entity's total admitted assets held in each of the five largest investments in real estate: 18.01 Are assets held in real estate reported Yes x No / / less than 2.5% of the reporting entity's total admitted assets? If response to 18.01 above is yes, responses are not required for the remainder of Interrogatory 18. Largest five investments in any one parcel or group of contiguous parcels of real estate.
DESCRIPTION 2 3 -------------------------------------------------------------------------------- 18.02 $ 0.000 % 18.03 $ 0.000 % 18.04 $ 0.000 % 18.05 $ 0.000 % 18.06 $ 0.000 %
19. Report aggregate amounts and percentages of the reporting entity's total admitted assets held in investments in mezzanine real estate loans. 19.01 Are assets held in investments held in mezzanine real Yes x No / / estate loans less than 2.5% of the reporting entity's admitted assets? Is response to 19.01 is yes, responses are not required for the remainder of Interrogatory 19.
1 2 3 -------------------------------------------------------------------------------- 19.02 Aggregate $ 0.000 % statement value of investments held in mezzanine real estate loans Largest three investments held in mezzanine real estate loans. 19.03 $ 0.000 % 19.04 $ 0.000 % 19.05 $ 0.000 %
20. Amounts and percentages of the reporting entity's total admitted assets subject to the following types of agreements:
AT END OF EACH QUARTER AT YEAR-END 1ST QTR 2ND QTR 3RD QTR 1 2 3 4 5 --------------------------------------------------------------------------------------------------------------------------------- 20.01 Securities lending (do $388,665,636 4.697 % $197,522,197 $224,652,392 $409,563,021 not include assets held as collateral for such transactions) 20.02 Repurchase agreements $ 0.000 % $ $ $ 20.03 Reverse repurchase $ 0.000 % $ $ $ agreements 20.04 Dollar repurchase $ 0.000 % $ $ $ agreements 20.05 Dollar reverse $ 0.000 % $ $ $ repurchase agreements
F-36 21. Amounts and percentages indicated below for warrants not attached to other financial instruments, options, caps and floors:
OWNED WRITTEN 1 2 3 4 --------------------------------------------------------------------------------------------------------------------------------- 21.01 Hedging $ 0.000 % $ 0.000 % 21.02 Income generation $ 0.000 % $ 0.000 % 21.03 Other $404,761,614 4.891 % $ 0.000 %
22. Amounts and percentages of the reporting entity's total admitted assets of potential exposure for collars, swaps, and forwards:
AT END OF EACH QUARTER AT YEAR-END 1ST QTR 2ND QTR 3RD QTR 1 2 3 4 5 --------------------------------------------------------------------------------------------------------------------------------- 22.01 Hedging $3,489,804 0.042 % $3,404,726 $3,081,019 $3,641,617 22.02 Income generation $ 0.000 % $ $ $ 22.03 Replications $112,363 0.001 % $279,371 $219,338 $113,929 22.04 Other $340,510,916 4.115 % $23,117,070 $340,865,942 $344,677,551
23. Amounts and percentages of the reporting entity's total admitted assets of potential exposure for futures contracts:
AT END OF EACH QUARTER AT YEAR-END 1ST QTR 2ND QTR 3RD QTR 1 2 3 4 5 --------------------------------------------------------------------------------------------------------------------------------- 23.01 Hedging $ 0.000 % $ $ $ 23.02 Income generation $ 0.000 % $ $ $ 23.03 Replications $ 0.000 % $ $ $ 23.04 Other $7,779,300 0.094 % $5,724,450 $13,907,600 $5,077,150
F-37