485BPOS 1 a10-23150_1485bpos.txt 485BPOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 2011 FILE NO. 333-136548 811-09295 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ PRE-EFFECTIVE AMENDMENT NO. / / POST-EFFECTIVE AMENDMENT NO. 14 /X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 354 /X/ HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN (Exact Name of Registrant) HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (Name of Depositor) P.O. BOX 2999 HARTFORD, CT 06104-2999 (Address of Depositor's Principal Offices) (860) 843-1941 (Depositor's Telephone Number, Including Area Code) RICHARD J. WIRTH HARTFORD LIFE AND ANNUITY INSURANCE COMPANY P.O. BOX 2999 HARTFORD, CT 06104-2999 (Name and Address of Agent for Service) ------------ APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT. ------------ It is proposed that this filing will become effective: / / immediately upon filing pursuant to paragraph (b) of Rule 485 /X/ on May 2, 2011 pursuant to paragraph (b) of Rule 485 / / 60 days after filing pursuant to paragraph (a)(1) of Rule 485 / / on pursuant to paragraph (a)(1) of Rule 485 / / this post-effective amendment designates a new effective date for a previously filed post-effective amendment. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ PART A HARTFORD'S PERSONAL RETIREMENT MANAGER 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) ADDRESS UNTIL AUGUST 13, 2011: PO BOX 5085 HARTFORD, CONNECTICUT 06102-5085 ADDRESS AFTER AUGUST 13, 2011: PO BOX 14293 LEXINGTON, KY 40512-4293 [TELEPHONE ICON] 1-800-862-6668 (CONTRACT OWNERS) 1-800-862-7155 (INVESTMENT PROFESSIONALS) [COMPUTER ICON] WWW.HARTFORDINVESTOR.COM [THE HARTFORD LOGO] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This prospectus describes information you should know before you purchase Series II of the Hartford's Personal Retirement Manager Foundation variable annuity. If you purchased a Contract between May 1, 2010 and January 7, 2011, this variable annuity was called Hartford Leaders Foundation. The prospectus describes a contract between each Owner and joint Owner ("you") and Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company ("us," "we" or "our"). This is an individual, deferred, flexible-premium variable annuity. This variable annuity allows you to allocate your Deposit among the following portfolio companies: X Invesco 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 X Hartford Series Fund, Inc. X Lord Abbett Series Fund, Inc. X MFS(R) Variable Insurance Trust X Putnam Variable Trust You may also allocate your Deposit to the Personal Pension Account and/or the Fixed Accumulation Feature. The Fixed Accumulation Feature is not available for every Contract class. This prospectus refers to the following Contract classes: X A Share X B Share The Contract class will be selected on your application and identified in your Contract. Not every Contract class or optional rider may be available from your Financial Intermediary. Other available Contract classes offered through select Financial Intermediaries are not described in this Prospectus and may be subject to different charges. Please read this prospectus carefully before investing and keep it for your records and for future reference. You can also contact us to get a Statement of Additional Information free of charge. The Statement of Additional Information contains more information about this Contract and, like this prospectus, is filed with the Securities and Exchange Commission ("SEC" or "Commission"). Although we file this prospectus and the Statement of Additional Information with the SEC, the SEC doesn't approve or disapprove these securities or determine if the information in this prospectus is truthful or complete. Anyone who represents that the SEC does these things may be guilty of a criminal offense. This prospectus and the Statement of Additional Information can also be obtained from us or the SEC's website (www.sec.gov). This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing. You will get NO ADDITIONAL TAX ADVANTAGE from this variable annuity if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account ("IRA")). This prospectus is not intended to provide tax, accounting or legal advice. We are not an investment adviser nor are we registered as such with the SEC or any state securities regulatory authority. We are not acting in any fiduciary capacity with respect to your investment. This information does not constitute personalized investment advice or financial planning advice. NOT INSURED BY FDIC OR ANY MAY LOSE NOT A DEPOSIT OF OR GUARANTEED BY [NOT] FDIC FEDERAL GOVERNMENT AGENCY VALUE ANY BANK OR ANY BANK AFFILIATE [NOT] BANK
-------------------------------------------------------------------------------- PROSPECTUS DATED: MAY 2, 2011 STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 2, 2011 2 ------------------------------------------------------------------------------- CONTENTS
PAGE -------------------------------------------------------------------------------- 1. INTRODUCTION 3 2. FEE SUMMARY 4 3. MANAGEMENT OF THE CONTRACT 9 The Company 9 The General Account 9 The Separate Account 9 The Funds 9 Fixed Accumulation Feature 11 Personal Pension Account 12 4. INFORMATION ON YOUR ACCOUNT 16 a. Opening an Account 16 b. Charges and Fees 24 c. Surrenders 28 d. Annuity Payouts 29 e. Standard Death Benefit 34 5. OPTIONAL DEATH BENEFITS 36 a. Maximum Anniversary Value Death Benefit 36 b. Return of Premium Death Benefit II 39 6. FURTHER INFORMATION 42 a. Glossary 42 b. State Variations 44 c. Miscellaneous 45 d. Legal Proceedings 46 e. How Contracts Are Sold 46 7. FEDERAL TAX CONSIDERATIONS/INFORMATION REGARDING TAX-QUALIFIED 48 RETIREMENT PLANS TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 63 APPENDIX A - EXAMPLES APP A-1 APPENDIX B - ACCUMULATION UNIT VALUES APP B-1 APPENDIX C - FUND DATA APP C-1 APPENDIX D - [RESERVED] App D-1 APPENDIX E - RETURN OF PREMIUM DEATH BENEFIT I APP E-1
3 ------------------------------------------------------------------------------- 1. INTRODUCTION HOW TO BUY THIS VARIABLE ANNUITY [Thumbs up] CHOOSE A CONTRACT CLASS
MORTALITY & MINIMUM INITIAL EXPENSE RISK DEPOSIT NON- AND MAXIMUM QUALIFIED QUALIFIED ADMINISTRATIVE UP-FRONT CONTRACT CONTRACT SALES RELATED CHARGES CHARGES COMMISSION ----------------------------------------------------------------------------------------------------------------------------------- A SHARE $2,000 $5,000 Front End Sales Charge 0.65% 5% B SHARE $2,000 $5,000 8 year Contingent Deferred Sales Charge and 0.65% 6.5% Distribution Charge
This table does not show Fund expenses, Premium taxes, Distribution Charges, Annual Maintenance Fee, and optional rider fees. Each Contract class has its own minimum contract value requirements. [Thumbs up] CHOOSE INVESTMENT OPTIONS X Sub-Accounts - Funds with different investment strategies, objectives and risk/reward profiles. X Fixed Accumulation Feature (A and B share classes only) - A fixed interest account. X Personal Pension Account - A fixed interest account designed to provide lifetime payouts. Subject to limitations, you may move your investment among each of these options. [Thumbs up] CHOOSE AN OPTIONAL FEATURE (IF DESIRED) OPTIONAL FEATURE GENERAL PURPOSE ------------------------------------------------------------------------ Return of Premium Death Benefit II Guaranteed Minimum Death Benefit Maximum Anniversary Value Death Guaranteed Minimum Death Benefit Benefit* * Investment restrictions apply. [In writing] COMPLETE OUR APPLICATION OR ORDER REQUEST AND SUBMIT IT TO YOUR FINANCIAL INTERMEDIARY FOR APPROVAL. $ PAY THE APPLICABLE MINIMUM INITIAL DEPOSIT. 4 ------------------------------------------------------------------------------- 2. FEE SUMMARY THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING YOUR VARIABLE ANNUITY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY OR SURRENDER THIS VARIABLE ANNUITY. STATE PREMIUM TAXES MAY ALSO BE DEDUCTED. CONTRACT OWNER TRANSACTION EXPENSES
A SHARE B SHARE -------------------------------------------------------------------------------- FRONT END SALES CHARGES (FESC) (1) None $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 (CDSC) (2) None 1 7% 2 7% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0% SURRENDER FEE None None TRANSFER FEE None None
(1) FESC is based on a percentage of Deposits. (2) Each Deposit has its own CDSC schedule. CONTRACT OWNER PERIODIC EXPENSES THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY AND ON A DAILY BASIS (EXCEPT AS NOTED) DURING THE TIME THAT YOU OWN THE VARIABLE ANNUITY, NOT INCLUDING ANNUAL FUND FEES AND EXPENSES.
A SHARE B SHARE -------------------------------------------------------------------------------- ANNUAL MAINTENANCE FEE (3) $30 $30 DISTRIBUTION CHARGE (4) None 0.75% SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily Contract Value excluding Fixed Accumulation Feature and Personal Pension Account investments) Mortality and Expense Risk Charge 0.45% 0.45% Administrative Charge 0.20% 0.20% TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 0.65% 0.65% MAXIMUM OPTIONAL CHARGES (5) Maximum Anniversary Value ("MAV") Death Benefit (6) 1.50% 1.50% Return of Premium Death Benefit II (7) 0.75% 0.75% Return of Premium Death Benefit I (8) 0.75% 0.75%
(3) Fee waived if Total Balance is $50,000 or more on your Contract Anniversary. (4) An annual Distribution Charge is charged against each Premium Payment. The Distribution Charge is based on a percentage of Remaining Gross Premium. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge is reduced to 0% after the completion of eight years after each respective Premium Payment. The Distribution Charge will be assessed only with respect to Contract Value invested in Sub-Accounts and not investments in the Fixed Accumulation Feature. 5 ------------------------------------------------------------------------------- (5) Only one optional death benefit can be elected. (6) Charge based on the greater of the Maximum Anniversary Value, or Premium Payments adjusted for Surrenders and is taken on each Contract Anniversary. Current rider charge is 0.35%. (7) Charge based on a percentage of Premium Payments adjusted for Surrenders on each Contract Anniversary. Current rider charge is 0.25%. (8) Charge based on a percentage of Premium Payments adjusted for Surrenders on each Contract Anniversary. Current rider charge is 0.75% and has been voluntarily waived to 0.25%. This rider is no longer available subject to state availability of Return of Premium II death benefit. Please see Appendix E for more information. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL FUND OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY ON A DAILY BASIS DURING THE TIME THAT YOU OWN THIS VARIABLE ANNUITY. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM MAXIMUM --------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES 0.43% 1.63% (expenses that are deducted from Sub-Account assets, including management fees, distribution and/or service fees (12b-1) fees, and other expenses.
THE LAST TABLE SHOWS THE TOTAL ANNUAL FUND OPERATING EXPENSES FOR EACH UNDERLYING FUND. ACTUAL FEES AND EXPENSES FOR THE UNDERLYING FUNDS VARY DAILY. AS A RESULT, THE FEES AND EXPENSES FOR ANY GIVEN DAY MAY BE GREATER OR LESS THAN THE TOTAL ANNUAL FUND OPERATING EXPENSES LISTED BELOW. MORE DETAIL CONCERNING EACH UNDERLYING FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. THESE EXPENSES MAY VARY FROM YEAR TO YEAR. ANNUAL FUND OPERATING EXPENSES AS OF THE FUND'S YEAR END (As a percentage of net assets)
DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEES FEES EXPENSES EXPENSES ---------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation Fund - Series II 0.95% 0.25% 0.39% 0.04% Invesco V.I. Core Equity Fund - Series II 0.61% 0.25% 0.28% N/A Invesco V.I. International Growth Fund - Series II 0.71% 0.25% 0.33% N/A Invesco V.I. Mid Cap Core Equity Fund - Series II 0.73% 0.25% 0.30% N/A Invesco V.I. Small Cap Equity Fund - Series II 0.75% 0.25% 0.32% N/A ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 0.55% 0.25% 0.13% N/A AllianceBernstein VPS International Value Portfolio - Class B 0.75% 0.25% 0.10% N/A AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 0.75% 0.25% 0.09% N/A AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund - Class 2 0.30% 0.25% 0.02% N/A American Funds Blue Chip Income and Growth Fund - Class 2 0.42% 0.25% 0.02% N/A American Funds Bond Fund - Class 2 0.37% 0.25% 0.01% N/A American Funds Global Bond Fund - Class 2 0.54% 0.25% 0.04% N/A American Funds Global Growth and Income Fund - Class 2 0.59% 0.25% 0.02% N/A American Funds Global Growth Fund - Class 2 0.53% 0.25% 0.03% N/A American Funds Global Small Capitalization Fund - Class 2 0.71% 0.25% 0.04% N/A American Funds Growth Fund - Class 2 0.32% 0.25% 0.02% N/A TOTAL TOTAL CONTRACTUAL ANNUAL FUND ANNUAL FEE WAIVER OPERATING OPERATING AND/OR EXPENSE EXPENSES UNDERLYING FUND: EXPENSES REIMBURSEMENT AFTER FEE WAIVER -------------------------------------- ---------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS Invesco V.I. Balanced Risk Allocation Fund - Series II 1.63% 0.64% 0.99% (1)(2) Invesco V.I. Core Equity Fund - Series II 1.14% N/A 1.14% (3) Invesco V.I. International Growth Fund - Series II 1.29% N/A 1.29% (4) Invesco V.I. Mid Cap Core Equity Fund - Series II 1.28% N/A 1.28% (3) Invesco V.I. Small Cap Equity Fund - Series II 1.32% N/A 1.32% (5) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein VPS Balanced Wealth Strategy Portfolio - Class B 0.93% N/A 0.93% AllianceBernstein VPS International Value Portfolio - Class B 1.10% N/A 1.10% AllianceBernstein VPS Small/ Mid Cap Value Portfolio - Class B 1.09% N/A 1.09% AMERICAN FUNDS INSURANCE SERIES American Funds Asset Allocation Fund - Class 2 0.57% N/A 0.57% American Funds Blue Chip Income and Growth Fund - Class 2 0.69% N/A 0.69% American Funds Bond Fund - Class 2 0.63% N/A 0.63% American Funds Global Bond Fund - Class 2 0.83% N/A 0.83% American Funds Global Growth and Income Fund - Class 2 0.86% N/A 0.86% American Funds Global Growth Fund - Class 2 0.81% N/A 0.81% American Funds Global Small Capitalization Fund - Class 2 1.00% N/A 1.00% American Funds Growth Fund - Class 2 0.59% N/A 0.59%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEES FEES EXPENSES EXPENSES ---------------------------------------------------------------------------------------------------------------- American Funds Growth-Income Fund - Class 2 0.27% 0.25% 0.02% N/A American Funds International Fund - Class 2 0.49% 0.25% 0.04% N/A American Funds New World Fund - Class 2 0.74% 0.25% 0.06% N/A FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) Portfolio - Service Class 2 0.56% 0.25% 0.09% N/A Fidelity(R) VIP Mid Cap Portfolio - Service Class 2 0.56% 0.25% 0.10% N/A Fidelity(R) VIP Strategic Income Portfolio - Service Class 2 0.57% 0.25% 0.15% N/A FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 2 0.65% 0.25% 0.29% 0.01% Franklin Income Securities Fund - Class 2 0.45% 0.25% 0.02% N/A Franklin Rising Dividends Securities Fund - Class 2 0.62% 0.25% 0.03% 0.01% Franklin Small Cap Value Securities Fund - Class 2 0.51% 0.25% 0.17% 0.01% Franklin Small-Mid Cap Growth Securities Fund - Class 2 0.51% 0.25% 0.29% 0.01% Franklin Strategic Income Securities Fund - Class 2 0.34% 0.25% 0.25% N/A Mutual Global Discovery Securities Fund - Class 2 0.80% 0.25% 0.20% N/A Mutual Shares Securities Fund - Class 2 0.60% 0.25% 0.14% N/A Templeton Foreign Securities Fund - Class 2 0.65% 0.25% 0.14% 0.01% Templeton Global Bond Securities Fund - Class 2 0.46% 0.25% 0.09% N/A Templeton Growth Securities Fund - Class 2 0.74% 0.25% 0.03% N/A HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.61% N/A 0.05% N/A Hartford U.S. Government Securities HLS Fund - Class IA 0.45% N/A 0.03% N/A HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS Fund - Class IA 0.63% N/A 0.04% N/A Hartford Disciplined Equity HLS Fund - Class IA 0.70% N/A 0.05% N/A Hartford Dividend and Growth HLS Fund - Class IA 0.64% N/A 0.04% N/A Hartford Global Growth HLS Fund - Class IA 0.74% N/A 0.07% N/A Hartford Global Research HLS Fund - Class IA 0.90% N/A 0.11% N/A Hartford Growth HLS Fund - Class IA 0.78% N/A 0.05% N/A Hartford High Yield HLS Fund - Class IA 0.69% N/A 0.06% N/A Hartford Index HLS Fund - Class IB 0.30% 0.25% 0.04% N/A Hartford International Opportunities HLS Fund - Class IA 0.67% N/A 0.07% N/A Hartford Money Market HLS Fund - Class IA 0.40% N/A 0.03% N/A Hartford Small Company HLS Fund - Class IA 0.69% N/A 0.04% N/A Hartford Total Return Bond HLS Fund - Class IA 0.46% N/A 0.04% N/A Hartford Value HLS Fund - Class IA 0.73% N/A 0.05% N/A LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio - Class VC 0.50% N/A 0.44% N/A Lord Abbett Fundamental Equity Portfolio - Class VC 0.75% N/A 0.48% N/A Lord Abbett Growth and Income Portfolio - Class VC 0.50% N/A 0.42% N/A MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 0.75% 0.25% 0.10% N/A MFS(R) Investors Trust Series - Service Class 0.75% 0.25% 0.08% N/A MFS(R) Research Bond Series - Service Class 0.50% 0.25% 0.09% N/A TOTAL TOTAL CONTRACTUAL ANNUAL FUND ANNUAL FEE WAIVER OPERATING OPERATING AND/OR EXPENSE EXPENSES UNDERLYING FUND: EXPENSES REIMBURSEMENT AFTER FEE WAIVER -------------------------------------- ---------------------------------------------------------- American Funds Growth-Income Fund - Class 2 0.54% N/A 0.54% American Funds International Fund - Class 2 0.78% N/A 0.78% American Funds New World Fund - Class 2 1.05% N/A 1.05% FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS Fidelity(R) VIP Contrafund(R) Portfolio - Service Class 2 0.90% N/A 0.90% (6) Fidelity(R) VIP Mid Cap Portfolio - Service Class 2 0.91% N/A 0.91% (7) Fidelity(R) VIP Strategic Income Portfolio - Service Class 2 0.97% N/A 0.97% (8) FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Flex Cap Growth Securities Fund - Class 2 1.20% 0.26% 0.94% (9)(11) Franklin Income Securities Fund - Class 2 0.72% N/A 0.72% (10) Franklin Rising Dividends Securities Fund - Class 2 0.91% 0.01% 0.90% (10)(11) Franklin Small Cap Value Securities Fund - Class 2 0.94% 0.01% 0.93% (11) Franklin Small-Mid Cap Growth Securities Fund - Class 2 1.06% 0.01% 1.05% (11) Franklin Strategic Income Securities Fund - Class 2 0.84% N/A 0.84% Mutual Global Discovery Securities Fund - Class 2 1.25% N/A 1.25% Mutual Shares Securities Fund - Class 2 0.99% N/A 0.99% Templeton Foreign Securities Fund - Class 2 1.05% 0.01% 1.04% (11) Templeton Global Bond Securities Fund - Class 2 0.80% N/A 0.80% (10) Templeton Growth Securities Fund - Class 2 1.02% N/A 1.02% (10) HARTFORD HLS SERIES FUND II, INC. Hartford Growth Opportunities HLS Fund - Class IA 0.66% N/A 0.66% Hartford U.S. Government Securities HLS Fund - Class IA 0.48% N/A 0.48% HARTFORD SERIES FUND, INC. Hartford Capital Appreciation HLS Fund - Class IA 0.67% N/A 0.67% Hartford Disciplined Equity HLS Fund - Class IA 0.75% N/A 0.75% Hartford Dividend and Growth HLS Fund - Class IA 0.68% N/A 0.68% Hartford Global Growth HLS Fund - Class IA 0.81% N/A 0.81% Hartford Global Research HLS Fund - Class IA 1.01% N/A 1.01% Hartford Growth HLS Fund - Class IA 0.83% N/A 0.83% Hartford High Yield HLS Fund - Class IA 0.75% N/A 0.75% Hartford Index HLS Fund - Class IB 0.59% N/A 0.59% Hartford International Opportunities HLS Fund - Class IA 0.74% N/A 0.74% Hartford Money Market HLS Fund - Class IA 0.43% N/A 0.43% Hartford Small Company HLS Fund - Class IA 0.73% N/A 0.73% Hartford Total Return Bond HLS Fund - Class IA 0.50% N/A 0.50% Hartford Value HLS Fund - Class IA 0.78% N/A 0.78% LORD ABBETT SERIES FUND, INC. Lord Abbett Bond-Debenture Portfolio - Class VC 0.94% 0.04% 0.90% (12) Lord Abbett Fundamental Equity Portfolio - Class VC 1.23% 0.08% 1.15% (12) Lord Abbett Growth and Income Portfolio - Class VC 0.92% N/A 0.92% MFS(R) VARIABLE INSURANCE TRUST MFS(R) Growth Series - Service Class 1.10% N/A 1.10% MFS(R) Investors Trust Series - Service Class 1.08% N/A 1.08% MFS(R) Research Bond Series - Service Class 0.84% N/A 0.84%
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DISTRIBUTION ACQUIRED AND/OR FUND MANAGEMENT SERVICE (12B-1) OTHER FEES AND UNDERLYING FUND: FEES FEES EXPENSES EXPENSES ---------------------------------------------------------------------------------------------------------------- MFS(R) Total Return Series - Service Class 0.75% 0.25% 0.06% N/A MFS(R) Value Series - Service Class 0.74% 0.25% 0.08% N/A PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 0.48% 0.25% 0.17% 0.05% Putnam VT Investors Fund - Class IB 0.56% 0.25% 0.17% N/A Putnam VT Voyager Fund - Class IB 0.56% 0.25% 0.16% 0.02% TOTAL TOTAL CONTRACTUAL ANNUAL FUND ANNUAL FEE WAIVER OPERATING OPERATING AND/OR EXPENSE EXPENSES UNDERLYING FUND: EXPENSES REIMBURSEMENT AFTER FEE WAIVER -------------------------------------- ---------------------------------------------------------- MFS(R) Total Return Series - Service Class 1.06% 0.04% 1.02% (13) MFS(R) Value Series - Service Class 1.07% N/A 1.07% PUTNAM VARIABLE TRUST Putnam VT Equity Income Fund - Class IB 0.95% N/A 0.95% Putnam VT Investors Fund - Class IB 0.98% N/A 0.98% Putnam VT Voyager Fund - Class IB 0.99% N/A 0.99%
NOTES (1) Invesco Advisers, Inc. (Invesco or Adviser) has contractually agreed, through at least June 30, 2013, 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 0.95% of average daily nets assets. In determining the Adviser'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 After Fee Waiver and/or Expense Reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; (5) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds (as disclosed above as Acquired Fund Fees and Expenses); and (6) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agreed to amend or continue the fee waiver agreement, it will terminate on June 30, 2013. (2) "Other Expenses", "Acquired Fund Fees and Expenses" and "Total Annual Operating Expenses" are based on estimated amounts for the current fiscal year. (3) The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding certain items discussed below) of Series II shares to 1.45% of average daily nets assets. In determining the Adviser'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 After Fee Waivers and/or Expense Reimbursements to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary or non-routine items; (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012. (4) The Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (subject to the same exclusions discussed above in Note 2) of Series II shares to 1.45% of average daily net assets for Invesco V.I. Capital Development Fund, to 0.92% of average daily net assets for Invesco V.I. Dividend Growth Fund, to 0.85% of average daily net assets for Invesco V.I. Government Securities Fund, to 1.36% of average daily net assets for Invesco V.I. International Growth Fund, to 0.62% of average daily net assets for Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund, to 1.09% of average daily net assets for Invesco Van Kampen V.I. Capital Growth Fund, to 0.75% of average daily net assets for Invesco Van Kampen Equity and Income Fund , to 0.87% of average daily net assets for Invesco Van Kampen V.I. Comstock and Invesco Van Kampen V.I. Growth and Income, to 1.23% of average daily net assets for Invesco Van Kampen V.I. Mid Cap Growth Fund, to 1.28% of average daily net assets for Invesco Van Kampen V.I. Mid Cap Value. (5) The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (subject to the same exclusions discussed above in Note 2) of Series II shares to 1.40% of average daily net assets. (6) 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 0.70%. These offsets may be discontinued at any time. (7) 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 0.58%. These offsets may be discontinued at any time. (8) Fidelity Management & Research or its affiliates agreed to waive certain fees during the period. (9) The investment manager and administrator have contractually agreed to waive or limit their respective fees and to assume as their own expenses certain expenses otherwise payable by the Fund so that common annual fund operating expenses (i.e., a combination of investment management fees, fund administration fees, and other expenses, but excluding Rule 12b-1 fees, and acquired fund fees and expenses do not exceed 0.68% for Franklin Flex Cap Growth Securities Fund - Class 2 and do not exceed 0.65% for Franklin Large Cap Value Securities Fund - Class 2 (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2012. T (10) The Fund administration fee is paid indirectly through the management fee. (11) The manager and administrator have agreed in advance to reduce their fees as a result of the fund's investment in a Franklin Templeton money market fund. This reduction will continue until at least April 30, 2012. (12) For the period May 1, 2011 through April 30, 2012, Lord Abbett has contractually agreed to waive all or a portion of its management fee and, if necessary, reimburse the Fund's other expenses to the extent necessary so that the total net annual operating expenses do not exceed an annual rate of: 0.90% for Lord Abbett Bond-Debenture Portfolio - Class VC; 0.95% for Lord Abbett Classic Stock Portfolio - Class VC; and 1.15% for Lord Abbett Fundamental Equity Portfolio - Class VC and Lord Abbett Capital Structure Portfolio - Class VC. This agreement may be terminated only upon the approval of the Fund's Board of Directors (13) Effective May 1, 2011, MFS has agreed in writing to reduce its management fee to 0.70% of the fund's average daily net assets annually in excess of $1 billion and 0.65% of the fund's average daily net assets annually in excess of $2.5 billion to $3 billion until modified by a vote of the fund's Board of Trustees, but such agreement will continue until at least April 30, 2012. 8 ------------------------------------------------------------------------------- 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 INCLUDING THE ELECTION OF THE HIGHEST POSSIBLE OPTIONAL CHARGES (I.E., MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT). THE EXAMPLE ILLUSTRATES THE EFFECT OF FEES AND EXPENSES THAT YOU COULD INCUR (OTHER THAN TAXES). YOUR ACTUAL FEES AND EXPENSES MAY VARY. FOR EVERY $10,000 INVESTED (EXCLUDING PERSONAL PENSION ACCOUNT CONTRIBUTIONS AND AMOUNTS ALLOCATED TO THE FIXED ACCUMULATION FEATURE), HERE'S HOW MUCH YOU WOULD PAY UNDER EACH OF THE THREE SCENARIOS POSED: (1) If you Surrender your Contract at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- A Share $951 $1,758 $2,572 $4,658 B Share $1,154 $2,141 $2,939 $4,789
(2) If you annuitize at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- A Share $771 $1,578 $2,391 $4,472 B Share $234 $1,218 $2,204 $4,603
(3) If you do not Surrender your Contract:
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------------------- A Share $951 $1,758 $2,572 $4,658 B Share $491 $1,477 $2,463 $4,789
CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- When Premium Payments are credited to your Funds, they are converted into Accumulation Units by dividing the amount of your Premium Payments minus any Premium taxes, by the Accumulation Unit Value for that Valuation Day. All classes of Accumulation Unit Values may be obtained, free of charge, by contacting us. See Appendix B - Accumulation Unit Values for additional information. You can find financial statements for us and the Separate Account in the Statement of Additional Information. 9 ------------------------------------------------------------------------------- 3. MANAGEMENT OF THE CONTRACT THE COMPANY We are a stock life insurance company engaged in the business of writing life insurance and individual and group annuities. Hartford Life Insurance Company is authorized to do business in all states of the United States and the District of Columbia. Hartford Life and Annuity Insurance Company is authorized to do business in Puerto Rico, the District of Columbia, and all states of the United States except New York. Hartford Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Hartford Life and Annuity Insurance Company is a subsidiary of Hartford Life Insurance Company. Our corporate offices are located in Simsbury, Connecticut. Neither company cross guarantees the obligations of the other. We are ultimately controlled by The Hartford Financial Services Group, Inc. All guarantees under the Contract are subject to each issuing company's financial strength and claims-paying capabilities. We provide information about our financial strength in reports filed with the SEC (Hartford Life Insurance Company only) and/or state insurance departments. For example, Hartford Life Insurance Company files annual reports (Form 10-K), quarterly reports (Form 10-Q) and periodic reports (Form 8-K) with the SEC. Forms 10-K and 10-Q include information such as our financial statements, management discussion and analysis of the previous year of operations, risk factors, and other information. Form 8-K reports are used to communicate important developments that are not otherwise disclosed in the other forms described above. You may read or copy these reports at the SEC's Public Reference Room at 100 F. Street N.E., Room 1580, Washington, D.C. 20549-2001. You may also obtain reports and other information about us by contacting us using the information stated on the cover page of this prospectus, visiting our website at www.hartfordinvestor.com or visiting the SEC's website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department. THE GENERAL ACCOUNT The Fixed Accumulation Feature (including amounts invested in the DCA Plus program) and the Personal Pension Account are part of our General Account. Any amounts that we are obligated to pay under the Fixed Accumulation Feature and the Personal Pension Account and any other payment obligation we undertake under the Contract are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. We invest the assets of the General Account according to the laws governing the investments of insurance company general accounts. The General Account is not a bank account and is not insured by the FDIC or any other government agency. We receive a benefit from all amounts held in our General Account. Amounts in our General Account are available to our general creditors. We issue other types of insurance policies and financial products and pay our obligations under these products from our assets in the General Account. THE SEPARATE ACCOUNT We set aside and invest the assets of some of our annuity contracts, including these Contracts, in a Separate Account. These Separate Accounts are registered as unit investment trusts under the 1940 Act. This registration does not involve supervision by the SEC of the management or the investment practices of a Separate Account or us. Separate Accounts meet the definition of "Separate Account" under federal securities law. The Separate Accounts referenced in this prospectus hold only assets for variable annuity contracts. These Separate Accounts: - hold assets for your benefit and the benefit of other Contract Owners, and the persons entitled to the payouts described in the Contract; - are not subject to the liabilities arising out of any other business we may conduct; - are not affected by the rate of return of our General Account or by the investment performance of any of our other Separate Accounts; - may be subject to liabilities of other variable annuity contracts offered by this Separate Account which are not described in this prospectus; and - are credited with income and gains, and takes losses, whether or not realized, from the assets they hold without regard to our other income, gains or loss. We do not guarantee the investment results of the Separate Account. THE FUNDS The Funds available for investment are not the same mutual funds that you can buy through your Investment Professional even though they may have similar investment strategies and the same portfolio managers. Each Fund has varying degrees of investment risk. Funds are also subject to separate fees and expenses such as management fees, distribution and operating expenses. "Master-feeder" or "fund of funds" ("feeder funds") invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the prospectuses 10 ------------------------------------------------------------------------------- for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all Contract classes. Please see Appendix C for additional information. MIXED AND SHARED FUNDING - Fund shares may be sold to our other separate accounts, our insurance company affiliates or other unaffiliated insurance companies to serve as an underlying investment for variable annuity contracts and variable life insurance policies, pursuant to a practice known as "mixed and shared funding." As a result, there is a possibility that a material conflict may arise between the interests of Owners, and other contract owners investing in these Funds. If a material conflict arises, we will consider what action may be appropriate, including removing the Fund from the Separate Account or replacing the Fund with another underlying fund. VOTING RIGHTS - We are the legal owners of all Fund shares held in the Separate Account and we have the right to vote at the Funds' shareholder meetings. To the extent required by federal securities laws or regulations, we will: - notify you of any Fund shareholders' meeting if the shares held for your Contract may be voted; - send proxy materials and a form of instructions that you can use to tell us how to vote the Fund shares held for your Contract; - arrange for the handling and tallying of proxies received from Owners; - vote all Fund shares attributable to your Contract according to instructions received from you, and - vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. If any federal securities laws or regulations, or their present interpretation, change to permit us to vote Fund shares on our own, we may decide to do so. You may attend any shareholder meeting at which shares held for your Contract may be voted. After we begin to make Annuity Payouts to you, the number of votes you have will decrease. As a result of proportional voting, a small number of Owners could determine the outcome of a proposition subject to shareholder vote. SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS - Subject to any applicable law, we may make certain changes to the Funds offered under your Contract. We may, in our sole discretion, establish new Funds. New Funds may be made available to existing Owners as we deem appropriate. We may also close one or more Funds to additional Premium Payments or transfers from existing Funds. We may liquidate one or more Sub-Accounts if the board of directors of any Fund determines that such actions are prudent. Unless otherwise directed, investment instructions will be automatically updated to reflect the Fund surviving after any merger, substitution or liquidation. We may eliminate the shares of any of the Funds from the Contract for any reason and we may substitute shares of another registered investment company for the shares of any Fund already purchased or to be purchased in the future by the Separate Account. To the extent required by the 1940 Act, substitutions of shares attributable to your interest in a Fund will not be made until we have the approval of the SEC and we have notified you of the change. In the event of any substitution or change, we may, by appropriate endorsement, make any changes in the Contract necessary or appropriate to reflect the substitution or change. If we decide that it is in the best interest of the Owners, the Separate Account may be operated as a management company under the 1940 Act or any other form permitted by law, may be de-registered under the 1940 Act in the event such registration is no longer required, or may be combined with one or more other Separate Accounts. FEES AND PAYMENTS WE RECEIVE FROM FUNDS AND RELATED PARTIES- We receive substantial fees and payments with respect to the Funds that are offered through your Contract (sometimes referred to as "revenue sharing" payments). We consider these fees and payments, among a number of facts, when deciding to include a Fund that we offer through the Contract. All of the Funds on the overall menu make payments to Hartford or an affiliate. We receive these payments and fees under agreements between us and a Fund's principal underwriter, transfer agent, investment adviser and/or other entities related to the Funds in amounts up to 0.55% of assets invested in a Fund. These fees and payments may include asset-based sales compensation and service fees under distribution and/or servicing plans adopted by Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940. These fees and payments may also include administrative service fees and additional payments, expense reimbursements and other compensation. Hartford expects to make a profit on the amount of the fees and payments that exceed Hartford's own expenses, including our expenses of payment compensation to broker-dealers, financial institutions and other persons for selling the Contracts. The availability of these types of arrangements creates an incentive for us to seek and offer Funds (and classes of shares of such Funds) that pay us revenue sharing. Other funds (or available classes of shares) may have lower fees and better overall investment performance. As of December 31, 2010, we have entered into arrangements to receive administrative service payments and/or Rule 12b-1 fees from each of the following Fund complexes (or affiliated entities): AllianceBernstein Variable Products Series Funds & Alliance Bernstein Investments, American Variable Insurance Series & Capital Research and Management Company, BlackRock Advisors, LLC, BlackRock Investment, LLC, Branch Banking & Trust Company, Columbia Management Distributors, Inc., Evergreen 11 ------------------------------------------------------------------------------- Investment Services Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Franklin Templeton Services, LLC, HL Investment Advisors, LLC, The Huntington Funds, Invesco Advisors Inc., Invesco Distributors Inc., Lord Abbett Series Fund & Lord Abbett Distributor, LLC, MFS Fund Distributors, Inc. & Massachusetts Financial Services Company, Morgan Stanley Distribution, Inc. & Morgan Stanley Investment Management & The Universal Institutional Funds, MTB Investment Advisors, Inc., JPMorgan Investment Advisors, Inc., Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc., Pioneer Variable Contracts Trust & Pioneer Investment Management, Inc. & Pioneer Funds Distributor, Inc., Prudential Investment Management Services, LLC, Putnam Retail Management Limited Partnership, 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 amount of fees and compensation to us and not all Funds pay according to the same formula. Because of this, the amount of fees and payments received by Hartford varies by Fund and Hartford may receive greater or less fees and payments depending on the Funds you select. Revenue sharing payments and Rule 12b-1 fees did not exceed 0.50% and 0.35%, respectively, in 2010, and are not expected to exceed 0.50% and 0.35%, respectively, of the annual percentage of the average daily net assets (for instance, assuming that you invested in a Fund that paid us the maximum fees and you maintained a hypothetical average balance of $10,000, we would collect a total of $85 from that Fund). For the fiscal year ended December 31, 2010, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $129.4 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options. FIXED ACCUMULATION FEATURE INTERESTS IN THE FIXED ACCUMULATION FEATURE ARE NOT REGISTERED UNDER THE 1933 ACT AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE FIXED ACCUMULATION FEATURE NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE FIXED ACCUMULATION FEATURE IS NOT OFFERED IN ALL CONTRACT CLASSES AND IS NOT AVAILABLE IN ALL STATES. We guarantee that we will credit interest to amounts you allocate to the Fixed Accumulation Feature at a minimum rate that meets your State's minimum non-forfeiture requirements. Non-forfeiture rates vary from state-to-state. We may credit a rate higher than the minimum rate. We reserve the right to declare different rates of interest depending on when amounts are allocated or transferred to the Fixed Accumulation Feature. This means that amounts at any designated time may be credited with a different rate of interest than the rate previously credited to such amounts and to amounts allocated or transferred at any other designated time. We will periodically publish the Fixed Accumulation Feature interest rates currently in effect. There is no specific formula for determining interest rates and, except as specifically stated above, no assurances are offered as to future rates in excess of non-forfeiture rates. Some of the factors that we may consider in determining whether to credit interest are: general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. Fixed Accumulation Feature interest rates may vary by State. We will account for any deductions, Surrenders or transfers from the Fixed Accumulation Feature on a "first-in, first-out" basis (i.e., oldest investments will be liquidated first). ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED ACCUMULATION FEATURE IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEED INTEREST RATE FOR ANY GIVEN YEAR. WHILE WE DO NOT CHARGE A SEPARATE RIDER FEE FOR INVESTING IN THE FIXED ACCUMULATION FEATURE, OUR EXPENSES ASSOCIATED WITH OFFERING THIS FEATURE ARE FACTORED INTO THE FIXED ACCUMULATION FEATURE. From time to time, we may credit increased interest rates in our sole discretion. We may restrict your ability to allocate Contract Value, Benefit Balance or Premium Payments to the Fixed Accumulation Feature (and vice versa) at any time in our sole discretion. We may close the Fixed Accumulation Feature to new Premium Payments or transfers of existing Contract Value and/or Benefit Balance. 12 ------------------------------------------------------------------------------- Except as otherwise provided, during each Contract Year, you may make transfers out of the Fixed Accumulation Feature to Sub-Accounts or the Personal Pension Account, subject to the transfer restrictions discussed below. All transfer allocations must be in whole numbers (e.g., 1%). Each Contract Year you may transfer the greater of: - 30% of the Contract Value in the Fixed Accumulation Feature as of the last Contract Anniversary. When we calculate the 30%, we add Premium Payments allocated to the Fixed Accumulation Feature, transfers from Sub-Accounts and transfers from the Personal Pension Account made after that date but before the next Contract Anniversary. These restrictions also apply to systematic transfers. The 30% does not include Contract Value in any DCA Plus Program; or - an amount equal to your largest previous transfer from the Fixed Accumulation Feature in any one Contract Year. We apply these restrictions to all transfers from the Fixed Accumulation Feature, including all systematic transfers and Dollar Cost Averaging Programs, except for transfers under our DCA Plus Program. If your interest rate renews at a rate at least 1% lower than your prior interest rate, you may transfer any amount up to 100% of the amount to be invested at the renewal rate. You must make this transfer request within 60 days of being notified of the renewal rate. We may defer transfers and partial Surrenders from the Fixed Accumulation Feature for up to six months from the date of your request. You must wait six months after your most recent transfer from the Fixed Accumulation Feature before moving Sub-Account Values or Benefit Balance back to the Fixed Accumulation Feature. If you make systematic transfers from the Fixed Accumulation Feature under a Dollar Cost Averaging Program or DCA Plus Program, you must wait six months after your last systematic transfer before moving Contract Value or Benefit Balance back to the Fixed Accumulation Feature. As a result of these limitations, it may take a significant amount of time (i.e., several years) to move Contract Value in the Fixed Accumulation Feature to Sub-Accounts and/or Personal Pension Account and therefore this may not provide an effective short term defensive strategy. PERSONAL PENSION ACCOUNT INTERESTS IN THE PERSONAL PENSION ACCOUNT ARE NOT REGISTERED UNDER THE 1933 ACT AND THE PERSONAL PENSION ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE PERSONAL PENSION ACCOUNT NOR ANY OF ITS INTERESTS ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURES REGARDING THE PERSONAL PENSION ACCOUNT. THE FOLLOWING DISCLOSURE ABOUT THE PERSONAL PENSION ACCOUNT IS SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURES. THE PERSONAL PENSION ACCOUNT IS CURRENTLY AVAILABLE TO IRA, ROTH IRA, SEP AND NON-QUALIFIED PLAN TYPES. THE PERSONAL PENSION ACCOUNT MAY NOT BE AVAILABLE TO ALL TYPES OF OWNERSHIP ARRANGEMENTS, OR IN ALL STATES. WHAT IS THE PERSONAL PENSION ACCOUNT? THE FOLLOWING IS A BRIEF SUMMARY OF THE PERSONAL PENSION ACCOUNT. YOU SHOULD READ THIS ENTIRE SECTION OF THE PROSPECTUS TO MAKE SURE THAT YOU UNDERSTAND THE IMPORTANT LIMITATIONS AND RESTRICTIONS APPLICABLE TO THE PERSONAL PENSION ACCOUNT. The Personal Pension Account is like the Fixed Accumulation Feature because you receive a fixed interest rate investment return. So, like the Fixed Accumulation Feature, you can invest in the Personal Pension Account if you want guaranteed income in the form of Personal Pension Account Payouts, as compared with investing in Sub-Accounts, where your return depends on the investment performance of the Funds you select. While the Personal Pension Account and Fixed Accumulation Feature both offer a fixed interest rate return, the Personal Pension Account is designed to serve a different purpose than the Fixed Accumulation Feature. The Fixed Accumulation Feature is designed to serve as a conventional accumulation-oriented investment -you put money in to build up your investment, and you can then withdraw money to meet financial needs as they arise. You can also transfer some or all of your investment to the Sub-Accounts or the Personal Pension Account, and your beneficiaries receive a death benefit if you die. The Personal Pension Account is designed to serve a different purpose - it has features and guarantees you can use to design your own personal pension plan to provide you with life-long income payments without having to use the Sub-Accounts or Fixed Accumulation Feature for that purpose. You will know at the time of each Deposit what you can expect in terms of lifetime payouts if commenced during your Guarantee Window. Crediting rates (including the step down in such rates) are also available at or prior to each Contribution. While you can take income payments from the Fixed Accumulation Feature too, the amount of those income payments is not guaranteed in advance. Why would you invest in the Fixed Accumulation Feature if the Personal Pension Account gives you income guarantees and more flexibility structuring income payments? The reason is that to give you the guarantees and income payment flexibility, we had to place significant restrictions on how much you can transfer out of the Personal Pension Account in any year as well as on your ability to receive lump sum payments - instead of SURRENDERING part or all of the amounts you have built up in the Personal Pension Account, you 13 ------------------------------------------------------------------------------- can get a lump sum payment only by specifying some or all of the payments you are receiving, and then COMMUTING them into one lump sum. When you invest in the Personal Pension Account, you may end up getting less than you would have if you invested in the Fixed Accumulation Feature. This is the tradeoff you have to accept in return for getting the additional flexibility and guarantees that let you design your own personal pension plan. THERE ARE CERTAIN CONDITIONS THAT MUST BE SATISFIED FOR YOU TO RECEIVE GUARANTEED INCOME PAYMENTS FROM YOUR PERSONAL PENSION ACCOUNT INVESTMENT, INCLUDING STARTING TO TAKE PAYMENTS BEFORE THE END OF A SPECIFIED PERIOD. YOU SHOULD READ THE REST OF THIS PROSPECTUS AND YOUR CONTRACT CAREFULLY TO MAKE SURE YOU UNDERSTAND ALL OF THESE CONDITIONS. AS YOU READ THE REMAINDER OF THIS SECTION OF THE PROSPECTUS, WHICH PROVIDES YOU WITH MORE DETAILED INFORMATION ABOUT HOW THE PERSONAL PENSION ACCOUNT WORKS, YOU SHOULD KEEP IN MIND THESE IMPORTANT POINTS: - YOUR ABILITY TO MAKE TRANSFERS FROM THE PERSONAL PENSION ACCOUNT IS SIGNIFICANTLY LIMITED BECAUSE THE PERSONAL PENSION ACCOUNT RESTRICTS LIQUIDITY DUE TO TRANSFER LIMITATIONS AND THE POTENTIAL LOSS OF VALUE AS A RESULT OF COMMUTATION. ACCORDINGLY, YOU SHOULD ENSURE THAT YOUR INVESTMENTS IN THE FIXED ACCUMULATION FEATURE AND THE SUB-ACCOUNTS WILL BE ADEQUATE TO MEET YOUR LIQUIDITY NEEDS. - BECAUSE THE PERSONAL PENSION ACCOUNT IS DESIGNED AS A LONG-TERM RETIREMENT FUNDING VEHICLE, IT HAS GUARANTEED PAYOUT RATES APPLICABLE ONLY FOR PERSONAL PENSION ACCOUNT PAYOUTS COMMENCED BEFORE THE EXPIRATION OF YOUR SPECIFIED "GUARANTEE WINDOW" (AS DESCRIBED BELOW). - THE PERSONAL PENSION ACCOUNT PROVIDES CERTAIN ADDITIONAL FLEXIBILITY WITH RESPECT TO STRUCTURING INCOME PAYMENTS - YOU CAN CONVERT PART OF YOUR INVESTMENT IN THE PERSONAL PENSION ACCOUNT INTO INCOME PAYMENTS AT A PARTICULAR TIME RATHER THAN YOUR ENTIRE INVESTMENT, AND YOU MAY ESTABLISH DIFFERENT INCOME STREAMS. - AT ANY GIVEN TIME, CREDITED RATES AVAILABLE UNDER THE PERSONAL PENSION ACCOUNT MAY BE HIGHER OR LOWER THAN INTEREST RATES OFFERED UNDER THE FIXED ACCUMULATION FEATURE. - YOU MAY USE THE PERSONAL PENSION ACCOUNT TO ESTABLISH STREAMS OF INCOME PAYMENTS THAT WILL CONTINUE UNTIL THE OWNER, THE ANNUITANT OR A JOINT OWNER DIES, WHICHEVER IS FIRST. - SUMS INVESTED INTO THE PERSONAL PENSION ACCOUNT ARE SUBJECT TO SEVERE TRANSFER RESTRICTIONS AND ANY LUMP SUM WITHDRAWALS ARE SUBJECT TO COMMUTATION (WHICH MAY SIGNIFICANTLY REDUCE THE AMOUNT YOU RECEIVE). PLEASE MAKE SURE THAT YOU HAVE SUFFICIENT ASSETS AVAILABLE TO MEET YOUR SHORT TERM OR EMERGENCY NEEDS AND/OR REQUIRED MINIMUM DISTRIBUTIONS BEFORE INVESTING IN THE PERSONAL PENSION ACCOUNT. - YOU MAY COMMUTE ANY OR ALL OF YOUR ANNUITY PAYOUT VALUE TO GET A LUMP SUM PAYMENT FROM THE PERSONAL PENSION ACCOUNT. THERE IS AN INITIAL THIRTY DAY WAITING PERIOD FOR RECEIVING COMMUTED VALUE OF YOUR PERSONAL PENSION ACCOUNT. - IF YOU TERMINATE THIS CONTRACT, YOU GIVE UP YOUR RIGHT TO FUTURE "PERSONAL PENSION ACCOUNT PAYOUTS" (AS DESCRIBED BELOW). HOW DOES THE PERSONAL PENSION ACCOUNT WORK? CONTRIBUTIONS. You invest in the Personal Pension Account through Personal Pension Account Contributions. The first Personal Pension Account Contribution becomes your initial investment called your "Benefit Balance." The Benefit Balance will be increased by the amount of each subsequent Personal Pension Account Contribution, transfers into the Personal Pension Account from the Fixed Accumulation Feature and Sub-Accounts and accrued interest. Unlike the Fixed Accumulation Feature, the Benefit Balance is not indicative of what you would receive as a lump sum. Once you start taking Personal Pension Account Payouts, as described below, your Benefit Balance is divided into an "Accumulation Balance" and "Annuity Payout Value." Annuity Payout Value refers to the sums used to fund your Personal Pension Account Payouts and anything remaining is referred to as your Accumulation Balance. Because you may convert all or any portion of your Accumulation Balance into Personal Pension Account Payouts at different times, you may have more than one Annuity Payout Value. The minimum initial Personal Pension Account Contribution is $10,000. Our prior approval may be required for any single or cumulative Personal Pension Account Contribution of $1 million or more. Each subsequent Personal Pension Account Contribution must be at least $1,000. FAILURE TO MAINTAIN A MINIMUM ACCUMULATION BALANCE OF $5,000 WILL RESULT IN PREMATURE COMMENCEMENT OF PENSION ACCOUNT PAYOUTS. You may not make any Personal Pension Account Contributions after the Annuity Commencement Date. INTEREST CREDITING - We guarantee that we will credit interest to amounts that you allocate to the Personal Pension Account at a minimum rate of 1.5% (called a "credited rate(s)"). We may credit a rate higher than the minimum credited rate. Interest rates will decrease over different time bands. We expect to make a profit in setting credited rates. Different credited rates may apply during the course of your investment in the Personal Pension Account. Credited rates will continue to apply to your Accumulation Balance 14 ------------------------------------------------------------------------------- until the earliest of when you commence taking Personal Pension Account Payouts, the Annuity Commencement Date or when we pay the Death Benefit. Credited rates will not apply to your Annuity Payout Value(s). We reserve the right to periodically establish new credited rates and bands that will be applied to new Personal Pension Account Contributions. This means that all or portions of your Accumulation Balance may earn interest at different credited rates. See Examples 1, 2 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of how different credited rates may apply during the term of your Contract. We will confirm your credited rate schedule with each Personal Pension Account Contribution. There is no specific formula for determining credited rates and no assurances are offered as to future credited rates and their applicability. Some of the factors that we may consider in determining credited rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match these or our general liabilities and anticipated yields on our investments; regulatory and tax requirements; and competitive factors. PERSONAL PENSION ACCOUNT PAYOUTS - You may tell us to start paying you income payments called "Personal Pension Account Payouts" at any time or at different times until your Annuity Commencement Date. Subsequent Premium Payments can be made into Sub-Accounts and/or the Fixed Accumulation Feature after Personal Pension Account Payouts have begun (if received before your Annuity Commencement Date). There is a thirty day waiting period for your first Personal Pension Account Payout following each Personal Pension Account Start Date. As noted above, your ability to receive lump sum payments from the Personal Pension Account is limited. You do not withdraw any part of your Benefit Balance in the same way that you can surrender your Contract Value from Sub-Accounts or the Fixed Accumulation Feature. Rather, you must convert Accumulation Balance into an Annuity Payout Value that is then used to set your Personal Pension Account Payouts. You may surrender any or all of your Contract Value without affecting your Annuity Payout Value, or you may commute any or all of your Annuity Payout Value without affecting your Contract Value. However, you may terminate your Contract by (a) fully surrendering all of your Contract Value in the Sub-Accounts and Fixed Accumulation Feature; (b) commuting your Annuity Payout Value in your Personal Pension Account (as discussed in more detail below); and (c) giving up your right to Personal Pension Account Payouts arising after your Guaranteed Payout Duration. You will automatically start receiving Personal Pension Account Payouts on your Annuity Commencement Date. Personal Pension Account Payouts will be paid in the manner described in Annuity Payout Option Two or Eight under the heading "When do your Annuity Payouts begin?" under the Annuity Payouts section below. We reserve the right to require that you own your Contract for at least six months before you start receiving Personal Pension Account Payouts. For Qualified Contracts, we reserve the right to require that you start taking Personal Pension Account Payouts no later than when the Annuitant turns age 70 1/2. An annual benefit increase option may also be elected to adjust Personal Pension Account Payouts, subject to availability. We calculate the amount of your Personal Pension Account Payouts by applying the applicable payout rate to your Accumulation Balance. We will provide you with a guaranteed payout rate each time that you make a new Personal Pension Account Contribution. Payout rates are set at our sole discretion. There is no specific formula for determining payout rates and, except as specifically provided below, there is no assurance as to future payout rates. Payout rates may vary based on Contract class and distribution channel. Some of the factors that we may consider in determining payout rates include, but are not limited to, general economic trends, rates of return currently available for the types of investments and durations that match our liabilities and anticipated yields on our investments; regulatory and tax requirements; competitive factors and mortality tables (including age and gender factors). When you first make a Personal Pension Account Contribution, you will be required to choose a Target Income Age at which you are likely to begin taking Personal Pension Account Payouts. The Target Income Age cannot exceed twenty (20) years from the oldest Annuitant's age at the time of investment or age 80, whichever shall first occur. A single Target Income Age will apply to your Contract irrespective of the number of subsequent Personal Pension Account Contributions you may make in the future. Except as provided below, the Target Income Age cannot be changed. We will use the guaranteed payout rate(s) to calculate Personal Pension Account Payouts if you commence taking Personal Pension Account Payouts during the timeframe that begins three (3) years prior to the Target Income Age and ends three (3) years after the Target Income Age (this seven year period is referred to as the "guarantee window"). If you commence taking Personal Pension Account Payouts at any time outside of the guarantee window, then we will calculate your Personal Pension Account Payouts using payout rate(s) that we then determine at our sole discretion. Payouts taken outside of your Guarantee Window are not guaranteed. In these circumstances, your payout rate will be the lesser of our then current payout rate or the maximum payout rate set internally at the time of each Contribution; but, will never be less than the Minimum Guaranteed Payout Purchase Rates specified in your Contract. The existence of guaranteed payout rates, among other things, distinguishes the Personal Pension Account from the way we treat annuitization of your Contract Value and investments in the Fixed Accumulation Feature at the end of the accumulation phase of your Contract. See Examples 1 and 4 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Payouts during the guarantee window. LUMP SUM PAYMENTS. You may commute any or all of your Annuity Payout Value to get a lump sum payment from the Personal Pension Account. The way we do this is to calculate the number of Personal Pension Account Payouts (corresponding to the Annuity 15 ------------------------------------------------------------------------------- Payout Value that you seek to commute) that when added together will equal the amount of your commutation request, and then the time period over which these Personal Pension Account Payouts would have otherwise been made is called the "Guaranteed Payout Duration." Personal Pension Account Payouts based on the remaining, non-commuted portion of your Annuity Payout Value will take place after the Guaranteed Payout Duration based on the same frequency established on your original Personal Pension Account Start Date provided that you, the Annuitant or a joint Owner are alive at that time. There is an initial thirty day waiting period for receiving commuted value of your Personal Pension Account. Please see "What is Commuted Value?" in section 4(c)(Surrenders) and Personal Pension Account Examples 4a and 4b in Appendix A for more information about how Guaranteed Payout Duration is determined. You should understand that if you commute you will receive less than your Annuity Payout Value. The amount you receive over time depends on a number of factors, including the difference between interest rates currently being credited and the discount rate used upon commutation, how long you have invested in the Personal Pension Account and whether you (or the Annuitant) live long enough so that Personal Pension Account Payouts start up again after the Guaranteed Payout Duration. We will pay you the commuted value of your lump sum payment thirty days after your request. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information about how commutation works. TRANSFERS - Each Contract Year, you may transfer a portion of your Accumulation Balance to the Fixed Accumulation Feature or Sub-Accounts without having to comply with the annuitization and commutation requirements discussed above. All transfer allocations must be in whole numbers (e.g., 1%). The maximum amount of Accumulation Balance that may be transferred is the highest of: - 4% of your Accumulation Balance as of your prior Contract Anniversary; - the amount of interest credited to your Accumulation Balance over the most recent full Contract Year; or - the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year. We reserve the right to: (a) limit the number of transfers from the Personal Pension Account; (b) make you wait six months after your most recent transfer from the Personal Pension Account before moving Contract Value back into the Personal Pension Account; or (c) revoke this transfer privilege at any time. Amounts transferred out of the Personal Pension Account will reduce the Accumulation Balance by the amount transferred. Amounts transferred from the Personal Pension Account to the Fixed Accumulation Feature or the Sub-Accounts will be treated as a subsequent Premium Payment and become part of your Contract Value. You may also transfer Contract Value from your Sub-Accounts or Fixed Accumulation Feature, to the Accumulation Balance (such transfers will reduce the amount of your optional Death Benefit, Annual Withdrawal Amount (AWA) and Remaining Gross Premiums). If applicable, no CDSC will be applied to Accumulation Balance transferred to Sub-Accounts or the Fixed Accumulation Feature, or vice versa. No transfers may be made to or from the Personal Pension Account after the Annuity Commencement Date. See Example 3 under the Personal Pension Account Examples in Appendix A for an illustration of transfers into your Personal Pension Account. AS A RESULT OF THESE OUT-BOUND TRANSFER RESTRICTIONS, IT MAY TAKE A SIGNIFICANT AMOUNT OF TIME (I.E., SEVERAL YEARS) TO MOVE ACCUMULATION BALANCE TO SUB-ACCOUNTS OR THE FIXED ACCUMULATION FEATURE AND THEREFORE THIS MAY NOT PROVIDE AN EFFECTIVE SHORT TERM DEFENSIVE STRATEGY. PLEASE REFER TO EXAMPLE 3 UNDER THE PERSONAL PENSION ACCOUNT EXAMPLES IN APPENDIX A FOR AN ILLUSTRATION OF TRANSFER RESTRICTIONS. DEATH BENEFIT - The Personal Pension Account includes a Death Benefit equal to your Benefit Balance. This Death Benefit is considered to be part of the standard Death Benefit or any optional Death Benefit that you elect. Your Personal Pension Account Death Benefit increases as a result of additional Personal Pension Account Contributions and transfers into the Personal Pension Account. YOUR PERSONAL PENSION ACCOUNT DEATH BENEFIT DECREASES AS YOU TAKE PERSONAL PENSION ACCOUNT PAYOUTS. YOUR PERSONAL PENSION ACCOUNT DEATH BENEFIT ALSO DECREASES UPON COMMUTATION OF YOUR ANNUITY PAYOUT VALUE. Benefit Balance transfers to Sub-Accounts and/or the Fixed Accumulation Feature also decrease your Personal Pension Account Death Benefit but because these amounts are converted into Contract Value, they become part of the standard Death Benefit and/or optional Death Benefit. Personal Pension Account Payouts will generally terminate upon notification to us of the death of the Owner, joint Owner or Annuitant, if prior to the Annuity Commencement Date; or upon notification to us of the Annuitant's death, if after the Annuity Commencement Date. The method of payment of the Death Benefit will be subject to the restrictions contained in the "Standard Death Benefit" section of this Prospectus. See Example 3 under the Personal Pension Account Examples in Appendix A for an illustration of transfers into your Personal Pension Account. Your Benefit Balance will be converted into Contract Value and transferred to the Money Market Sub-Account without annuitization and commutation. For tax purposes, the conversion and transfer of the Benefit Balance will be treated as a taxable distribution made in the year of the conversion and transfer. Unless otherwise stated below, Contract Value may not be reallocated back into the Personal Pension Account. The Contingent Annuitant may reinvest Contract Value back into the Personal Pension Account and establish a new guarantee window, target income age and receive then applicable credited rates. If Spousal Contract continuation is elected, your Spouse can either continue to maintain the Personal Pension Account and resume Personal Pension Account Payouts, if 16 ------------------------------------------------------------------------------- applicable, or instruct us to transfer Benefit Balance to the Money Market Sub-Account. Your Spouse may then reinvest Contract Value back into the Personal Pension Account by establishing a new guarantee window and target income age. New crediting rates will apply. OTHER INFORMATION - We will account for any Personal Pension Account Contributions, Personal Pension Account Payouts, interest, and deductions separately and on a first-in, first-out basis for the purposes of determining which credited rates are associated with each Personal Pension Account Contribution. Personal Pension Account Payouts are not cumulative and may not be advanced, commuted or accelerated, except as explicitly stated in this prospectus. Subject to applicable state insurance law, the Personal Pension Account does not establish a cash surrender benefit. We may close the Personal Pension Account to new Personal Pension Account Contributions at any time without notice. We may also make the Personal Pension Account available only through enrollment in one or more investment Programs that we establish. Special consideration should be given by Personal Pension Account investors who are under age 40 to the twenty-year limitation on setting your Target Income Age and the absence of guaranteed payout rates applied if Personal Pension Account Payouts commence outside of your guarantee window. The Personal Pension Account should not be confused with a pension plan under The Employee Retirement Income Security Act of 1974, as amended (ERISA). Neither we nor any of our affiliates assume any fiduciary duties with regard to this Contract, as such terms are defined under ERISA laws and regulations. The Personal Pension Account is not a defined benefit plan guaranteed by the Pension Benefit Guaranty Corporation (PBGC) or any federal or state government agency. This feature is not a corporate pension plan issued by us or our affiliates. In summary, the Personal Pension Account is designed for the long-term investor who is willing to forego some degree of liquidity in exchange for, among other things, deferred lifetime income in the form of Personal Pension Account Payouts. This feature restricts liquidity through transfer and commutation restrictions. The amount ultimately received as a consequence of your investment in the Personal Pension Account is not predictable because of the uncertainty of factors such as how long you have invested in the Personal Pension Account, interest rates in effect at the time of investment and commutation, and how long you receive lifetime Personal Pension Account Payouts. If you partially commute your Personal Pension Account Payouts, you will retain the right to collect life contingent Personal Pension Account Payouts that resume after the applicable Guaranteed Payout Duration. HOWEVER, IF YOU ELECT TO TERMINATE YOUR CONTRACT, YOU WILL GIVE UP YOUR RIGHT TO THESE FUTURE LIFE CONTINGENT PERSONAL PENSION ACCOUNT PAYOUTS. YOU SHOULD THEREFORE CONSULT WITH YOUR INVESTMENT PROFESSIONAL OR A TRUSTED ADVISER BEFORE TERMINATING YOUR CONTRACT TO BE SURE THAT YOU UNDERSTAND THESE IMPORTANT IMPLICATIONS. Please refer to "What kinds of Surrenders are available" and "What is the Commuted Value" in the Surrenders section as well as Example 4 under the Personal Pension Account Examples in Appendix A for more information. 4. INFORMATION ON YOUR ACCOUNT A. OPENING AN ACCOUNT WHO CAN BUY THIS CONTRACT? The Contract is an individual 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 do not accept any incoming 403(b) exchanges, transfers or applications for 403(b) individual annuity contracts or additional investments into any individual annuity contract funded through a 403(b) plan. 17 ------------------------------------------------------------------------------- We do not accept any new retirement plans qualified under Sections 401(a) and 403(a) of the Code or 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, or certain eligible deferred compensation plans as defined in Section 457 of the Code. The Personal Pension Account may not be available to all types of Qualified Plans. HOW DO YOU PURCHASE A CONTRACT? You may only purchase a Contract through a Financial Intermediary. A Investment Professional will work with you to complete and submit an application or an order request form. Part of this process will include an assessment as to whether this variable annuity may be suitable for you. Prior to recommending the purchase or exchange of a deferred variable annuity, your Investment Professional shall make reasonable efforts to obtain certain information about you and your investment needs. This recommendation will be independently reviewed by a principal within your Financial Intermediary. Your initial Deposit will not be invested in any Account and/or the Personal Pension Account during this period. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, your Financial Intermediary will ask for your name, address, date of birth and other information that will allow us to identify you. They may also ask to see your driver's license or other identifying documents. Non-Resident Alien (NRA) application submissions require our prior approval. The minimum initial Deposit required to buy this Contract varies based on the type of investment, Contract class and whether you enroll in a systematic investment Program such as the InvestEase(R) Program. Financial Intermediaries may impose requirements regarding the form of payment they will accept. Deposits not actually received by us within the time period provided below will result in the rejection of your application or order request. Deposits sent to us must be made in U.S. dollars and checks must be drawn on U.S. banks. We do not accept cash, third party checks or double endorsed checks. We reserve the right to limit the number of checks processed at one time. If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees incurred. A check must clear our account through our Administrative Office to be considered to be in good order. We reserve the right to impose special conditions on anyone who seeks our prior approval to purchase a Contract with Deposits of $1 million or more. In order to request prior approval, you must submit a completed enhanced due diligence form prior to the submission of your application: - if you are seeking to purchase a Contract with an initial Deposit of $1 million or more; - if total Deposits, aggregated by social security number or taxpayer identification number, equal $1 million or more; and - for all applications where the Owner or joint Owner are non-resident aliens. You and your Annuitant must not be older than age 80 on the date that your Contract is issued. You must be of minimum legal age in the state where the Contract is being purchased or a guardian must act on your behalf. Optional riders are subject to additional maximum issue age restrictions. We urge you to discuss with your Investment Professional which share class is suitable for your needs. Share class availability and/or mortality and expense risk charge arrangements may vary based on the Financial Intermediary selling this variable annuity to you. Charges affect your overall rate of return on your Contract Value. In determining whether to invest in a share class that imposes a front-end sales charge, you might consider whether over a long time horizon lower mortality and expense risk charges out weigh up front sales charges and if you will be entitled to breakpoint discounts based on our rights of accumulation and letter of intent programs. In determining whether to invest in a share class that imposes a contingent deferred sales charge, you might consider whether higher mortality and expense risk and distribution charges out weigh the benefits of contingent deferred sales charges that reduce, or are eliminated, over time. For instance, those investing over $100,000 may find a front-end sales charge class share to be more economically advantageous than a contingent deferred sales charge share class. Finally, in determining whether to invest in a share class offered through a financial advisor, you might consider how the fee charged by your advisor bears in relation to the costs associated with investing in other share classes that impose higher fees. It is important that you notify us if you change your address. If your mail is returned to us, we are likely to suspend future mailings until an updated address is obtained. In addition, we may rely on a third party, including the US Postal Service, to update your current address. Failure to give us a current address may result in payments due and payable on your annuity contract being considered aban-doned property under state law, and remitted to the applicable state. 18 ------------------------------------------------------------------------------- CAN YOU CANCEL YOUR CONTRACT AFTER YOU PURCHASE IT? Yes. If for any reason you are not satisfied with your Contract, simply return it within ten days after you receive it with a written request for cancellation that indicates your tax-withholding instructions. In some states, you may be allowed more time to cancel your Contract. We may require additional information, including a signature guarantee, before we can cancel your Contract. Unless otherwise required by state law, we will pay you your Total Balance (plus any front-end sales charge associated with class A shares and minus applicable expenses) as of the Valuation Day we receive your properly completed request to cancel and will refund any sales or Contract charges incurred during the period you owned the Contract. The Total Balance may be more or less than your Deposits depending upon the investment performance of your Contract. This means that you bear the risk of any decline in your Total Balance until we receive your notice of cancellation. In certain states, however, we are required to return your Deposit without deduction for any fees or charges. HOW ARE DEPOSITS APPLIED TO YOUR CONTRACT? Your initial Deposit will usually be invested within two Valuation Days of our receipt at our Administrative Office of both a properly completed application or order request and the Deposit; both being in good order. If we receive a subsequent Deposit before the end of a Valuation Day, it will be invested on the same Valuation Day. If we receive your subsequent Deposit after the end of a Valuation Day, it will be invested on the next Valuation Day. If we receive a subsequent Deposit on a non-Valuation Day, the amount will be invested on the next Valuation Day. Unless we receive new instructions, we will invest all Deposits based on your last instructions on record. We will send you a confirmation when we invest your Deposit. If the request or other information accompanying the initial Deposit is incomplete or not in good order when received, we will hold the money in a non-interest bearing account for up to five Valuation Days (from the Valuation Day that we actually receive your initial Deposit at our Administrative Office) while we try to obtain complete information. If we cannot obtain the information within five Valuation Days, we will either return the Deposit and explain why it could not be processed or keep the Deposit if you authorize us to keep it until you provide the necessary information. Generally, we will receive your application or order request (whether for an initial purchase or a subsequent investment) after your Financial Intermediary has completed a suitability review. We will then consider if your investment is in good order. While the suitability and good order process is underway, Deposits will not be applied to your Contract. You will not earn any interest on Deposits even if they have been sent to us or deposited into our bank account. We are not responsible for gains or lost investment opportunities incurred during this review period or if your Financial Intermediary asks us to unwind a transaction based on their review of your Investment Professional's recommendations. The firm that sold this Contract to you and we, may directly or indirectly earn income on your Deposits. For more information, contact your Investment Professional. HOW IS CONTRACT VALUE CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE? The Contract Value is the sum of the value of the Fixed Accumulation Feature, if applicable, and all Funds, and does not include Benefit Balance. There are two things that affect the value of your Sub-Accounts: (1) the number of Accumulation Units, and (2) the Accumulation Unit Value. Contract Value is determined by multiplying the number of Accumulation Units by the Accumulation Unit Value. On any Valuation Day the investment performance of the Sub-Accounts will fluctuate with the performance of the Funds. When Premium Payments are credited to Sub-Accounts within your Account, they are converted into Accumulation Units by dividing the amount of your Premium Payments, minus any Premium taxes, by the Accumulation Unit Value for that day. The more Premium Payments you make to your Account, the more Accumulation Units you will own. You decrease the number of Accumulation Units you have by requesting partial or full Surrenders, settling a Death Benefit claim or by annuitizing your Contract or as a result of the application of certain Contract charges. To determine the current Accumulation Unit Value, we take the prior Valuation Day's Accumulation Unit Value and multiply it by the Net Investment Factor for the current Valuation Day. The Net Investment Factor is used to measure the investment performance of a Sub-Account from one Valuation Day to the next. The Net Investment Factor for each Sub-Account equals: - the net asset value per share plus applicable distributions per share of each Fund at the end of the current Valuation Day; reduced by - the net asset value per share of each Fund at the end of the prior Valuation Day; reduced by - contract charges including the deductions for the mortality and expense risk charge and any other periodic expenses and administrative charges, divided by the number of days in the year multiplied by the number of days in the valuation period. We will send you a statement at least annually. 19 ------------------------------------------------------------------------------- WHAT OTHER WAYS CAN YOU INVEST? You may enroll in the following features (sometimes called a "Program") for no additional fee. Not all Programs are available with all Contract variations. - INVESTEASE This electronic funds transfer feature allows you to have money automatically transferred from your checking or savings account and deposited into your Contract on a monthly or quarterly basis. It can be changed or discontinued at any time. The minimum amount for each transfer is $50. You can elect to have transfers made into any available Fund, the Fixed Accumulation Feature, or the Personal Pension Account. You cannot use this Program to invest in the DCA Plus Programs. - STATIC ASSET ALLOCATION MODELS This feature allows you to select an asset allocation model based on several potential factors including your risk tolerance, time horizon, investment objectives, or your preference to invest in certain Funds or Fund families. Based on these factors, you can select one of several asset allocation models, with each specifying percentage allocations among various Funds available under your Contract. Some asset allocation models are based on generally accepted investment theories that take into account the historic returns of different asset classes (e.g., equities, bonds or cash) over different time periods. Other asset allocation models focus on certain potential investment strategies that could possibly be achieved by investing in particular Funds or Fund families and are not based on such investment theories. Static asset allocation models offered from time to time are reflected in your application and marketing materials. You may obtain a copy of the current models by contacting your Financial Intermediary. You may invest in an asset allocation model through the Dollar Cost Averaging Program where the Fixed Accumulation Feature, Personal Pension Account, or a DCA Plus Program is the source of the assets to be invested in the asset allocation model you have chosen. You can also participate in these asset allocation models while enrolled in the InvestEase or Automatic Income Program. You can switch asset allocation models up to twelve times per year. Your ability to elect or switch into and between asset allocation models may be restricted based on Fund abusive trading restrictions. Your investments in an asset allocation model will be rebalanced quarterly to reflect the model's original percentages and you may cancel your model at any time subject to investment restrictions for maintaining certain optional riders. We have no discretionary authority or control over your investment decisions. These asset allocation models are based on then available Funds and do not include the Fixed Accumulation Feature or the Personal Pension Account. We make available educational information and materials (e.g., risk tolerance questionnaire, pie charts, graphs, or case studies) that can help you select an asset allocation model, but we do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you. While we will not alter allocation percentages used in any asset allocation model, allocation weightings could be affected by mergers, liquidations, fund substitutions or closures. Availability of these models is subject to Fund company restrictions. Please refer to "What Restrictions Are There on your Ability to Make a Sub-Account Transfer?" for more information. You will not be provided with information regarding periodic updates to the Funds and allocation percentages in the asset allocation models, and we will not reallocate your Contract Value based on those updates. Information on updated asset allocation models may be obtained by contacting your Investment Professional. If you wish to update your asset allocation model, you may do so by terminating your existing model and re-enrolling into a new one. Investment alternatives other than these asset allocation models are available that may enable you to invest your Contract Value with similar risk and return characteristics. When considering an asset allocation model for your individual situation, you should consider your other assets, income and investments in addition to this annuity. Asset allocation does not guarantee that your Contract Value will increase nor will it protect against a decline if market prices fall. If you choose to participate in an asset allocation program, you are responsible for determining which asset allocation model is best for you. Tools used to assess your risk tolerance may not be accurate and could be useless if your circumstances change over time. Although each asset allocation model is intended to maximize returns given various levels of risk tolerance, an asset allocation model may not perform as intended. Market, asset class or allocation option class performance may differ in the future from historical performance and from the assumptions upon which the asset allocation model is based, which could cause an asset allocation model to be ineffective or less effective in reducing volatility. An asset allocation model may perform better or worse than any single Fund, allocation option or any other combination of Funds or allocation options. In addition, the timing of your investment and automatic rebalancing may affect performance. Quarterly rebalancing and periodic updating of asset allocation models can cause their component Funds to incur transactional expenses to raise cash for money flowing out of Funds or to buy securities with money flowing into the Funds. Moreover, large outflows of money from the Funds may increase the expenses attributable to the assets remaining in the Funds. These expenses can adversely affect the performance of the relevant Funds and of the asset allocation models. In addition, these inflows and outflows may cause a Fund to hold a large portion of its assets in cash, which could detract 20 ------------------------------------------------------------------------------- from the achievement of the Fund's investment objective, particularly in periods of rising market prices. For additional information regarding the risks of investing in a particular Fund, see that Fund's prospectus. Additional considerations apply for qualified Contracts with respect to Static Asset Allocation Model Programs. Neither we, nor any third party service provider, nor any of their respective affiliates, is acting as a fiduciary under The Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Code, in providing any information or other communication contemplated by any Program, including, without limitation, any asset allocation models. That information and communications are not intended, and may not serve as a primary basis for your investment decisions with respect to your participation in a Program. Before choosing to participate in a Program, you must determine that you are capable of exercising control and management of the assets of the plan and of making an independent and informed decision concerning your participation in the Program. Also, you are solely responsible for determining whether and to what extent the Program is appropriate for you and the assets contained in the qualified Contract. Qualified Contracts are subject to additional rules regarding participation in these Programs. It is your responsibility to ensure compliance of any recommendation in connection with any asset allocation model with governing plan documents. - ASSET REBALANCING In asset rebalancing, you select a portfolio of Funds, and we will rebalance your assets at the specified frequency to reflect the original allocation percentages you selected (choice of frequency may be limited when certain optional riders are elected). You can also combine this Program with others such as the Automatic Income Program, InvestEase and DCA Programs (subject to restrictions). You may designate only one set of asset allocation instructions at a time. - DOLLAR COST AVERAGING PROGRAMS We offer three Dollar Cost Averaging Programs: - DCA Plus - Fixed Amount DCA - Earnings/Interest DCA DCA Plus - These programs allow you to earn a fixed rate of interest on investments. These Programs are different from the Fixed Accumulation Feature or the Personal Pension Account. We determine, in our sole discretion, the interest rates to be credited. These interest rates may vary depending on the Contract class you purchased and the date the request for the Program is received. Please consult your Investment Professional to determine the interest rate for your Program. You may elect either the "12-Month Transfer Program" or the "6-Month Transfer Program". - Under the 12-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 12 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 12 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 7 but no more than 12 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Under the 6-Month Transfer Program, new Premium Payments will be credited with an interest rate that will not change for 6 months. You must transfer these investments into available Funds or the Personal Pension Account (and not the Fixed Accumulation Feature) during this 6 month period. Unless otherwise depleted, all then remaining Program investments are transferred to the designated destination Funds or other instructions will be sought from you. You must make at least 3 but no more than 6 consecutive, monthly transfers to fully deplete sums invested in this Program. Transfers out will occur monthly. - Each time you make a subsequent Premium Payment, you can invest in a different rate lock program. Any subsequent investments made considered a separate rate lock Program investment. You can invest in up to 5 different rate lock Programs at one time. - You must invest at least $5,000 in each rate lock program ($2,000 for qualified plan transfers or rollovers, including IRAs). We will pre-authorize transfers from our Fixed Accumulation Feature subject to restrictions. - Pre-authorized transfers will begin within 15 days of receipt of the Program payment provided we receive complete enrollment instructions in good order. - If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is active on the Contract, we will set up the new Program to mirror the existing one. If a DCA Plus payment is received without enrollment instructions and a DCA Plus Program is not active on the Contract, but is the future investment allocation and a static asset allocation model is active on the Contract, we will set up the new Program to move Funds to the Static Asset Allocation Model. Otherwise, we will contact your investment professional to obtain complete instructions. If we do not receive in good order enrollment instructions within the 15 day timeframe noted above, we will refund the Program payment for further instruction. 21 ------------------------------------------------------------------------------- - If your Program payment is less than the required minimum amount, we will invest into the destination Funds or the Personal Pension Account indicated on the Program instructions accompanying the payment. If Program instructions were not provided and a DCA Plus Program is active on the Contract, we will apply the payment to the destination Funds or the Personal Pension Account of the current DCA Plus Program. Otherwise, we will contact your investment professional to obtain further investment instructions. - The credited interest rate used under the DCA Plus Programs is not earned on the full amount of your Premium Payment for the entire length of the Program because Program transfers to Sub-Accounts or the Personal Pension Account decrease the amount of your Premium Payment remaining in the Program. - You may elect to terminate your involvement in this Program at any time. Upon cancellation, all the amounts remaining in the Program will be immediately transferred to the Funds or the Personal Pension Account you designated. Fixed Amount DCA - This feature allows you to regularly transfer (monthly or quarterly) a fixed amount from the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into different Fund(s) or the Personal Pension Account. This program begins in 15 days unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. Earnings/Interest DCA - This feature allows you to regularly transfer (monthly or quarterly) the earnings (i.e., any gains over the previous month's or quarter's value) from your investment in the Fixed Accumulation Feature (if available based on the form of Contract selected) or any Fund(s) into other Fund(s) or the Personal Pension Account. This program begins two business days plus the frequency selected unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. - AUTOMATIC INCOME PROGRAM This systematic withdrawal feature allows you to make partial Surrenders up to 5% of your total Premium Payments each Contract Year. You can designate the Funds to be surrendered from and also choose the frequency of partial Surrenders (monthly, quarterly, semiannual, or annually). The Personal Pension Account is not an eligible source Fund for partial Surrenders facilitated through the Automatic Income Program. The minimum amount of each Surrender is $100. Amounts taken under this program will count towards the AWA and may be subject to a CDSC. If received prior to age 59 1/2, may have adverse tax consequences, including a 10% federal income tax penalty on the taxable portion of the Surrender payment. You may satisfy Code Section 72(t)/(q) requirements by enrolling in this program. Please see the "Federal Tax Considerations" section and consult your tax adviser for information about the tax consequences associated with your Contract. Your level of participation in this program may result in your exceeding permissible withdrawal limits under certain optional riders. - OTHER PROGRAM CONSIDERATIONS - You may terminate your enrollment in any Program at any time. - We may discontinue, modify or amend any of these Programs at any time. We will automatically and unilaterally amend your enrollment instructions if: - any Fund is merged or substituted into another Fund - then your allocations will be directed to the surviving Fund; or - any Fund is liquidated - then your allocations to that Fund will be directed to any available money market Fund following prior notifications prior to reallocation. You may always provide us with updated instructions following any of these events. - Continuous or periodic investment neither insures a profit nor protects against a loss in declining markets. Because these Programs involve continuous investing regardless of fluctuating price levels, you should carefully consider your ability to continue investing through periods of fluctuating prices. - The Personal Pension Account and Return of Premium Death Benefit I and II include withdrawal limitations. Breaking these limits can have a significant adverse effect on your rights and future benefits. Participation is a systematic withdrawal program (including systematic transfers into the Personal Pension Account, if available), may cause you to break these limits. - These Programs may be modified, terminated or adversely impacted by the imposition of Fund trading policies. CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER? Yes. During those phases of your Contract when transfers are permissible, you may make transfers between Funds and/or Benefit Balance according to the following policies and procedures, as they may be amended from time to time. 22 ------------------------------------------------------------------------------- - WHAT IS A SUB-ACCOUNT TRANSFER? A Sub-Account transfer is a transaction requested by you that involves reallocating part or all of your Contract Value among the Funds available in your Contract. Your transfer request will be processed as of the end of the Valuation Day that it is received in good order. Otherwise, your request will be processed on the following Valuation Day. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly advising us of any errors within 30 days of receiving the confirmation. - WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER? Many Owners request Sub-Account transfers. Some request transfers into (purchases) a particular Sub-Account, and others request transfers out of (redemptions) a particular Sub-Account. In addition, some Owners allocate new Premium Payments to Sub-Accounts, and others request Surrenders. We combine all the daily requests to transfer out of a Sub-Account along with all Surrenders from that Sub-Account and determine how many shares of that Fund we would need to sell to satisfy all Owners' "transfer-out" requests. At the same time, we also combine all the daily requests to transfer into a particular Sub-Account or new Premium Payments allocated to that Sub-Account and determine how many shares of that Fund we would need to buy to satisfy all contract owners' "transfer-in" requests. In addition, many of the Funds that are available as investment options in our variable annuity products are also available as investment options in variable life insurance policies, retirement plans, funding agreements and other products offered by us or our affiliates. Each day, investors and participants in these other products engage in similar transfer transactions. We take advantage of our size and available technology to combine sales of a particular Fund for many of the variable annuities, variable life insurance policies, retirement plans, funding agreements or other products offered by us or our affiliates. We also combine transfer-out requests and transfer-in requests. We then "net" these trades by offsetting purchases against redemptions. Netting trades has no impact on the net asset value of the Fund shares that you purchase or sell. This means that we sometimes reallocate shares of a Fund rather than buy new shares or sell shares of the Fund. For example, if we combine all transfer-out requests of a stock Fund with all other transfer-out requests of that Fund from all our other products, we may have to sell $1 million dollars of that Fund on any particular day. However, if other Owners and the owners of other products offered by us, want to transfer-in an amount equal to $300,000 of that same Fund, then we would send a sell order to the Fund for $700,000 (a $1 million sell order minus the purchase order of $300,000) rather than making two or more transactions. - WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER? FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We count all Sub-Account transfer activity that occurs on any one Valuation Day as one "Sub-Account transfer", however, you cannot transfer the same Contract Value more than once a Valuation Day. Examples
TRANSFER REQUEST PER VALUATION DAY PERMISSIBLE? ------------------------------------------------------------------------------------------------------------ Transfer $10,000 from a money market Sub-Account to a growth Sub-Account Yes Transfer $10,000 from a money market Sub-Account to any number of other Sub-Accounts Yes (dividing the $10,000 among the other Sub-Accounts however you chose) Transfer $10,000 from any number of different Sub-Accounts to any number of other Yes Sub-Accounts Transfer $10,000 from a money market Sub-Account to a growth Sub-Account and then, before No the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH CONTRACT YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet or telephone. Once you have reached the maximum number of Sub-Account transfers, you may only submit any additional Sub-Account transfer requests and any trade cancellation requests in writing through U.S. Mail or overnight delivery service. In other words, Voice Response Unit, Internet or telephone transfer requests will not be honored. We may, but are not obligated to, notify you when you are in jeopardy of approaching these limits. For example, we will send you a letter after your 10th Sub-Account transfer to remind you about the Transfer Rule. After your 20th transfer request, our computer system will not allow you to do another Sub-Account transfer by telephone, Voice Response Unit or via the Internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service. We reserve the right to aggregate your Contracts (whether currently existing or those recently surrendered) for the purposes of enforcing these restrictions. 23 ------------------------------------------------------------------------------- The Transfer Rule does not apply to Sub-Account transfers that occur automatically as part of a Company sponsored Program. Reallocations made based on a Fund merger or liquidation also do not count toward this transfer limit. Restrictions may vary based on state law. We make no assurances that the Transfer Rule is or will be effective in detecting or preventing market timing. THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS. You should not purchase this Contract if you want to make frequent Sub-Account transfers for any reason. In particular, don't purchase this Contract if you plan to engage in "market timing," which includes frequent transfer activity into and out of the same Fund, or frequent Sub-Account transfers in order to exploit any inefficiencies in the pricing of a Fund. Even if you do not engage in market timing, certain restrictions may be imposed. Generally, you are subject to Fund trading policies, if any. We are obligated to provide, at the Fund's request, tax identification numbers and other shareholder identifying information contained in our records to assist Funds in identifying any pattern or frequency of Sub-Account transfers that may violate their trading policy. In certain instances, we have agreed to serve as a Fund's agent to help monitor compliance with that Fund's trading policy. We are obligated to follow each Fund's instructions regarding enforcement of their trading policy. Penalties for violating these policies may include, among other things, temporarily or permanently limiting or banning you from making Sub-Account transfers into a Fund or other funds within that fund complex. We are not authorized to grant an exception to a Fund's trading policy. Please refer to each Fund's prospectus for more information. Transactions that cannot be processed because of Fund trading policies will be considered not in good order. In certain circumstances, Fund trading policies do not apply or may be limited. For instance: - Certain types of Financial Intermediaries may not be required to provide us with shareholder information. - "Excepted funds" such as money market funds and any Fund that affirmatively permits short-term trading of its securities may opt not to adopt this type of policy. This type of policy may not apply to any Financial Intermediary that a Fund treats as a single investor. - A Fund can decide to exempt categories of Contract holders whose Contracts are subject to inconsistent trading restrictions or none at all. - Non-shareholder initiated purchases or redemptions may not always be monitored. These include Sub-Account transfers that are executed: (i) automatically pursuant to a company-sponsored contractual or systematic program such as transfers of assets as a result of "dollar cost averaging" programs, asset allocation programs, automatic rebalancing programs, annuity payouts, or systematic withdrawal programs; (ii) as a result of the payment of a Death Benefit; (iii) as a result of any deduction of charges or fees under a Contract; or (iv) as a result of payments such as scheduled contributions, scheduled withdrawals or Surrenders, retirement plan salary reduction contributions, or planned Premium Payments. POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able to detect or prevent all abusive trading or market timing activities. For instance: - Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked. - Certain forms of variable annuities and types of Funds may be attractive to market timers. We cannot provide assurances that we will be capable of addressing possible abuses in a timely manner. - These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all. - In some cases, we are unable to count the number of Sub-Account transfers requested by group annuity participants co-investing in the same Funds ("Participants") or enforce the Transfer Rule because we do not keep Participants' account records for a Contract. In those cases, the Participant account records and Participant Sub-Account transfer information are kept by such owners or its third party service provider. These owners and third party service providers may provide us with limited information or no information at all regarding Participant Sub-Account transfers. 24 ------------------------------------------------------------------------------- HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS? We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract Value. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce the value of other optional benefits available under your Contract. Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund's trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product investors if the Fund and we cannot reach a mutually acceptable agreement on how to treat an investor who, in a Fund's opinion, has violated the Fund's trading policy. In some cases, we do not have the tax identification number or other identifying information requested by a Fund in our records. In those cases, we rely on the Contract Owner to provide the information. If the Contract Owner does not provide the information, we may be directed by the Fund to restrict the Owner from further purchases of Fund shares. In those cases, all participants under a plan funded by the Contract will also be precluded from further purchases of Fund shares. MAIL, TELEPHONE AND INTERNET TRANSFERS You may make transfers through the mail or your Financial Intermediary. You may also make transfers by calling us or through our website. Transfer instructions received by telephone before the end of any Valuation Day will be carried out at the end of that day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the end of any Valuation Day, the instructions will be carried out at the end of that Valuation Day. Otherwise, the instructions will be carried out at the end of the next Valuation Day. If you do not receive an electronic acknowledgement, you should contact us as soon as possible. We will send you a confirmation when we process your transfer. You are responsible for verifying transfer confirmations and promptly reporting any inaccuracy or discrepancy to us and your Investment Professional. Any verbal communication should be re-confirmed in writing. Telephone or Internet transfer requests may currently only be cancelled by calling us before the end of the Valuation Day you made the transfer request. We, our agents or our affiliates are NOT responsible for losses resulting from telephone or electronic requests that we believe are genuine. We will use reasonable procedures to confirm that instructions received by telephone or through our website are genuine, including a requirement that Contract Owners provide certain identification information, including a personal identification number. We record all telephone transfer instructions. We may suspend, modify, or terminate telephone or electronic transfer privileges at any time. POWER OF ATTORNEY You may authorize another person to conduct financial and other transactions on your behalf by submitting a completed power of attorney form that meets the power of attorney requirements of your resident state law. Once we have the completed form on file, we will accept transaction requests, including transfer instructions, subject to our transfer restrictions, from your designated third party until we receive new instructions in writing from you. B. CHARGES AND FEES MORTALITY AND EXPENSE RISK CHARGE We deduct a daily charge for assuming mortality and expense risks under the Contract. This charge is deducted from your Sub-Account Value. The mortality and expense risk charge is broken into charges for mortality risks and for an expense risk: - Mortality Risk - There are two types of mortality risks that we assume, those made while your Premium Payments are accumulating and those made once Annuity Payouts have begun. During the accumulation phase of your Contract, we are required to cover any difference between the Death Benefit paid and the Surrender Value. These differences may occur in periods of declining value or in periods where any CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates. Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates. 25 ------------------------------------------------------------------------------- - Expense Risk - We also bear an expense risk that the sales charges (if applicable), Distribution Charge (if applicable) and the Annual Maintenance Fee collected before the Annuity Commencement Date may not be enough to cover the actual cost of selling, distributing and administering the Contract. Although variable Annuity Payouts will fluctuate with the performance of the Fund selected, your Annuity Payouts will NOT be affected by (a) the actual mortality experience of our annuitants, or (b) our actual expenses if they are greater than the deductions stated in the Contract. Because we cannot be certain how long our Annuitants will live, we charge this percentage fee based on the mortality tables currently in use. The mortality and expense risk charge enables us to keep our commitments and to pay you as planned. If the mortality and expense risk charge under a Contract is insufficient to cover our actual costs, we will bear the loss. If the mortality and expense risk charge exceeds these costs, we keep the excess as profit. We may use these profits, as well as revenue sharing and Rule 12b-1 fees received from certain Funds, for any proper corporate purpose including, among other things, payment of sales expenses, including the fees paid to distributors. We expect to make a profit from the mortality and expense risk charge. ANNUAL MAINTENANCE FEE The Annual Maintenance Fee is a flat fee that is deducted from your Contract Value to reimburse us for expenses relating to the administrative maintenance of the Contract and your Account. The annual charge is deducted on a Contract Anniversary or when the Contract is fully Surrendered if the Total Balance at either of those times is less than $50,000. The charge is deducted proportionately from each Sub-Account in which you are invested. We will waive the Annual Maintenance Fee if your Total Balance is $50,000 or more on your Contract Anniversary or when you fully Surrender your Contract. In addition, we will waive one Annual Maintenance Fee for Owners who own more than one Contract with a combined Total Balance between $50,000 and $100,000. If you have multiple Contracts with a combined Total Balance of $100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts. However, we may limit the number of waivers to a total of six Contracts. We also may waive the Annual Maintenance Fee under certain other conditions. We do not include Contracts from our Putnam Hartford line of variable annuity Contracts with the Contracts when we combine Total Balance for purposes of this waiver. ADMINISTRATIVE CHARGE We apply a daily administration charge against all Contract Values held in the Separate Account during both the accumulation and annuity phases of the Contract. This charge compensates us for administrative expenses that exceed revenues from the Annual Maintenance Fee described above. There is not necessarily a relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributable to that Contract; expenses may be more or less than the charge. DISTRIBUTION CHARGE We apply an annual distribution charge against all Remaining Gross Premiums invested in B share class Contracts (the "Distribution Charge"). The Distribution Charge will apply to each Premium Payment that has been invested for eight years or less and will be deducted on each Contract Anniversary. The Distribution Charge will be assessed only with respect to Contract Value invested in Sub-Accounts and not investments in the Fixed Accumulation Feature. Each Premium Payment has its own Distribution Charge schedule. The Distribution Charge will also apply to any partial Surrender in excess of the AWA. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses, including promotion and distribution of the Contract. A proportional Distribution Charge will be deducted upon: - partial Surrenders in excess of the AWA (partial Surrenders are taken on a first-in, first-out basis); - full Surrender; - full or partial Annuitization, and/or - the date we receive due proof of death of the Owner, joint Owner, or the Annuitant and upon a corresponding full Surrender and/or annuitization. Upon such death, a proportional Distribution Charge will be applied on receipt of due proof of death and upon a Death Benefit distribution if elected at a later date. If a Beneficiary elects to continue under any of the available options described under the "Standard Death Benefits" section below, we will continue to deduct the Distribution Charge based on the portion of Remaining Gross Premium applicable for that Beneficiary. The Distribution Charge is taken proportionally out of the Sub-Accounts. PREMIUM TAXES A deduction is also made for premium taxes, if any, imposed on Hartford by a state, municipality, or other governmental entity. The tax, currently ranging from 0% to 3.5%, is assessed at the time purchase payments are made or when annuity payments begin. Hartford will pay premium taxes at the time imposed under applicable law. At its sole discretion, Hartford may deduct premium taxes at the time Hartford pays such taxes to the applicable taxing authorities, upon surrender, or when annuity payments commence. 26 ------------------------------------------------------------------------------- SALES CHARGES FRONT-END SALES CHARGE (FESC) - A SHARE CONTRACTS ONLY A front-end load, or sales charge, will be applied to all initial and subsequent Deposits. We deduct the sales charge from each Deposit before it is allocated to a Sub-Account, the Personal Pension Account and/or Fixed Accumulation Feature. This sales charge is a percentage of each Deposit at the time each Deposit is received by us, according to the schedule shown in the Fee Summary table. We offer a Right of Accumulation program to allow a contract owner to get lower front end sales charges through multiple Premium Payments, instead of requiring a single Premium Payment to be over a given amount. We use the aggregate amount of Eligible Investments to calculate the applicable sales charge. "Eligible Investments" are the higher of (a) Deposits less any withdrawals; or (b) your last Valuation Day's Account Balance. To calculate your breakpoints, we consider partial Surrenders, Personal Pension Account Payouts and the payment of Commuted Value to be "withdrawals" and we will stop counting withdrawals against Deposits if the resulting amount is less than zero. We also accept Letters of Intent as a basis to reduce sales charges. A Letter of Intent is used to avoid paying higher front-end sales charge for deposits that would otherwise fall within lower breakpoints. A Letter of Intent is a non-binding commitment to invest a certain amount of Deposits 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 Deposits 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. We reserve the right to modify, suspend, or terminate these privileges at any time. CONTINGENT DEFERRED SALES CHARGES (CDSC) - B SHARE CONTRACTS ONLY We may deduct a CDSC when you make Surrenders from your Contract. We may also deduct a CDSC in connection with certain Annuity Payout Options. This charge is designed to recover the expense of distributing the Contracts that are surrendered before distribution expenses have been recouped from revenue generated by these Contracts. Each Deposit has its own CDSC schedule. Only amounts invested for less than the requisite holding period are subject to a CDSC. In computing the CDSC, Surrenders will be taken: 1st - from the AWA; 2nd - from Contract Value subject to a CDSC on a first-in, first-out basis; and 3rd - from remaining Contract Value. CDSC is charged based on the type of transaction: - Partial Surrenders: To calculate the CDSC when you make a partial Surrender, we apply the applicable CDSC percentage to the amount of the Surrender in excess of the AWA that is eligible for CDSC. - Full Surrenders: If you fully Surrender your Contract, we apply the applicable CDSC percentage to the greater of Contract Value or Remaining Gross Premiums minus the AWA. - Annuity Payouts: To calculate the CDSC when you take an Annuity Payout pursuant to certain Annuity Payout Options, we apply the applicable CDSC to Commuted Value. Please refer to Examples 1 through 5 under the Remaining Gross Premium Examples in Appendix A for an illustration of these computations. The following are NOT subject to a CDSC: - Annual Withdrawal Amount (AWA) - During each Contract Year when a CDSC applies, you may take partial Surrenders up to the greater of: 1. 5% of the total Premium Payments that are otherwise subject to CDSC, or 2. Contract Value minus Remaining Gross Premiums. We compute the AWA as of the end of the Valuation Day when a partial Surrender request is received by us in good order. The AWA is calculated by comparing two values. First, total Premium Payments subject to a CDSC is multiplied by 5%. Next, the total Remaining Gross Premiums is subtracted from the Contract Value. The greater of the two calculations is the applicable AWA at the end of that particular Valuation Day. This method for calculating CDSCs is used for the current and all future partial Surrenders. All reductions from your Premium Payments will be made on a first-in, first-out basis. The financial impact 27 ------------------------------------------------------------------------------- of the CDSC will be greater during declining market conditions. These amounts are different for Contracts issued to a Charitable Remainder Trust. The AWA may vary on a daily basis because of fluctuations in Contract Value. If you do not take maximum AWA one Contract Year, you may not take more than the maximum AWA in a subsequent Contract Year. The AWA does not apply to Personal Pension Account Payouts. - Transfers from Sub-Accounts or the Fixed Accumulation Feature to the Personal Pension Account. Transfers into the Personal Pension Account will count as a Surrender for the purposes of calculating Remaining Gross Premium, which can result in a reduction to your AWA and may reduce or eliminate your remaining AWA for the Contract Year. Please refer to Example 3 of the Return of Premium Death Benefit II Examples in Appendix A for more information. - If you are a patient in a certified long-term care facility or other eligible facility - CDSC will be waived for a partial or full Surrender if you, the joint Owner or the Annuitant, are confined for at least 180 calendar days to a: - facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals; - facility certified as a hospital or long-term care facility; or - nursing home licensed by the state in which it is located and offers the services of a registered nurse 24 hours a day. For this waiver to apply, you must: - have owned the Contract continuously since it was issued, - provide written proof of your eligibility satisfactory to us, and - request the Surrender within 91 calendar days after the last day that you are an eligible patient in a recognized facility or nursing home. This waiver is not available if the Owner, the joint Owner or the Annuitant is in a facility or nursing home when you purchase the Contract. We will not waive any CDSC applicable to any Premium Payments made while you are in an eligible facility or nursing home. This waiver can be used any time after the first 180 days in a certified long-term care facility or other eligible facility up until ninety days after exiting such a facility. This waiver may not be available in all states. - Upon death of the Annuitant or any Contract Owner(s) - CDSC will be waived if the Annuitant or any Contract Owner(s) dies. - Upon Annuitization - CDSC will be waived when you annuitize the Contract. However, we will charge a CDSC if the Contract is Surrendered during the CDSC period under an Annuity Payout Option which allows commutation. - For Required Minimum Distributions - CDSC will be waived for any Annuitant age 70 1/2 or older with a Contract held under an IRA who Surrenders an amount equal to the Required Minimum Distribution for one year's required minimum distribution for that Contract Year. All requests for Required Minimum Distributions must be in writing. - For substantially equal periodic payments - CDSC will be waived if you take partial Surrenders under the Automatic Income Program where you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59 1/2. - Upon cancellation during the Right to Cancel Period - CDSC will be waived if you cancel your Contract during the Right to Cancel Period. - Exchanges - As an accommodation, we may, in our sole discretion, time-credit CDSC for the time that you held an annuity previously issued by us. - Settlements - We may, in our sole discretion, waive or time-credit CDSCs in connection with the settlement of disputes or if required by regulatory authorities. CHARGES AGAINST THE FUNDS Annual Fund Operating Expenses - The Separate Account purchases shares of the Funds at net asset value. The net asset value of the Fund reflects investment advisory fees, distribution fees, operating expenses and administrative expenses already deducted from the assets of the Funds. These charges are described in the Funds' prospectuses and the Fee Summary. REDUCED FEES AND CHARGES We may offer, in our discretion, reduced fees and charges for certain Contracts (including employer sponsored savings plans) which may result in decreased costs and expenses. 28 ------------------------------------------------------------------------------- C. SURRENDERS WHAT KINDS OF SURRENDERS ARE AVAILABLE? BEFORE THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - When you Surrender or terminate your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable, distribution charges and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract. For information on how termination of the Contract impacts the Personal Pension Account, see "Personal Pension Account" section above. Partial Surrenders - You may request a partial Surrender of Contract Value at any time before the Annuity Commencement Date. We will deduct any applicable CDSC and Distribution Charge. You can ask us to deduct the CDSC and Distribution Charge from the amount you are Surrendering or from your remaining Contract Value. If we deduct the CDSC from your remaining Contract Value, that amount will also be subject to CDSC. This is our default option. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. There are several restrictions on partial Surrenders of Contract Value before the Annuity Commencement Date: - the partial Surrender of Contract Value must be at least equal to $500, and - your Total Balance must be equal to or greater than our then current Minimum Amount Rule that we establish according to our then current policies and procedures. The "Minimum Amount Rule" refers to the minimum Total Balance that you must maintain within this Contract prior to your Contract becoming an annuitized income source. If you fail to comply with the Minimum Amount Rule, we reserve the right to fully terminate your Contract. The Minimum Amount Rule varies by share class. Currently the Minimum Amount Rule for class A share Contracts is $500 and is $2,000 for Class B Shares. We may increase the Minimum Amount Rule from time to time but in no event shall the Minimum Amount Rule exceed $2,000 (Class A Shares) or $10,000 (Class B Shares). You may only commute all or a portion of Personal Pension Account Payouts by following the procedures described below in the "After the Annuity Commencement Date" section below. Withdrawals will reduce your standard Death Benefit on a dollar-for-dollar basis. Please consult with your Investment Professional to be sure that you fully understand the ways such a decision will affect your Contract. AFTER THE ANNUITY COMMENCEMENT DATE: Full Surrenders/Contract Termination - You may Surrender and thus terminate your Contract on or after the Annuity Commencement Date only if you selected Annuity Payout Options Two, Three, Five, Six and Eight. IN THE EVENT YOU TAKE A FULL SURRENDER AND THEREBY TERMINATE YOUR CONTRACT AFTER ELECTING ANNUITY PAYOUT OPTIONS TWO, THREE, FIVE, OR EIGHT, YOU WILL FORFEIT THE LIFE CONTINGENT PAYMENTS PAYABLE UNDER THESE OPTIONS. We pay you the Commuted Value, minus any applicable CDSCs and Premium tax. Partial Surrenders/Commutation - Partial Surrenders and/or commutation are permitted after the Annuity Commencement Date if you select the Annuity Payout Option Two, Three, Five, or Six, or Eight. You may withdraw amounts equal to the Commuted Value of the payments that we would have made during the Guaranteed Payout Duration. See Example 4 and footnote 3 under the Personal Pension Account Examples in Appendix A for an illustration of Personal Pension Account Commuted Value and the computation of Guaranteed Payout Duration. If you select the Annuity Payout Options Two or Eight, the Guaranteed Payout Duration will be equivilant to the Annuity Payout Value divided by the Annuity Payout amount, rounded down. To qualify under these Annuity Payout Options you must make the request before the Guaranteed Payout Duration expires. Both full and partial Surrenders of Contract Value are taken proportionally out of the Sub-Accounts and the Fixed Accumulation Feature unless prohibited by your state. We will deduct any applicable CDSCs. If you elect to withdraw the entire Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will not make any Annuity Payouts during the remaining Guaranteed Payout Duration. If you elect to withdraw only some of the Commuted Value of the Annuity Payouts we would have made during the Guaranteed Payout Duration, we will reduce the remaining Annuity Payouts during the remaining Guaranteed Payout Duration on a first-in, first-out basis. ONCE THE GUARANTEED PAYOUT DURATION HAS EXPIRED, YOU MAY RESUME RECEIVING ANNUITY PAYOUTS PROVIDED THAT YOU, A JOINT OWNER OR THE ANNUITANT IS ALIVE AND YOU HAVE NOT TERMINATED YOUR CONTRACT. Annuity Payout Options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457. 29 ------------------------------------------------------------------------------- WHAT IS THE COMMUTED VALUE? You may choose to accelerate Annuity Payouts under certain Annuity Payout Options to be received in one lump sum. This is referred to as "commuting" your Annuity Payout. The amount that you request to commute must be at least equal to $500. There will be a waiting period of at least thirty days for payment of any lump sum commutation. Upon commutation, the Annuity Payout Value or the remaining Guaranteed Payout Duration payments, as applicable, will be discounted based on an interest rate that we determine at our sole discretion (the "discount rate"). The discount rate may be different than the interest rate used to establish payout rates. We determine the discount rate based on a number of factors including then current interest rate(s), investment assumptions and the additional anti-selection and mortality risk we incur by permitting commutation. The higher the discount rate and CDSC, the lower the amount that you will receive. COMMUTED VALUE OF YOUR PERSONAL PENSION ACCOUNT WILL BE LESS THAN YOUR ANNUITY PAYOUT VALUE. Commutation does not affect resumption of life contingent Personal Pension Account Payouts at the conclusion of the applicable Guaranteed Payout Duration. Commuted Value is determined on the day we receive your written request. HOW DO YOU REQUEST A SURRENDER? Requests for full Surrenders terminating your Contract must be in writing. Requests for partial Surrenders can be made in writing, by telephone or on the Internet. We will send your money within seven days of receiving complete instructions. However, we may postpone payment whenever: (a) the New York Stock Exchange is closed, (b) trading on the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and orders postponement or (d) the SEC determines that an emergency exists to restrict valuation. We may also postpone payment of Surrenders with respect to a money market fund sub-account if the board of directors of the underlying money market fund suspends redemptions from the fund in connection with the fund's plan of liquidation, in compliance with rules of the SEC or an order of the SEC. Written Requests - Complete a Surrender Form or send us a letter, signed by you, stating: - the dollar amount that you want to receive, either before or after we withhold taxes and deduct for any applicable charges, - your tax withholding amount or percentage, if any, and - your mailing address. You may submit this form via facsimile. You must complete a Commutation Form to commute any portion of your Personal Pension Account Annuity Payout Value or receive Commuted Value under applicable Annuity Payout Options. If there are joint Owners, both must authorize these transactions. For a partial Surrender, specify the Sub-Accounts that you want your Surrender to come from (this may be limited to pro-rata surrenders if optional benefits are elected); otherwise, the Surrender will be taken in proportion to the value in each Sub-Account. Telephone Requests - To request a partial Surrender by telephone, we must have received your completed Telephone Redemption Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept telephone instructions for partial Surrenders from either Owner. Telephone authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on telephone Surrenders. Internet Requests - To request a partial Surrender by internet; we must have received your completed Internet Partial Withdrawal Program Enrollment Form. If there are joint Owners, both must sign this form. By signing the form, you authorize us to accept internet instructions for partial Surrenders from either Owner. Internet authorization will remain in effect until we receive a written cancellation notice from you or your joint Owner, we discontinue the program, or you are no longer the Owner of the Contract. Please call us with any questions regarding restrictions on Internet Surrenders. We may record telephone calls and use other procedures to verify information and confirm that instructions are genuine. We will not be liable for losses or expenses arising from telephone instructions reasonably believed to be genuine. WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME. Telephone and Internet Surrender instructions received before the end of a Valuation Day will be processed at the end of that Valuation Day. Otherwise, your request will be processed at the end of the next Valuation Day. Completing a Power of Attorney form for another person to act on your behalf may prevent you from making Surrenders via telephone and Internet. 30 ------------------------------------------------------------------------------- WHAT SHOULD BE CONSIDERED ABOUT TAXES? There are certain tax consequences associated with Surrenders and Personal Pension Account Payouts. If you make a Surrender or take a Personal Pension Account Payout prior to age 59 1/2, there may be adverse tax consequences including a 10% federal income tax penalty on the taxable portion of the Surrender payment or Personal Pension Account Payout. Taking these actions before age 59 1/2 may also affect the continuing tax-qualified status of some Contracts. WE DO NOT MONITOR SURRENDER REQUESTS. CONSULT YOUR PERSONAL TAX ADVISER TO DETERMINE WHETHER A SURRENDER OR A PERSONAL PENSION ACCOUNT PAYOUT IS PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY. More than one Contract owned in the same calendar year - If you own more than one Contract issued by us or our affiliates in the same calendar year, then these Contracts may be treated as one Contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. Please see "Federal Tax Considerations" and "Information Regarding Tax-Qualified Retirement Plans" for more information. D. ANNUITY PAYOUTS Generally speaking, when you annuitize your Contract, you begin the process of converting Accumulation Units in what is known as the "payout phase." The payout phase starts when you annuitize your Contract or with your Annuity Commencement Date and ends when we make the last payment required under your Contract. You may take Personal Pension Account Payouts without annuitizing Contract Value. Once you annuitize your Contract, you may no longer make Personal Pension Account Contributions. You must commence taking Annuity Payouts no later than when you reach your Annuity Commencement Date. Funds allocated to the Personal Pension Account under Annuity Payout Options Two and Eight. Contract Value can only be annuitized under Annuity Payout Options One, Three, Four, Five and Six. Please check with your Investment Professional to select the Annuity Payout Option that best meets your income needs. WHEN DO YOUR ANNUITY PAYOUTS BEGIN? Personal Pension Account Payouts may begin at any time but we reserve the right to require that you own your Contract for at least six months before you start taking these payments. Contract Value may only be annuitized on the Annuity Commencement Date. Your Annuity Commencement Date cannot be earlier than your second Contract Anniversary if choosing a fixed dollar Annuity Payout. The Annuity Commencement Date may be immediate if electing a variable dollar amount Annuity Payout. In no event; however, may the Annuity Commencement Date be later than: - Annuitant's 90th birthday (or if the Owner is a Charitable Remainder Trust, the Annuitant's 100th birthday); - 10th Contract Anniversary (subject to state variation); - The Annuity Commencement Date stated in an extension request (subject to your Financial Intermediary's rules for granting extension requests) received by us not less than 30 days prior to a scheduled Annuity Commencement Date; or - The date that you fully annuitize Accumulation Balance (assuming that no Contract Value exists as of such date). Unless otherwise requested, commencement of receipt of Personal Pension Account Payouts do not constitute an Annuity Commencement Date. We reserve the right, in our sole discretion, to refuse to extend your Annuity Commencement Date regardless of whether we may have granted extensions in the past to you or other similarly situated investors. Your Financial Intermediary may ask us to prohibit Annuity Commencement Date extensions beyond when the Annuitant turns age 95. Please ask your Investment Professional whether you are affected by any such prohibition and make sure that you fully understand the implications this might have in regard to your Death Benefits. Except as otherwise provided, the Annuity Calculation Date is when the amount of your Annuity Payout is determined. This occurs within five Valuation Days before your selected Annuity Commencement Date. All Annuity Payouts, regardless of frequency, will occur on the same day of the month as the Annuity Commencement Date. After the initial payout, if an Annuity Payout date falls on a non-Valuation Day, the Annuity Payout is computed on the prior Valuation Day. If the Annuity Payout date does not occur in a given month due to a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE? Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. We may change these Annuity Payout Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout Option with respect to that portion of your Contract cannot be changed. 31 ------------------------------------------------------------------------------- - OPTION ONE - LIFE ANNUITY We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth. - OPTION TWO - LIFE ANNUITY WITH A CASH REFUND In general, we will make Annuity Payouts as long as the Annuitant is living. However, when the Owner or joint Owner or Annuitant dies before the Annuity Commencement Date, the Death Benefit will be paid. When the Annuitant dies after the Annuity Commencement Date (and the Owner is living or deceased), then the Beneficiary will receive the Death Benefit. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). Please see the Personal Pension Account Death Benefit section for additional information. - OPTION THREE - LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as the Annuitant is living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus the Annuitant's age. If the Annuitant dies before the guaranteed number of years has passed, then the Beneficiary may elect to continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. - OPTION FOUR - JOINT AND LAST SURVIVOR LIFE ANNUITY We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are living. When one Annuitant dies, we continue to make Annuity Payouts until that second Annuitant dies. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable Annuity Payouts, these percentages represent Annuity Units; for fixed Annuity Payouts, they represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION FIVE - JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are living, but we at least guarantee to make Annuity Payouts for a time period you select, between 5 years and 100 years minus your younger Annuitant's age. If the Annuitant and the Joint Annuitant both die before the guaranteed number of years have passed, then the Beneficiary may continue Annuity Payouts for the remainder of the guaranteed number of years or receive the Commuted Value in one sum. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 66.67%, or - Decrease to 50%. For variable dollar amount Annuity Payouts, these percentages represent Annuity Units. For fixed dollar amount Annuity Payouts, these percentages represent actual dollar amounts. The percentage will also impact the Annuity Payout amount we pay while both Annuitants are living. If you pick a lower percentage, your original Annuity Payouts will be higher while both Annuitants are alive. - OPTION SIX - PAYMENTS FOR A PERIOD CERTAIN We agree to make payments for a specified time. The minimum period that you can select is 10 years during the first two Contract Years and 5 years after the second Contract Anniversary. The maximum period that you can select is 100 years minus your Annuitant's age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. 32 ------------------------------------------------------------------------------- - OPTION SEVEN - RESERVED -OPTION EIGHT - JOINT AND LAST SURVIVOR LIFE WITH CASH REFUND (NOT CURRENTLY AVAILABLE) In general, we will make Annuity Payouts as long as the Owner, and either Annuitant or Joint Annuitant are living. When the Owner dies before the Annuity Commencement Date (and the Annuitant or Joint Annuitant is living or deceased), then the Death Benefit is paid. If death occurs after the Annuity Commencement Date, we will make Annuity Payouts as long as either the Annuitant or the Joint Annuitant is living. When one Annuitant dies, we continue to make Annuity Payouts at the elected percentage until the second Annuitant dies. When the last Annuitant dies, then the Death Benefit is paid. When choosing this option, you must decide what will happen to the Annuity Payouts after the first Annuitant dies. You must select Annuity Payouts that: - Remain the same at 100%, or - Decrease to 75%, or - Decrease to 50%. This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). Please see the Personal Pension Account Death Benefit section for additional information. YOU CANNOT TERMINATE YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE SELECTED ANNUITY PAYOUT OPTIONS TWO, THREE, FIVE, SIX OR EIGHT. A CDSC, IF APPLICABLE, MAY BE DEDUCTED. Annuity Payout Option Two is only available for Personal Pension Account Payouts from the Personal Pension Account. Annuity Payout Options One, Three, Four, Five and Six are only available for Annuity Payouts from the Fixed Accumulation Feature or Sub-Accounts. Annuity Payout Option Eight is only available for Personal Pension Account Payouts from the Personal Pension Account and is not currently available. For certain qualified Contracts, if you elect an Annuity Payout Option with a Period Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables. We use a present value formula to compute Commuted Value. The results of this formula vary based on, among other things, the discount rate used. As discussed above, the discount rate may vary based on a number of factors including, but not limited to, current interest rates and investment returns. The higher the discount rate, the lower the Commuted Value will be. AUTOMATIC ANNUITY PAYOUTS If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under Annuity Payout Option Three. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to 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. If you elect the Personal Pension Account, your Annuity Payout Option may only be a fixed dollar amount. 33 ------------------------------------------------------------------------------- - FIXED DOLLAR AMOUNT ANNUITY PAYOUTS Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium taxes, by an annuity rate set by us. Annuity purchase rates may vary based on the aspect of the Contract annuitized. - VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts. The dollar amount of the first variable Annuity Payout depends on: - the Annuity Payout Option chosen, - the Annuitant's attained age and gender (if applicable), - the applicable annuity purchase rates based on the 1983a Individual Annuity Mortality table adjusted for projections based on accepted actuarial principles; and - the Assumed Investment Return ("AIR"). The total amount of the first variable dollar amount Annuity Payout is determined by dividing the Contract Value minus any applicable Premium taxes, by $1,000 and multiplying the result by the payment factor defined in the Contract for the selected Annuity Payout Option. The dollar amount of each subsequent variable dollar amount Annuity Payout is equal to the total of Annuity Units for each Sub-Account multiplied by the Annuity Unit Value of each Sub-Account. The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to the Accumulation Unit Value Net Investment Factor for the current Valuation Period multiplied by the Annuity Unit Factor, multiplied by the Annuity Unit Value for the preceding Valuation Period. The Annuity Unit Factor offsets the AIR used to calculate your first variable dollar amount Annuity Payout. The first Annuity Payout will be based upon the AIR. The remaining Annuity Payouts will fluctuate based on the performance of the Funds in relation to the AIR. The degree of the fluctuation will depend on the AIR you select. You can select one of the following AIRs offered, subject to state variations:
ANNUITY ANNUITY ANNUITY AIR UNIT FACTOR AIR UNIT FACTOR AIR UNIT FACTOR ------------------------------------------------------------------- 3% 0.999919% 5% 0.999866% 6% 0.999840%
The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR. For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first. Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select. 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. 34 ------------------------------------------------------------------------------- - 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 BENEFIT WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED? The Death Benefit is the amount we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The standard Death Benefit is equal to your Total Balance (less Distribution Charge) calculated as of the Valuation Day when we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature and Personal Pension Account for each Beneficiary's portion of the proceeds. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purposes of determining your total Death Benefits. These limits will be applied if you 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 the greater of: a. the aggregate Deposits, modified by adjustments for partial Surrenders and Personal Pension Account Payouts under applicable contracts and riders; or b. the aggregate Total Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. Please see the heading entitled "What kinds of Surrenders are available? - Before the Annuity Commencement Date" under the Surrenders section and "What effect does partial or full Surrenders have on your benefits under the rider?" in the Return of Premium Death Benefit II section for a discussion regarding when partial Surrenders reduce your Death Benefit on either a dollar-for-dollar or proportionate basis. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. Please consult with your Investment Professional before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. HOW IS THE DEATH BENEFIT PAID? The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. We will calculate the Death Benefit as of the date we receive a certified death certificate or other legal documents acceptable to 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 the Death Benefit payment is $5,000 or more, the Beneficiary may elect to have their Death Benefit paid through our "Safe Haven Program." Under this program, the proceeds remain in our General Account and the Beneficiary will receive a draft book. Proceeds are guaranteed by the claims paying ability of the Company; however, it is not a bank account and is not insured by Federal Deposit Insurance Corporation (FDIC), nor is it backed by any federal or state government agency. 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. THE INTEREST RATE IS BASED UPON THE ANALYSIS OF INTEREST RATES CREDITED TO FUNDS LEFT ON DEPOSIT WITH OTHER INSURANCE COMPANIES UNDER PROGRAMS SIMILAR TO THE HARTFORD'S SAFE HAVEN PROGRAM. IN DETERMINING THE INTEREST RATE, WE ALSO FACTOR IN THE IMPACT OF OUR PROFITABILITY, GENERAL ECONOMIC TRENDS, COMPETITIVE FACTORS AND ADMINISTRATIVE EXPENSES. THE INTEREST RATE CREDIT IS NOT THE SAME RATE EARNED ON ASSETS IN THE FIXED ACCUMULATION FEATURE OR PERSONAL PENSION ACCOUNT AND IS NOT SUBJECT TO MINIMUM INTEREST RATES PRESCRIBED BY STATE NON-FORFEITURE LAWS. For federal income tax purposes, the Beneficiary will be deemed to have received the lump sum payment on transfer of the Death Benefit amount to the General Account. The interest will be taxable to the Beneficiary in the tax year that it is credited. We may not offer the Safe Haven Program in all states and we reserve the right to discontinue offering it at any time. Although there are no direct charges for this program, we earn investment income from the proceeds. The investment income we earn is likely more than the amount of interest we credit; therefore, we make a profit from the difference. The Beneficiary may elect to leave proceeds from the Death Benefit invested with us for up to five years from the date of death of the Annuitant or Owner if death occurred before the Annuity Commencement Date. Once we receive a certified death certificate or 35 ------------------------------------------------------------------------------- other legal documents acceptable to us, the Beneficiary can: (a) make Sub-Account transfers (subject to applicable restrictions) and (b) take Surrenders without paying CDSCs, if any. The Beneficiary may not make Personal Pension Account Contributions. We shall endeavor to fully discharge the last instructions from the Owner wherever possible or practical. The Beneficiary of a non-qualified Contract or IRA (prior to the required distribution date) may also elect an annuity option that allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. If the Owner dies before the Annuity Commencement Date, the Death Benefit must be distributed within five years after death or be distributed under a distribution option or Annuity Payout Option that satisfies the Alternatives to the Required Distributions described below. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. WHO WILL RECEIVE THE DEATH BENEFIT? The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. If death occurs on or after the Annuity Commencement Date, there may be no payout at death unless the Owner has elected an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive any remaining value such as a cash refund, Benefit Balance, or receive the Commuted Value. IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . . Owner There is a surviving joint The Annuitant is living or Joint Owner receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Beneficiary receives the Death Owner deceased Benefit. Owner There is no surviving joint The Annuitant is living or Owner's estate receives the Owner and the Beneficiary deceased Death Benefit. predeceases the Owner Annuitant The Owner is living There is no named Contingent The Owner becomes the Annuitant Contingent Annuitant and the Contract continues. The Owner may waive this presumption and receive the Death Benefit. Annuitant The Owner is living The Contingent Annuitant is Contingent Annuitant becomes living the Annuitant, and the Contract continues.
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE: IF THE DECEASED IS THE . . . AND . . . THEN THE . . . Owner The Annuitant is living Beneficiary becomes the Owner. Annuitant The Owner is living Owner receives the payout at death. Annuitant The Annuitant is also the Owner Beneficiary receives the payout at death.
THESE ARE THE MOST COMMON SCENARIOS. SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A PAYOUT AT DEATH. 36 ------------------------------------------------------------------------------- 5. OPTIONAL DEATH BENEFITS A. MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OBJECTIVE To provide a Death Benefit equal to the greater of Maximum Anniversary Value, Premium Payments adjusted for Surrenders or Contract Value that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. The "Maximum Anniversary Value" is the highest Contract Value as of each Contract Anniversary as of the date of death of the oldest Owner or Annuitant's 81st birthday, whichever first occurs, adjusted for any Premium Payments and partial Surrenders occurring after such Contract Anniversary. WHEN CAN YOU BUY THE RIDER? You can currently elect this benefit (called a "rider") only at the time that you buy this Contract. We reserve the right to permit certain existing Owners to elect this rider after Contract issuance. This rider may not be available through all Financial Intermediaries and may be subject to additional restrictions set by your Financial Intermediary or us. We reserve the right to withdraw this rider at any time without notice for new sales only. The maximum age of any Owner or Annuitant when electing this rider is 75. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. You may not elect this rider if you have already elected Return of Premium Death Benefit I or II. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on the greater of the Maximum Anniversary Value, or Premium Payments adjusted for Surrenders and is taken on each Contract Anniversary. Even though the amount we charge you for this rider can go up or down, except as provided below, we can not increase the rider fee once you elect this rider. A prorated charge will be deducted in the event of a full Surrender of this Contract. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account and the Fixed Accumulation Feature bears to the total Contract Value. The rider charge will not be applied to Personal Pension Account Benefit Balance. 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. See Maximum Anniversary Value Death Benefit Example 3 in Appendix A. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be the then current rider fee for new Contracts (absent any voluntary waivers by us). We reserve the right to charge up to the maximum fee described in the Fee Summary (absent any voluntary fee waivers by us) at any time without notice. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the greatest of A, B or C, WHERE: A = Contract Value (minus Distribution Charges if applicable); B = Premium Payments (on a dollar-for-dollar basis post rider issuance) adjusted for partial Surrenders; and C = Maximum Anniversary Value, prior to the earlier of date of death or the decedent's 81st birthday.
See Maximum Anniversary Value Death Benefit Example 1 in Appendix A. If you elect this rider after the Contract has been issued, the starting values for Contract Value (minus Distribution Charges if applicable), Premium Payments and Maximum Anniversary Value will all be reset to Contract Value (minus Distribution Charges if applicable) as of the Valuation Day that you elect this rider. Contract Value and Premium Payments prior to election of the rider (as well as those values that would have been used to set the Maximum Anniversary Value had this rider been elected upon Contract issuance), will be disregarded. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit. EVEN THOUGH YOUR BENEFIT BALANCE IS NOT SUBJECT TO PRINCIPAL PROTECTION UNDER THIS RIDER, ANY PORTIONS OF YOUR BENEFIT BALANCE TRANSFERRED TO SUB-ACCOUNTS AND/OR THE FIXED ACCUMULATION FEATURE ARE ALSO CONSIDERED TO BE PART OF THE CONTRACT VALUE USED TO COMPUTE THIS DEATH BENEFIT. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other documents acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and your Beneficiary receiving the standard Death Benefit. 37 ------------------------------------------------------------------------------- The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? No. WHAT EFFECT DO PARTIAL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? Any and all partial Surrenders, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the partial Surrender divided by the Contract Value prior to such partial Surrender. The factor is multiplied by Premium Payments as well as the Maximum Anniversary Value as well as the anniversary values immediately prior to a partial Surrender to determine the adjusted Death Benefit. For purposes of this rider, a Surrender also includes a transfer of Contract Value to the Personal Pension Account. A PARTIAL SURRENDER (OR TRANSFER TO THE PERSONAL PENSION ACCOUNT) MAY NOT REDUCE YOUR DEATH BENEFIT BY THE SAME DOLLAR AMOUNT THAT YOUR CONTRACT VALUE IS REDUCED. THE ADJUSTMENT TO YOUR DEATH BENEFIT MAY BE LOWER OR HIGHER THAN THE ADJUSTMENT TO YOUR CONTRACT VALUE. See Maximum Anniversary Value Death Benefit Example 2 in Appendix A for an illustration of this calculation. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We also reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a re-calculation this Death Benefit. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed thereafter. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge then currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated based on the Contract Value on the effective date of the ownership change. If the oldest Owner after the change is greater than the maximum rider age limitation as of the effective date of ownership change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. Ownership changes may be taxable to you. We recommend that you consult with a tax adviser before making any ownership changes. CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, we will increase the Contract Value to the Maximum Anniversary Death Benefit value, if greater than the Contract Value on the date of due proof of death. The Spouse may elect to continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. 38 ------------------------------------------------------------------------------- If any Owner or the Annuitant is greater than the age limitation of the rider at the time of the Spousal Contract continuation and/or this rider (or a similar rider, as we determine) is not available for sale, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed thereafter. If any Owner or the Annuitant is equal to or less than the age limitation of the rider at the time of the Spousal Contract continuation or this rider (or a similar rider, as we determine) is still available for sale, the Death Benefit will be reset based on the Contract Value as of the date we receive due proof of death and will serve as the new basis for the Death Benefit. See "Is this rider designed to pay you Death Benefits?" above for further discussion regarding post-issue election of this rider. The rider charge will be reset to the charge then being assessed for new sales of the rider. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option (other than Annuity Payout Options Two or Eight) is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. You may allocate your Contract Value to any Sub-Accounts(s), asset allocation models, investment programs, fund of funds Sub-Accounts(s) or other investment option(s) or you may design your own portfolio, provided that your Fund selections comply with the investment restrictions in the following table:
CLASSIFICATION ALLOCATION --------------------------------------------------------------------------------------------------------------------------------- Fixed investments Funds Minimum of 30% - to a maximum of 100% Equity Investments - Maximum of 70% - No more than 20% may be invested in any one Fund in this category Limited Investments Maximum of 20% Multi-Asset Investments - 0% or 100% - May not be combined with Funds in the above classifications
Investing in the Personal Pension Account and Fixed Accumulation Feature do not constitute a violation of these investment restrictions. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. See Appendix C - Fund Data for more detailed information. The Personal Pension Account and Fixed Accumulation Feature are not included within any classification. We may, in our sole discretion, add, replace or delete Funds, programs, classifications, allocations and asset allocation models from time to time. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. You will be provided with advance notification of any investment restriction changes and you must invest Premium Payments in accordance with such updated investment restrictions. You must participate in an asset rebalancing program. If on any Valuation Day, your Contract Value is no longer invested within the permissible allocations in the table above as a result of market fluctuations, we will not terminate the rider. Instead, your Contract Value will be rebalanced quarterly in accordance with your last compliant allocation instructions. All subsequent Premium Payments must also be invested according to the classifications described in this section. YOU MAY PROVIDE INVESTMENT INSTRUCTIONS TO INVEST CONTRACT VALUE IN A MANNER THAT VIOLATES THESE INVESTMENT RESTRICTIONS. ANY SUCH ACTION WILL, HOWEVER, RESULT IN THE TERMINATION OF THIS RIDER. WE WILL NOT ACCEPT INSTRUCTIONS TO VIOLATE THE INVESTMENT RESTRICTIONS FROM YOUR INVESTMENT PROFESSIONAL. VIOLATING THESE INVESTMENT RESTRICTIONS SHALL RESULT IN THE TERMINATION OF YOUR DEATH BENEFIT UNDER THIS RIDER. If this rider is terminated due to failure to comply with these investment restrictions, you will have a one time opportunity to reinstate the rider. You will be notified in your confirmation statement that you have violated these investment restrictions. The thirty calendar day reinstatement period will begin from the date this rider is terminated. Your opportunity to reinstate will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, or make an ownership change. UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENT WILL BE RESET AT THE LOWER OF THE PREMIUM PAYMENTS PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE REINSTATEMENT. YOUR MAXIMUM ANNIVERSARY VALUE WILL BE RESET AT THE LOWER OF THE MAXIMUM ANNIVERSARY VALUE PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE 39 ------------------------------------------------------------------------------- REINSTATEMENT. WE WILL DEDUCT A PRORATED RIDER CHARGE ON YOUR CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? 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: a. the aggregate Deposits, modified by adjustments for partial Surrenders and Personal Pension Account Payouts under all applicable contracts and riders; or b. the aggregate Total Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, assignment and/or violation of the investment restrictions. If we terminate the rider, it cannot be re-elected by you. - The selection of an Annuity Payout Option and the timing of the selection may have an impact on the tax treatment of the Death Benefit. - Any partial Surrender or transfer of Contract Value into the Personal Pension Account, including enrollment in certain asset rebalancing Programs, will trigger a proportionate reduction to your Death Benefit. - Transfers made pursuant to an automatic income program may violate this rider if made during the reinstatement period following a violation of investment restrictions under this rider. B. RETURN OF PREMIUM DEATH BENEFIT II OBJECTIVE To provide a Death Benefit equal to the greater of Contract Value minus Distribution Charges or Premium Payments adjusted for Surrenders that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. WHEN CAN YOU BUY THE RIDER? You can currently elect this benefit (called a "rider") only at the time that you buy this Contract. This rider may not be available through all Financial Intermediaries and may be subject to additional restrictions set by your Financial Intermediary or us. We reserve the right to withdraw this rider at any time without notice for new sales only. The maximum age of any Owner or Annuitant when electing this rider is 80. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. You may not elect this rider if you have already elected Maximum Anniversary Value Death Benefit or Return of Premium Death Benefit I. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on Premium Payments adjusted for Surrenders on each Contract Anniversary. Even though the amount we charge you for this rider can go up or down, except as provided below, we can not increase the rider fee once you elect this rider. This charge will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A prorated charge will be deducted in the event of a full Surrender of this Contract. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account and the Fixed Accumulation Feature bears to the total Contract Value. The rider charge will not be applied to Personal Pension 40 ------------------------------------------------------------------------------- Account Benefit Balance. 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. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be based on the Contract Value on the date of any such change plus Premium Payments received after such date, as adjusted for Surrenders. We reserve the right to change the rider charge up to the maximum fee described in the Fee Summary (absent any voluntary waivers by us) at any time without notice. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the higher of Contract Value (minus Distribution Charges) or Premium Payments adjusted for Surrenders. See the Return of Premium Death Benefit II Example in Appendix A. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and your Beneficiary receiving the standard Death Benefit. The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. The distribution of the Death Benefit applies only when death is before the Annuity Commencement Date. 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 any remaining value such as a cash refund, Benefit Balance, or receive the Commuted Value. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? Yes. At anytime following the earliest of the fifth anniversary of the rider effective date or Spousal Contract continuation, the Contract Owner may elect to terminate this rider. If this rider is terminated, then a pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. The Death Benefit will be reset to the standard Death Benefit. No other optional benefit may be elected following the termination. A Company-sponsored exchange of this rider will not be considered to be a termination by you of the rider. This rider will also terminate upon election of a Death Benefit option (described in the "standard Death Benefit" section) by the Beneficiary (excluding Spousal Contract continuation). WHAT EFFECT DO PARTIAL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? Any and all partial Surrenders, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the partial Surrender divided by the Contract Value prior to such partial Surrender. The factor is multiplied by Premium Payments immediately prior to the partial surrender to determine the adjusted Death Benefit. For purposes of this rider, a Surrender also includes a transfer of Contract Value to the Personal Pension Account. A PARTIAL SURRENDER (OR TRANSFER TO THE PERSONAL PENSION ACCOUNT) MAY NOT REDUCE YOUR DEATH BENEFIT BY THE SAME DOLLAR AMOUNT THAT YOUR CONTRACT VALUE IS REDUCED (I.E., DEPENDING ON IF THERE IS A GAIN OR LOSS IN YOUR CONTRACT VALUE AT THE TIME OF THE SURRENDER (OR TRANSFER), THE ADJUSTMENT TO YOUR DEATH BENEFIT MAY BE LOWER OR HIGHER THAN THE ADJUSTMENT TO YOUR CONTRACT VALUE). See Return of Premium Death Benefit II Example in Appendix A. 41 ------------------------------------------------------------------------------- WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We also reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a reset of this Death Benefit. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed thereafter. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated based on the lesser of the Contract Value or the Death Benefit on the effective date of the ownership change. If the oldest Owner after the change is greater than the maximum rider age limitation as of the effective date of ownership change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. Ownership changes may be taxable to you. We recommend that you consult with a tax adviser before making any ownership changes. CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, we will increase the Contract Value to the Return of Premium II Death Benefit value, if greater than the Contract Value on the date of due proof of death. The Spouse may elect to continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. If the Owner or the Annuitant is greater than the age limitation of the rider at the time of the Spousal Contract continuation or this rider (or similar rider, as we determine) is not available for sale, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. If the Owner or the Annuitant is equal to or less than the age limitation of the rider at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is still available for sale, the Death Benefit will be reset based on the Contract Value as of the date of due proof of death and will serve as the new basis for the Death Benefit. The rider charge will be reset to the rider charge then being assessed for new sales of the rider. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option (other than Annuity Payout Options Two or Eight) is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? No. We reserve the right to impose investment restrictions in the future. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. CAN WE AGGREGATE CONTRACTS? Yes. We reserve the right to treat all deferred variable annuities that you buy from us or our affiliates as a single contract for the purpose 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: a. the aggregate Deposits, modified by adjustments for partial Surrenders or payouts under all applicable contracts and riders; or 42 ------------------------------------------------------------------------------- b. the aggregate Total Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, and/or assignment. If we terminate the rider, it cannot be re-elected by you. - Any partial Surrender or transfer of Contract Value into the Personal Pension Account, including enrollment in certain asset rebalancing Programs, will trigger a proportionate reduction to your Death Benefit. 6. FURTHER INFORMATION A. GLOSSARY Except as provided elsewhere in this prospectus, the following capitalized terms shall have the meaning ascribed below: ACCOUNT: Any of the Sub-Accounts or the Fixed Accumulation Feature. ACCOUNT BALANCE: The sum of your Contract Value and Benefit Balance (this term is also referred to as the "Total Balance" in your Contract and marketing materials). ACCUMULATION BALANCE - The sum of all Personal Pension Account Contributions increased by credited interest; minus any transfers into any other Account(s) and any conversion into Annuity Payout Value. ACCUMULATION UNITS: If you allocate your Premium Payment to any of the Sub-Accounts, we will convert Premium Payments into Accumulation Units in the selected Sub-Accounts. Accumulation Units are valued at the end of each Valuation Day and are used to calculate Contract Value prior to Annuitization. ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation Day. ADMINISTRATIVE OFFICE: Our overnight mailing address is: 1 Griffin Street North, Windsor, CT 06095-1512. Our standard mailing address is: P.O. Box 5085, Hartford, CT 06102-5085. AFTER AUGUST 13, 2011, OUR OVERNIGHT ADDRESS WILL BE: THE HARTFORD WEALTH MANAGEMENT - GLOBAL ANNUITIES, 745 WEST NEW CIRCLE ROAD BUILDING 200, 1ST FLOOR, LEXINGTON, KY 40511. OUR STANDARD MAILING ADDRESS WILL BE: THE HARTFORD WEALTH MANAGEMENT - GLOBAL ANNUITIES, PO BOX 14293, LEXINGTON, KY 40512-4293 ANNUAL MAINTENANCE FEE: An annual charge deducted on a Contract Anniversary or upon full Surrender. ANNUAL WITHDRAWAL AMOUNT (AWA): The amount you may Surrender each Contract Year without incurring a CDSC. ANNUITANT: The person on whose life the Contract is issued. Except as otherwise provided, the Annuitant may not be changed after your Contract is issued. ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout. ANNUITY COMMENCEMENT DATE: The first day of the first period for which a distribution is received as an Annuity Payout under the Contract. ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the duration and frequency you select. Annuity Payout also refers to Personal Pension Account Payouts. ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity Commencement Date, the death of the Contract Owner or Annuitant; or annuitization(s) of Benefit Balance. ANNUITY PAYOUT VALUE: The portion of your Benefit Balance converted into Personal Pension Account Payouts, as reduced by future Personal Pension Account Payouts. ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity Payouts under a variable dollar amount Annuity Payout Option. ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day. 43 ------------------------------------------------------------------------------- BENEFICIARY: The person(s) entitled to receive benefits pursuant to the terms of the Contract upon the death of any Contract Owner or Annuitant, as the case may be. BENEFIT BALANCE: Personal Pension Account Contributions, as adjusted for transfers to or from Contract Value, credited interest and/or annuitization. Benefit Balance includes Annuity Payout Value, if any. CODE: The Internal Revenue Code of 1986, as amended. COMMUTED VALUE: The present value of any Annuity Payout due and payable during the Guaranteed Payout Duration. This amount is calculated using the Assumed Investment Return for variable dollar amount Annuity Payouts and the applicable discount rate determined by us for applicable fixed dollar amount Annuity Payouts. CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if the original Annuitant dies before the Annuity Commencement Date. You must name a Contingent Annuitant before the original Annuitant's death. CONTINGENT DEFERRED SALES CHARGE (CDSC): The deferred sales charge, if applicable, that may apply when you make a full or partial Surrender. CONTRACT: The individual Annuity Contract and any endorsements or riders. Group participants and some individuals may receive a certificate rather than a Contract. CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If the Contract Anniversary falls on a Non-Valuation Day, then the Contract Anniversary will be the next Valuation Day. CONTRACT OWNER, OWNER OR YOU: The owner or holder of the Contract described in this prospectus including any joint Owner(s). We do not capitalize "you" in the prospectus. CONTRACT VALUE: The total value of the Account on any Valuation Day. CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued. DEATH BENEFIT: Except as otherwise provided, the amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date. Where applicable, your Death Benefit includes the standard or optional Death Benefit plus the Personal Pension Account Death Benefit. DEPOSIT: The sum of allPremium Payments and Personal Pension Account Contributions. FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate all or a portion of your Contract Value. In your Contract, the Fixed Accumulation Feature may be called the Fixed Account. Not all classes of Contracts we offer contain a Fixed Accumulation Feature. FUND: A registered investment company or a series thereof in which assets of a Sub-Account may be invested. We sometimes call the Funds you select a "Sub-Account". GUARANTEED PAYOUT DURATION: The time period (sometimes referred to as a "Period Certain") specified in Annuity Payout Options Three, Five and Six; and with respect to Annuity Payout Options Two and Eight, the time period equal to the applicable Annuity Payout Value divided by the corresponding Personal Pension Account Payout, rounded down. 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. MAXIMUM ANNIVERSARY VALUE: The highest Contract Value as of each Contract Anniversary prior to the date of death of the oldest Owner or Annuitant's 81st birthday, whichever first occurs, adjusted for any Premium Payments (on a dollar-for-dollar basis post rider issuance) and partial Surrenders occurring after such Contract Anniversary. 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. 44 ------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT CONTRIBUTIONS: Sums allocated to the Personal Pension Account (after deduction of front-end sales charges, if applicable). Personal Pension Account Contributions may take the form of Deposits or transfers of Contract Value from Sub-Accounts or the Fixed Accumulation Feature (if applicable). PERSONAL PENSION ACCOUNT PAYOUTS: Regularly scheduled periodic payments of Annuity Payout Value. PREMIUM OR PREMIUM PAYMENT: Money sent to us to be invested in your Contract (not taking into consideration any applicable sales charges). Unless otherwise specified, a Premium Payment does not include Personal Pension Account Contributions. Portions of your Benefit Balance transferred to Sub-Accounts and/or the Fixed Accumulation Feature are considered to be Premium Payments that become part of your Contract Value. REMAINING GROSS PREMIUM: Premium Payments minus prior partial Surrenders in excess of the AWA at the time of such partial Surrender. SPOUSE: A person related to a Contract Owner by marriage pursuant to the Code. SUB-ACCOUNT: A division of the Separate Account containing shares of a Fund. There is a Sub-Account for each Fund. We sometimes call the Funds you select your "Sub-Account". SUB-ACCOUNT VALUE: The value of each Sub-Account on or before the Annuity Calculation Date, which is determined on any day by multiplying the number of Accumulation Units by the Accumulation Unit Value for each Sub-Account. SURRENDER: A complete or partial withdrawal from your Contract. For the purposes of optional riders only, a Surrender may also include a transfer of Contract Value to Benefit Balance. SURRENDER VALUE: The amount we pay you if you terminate your Contract before the Annuity Commencement Date. The Surrender Value is equal to the Contract Value minus any applicable charges (subject to rounding). Surrender Value does not include the Commuted Value of your Personal Pension Account. TARGET INCOME AGE - The year that commences with the birthday of the older Annuitant during which Personal Pension Account Payouts are expected to begin. Target Income Age establishes a 7-year guarantee window (three years before and after) during which a guaranteed payout rate will be applied to your Accumulation Balance. TOTAL BALANCE: The sum of your Contract Value and Benefit Balance. VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values of the Separate Account are determined as of the close of the New York Stock Exchange. The Exchange generally closes at 4:00 p.m. Eastern Time but may close earlier on certain days and as conditions warrant. VALUATION PERIOD: The time span between the close of trading on the New York Stock Exchange from one Valuation Day to the next. WE, US OR OUR: Hartford Life and Annuity Insurance Company or Hartford Life Insurance Company, as the case may be. YOU: The Owner including any joint Owner(s). We do not capitalize "you" or "your" in this prospectus. B. STATE VARIATIONS The following section describes modifications to this prospectus required by one or more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of Contracts we issue. References to certain state's variations do not imply that we actually offer Contracts in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders. ALABAMA, NEW JERSEY AND OHIO - The Fixed Accumulation Feature is not available. The DCA Plus 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 45 ------------------------------------------------------------------------------- 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. The only AIRs available are 3% and 5%. CALIFORNIA, CONNECTICUT, NEW HAMPSHIRE, NEW JERSEY, NEW YORK AND OREGON - 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). CONNECTICUT, FLORIDA, ILLINOIS AND NEW JERSEY - The limit on Death Benefits imposed when aggregate Premium Payments total $5 million or more does not apply. CONNECTICUT AND NEW JERSEY - Our approval is required for any subsequent Contribution or transfer resulting in cumulative Contributions and transfers into the Personal Pension Account exceeding $50,000. MASSACHUSETTS - We will accept subsequent Premium Payments only until the Annuitant's 62nd birthday or the second Contract Anniversary, whichever is later (B Share Contracts). The Nursing Home Waiver is not available. MINNESOTA - The CDSC for B Share Contracts is 7%, 7%, 6%, 6%, 5%, 4%, 3%, 2%, 0% for years 1-9. NEW JERSEY - The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. We reserve the right to prohibit subsequent Premium Payments and transfers after the first Contract Year if you have elected the Return of Premium death benefit. This restriction is not currently being enforced. We will notify you if subsequent Premium Payments and transfers cease to be available to affected contract owners. NEW YORK - The Personal Pension Account is not available in New York. A Contract issued by Hartford Life and Annuity Insurance Company is not available in New York. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. Letters of Intent are not available as a basis to reduce sales charges. OKLAHOMA - The only AIRs available are 3% and 5%. OREGON - We will accept subsequent Premium Payments during the first three Contract Years (B Share Contracts). Owners may only sign up for DCA Plus Programs that are 6 months or longer. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. The only AIRs available are 3% and 5%. PENNSYLVANIA - The Nursing Home Waiver minimum confinement period is changed from 180 days to 90 days. You may not choose a fixed dollar amount Annuity Payout. Annuity Payout Option Two is not available. TEXAS - Letters of Intent are not available as a basis to reduce sales charges. VERMONT - Eligible Investments owned by you, your Spouse or any immediate family member may be included under the Rights of Accumulation Program. WASHINGTON - In any year when no Premium Payment is paid into the Fixed Accumulation Feature, any pro-rata portion of the fee taken from the Fixed Accumulation Feature will be limited to interest earned in excess of the 3% for that year. C. MISCELLANEOUS OWNERSHIP CHANGES - We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral. Certain approved changes in ownership may cause a re-calculation of the benefits subject to applicable state law. Generally, we will not re-calculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change in the tax identification number under the Contract. You may not change the named Annuitant. However, if the Annuitant is still living, the Contingent Annuitant may be changed at any time prior to the Annuity Commencement Date by sending us written notice. ASSIGNMENT - A non-qualified Contract may be assigned subject to the ownership change restrictions above. We must be properly notified in writing of an assignment. Any Annuity Payouts or Surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract. SPECULATIVE INVESTING - Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. Your Contract may not be traded on any stock exchange or secondary market. By purchasing this contract you represent and warrant that you are not using this Contract, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. 46 ------------------------------------------------------------------------------- CONTRACT MODIFICATION - We may unilaterally modify the Contract to reflect, among other things, changes in applicable tax law or interpretations of tax law, but no modification will affect the amount or term of any Contract unless a modification is required to conform the Contract to applicable federal or state law. No modification will affect the method by which Contract Values are determined. Any modifications to the Contract will be filed with each state in which the Contract is for sale. Contract changes will be communicated to Owners through regular mail as an endorsement to their Contract. MEDICAID BENEFITS - Medicaid estate planning may be important to people who are concerned about long term care costs. Benefits associated with this variable annuity may have an impact on your Medicaid eligibility and the assets considered for Medicaid benefits. Ownership interests or beneficiary status under this variable annuity could render you or your loved ones ineligible for Medicaid. This may be particularly troubling if your Spouse or Beneficiary is already receiving Medicaid benefits at the time of transfer or receipt of Death Benefits. As certain ownership changes are either impermissible or are subject to benefit resetting rules, you may want to carefully consider how you structure the ownership and beneficiary status of your Contract. This discussion is intended to provide a very general overview and does not constitute legal advice or in any way suggest that you circumvent these rules. You should seek advice from a competent elder law attorney to make informed decisions about how this variable annuity may affect your plans. D. LEGAL PROCEEDINGS There continues to be significant federal and state regulatory activity relating to financial services companies. Like other insurance companies, we are involved in lawsuits, arbitrations, and regulatory/legal proceedings. Certain of the lawsuits and legal actions the Company is involved in assert claims for substantial amounts. While it is not possible to predict with certainty the ultimate outcome of any pending or future case, legal proceeding or regulatory action, we do not expect the ultimate result of any of these actions to result in a material adverse effect on the Company or its Separate Accounts. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods. E. HOW CONTRACTS ARE SOLD We have entered into a distribution agreement with our affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD serves as the principal underwriter for the Contracts, which are offered on a continuous basis. HSD is registered with the Securities and Exchange Commission under the 1934 Act as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of HSD is the same as ours. Hartford Life Distributors, LLC, LLC, a subsidiary of Hartford Life Insurance Company, provides marketing support for us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that sells this Contract. HSD has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to HSD for sales of the Contracts by Financial Intermediaries. HSD, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2010. Contracts will be sold by individuals who have been appointed by us as insurance agents and who are investment professionals of Financial Intermediaries ("Investment Professionals"). A share and B share Contracts may be sold directly to the following individuals free of any commission: 1) current or retired officers, directors, trustees and employees (and their families) and our ultimate corporate parent, affiliates, and subsidiaries; and 2) employees and Investment Professionals of Financial Intermediaries. If applicable, we will credit the B share Contract with a credit of 5.0% of the initial Deposit and each subsequent Deposit, if any. This additional percentage of Deposit in no way affects current or future charges, rights, benefits or account values of other Owners. Subject to the internal eligibility requirements, employees of a Financial Intermediary; as well as our current or retired officers, directors, trustees and employees and those of our affiliates, subsidiaries and parent companies; may purchase class A share versions of this Contract and make additional Deposits therein without incurring a front-end sales charge. This prospectus does not constitute personalized investment or financial planning advice or a recommendation to purchase this or any other variable annuity. We reserve the right to modify, suspend, or terminate these privileges at any time. We list below types of arrangements that help to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affect each variable annuity. These types of arrangements could be viewed as creating conflicts of interest. 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 Investment Professionals according to a Financial Intermediaries' internal compensation practices. Affiliated broker-dealers also employ individuals called "wholesalers" in the sales process. Wholesalers typically receive commissions based on the type of Contract or optional benefits sold. Commissions are based on a specified amount of Deposits or Total Balance. 47 ------------------------------------------------------------------------------- - COMMISSIONS Up front commissions paid to Financial Intermediaries generally range from 0% to up to 6.5% of each Deposit. Trail commissions (fees paid for customers that maintain their Contracts generally for more than 1 year) range up to 1% of your Total Balance. We pay no additional commissions with respect to assets moved from the Personal Pension Account to Sub-Accounts or the Fixed Accumulation Feature. We pay different commissions based on the Contract variation that you buy. We may pay a lower commission for sales to Owners over age 80. Commission arrangements vary from one Financial Intermediary to another. We are not involved in determining your Investment Professional's compensation. Under certain circumstances, your Investment Professional may be required to return all or a portion of the commissions paid. Check with your Investment Professional to verify whether your account is a brokerage or an advisory account. Your interests may differ from ours and your Investment Professional (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 Investment Professional (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 Investment Professional'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 Investment Professional, 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 Investment Professionals 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 Investment Professionals) receive prizes such as travel awards, merchandise and recognition; client generation expenses. Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities for certain Allowances Funds. Support Sales support through such things as providing hardware and software, operational and systems integration, links to our website from a Financial Intermediary's websites; shareholder services (including sub-accounting sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and reimbursements). Training Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training, and/or client or prospect seminar sponsorships. Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or visibility at, national and regional conferences; and/or articles in Financial Intermediary publications highlighting our products and services. Volume Pay for the overall volume of their sales or the amount of money investing in our products.
As of December 31, 2010, we have entered into ongoing contractual arrangements to make Additional Payments to the following Financial Intermediaries for our entire suite of variable annuities: AIG Advisors Group, Inc., (FSC Securities Corporation, Royal Alliance Assoc., Inc., Sagepoint Financial), Allen & Company of Florida, Inc., AMTrust Investment Svcs Inc., Bancwest Investment Services, Inc., BBVA Compass Inv. Solutions, Inc., Cadaret, Grant & Co., Inc., Cambridge Investment Research Inc., Capital Analyst Inc., Centaurus Financial, Inc., CCO Investment Services Corp., Citigroup Global Markets, Inc., Comerica Securities, Inc., Commonwealth Financial Network, Crown Capital Securities, LLP, Cuna Brokerage Services, Inc., Cuso Financial Services, LLP, Edward D. Jones & Co., LLP, Fifth Third Securities, Inc., First Allied Securities, Inc., First Citizens Investor Services, Inc., First Tennessee Brokerage Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc., H. Beck, Inc., H.D. Vest Investment Services, Harbour Investments, Inc., Heim, Young & Associates, Inc., Huntington Investment Company, Infinex Investment, Inc., ING Advisors Network, (Financial Network Investment Corp., ING Financial Partners, Multi-Financial Securities Corp., Primevest Financial 48 ------------------------------------------------------------------------------- Services, Inc.,), Investacorp, Inc., Investment Professionals, Inc., Investors Capital Corp., J.J.B. Hilliard, W.L. Lyons LLC, Janney Montgomery Scott, Inc., Key Investment Services, Lincoln Financial Advisors Corp., Lincoln Financial Securities Corp., Lincoln Investment Planning, LPL Financial Corporation, M&T Securities, Inc., Merrill Lynch Pierce Fenner & Smith, MML Investor Services Inc., Morgan Keegan & Company, Inc., Morgan Stanley Smith Barney, LLC, (various divisions and affiliates), Newbridge Securities Corp., NEXT Financial Group, Inc., NFP Securities, Inc., Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James & Associates, Inc., Raymond James Financial Services, RBC Capital Markets., Robert W. Baird & Co. Inc., Rogan & Associates, Securities America, Inc., Sigma Financial Corporation, Sorrento Pacific Financial LLC, Summit Brokerage Services Inc., Sun Trust Investment Services, TFS Securities, Inc., The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc., Transamerica Financial Advisors, Triad Advisors, Inc., U.S. Bancorp Investments, Inc., Unionbanc Investment Services, UBS Financial Services, Inc., Uvest Financial Services Group Inc., Vanderbilt Securities, LLC, Wells Fargo Advisors LLC (various divisions), Wells Fargo Investments LLC, Woodbury Financial Services, Inc. (an affiliate of ours). Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their Investment Professional is or should be included in any such listing. As of December 31, 2010, 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: 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, 2010, Additional Payments did not in the aggregate exceed approximately $36 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.05% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $0.9 million or approximately 0.25% of the Premium Payments invested in a particular Fund during this period. Financial Intermediaries that received Additional Payments in 2010, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. Financial Intermediaries that received Additional Payments in 2010, but do not have an ongoing contractual relationship, are listed in the Statement of Additional Information. 7. FEDERAL TAX CONSIDERATIONS A. INTRODUCTION The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the Internal Revenue Code ("Code"), Treasury Regulations thereunder, and public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by published court decisions. This summary discusses only certain federal income tax consequences to United States Persons, and does not discuss state, local or foreign tax consequences. The term United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trust or estates that are subject to United States federal income tax, regardless of the source of their income. See "Annuity Purchases by Nonresident Aliens and Foreign Corporations," regarding annuity purchases by non-U.S. Persons or residents. This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract. In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, 49 ------------------------------------------------------------------------------- if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it. Pursuant to Section 3 of the federal Defense of Marriage Act ("DOMA"), same-sex marriages currently are not recognized for purposes of federal law. Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) are currently NOT available to a same-sex spouse. Same-sex spouses who own or are considering the purchase of annuity products that provide benefits based upon status as a spouse should consult a tax advisor. To the extent that an annuity contract or certificate accords to spouses other rights or benefits that are not affected by DOMA, same-sex spouses remain entitled to such rights or benefits to the same extent as any annuity holder's spouse. The federal, as well as state and local, tax laws and regulations require the Company to report certain transactions with respect to Your contract (such as an exchange of or a distribution from the contract) to the Internal Revenue Service and state and local tax authorities, and generally to provide You with a copy of what was reported. This copy is not intended to supplant Your own records. It is Your responsibility to ensure that what You report to the Internal Revenue Service and other relevant taxing authorities on your income tax returns is accurate based on Your books and records. You should review whatever is reported to the taxing authorities by the Company against your own records, and in consultation with your own tax advisor, and should notify the Company if You find any discrepancies in case corrections have to be made. THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW. B. TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT The Separate Account is taxed as part of the Company which is taxed as a life insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the Separate Account will not be taxed as a "regulated investment company" under Subchapter M of Chapter 1 of the Code. Investment income and any realized capital gains on assets of the Separate Account are reinvested and taken into account in determining the value of the Accumulation and Annuity Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the Contract. Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. The Company is entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account. These tax benefits, which may include the foreign tax credit and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived. C. TAXATION OF ANNUITIES - GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN TAX-QUALIFIED RETIREMENT PLANS Section 72 of the Code governs the taxation of annuities in general. 1. NON-NATURAL PERSONS AS OWNERS Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Owner is generally required to currently include in gross income for each taxable year the excess of (a) the sum of the net surrender value of the contract as of the end of the taxable year plus all distributions under the contract received during the taxable year or any prior taxable year, over (b) the sum of the amount of net premiums under the contract for the taxable year and prior taxable years and amounts includible in gross income for prior taxable years with respect to such 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. 50 ------------------------------------------------------------------------------- Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements. 2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected. The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts which were purchased prior to August 14, 1982. a. AMOUNTS RECEIVED AS AN ANNUITY Contract payments made periodically at regular intervals over a period of more than one full year, such that the total amount payable is determinable from the start ("amounts received as an annuity") are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the allocable "investment in the contract" to the total amount of the payments to be made after the start of the payments (the "exclusion ratio") under Section 72 of the Code. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract." The start of the payments may be the Annuity Commencement Date, or may be an annuity starting date assigned should any portion less than the full Contract be converted to periodic payments from the Contract (Annuity Payouts). i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the allocated investment in the contract for the Annuity Payout, any additional payments (including surrenders) will be entirely includable in gross income. 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 "income on the contract" does not include some measure of the value of certain future cash-value type benefits, but the IRS could take a contrary position and include such value in determining the "income on the contract". iii. Under Section 72(a)(2) of the Code, if any amount is received as an annuity (i.e., as one of a series of periodic payments at regular intervals over more than one full year) for a period of 10 or more years, or during one or more lives, under any portion of an annuity, endowment, or life insurance contract, then that portion of the contract shall be treated as a separate contract with its own annuity starting date (otherwise referred to as a partial annuitization of the contract). This assigned annuity starting date for the new separate contract can be different from the original Annuity Commencement Date for the Contract. Also, for purposes of applying the exclusion ratio for the amounts received under the partial annuitization, the investment in the contract before receiving any such amounts shall be allocated pro rata between the portion of the Contract from which such amounts are received as an annuity and the portion of the Contract from which amounts are not received as an annuity. These provisions apply to payments received in taxable years beginning after December 31, 2010. We believe that Personal Pension Account Payouts are partial annuitizations of the Contract, and that an equitable allocation of the investment in the contract would be in proportion to the estimated fair market values of the portions of the Contract. iv. When annuitization of the Personal Pension Account has occurred, your Benefit Balance will be calculated by using an actuarial present value formula. b. AMOUNTS NOT RECEIVED AS AN ANNUITY i. To the extent that the "cash 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." ii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a withdrawal or partial surrender), which is non-periodic and not part of a partial annuitization, 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" is computed by reference to the aggregation rule described 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." 51 ------------------------------------------------------------------------------- iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date (or after the assigned annuity starting date for a partial annuitization) 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 2.c. may apply). 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 2.b. and the previous subparagraph 2.a. 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 2.b. and the previous subparagraph 2.a. 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 2.b. and the previous subparagraph 2. 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 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 taxpayer 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 taxpayer 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 taxpayer (or the joint lives or life expectancies of the taxpayer and the taxpayer'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 52 ------------------------------------------------------------------------------- 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; 2. If any Contract Owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and 3. If the Contract Owner is not an individual, then for purposes of 1. or 2. above, the primary annuitant under the Contract shall be treated as the Contract Owner, and any change in the primary annuitant shall be treated as the death of the Contract Owner. The primary annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract. ii. Alternative Election to Satisfy Distribution Requirements If any portion of the interest of a Contract Owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the Contract Owner's death. iii. Spouse Beneficiary If any portion of the interest of a Contract Owner is payable to or for the benefit of his or her Spouse, and the Annuitant or Contingent Annuitant is living, such Spouse shall be treated as the Contract Owner of such portion for purposes of section i. above. This Spousal Contract continuation shall apply only once for this Contract. iv. Civil Union or Domestic Partner Upon the death of the Contract Owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving civil union or domestic partner of the Contract Owner pursuant to a civil union or domestic partnership recognized under state law, then such designated beneficiary's right to continue the Contract as the succeeding Contract Owner will be contingent, among other things, upon the treatment of such designated beneficiary as the spouse of the Contract Owner under Code Section 72(s) (or any successor provision). Currently, Federal tax law only recognizes spouses if they are married individuals of the opposite sex. Consequently, such designated beneficiary who is not recognized as a "spouse" under Federal tax law will not be able to continue the Contract and the entire interest in the Contract must be distributed within five years of the Contract Owner's death or under the Alternative Election. g. ADDITION OF RIDER OR MATERIAL CHANGE. The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information. h. PARTIAL EXCHANGES. The IRS in Rev. Rul. 2003-76 confirmed that the owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul. 2003-76 also refers to caveats and additional guidance in the companion Notice 2003-51, which discusses cases in which a partial exchange is followed by a surrender, withdrawal or other distribution from either the old contract or the new contract. Notice 2003-51 specifically indicates that the IRS is considering (1) under what circumstances it should treat a partial exchange followed by such a distribution within 24 months as presumptively for "tax avoidance" purposes (e.g., to avoid the income-out-first rules on amounts received under Code Section 72) and (2) what circumstances it should treat as rebutting such a presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of employment). Notice 2003-51 was superseded by Revenue Procedure 2008-24, effective for partial exchanges completed on or after June 30, 2008. Partial exchanges completed on or after this date will qualify for tax free treatment if: (1) no amounts are withdrawn from, or received in surrender of, either of the contracts involved in the exchange during the 12 months beginning on the date on which amounts are treated as received as premiums or other consideration paid for the contract received in the exchange (the date of transfer); or (2) the taxpayer demonstrates that certain conditions (e.g., death, 53 ------------------------------------------------------------------------------- disability, reaching age 59 1/2, divorce, loss of employment) occurred between the date of transfer and the date of the withdrawal or surrender. A transfer within the scope of the revenue procedure, but not treated as a tax-free exchange, will be treated as a taxable distribution, followed by a payment for a second contract. Two annuity contracts that are the subject of a tax-free exchange pursuant to the revenue procedure will not be aggregated, even if issued by the same insurance company. We advise you to consult with a qualified tax adviser as to potential tax consequences before attempting any partial exchange. The applicability of the IRS's partial exchange guidance to the splitting of an annuity contract is not clear. You should consult with a tax adviser if you plan to split an annuity contract as part of an exchange of annuity contracts. 3. DIVERSIFICATION REQUIREMENTS. The Code requires that investments supporting your Contract be adequately diversified. Code Section 817(h) provides that a variable annuity contract will not be treated as an annuity contract for any period during which the investments made by the separate account or Fund are not adequately diversified. If a contract is not treated as an annuity contract, the contract owner will be subject to income tax on annual increases in cash value. The Treasury Department's diversification regulations under Code Section 817(h) require, among other things, that: - no more than 55% of the value of the total assets of the segregated asset account underlying a variable contract is represented by any one investment, - no more than 70% is represented by any two investments, - no more than 80% is represented by any three investments and - no more than 90% is represented by any four investments. In determining whether the diversification standards are met, all securities of the same issuer, all interests in the same real property project, and all interests in the same commodity are each treated as a single investment. In the case of government securities, each government agency or instrumentality is treated as a separate issuer. A separate account must be in compliance with the diversification standards on the last day of each calendar quarter or within 30 days after the quarter ends. If an insurance company inadvertently fails to meet the diversification requirements, the company may still comply within a reasonable period and avoid the taxation of contract income on an ongoing basis. However, either the insurer or the contract owner must agree to make adjustments or pay such amounts as may be required by the IRS for the period during which the diversification requirements were not met. Fund shares may also be sold to tax-qualified plans pursuant to an exemptive order and applicable tax laws. If Fund shares are sold to non-qualified plans, or to tax-qualified plans that later lose their tax-qualified status, the affected Funds may fail the diversification requirements of Code Section 817(h), which could have adverse tax consequences for Contract Owners with premiums allocated to affected Funds. In order to prevent a Fund diversification failure from such an occurrence, the Company obtained a private letter ruling ("PLR") from the IRS. As long as the Funds comply with certain terms and conditions contained in the PLR, Fund diversification will not be prevented if purported tax-qualified plans invest in the Funds. The Company and the Funds will monitor the Funds' compliance with the terms and conditions contained in the PLR. 4. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the "owner" of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the "tax owner" of certain separate account assets, income and gain from such assets would be includable in the variable contract owner's gross income. The Treasury Department indicated in 1986 that it would provide guidance on the extent to which contract owners may direct their investments to particular Sub-Accounts without being treated as tax owners of the underlying shares. Although no such regulations have been issued to date, the IRS has issued a number of rulings that indicate that this issue remains subject to a facts and circumstances test for both variable annuity and life insurance contracts. Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where interests in a partnership offered in an insurer's separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such interests can be purchased directly by the general public or others without going through such a variable contract), such "public availability" means that such interests should be treated as owned directly by the contract owner (and not by the insurer) for tax purposes, as if such contract owner had chosen instead to purchase such interests directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer's variable contracts or by other permitted entities. 54 ------------------------------------------------------------------------------- Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund options, if any, that might prevent a variable contract owner from receiving favorable tax treatment. As a result, although the owner of a Contract has more than 20 fund choices, we believe that any owner of a Contract also should receive the same favorable tax treatment. However, there is necessarily some uncertainty here as long as the IRS continues to use a facts and circumstances test for investor control and other tax ownership issues. Therefore, we reserve the right to modify the Contract as necessary to prevent you from being treated as the tax owner of any underlying assets. 5. CERTAIN TAX CONSIDERATIONS FOR FULL OR PARTIAL SETTLEMENT PAYMENTS FROM THE PERSONAL PENSION ACCOUNT The recent enactment of new Section 72(a)(2) of the Code for partial annuitizations provides direction on how Personal Pension Account Payouts should be treated for tax purposes, effective for payments received in taxable years beginning after December 31, 2010 (regardless of when the annuity was purchased). However, because there is yet to be guidance on the new provisions from the IRS, there is still some uncertainty as to how the partial annuitization provisions will be applied and we advise you to consult with a qualified tax adviser concerning such tax treatment before you deposit amounts into the Personal Pension Account or take a settlement for a Personal Pension Account Payout. With respect to the Personal Pension Account, the Company plans to report any periodic payments under a settlement of the Personal Pension Account (Personal Pension Account Payouts) as amounts received as an annuity and a partial annuitization of the Contract, resulting in that portion of the Contract being treated as a separate contract for which an annuity starting date is assigned, a portion of the investment in the contract is allocated and an exclusion ratio is determined (discussed in subparagraph 2.a. above). Likewise, after December 31, 2010, the Company plans to report any continuing periodic settlement payments from the Personal Pension Account as amounts received as an annuity under a separate contract with an annuity starting date of January 1, 2010, for which a portion of the investment in the contract should be allocated and an exclusion ratio should be determined consistent with new Section 72(a)(2) of the Code (and discussed in subparagraph 2.a. above). D. FEDERAL INCOME TAX WITHHOLDING The portion of an amount received under a Contract that is taxable gross income to the Payee is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following: 1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless an individual elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" form is not submitted to us in a timely manner, generally we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS. 2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is generally subject to federal income tax withholding as if the Payee were a married individual claiming 3 exemptions, unless the individual elects otherwise. An individual generally may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming 3 exemptions, and remit this amount to the IRS. Generally no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the Payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A Payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the Payee's total tax liability. E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to the section entitled "Information Regarding Tax-Qualified Retirement Plans" for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans. F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal income tax and mandatory withholding on U.S. source taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required tax forms are submitted to us. If withholding applies, we are required to withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In addition, purchasers may be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence. 55 ------------------------------------------------------------------------------- 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. H. TAX DISCLOSURE OBLIGATIONS In some instances certain transactions must be disclosed to the IRS or penalties could apply. See, for example, IRS Notice 2004-67. The Code also requires certain "material advisers" to maintain a list of persons participating in such "reportable transactions," which list must be furnished to the IRS upon request. It is possible that such disclosures could be required by Hartford The Company, the Owner(s) or other persons involved in transactions involving annuity contracts. It is the responsibility of each party, in consultation with their tax and legal advisers, to determine whether the particular facts and circumstances warrant such disclosures. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences. The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts or accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan. THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN ADMINISTRATIVE DUTIES INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS, DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF QUALIFIED PLAN LOANS, COMPLIANCE WITH REGULATORY REQUIREMENTS AND FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A CONTRACT THROUGH A QUALIFIED PLAN, YOU SHOULD CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE. The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, 56 ------------------------------------------------------------------------------- and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law and any applicable Qualified Plan terms. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences. We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future. 1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS"). In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) may elect to provide for a separate account or annuity contract that accepts after-tax employee contributions and is treated as a "Deemed IRA" under Code Section 408(q), which is generally subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available. a. TRADITIONAL IRAS Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the Owner reaches age 70 1/2 or dies, as described below, may result in imposition of a 50% penalty tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA. You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into a Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to the Traditional IRA. In addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant). IRAs generally may not invest in life insurance contracts. However, an annuity contract that is used as an IRA may provide a death benefit that equals the greater of the premiums paid or the contract's cash value. The Contract offers an enhanced death benefit that may exceed the greater of the Contract Value or total premium payments. The tax rules are unclear as to what extent an IRA can provide a death benefit that exceeds the greater of the IRA's cash value or the sum of the premiums paid and other contributions into the IRA. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. b. SEP IRAS Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, and in limited circumstances employee and salary reduction contributions, as well as higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. c. SIMPLE IRAS The Savings Incentive Match Plan for Employees of small employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax on premature distributions, as described below. In addition, the 10% penalty tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these 57 ------------------------------------------------------------------------------- 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 or other qualified plan assets may convert a Traditional IRA into a Roth IRA under certain circumstances. The conversion of a Traditional IRA or other qualified plan assets to a Roth IRA will subject the fair market value of the converted Traditional IRA to federal income tax in the year of conversion (special rules apply to 2010 conversions). In addition to the amount held in the converted Traditional IRA, the fair market value may include the value of additional benefits provided by the annuity contract on the date of conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. 2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice. In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. 3. TAX SHELTERED ANNUITY UNDER SECTION 403(b) ("TSA") Code Section 403(b) permits public school employees and employees of certain types of charitable, educational and scientific organizations described in Code Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and, subject to certain limitations, exclude employer contributions to a TSA from such an employee's gross income. Generally, total contributions may not exceed the lesser of an annual dollar limit (e.g., $49,000 in 2011) or 100% of the employee's "includable compensation" for the most recent full year of service, subject to other adjustments. There are also legal limits on annual elective deferrals that a participant may be permitted to make under a TSA. In certain cases, such as when the participant is age 50 or older, those limits may be increased. A TSA participant should contact his plan administrator to determine applicable elective contribution limits. Special provisions may allow certain employees different overall limitations. 58 ------------------------------------------------------------------------------- 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 (as defined in applicable law and in the case of hardship, any income attributable to such contributions may not be distributed); or e. as a qualified reservist distribution upon certain calls to active duty. An employer sponsoring a TSA may impose additional restrictions on your TSA through its plan document. Please note that the TSA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a TSA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification. In particular, please note that tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification. In addition, a life insurance contract issued after September 23, 2007 is generally ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2). Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. Section 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant's or beneficiary's accumulated benefit immediately before such exchange (taking into account such participant's or beneficiary's accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant's employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. In addition, the same Regulation provides corresponding rules for a transfer from one TSA to another TSA under a different TSA Plan (e.g., for a different eligible employer). We are no longer accepting any incoming exchange request, or new contract application, for any individual TSA contract. 4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS") Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $15,000 for 2006 and thereafter ($16,500 for 2010). The limit will be indexed for cost-of-living adjustments at $500 increments. The Plan may provide for additional "catch-up" contributions . In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70 1/2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations). 59 ------------------------------------------------------------------------------- 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 or Roth accounts in certain Qualified Plans, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above. For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Contract Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual. In addition, penalty taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan. 6. PENALTY TAXES FOR QUALIFIED PLANS Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal penalty taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Penalty taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The penalty taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below. a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59 1/2. However, this 10% penalty tax does not apply to a distribution that is either: (i) made to a beneficiary (or to the employee's estate) on or after the employee's death; (ii) attributable to the employee's becoming disabled under Code Section 72(m)(7); (iii) part of a series of substantially equal periodic payments (not less frequently than annually - "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service; (iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans); (v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse); (vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year; (vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty; (viii) made an account of an IRS levy on the Qualified Plan under Code Section 72(t)(2)(A)(vii); or (ix) made as a "direct rollover" or other timely rollover to an Eligible Retirement Plan, as described below. 60 ------------------------------------------------------------------------------- In addition, the 10% penalty tax does not apply to a distribution from an IRA that is either: (x) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions in Code Section 72(t)(2)(D) are met; (xi) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or (xii) for a qualified first-time home buyer and meets the requirements of Code Section 72(t)(8). If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death, disability or a method change allowed by Rev. Rul. 2002-62), the 10% penalty tax will be applied retroactively to all the 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. A special rule applies to individuals who attained age 70 1/2 in 2009. Such individuals should consult with a qualified tax adviser before taking RMDs in 2010. The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over - (a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or (b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary. If an individual dies before reaching the Required Beginning Date, the individual's entire interest generally must be distributed within 5 years after the individual's death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual's death to a qualifying designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual's surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 70 1/2. If an individual dies after RMDs have begun for such individual, any remainder of the individual's interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual's death. The RMD rules that apply while the Contract Owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the Owner apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own. The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of the Owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs. In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% penalty tax for RMDs if such additional RMD amount is not timely distributed. 61 ------------------------------------------------------------------------------- 7. TAX WITHHOLDING FOR QUALIFIED PLANS Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" from a Qualified Plan (described below in "ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution." 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 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 transfer or Plan and certain other conditions to maintain the applicable tax qualification are satisfied. 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 into a different type of Plan generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to such tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover", the missing amount that is not rolled over remains subject to normal income tax plus any applicable penalty tax. Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either - a. an RMD amount; b. one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or c. any distribution made upon hardship of the employee. Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457 (e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is 62 ------------------------------------------------------------------------------- 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 rollover rules also apply to (1) transfers or rollovers for the benefit of a spouse (or ex-spouse) or a nonspouse designated beneficiary, (2) Plan distributions of property, (3) distributions from a Roth account in certain Plans, (4) recontributions within 3 years of "qualified hurricane distributions" made before 2007 under Code Section 1400Q(a), (5) transfers from a Traditional or Roth IRA to certain health savings accounts under Code Section 408(d)(9), and (6) obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. 9. CERTAIN TAX CONSIDERATIONS WITH THE PERSONAL PENSION ACCOUNT IN QUALIFIED PLANS Because the IRS has published no guidance on the tax treatment of arrangements resembling the Personal Pension Account, there is necessarily some uncertainty as to how an annuity contract with a Personal Pension Account will be treated in different types of Qualified Plans, and we advise you to consult with a qualified tax adviser concerning such treatment before you deposit any amount into a Personal Pension Account that is held in any Qualified Plan. Among such tax issues for you to consider with a qualified tax adviser in such a case are the following: a. Any amounts received by you (or your payee) prior to your attaining age 59 1/2 are generally subject to the penalty tax on premature distributions described above, unless such an amount received can qualify for an exception from such a penalty tax, e.g., scheduled payments that qualify for the SEPP Exception. In addition, any modification in payments qualifying for the SEPP Exception (e.g., by commutation) can have adverse penalty tax consequences, as described above. b. The tax rules for satisfying RMD requirements vary according to both the form of Qualified Plan (e.g., NonRoth or Roth IRA) and the form of payment (e.g., periodic annuity payout or non-periodic distribution from an account value). As a result, such variations should be considered when RMD amounts need to be taken (e.g., after age 70 1/2 or death). In addition, any modification in the form or amount of such payments (e.g., by commutation) could have adverse tax consequences, if such a modification does not satisfy an IRS-recognized RMD exception (e.g., for an acceleration or other change in periodic payments under Reg. Section 1.401(a) (9)-6, Q&A-1 and Q&A-14). c. Any attempt to transfer an amount from the Benefit Balance to Sub-Accounts or the Fixed Accumulation Feature (if available) that exceeds the threshold for such a transfer will be treated by us as a form of annuitization distribution from the Personal Pension Account, and thus may not qualify as a tax-free direct transfer. Instead, such an attempted excess transfer could be treated for tax purposes as a potentially taxable distribution out of the entire annuity contract, followed by a contribution back into the same contract. While such a distribution from an IRA may qualify for 60-day rollover treatment (if it is not needed to satisfy RMD requirements), only one such tax-free 60-day rollover is allowed for any 365-day period for any individual from all of such individual's IRAs. Failing such tax-free rollover treatment, such a distribution could be subject to both income and penalty tax, and any deemed contribution back into the contract may be subject to an excise tax on excess contributions, particularly after age 70 1/2. IN ADDITION, ANY SUCH DISTRIBUTION FROM A NON-IRA FORM OF QUALIFIED PLAN MAY BE SUBJECT TO THE 20% MANDATORY WITHHOLDING TAX, UNLESS SUCH DISTRIBUTION IS AN RMD OR OTHERWISE AVOIDS CLASSIFICATION AS AN "ELIGIBLE ROLLOVER DISTRIBUTION," AS DESCRIBED ABOVE. 63 ------------------------------------------------------------------------------- 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 FINANCIAL STATEMENTS
APP A-1 ------------------------------------------------------------------------------- APPENDIX A - EXAMPLES TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT EXAMPLES APP A-2 EXAMPLE 1: STANDARD ILLUSTRATIONS WITH PARTIAL INCOME STREAM APP A-2 EXAMPLE 2: SUBSEQUENT PERSONAL PENSION ACCOUNT DEPOSITS APP A-3 EXAMPLE 3A: BENEFIT BALANCE TRANSFER (IN-BOUND) APP A-3 EXAMPLE 3B: BENEFIT BALANCE TRANSFER (OUT-BOUND) APP A-4 EXAMPLE 4A: FULL COMMUTATION WITH COMMUTED VALUE APP A-5 EXAMPLE 4B: PARTIAL COMMUTATION WITH COMMUTED VALUE APP A-7 EXAMPLE 5: DEATH BENEFIT EXAMPLES APP A-9 MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT APP A-9 RETURN OF PREMIUM II DEATH BENEFIT APP A-12 RETURN OF PREMIUM I DEATH BENEFIT APP A-12 REMAINING GROSS PREMIUM EXAMPLES APP A-13
APP A-2 ------------------------------------------------------------------------------- PERSONAL PENSION ACCOUNT EXAMPLES EXAMPLE 1: STANDARD ILLUSTRATIONS WITH A PARTIAL INCOME STREAM Assume the initial Personal Pension Account Contribution is equal to $100,000 (no Premium Payments have been invested in the Fixed Accumulation Feature or Sub-Accounts). Assume that in Contract Year 7, the Owner requested to commence an income stream based on $50,000 of Annuity Payout Value during the guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. Hypothetical credited and payout rates are illustrated below. A. To understand how your guaranteed payout rates are set during your guarantee window (shaded area), see Guaranteed Payout Rates in Contract Years 1 through 7. In this Example, the guaranteed payout rate is locked in at Contract Year 7 when Personal Pension Account Payouts commence. B. Credited interest rates vary during the duration of your Contract as illustrated in column 4. In this illustration, credited interest rates change at the 10th Contract Year and again at the 20th Contract Year. C. Please refer to the last column in Contract Year 23 for an example of how Personal Pension Account Payouts will continue for the life of the Annuitant, Owner or joint Owner even though Annuity Payout Value has been exhausted.
CREDITED CONTRACT BENEFIT INTEREST YEAR AGE BALANCE RATE ------------------------------------------------------------------------ 0 60 $ 100,000 5.00% 1 61 105,000 5.00% 2 62 110,250 5.00% 3 63 115,763 5.00% GUARANTEE 4 64 121,551 5.00% WINDOW 5 65 127,628 5.00% 6 66 134,010 5.00% 7 67 140,710 5.00% 8 68 142,009 5.00% 9 69 143,535 5.00% 10 70 145,299 3.00% 11 71 145,212 3.00% 12 72 145,220 3.00% 13 73 145,326 3.00% 14 74 145,532 3.00% 15 75 145,841 3.00% 16 76 146,256 3.00% 17 77 146,781 3.00% 18 78 147,419 3.00% 19 79 148,173 3.00% 20 80 149,047 1.50% 21 81 147,927 1.50% 22 82 146,839 1.50% 23 83 147,568 1.50% PERSONAL ANNUITY GUARANTEED PENSION ACCUMULATION PAYOUT PAYOUT RATES ACCOUNT BALANCE VALUE (PER 1000)(3) PAYOUTS(2) ------------ -------------------------------------------------------------------------- $ 100,000 105,000 61.99 110,250 62.33 115,763 62.72 GUARANTEE 121,551 63.16 WINDOW 127,628 63.65 134,010 64.17 90,710 (1) $50,000 64.73 $ 3,237 95,246 46,763 3,237 100,008 43,527 3,237 105,008 40,290 3,237 108,158 37,054 3,237 111,403 33,817 3,237 114,745 30,581 3,237 118,188 27,344 3,237 121,733 24,108 3,237 125,385 20,871 3,237 129,147 17,634 3,237 133,021 14,398 3,237 137,012 11,161 3,237 141,122 7,925 3,237 143,239 4,688 3,237 145,388 1,452 3,237 147,568 0 3,237
(1) Accumulation Balance is reduced by $50,000 that is converted into the Annuity Payout Value. CDSC's and Premium tax have not been applied in this Example. If the $50,000 was instead commuted into a Commuted Value (assuming a hypothetical discount rate of 6%), the Commuted Value would be $32,294. The remaining Accumulation Balance can be converted into Annuity Payout Value at a later date for additional Personal Pension Account Payouts. (2) These Personal Pension Account Payouts shall continue for the life of the Annuitant, Owner or joint Owner pursuant to Annuity Payout Option Two. (3) Guaranteed Payout Rates are based on a hypothetical investment in B shares. APP A-3 ------------------------------------------------------------------------------- EXAMPLE 2: SUBSEQUENT PERSONAL PENSION ACCOUNT DEPOSITS Assume a $100,000 initial Personal Pension Account Contribution was made at a time when we declared a hypothetical credited rate of 4% and that a $15,000 subsequent Personal Pension Account Contribution was made when we declared a hypothetical credited rate of 3.75%. Your Benefit Balance would increase as follows:
PERSONAL PERSONAL TOTAL PENSION ACCOUNT CREDITED PENSION ACCOUNT CREDITED BENEFIT AGE CONTRIBUTION RATE CONTRIBUTION RATE BALANCE -------------------------------------------------------------------------------------------------------------------- 55 First $100,000 $100,000 56 Deposit 4.00% 104,000 57 4.00% 108,160 58 4.00% 112,486 59 4.00% Second $15,000 131,986 60 4.00% Deposit 3.75% 137,228 61 4.00% 3.75% 142,678 62 4.00% 3.75% 148,345 63 4.00% 3.75% 154,237 64 4.00% 3.75% 160,362 65 4.00% 3.75% 166,732
At Age 59, the $100,000 Contribution has accumulated to $116,986. The subsequent Contribution of $15,000 creates a Total Benefit Balance of $131,986. The Total Benefit Balance at Age 60 is determined as follows: Interest is compounded daily at 4.00% on the previous First Deposit Benefit Balance of $116,986 resulting in an Age 60 First Deposit Benefit Balance of $121,665. Interest is compounded daily at 3.75% on the previous Second Deposit Benefit Balance of $15,000 resulting in an Age 60 Second Deposit Benefit Balance of $15,563. The First Deposit Benefit Balance of $121,665 + the Second Deposit Benefit Balance of $15,563 creates a Total Age 60 Benefit Balance of $137,228. EXAMPLE 3A: BENEFIT BALANCE TRANSFER (IN-BOUND) The following example illustrates the impact on various values associated to the contract when a transfer from the Sub-Accounts to the Personal Pension Account occurs. Assume that the Owner deposits $100,000 in the Sub-Accounts and then elects to transfer $5,000 from the Sub-Accounts to the Personal Pension Account in which event:
TRANSFER FROM SUB-ACCOUNTS TO THE PERSONAL PENSION ACCOUNT BEFORE VALUE AFTER VALUE -------------------------------------------------------------------------------------------- Sub-Account Value (assumed) $130,000 $125,000 Remaining Gross Premium $100,000 $100,000 Return of Premium II Withdrawal Limit $0 $0 Maximum Anniversary Value Withdrawal Limit n/a n/a Return of Premium II Death Benefit $100,000 $96,153.85 Maximum Anniversary Value Death Benefit - $107,000 $102,884.62 Anniversary Value (Before Value is assumed) Maximum Anniversary Value Death Benefit - Premium $100,000 $96,153.85 Payments Benefit Balance $0 $5,000
- The Sub-Account Value is reduced by the amount of the transfer ($5,000). - The Remaining Gross Premium associated to the Sub-Accounts is not reduced by the amount of the transfer as Remaining Gross Premium is only reduced for Surrenders or transfers in excess of the Annual Withdrawal Amount. APP A-4 ------------------------------------------------------------------------------- - As a result of the transfer, the Return of Premium II Death Benefit is reduced by a factor. The $5,000 transfer results in a factor of 0.961538462 being applied to Premium Payments. The factor of 0.961538462 is derived by 1-($5,000 Transfer / Contract Value Prior to the Transfer $130,000). - As a result of the transfer, the Maximum Anniversary Value Death Benefit Anniversary Value and Premium Payments are both reduced by a factor. The $5,000 transfer results in a factor of 0.961538462 being applied to Premium Payments. The factor of 0.961538462 is derived by 1-($5,000 Transfer / Contract Value Prior to the Transfer $130,000). - Assume there were no sums previously invested in the Personal Pension Account. The Benefit Balance is increased by the amount of the transfer ($5,000). EXAMPLE 3B: BENEFIT BALANCE TRANSFER (OUT-BOUND) The following example illustrates the impact on various values associated to the Contract when a transfer from the Personal Pension Account to the Sub-Accounts occurs. Assume that the Owner makes a Personal Pension Account Contribution of $100,000 into the Personal Pension Account and then elects to transfer the maximum available transfer from the Personal Pension Account to the Sub-Accounts. The out-bound transfer restriction considers the following factors:
END OF YEAR MAXIMUM OF A, B, C A B C ------------------------------------------------------------------- 1 $4,120 $4,120 $3,000 $0 2 $4,120 $4,073 $2,966 $4,120
Where, - Column A equals 4% of the Accumulation Balance as of the prior Contract Anniversary. Assume that the $100,000 Personal Pension Account Contribution earns a credited interest rate of 3%. - Column B equals the amount of interest credited to the Accumulation Balance over the most recent full Contract Year. - Column C equals the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year.
TRANSFER FROM PERSONAL PENSION ACCOUNT TO THE SUB-ACCOUNTS END OF YEAR 1 BEFORE VALUE AFTER VALUE --------------------------------------------------------------------------------------------------- Sub-Account Value (assumed) $130,000 $134,120 Remaining Gross Premium $100,000 $100,000 Annual Withdrawal Amount $5,000 $5,206 Return of Premium II Death Benefit $100,000 $104,120 Maximum Anniversary Value Death Benefit - $107,000 $111,120 Anniversary Value (Before Value is assumed) Maximum Anniversary Value Death Benefit - Premium $100,000 $104,120 Payments Benefit Balance $103,000 $98,880
- The Benefit Balance is reduced by the amount of the transfer ($4,120). - The Remaining Gross Premium associated to the Sub-Accounts is not increased by the amount of the transfer as Personal Pension Account Remaining Gross Premium is only reduced, and the Remaining Gross Premium associated to the Sub-Accounts increased, for transfers in excess of the Annual Withdrawal Amount. - The Return of Premium II Death Benefit is increased dollar for dollar for the amount of the transfer ($4,120). - The Maximum Anniversary Value Death Benefit Anniversary Value and Premium Payments are both increased dollar for dollar for the amount of the transfer ($4,120). - The Sub-Account Value is increased by the amount of the transfer ($4,120). APP A-5 ------------------------------------------------------------------------------- EXAMPLE 4A: FULL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking all Personal Pension Account Payouts and then fully commute the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). Also, assume that the initial Personal Pension Account Contribution is equal to $100,000 and no Premium Payments have been invested in the Fixed Accumulation Feature or Sub-Accounts.
CONTRACT BENEFIT ACCUMULATION CREDITED YEAR AGE BALANCE BALANCE RATE ------------------------------------------------------------------------------------------------- 0 60 $100,000 $ 100,000 5.00% 1 61 105,000 105,000 5.00% 2 62 110,250 110,250 5.00% 3 63 115,763 115,763 5.00% GUARANTEE 4 64 121,551 121,551 5.00% WINDOW 5 65 127,628 127,628 5.00% 6 66 134,010 134,010 5.00% 7 67 140,710 140,710 5.00% 8 68 147,746 147,746 5.00% 9 69 155,133 155,133 5.00% 10 70 162,889 162,889 3.00% 11 71 167,776 167,776 3.00% 12 72 172,809 172,809 3.00% 13 73 177,994 177,994 3.00% 14 74 183,334 183,334 3.00% 15 75 188,834 188,834 3.00% 16 76 194,499 194,499 3.00% 17 77 200,333 200,333 3.00% 18 78 206,343 206,343 3.00% 19 79 212,534 212,534 3.00% 20 80 218,910 0 (2) 1.50% 21 81 n/a N/A n/a (3) 22 82 n/a N/A n/a 23 83 n/a N/A n/a 24 84 n/a N/A n/a 25 85 n/a N/A n/a 26 86 n/a N/A n/a 27 87 n/a N/A n/a 28 88 n/a N/A n/a 29 89 n/a N/A n/a 30 90 n/a N/A n/a ANNUITY PAYOUT PAYOUT RATES COMMUTED VALUE (PER 1000)(1) VALUE PAYOUTS ------------ ------------------------------------------------------------- $ 0 61.68 0 61.99 $ 0 0 62.33 0 0 62.72 0 GUARANTEE 0 63.16 0 WINDOW 0 63.65 0 0 64.17 0 0 64.73 0 0 65.31 0 0 65.91 0 0 66.56 0 0 69.14 0 0 71.94 0 0 74.99 0 0 78.32 0 0 81.96 0 0 85.92 0 0 90.11 0 0 94.63 0 0 99.55 0 218,910 105.02 (6) $156,367 (5) 0 (4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 22,989 (7) N/A N/A N/A 22,989 (7)
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. Guaranteed Payout Rates are based on a hypothetical investment in B shares. (2) The Accumulation Balance is depleted to $0 based on being converted to Annuity Payout Value. CDSCs and Premium tax are not shown in this Example. APP A-6 ------------------------------------------------------------------------------- (3) Interest is no longer credited under the Personal Pension Account. (4) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the payout rate applicable to the year in which commutation is requested and dividing by 1,000. In this case, $218,910*$105.02/1,000 = $22,989. However, in this example, Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living and have not terminated the Contract as illustrated in years 29 and 30. (5) The Commuted Value depicted is based on commutation of the Annuity Payout Value (in this Example, is the same as the Benefit Balance because this is a full commutation) of $218,910 using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the Guaranteed Payout Duration (i.e., $218,910/$22,989, rounded down = 9 years) calculated using this discount rate. (6) Hypothetical Payout Rate used because Personal Pension Accounts and subsequent commutation occur outside of the guarantee window. (7) Lifetime Personal Pension Account Payouts resume because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. APP A-7 ------------------------------------------------------------------------------- EXAMPLE 4B: PARTIAL COMMUTATION WITH COMMUTED VALUE Assume that the Owner desires to start taking Personal Pension Account Payouts and commute half of the Personal Pension Account Payouts in year 20, which is outside of their guarantee window. In this Example, the guarantee window is represented by the shaded area in years 1 though 7. Year 20 "Before" illustrates how the Annuity Payout Value is split in half to serve as the basis for Personal Pension Account Payouts and the Commuted Value. Year 20 "After" illustrates the amounts paid to the Owner in the form of Personal Pension Account Payouts and Commuted Value. The Owner does not terminate their Contract and therefore Personal Pension Account Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). The Guaranteed Payout Duration in this Example is illustrated as the shaded rows corresponding to Contract Years 20 through 28. Assume the initial Deposit is equal to $100,000 and no sums are invested in the Fixed Accumulation Feature or Sub-Accounts.
ANNUITY CONTRACT BENEFIT ACCUMULATION CREDITED PAYOUT YEAR AGE BALANCE BALANCE RATE VALUE 1 ------------------------------------------------------------------------------------------ 0 60 $100,000 $ 100,000 5.00% $ 0 1 61 105,000 105,000 5.00% 0 2 62 110,250 110,250 5.00% 0 3 63 115,763 115,763 5.00% 0 4 64 121,551 121,551 5.00% 0 5 65 127,628 127,628 5.00% 0 6 66 134,010 134,010 5.00% 0 7 67 140,710 140,710 5.00% 0 8 68 147,746 147,746 5.00% 0 9 69 155,133 155,133 5.00% 0 10 70 162,889 162,889 3.00% 0 11 71 167,776 167,776 3.00% 0 12 72 172,809 172,809 3.00% 0 13 73 177,994 177,994 3.00% 0 14 74 183,334 183,334 3.00% 0 15 75 188,834 188,834 3.00% 0 16 76 194,499 194,499 3.00% 0 17 77 200,333 200,333 3.00% 0 18 78 206,343 206,343 3.00% 0 19 79 212,534 212,534 3.00% 0 20 BEFORE 80 218,910 0 (2) 1.50% 109,455 20 AFTER 80 97,960 0 (2) n/a 97,960 21 81 86,465 N/A n/a (3) 86,465 22 82 74,970 N/A n/a 74,970 23 83 63,475 N/A n/a 63,475 24 84 51,980 N/A n/a 51,980 25 85 40,485 N/A n/a 40,485 26 86 28,990 N/A n/a 28,990 27 87 17,495 N/A n/a 17,495 28 88 6,000 N/A n/a 6,000 29 89 0 N/A n/a 0 30 90 0 N/A n/a 0 31 91 0 N/A n/a 0 ANNUITY CONTRACT PAYOUT COMMUTED PAYOUT RATES YEAR VALUE 2 VALUE (PER 1000)(1) PAYOUTS ------------ --------------------------------------------------------------------------- 0 $ 0 61.68 1 0 61.99 $ 0 2 0 62.33 0 3 0 62.72 0 4 0 63.16 0 5 0 63.65 0 6 0 64.17 0 7 0 64.73 0 8 0 65.31 0 9 0 65.91 0 10 0 66.56 0 11 0 69.14 0 12 0 71.94 0 13 0 74.99 0 14 0 78.32 0 15 0 81.96 0 16 0 85.92 0 17 0 90.11 0 18 0 94.63 0 19 0 99.55 0 20 BEFORE (4) 109,455 (4) 20 AFTER (5) 0 $ 78,185 (7) 105.02 (8) 11,495 (6) 21 0 N/A N/A 11,495 22 0 N/A N/A 11,495 23 0 N/A N/A 11,495 24 0 N/A N/A 11,495 25 0 N/A N/A 11,495 26 0 N/A N/A 11,495 27 0 N/A N/A 11,495 28 0 N/A N/A 11,495 29 0 N/A N/A 22,989 (9) 30 0 N/A N/A 22,989 31 0 N/A N/A 22,989
(1) Payout Rates are only guaranteed if Personal Pension Account Payouts begin within the guarantee window. Personal Pension Account Payouts that begin outside the guarantee window are generally established using rates set at our discretion, subject to the terms of your Contract. We cannot speculate what payout rates could be when commencing Personal Pension Account Payouts outside of the guarantee window. These rates may be as high as, but will never be greater than, the payout rates guaranteed for Personal Pension Account Payouts we set at the time of your Personal Pension Account Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner's contract. (2) The Accumulation Balance is depleted to $0 based on all amounts being converted to Annuity Payout Value. CDSCs and Premium tax not shown in the Example. (3) Interest is no longer credited under the Personal Pension Account. APP A-8 ------------------------------------------------------------------------------- (4) In year 20, the Owner elected to commute half of their Annuity Payout Value and receive the remaining half in the form of Personal Pension Account Payouts. Thus, the Accumulation Balance of $210,910 is split in half. $109,455 is converted into Annuity Payout Value and will serve as the basis for Personal Pension Account Payouts. The remaining $109,455 will serve as the basis for the Commuted Value calculation. (5) The Annuity Payout Value of $109,455 is reduced by the Personal Pension Account Payout of $11,495, leaving an Annuity Payout Value of $97,960 remaining. (6) The Personal Pension Account Payout is derived by multiplying the Annuity Payout Value by the appropriate payout rate and dividing by 1,000. In this case, $109,455*105.02/1,000 = $11,495. However, in this example, half of the Personal Pension Account Payouts are commuted and paid to the Owner in one lump sum. Life contingent Personal Pension Account Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living as illustrated in years 29, 30, and 31. (7) The Commuted Value depicted is based on commutation of half of the Annuity Payout Value, or $109,455, using a hypothetical discount rate of 6%. The Commuted Value is equal to the present value of the Personal Pension Account Payout(s) associated with the Annuity Payout Value over the remaining Guaranteed Payout Duration (i.e., $109,455/$11,495, rounded down = 9) calculated using the discount rate. (8) A hypothetical Payout Rate is used because Personal Pension Account Payouts and commutation occur outside of the guarantee window. (9) In this case, the lifetime Personal Pension Account Payouts for each Annuity Payout Value is $11,495 ($109,455*105.02/1000 = $11,495). When combined, these lifetime Personal Pension Account Payouts equal $22,989. Lifetime Personal Pension Account Payouts begin because in this Example the Annuitant is still living. The Owner would give up these lifetime Personal Pension Account Payouts if he or she terminated the Contract. APP A-9 -------------------------------------------------------------------------------- EXAMPLE 5: DEATH BENEFIT EXAMPLES (a) MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT EXAMPLES MAXIMUM ANNIVERSARY VALUE (MAV): This Death Benefit is equal to the greatest of A, B or C, where: A = Contract Value (minus Distribution Charges); B = Premium Payments adjusted for partial Surrenders; and C = Maximum Anniversary Value. Assume your initial Premium Payment is $100,000.
TOTAL PREMIUM PAYMENTS CONTRACT (ADJUSTED BY CONTRACT CONTRACT VALUE(3)(4) SURRENDERS) VALUE YEAR "A" "B" PERFORMANCE(4) -------------------------------------------------------------------------- 0 $100,000.00 $100,000.00 0.00% 1 102,120.00 100,000.00 2.12% 2 107,001.34 100,000.00 4.78% 3 105,663.82 100,000.00 -1.25% 4 96,259.74 100,000.00 -8.90% 5 106,424.77 100,000.00 10.56% GUARANTEED MINIMUM DEATH BENEFIT MAXIMUM AT END OF ANNIVERSARY EACH CONTRACT YEAR CONTRACT ANNIVERSARY VALUE(5) GREATEST OF "A", "B", YEAR VALUE(2) "C" AND "C" ----------------------- ------------------------------------------------------------ 0 - - $100,000.00 1 $102,120.00 $102,120.00 102,120.00 2 107,001.34 (1) 107,001.34 107,001.34 3 105,663.82 107,001.34 107,001.34 4 96,259.74 107,001.34 107,001.34 5 106,424.77 107,001.34 107,001.34
(1) Is the highest Anniversary Value and therefore is the Maximum Anniversary Value (MAV). (2) Anniversary Value each year is first established as the Contract Value on that Anniversary and may later be adjusted by subsequent Premium Payments and Partial Surrenders, if applicable. (3) Does not reflect a Distribution Charge, if applicable. (4) Assumes annual performance on the Contract Value. Annual Performance is only shown for illustration purposes, and is not indicative of the performance you have achieved or will achieve under the rider. (5) Is the Maximum Anniversary Value as of the end of each Contract Year. APP A-10 -------------------------------------------------------------------------------- Assume your initial Premium Payment is $100,000. At the end of Contract Year 2 you apply a subsequent Premium Payment of $50,000. In Contract Year 5 you take a partial Surrender for $10,000.
TOTAL PREMIUM DEATH BENEFIT PAYMENTS MAXIMUM AT END OF CONTRACT (ADJUSTED BY CONTRACT ANNIVERSARY EACH CONTRACT YEAR CONTRACT VALUE(5)(7) SURRENDERS) VALUE ANNIVERSARY VALUE(8) GREATEST OF "A", "B", YEAR "A" "B" PERFORMANCE(4) VALUE(4) "C" AND "C" -------------------------------------------------------------------------------------------------------------------------------- 0 $100,000.00 $100,000.00 0.00 % - - $100,000.00 1 102,120.00 100,000.00 2.12 % $141,828.27 (1)(3) $102,120.00 102,120.00 2 157,001.34 150,000.00 (2) 4.78 % 146,379.36 (1)(3)(6) 157,001.34 157,001.34 3 155,038.82 150,000.00 -1.25 % 144,549.62 (3) 157,001.34 157,001.34 4 141,240.36 150,000.00 -8.90 % 131,684.70 (3) 157,001.34 157,001.34 5 137,808.04 139,851.70 (3) 4.65 % 137,808.04 146,379.36 146,379.36
(1) The Year 1 & 2 Anniversary Values are adjusted by the subsequent Premium Payment of $50,000. (2) Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000. (3) The $10,000 Partial Surrender results in a factor of 0.932344682 being applied to Premium Payments as well as previous Anniversary Values. The factor of 0.932344682 is derived by 1-(Partial Surrender $10,000 / Contract Value Prior to Surrender $147,808.04). We will reduce the assigned value of Premium Payments and Maximum Anniversary Value as used in this formula based on a factor whenever partial Surrenders occur. The factor is equal to 1 - (a/b) where "a" is the amount of the partial Surrender and "b" is the Contract Value immediately prior to the partial Surrender. The impact of the $10,000 Partial Surrender on the Death Benefit would be the same if a $10,000 transfer to the Personal Pension Account was made. (4) Anniversary Value each year is first established as the Contract Value on that Anniversary and later may be adjusted by subsequent Premium Payments and Partial Surrenders, if applicable. (5) Does not reflect a Distribution Charge, if applicable. (6) Is the Maximum Anniversary Value (MAV) as adjusted by subsequent Premium Payments and Partial Surrenders. (7) Assumes annual performance on the Contract Value, as well as subsequent Premium Payment and Partial Surrender activity. Annual Performance is only shown for illustration purposes, and is not indicative of the performance you have achieved or will achieve under the rider. APP A-11 -------------------------------------------------------------------------------- MAXIMUM ANNIVERSARY VALUE RIDER CHARGE Assume the Maximum Anniversary Value is $102,120.00 and Premium Payments is $100,000. The current rider charge is 0.75%. The current rider charge is assessed on the greater of the Maximum Anniversary Value or Premium Payments; therefore, the rider charge is $765.90, or $102,120 x 0.75%. APP A-12 ------------------------------------------------------------------------------- RETURN OF PREMIUM I DEATH BENEFIT EXAMPLES EXAMPLE 1: ASSUME YOUR INITIAL PREMIUM PAYMENT IS $100,000. IN CONTRACT YEAR 1 YOU APPLY A SUBSEQUENT PREMIUM PAYMENT OF $50,000. IN CONTRACT YEAR 3 YOU TAKE A PARTIAL SURRENDER FOR $1,000 AND IN THE SAME CONTRACT YEAR YOU TAKE ANOTHER PARTIAL SURRENDER FOR $10,000, YOUR CONTRACT VALUE IMMEDIATELY FOLLOWING IS $173,000. YOUR INITIAL VALUE: $100,000 VALUE AFTER THE SUBSEQUENT PREMIUM PAYMENT OF $50,000: $150,000, which is the prior value increased by the amount of the subsequent Premium Payments VALUE AFTER THE PARTIAL SURRENDER ($1,000): $149,000, which is the prior value reduced dollar-for-dollar by the amount of the Surrender because it is within the withdrawal limit VALUE AFTER THE ADDITIONAL PARTIAL SURRENDER ($10,000): $139,674.22, which is the prior value reduced first dollar-for-dollar by the amount of the Surrender not in excess of 5% of Premium Payments ($6,500) and then proportional for the amount in excess of 5% of Premium Payments ($3,500). The proportionate reduction is determined by first determining the factor: 1 - (excess Surrender/(Contract Value prior to the Surrender - Death Benefit withdrawal limit remaining) 1- ($3,500/($173,000 + $10,000 - $6,500) = .980169971 Once the factor is determined the value prior to the Surrender is first reduced dollar-for-dollar by the amount of the Surrender not in excess of the Death Benefit withdrawal limit: $149,000 - $6,500 =$142,500 This value is then multiplied by the factor: $142,500 * .980169971 = $139,674.22 The death benefit would be the Contract Value or $173,000. You will also receive the Personal Pension Account death benefit equal to any remaining Benefit Balance. EXAMPLE 2: SAME FACTS AS ABOVE EXCEPT THE BENEFIT BALANCE AT THE TIME OF DEATH WAS EQUAL TO $100,000. The Death Benefit would be $273,000 (Return of Premium Death Benefit = $173,000 + Personal Pension Account Death Benefit = $100,000). RETURN OF PREMIUM DEATH BENEFIT II EXAMPLE: Assume your initial Premium Payment is $100,000. In Contract Year 2 you apply a subsequent Premium Payment of $50,000. In Contract Year 5 you take a partial Surrender for $10,000.
GUARANTEED MINIMUM DEATH BENEFIT CONTRACT CONTRACT PREMIUM AT END OF YEAR VALUE(3)(4) PAYMENTS EACH CONTRACT YEAR --------------------------------------------------------------------- 0 $100,000.00 $100,000.00 $100,000.00 1 102,120.00 100,000.00 102,120.00 2 157,001.34 150,000.00 (1) 157,001.34 3 155,038.82 150,000.00 155,038.82 4 141,240.36 150,000.00 150,000.00 5 137,808.04 139,851.70 (2) 139,851.70
(1) Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000. (2) The $10,000 Partial Surrender results in a factor of 0.932344682 being applied to Premium Payments. After multiplying the factor of 0.932344682 to $150,000, the adjusted Premium Payments equal $139,851.70. The factor of 0.932344682 is derived by 1-(Partial Surrender $10,000 / Contract Value Prior to Surrender $147,808.04). The impact of the $10,000 Partial Surrender on the Minimum Guaranteed Death Benefit would be the same if a $10,000 transfer to the Personal Pension Account was made. (3) Does not reflect a Distribution Charge, if applicable. (4) Assumes annual performance on the Contract Value, as well as subsequent Premium Payment and Partial Surrender activity. APP A-13 ------------------------------------------------------------------------------- REMAINING GROSS PREMIUM EXAMPLES EXAMPLE 1: ILLUSTRATES A PARTIAL SURRENDER THAT IS LESS THAN THE AWA IN A DOWN MARKET. ASSUME A PARTIAL SURRENDER TAKEN IN CONTRACT YEAR 2 EQUALS $5,000. VALUES PRIOR TO THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0, as the AWA was not exceeded EXAMPLE 2: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN A DOWN MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME TWO PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 2, FOR $5,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000. VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $90,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $85,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender was equal to the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the second partial Surrender is $75,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 APP A-14 ------------------------------------------------------------------------------- VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $70,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $95,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($5,000) of the AWA - The CDSC applied to this $5,000 partial Surrender is $350, which is the amount of the partial Surrender in excess of the AWA ($5,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $78,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premium is $95,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $68,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA has been taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $85,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% EXAMPLE 3: ILLUSTRATES A PARTIAL SURRENDER IN EXCESS OF THE AWA IN AN UP MARKET, THE NON-CUMULATIVE FEATURE OF THE AWA AND IMPACTS TO FUTURE AWA CALCULATIONS. ASSUME BOTH PARTIAL SURRENDERS ARE TAKEN IN CONTRACT YEAR 1 FOR $10,000 EACH. ANOTHER PARTIAL SURRENDER IS TAKEN IN CONTRACT YEAR 3 FOR $15,000 VALUES PRIOR TO THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the partial Surrender is $110,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $10,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $10,000, which are your earnings - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FIRST PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the first partial Surrender is $100,000 - Your AWA is $0 for the remainder of the Contract Year because the full AWA was taken (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $100,000. The partial Surrender did not exceed the AWA so the Remaining Gross Premium is not reduced - Your CDSC is $0 because the AWA was not exceeded APP A-15 ------------------------------------------------------------------------------- VALUES PRIOR TO THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the second partial Surrender is $100,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $0 - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE SECOND PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the second partial Surrender is $90,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $90,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($10,000) of the AWA - The CDSC applied to this $10,000 partial Surrender is $700, which is the amount of the partial Surrender in excess of the AWA ($10,000) multiplied by 7% VALUES PRIOR TO THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value prior to the third partial Surrender is $99,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $9,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $9,000, which are your earnings - Your Remaining Gross Premiums are $90,000 VALUES AFTER THE THIRD PARTIAL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value after the third partial surrender is $84,000 - Your AWA is $0 for the remainder of the Contract Year because the AWA has been exceeded (unless future earnings within the same Contract Year exceed 5% of the total Premium Payments subject to CDSC) - Your Remaining Gross Premium is $84,000, which is your prior Remaining Gross Premium reduced by the amount of the partial Surrender in excess ($6,000) of the AWA - The CDSC applied to this $15,000 partial Surrender is $420, which is the amount of the partial Surrender in excess of the AWA ($6,000) multiplied by 7% EXAMPLE 4: ILLUSTRATES A FULL SURRENDER CALCULATION WITH ONE OF TWO PREMIUM PAYMENTS OUT OF THE APPLICABLE CDSC SCHEDULE. ASSUME TWO PREMIUM PAYMENTS WERE MADE FOR $100,000 EACH. ONE PAYMENT WAS APPLIED IN THE BEGINNING OF CONTRACT YEAR 1, THE SECOND IN THE BEGINNING OF CONTRACT YEAR 3. A FULL SURRENDER IS TAKEN IN CONTRACT YEAR 8. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $200,000 - Your Contract Value just prior to the full Surrender is $300,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $100,000 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $200,000, which is the premium out of CDSC schedule ($100,000) plus your earnings - Your Remaining Gross Premium for the second Premium Payment (still in CDSC) is $100,000 APP A-16 ------------------------------------------------------------------------------- VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $300,000 full Surrender is $4,000, which is the maximum of the full Surrender or Remaining Gross Premium, reduced by the AWA ($100,000) multiplied by 4% EXAMPLE 5: ILLUSTRATES A FULL SURRENDER CALCULATION IN A DOWN MARKET. VALUES PRIOR TO THE FULL SURRENDER: - Your total Premium Payments are $100,000 - Your Contract Value just prior to the full Surrender is $50,000 - Your earnings (maximum of Contract Value - Remaining Gross Premiums, or 0) are $0 - Your AWA (maximum of earnings, or 5% of total Premium Payments subject to CDSC) is $5,000, which is 5% of total Premium Payments subject to CDSC - Your Remaining Gross Premiums are $100,000 VALUES AFTER THE FULL SURRENDER: - Your Contract Value after the full Surrender is $0 - The CDSC applied to this $50,000 full Surrender is $6,650, which is the maximum of the full Surrender or Remaining Gross Premium reduced by the AWA ($95,000) multiplied by 7% (using the 7-year CDSC schedule applicable to the B-Share Hartford's Personal Retirement Manager variable annuity Contract) APP B-1 ------------------------------------------------------------------------------- APPENDIX B - ACCUMULATION UNIT VALUES The following information should be read in conjunction with the financial statements for the Separate Account included in the Statement of Additional Information. There are several classes of Accumulation Unit Values under the Contract depending on the number of optional benefits you select. The table below shows only the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits. A table showing all classes of Accumulation Unit Values corresponding to all combinations of optional benefits is shown in the Statement of Additional Information, which you may obtain free of charge by contacting us. There is no information available because as of December 31, 2009 the Sub-Accounts had not commenced operations. APP C-1 ------------------------------------------------------------------------------- APPENDIX C - FUND DATA I. INVESTMENT OPTIONS (STANDARD)
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS INVESCO V.I. BALANCED RISK Long-term capital growth Invesco Advisers, Inc. Multi-Asset ALLOCATION FUND - SERIES II (1) INVESCO V.I. CORE EQUITY FUND - Seeks long-term growth of capital Invesco Advisers, Inc. Equity SERIES II INVESCO V.I. INTERNATIONAL Seeks long-term growth of capital Invesco Advisers, Inc. Equity GROWTH FUND - SERIES II INVESCO V.I. MID CAP CORE EQUITY Seeks long-term growth of capital Invesco Advisers, Inc. Limited FUND - SERIES II INVESCO V.I. SMALL CAP EQUITY Seeks long-term growth of capital Invesco Advisers, Inc. Limited FUND - SERIES II ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS BALANCED Maximize total return consistent with ABIS - AllianceBernstein Investor Multi-Asset WEALTH STRATEGY PORTFOLIO - Advisor's determination of reasonable Services, Inc. CLASS B risk ALLIANCEBERNSTEIN VPS Seeks long-term growth of capital ABIS - AllianceBernstein Investor Equity INTERNATIONAL VALUE PORTFOLIO - Services, Inc. CLASS B ALLIANCEBERNSTEIN VPS SMALL/MID Seeks long-term growth of capital ABIS - AllianceBernstein Investor Equity CAP VALUE PORTFOLIO - CLASS B Services, Inc. AMERICAN FUNDS INSURANCE SERIES AMERICAN FUNDS ASSET ALLOCATION Seeks high total return, including Capital Research and Management Equity FUND - CLASS 2 income and capital gains, consistent Company with the preservation of capital over the long term by investing in a diversified portfolio of common stocks and fixed-income securities. AMERICAN FUNDS BLUE CHIP INCOME Seeks to produce income exceeding the Capital Research and Management Equity AND GROWTH FUND - CLASS 2 average yield on U.S. stocks generally Company and to provide an opportunity for growth of principal consistent with sound common stock investing through investments in quality common stocks. AMERICAN FUNDS BOND FUND - CLASS Seeks a high level of current income Capital Research and Management Fixed 2 as is consistent with preservation of Company capital by investing primarily in bonds. AMERICAN FUNDS GLOBAL BOND FUND Seeks a high level of total return Capital Research and Management Limited - CLASS 2 consistent with prudent investment Company management by investing primarily in a global portfolio of investment-grade bonds.
APP C-2 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL GROWTH AND Seeks to provide long-term growth of Capital Research and Management Equity INCOME FUND - CLASS 2 capital with current income by Company investing in well-established, companies located around the world. AMERICAN FUNDS GLOBAL GROWTH Seeks growth of capital over time by Capital Research and Management Equity FUND - CLASS 2 investing primarily in common stocks Company of companies located around the world. AMERICAN FUNDS GLOBAL SMALL Seeks growth of capital over time by Capital Research and Management Limited CAPITALIZATION FUND - CLASS 2 investing primarily in stocks of Company smaller companies located around the world. AMERICAN FUNDS GROWTH FUND - Seeks to invest in a wide range of Capital Research and Management Equity CLASS 2 companies that appear to offer Company superior opportunities for growth of capital. AMERICAN FUNDS GROWTH-INCOME Seeks capital growth and income over Capital Research and Management Equity FUND - CLASS 2 time by investing primarily in U.S. Company common stocks or other securities that demonstrate the potential for capital appreciation and/or dividends. AMERICAN FUNDS INTERNATIONAL Seeks growth of capital over time by Capital Research and Management Equity FUND - CLASS 2 investing primarily in common stocks Company of companies located outside the United States. AMERICAN FUNDS NEW WORLD FUND - Seeks long-term growth of capital by Capital Research and Management Limited CLASS 2 investing primarily in stocks and Company bonds of companies with significant exposure to countries with developing economies and/or markets. FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS FIDELITY(R) VIP CONTRAFUND(R) Seeks long-term capital appreciation Fidelity Management & Research Company Equity PORTFOLIO - SERVICE CLASS 2 Sub-advised by FMR Co., Inc. and other Fidelity affiliates FIDELITY(R) VIP MID CAP Long-term growth of capital with Fidelity Management & Research Company Equity PORTFOLIO - SERVICE CLASS 2 current income as a secondary Sub-advised by FMR Co., Inc. and other consideration Fidelity affiliates FIDELITY(R) VIP STRATEGIC INCOME Seeks a high level of current income. Fidelity Investments Money Management Limited PORTFOLIO - SERVICE CLASS 2 The fund may also seek capital appreciation FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN FLEX CAP GROWTH Seeks capital appreciation Franklin Advisers, Inc. Equity SECURITIES FUND - CLASS 2
APP C-3 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- FRANKLIN INCOME SECURITIES FUND Seeks to maximize income while Franklin Advisers, Inc. Limited - CLASS 2 maintaining prospects for capital appreciation. The fund normally invests in both equity and debt securities FRANKLIN RISING DIVIDENDS Seeks long-term capital appreciation Franklin Advisory Services, LLC Equity SECURITIES FUND - CLASS 2 with preservation of capital as an important consideration FRANKLIN SMALL CAP VALUE Seeks long-term total return Franklin Advisory Services, LLC Limited SECURITIES FUND - CLASS 2 FRANKLIN SMALL-MID CAP GROWTH Seeks long-term capital growth Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 2 FRANKLIN STRATEGIC INCOME Seeks a high level of current income, Franklin Advisers, Inc. Limited SECURITIES FUND - CLASS 2 with capital appreciation over the long term as a secondary goal MUTUAL GLOBAL DISCOVERY Seeks capital appreciation Franklin Mutual Advisers, LLC Equity SECURITIES FUND - CLASS 2 Sub-advised by Franklin Templeton Investment Management Limited MUTUAL SHARES SECURITIES FUND - Capital appreciation, with income as a Franklin Mutual Advisers, LLC Equity CLASS 2 secondary goal TEMPLETON FOREIGN SECURITIES Seeks long-term capital growth Templeton Investment Counsel, LLC Equity FUND - CLASS 2 TEMPLETON GLOBAL BOND SECURITIES Seeks high current income, consistent Franklin Advisers, Inc. Limited FUND - CLASS 2 with preservation of capital, with capital appreciation as a secondary consideration TEMPLETON GROWTH SECURITIES FUND Seeks long-term capital growth Templeton Global Advisors Limited Equity - CLASS 2 Sub-advised by Templeton Asset Management Ltd. and Franklin Templeton Investments (Asia) Limited HARTFORD HLS SERIES FUND II, INC. HARTFORD GROWTH OPPORTUNITIES Seeks capital appreciation HL Investment Advisors, LLC Equity HLS FUND - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD U.S. GOVERNMENT Seeks to maximize total return while HL Investment Advisors, LLC SECURITIES HLS FUND - CLASS IA providing shareholders with a high Sub-advised by Hartford Investment level of current income consistent Management Company with prudent investment risk HARTFORD SERIES FUND, INC. HARTFORD CAPITAL APPRECIATION Seeks growth of capital HL Investment Advisors, LLC Equity HLS FUND - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD DISCIPLINED EQUITY HLS Seeks growth of capital HL Investment Advisors, LLC Equity FUND - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD DIVIDEND AND GROWTH HLS Seeks a high level of current income HL Investment Advisors, LLC Equity FUND - CLASS IA consistent with growth of capital Sub-advised by Wellington Management Company, LLP
APP C-4 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- HARTFORD GLOBAL GROWTH HLS FUND Seeks growth of capital HL Investment Advisors, LLC Equity - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD GLOBAL RESEARCH HLS Seeks long-term capital appreciation HL Investment Advisors, LLC Equity FUND - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD GROWTH HLS FUND - CLASS Seeks long-term capital appreciation HL Investment Advisors, LLC Equity IA Sub-advised by Wellington Management Company, LLP HARTFORD HIGH YIELD HLS FUND - Seeks high current income with growth HL Investment Advisors, LLC Limited CLASS IA of capital as a secondary objective Sub-advised by Hartford Investment Management Company HARTFORD INDEX HLS FUND - CLASS Seeks to provide high current income, HL Investment Advisors, LLC Equity IB and long-term total return Sub-advised by Hartford Investment Management Company HARTFORD INTERNATIONAL Seeks long-term growth of capital HL Investment Advisors, LLC Equity OPPORTUNITIES HLS FUND - CLASS Sub-advised by Wellington Management IA Company, LLP HARTFORD MONEY MARKET HLS FUND - Maximum current income consistent with HL Investment Advisors, LLC Fixed CLASS IA* liquidity and preservation of capital Sub-advised by Hartford Investment Management Company HARTFORD SMALL COMPANY HLS FUND Seeks growth of capital HL Investment Advisors, LLC Limited - CLASS IA Sub-advised by Wellington Management Company, LLP HARTFORD TOTAL RETURN BOND HLS Seeks a competitive total return, with HL Investment Advisors, LLC Fixed FUND - CLASS IA income as a secondary objective Sub-advised by Hartford Investment Management Company HARTFORD VALUE HLS FUND - CLASS Seeks long-term total return HL Investment Advisors, LLC Equity IA Sub-advised by Wellington Management Company, LLP LORD ABBETT SERIES FUND, INC. LORD ABBETT BOND-DEBENTURE High current income and the Lord, Abbett & Co. LLC Limited PORTFOLIO - CLASS VC opportunity for capital appreciation to produce a high total return LORD ABBETT FUNDAMENTAL EQUITY Long-term growth of capital and income Lord, Abbett & Co. LLC Equity PORTFOLIO - CLASS VC without excessive fluctuations in market value LORD ABBETT GROWTH AND INCOME Long-term growth of capital and income Lord, Abbett & Co. LLC Equity PORTFOLIO - CLASS VC without excessive fluctuations in market value MFS(R) VARIABLE INSURANCE TRUST MFS(R) GROWTH SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS MFS(R) INVESTORS TRUST SERIES - Seeks capital appreciation MFS Investment Management Equity SERVICE CLASS MFS(R) RESEARCH BOND SERIES - Total return with an emphasis on high MFS Investment Management Fixed SERVICE CLASS current income, but also considering capital appreciation MFS(R) TOTAL RETURN SERIES - Seeks total return MFS Investment Management Multi-Asset SERVICE CLASS
APP C-5 -------------------------------------------------------------------------------
INVESTMENT INVESTMENT FUNDING OPTION OBJECTIVE SUMMARY ADVISER/SUB-ADVISER CLASSIFICATION --------------------------------------------------------------------------------------------------------------------------------- MFS(R) VALUE SERIES - SERVICE Seeks capital appreciation MFS Investment Management Equity CLASS PUTNAM VARIABLE TRUST PUTNAM VT EQUITY INCOME FUND - Capital growth and current income Putnam Investment Management, LLC Equity CLASS IB PUTNAM VT INVESTORS FUND - CLASS Long-term growth of capital and any Putnam Investment Management, LLC Equity IB increased income that results from this growth PUTNAM VT VOYAGER FUND - CLASS Capital appreciation Putnam Investment Management, LLC Equity IB FIXED ACCUMULATION FEATURE** Preservation of Capital General Account N/A
(1) formerly Invesco V.I. Global Multi-Asset Fund * In a low interest rate environment, yields for money market funds, after deduction of Contract charges may be negative even though the fund's yield, before deducting for such charges, is positive. If you allocate a portion of your Contract Value to a money market Sub-Account or participate in an Asset Allocation Program where Contract Value is allocated to a money market Sub-Account, that portion of your Contract Value may decrease in value. ** The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this product. APP D-1 ------------------------------------------------------------------------------- APPENDIX D - RESERVED APP E-1 ------------------------------------------------------------------------------- APPENDIX E RETURN OF PREMIUM DEATH BENEFIT I OBJECTIVE To provide a Death Benefit equal to at least Premium Payments adjusted for Surrenders that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts. WHEN CAN YOU BUY THE RIDER? This benefit (called a "rider") is no longer offered for election provided that Return of Premium II Death Benefit has been approved for sale in your state. Subject to the foregoing, if you bought the Return of Premium Death Benefit prior to August 16, 2010, you now own Return of Premium Death Benefit I. DOES ELECTING THIS RIDER FORFEIT YOUR ABILITY TO BUY OTHER RIDERS? Yes. Unless made part of a Company-sponsored rider exchange program, you may not elect any other guaranteed minimum death benefit once you have chosen this rider. HOW IS THE CHARGE FOR THIS RIDER CALCULATED? The fee for the rider is based on Premium Payments, adjusted for Surrenders on each Contract Anniversary. Even though the amount we charge you for this rider can go up or down; except as provided below; we can not increase the rider fee once you elect this rider. This charge will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A prorated charge will be deducted in the event of a full Surrender of this Contract. The charge for the rider will be withdrawn from each Sub-Account and the Fixed Accumulation Feature in the same proportion that the value of each Sub-Account and the Fixed Accumulation Feature bears to the total Contract Value. The rider charge will not be applied to Personal Pension Account Benefit Balance. Except as otherwise provided below, we will continue to deduct this charge until we begin to make Annuity Payouts or the rider is terminated. The rider charge may limit access to the Fixed Accumulation Feature in certain states. In the event of a change in ownership or upon Spousal Contract continuation, the fee for the rider will be based on the Contract Value on the date of any such change plus Premium Payments received after such date, as adjusted for Surrenders. We reserve the right to reduce the voluntary rider charge waiver, in whole or in part, from time to time. The rider charge waiver may also prospectively decrease upon certain ownership changes or upon Spousal Contract continuation. IS THIS RIDER DESIGNED TO PAY YOU DEATH BENEFITS? Yes. This Death Benefit is equal to the higher of Contract Value (minus Distribution Charges if applicable) or Premium Payments, as adjusted for Surrenders. See Example 1 under Return of Premium I Death Benefit Examples in Appendix A. In addition to this Death Benefit, you may also be entitled to receive the Personal Pension Account Death Benefit. See Example 2 under Return of Premium I Death Benefit Examples in Appendix A. We calculate the Death Benefit when, and as of the Valuation Day, we receive a certified death certificate or other legal document acceptable to us. The calculated Death Benefit will remain invested according to the Owner's last instructions until we receive complete written settlement instructions from the Beneficiary. This means the Death Benefit amount will fluctuate with the performance of the Account. When there is more than one Beneficiary, we will calculate the Accumulation Units for each Sub-Account and the dollar amount for the Fixed Accumulation Feature for each Beneficiary's portion of the proceeds. Termination of this rider will result in the rescission of this Death Benefit and result in your Beneficiary receiving the standard Death Benefit. The Death Benefit may be taken in one lump sum or under any of the Annuity Payout Options then being offered by us, unless the Owner has designated the manner in which the Beneficiary will receive the Death Benefit. On the date we receive complete instructions from the Beneficiary, we will compute the Death Benefit amount to be paid out or applied to a selected Annuity Payout Option. When there is more than one Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's portion of the proceeds and then pay it out or apply it to a selected Annuity Payout Option according to each Beneficiary's instructions. If we receive the complete instructions on a non-Valuation Day, computations will take place on the next Valuation Day. If the Owner dies on or after the Annuity Commencement Date under an Annuity Payout Option that permits the Beneficiary to elect to continue Annuity Payouts or receive the Commuted Value, any remaining Contract Value must be distributed at least as rapidly as under the payment method being used as of the Owner's death. If the Owner is not an individual (e.g. a trust), then the original Annuitant will be treated as the Owner in the situations described above and any change in the original Annuitant will be treated as the death of the Owner. APP E-2 ------------------------------------------------------------------------------- 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 any remaining value such as a cash refund, Benefit Balance, or receive the Commuted Value. Please refer to the discussion under the caption "Who will receive the Death Benefit" under Standard Death Benefits for more information. DOES THIS RIDER REPLACE THE STANDARD DEATH BENEFIT? Yes. CAN YOU TERMINATE THIS RIDER? Yes. At anytime following the earliest of the fifth anniversary of the rider effective date or Spousal Contract continuation, the Contract Owner may elect to terminate this rider. If this rider is terminated, then a pro-rated rider charge will be assessed on the termination date, and will no longer be assessed thereafter. The Death Benefit will be reset to the standard Death Benefit. No other optional benefit may be elected following the termination. A Company-sponsored exchange of this rider will not be considered to be a termination by you of the rider. This rider will also terminate upon election of a Death Benefit option (described in the "Standard Death Benefit" section) by the Beneficiary (excluding Spousal Contract continuation). WHAT EFFECT DO PARTIAL SURRENDERS HAVE ON YOUR BENEFITS UNDER THE RIDER? We calculate the adjustment to your aggregate Premium Payments for any Surrender by reducing your aggregate Premium Payments on a dollar-for-dollar basis for any Surrender within a Contract Year up to the Death Benefit withdrawal limit. The "Death Benefit withdrawal limit" is 5% of aggregate Premium Payments. If a change of ownership occurs or if Spousal Contract continuation is elected, the Death Benefit withdrawal limit will be 5% of Contract Value as of the date of such change plus Premium Payments made after such date. For purposes of this rider, a Surrender also includes a transfer of Contract Value to Benefit Balance. Any partial Surrender that causes cumulative Surrenders during the Contract Year to exceed the Death Benefit withdrawal limit, even if less than your permissible AWA (provided that such Surrender was not made in accordance with our Automatic Income program for the purposes of meeting Required Minimum Distribution requirements), will cause a proportionate reduction in your Death Benefit. Partial Surrenders up to, but not in excess of the Death Benefit withdrawal limit (assuming no ownership changes) will reduce your Death Benefit on a dollar-for-dollar basis. Any and all partial Surrenders in excess of your Death Benefit withdrawal limit, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis based on a factor equal to 1 minus the excessive partial Surrender (which is the amount of the Surrender in excess of the Death Benefit withdrawal limit) divided by the sum of (i) Contract Value prior to such partial Surrender minus (ii) any remaining Death Benefit withdrawal limit. Taking excess partial Surrenders may significantly negatively affect your Death Benefit. ACCORDINGLY, A PARTIAL SURRENDER (OR TRANSFER TO THE PERSONAL PENSION ACCOUNT) MAY REDUCE THE DEATH BENEFIT BY AN AMOUNT GREATER THAN THE AMOUNT SURRENDERED IF THE PARTIAL SURRENDER IS MADE AT A TIME WHEN YOUR CONTRACT VALUE IS LESS THAN YOUR PREMIUM PAYMENTS. Please consult with your Investment Professional before making excess partial Surrenders to be sure that you fully understand the ways such a decision will affect your Contract. See Example 1 under the Return of Premium Examples in Appendix A for an illustration of this calculation. WHAT HAPPENS IF YOU CHANGE OWNERSHIP? We reserve the right to approve all ownership changes. Certain approved changes in ownership before the Annuity Commencement Date may cause a re-calculation of the Death Benefit. Any ownership change made within the first six months from the Contract issue date (if prior to the Annuity Commencement Date) will have no impact on the rider values as long as each succeeding Owner is less than the maximum rider age limitation at the time of the change. We reserve the right to require you to reallocate investments according to then applicable investment restrictions in the event of an ownership change after six months from the rider's effective date. An ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a reset of this Death Benefit. If the rider is not available for sale at the time of the ownership change, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the rider is currently available for sale on the date of the ownership change, we will continue the existing rider with respect to all benefits at the rider charge currently being assessed on new sales (or the last declared maximum rider fee).The Death Benefit will be recalculated to the lesser of the Contract Value or the Death Benefit on the effective date of the ownership change. If the oldest Owner after the change is greater than the age limitation of the rider as of the trade date of the change, then we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. Ownership changes may be taxable to you. We recommend that you consult with a tax adviser before making any ownership changes. APP E-3 ------------------------------------------------------------------------------- CAN YOUR SPOUSE CONTINUE YOUR DEATH BENEFIT? Yes. If the Owner dies and the sole Beneficiary is the deceased Owner's Spouse at the time of death, that Spouse may continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract. If the Owner or the Annuitant is greater than the age limitation of the rider at the time of the Spousal Contract continuation and/or this rider (or similar rider, as we determine) is not available for sale, we will terminate this rider whereupon the Death Benefit will be reset to the standard Death Benefit. A final pro-rated rider charge will be assessed on the termination date, and then will no longer be assessed. If the Owner or the Annuitant is equal to or less than the age limitation of the rider at the time of the Spousal Contract continuation and such rider (or similar rider, as we determine) is still available for sale, the Death Benefit will be reset based on the Contract Value if higher than the Death Benefit as of the date of due proof of death and will serve as the new basis for the Death Benefit. The rider charge will be reset to the rider charge then being assessed for new sales of the rider. WHAT HAPPENS IF YOU ANNUITIZE YOUR CONTRACT? Except as otherwise provided, if you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized unless we agree to extend the Annuity Commencement Date, in our sole discretion. In this circumstance, the Contract may be annuitized under our standard annuitization rules. This rider terminates once an Annuity Payout Option (other than Annuity Payout Options Two or Eight) is elected. ARE THERE RESTRICTIONS ON HOW YOU MUST INVEST? Yes. You may allocate your Contract Value to any Sub-Accounts(s), asset allocation models, investment programs, fund of funds Sub-Accounts(s) or other investment option(s) or you may design your own portfolio, provided that your Fund selections comply with the investment restrictions in the following table:
CLASSIFICATION ALLOCATION -------------------------------------------------------------------------------- Fixed investments Funds Minimum of 30% - to a maximum of 100% Equity Investments - Maximum of 70% - No more than 20% may be invested in any one Fund in this category Limited Investments Maximum of 20% Multi-Asset Investments - 0% or 100% - May not be combined with Funds in the above classifications
Please refer to Appendix C for the classification associated with each currently offered Fund. Investing in the Personal Pension Account, and Fixed Accumulation Feature do not constitute a violation of these investment restrictions. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. The Personal Pension Account, and Fixed Accumulation Feature are not included within any classification. We may, in our sole discretion, add, replace or delete Funds, programs, classifications, allocations and asset allocation models from time to time. Not all asset allocation models, Funds or programs are available through all Financial Intermediaries. You will be provided with advance notification of any investment restriction changes and you must invest any subsequent Premium Payments in accordance with such updated investment restrictions. You must participate in an asset rebalancing program. If on any Valuation Day, your Contract Value is no longer invested within the permissible allocations in the table above as a result of market fluctuations, we will not terminate the rider. Instead, your Contract Value will be rebalanced quarterly in accordance with your last compliant allocation instructions. All subsequent Premium Payments must also be invested according to the classifications described in this section. YOU MAY PROVIDE INVESTMENT INSTRUCTIONS TO INVEST CONTRACT VALUE IN A MANNER THAT VIOLATES THESE INVESTMENT RESTRICTIONS. ANY SUCH ACTION WILL, HOWEVER, RESULT IN THE TERMINATION OF THIS RIDER. WE WILL NOT ACCEPT INSTRUCTIONS TO VIOLATE THE INVESTMENT RESTRICTIONS FROM YOUR INVESTMENT PROFESSIONAL. VIOLATING THESE INVESTMENT RESTRICTIONS SHALL RESULT IN THE TERMINATION OF YOUR DEATH BENEFIT UNDER THIS RIDER. If this rider is terminated due to failure to comply with these investment restrictions, you will have a one time opportunity to reinstate the rider. You will be notified in your confirmation statement that you have violated these investment restrictions. The thirty calendar day reinstatement period will begin from the date this rider is terminated. Your opportunity to reinstate will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, or make an ownership change. APP E-4 ------------------------------------------------------------------------------- UPON REINSTATEMENT OF YOUR RIDER, YOUR PREMIUM PAYMENT WILL BE RESET AT THE LOWER OF THE DEATH BENEFIT PRIOR TO THE REVOCATION OR CONTRACT VALUE AS OF THE DATE OF THE REINSTATEMENT. WE WILL DEDUCT A PRORATED RIDER CHARGE ON YOUR CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT FOR THE TIME PERIOD BETWEEN THE REINSTATEMENT DATE AND YOUR FIRST CONTRACT ANNIVERSARY FOLLOWING THE REINSTATEMENT. VIOLATION OF THESE INVESTMENT RESTRICTIONS COULD RESULT IN A SERIOUS EROSION OF THE VALUE IN THIS RIDER. We are not responsible for lost investment opportunities associated with the implementation of these investment restrictions. ARE THERE RESTRICTIONS ON THE AMOUNT OF SUBSEQUENT PREMIUM PAYMENTS? Yes. We reserve the right to require our approval on all subsequent Premium Payments received after the first twelve months. We may not accept any subsequent Premium Payment which brings the total of such cumulative subsequent Premium Payments in excess of $100,000 without prior approval. Following your Annuity Commencement Date, we will no longer accept subsequent Premium Payments. 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. the aggregate Deposits, modified by adjustments for partial Surrenders or Personal Pension Account Payouts under applicable contracts and riders; or b. the aggregate Total Balance plus $1 million. Any reduction in Death Benefits will be in proportion to the Contract Value of each deferred variable annuity at the time of reduction. OTHER INFORMATION The rider may not be appropriate for all investors. Several factors, among others, should be considered: - The benefits under the rider cannot be directly or indirectly assigned, collateralized, pledged or securitized in any way. Any such actions will invalidate the rider and allow us to terminate the rider. - We may terminate this rider based upon the following conditions: Spousal Contract continuation, ownership changes, assignment and/or violation of the investment restrictions. If we terminate the rider, it cannot be re-elected by you. - The selection of an Annuity Payout Option and the timing of the selection may have an impact on the tax treatment of the Death Benefit. - Upon Spousal Contract continuation or ownership change, the Death Benefit withdrawal limit upon which we reduce the Death Benefit will be adjusted to equal 5% of the Contract Value as of the date of such change plus Premium Payments received after such date. - Any partial Surrender or transfer of Contract Value into the Personal Pension Account, including enrollment in certain asset rebalancing Programs, will trigger a proportionate reduction to your Death Benefit. - Transfers made pursuant to an automatic income program may violate this rider if made during the reinstatement period following a violation of investment restrictions under this rider. - This rider may be referred to as "Return of Premium" death benefit in your Contract. To obtain a Statement of Additional Information, please complete the form below and mail to: ADDRESS UNTIL AUGUST 13, 2011: The Hartford Wealth Management - Global Annuities PO Box 5085 Hartford, Connecticut 06102-5085 ADDRESS AFTER AUGUST 13, 2011: The Hartford Wealth Management - Global Annuities PO Box 14293 Lexington, KY 40512-4293 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 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN HARTFORD'S PERSONAL RETIREMENT MANAGER FOUNDATION 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: ADDRESS UNTIL AUGUST 13, 2011: The Hartford Wealth Management - Global Annuities PO Box 5085 Hartford, Connecticut 06102-5085 ADDRESS AFTER AUGUST 13, 2011: The Hartford Wealth Management - Global Annuities PO Box 14293 Lexington, KY 40512-4293 Date of Prospectus: May 2, 2011 Date of Statement of Additional Information: May 2, 2011 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 4 Total Return for all Sub-Accounts 4 Yield for Sub-Accounts 4 Money Market Sub-Accounts 5 Additional Materials 5 Performance Comparisons 5 FINANCIAL STATEMENTS SA-1
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 financial statements of Hartford Life and Annuity Insurance Company (the "Company") as of December 31, 2010 and 2009, and for each of the three years in the period ended December 31, 2010 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report dated April 11, 2011 (which report expresses an unqualified opinion in accordance with accounting practices prescribed and permitted by the Insurance Department of the State of Connecticut and includes an explanatory paragraph relating to the Company's change in its method of accounting and reporting for deferred income taxes in 2009 and 2008. In 2009, the Company adopted Statement of Statutory Accounting Principle No. 10R and in 2008, the Company received approval from the State of Connecticut Insurance Department for the use of a permitted practice related to the accounting for deferred income taxes, which expired at the end of 2009), and the statements of assets and liabilities of Hartford Life and Annuity Insurance Company Separate Account Seven as of December 31, 2010, and the related statements of operations for each of the periods presented in the year then ended, the statements of changes in net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated March 30, 2011, which reports are both included in the Statement of Additional Information which is part of the Registration Statement. Such financial statements are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is City Place, 32nd Floor, 185 Asylum Street, Hartford, Connecticut 06103-3402. 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: 2010: $60,476,306; 2009: $103,577,895; and 2008: $249,801,679. 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 of at least $100 in 2010 of items such as sponsorship of meetings, education seminars, and travel and entertainment, whether or not an ongoing contractual relationship exists. A & F Financial Securities, Inc., Addison Avenue Federal C. U., AIG Financial Advisors, AIG Retirement Advisors, Inc., AIM Distributors, Inc., Allen & Company of Florida, Inc., Alliance Bernstein Investments, Inc., Amcore Investment Services, Inc., American Capital Partners LLC, American Investors Company, American Portfolios Financial Services, Ameriprise Financial Services, Inc., Ameritas Investment Corp., Amtrust Bank, Amtrust Investment Services, Inc., Anchor Bank, Anderson & Strudwick, Inc., Arvest Asset Management, Arvest Bank, Associated Bank, NA, Associated Investment Services, Inc., AXA Advisors, LLC, Banc of America Investment Services, Inc., Bancorpsouth Investment Services, Inc., BancWest Investment Services, Inc., Bank of Oklahoma, NA., Bank of the West, Bank Securities Association, Bankers & Investors Co., BankWest, Inc., Baxter CU, BB&T Investment Services, Inc., BCG Securities, Inc., Beneficial Investment Services, Bernard Herold & Co., Inc., BOSC, Inc., BPU Investment Management, Inc., Brewer 3 ------------------------------------------------------------------------------- Financial Services, LLC, Bruce A. Lefavi Securities, Inc., Cadaret, Grant & Co., Inc., Cambridge Investment Research, Inc., Cambridge Legacy Sec., LLC, Cantella & Co., Inc., Capital Analysts, Inc., Capital Investment Group, Inc., Capital One Investments Services LLC, Carolina First Bank, CCF Investments, Inc., CCO Investment Services Corp., Centaurus Financial, Inc., Center Street Securities, Inc., Charles Schwab & Company, Inc, Chase Investments Services, Corp., Citadel Federal Credit Union, Citigroup Global Markets, Inc., City Securities Corporation, Columbia Bank, Comerica Securities, Commerce Brokerage Services, Inc., Commonwealth Financial Network, Compass Bank, Compass Brokerage, Inc., Crowell, Weedon & Co., Crown Capital Securities, LLP, CUE, Cuna Brokerage Services, Inc., Cuso Financial Services, LLP., Cutter & Company, Inc., D.A. Davidson & Company, David A. Noyes & Company, Delta Equity Services Corp., Diversified Resources, LLC, Dominion Investor Services, Inc., Donnelly Steen & Co., Eagle One Investments, LLC, Edward Jones, Emerson Equity, LLC, Essex Financial Services, Inc., Essex National Securities, Inc., Essex Savings Bank, Fairport Capital, Inc., FCG Advisors, Fifth Third Bank, Fifth Third Securities, Financial Network Investment Corp., Financial Security Management, Inc., Fintegra LLC, First Allied Securities, First Bank, First Citizens Bank & Trust Co., First Citizens Investor Services, First Commonwealth Bank, First Heartland Capital, Inc., First Liberty National Bank, First Midwest Securities, First National Bank of Omaha, First Niagara Bank, First Tennessee Bank, First Tennessee Brokerage, Inc., First Western Securities, Inc., FNIC F.I.D. Div., Foothill Securities, Inc., Foresters Equity Services, Inc., Franklin Templeton Dist., Inc., Frost Brokerage Services Inc., FSC Securities Corporation, FSIC, Fulton Bank, Fulton Financial Corp., GBS Financial Corp., Geneos Wealth Management, Inc., Genworth Financial Securities Corp., Gold Coast Securities, Inc., Great American Advisors, Inc., Greylock Federal Credit Union, Gunnallen Financial, Inc., GWN Securities, Inc., H. Beck, Inc., H. D. Vest Investment Services, Hamilton Cavanaugh & Associates, Inc., Harbour Investments, Inc., Harris Investor Services, Inc., Harris Investors, Harvest Capital LLC, Hazlett, Burt & Watson, Inc., Hefren - Tillotson / Masterplan, Hightower Securities LLC, Hornor, Townsend & Kent, Inc., HSBC Bank USA, National Association, HSBC Securities (USA) Inc., Huntington Valley Bank, Huntleigh Securities Corp., Independent Financial Group, LLC, Indiana Merchant Banking & Brok., Infinex Investment, Inc., ING Financial Advisors, LLC, ING Financial Partners, InterSecurities Inc., Intervest Inter. Equities Corp., INVEST Financial Corporation, INVEST / Johnson Bank, Investacorp, Inc., Investment Center, Inc., Investment Centers of America, Investment Professionals, Inc., Investors Capital Corp., Investors Security Co., Inc., J.J.B. Hilliard, W.L. Lyons LLC, J. P. Turner & Company, LLC, J.W. Cole Financial, Inc., Janney Montgomery Scott, Inc., Joseph Gunnar & Co. LLC, KeyBank, NA, Key Investment Services, LLC., Kinecta Credit Union, KMS Financial Services, Inc., Kovack Securities, Inc., KW Securities Corporation, L.O. Thomas & Company, LaSalle Street Securities, Inc., Leigh Baldwin & Co., LLC, Liberty Group, LLC, Lincoln Financial Advisors Corp., Lincoln Financial Securities, Lincoln Investment Planning, Inc., Linsco / Private Ledger / Bank Div., Long Island Financial Group. LPL Financial Corporation, LPL Financial Services, LSY, Inc., M Holdings Securities, Inc., M & T Bank, M & T Securities, Inc., Manufacturers Bank & Trust Co., MB Financial Bank, NA, Merrill Lynch Inc., MetLife Securities, Inc., MidAmerica Financial Services, Inc., Money Concepts Capital Corp., Morgan Keegan & Co., Inc., Morgan Keegan FID Division, Morgan Stanley & Co., Inc., Morgan Stanley Smith Barney, Multi-Financial Securities Corp., Multiple Financial Services, Inc., Mutual Securities, Inc., Mutual Service Corp., National Penn Investors Trust, National Planning Corporation, National Securities Corp., Navy Federal Brokerage Services, Navy Federal Credit Union, NBC Securities, Inc., New England Securities Corp., NewAlliance Investments, Inc., Newbridge Securities Corp., Nexity Financial Services, Inc., Next Financial Group, Inc., NFP Securities, Inc., North Ridge Securities Corp., Northeast Securities, Inc., Northwestern Mutual Inv. Services, NRP Financial, Inc., Nutmeg Securities, Ltd., nuVision Financial Federal CU, OFG Financial Services, Inc., Ohio National Equities, Inc., OneAmerica Securities, Inc., Oppenheimer & Co., Inc., Pacific West Securities, Inc., Park Avenue Securities, LLC, Peak Investment, Peoples Securities, Inc., Pershing, PlanMember Securities Corp., PNC Bank Corp., PNC Investments LLC, Poca Valley Bank, Inc., Premier America Credit Union, Prime Capital Services, Inc., PrimeVest Financial Services, Princor Financial Service Corp., ProEquities, Inc., Professional Asset Management, Inc., Prospera Financial Services, Purshe Kaplan Sterling Investment, Putnam Investments, QA3 Financial Corp., Questar Capital Corp., Raymond James Financial Services, Inc., Raymond James & Associates Inc., Raymond James FID Division, RBC Bank, RBC Capital Markets Corp., RBC Dain FID Division, RBS Citizens, NA, Regal Securities, Inc., Resource Horizons Group, LLC, Robert W. Baird & Co., Inc., Rogan & Associates, Inc., Royal Alliance Associates, Inc., Sagepoint Financial, Inc., Sammons Securities Company LLC, Sanders Morris Harris, Inc., SchoolsFirst FCU, Scott & Stringfellow, Inc., Securian Financial Services, Securities America, Inc., Securities Service Network, Inc., Sigma Financial Corporation, Signature Bank, Signature Securities Group, SII Investments, Smith Barney, Smith Barney Bank Advisor, South Valley Wealth Management, Southwest Securities, Inc., Sovereign Bank, Spectrum Capital Inc., StellarOne Wealth Management, Stephens, Inc., Sterne Agee & Leach, inc., Stifel, Nicolaus & Co., Inc., Summit Brokerage Services Inc., Summitalliance Securities, Sunset Financial Services, Inc., SunTrust Investment Services, Inc., Susquehanna Bank, SWBC Investment Company, Symetra Investment Services, Inc., Synergy Investment Group, Synovus Securities, TD Ameritrade, Inc., TD Bancnorth, National Association, TFS Securities, Inc., The Golden 1 Credit Union, The Huntington Investment Co., The Winning Edge Financial Group, Thrasher & Company, Thurston, Springer, Miller, Herd, Tower Square Securities, Inc., Transamerica Financial Advisor, Triad Advisors, Inc., Triangle Securities LLC, Trustmont Financial Group, Inc., UBS Financial Services, Inc., UMB Bank, NA, UMB Financial Services, Inc., Union Bank & Trust, Union Bank of California, NA, Union Savings Bank, UnionBanc Investment Services, United Bank, United Bank, Inc., United Brokerage Services, Inc., US Bancorp FID, US Bancorp Investments, US Bank, NA, UVest Financial Services Group, Inc., VALIC Financial Advisors, Inc., Valmark Securities, VanDerbilt Securities, LLC, VSR Financial Services, Inc., Wachovia ISG Platform, Waddell & Reed, Inc., Wall Street Financial Group, Walnut Street Securities, Inc., Waterstone Financial Group, Inc., Wedbush Morgan Securities, Inc., Wells Fargo Adv. Financial Network LLC, Wells Fargo Advisors, LLC, Wells Fargo Advisors, LLC ISG, Wells Fargo Ins. Services Inv. Adv., Wells Fargo Investments, Wells Federal Bank, WesBanco Bank, Inc., WesBanco Securities, Inc., Wescom Financial Services, Westamerica Bank, Western Federal Credit Union, Western International Securities, WFG Investments, Inc., Woodbury Financial Services, Inc., Workman Securities Corp. and WRP Investments, 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 be calculated on a quarterly basis from the date the underlying fund is made available in the Separate Account for one, five and ten year periods or some other relevant periods if the underlying fund has not been in existence for at least ten years. Total return is measured by comparing the value of an investment in the Sub-Account at the beginning of the relevant period to the value of the investment at the end of the period. To calculate standardized total return, the Total Annual Fund Operating Expenses, applicable Sales Charges, Distribution Charge, Separate Account Annual Expenses, and the Annual Maintenance Fee are deducted from a hypothetical initial Premium Payment of $1,000.00. Standardized total returns do not include charges for optional benefit riders. The formula we use to calculate standardized total return is P(1+T) TO THE POWER OF n = ERV. In this calculation, "P" represents a hypothetical initial premium payment of $1,000.00, "T" represents the average annual total return, "n" represents the number of years and "ERV" represents the redeemable value at the end of the period. The Sub-Account may advertise a non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Non-standardized total return is measured in the same manner as the standardized total return described above, except that non-standardized total return does not include the Annual Maintenance Fee, Distribution Charge, or Sales Charges (except for a 1% FESC for A Share Contract class). Therefore, non-standardized total return for a Sub-Account is higher than standardized total return for a Sub-Account. The Sub-Account may also advertise adjusted non-standardized total return. These figures will be calculated on a monthly basis from the inception date of the underlying fund for one, five and ten year periods or other relevant periods. Adjusted non-standardized total return is measured in the same manner as the standardized total return described above. A Sub-Account may advertise non-standardized total returns for periods predating its inception as an investment option in this variable annuity. Such non-standardized total returns reflect the adjusted historical returns of the underlying Fund in which the Sub-Account invests, as adjusted for certain Separate Account annual expenses (Mortality and Expense Risk Charges and Administrative Fees), but excludes adjustments for optional riders or deductions for Annual Maintenance Fees, sales charges, premium taxes and federal/state taxes (including possible penalties). To the extent that a Sub-Account invests in a Feeder Fund (a Feeder Fund is a fund that invests all of its assets into a corresponding Master Fund), the Feeder Fund's performance for periods pre-dating the inception of the Feeder Fund and/or its inclusion within a Separate Account may include the performance of the Master Fund since the inception of the Master Fund, as adjusted for the Feeder Fund's operating expenses. In such case, the performance of a Feeder Fund will be lower than the corresponding Master Fund because of Feeder Fund operating expenses. Performance may include the effect of waivers and reimbursements, in the absence of which performance may have been lower. A Sub-Account may advertise non-standardized total returns for periods predating its inception as an investment option in this variable annuity. Such non-standardized total returns reflect the adjusted historical returns of the underlying Fund in which the Sub-Account invests, as adjusted for certain Separate Account annual expenses (Mortality and Expense Risk Charges and Administrative Fees), but excludes adjustments for optional riders or deductions for Annual Maintenance Fees, sales charges, premium taxes and federal/state taxes (including possible penalties). To the extent that a Sub-Account invests in a Feeder Fund (a Feeder Fund is a fund that invests all of its assets into a corresponding Master Fund), the Feeder Fund's performance for periods pre-dating the inception of the Feeder Fund and/or its inclusion within a Separate Account may include the performance of the Master Fund since the inception of the Master Fund, as adjusted for the Feeder Fund's operating expenses. In such case, the performance of a Feeder Fund will be lower than the corresponding Master Fund because of Feeder Fund operating expenses. Performance may include the effect of waivers and reimbursements, in the absence of which performance may have been lower. YIELD FOR SUB-ACCOUNTS If applicable, the Sub-Accounts may advertise yield in addition to total return. At any time in the future, yields may be higher or lower than past yields and past performance is no indication of future performance. The standardized yield will be computed for periods beginning with the inception of the Sub-Account in the following manner. The net investment income per Accumulation Unit earned during a one-month period is divided by the Accumulation Unit Value on the last day of the period. The formula we use to calculate yield is: YIELD = 2[(a - b/cd +1) TO THE POWER OF 6 - 1]. In this calculation, "a" represents the net investment income earned during the period by the underlying fund, "b" represents the expenses accrued for the period, "c" represents the average daily number of Accumulation Units outstanding during the period and "d" represents the maximum offering price per Accumulation Unit on the last day of the period. MONEY MARKET SUB-ACCOUNTS At any time in the future, current and effective yields may be higher or lower than past yields and past performance is no indication of future performance. Current yield of a money market fund Sub-Account is calculated for a seven-day period or the "base period" without taking into consideration any realized or unrealized gains or losses on shares of the underlying fund. The first step in determining yield is to compute the base period return. We take a hypothetical account with a balance of one Accumulation Unit of the Sub-Account and calculates the net change in its value from the beginning of the base period to the end of the base period. We then subtract an amount equal to the total deductions for the Contract and then divides that number by the value of the account at the beginning of the base period. The result is the base period return or "BPR." Once the base period return is calculated, we then multiply it by 365/7 to compute the current yield. Current yield is calculated to the nearest hundredth of one percent. The formula for this calculation is YIELD = BPR x (365/7), where BPR = (A - B)/C. "A" is equal to the net change in value of a hypothetical account with a balance of one Accumulation Unit of the Sub-Account from the beginning of the base period to the end of the base period. "B" is equal to the amount that Hartford deducts for mortality and expense risk charge, any applicable administrative charge and the Annual Maintenance Fee. "C" represents the value of the Sub-Account at the beginning of the base period. Effective yield is also calculated using the base period return. The effective yield is calculated by adding 1 to the base period return and raising that result to a power equal to 365 divided by 7 and subtracting 1 from the result. The calculation we use is: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) TO THE POWER OF 365/7] - 1. ADDITIONAL MATERIALS We may provide information on various topics to Contract Owners and prospective Contract Owners in advertising, sales literature or other materials. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, dollar cost averaging and asset allocation), the advantages and disadvantages of investing in tax-deferred and taxable instruments, customer profiles and hypothetical purchase scenarios, financial management and tax and retirement planning, and other investment alternatives, including comparisons between the Contracts and the characteristics of and market for any alternatives. PERFORMANCE COMPARISONS Each Sub-Account may from time to time include in advertisements the ranking of its performance figures compared with performance figures of other annuity contract's sub-accounts with the same investment objectives which are created by Lipper Analytical Services, Morningstar, Inc. or other recognized ranking services. 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, 2010, and the related statements of operations for each of the periods presented in the year then ended, the statements of changes in net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended. These financial statements and financial highlights are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Account is not required to have, nor were we engaged to perform, an audit of their 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, 2010, by correspondence with the fund managers, where replies were not received from the fund managers; we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the individual Sub-Accounts disclosed in Note 1 constituting the Hartford Life and Annuity Insurance Company Separate Account Seven as of December 31, 2010, the results of their operations for each of the periods presented in the year then ended, the changes in their net assets for each of the periods presented in the two years then ended, and the financial highlights in Note 6 for each of the periods presented in the five years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Hartford, Connecticut March 30, 2011 SA-1 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 3,018,421 2,712,784 ============= ============= Cost $29,255,718 $36,308,646 ============= ============= Market Value $34,349,624 $40,067,813 Due from Hartford Life and Annuity Insurance Company 1,578 -- Receivable from fund shares sold -- 24,917 Other assets -- 1 ------------- ------------- Total Assets 34,351,202 40,092,731 ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 24,917 Payable for fund shares purchased 1,578 -- Other liabilities 1 -- ------------- ------------- Total Liabilities 1,579 24,917 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $34,349,623 $40,067,814 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-2 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INVESCO V.I. SMALL/MID CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) ------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 1,281,013 128,261 580,283 16,810,401 ============= ============ ============= ============== Cost $17,162,250 $1,115,018 $9,700,151 $150,075,044 ============= ============ ============= ============== Market Value $21,610,687 $1,250,549 $10,584,364 $107,250,362 Due from Hartford Life and Annuity Insurance Company 8,991 -- -- -- Receivable from fund shares sold -- 53 635 30,924 Other assets -- -- -- 9 ------------- ------------ ------------- -------------- Total Assets 21,619,678 1,250,602 10,584,999 107,281,295 ------------- ------------ ------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 53 635 30,924 Payable for fund shares purchased 8,991 -- -- -- Other liabilities 1 -- -- -- ------------- ------------ ------------- -------------- Total Liabilities 8,992 53 635 30,924 ------------- ------------ ------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $21,610,686 $1,250,549 $10,584,364 $107,250,371 ============= ============ ============= ============== INVESCO V.I. INVESCO V.I. INVESCO V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT (2) SUB-ACCOUNT (3) SUB-ACCOUNT (4) ----------------------------- --------------------------------------------------------------------- ASSETS: Investments: Number of Shares 2,265,355 8,179,392 59,792,941 ============= ============== ============== Cost $46,694,362 $204,220,676 $728,270,191 ============= ============== ============== Market Value $52,753,487 $221,049,205 $717,515,287 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 44,840 149,863 553,882 Other assets 11 -- -- ------------- -------------- -------------- Total Assets 52,798,338 221,199,068 718,069,169 ------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 44,840 149,894 553,882 Payable for fund shares purchased -- -- -- Other liabilities -- 9 78 ------------- -------------- -------------- Total Liabilities 44,840 149,903 553,960 ------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $52,753,498 $221,049,165 $717,515,209 ============= ============== ==============
(1) Formerly AIM V.I. Basic Value Fund. Change effective April 30, 2010. (2) Formerly AIM V.I. Capital Appreciation Fund. Change effective April 30, 2010. (3) Formerly AIM V.I. Core Equity Fund. Change effective April 30, 2010. (4) Formerly AIM V.I. Government Securities Fund. Change effective April 30, 2010. SA-3 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INTERNATIONAL MID CAP CORE GROWTH FUND EQUITY FUND SUB-ACCOUNT (5) SUB-ACCOUNT (6) ---------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 7,700,981 21,322,235 ============== ============== Cost $195,462,996 $245,451,936 ============== ============== Market Value $220,293,491 $264,180,971 Due from Hartford Life and Annuity Insurance Company 84,581 -- Receivable from fund shares sold -- 62,512 Other assets 11 -- -------------- -------------- Total Assets 220,378,083 264,243,483 -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 62,512 Payable for fund shares purchased 84,581 -- Other liabilities -- 34 -------------- -------------- Total Liabilities 84,581 62,546 -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $220,293,502 $264,180,937 ============== ==============
(5) Formerly AIM V.I. International Growth Fund. Change effective April 30, 2010. (6) Formerly AIM V.I. Mid Cap Core Equity Fund. Change effective April 30, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-4 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. INVESCO V.I. SMALL CAP LARGE CAP CAPITAL GLOBAL EQUITY FUND GROWTH FUND DEVELOPMENT FUND MULTI-ASSET FUND SUB-ACCOUNT (7) SUB-ACCOUNT (8) SUB-ACCOUNT (9) SUB-ACCOUNT (10) ---------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 8,933,901 2,255,540 766,615 925,087 ============= ============ ============ ============ Cost $127,128,795 $27,957,688 $8,312,701 $11,831,021 ============= ============ ============ ============ Market Value $147,413,716 $32,321,893 $10,244,351 $14,033,562 Due from Hartford Life and Annuity Insurance Company 58,342 -- -- -- Receivable from fund shares sold -- 12,247 996 614 Other assets 1 1 -- -- ------------- ------------ ------------ ------------ Total Assets 147,472,059 32,334,141 10,245,347 14,034,176 ------------- ------------ ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 12,324 996 614 Payable for fund shares purchased 58,342 -- -- -- Other liabilities -- -- -- -- ------------- ------------ ------------ ------------ Total Liabilities 58,342 12,324 996 614 ------------- ------------ ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $147,413,717 $32,321,817 $10,244,351 $14,033,562 ============= ============ ============ ============ AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- ASSETS: Investments: Number of Shares 25,283,272 55,690,695 78,151,546 ============= ============= =============== Cost $278,949,868 $613,128,848 $1,137,803,342 ============= ============= =============== Market Value $297,836,943 $553,565,506 $1,263,710,493 Due from Hartford Life and Annuity Insurance Company -- 39,094 -- Receivable from fund shares sold 231,892 -- 519,680 Other assets 3 13 26 ------------- ------------- --------------- Total Assets 298,068,838 553,604,613 1,264,230,199 ------------- ------------- --------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 231,892 -- 519,680 Payable for fund shares purchased -- 39,094 -- Other liabilities -- -- -- ------------- ------------- --------------- Total Liabilities 231,892 39,094 519,680 ------------- ------------- --------------- NET ASSETS: For Variable Annuity Contract Liabilities $297,836,946 $553,565,519 $1,263,710,519 ============= ============= ===============
(7) Formerly AIM V.I. Small Cap Equity Fund. Change effective April 30, 2010. (8) Formerly AIM V.I. Large Cap Growth Fund. Change effective April 30, 2010. (9) Formerly AIM V.I. Capital Development Fund. Change effective April 30, 2010. (10) Formerly AIM V.I. PowerShares ETF Allocation Fund. Change effective April 30, 2010. SA-5 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 83,624,487 107,285,827 ============== ================ Cost $744,468,196 $1,155,031,112 ============== ================ Market Value $767,672,787 $1,132,938,331 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 176,744 1,046,075 Other assets 56 -- -------------- ---------------- Total Assets 767,849,587 1,133,984,406 -------------- ---------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 176,744 1,046,075 Payable for fund shares purchased -- -- Other liabilities -- 25 -------------- ---------------- Total Liabilities 176,744 1,046,100 -------------- ---------------- NET ASSETS: For Variable Annuity Contract Liabilities $767,672,843 $1,132,938,306 ============== ================
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-6 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 24,258,656 51,205,992 78,779,567 45,421,793 ============== ================ ============== ============== Cost $409,589,422 $2,574,742,317 $2,650,267,791 $746,717,384 ============== ================ ============== ============== Market Value $521,075,932 $2,782,533,603 $2,698,200,180 $816,683,828 Due from Hartford Life and Annuity Insurance Company -- -- -- -- Receivable from fund shares sold 216,528 935,552 718,828 419,930 Other assets -- 48,327 8 48,928 -------------- ---------------- -------------- -------------- Total Assets 521,292,460 2,783,517,482 2,698,919,016 817,152,686 -------------- ---------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 216,528 935,552 718,828 419,930 Payable for fund shares purchased -- -- -- -- Other liabilities 1 -- -- -- -------------- ---------------- -------------- -------------- Total Liabilities 216,529 935,552 718,828 419,930 -------------- ---------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $521,075,931 $2,782,581,930 $2,698,200,188 $816,732,756 ============== ================ ============== ============== WELLS FARGO AMERICAN FUNDS ADVANTAGE VT AMERICAN FUNDS GLOBAL SMALL OMEGA NEW WORLD FUND CAPITALIZATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (11) ----------------------------- -------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 19,811,592 18,950,886 85,013 ============== ============== ============ Cost $316,032,637 $323,733,084 $1,618,926 ============== ============== ============ Market Value $457,449,649 $404,601,422 $2,040,318 Due from Hartford Life and Annuity Insurance Company 31,122 -- -- Receivable from fund shares sold -- 203,024 1,247 Other assets 3 1 -- -------------- -------------- ------------ Total Assets 457,480,774 404,804,447 2,041,565 -------------- -------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 203,024 1,247 Payable for fund shares purchased 31,122 -- -- Other liabilities -- -- -- -------------- -------------- ------------ Total Liabilities 31,122 203,024 1,247 -------------- -------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $457,449,652 $404,601,423 $2,040,318 ============== ============== ============
(11) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Growth Fund merged with newly created Wells Fargo Advantage VT Omega Growth Fund. SA-7 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP GROWTH CONTRAFUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------- ASSETS: Investments: Number of Shares 110,415 3,991,514 ============ ============= Cost $3,562,601 $74,020,905 ============ ============= Market Value $4,054,447 $93,760,659 Due from Hartford Life and Annuity Insurance Company -- 44,789 Receivable from fund shares sold 191 -- Other assets -- 2 ------------ ------------- Total Assets 4,054,638 93,805,450 ------------ ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 191 -- Payable for fund shares purchased -- 44,789 Other liabilities -- -- ------------ ------------- Total Liabilities 191 44,789 ------------ ------------- NET ASSETS: For Variable Annuity Contract Liabilities $4,054,447 $93,760,661 ============ =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-8 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL FIDELITY VIP MID CAP VALUE STRATEGIES APPRECIATION STRATEGIC INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (12) ------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 2,944,474 600,599 224,745 32,175 ============= ============ ============ ========== Cost $64,979,467 $3,969,015 $1,504,243 $369,616 ============= ============ ============ ========== Market Value $94,605,928 $5,879,866 $1,867,629 $364,547 Due from Hartford Life and Annuity Insurance Company 28,171 23,531 18,151 32 Receivable from fund shares sold -- -- -- -- Other assets 4 -- -- -- ------------- ------------ ------------ ---------- Total Assets 94,634,103 5,903,397 1,885,780 364,579 ------------- ------------ ------------ ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 28,171 23,531 18,151 32 Other liabilities -- -- -- -- ------------- ------------ ------------ ---------- Total Liabilities 28,171 23,531 18,151 32 ------------- ------------ ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $94,605,932 $5,879,866 $1,867,629 $364,547 ============= ============ ============ ========== FRANKLIN FRANKLIN RISING FRANKLIN LARGE CAP DIVIDENDS INCOME GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- ASSETS: Investments: Number of Shares 40,652,898 147,333,675 9,182,705 ============== ================ ============== Cost $717,173,173 $2,203,080,008 $128,954,923 ============== ================ ============== Market Value $765,099,088 $2,187,102,769 $136,454,999 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 264,938 486,175 100,692 Other assets 7 -- -- -------------- ---------------- -------------- Total Assets 765,364,033 2,187,588,944 136,555,691 -------------- ---------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 264,938 486,175 100,692 Payable for fund shares purchased -- -- -- Other liabilities -- 25 1 -------------- ---------------- -------------- Total Liabilities 264,938 486,200 100,693 -------------- ---------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $765,099,095 $2,187,102,744 $136,454,998 ============== ================ ==============
(12) Funded as of February 22, 2010. SA-9 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN GLOBAL SMALL-MID CAP REAL ESTATE GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 720,331 15,378,837 ============= ============== Cost $12,208,363 $276,185,405 ============= ============== Market Value $9,241,856 $331,364,604 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 2,013 773,750 Other assets -- -- ------------- -------------- Total Assets 9,243,869 332,138,354 ------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 2,013 773,751 Payable for fund shares purchased -- -- Other liabilities -- -- ------------- -------------- Total Liabilities 2,013 773,751 ------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $9,241,856 $331,364,603 ============= ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-10 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON SMALL CAP STRATEGIC DEVELOPING VALUE INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 6,643,076 74,627,202 76,568,483 21,300,459 ============== ============== ================ ============== Cost $90,659,357 $882,438,020 $1,184,802,618 $196,715,168 ============== ============== ================ ============== Market Value $108,345,625 $967,601,088 $1,221,861,829 $242,579,722 Due from Hartford Life and Annuity Insurance Company 25,302 -- -- -- Receivable from fund shares sold -- 2,023,692 335,170 27,247 Other assets 1 41 -- 2 -------------- -------------- ---------------- -------------- Total Assets 108,370,928 969,624,821 1,222,196,999 242,606,971 -------------- -------------- ---------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 2,023,692 335,170 27,247 Payable for fund shares purchased 25,302 -- -- -- Other liabilities -- -- 1 -- -------------- -------------- ---------------- -------------- Total Liabilities 25,302 2,023,692 335,171 27,247 -------------- -------------- ---------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $108,345,626 $967,601,129 $1,221,861,828 $242,579,724 ============== ============== ================ ============== TEMPLETON TEMPLETON MUTUAL FOREIGN GROWTH GLOBAL DISCOVERY SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 30,750,369 52,512,584 30,072,121 ============== ============== ============== Cost $410,233,774 $634,534,360 $555,453,512 ============== ============== ============== Market Value $439,606,172 $578,598,566 $625,736,971 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 90,939 103,967 6,728 Other assets 11 7 6 -------------- -------------- -------------- Total Assets 439,697,122 578,702,540 625,743,705 -------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 90,939 103,967 6,728 Payable for fund shares purchased -- -- -- Other liabilities -- -- -- -------------- -------------- -------------- Total Liabilities 90,939 103,967 6,728 -------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $439,606,183 $578,598,573 $625,736,977 ============== ============== ==============
SA-11 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN FLEX CAP LARGE CAP GROWTH VALUE SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 4,782,936 2,916,226 ============= ============= Cost $51,994,307 $31,741,424 ============= ============= Market Value $60,718,522 $30,620,371 Due from Hartford Life and Annuity Insurance Company 59,875 -- Receivable from fund shares sold -- 1,743 Other assets -- 1 ------------- ------------- Total Assets 60,778,397 30,622,115 ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 1,743 Payable for fund shares purchased 59,875 -- Other liabilities -- -- ------------- ------------- Total Liabilities 59,875 1,743 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $60,718,522 $30,620,372 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-12 -------------------------------------------------------------------------------
HARTFORD HARTFORD TEMPLETON HARTFORD TOTAL CAPITAL GLOBAL BOND ADVISERS RETURN BOND APPRECIATION SECURITIES FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 6,870,981 720,550 66,531,612 19,046,980 ============== ============= ============== ============== Cost $118,536,313 $11,811,701 $694,936,885 $594,774,206 ============== ============= ============== ============== Market Value $135,811,248 $13,922,451 $724,922,717 $806,822,283 Due from Hartford Life and Annuity Insurance Company -- -- -- -- Receivable from fund shares sold 169,244 530 160,834 25,247 Other assets 3 -- -- 19 -------------- ------------- -------------- -------------- Total Assets 135,980,495 13,922,981 725,083,551 806,847,549 -------------- ------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 169,244 530 160,834 25,247 Payable for fund shares purchased -- -- -- -- Other liabilities -- -- 9 -- -------------- ------------- -------------- -------------- Total Liabilities 169,244 530 160,843 25,247 -------------- ------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $135,811,251 $13,922,451 $724,922,708 $806,822,302 ============== ============= ============== ============== HARTFORD DIVIDEND HARTFORD HARTFORD AND GROWTH GLOBAL RESEARCH GLOBAL GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (13) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------ ASSETS: Investments: Number of Shares 25,711,021 74,181 118,262 ============== ========== ============ Cost $411,427,884 $580,094 $1,662,327 ============== ========== ============ Market Value $501,345,846 $737,586 $1,847,472 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 12,431 32 81 Other assets -- -- -- -------------- ---------- ------------ Total Assets 501,358,277 737,618 1,847,553 -------------- ---------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 12,431 32 81 Payable for fund shares purchased -- -- -- Other liabilities 17 -- -- -------------- ---------- ------------ Total Liabilities 12,448 32 81 -------------- ---------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $501,345,829 $737,586 $1,847,472 ============== ========== ============
(13) Formerly Hartford Global Equity HLS Fund. Change effective March 1, 2010. SA-13 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD DISCIPLINED HARTFORD EQUITY GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (14) ----------------------------------------------------------------------- ASSETS: Investments: Number of Shares 8,780,608 2,024,360 ============== ============= Cost $84,742,327 $18,607,355 ============== ============= Market Value $103,559,276 $24,325,621 Due from Hartford Life and Annuity Insurance Company 30,589 5,474 Receivable from fund shares sold -- -- Other assets -- 1 -------------- ------------- Total Assets 103,589,865 24,331,096 -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- Payable for fund shares purchased 30,589 5,474 Other liabilities -- -- -------------- ------------- Total Liabilities 30,589 5,474 -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $103,559,276 $24,325,622 ============== =============
(14) Effective April 16, 2010 Hartford Fundamental Growth HLS Fund merged with Hartford Growth HLS Fund. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-14 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH HARTFORD HARTFORD INTERNATIONAL OPPORTUNITIES HIGH YIELD INDEX OPPORTUNITIES HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (15) SUB-ACCOUNT (16) ----------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 6,713,798 6,544,002 4,493 2,724,711 ============== ============= ========== ============= Cost $134,365,283 $50,230,128 $105,570 $28,648,068 ============== ============= ========== ============= Market Value $173,632,253 $59,908,442 $117,189 $33,954,451 Due from Hartford Life and Annuity Insurance Company 24,868 570,974 -- 16,260 Receivable from fund shares sold -- -- 2 -- Other assets -- 1 -- 2 -------------- ------------- ---------- ------------- Total Assets 173,657,121 60,479,417 117,191 33,970,713 -------------- ------------- ---------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- 2 -- Payable for fund shares purchased 24,868 570,974 -- 16,260 Other liabilities 3 -- -- -- -------------- ------------- ---------- ------------- Total Liabilities 24,871 570,974 2 16,260 -------------- ------------- ---------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $173,632,250 $59,908,443 $117,189 $33,954,453 ============== ============= ========== ============= HARTFORD SMALL/MID CAP HARTFORD HARTFORD EQUITY MONEY MARKET SMALL COMPANY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (17) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- ASSETS: Investments: Number of Shares 1,178,753 732,606,440 776,449 ============= ============== ============= Cost $8,055,435 $732,606,440 $10,398,492 ============= ============== ============= Market Value $11,609,911 $732,606,440 $13,714,248 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 10,447 984,605 405 Other assets -- 94 -- ------------- -------------- ------------- Total Assets 11,620,358 733,591,139 13,714,653 ------------- -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 10,447 984,605 405 Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ------------- -------------- ------------- Total Liabilities 10,447 984,605 405 ------------- -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $11,609,911 $732,606,534 $13,714,248 ============= ============== =============
(15) Funded as of March 8, 2010. (16) Effective April 16, 2010 Hartford International Growth HLS Fund merged with Hartford International Opportunities HLS Fund. (17) Formerly Hartford MidCap Growth HLS Fund. Change effective March 1, 2010. SA-15 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD HARTFORD SMALLCAP GROWTH STOCK HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 382,336 53,582 ============ ============ Cost $5,911,428 $1,745,084 ============ ============ Market Value $8,170,081 $2,195,988 Due from Hartford Life and Annuity Insurance Company 534,811 -- Receivable from fund shares sold -- 152 Other assets -- -- ------------ ------------ Total Assets 8,704,892 2,196,140 ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 152 Payable for fund shares purchased 534,811 -- Other liabilities -- -- ------------ ------------ Total Liabilities 534,811 152 ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $8,170,081 $2,195,988 ============ ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-16 -------------------------------------------------------------------------------
AMERICAN FUNDS HARTFORD BLUE CHIP U.S. GOVERNMENT HARTFORD AMERICAN FUNDS INCOME AND SECURITIES VALUE ASSET ALLOCATION GROWTH HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT (18)(19) SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 4,590,763 2,194,755 4,740,084 3,037,180 ============= ============= ============= ============= Cost $48,421,320 $21,228,064 $39,984,148 $23,269,007 ============= ============= ============= ============= Market Value $47,999,085 $23,642,146 $46,169,758 $27,878,706 Due from Hartford Life and Annuity Insurance Company 10,814 -- -- 3,115 Receivable from fund shares sold -- 1,975 2,089 -- Other assets -- -- -- -- ------------- ------------- ------------- ------------- Total Assets 48,009,899 23,644,121 46,171,847 27,881,821 ------------- ------------- ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 1,975 2,089 -- Payable for fund shares purchased 10,814 -- -- 3,115 Other liabilities 1 -- 1 1 ------------- ------------- ------------- ------------- Total Liabilities 10,815 1,975 2,090 3,116 ------------- ------------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $47,999,084 $23,642,146 $46,169,757 $27,878,705 ============= ============= ============= ============= AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH BOND GLOBAL BOND AND INCOME HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 16,321,572 3,128,016 8,468,825 ============== ============= ============= Cost $154,610,376 $30,559,247 $62,119,619 ============== ============= ============= Market Value $166,633,770 $33,957,922 $76,688,878 Due from Hartford Life and Annuity Insurance Company 11,666 -- 5,660 Receivable from fund shares sold -- 1,568 -- Other assets -- -- 5 -------------- ------------- ------------- Total Assets 166,645,436 33,959,490 76,694,543 -------------- ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 1,568 -- Payable for fund shares purchased 11,666 -- 5,660 Other liabilities 1 -- -- -------------- ------------- ------------- Total Liabilities 11,667 1,568 5,660 -------------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $166,633,769 $33,957,922 $76,688,883 ============== ============= =============
(18) Effective March 19, 2010 Hartford Equity Income HLS Fund merged with Hartford Value HLS Fund. (19) Effective March 19, 2010 Hartford Value Opportunities HLS Fund merged with Hartford Value HLS Fund. SA-17 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL GLOBAL GROWTH CAPITALIZATION HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 3,048,718 6,368,235 ============= ============= Cost $24,658,614 $42,687,136 ============= ============= Market Value $29,690,670 $63,184,852 Due from Hartford Life and Annuity Insurance Company 2,216 50,505 Receivable from fund shares sold -- -- Other assets -- -- ------------- ------------- Total Assets 29,692,886 63,235,357 ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- Payable for fund shares purchased 2,216 50,505 Other liabilities 1 1 ------------- ------------- Total Liabilities 2,217 50,506 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $29,690,669 $63,184,851 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-18 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH GROWTH-INCOME INTERNATIONAL NEW WORLD HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 31,424,213 16,924,505 21,907,192 6,062,371 ============== ============== ============== ============= Cost $225,774,235 $126,386,247 $160,648,753 $46,723,505 ============== ============== ============== ============= Market Value $294,660,788 $152,371,962 $196,323,840 $62,064,793 Due from Hartford Life and Annuity Insurance Company 90,998 41,618 33,407 71,666 Receivable from fund shares sold -- -- -- -- Other assets 4 -- -- -- -------------- -------------- -------------- ------------- Total Assets 294,751,790 152,413,580 196,357,247 62,136,459 -------------- -------------- -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- -- -- -- Payable for fund shares purchased 90,998 41,618 33,407 71,666 Other liabilities -- 8 9 1 -------------- -------------- -------------- ------------- Total Liabilities 90,998 41,626 33,416 71,667 -------------- -------------- -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $294,660,792 $152,371,954 $196,323,831 $62,064,792 ============== ============== ============== ============= LORD ABBETT LORD ABBETT LORD ABBETT FUNDAMENTAL CAPITAL STRUCTURE BOND-DEBENTURE EQUITY PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (20) SUB-ACCOUNT (21) SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------- ASSETS: Investments: Number of Shares 17,408 1,040,068 6,587,065 ========== ============= ============= Cost $270,098 $11,612,158 $69,318,172 ========== ============= ============= Market Value $307,418 $13,926,504 $78,583,687 Due from Hartford Life and Annuity Insurance Company -- -- 179,708 Receivable from fund shares sold 7 583 -- Other assets -- -- 2 ---------- ------------- ------------- Total Assets 307,425 13,927,087 78,763,397 ---------- ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 7 583 -- Payable for fund shares purchased -- -- 179,708 Other liabilities -- -- -- ---------- ------------- ------------- Total Liabilities 7 583 179,708 ---------- ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $307,418 $13,926,504 $78,583,689 ========== ============= =============
(20) Formerly Lord Abbett All Value Portfolio. Change effective May 1, 2010. (21) Formerly Lord Abbett America's Value Portfolio. Change effective May 1, 2010. SA-19 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
LORD ABBETT GROWTH & INCOME MFS CORE PORTFOLIO EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------ ASSETS: Investments: Number of Shares 644,331 1,382,007 ============= ============= Cost $12,686,754 $25,077,753 ============= ============= Market Value $15,315,744 $21,628,421 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 629 39,531 Other assets -- -- ------------- ------------- Total Assets 15,316,373 21,667,952 ------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 629 39,531 Payable for fund shares purchased -- -- Other liabilities -- 1 ------------- ------------- Total Liabilities 629 39,532 ------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $15,315,744 $21,628,420 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-20 -------------------------------------------------------------------------------
MFS INVESTORS MFS GROWTH MFS GLOBAL MFS HIGH GROWTH SERIES EQUITY SERIES INCOME SERIES STOCK SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 2,306,491 1,762,071 30,003,665 4,664,988 ============= ============= ============== ============= Cost $51,215,905 $20,423,448 $253,768,454 $49,449,204 ============= ============= ============== ============= Market Value $56,875,907 $23,611,751 $263,432,175 $51,361,525 Due from Hartford Life and Annuity Insurance Company -- 15,117 434,394 -- Receivable from fund shares sold 351,519 -- -- 1,889 Other assets -- -- -- -- ------------- ------------- -------------- ------------- Total Assets 57,227,426 23,626,868 263,866,569 51,363,414 ------------- ------------- -------------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 351,519 -- -- 1,889 Payable for fund shares purchased -- 15,117 434,394 -- Other liabilities -- 4 3 -- ------------- ------------- -------------- ------------- Total Liabilities 351,519 15,121 434,397 1,889 ------------- ------------- -------------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $56,875,907 $23,611,747 $263,432,172 $51,361,525 ============= ============= ============== ============= MFS INVESTORS MFS MID CAP MFS NEW TRUST SERIES GROWTH SERIES DISCOVERY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------- ASSETS: Investments: Number of Shares 17,738,252 18,103,936 15,305,671 ============== ============== ============== Cost $320,263,959 $113,511,917 $221,721,956 ============== ============== ============== Market Value $355,461,204 $108,442,576 $280,246,840 Due from Hartford Life and Annuity Insurance Company -- 4,556 860,503 Receivable from fund shares sold 127,931 -- -- Other assets 9 -- 1 -------------- -------------- -------------- Total Assets 355,589,144 108,447,132 281,107,344 -------------- -------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 127,931 -- -- Payable for fund shares purchased -- 4,556 860,503 Other liabilities -- -- -- -------------- -------------- -------------- Total Liabilities 127,931 4,556 860,503 -------------- -------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $355,461,213 $108,442,576 $280,246,841 ============== ============== ==============
SA-21 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
MFS TOTAL MFS VALUE RETURN SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------- ASSETS: Investments: Number of Shares 56,594,908 29,320,965 ================ ============== Cost $1,085,892,153 $357,100,002 ================ ============== Market Value $1,058,091,466 $378,973,815 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 395,528 47,893 Other assets 3 -- ---------------- -------------- Total Assets 1,058,486,997 379,021,708 ---------------- -------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 395,528 47,893 Payable for fund shares purchased -- -- Other liabilities -- 7 ---------------- -------------- Total Liabilities 395,528 47,900 ---------------- -------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,058,091,469 $378,973,808 ================ ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-22 -------------------------------------------------------------------------------
BLACKROCK MFS RESEARCH MFS RESEARCH MFS RESEARCH GLOBAL BOND SERIES INTERNATIONAL SERIES SERIES OPPORTUNITIES V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (22) ------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 26,347,992 4,452,537 1,852,966 53,524 ============== ============= ============= ========== Cost $306,201,496 $64,192,880 $33,677,161 $518,825 ============== ============= ============= ========== Market Value $332,807,088 $55,389,559 $35,280,468 $758,435 Due from Hartford Life and Annuity Insurance Company -- -- 13,041 -- Receivable from fund shares sold 198,998 12,544 -- 40 Other assets -- 1 1 -- -------------- ------------- ------------- ---------- Total Assets 333,006,086 55,402,104 35,293,510 758,475 -------------- ------------- ------------- ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 198,998 12,544 -- 40 Payable for fund shares purchased -- -- 13,041 -- Other liabilities 3 -- -- -- -------------- ------------- ------------- ---------- Total Liabilities 199,001 12,544 13,041 40 -------------- ------------- ------------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $332,807,085 $55,389,560 $35,280,469 $758,435 ============== ============= ============= ========== INVESCO BLACKROCK VAN KAMPEN V. I. UIF MID CAP LARGE CAP INTERNATIONAL GROWTH GROWTH V.I. FUND GROWTH EQUITY PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (23) SUB-ACCOUNT (24) -------------------------- --------------------------------------------------------------------- ASSETS: Investments: Number of Shares 115,170 54,493 2,496,828 ============ ========== ============= Cost $969,656 $565,358 $19,099,909 ============ ========== ============= Market Value $1,249,603 $496,434 $29,986,901 Due from Hartford Life and Annuity Insurance Company -- 85,810 7,175 Receivable from fund shares sold 68 -- -- Other assets -- -- 1 ------------ ---------- ------------- Total Assets 1,249,671 582,244 29,994,077 ------------ ---------- ------------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 68 -- -- Payable for fund shares purchased -- 85,810 7,175 Other liabilities -- -- -- ------------ ---------- ------------- Total Liabilities 68 85,810 7,175 ------------ ---------- ------------- NET ASSETS: For Variable Annuity Contract Liabilities $1,249,603 $496,434 $29,986,902 ============ ========== =============
(22) Formerly BlackRock Global Growth V.I. Fund. Change effective May 3, 2010. (23) Formerly Van Kampen -- UIF International Growth Equity Portfolio. Change effective June 1, 2010. (24) Formerly Van Kampen -- UIF Mid Cap Growth Portfolio. Change effective June 1, 2010. SA-23 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO VAN KAMPEN V. I. MORGAN STANLEY -- MID CAP FOCUS GROWTH VALUE FUND PORTFOLIO SUB-ACCOUNT (25) SUB-ACCOUNT ------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 1,331,561 52,038 ============= ============ Cost $14,299,269 $953,189 ============= ============ Market Value $16,937,461 $1,150,564 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 944 114,423 Other assets -- -- ------------- ------------ Total Assets 16,938,405 1,264,987 ------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 944 114,423 Payable for fund shares purchased -- -- Other liabilities -- -- ------------- ------------ Total Liabilities 944 114,423 ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $16,937,461 $1,150,564 ============= ============
(25) Formerly Van Kampen -- UIF U.S. Mid Cap Value Portfolio. Change effective June 1, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-24 -------------------------------------------------------------------------------
MORGAN STANLEY -- MORGAN STANLEY -- INVESCO V.I. SELECT CAPITAL MID CAP MORGAN STANLEY -- DIMENSIONS OPPORTUNITIES GROWTH FLEXIBLE INCOME DIVIDEND PORTFOLIO PORTFOLIO PORTFOLIO GROWTH PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (26) ------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 210,700 24,441 126,484 12,356 ============ ========== ========== ========== Cost $2,703,639 $684,505 $887,296 $214,688 ============ ========== ========== ========== Market Value $3,398,591 $846,622 $780,405 $192,139 Due from Hartford Life and Annuity Insurance Company 42,741 -- -- -- Receivable from fund shares sold -- 40 35 9 Other assets -- -- -- -- ------------ ---------- ---------- ---------- Total Assets 3,441,332 846,662 780,440 192,148 ------------ ---------- ---------- ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 40 35 9 Payable for fund shares purchased 42,741 -- -- -- Other liabilities -- -- -- -- ------------ ---------- ---------- ---------- Total Liabilities 42,741 40 35 9 ------------ ---------- ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $3,398,591 $846,622 $780,405 $192,139 ============ ========== ========== ========== OPPENHEIMER CAPITAL OPPENHEIMER OPPENHEIMER APPRECIATION GLOBAL SECURITIES MAIN STREET FUND/VA FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ----------------------------------------------------------------------- ASSETS: Investments: Number of Shares 70,031 1,065,338 122,502 ============ ============= ============ Cost $2,245,763 $24,723,823 $2,090,094 ============ ============= ============ Market Value $2,800,542 $32,002,763 $2,537,014 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 131 1,962 111 Other assets -- 1 -- ------------ ------------- ------------ Total Assets 2,800,673 32,004,726 2,537,125 ------------ ------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 131 1,962 111 Payable for fund shares purchased -- -- -- Other liabilities -- -- -- ------------ ------------- ------------ Total Liabilities 131 1,962 111 ------------ ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $2,800,542 $32,002,764 $2,537,014 ============ ============= ============
(26) Formerly Morgan Stanley -- Dividend Growth Portfolio. Change effective June 1, 2010. SA-25 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET OPPENHEIMER SMALL CAP VALUE FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------- ASSETS: Investments: Number of Shares 1,883,254 135,822 ============= ============ Cost $22,595,212 $1,148,757 ============= ============ Market Value $32,956,942 $1,389,456 Due from Hartford Life and Annuity Insurance Company 1,905 -- Receivable from fund shares sold -- 63 Other assets -- -- ------------- ------------ Total Assets 32,958,847 1,389,519 ------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 63 Payable for fund shares purchased 1,905 -- Other liabilities -- -- ------------- ------------ Total Liabilities 1,905 63 ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $32,956,942 $1,389,456 ============= ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-26 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT PUTNAM VT PUTNAM VT DIVERSIFIED GLOBAL ASSET INTERNATIONAL INTERNATIONAL INCOME FUND ALLOCATION FUND VALUE FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (27) SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 13,703,728 513,626 151,243 129,891 ============== ============ ============ ============ Cost $93,125,838 $6,108,678 $1,251,529 $1,414,047 ============== ============ ============ ============ Market Value $107,300,185 $7,642,759 $1,414,119 $1,530,116 Due from Hartford Life and Annuity Insurance Company 131,074 -- -- -- Receivable from fund shares sold -- 2,408 93 71 Other assets -- -- -- 1 -------------- ------------ ------------ ------------ Total Assets 107,431,259 7,645,167 1,414,212 1,530,188 -------------- ------------ ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company -- 2,408 93 71 Payable for fund shares purchased 131,074 -- -- -- Other liabilities 4 1 -- -- -------------- ------------ ------------ ------------ Total Liabilities 131,078 2,409 93 71 -------------- ------------ ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $107,300,181 $7,642,758 $1,414,119 $1,530,117 ============== ============ ============ ============ PUTNAM VT PUTNAM VT SMALL CAP PUTNAM VT INVESTORS FUND VALUE VOYAGER SUB-ACCOUNT (28) SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------- ASSETS: Investments: Number of Shares 5,207 162,066 13,293 ========= ============ ========== Cost $47,070 $1,612,470 $458,646 ========= ============ ========== Market Value $52,641 $2,233,268 $513,917 Due from Hartford Life and Annuity Insurance Company -- -- 69 Receivable from fund shares sold 1 734 -- Other assets -- -- -- --------- ------------ ---------- Total Assets 52,642 2,234,002 513,986 --------- ------------ ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 1 734 -- Payable for fund shares purchased -- -- 69 Other liabilities -- -- -- --------- ------------ ---------- Total Liabilities 1 734 69 --------- ------------ ---------- NET ASSETS: For Variable Annuity Contract Liabilities $52,641 $2,233,268 $513,917 ========= ============ ==========
(27) Formerly Putnam VT International Growth and Income Fund. Change effective January 1, 2010. (28) Funded as of March 3, 2010. SA-27 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
PUTNAM VT JENNISON 20/20 EQUITY FOCUS INCOME FUND PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 36,408 34,178 ========== ========== Cost $451,520 $366,866 ========== ========== Market Value $489,319 $523,269 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 36 26 Other assets -- -- ---------- ---------- Total Assets 489,355 523,295 ---------- ---------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 36 26 Payable for fund shares purchased -- -- Other liabilities -- -- ---------- ---------- Total Liabilities 36 26 ---------- ---------- NET ASSETS: For Variable Annuity Contract Liabilities $489,319 $523,269 ========== ==========
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-28 -------------------------------------------------------------------------------
INVESCO PRUDENTIAL VAN KAMPEN V. I. INVESCO JENNISON VALUE GROWTH AND VAN KAMPEN V. I. PORTFOLIO PORTFOLIO INCOME FUND COMSTOCK FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (29) SUB-ACCOUNT (30) ----------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 4,655 18,976 3,044,091 266,078 ========== ========== ============= ============ Cost $101,995 $339,960 $47,369,369 $3,767,043 ========== ========== ============= ============ Market Value $106,650 $325,053 $55,919,949 $3,105,136 Due from Hartford Life and Annuity Insurance Company -- -- 189,511 -- Receivable from fund shares sold 6 16 -- 145 Other assets -- -- -- -- ---------- ---------- ------------- ------------ Total Assets 106,656 325,069 56,109,460 3,105,281 ---------- ---------- ------------- ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 6 16 -- 145 Payable for fund shares purchased -- -- 189,511 -- Other liabilities -- -- 1 -- ---------- ---------- ------------- ------------ Total Liabilities 6 16 189,512 145 ---------- ---------- ------------- ------------ NET ASSETS: For Variable Annuity Contract Liabilities $106,650 $325,053 $55,919,948 $3,105,136 ========== ========== ============= ============ WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT INDEX ASSET TOTAL RETURN INTRINSIC ALLOCATION FUND BOND FUND VALUE FUND SUB-ACCOUNT (31) SUB-ACCOUNT SUB-ACCOUNT (32)(33) -------------------------- ------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 90,356 633,665 267,968 ============ ============ ============ Cost $1,131,838 $6,453,453 $3,851,314 ============ ============ ============ Market Value $1,058,972 $6,596,447 $3,419,266 Due from Hartford Life and Annuity Insurance Company -- -- -- Receivable from fund shares sold 57 1,633 565 Other assets -- 512 -- ------------ ------------ ------------ Total Assets 1,059,029 6,598,592 3,419,831 ------------ ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 57 1,633 565 Payable for fund shares purchased -- -- -- Other liabilities -- -- 1 ------------ ------------ ------------ Total Liabilities 57 1,633 566 ------------ ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $1,058,972 $6,596,959 $3,419,265 ============ ============ ============
(29) Formerly Van Kampen LIT Growth and Income Portfolio. Change effective June 1, 2010. (30) Formerly Van Kampen LIT Comstock Portfolio. Change effective June 1, 2010. (31) Formerly Wells Fargo Advantage VT Asset Allocation Fund. Change effective May 1, 2010. (32) Effective July 16, 2010 Wells Fargo Advantage VT C&B Large Cap Value Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. (33) Effective July 16, 2010 Wells Fargo Advantage VT Equity Income Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. SA-29 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTERNATIONAL SMALL CAP EQUITY FUND GROWTH FUND SUB-ACCOUNT (34) SUB-ACCOUNT ------------------------------------------------------------------------------ ASSETS: Investments: Number of Shares 328,616 406,807 ============ ============ Cost $1,553,942 $3,367,141 ============ ============ Market Value $1,886,254 $3,274,795 Due from Hartford Life and Annuity Insurance Company -- -- Receivable from fund shares sold 94 364 Other assets 156 1 ------------ ------------ Total Assets 1,886,504 3,275,160 ------------ ------------ LIABILITIES: Due to Hartford Life and Annuity Insurance Company 94 364 Payable for fund shares purchased -- -- Other liabilities -- -- ------------ ------------ Total Liabilities 94 364 ------------ ------------ NET ASSETS: For Variable Annuity Contract Liabilities $1,886,410 $3,274,796 ============ ============
(34) Formerly Wells Fargo Advantage VT International Core Fund. Change effective July 16, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-30 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT ADVANTAGE VT SMALL CAP ADVANTAGE VT CORE DISCOVERY FUND VALUE FUND OPPORTUNITY FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT (35) SUB-ACCOUNT SUB-ACCOUNT (36) ------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: Number of Shares 88,832 65,080 16,709 2,687 ============ ========== ========== ========= Cost $1,571,678 $730,362 $304,160 $42,955 ============ ========== ========== ========= Market Value $1,890,354 $587,674 $307,789 $53,016 Due from Hartford Life and Annuity Insurance Company -- -- -- -- Receivable from fund shares sold 102 28 14 3 Other assets -- -- -- -- ------------ ---------- ---------- --------- Total Assets 1,890,456 587,702 307,803 53,019 ------------ ---------- ---------- --------- LIABILITIES: Due to Hartford Life and Annuity Insurance Company 102 28 14 3 Payable for fund shares purchased -- -- -- -- Other liabilities -- -- -- -- ------------ ---------- ---------- --------- Total Liabilities 102 28 14 3 ------------ ---------- ---------- --------- NET ASSETS: For Variable Annuity Contract Liabilities $1,890,354 $587,674 $307,789 $53,016 ============ ========== ========== =========
(35) Formerly Wells Fargo Advantage VT Small/Mid Cap Value Fund. Change effective May 1, 2010. (36) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Core Fund merged with newly created Wells Fargo Advantage VT Core Equity Fund. SA-31 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION PERIOD (BY SUB-ACCOUNT): AllianceBernstein VPS Balanced Wealth Strategy Portfolio -- Class B 3,463,120 $9.526174 to $13.975034 $34,349,623 AllianceBernstein VPS International Value Portfolio -- Class B 5,614,969 6.783623 to 14.408935 40,067,814 AllianceBernstein VPS Small/Mid Cap Value Portfolio -- Class B 1,817,009 11.386043 to 19.150714 21,610,686 AllianceBernstein VPS Value Portfolio -- Class B 146,524 8.155045 to 13.390012 1,250,549 AllianceBernstein VPS International Growth Portfolio -- Class B 1,262,155 8.050779 to 16.306314 10,581,772 Invesco V.I. Basic Value Fund -- Class S1 100,440,644 1.005059 to 15.527976 107,197,637 Invesco V.I. Capital Appreciation Fund -- Class S1 43,988,731 1.089519 to 13.688686 50,956,629 Invesco V.I. Capital Appreciation Fund -- Class S2 192,974 8.576212 to 13.901433 1,765,708 Invesco V.I. Core Equity Fund -- Class S1 18,685,980 11.124549 to 13.575989 215,853,504 Invesco V.I. Core Equity Fund -- Class S2 513,235 9.591296 to 13.590857 5,079,144 Invesco V.I. Government Securities Fund -- Class S1 560,559,635 1.200346 to 10.334391 717,164,444 Invesco V.I. International Growth Fund -- Class S1 83,138,553 1.870845 to 15.425333 166,183,194 Invesco V.I. International Growth Fund -- Class S2 5,615,936 9.171032 to 15.702095 54,002,096 Invesco V.I. Mid Cap Core Equity Fund -- Class S1 150,021,649 1.649245 to 14.453873 263,829,630 Invesco V.I. Mid Cap Core Equity Fund -- Class S2 12,740 10.904869 to 13.714290 170,107 Invesco V.I. Small Cap Equity Fund -- Class S1 8,810,798 14.092937 to 15.816340 130,907,627 Invesco V.I. Small Cap Equity Fund -- Class S2 1,422,418 11.032037 to 15.748892 16,498,924 Invesco V.I. Large Cap Growth Fund -- Class S1 2,906,432 1.106617 to 14.528208 32,311,794 Invesco V.I. Capital Development Fund -- Class S1 1,090,808 8.109153 to 8.560390 9,043,912 Invesco V.I. Capital Development Fund -- Class S2 118,795 9.374262 to 16.411166 1,200,439 Invesco V.I. Global Multi-Asset Fund -- Class S2 983,388 12.882318 to 14.559783 14,033,562 American Funds Global Bond Fund -- Class 2 23,991,234 11.142028 to 12.887393 297,751,361 American Funds Global Growth and Income Fund -- Class 2 52,229,907 10.119463 to 15.648853 553,355,407 American Funds Asset Allocation Fund -- Class 2 95,438,247 12.118275 to 15.099175 1,263,112,727 American Funds Blue Chip Income and Growth Fund -- Class 2 736,750,012 0.968436 to 14.135335 767,252,366 American Funds Bond Fund -- Class 2 79,389,296 11.201828 to 15.818424 1,132,392,102 American Funds Global Growth Fund -- Class 2 35,431,235 10.845987 to 17.445402 520,472,038 American Funds Growth Fund -- Class 2 236,672,935 8.954023 to 16.218062 2,780,899,587 American Funds Growth-Income Fund -- Class 2 214,183,591 11.501384 to 14.780327 2,695,811,842 American Funds International Fund -- Class 2 57,964,435 10.410249 to 16.767312 816,175,067 American Funds New World Fund -- Class 2 17,240,812 14.561933 to 30.913810 457,327,501 American Funds Global Small Capitalization Fund -- Class 2 21,657,672 14.703862 to 22.646601 404,454,617 Wells Fargo Advantage VT Omega Growth Fund -- Class 2 162,186 12.547037 to 12.612644 2,040,318 Fidelity VIP Growth Portfolio -- Class SRV2 446,768 8.745303 to 15.380027 4,054,447 Fidelity VIP Contrafund Portfolio -- Class SRV2 9,467,137 9.479188 to 15.714822 93,760,661 Fidelity VIP Mid Cap Portfolio -- Class SRV2 8,268,252 10.886520 to 18.319340 94,605,932 Fidelity VIP Value Strategies Portfolio -- Class SRV2 557,023 10.012852 to 20.714619 5,879,866 Fidelity VIP Dynamic Capital Appreciation Portfolio -- Class SRV2 183,487 9.672059 to 16.114668 1,867,629 Fidelity VIP Strategic Income Portfolio -- Class SRV2 30,035 12.074240 to 12.266327 364,547 Franklin Rising Dividends Securities Fund -- Class 2 53,030,452 13.575870 to 15.333461 763,856,824 Franklin Rising Dividends Securities Fund -- Class 4 72,039 10.795787 to 14.187159 998,629 Franklin Income Securities Fund -- Class 2 120,399,742 13.408278 to 17.263025 1,938,360,483 Franklin Income Securities Fund -- Class 4 22,860,464 10.415972 to 15.819395 247,317,556 Franklin Large Cap Growth Securities Fund -- Class 2 12,381,767 10.402696 to 13.948188 136,399,429 Franklin Global Real Estate Securities Fund -- Class 2 548,262 14.312813 to 21.316773 9,233,157 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 29,081,502 7.804534 to 17.486064 318,590,517
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-32 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Franklin Small-Mid Cap Growth Securities Fund -- Class 4 1,064,605 $11.132217 to $17.557507 $12,613,932 Franklin Small Cap Value Securities Fund -- Class 2 7,617,094 9.476397 to 16.712128 74,073,329 Franklin Small Cap Value Securities Fund -- Class 4 3,013,556 10.914601 to 17.060373 34,233,845 Franklin Strategic Income Securities Fund -- Class 1 42,675,912 13.909880 to 20.868294 786,738,086 Franklin Strategic Income Securities Fund -- Class 2 1,737,889 11.601960 to 14.182489 20,941,898 Franklin Strategic Income Securities Fund -- Class 4 13,465,920 10.080929 to 14.186270 159,447,309 Mutual Shares Securities Fund -- Class 2 73,966,289 13.176448 to 17.534020 1,085,214,539 Mutual Shares Securities Fund -- Class 4 14,753,818 8.844456 to 14.014131 136,062,799 Templeton Developing Markets Securities Fund -- Class 1 8,457,988 20.102769 to 29.251465 214,777,124 Templeton Developing Markets Securities Fund -- Class 2 47,617 9.955707 to 20.473027 490,907 Templeton Developing Markets Securities Fund -- Class 4 2,656,609 9.682806 to 20.120775 27,251,717 Templeton Foreign Securities Fund -- Class 2 33,160,911 11.592637 to 15.092799 420,393,842 Templeton Foreign Securities Fund -- Class 4 1,964,452 8.971929 to 15.417996 18,902,833 Templeton Growth Securities Fund -- Class 2 43,614,154 10.904107 to 14.199091 530,126,883 Templeton Growth Securities Fund -- Class 4 5,533,260 8.407694 to 14.511652 48,330,490 Mutual Global Discovery Securities Fund -- Class 2 28,083,535 12.606120 to 22.153716 574,041,957 Mutual Global Discovery Securities Fund -- Class 4 4,984,350 9.823691 to 13.584093 51,339,811 Franklin Flex Cap Growth Securities Fund -- Class 2 4,894,576 10.978686 to 14.705171 56,230,754 Franklin Flex Cap Growth Securities Fund -- Class 4 407,395 10.535820 to 14.768708 4,468,418 Franklin Large Cap Value Securities Fund -- Class 2 2,985,432 9.781872 to 14.118514 30,594,252 Templeton Global Bond Securities Fund -- Class 2 491,174 12.518127 to 14.029559 6,502,509 Templeton Global Bond Securities Fund -- Class 4 9,948,872 10.049889 to 14.021191 129,308,742 Hartford Advisers HLS Fund -- Class IA 1,350,381 9.947373 to 14.698714 13,922,451 Hartford Total Return Bond HLS Fund -- Class IA 66,681,763 9.895514 to 12.317907 724,920,152 Hartford Capital Appreciation HLS Fund -- Class IA 82,440,209 9.332824 to 17.210902 806,814,492 Hartford Dividend and Growth HLS Fund -- Class IA 50,489,155 9.513114 to 14.176062 501,343,050 Hartford Global Research HLS Fund -- Class IA 71,581 9.587412 to 16.467240 737,586 Hartford Global Growth HLS Fund -- Class IA 215,450 7.861943 to 15.860036 1,847,472 Hartford Disciplined Equity HLS Fund -- Class IA 10,748,751 9.223343 to 14.509205 103,559,276 Hartford Growth HLS Fund -- Class IA 2,324,376 9.934147 to 16.156840 24,325,622 Hartford Growth Opportunities HLS Fund -- Class IA 19,066,148 8.684497 to 15.603811 173,632,250 Hartford High Yield HLS Fund -- Class IA 4,543,023 10.363784 to 17.628302 59,908,443 Hartford Index HLS Fund -- Class IB 8,442 13.851916 to 13.883156 117,189 Hartford International Opportunities HLS Fund -- Class IA 3,611,734 8.990583 to 15.874194 33,954,453 Hartford Small/Mid Cap Equity HLS Fund -- Class IA 1,077,510 10.087946 to 18.593626 11,609,911 Hartford Money Market HLS Fund -- Class IA 581,811,240 0.979543 to 9.963517 731,974,434 Hartford Small Company HLS Fund -- Class IA 1,312,705 10.081779 to 16.298343 13,714,248 Hartford SmallCap Growth HLS Fund -- Class IA 647,265 12.052733 to 19.117198 8,170,081 Hartford Stock HLS Fund -- Class IA 215,623 9.593407 to 16.033586 2,195,988 Hartford U.S. Government Securities HLS Fund -- Class IA 4,807,088 9.721547 to 10.582456 47,999,084 Hartford Value HLS Fund -- Class IA 2,366,692 9.529590 to 14.278537 23,642,146 American Funds Asset Allocation HLS Fund -- Class IB 4,651,207 9.491952 to 13.610109 46,167,528 American Funds Blue Chip Income and Growth HLS Fund -- Class IB 2,893,066 9.005117 to 14.125812 27,878,705 American Funds Bond HLS Fund -- Class IB 16,144,807 10.006638 to 11.974346 166,562,962 American Funds Global Bond HLS Fund -- Class IB 3,125,828 10.585294 to 11.895935 33,957,922 American Funds Global Growth and Income HLS Fund -- Class IB 8,333,335 8.797563 to 15.905602 76,686,147 American Funds Global Growth HLS Fund -- Class IB 2,961,672 9.475375 to 16.295059 29,690,669 American Funds Global Small Capitalization HLS Fund -- Class IB 6,400,897 9.355201 to 20.194381 63,154,655
SA-33 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- American Funds Growth HLS Fund -- Class IB 31,071,663 $9.052398 to $16.506866 $294,588,330 American Funds Growth-Income HLS Fund -- Class IB 16,502,986 8.842559 to 14.509211 152,301,596 American Funds International HLS Fund -- Class IB 21,620,228 8.694872 to 15.943606 196,281,839 American Funds New World HLS Fund -- Class IB 5,976,241 9.844643 to 17.855147 62,064,792 Lord Abbett Fundamental Equity Portfolio -- Class VC 24,036 11.285819 to 12.880117 307,418 Lord Abbett Capital Structure Portfolio -- Class VC 1,274,552 10.521868 to 14.294866 13,926,504 Lord Abbett Bond-Debenture Portfolio -- Class VC 6,412,890 10.247516 to 15.389907 78,583,689 Lord Abbett Growth & Income Portfolio -- Class VC 1,616,492 9.090114 to 13.993548 15,315,744 MFS Core Equity Series -- Class INIT 2,567,225 6.406723 to 15.274020 21,594,841 MFS Growth Series -- Class INIT 6,545,823 5.908062 to 15.206469 52,707,675 MFS Growth Series -- Class SRV 388,414 10.112173 to 15.209406 4,123,247 MFS Global Equity Series -- Class INIT 1,596,101 12.972231 to 17.373146 23,611,747 MFS High Income Series -- Class INIT 18,488,622 13.501766 to 16.899142 263,311,706 MFS Investors Growth Stock Series -- Class INIT 6,576,751 6.313161 to 15.076536 51,240,578 MFS Investors Trust Series -- Class INIT 37,360,622 8.741499 to 13.677553 352,340,123 MFS Investors Trust Series -- Class SRV 297,394 9.436697 to 13.894493 2,964,231 MFS Mid Cap Growth Series -- Class INIT 19,567,264 5.145768 to 17.788556 108,402,806 MFS New Discovery Series -- Class INIT 19,217,097 10.928429 to 23.243486 279,973,069 MFS Total Return Series -- Class INIT 72,134,200 12.382315 to 16.124833 992,918,667 MFS Total Return Series -- Class SRV 6,332,464 9.782756 to 12.878119 64,219,624 MFS Value Series -- Class INIT 15,092,076 13.429849 to 16.977153 240,883,219 MFS Value Series -- Class SRV 14,138,060 9.329606 to 13.736995 137,906,452 MFS Research Bond Series -- Class INIT 21,546,341 11.566286 to 12.767630 259,662,497 MFS Research Bond Series -- Class SRV 6,323,547 9.876812 to 12.405597 73,105,620 MFS Research International Series -- Class INIT 4,278,033 12.383777 to 14.801561 55,389,560 MFS Research Series -- Class INIT 2,932,762 11.189423 to 14.676565 35,280,469 BlackRock Global Opportunities V.I. Fund -- Class I 53,725 11.772777 to 15.280107 758,435 BlackRock Large Cap Growth V.I. Fund -- Class I 126,306 8.601826 to 10.708596 1,249,603 Invesco Van Kampen V. I. International Growth Equity -- Class S2 51,555 9.410090 to 9.777615 496,434 UIF Mid Cap Growth Portfolio -- Class II 2,511,545 11.460298 to 20.741220 29,986,902 Invesco Van Kampen V. I. Mid Cap Value Fund -- Class S2 1,564,972 10.128192 to 17.399742 16,937,461 Morgan Stanley -- Focus Growth Portfolio -- Class Y 136,508 7.978864 to 8.636505 1,150,564 Morgan Stanley -- Capital Opportunities Portfolio -- Class Y 613,648 5.246144 to 5.678500 3,398,591 Morgan Stanley -- Mid Cap Growth Portfolio -- Class Y 71,985 11.168445 to 12.088848 846,622 Morgan Stanley -- Flexible Income Portfolio -- Class Y 68,187 10.783596 to 11.672055 780,405 Invesco V.I. Select Dimensions Dividend Growth Portfolio -- Class S2 18,242 10.134682 to 10.835269 192,139 Oppenheimer Capital Appreciation Fund/VA -- Class SRV 298,124 8.954821 to 15.652531 2,800,542 Oppenheimer Global Securities Fund/VA -- Class SRV 3,102,854 9.936086 to 16.640327 32,002,764 Oppenheimer Main Street Fund/VA -- Class SRV 256,255 9.441614 to 14.731478 2,537,014 Oppenheimer Main Street Small Cap Fund/VA -- Class SRV 2,939,236 10.729552 to 17.628246 32,956,942 Oppenheimer Value Fund/VA -- Class SRV 143,100 9.199060 to 15.026440 1,389,456 Putnam VT Diversified Income Fund -- Class IB 8,774,553 11.726340 to 17.706722 107,300,181 Putnam VT Global Asset Allocation Fund -- Class IB 727,108 10.201866 to 15.472814 7,642,758 Putnam VT International Value Fund -- Class IB 175,158 7.567555 to 13.872866 1,414,119 Putnam VT International Equity Fund -- Class IB 184,549 7.929509 to 13.996731 1,530,117 Putnam VT Investors Fund -- Class IB 3,795 13.870722 to 13.870722 52,641 Putnam VT Small Cap Value -- Class IB 203,283 10.308076 to 16.943233 2,233,268 Putnam VT Voyager -- Class IB 34,353 11.118426 to 15.402708 513,917
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-34 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Putnam VT Equity Income Fund -- Class IB 36,701 $10.921139 to $13.389583 $489,319 Jennison 20/20 Focus Portfolio -- Class II 355,404 1.407108 to 1.492525 523,269 Jennison Portfolio -- Class II 116,634 0.897947 to 0.924809 106,650 Prudential Value Portfolio -- Class II 269,412 1.176590 to 1.217103 325,053 Invesco Van Kampen V. I. Growth and Income Fund -- Class S2 5,217,369 9.579982 to 15.617708 55,919,948 Invesco Van Kampen V. I. Comstock Fund -- Class S2 211,931 13.925507 to 14.988434 3,105,136 Wells Fargo Advantage VT Index Asset Allocation Fund 895,881 1.134366 to 1.247548 1,058,972 Wells Fargo Advantage VT Total Return Bond Fund 4,657,934 1.332467 to 11.913757 6,596,959 Wells Fargo Advantage VT Intrinsic Value Fund -- Class 2 3,041,018 1.051224 to 12.968994 3,419,265 Wells Fargo Advantage VT International Equity Fund -- Class 2 155,090 12.120069 to 12.193157 1,886,410 Wells Fargo Advantage VT Small Cap Growth Fund 1,949,054 1.563785 to 20.011357 3,274,796 Wells Fargo Advantage VT Discovery Fund 121,343 14.889172 to 18.480499 1,890,354 Wells Fargo Advantage VT Small Cap Value Fund 44,338 12.909634 to 13.537143 587,674 Wells Fargo Advantage VT Opportunity Fund 23,563 12.679284 to 13.295704 307,789 Wells Fargo Advantage VT Core Equity Fund -- Class 2 4,338 12.210912 to 12.266435 53,016 ANNUITY CONTRACTS IN THE ANNUITY PERIOD (BY SUB-ACCOUNT): AllianceBernstein VPS International Growth Portfolio -- Class B 311 8.340904 to 8.340904 2,592 Invesco V.I. Basic Value Fund -- Class S1 47,702 1.080576 to 1.158485 52,734 Invesco V.I. Capital Appreciation Fund -- Class S1 25,457 1.204471 to 1.255847 31,161 Invesco V.I. Core Equity Fund -- Class S1 9,823 11.690539 to 11.931858 116,517 Invesco V.I. Government Securities Fund -- Class S1 265,044 1.290550 to 1.383535 350,765 Invesco V.I. International Growth Fund -- Class S1 52,264 2.011361 to 2.079428 108,212 Invesco V.I. Mid Cap Core Equity Fund -- Class S1 100,692 1.773146 to 1.900907 181,200 Invesco V.I. Small Cap Equity Fund -- Class S1 453 15.810634 to 15.810634 7,166 Invesco V.I. Large Cap Growth Fund -- Class S1 5,229 1.201896 to 11.461427 10,023 American Funds Global Bond Fund -- Class 2 6,787 12.590317 to 12.617063 85,585 American Funds Global Growth and Income Fund -- Class 2 19,728 10.535571 to 10.916891 210,112 American Funds Asset Allocation Fund -- Class 2 44,412 12.947485 to 15.099175 597,792 American Funds Blue Chip Income and Growth Fund -- Class 2 396,700 1.041977 to 1.118849 420,477 American Funds Bond Fund -- Class 2 37,602 13.920428 to 15.818424 546,204 American Funds Global Growth Fund -- Class 2 37,469 12.746831 to 17.445402 603,893 American Funds Growth Fund -- Class 2 130,608 9.617146 to 15.366907 1,682,343 American Funds Growth-Income Fund -- Class 2 185,376 12.288512 to 14.780327 2,388,346 American Funds International Fund -- Class 2 37,923 12.276433 to 16.568395 557,689 American Funds New World Fund -- Class 2 4,487 25.693979 to 29.687121 122,151 American Funds Global Small Capitalization Fund -- Class 2 7,066 16.059663 to 22.377840 146,806 Franklin Rising Dividends Securities Fund -- Class 2 16,702 14.476136 to 15.310662 243,642 Franklin Income Securities Fund -- Class 2 86,307 16.176367 to 17.263025 1,422,309 Franklin Income Securities Fund -- Class 4 222 10.791840 to 10.791840 2,396 Franklin Large Cap Growth Securities Fund -- Class 2 4,897 11.160712 to 11.510411 55,569 Franklin Global Real Estate Securities Fund -- Class 2 493 17.659480 to 17.659480 8,699 Franklin Small-Mid Cap Growth Securities Fund -- Class 2 13,821 8.451916 to 15.025305 160,154 Franklin Small Cap Value Securities Fund -- Class 2 3,906 9.840955 to 9.857113 38,452 Franklin Strategic Income Securities Fund -- Class 1 24,874 18.170485 to 20.868294 473,836 Mutual Shares Securities Fund -- Class 2 38,044 14.056883 to 17.534020 584,490 Templeton Developing Markets Securities Fund -- Class 1 2,257 23.623172 to 28.090642 59,976 Templeton Foreign Securities Fund -- Class 2 23,053 12.497858 to 14.051270 309,508
SA-35 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 -------------------------------------------------------------------------------
UNITS MINIMUM MAXIMUM OWNED BY UNIT UNIT CONTRACT PARTICIPANTS FAIR VALUE # FAIR VALUE # LIABILITY --------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund -- Class 2 11,122 $12.024814 to $13.995139 $141,200 Mutual Global Discovery Securities Fund -- Class 2 17,151 20.518313 to 21.733036 355,209 Franklin Flex Cap Growth Securities Fund -- Class 2 1,658 11.537119 to 11.775265 19,350 Franklin Large Cap Value Securities Fund -- Class 2 2,541 10.279500 to 10.279500 26,120 Hartford Total Return Bond HLS Fund -- Class IA 235 10.889911 to 10.889911 2,556 Hartford Capital Appreciation HLS Fund -- Class IA 808 9.669885 to 9.669885 7,810 Hartford Dividend and Growth HLS Fund -- Class IA 282 9.856610 to 9.856610 2,779 Hartford Money Market HLS Fund -- Class IA 555,138 1.056032 to 1.146874 632,100 American Funds Asset Allocation HLS Fund -- Class IB 227 9.801022 to 9.801022 2,229 American Funds Bond HLS Fund -- Class IB 6,844 10.346110 to 10.346110 70,807 American Funds Global Growth and Income HLS Fund -- Class IB 301 9.096222 to 9.096222 2,736 American Funds Global small Capitalization HLS Fund -- Class IB 3,122 9.672766 to 9.672766 30,196 American Funds Growth HLS Fund -- Class IB 7,742 9.359771 to 9.359771 72,462 American Funds Growth-Income HLS Fund -- Class IB 7,696 9.142787 to 9.142787 70,358 American Funds International HLS Fund -- Class IB 4,671 8.990016 to 8.990016 41,992 MFS Core Equity Series -- Class INIT 3,605 6.936689 to 9.448727 33,579 MFS Growth Series -- Class INIT 5,050 6.312079 to 9.771444 44,985 MFS High Income Series -- Class INIT 8,066 14.433501 to 15.924769 120,466 MFS Investors Growth Stock Series -- Class INIT 13,633 8.851891 to 9.273210 120,947 MFS Investors Trust Series -- Class INIT 15,443 9.325710 to 10.970891 156,859 MFS Mid Cap Growth Series -- Class INIT 7,179 5.490474 to 5.675686 39,770 MFS New Discovery Series -- Class INIT 15,044 11.782080 to 19.971233 273,772 MFS Total Return Series -- Class INIT 66,535 13.209657 to 16.124833 953,178 MFS Value Series -- Class INIT 11,395 16.028067 to 16.464227 184,137 MFS Research Bond Series -- Class INIT 3,199 12.152175 to 12.401922 38,968
# Rounded unit values THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-36 ------------------------------------------------------------------------------- [This page intentionally left blank] SA-37 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $796,464 $1,026,852 ------------ ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (495,372) (593,905) ------------ ------------ Total Expense (495,372) (593,905) ------------ ------------ Net investment income (loss) 301,092 432,947 ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 26,200 447,287 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 2,328,585 581,493 ------------ ------------ Net gain (loss) on investments 2,354,785 1,028,780 ------------ ------------ Net increase (decrease) in net assets resulting from operations $2,655,877 $1,461,727 ============ ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-38 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INVESCO V.I. SMALL/MID CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $54,630 $20,356 $185,781 $658,368 ------------ ---------- ------------ ------------- EXPENSES: Administrative Charges -- -- -- (170,665) Mortality and Expense Risk Charges (282,996) (17,919) (164,152) (2,055,511) ------------ ---------- ------------ ------------- Total Expense (282,996) (17,919) (164,152) (2,226,176) ------------ ---------- ------------ ------------- Net investment income (loss) (228,366) 2,437 21,629 (1,567,808) ------------ ---------- ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (484,790) 11,340 154,628 10,116,732 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,436,725 95,470 829,940 (2,779,580) ------------ ---------- ------------ ------------- Net gain (loss) on investments 2,951,935 106,810 984,568 7,337,152 ------------ ---------- ------------ ------------- Net increase (decrease) in net assets resulting from operations $2,723,569 $109,247 $1,006,197 $5,769,344 ============ ========== ============ ============= INVESCO V.I. INVESCO V.I. INVESCO V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT (2) SUB-ACCOUNT (3) SUB-ACCOUNT (4) ----------------------------- -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $373,640 $2,166,345 $37,183,064 ------------- ------------- -------------- EXPENSES: Administrative Charges (73,444) (384,711) (1,161,134) Mortality and Expense Risk Charges (896,475) (3,878,792) (13,465,665) ------------- ------------- -------------- Total Expense (969,919) (4,263,503) (14,626,799) ------------- ------------- -------------- Net investment income (loss) (596,279) (2,097,158) 22,556,265 ------------- ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,247,214) 1,530,677 1,578,537 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 8,095,032 16,629,485 4,670,412 ------------- ------------- -------------- Net gain (loss) on investments 6,847,818 18,160,162 6,248,949 ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $6,251,539 $16,063,004 $28,805,214 ============= ============= ==============
(1) Formerly AIM V.I. Basic Value Fund. Change effective April 30, 2010. (2) Formerly AIM V.I. Capital Appreciation Fund. Change effective April 30, 2010. (3) Formerly AIM V.I. Core Equity Fund. Change effective April 30, 2010. (4) Formerly AIM V.I. Government Securities Fund. Change effective April 30, 2010. SA-39 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INTERNATIONAL MID CAP CORE GROWTH FUND EQUITY FUND SUB-ACCOUNT (5) SUB-ACCOUNT (6) -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $4,577,992 $1,440,718 ------------- ------------- EXPENSES: Administrative Charges (242,886) (383,769) Mortality and Expense Risk Charges (3,450,447) (4,378,585) ------------- ------------- Total Expense (3,693,333) (4,762,354) ------------- ------------- Net investment income (loss) 884,659 (3,321,636) ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (3,724,459) 2,994,356 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 23,494,392 29,125,444 ------------- ------------- Net gain (loss) on investments 19,769,933 32,119,800 ------------- ------------- Net increase (decrease) in net assets resulting from operations $20,654,592 $28,798,164 ============= =============
(5) Formerly AIM V.I. International Growth Fund. Change effective April 30, 2010. (6) Formerly AIM V.I. Mid Cap Core Equity Fund. Change effective April 30, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-40 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. INVESCO V.I. SMALL CAP LARGE CAP CAPITAL GLOBAL EQUITY FUND GROWTH FUND DEVELOPMENT FUND MULTI-ASSET FUND SUB-ACCOUNT (7) SUB-ACCOUNT (8) SUB-ACCOUNT (9) SUB-ACCOUNT (10) ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $ -- $138,151 $ -- $47,535 ------------- ------------ ------------ ------------ EXPENSES: Administrative Charges (1,397) (53,634) -- -- Mortality and Expense Risk Charges (2,399,661) (509,265) (172,542) (203,427) ------------- ------------ ------------ ------------ Total Expense (2,401,058) (562,899) (172,542) (203,427) ------------- ------------ ------------ ------------ Net investment income (loss) (2,401,058) (424,748) (172,542) (155,892) ------------- ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (1,985,380) 49,150 345,358 788 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 33,926,309 4,550,169 1,288,575 1,314,885 ------------- ------------ ------------ ------------ Net gain (loss) on investments 31,940,929 4,599,319 1,633,933 1,315,673 ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $29,539,871 $4,174,571 $1,461,391 $1,159,781 ============= ============ ============ ============ AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,626,723 $13,498,819 $23,738,311 ------------ -------------- -------------- EXPENSES: Administrative Charges -- -- (2,143,696) Mortality and Expense Risk Charges (5,251,973) (8,514,019) (19,031,045) ------------ -------------- -------------- Total Expense (5,251,973) (8,514,019) (21,174,741) ------------ -------------- -------------- Net investment income (loss) 3,374,750 4,984,800 2,563,570 ------------ -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 48,271 (11,409,255) (3,162,695) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 6,079,511 55,457,512 124,094,215 ------------ -------------- -------------- Net gain (loss) on investments 6,127,782 44,048,257 120,931,520 ------------ -------------- -------------- Net increase (decrease) in net assets resulting from operations $9,502,532 $49,033,057 $123,495,090 ============ ============== ==============
(7) Formerly AIM V.I. Small Cap Equity Fund. Change effective April 30, 2010. (8) Formerly AIM V.I. Large Cap Growth Fund. Change effective April 30, 2010. (9) Formerly AIM V.I. Capital Development Fund. Change effective April 30, 2010. (10) Formerly AIM V.I. PowerShares ETF Allocation Fund. Change effective April 30, 2010. SA-41 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $12,567,096 $35,010,025 -------------- -------------- EXPENSES: Administrative Charges (1,123,294) (2,100,156) Mortality and Expense Risk Charges (11,898,841) (18,384,880) -------------- -------------- Total Expense (13,022,135) (20,485,036) -------------- -------------- Net investment income (loss) (455,039) 14,524,989 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (9,278,317) 3,117,007 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 83,081,999 38,667,029 -------------- -------------- Net gain (loss) on investments 73,803,682 41,784,036 -------------- -------------- Net increase (decrease) in net assets resulting from operations $73,348,643 $56,309,025 ============== ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-42 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $7,310,890 $18,553,690 $37,858,922 $16,104,279 ------------- -------------- -------------- -------------- EXPENSES: Administrative Charges (880,608) (4,598,754) (4,564,857) (1,403,815) Mortality and Expense Risk Charges (7,902,221) (42,600,754) (41,227,419) (12,819,002) ------------- -------------- -------------- -------------- Total Expense (8,782,829) (47,199,508) (45,792,276) (14,222,817) ------------- -------------- -------------- -------------- Net investment income (loss) (1,471,939) (28,645,818) (7,933,354) 1,881,462 ------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 2,775,955 (62,135,045) (53,428,080) (12,886,853) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 43,464,656 498,378,885 298,492,068 49,183,390 ------------- -------------- -------------- -------------- Net gain (loss) on investments 46,240,611 436,243,840 245,063,988 36,296,537 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $44,768,672 $407,598,022 $237,130,634 $38,177,999 ============= ============== ============== ============== WELLS FARGO AMERICAN FUNDS ADVANTAGE VT AMERICAN FUNDS GLOBAL SMALL OMEGA NEW WORLD FUND CAPITALIZATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (11) ----------------------------- ---------------------------------------------------------------------- INVESTMENT INCOME: Dividends $6,531,313 $6,355,677 $15,892 ------------- ------------- ---------- EXPENSES: Administrative Charges (708,687) (649,406) -- Mortality and Expense Risk Charges (6,627,943) (5,983,041) (37,767) ------------- ------------- ---------- Total Expense (7,336,630) (6,632,447) (37,767) ------------- ------------- ---------- Net investment income (loss) (805,317) (276,770) (21,875) ------------- ------------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 3,038,418 273,673 (78,632) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 57,721,091 68,894,084 329,461 ------------- ------------- ---------- Net gain (loss) on investments 60,759,509 69,167,757 250,829 ------------- ------------- ---------- Net increase (decrease) in net assets resulting from operations $59,954,192 $68,890,987 $228,954 ============= ============= ==========
(11) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Growth Fund merged with newly created Wells Fargo Advantage VT Omega Growth Fund. SA-43 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP GROWTH CONTRAFUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $1,091 $860,849 ---------- ------------- EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (60,835) (1,301,670) ---------- ------------- Total Expense (60,835) (1,301,670) ---------- ------------- Net investment income (loss) (59,744) (440,821) ---------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 438,015 1,001,953 Net realized gain on distributions 12,646 39,174 Net unrealized appreciation (depreciation) of investments during the year 416,297 11,499,942 ---------- ------------- Net gain (loss) on investments 866,958 12,541,069 ---------- ------------- Net increase (decrease) in net assets resulting from operations $807,214 $12,100,248 ========== =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-44 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL FIDELITY VIP MID CAP VALUE STRATEGIES APPRECIATION STRATEGIC INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (12) ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $102,437 $15,537 $2,266 $15,041 ------------- ------------ ---------- --------- EXPENSES: Administrative Charges -- -- -- -- Mortality and Expense Risk Charges (1,292,526) (118,393) (23,446) (2,093) ------------- ------------ ---------- --------- Total Expense (1,292,526) (118,393) (23,446) (2,093) ------------- ------------ ---------- --------- Net investment income (loss) (1,190,089) (102,856) (21,180) 12,948 ------------- ------------ ---------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 838,610 343,793 74,003 (118) Net realized gain on distributions 264,730 -- -- 8,044 Net unrealized appreciation (depreciation) of investments during the year 19,435,720 947,681 198,796 (5,069) ------------- ------------ ---------- --------- Net gain (loss) on investments 20,539,060 1,291,474 272,799 2,857 ------------- ------------ ---------- --------- Net increase (decrease) in net assets resulting from operations $19,348,971 $1,188,618 $251,619 $15,805 ============= ============ ========== ========= FRANKLIN FRANKLIN RISING FRANKLIN LARGE CAP DIVIDENDS INCOME GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- --------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $11,301,622 $144,889,563 $1,100,495 -------------- -------------- ------------- EXPENSES: Administrative Charges (1,057,810) (3,198,975) (210,633) Mortality and Expense Risk Charges (11,304,526) (34,251,438) (2,281,835) -------------- -------------- ------------- Total Expense (12,362,336) (37,450,413) (2,492,468) -------------- -------------- ------------- Net investment income (loss) (1,060,714) 107,439,150 (1,391,973) -------------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (7,008,439) 1,760,978 (1,946,939) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 129,290,019 110,637,885 15,536,142 -------------- -------------- ------------- Net gain (loss) on investments 122,281,580 112,398,863 13,589,203 -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $121,220,866 $219,838,013 $12,197,230 ============== ============== =============
(12) Funded as of February 22, 2010. SA-45 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN GLOBAL SMALL-MID CAP REAL ESTATE GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $243,124 $ -- ------------ ------------- EXPENSES: Administrative Charges (13,984) (476,798) Mortality and Expense Risk Charges (127,852) (4,759,771) ------------ ------------- Total Expense (141,836) (5,236,569) ------------ ------------- Net investment income (loss) 101,288 (5,236,569) ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (242,711) (831,378) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,670,622 72,583,303 ------------ ------------- Net gain (loss) on investments 1,427,911 71,751,925 ------------ ------------- Net increase (decrease) in net assets resulting from operations $1,529,199 $66,515,356 ============ =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-46 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON SMALL CAP STRATEGIC DEVELOPING VALUE INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $788,860 $45,677,794 $18,945,236 $3,825,944 ------------- -------------- -------------- ------------- EXPENSES: Administrative Charges -- (1,379,098) (1,934,675) (337,628) Mortality and Expense Risk Charges (1,580,099) (15,548,487) (18,970,590) (3,674,848) ------------- -------------- -------------- ------------- Total Expense (1,580,099) (16,927,585) (20,905,265) (4,012,476) ------------- -------------- -------------- ------------- Net investment income (loss) (791,239) 28,750,209 (1,960,029) (186,532) ------------- -------------- -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,331,229) 8,391,037 (25,044,050) 7,070,260 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 19,173,945 47,390,303 134,188,163 22,808,917 ------------- -------------- -------------- ------------- Net gain (loss) on investments 16,842,716 55,781,340 109,144,113 29,879,177 ------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations $16,051,477 $84,531,549 $107,184,084 $29,692,645 ============= ============== ============== ============= TEMPLETON TEMPLETON TEMPLETON FOREIGN GLOBAL ASSET GROWTH SECURITIES FUND ALLOCATION FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT (13) SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,105,336 $285,351 $7,912,749 ------------- ------------- -------------- EXPENSES: Administrative Charges (716,535) (3,716) (937,648) Mortality and Expense Risk Charges (7,242,674) (32,221) (9,177,643) ------------- ------------- -------------- Total Expense (7,959,209) (35,937) (10,115,291) ------------- ------------- -------------- Net investment income (loss) 146,127 249,414 (2,202,542) ------------- ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (6,439,586) (7,640,707) (30,006,449) Net realized gain on distributions -- 454,059 -- Net unrealized appreciation (depreciation) of investments during the year 31,390,791 7,129,692 60,443,374 ------------- ------------- -------------- Net gain (loss) on investments 24,951,205 (56,956) 30,436,925 ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $25,097,332 $192,458 $28,234,383 ============= ============= ==============
(13) Effective April 30, 2010 Templeton Global Asset Allocation Fund was liquidated. SA-47 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN MUTUAL FLEX CAP GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $7,711,737 $ -- -------------- ------------ EXPENSES: Administrative Charges (865,838) (93,256) Mortality and Expense Risk Charges (9,599,523) (868,154) -------------- ------------ Total Expense (10,465,361) (961,410) -------------- ------------ Net investment income (loss) (2,753,624) (961,410) -------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (4,106,194) (209,409) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 65,200,846 8,212,086 -------------- ------------ Net gain (loss) on investments 61,094,652 8,002,677 -------------- ------------ Net increase (decrease) in net assets resulting from operations $58,341,028 $7,041,267 ============== ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-48 -------------------------------------------------------------------------------
FRANKLIN HARTFORD LARGE CAP TEMPLETON HARTFORD TOTAL VALUE GLOBAL BOND ADVISERS RETURN BOND SECURITIES FUND SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $521,272 $1,726,737 $187,794 $30,213,319 ------------ ------------- ------------ -------------- EXPENSES: Administrative Charges (50,209) -- -- -- Mortality and Expense Risk Charges (437,366) (1,906,764) (191,882) (10,059,947) ------------ ------------- ------------ -------------- Total Expense (487,575) (1,906,764) (191,882) (10,059,947) ------------ ------------- ------------ -------------- Net investment income (loss) 33,697 (180,027) (4,088) 20,153,372 ------------ ------------- ------------ -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (82,224) 78,545 103,888 995,188 Net realized gain on distributions -- 310,394 -- -- Net unrealized appreciation (depreciation) of investments during the year 3,060,188 13,534,727 1,178,047 17,169,107 ------------ ------------- ------------ -------------- Net gain (loss) on investments 2,977,964 13,923,666 1,281,935 18,164,295 ------------ ------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations $3,011,661 $13,743,639 $1,277,847 $38,317,667 ============ ============= ============ ============== HARTFORD HARTFORD CAPITAL DIVIDEND HARTFORD APPRECIATION AND GROWTH GLOBAL RESEARCH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (14) ----------------------------- ------------------------------------------------------------ INVESTMENT INCOME: Dividends $5,599,277 $9,071,519 $8,211 -------------- ------------- --------- EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (10,425,087) (6,331,851) (10,540) -------------- ------------- --------- Total Expense (10,425,087) (6,331,851) (10,540) -------------- ------------- --------- Net investment income (loss) (4,825,810) 2,739,668 (2,329) -------------- ------------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 4,227,570 719,449 4,987 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 105,999,633 48,664,020 79,736 -------------- ------------- --------- Net gain (loss) on investments 110,227,203 49,383,469 84,723 -------------- ------------- --------- Net increase (decrease) in net assets resulting from operations $105,401,393 $52,123,137 $82,394 ============== ============= =========
(14) Formerly Hartford Global Equity HLS Fund. Change effective March 1, 2010. SA-49 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED GLOBAL GROWTH EQUITY HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $3,941 $1,264,286 ---------- ------------- EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (23,678) (1,372,947) ---------- ------------- Total Expense (23,678) (1,372,947) ---------- ------------- Net investment income (loss) (19,737) (108,661) ---------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 32,014 282,034 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 157,735 11,594,560 ---------- ------------- Net gain (loss) on investments 189,749 11,876,594 ---------- ------------- Net increase (decrease) in net assets resulting from operations $170,012 $11,767,933 ========== =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-50 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH HARTFORD HARTFORD GROWTH OPPORTUNITIES HIGH YIELD INDEX HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (15) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (16) ------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $23,168 $22,488 $312,190 $1,622 ------------ ------------- ------------ --------- EXPENSES: Administrative Charges -- -- -- -- Mortality and Expense Risk Charges (236,134) (2,228,968) (751,018) (297) ------------ ------------- ------------ --------- Total Expense (236,134) (2,228,968) (751,018) (297) ------------ ------------- ------------ --------- Net investment income (loss) (212,966) (2,206,480) (438,828) 1,325 ------------ ------------- ------------ --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 496,988 759,267 134,561 19 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,340,788 25,902,224 6,320,151 11,619 ------------ ------------- ------------ --------- Net gain (loss) on investments 3,837,776 26,661,491 6,454,712 11,638 ------------ ------------- ------------ --------- Net increase (decrease) in net assets resulting from operations $3,624,810 $24,455,011 $6,015,884 $12,963 ============ ============= ============ ========= HARTFORD HARTFORD INTERNATIONAL SMALL/MID CAP HARTFORD OPPORTUNITIES EQUITY MONEY MARKET HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (17) SUB-ACCOUNT (18) SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------- INVESTMENT INCOME: Dividends $404,968 $72,784 $ -- ------------ ------------ -------------- EXPENSES: Administrative Charges -- -- (1,268,388) Mortality and Expense Risk Charges (466,415) (158,868) (14,384,724) ------------ ------------ -------------- Total Expense (466,415) (158,868) (15,653,112) ------------ ------------ -------------- Net investment income (loss) (61,447) (86,084) (15,653,112) ------------ ------------ -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 49,635 411,083 -- Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,856,181 1,857,223 -- ------------ ------------ -------------- Net gain (loss) on investments 3,905,816 2,268,306 -- ------------ ------------ -------------- Net increase (decrease) in net assets resulting from operations $3,844,369 $2,182,222 $(15,653,112) ============ ============ ==============
(15) Effective April 16, 2010 Hartford Fundamental Growth HLS Fund merged with Hartford Growth HLS Fund. (16) Funded as of March 8, 2010. (17) Effective April 16, 2010 Hartford International Growth HLS Fund merged with Hartford International Opportunities HLS Fund. (18) Formerly Hartford MidCap Growth HLS Fund. Change effective March 1, 2010. SA-51 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD HARTFORD SMALL COMPANY SMALLCAP GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $ -- $ -- ------------ ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (197,835) (84,249) ------------ ------------ Total Expense (197,835) (84,249) ------------ ------------ Net investment income (loss) (197,835) (84,249) ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 482,580 20,517 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 2,186,182 1,688,405 ------------ ------------ Net gain (loss) on investments 2,668,762 1,708,922 ------------ ------------ Net increase (decrease) in net assets resulting from operations $2,470,927 $1,624,673 ============ ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-52 -------------------------------------------------------------------------------
HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD AMERICAN FUNDS STOCK SECURITIES VALUE ASSET ALLOCATION HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (19)(20) SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $23,433 $2,497,579 $340,812 $688,995 ---------- ------------ ------------ ------------ EXPENSES: Administrative Charges -- -- -- -- Mortality and Expense Risk Charges (33,517) (877,826) (319,348) (656,207) ---------- ------------ ------------ ------------ Total Expense (33,517) (877,826) (319,348) (656,207) ---------- ------------ ------------ ------------ Net investment income (loss) (10,084) 1,619,753 21,464 32,788 ---------- ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 29,811 (55,947) 1,931,773 327,008 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 214,678 (518,050) 668,972 3,598,634 ---------- ------------ ------------ ------------ Net gain (loss) on investments 244,489 (573,997) 2,600,745 3,925,642 ---------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $234,405 $1,045,756 $2,622,209 $3,958,430 ========== ============ ============ ============ AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS AMERICAN FUNDS GROWTH BOND GLOBAL BOND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- INVESTMENT INCOME: Dividends $711,959 $3,764,282 $355,864 ------------ ------------- ------------ EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (411,829) (2,641,005) (558,577) ------------ ------------- ------------ Total Expense (411,829) (2,641,005) (558,577) ------------ ------------- ------------ Net investment income (loss) 300,130 1,123,277 (202,713) ------------ ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 496,529 247,484 67,363 Net realized gain on distributions -- -- 26,995 Net unrealized appreciation (depreciation) of investments during the year 1,690,832 5,544,727 1,102,223 ------------ ------------- ------------ Net gain (loss) on investments 2,187,361 5,792,211 1,196,581 ------------ ------------- ------------ Net increase (decrease) in net assets resulting from operations $2,487,491 $6,915,488 $993,868 ============ ============= ============
(19) Effective March 19, 2010 Hartford Equity Income HLS Fund merged with Hartford Value HLS Fund. (20) Effective March 19, 2010 Hartford Value Opportunities HLS Fund merged with Hartford Value HLS Fund. SA-53 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS AND INCOME GLOBAL GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $1,339,724 $246,403 ------------- ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (1,190,855) (464,313) ------------- ------------ Total Expense (1,190,855) (464,313) ------------- ------------ Net investment income (loss) 148,869 (217,910) ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,173,874 252,003 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 4,959,384 2,529,093 ------------- ------------ Net gain (loss) on investments 6,133,258 2,781,096 ------------- ------------ Net increase (decrease) in net assets resulting from operations $6,282,127 $2,563,186 ============= ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-54 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS CAPITALIZATION GROWTH GROWTH-INCOME INTERNATIONAL HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,499 $1,264,395 $1,789,614 $1,751,850 ------------- ------------- ------------- ------------- EXPENSES: Administrative Charges -- -- -- -- Mortality and Expense Risk Charges (895,315) (4,262,779) (2,283,190) (2,817,472) ------------- ------------- ------------- ------------- Total Expense (895,315) (4,262,779) (2,283,190) (2,817,472) ------------- ------------- ------------- ------------- Net investment income (loss) (886,816) (2,998,384) (493,576) (1,065,622) ------------- ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 879,574 1,963,001 636,760 877,091 Net realized gain on distributions -- -- -- 596,098 Net unrealized appreciation (depreciation) of investments during the year 10,528,921 43,095,108 12,844,348 10,447,933 ------------- ------------- ------------- ------------- Net gain (loss) on investments 11,408,495 45,058,109 13,481,108 11,921,122 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $10,521,679 $42,059,725 $12,987,532 $10,855,500 ============= ============= ============= ============= AMERICAN FUNDS LORD ABBETT LORD ABBETT NEW WORLD FUNDAMENTAL CAPITAL STRUCTURE HLS FUND EQUITY PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (21) SUB-ACCOUNT (22) ----------------------------- --------------------------------------------------------------------- INVESTMENT INCOME: Dividends $503,660 $772 $375,938 ------------ --------- ------------ EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (891,394) (839) (179,462) ------------ --------- ------------ Total Expense (891,394) (839) (179,462) ------------ --------- ------------ Net investment income (loss) (387,734) (67) 196,476 ------------ --------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 222,063 615 47,935 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 8,108,779 37,290 1,368,348 ------------ --------- ------------ Net gain (loss) on investments 8,330,842 37,905 1,416,283 ------------ --------- ------------ Net increase (decrease) in net assets resulting from operations $7,943,108 $37,838 $1,612,759 ============ ========= ============
(21) Formerly Lord Abbett All Value Portfolio. Change effective May 1, 2010. (22) Formerly Lord Abbett America's Value Portfolio. Change effective May 1, 2010. SA-55 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT GROWTH & BOND-DEBENTURE INCOME PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $4,573,187 $78,450 ------------ ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (1,214,065) (199,895) ------------ ------------ Total Expense (1,214,065) (199,895) ------------ ------------ Net investment income (loss) 3,359,122 (121,445) ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 228,896 25,917 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 3,971,013 2,112,576 ------------ ------------ Net gain (loss) on investments 4,199,909 2,138,493 ------------ ------------ Net increase (decrease) in net assets resulting from operations $7,559,031 $2,017,048 ============ ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-56 -------------------------------------------------------------------------------
MFS CORE MFS GROWTH MFS GLOBAL MFS HIGH EQUITY SERIES SERIES EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $228,960 $58,136 $226,136 $18,341,320 ------------ ------------- ------------ ------------- EXPENSES: Administrative Charges (33,785) (82,493) (38,669) (431,689) Mortality and Expense Risk Charges (317,542) (848,463) (368,691) (4,206,331) ------------ ------------- ------------ ------------- Total Expense (351,327) (930,956) (407,360) (4,638,020) ------------ ------------- ------------ ------------- Net investment income (loss) (122,367) (872,820) (181,224) 13,703,300 ------------ ------------- ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (799,022) (1,040,083) (139,425) 2,863,222 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,910,368 8,647,251 2,501,014 12,340,036 ------------ ------------- ------------ ------------- Net gain (loss) on investments 3,111,346 7,607,168 2,361,589 15,203,258 ------------ ------------- ------------ ------------- Net increase (decrease) in net assets resulting from operations $2,988,979 $6,734,348 $2,180,365 $28,906,558 ============ ============= ============ ============= MFS INVESTORS GROWTH MFS INVESTORS MFS MID CAP STOCK SERIES TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $240,298 $4,145,677 $ -- ------------ ------------- ------------- EXPENSES: Administrative Charges (86,709) (593,630) (159,743) Mortality and Expense Risk Charges (830,979) (5,756,321) (1,574,223) ------------ ------------- ------------- Total Expense (917,688) (6,349,951) (1,733,966) ------------ ------------- ------------- Net investment income (loss) (677,390) (2,204,274) (1,733,966) ------------ ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (276,402) (2,752,586) (927,387) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 5,798,348 36,230,905 24,915,815 ------------ ------------- ------------- Net gain (loss) on investments 5,521,946 33,478,319 23,988,428 ------------ ------------- ------------- Net increase (decrease) in net assets resulting from operations $4,844,556 $31,274,045 $22,254,462 ============ ============= =============
SA-57 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $29,694,736 ------------- -------------- EXPENSES: Administrative Charges (424,257) (1,758,997) Mortality and Expense Risk Charges (4,149,351) (16,860,066) ------------- -------------- Total Expense (4,573,608) (18,619,063) ------------- -------------- Net investment income (loss) (4,573,608) 11,075,673 ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,347,360) (18,436,544) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 78,918,174 88,482,804 ------------- -------------- Net gain (loss) on investments 76,570,814 70,046,260 ------------- -------------- Net increase (decrease) in net assets resulting from operations $71,997,206 $81,121,933 ============= ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-58 -------------------------------------------------------------------------------
MFS VALUE MFS RESEARCH MFS RESEARCH MFS RESEARCH SERIES BOND SERIES INTERNATIONAL SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $5,039,289 $8,783,398 $863,186 $333,264 ------------- ------------- ------------- ------------ EXPENSES: Administrative Charges (354,984) (459,192) (95,510) (62,856) Mortality and Expense Risk Charges (5,443,258) (5,001,639) (851,606) (392,818) ------------- ------------- ------------- ------------ Total Expense (5,798,242) (5,460,831) (947,116) (455,674) ------------- ------------- ------------- ------------ Net investment income (loss) (758,953) 3,322,567 (83,930) (122,410) ------------- ------------- ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (2,574,740) 881,242 (1,748,773) 131,652 Net realized gain on distributions -- 909,571 -- -- Net unrealized appreciation (depreciation) of investments during the year 37,261,215 10,363,816 6,254,773 4,314,386 ------------- ------------- ------------- ------------ Net gain (loss) on investments 34,686,475 12,154,629 4,506,000 4,446,038 ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations $33,927,522 $15,477,196 $4,422,070 $4,323,628 ============= ============= ============= ============ INVESCO BLACKROCK BLACKROCK VAN KAMPEN V. I. GLOBAL LARGE CAP INTERNATIONAL OPPORTUNITIES V.I. FUND GROWTH V.I. FUND GROWTH EQUITY SUB-ACCOUNT (23) SUB-ACCOUNT SUB-ACCOUNT (24) -------------------------- ---------------------------------------------------------------------- INVESTMENT INCOME: Dividends $4,654 $13,572 $5,118 --------- ---------- --------- EXPENSES: Administrative Charges (1,252) (1,863) -- Mortality and Expense Risk Charges (13,246) (21,493) (6,664) --------- ---------- --------- Total Expense (14,498) (23,356) (6,664) --------- ---------- --------- Net investment income (loss) (9,844) (9,784) (1,546) --------- ---------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 12,298 23,994 (1,601) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 60,365 143,004 33,177 --------- ---------- --------- Net gain (loss) on investments 72,663 166,998 31,576 --------- ---------- --------- Net increase (decrease) in net assets resulting from operations $62,819 $157,214 $30,030 ========= ========== =========
(23) Formerly BlackRock Global Growth V.I. Fund. Change effective May 3, 2010. (24) Formerly Van Kampen -- UIF International Growth Equity Portfolio. Change effective June 1, 2010. SA-59 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO UIF MID CAP VAN KAMPEN V. I. GROWTH MID CAP PORTFOLIO VALUE FUND SUB-ACCOUNT (25) SUB-ACCOUNT (26) ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $ -- $128,585 ------------ ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (377,479) (217,197) ------------ ------------ Total Expense (377,479) (217,197) ------------ ------------ Net investment income (loss) (377,479) (88,612) ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,263,252 334,630 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 6,305,699 2,784,756 ------------ ------------ Net gain (loss) on investments 7,568,951 3,119,386 ------------ ------------ Net increase (decrease) in net assets resulting from operations $7,191,472 $3,030,774 ============ ============
(25) Formerly Van Kampen -- UIF Mid Cap Growth Portfolio. Change effective June 1, 2010. (26) Formerly Van Kampen -- UIF U.S. Mid Cap Value Portfolio. Change effective June 1, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-60 -------------------------------------------------------------------------------
MORGAN STANLEY -- MORGAN STANLEY -- MORGAN STANLEY -- CAPITAL MID CAP MORGAN STANLEY -- FOCUS GROWTH OPPORTUNITIES GROWTH FLEXIBLE INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- $46,195 ---------- ---------- ---------- --------- EXPENSES: Administrative Charges (2,035) (6,151) (1,508) (1,568) Mortality and Expense Risk Charges (15,058) (46,418) (11,422) (11,210) ---------- ---------- ---------- --------- Total Expense (17,093) (52,569) (12,930) (12,778) ---------- ---------- ---------- --------- Net investment income (loss) (17,093) (52,569) (12,930) 33,417 ---------- ---------- ---------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 30,970 7,263 5,578 8,031 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 225,558 756,396 210,401 13,497 ---------- ---------- ---------- --------- Net gain (loss) on investments 256,528 763,659 215,979 21,528 ---------- ---------- ---------- --------- Net increase (decrease) in net assets resulting from operations $239,435 $711,090 $203,049 $54,945 ========== ========== ========== ========= INVESCO V.I. SELECT OPPENHEIMER DIMENSIONS CAPITAL OPPENHEIMER DIVIDEND APPRECIATION GLOBAL SECURITIES GROWTH PORTFOLIO FUND/VA FUND/VA SUB-ACCOUNT (27) SUB-ACCOUNT SUB-ACCOUNT -------------------------- ------------------------------------------------------------------- INVESTMENT INCOME: Dividends $2,774 $ -- $371,287 --------- ---------- ------------ EXPENSES: Administrative Charges (376) -- -- Mortality and Expense Risk Charges (2,871) (45,713) (465,063) --------- ---------- ------------ Total Expense (3,247) (45,713) (465,063) --------- ---------- ------------ Net investment income (loss) (473) (45,713) (93,776) --------- ---------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (5,544) 86,584 707,620 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 21,783 136,581 3,359,537 --------- ---------- ------------ Net gain (loss) on investments 16,239 223,165 4,067,157 --------- ---------- ------------ Net increase (decrease) in net assets resulting from operations $15,766 $177,452 $3,973,381 ========= ========== ============
(27) Formerly Morgan Stanley -- Dividend Growth Portfolio. Change effective June 1, 2010. SA-61 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER MAIN STREET MAIN STREET SMALL CAP FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $19,432 $129,059 ---------- ------------ EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (34,115) (472,703) ---------- ------------ Total Expense (34,115) (472,703) ---------- ------------ Net investment income (loss) (14,683) (343,644) ---------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 76,705 601,935 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 230,485 5,799,114 ---------- ------------ Net gain (loss) on investments 307,190 6,401,049 ---------- ------------ Net increase (decrease) in net assets resulting from operations $292,507 $6,057,405 ========== ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-62 -------------------------------------------------------------------------------
OPPENHEIMER PUTNAM VT PUTNAM VT PUTNAM VT VALUE DIVERSIFIED GLOBAL ASSET INTERNATIONAL FUND/VA INCOME FUND ALLOCATION FUND VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (28) ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $13,346 $15,305,506 $386,638 $47,468 ---------- ------------- ----------- --------- EXPENSES: Administrative Charges -- -- -- -- Mortality and Expense Risk Charges (22,861) (1,703,238) (107,672) (22,132) ---------- ------------- ----------- --------- Total Expense (22,861) (1,703,238) (107,672) (22,132) ---------- ------------- ----------- --------- Net investment income (loss) (9,515) 13,602,268 278,966 25,336 ---------- ------------- ----------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 86,971 517,195 788 44,096 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 86,982 (3,184,933) 583,397 10,044 ---------- ------------- ----------- --------- Net gain (loss) on investments 173,953 (2,667,738) 584,185 54,140 ---------- ------------- ----------- --------- Net increase (decrease) in net assets resulting from operations $164,438 $10,934,530 $863,151 $79,476 ========== ============= =========== ========= PUTNAM VT PUTNAM VT INTERNATIONAL PUTNAM VT SMALL CAP EQUITY FUND INVESTORS FUND VALUE SUB-ACCOUNT SUB-ACCOUNT (29) SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- INVESTMENT INCOME: Dividends $51,451 $123 $6,185 ---------- ------- ---------- EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (25,552) (96) (34,271) ---------- ------- ---------- Total Expense (25,552) (96) (34,271) ---------- ------- ---------- Net investment income (loss) 25,899 27 (28,086) ---------- ------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 5,187 296 1,380 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 69,502 5,571 425,752 ---------- ------- ---------- Net gain (loss) on investments 74,689 5,867 427,132 ---------- ------- ---------- Net increase (decrease) in net assets resulting from operations $100,588 $5,894 $399,046 ========== ======= ==========
(28) Formerly Putnam VT International Growth and Income Fund. Change effective January 1, 2010. (29) Funded as of March 3, 2010. SA-63 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT EQUITY VOYAGER INCOME FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ INVESTMENT INCOME: Dividends $2,205 $1,321 --------- --------- EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (1,417) (1,046) --------- --------- Total Expense (1,417) (1,046) --------- --------- Net investment income (loss) 788 275 --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,089 527 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 55,217 37,809 --------- --------- Net gain (loss) on investments 56,306 38,336 --------- --------- Net increase (decrease) in net assets resulting from operations $57,094 $38,611 ========= =========
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-64 -------------------------------------------------------------------------------
INVESCO JENNISON 20/20 PRUDENTIAL VAN KAMPEN V. I. FOCUS JENNISON VALUE GROWTH AND PORTFOLIO PORTFOLIO PORTFOLIO INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (30) -------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $16 $991 $52,153 --------- --------- --------- ------------ EXPENSES: Administrative Charges (712) (147) -- (20,452) Mortality and Expense Risk Charges (8,005) (2,000) (5,312) (593,267) --------- --------- --------- ------------ Total Expense (8,717) (2,147) (5,312) (613,719) --------- --------- --------- ------------ Net investment income (loss) (8,717) (2,131) (4,321) (561,566) --------- --------- --------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions 1,940 (881) 112 322,113 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 34,009 11,362 37,414 6,120,481 --------- --------- --------- ------------ Net gain (loss) on investments 35,949 10,481 37,526 6,442,594 --------- --------- --------- ------------ Net increase (decrease) in net assets resulting from operations $27,232 $8,350 $33,205 $5,881,028 ========= ========= ========= ============ WELLS FARGO WELLS FARGO INVESCO ADVANTAGE VT ADVANTAGE VT VAN KAMPEN V. I. INDEX ASSET TOTAL RETURN COMSTOCK FUND ALLOCATION FUND BOND FUND SUB-ACCOUNT (31) SUB-ACCOUNT (32) SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------- INVESTMENT INCOME: Dividends $3,862 $18,357 $253,940 ---------- ---------- ----------- EXPENSES: Administrative Charges (5,782) -- -- Mortality and Expense Risk Charges (43,583) (20,403) (146,020) ---------- ---------- ----------- Total Expense (49,365) (20,403) (146,020) ---------- ---------- ----------- Net investment income (loss) (45,503) (2,046) 107,920 ---------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (56,388) (13,321) 1,625 Net realized gain on distributions -- -- 205,496 Net unrealized appreciation (depreciation) of investments during the year 477,380 123,680 36,996 ---------- ---------- ----------- Net gain (loss) on investments 420,992 110,359 244,117 ---------- ---------- ----------- Net increase (decrease) in net assets resulting from operations $375,489 $108,313 $352,037 ========== ========== ===========
(30) Formerly Van Kampen LIT Growth and Income Portfolio. Change effective June 1, 2010. (31) Formerly Van Kampen LIT Comstock Portfolio. Change effective June 1, 2010. (32) Formerly Wells Fargo Advantage VT Asset Allocation Fund. Change effective May 1, 2010. SA-65 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTRINSIC INTERNATIONAL VALUE FUND EQUITY FUND SUB-ACCOUNT (33)(34) SUB-ACCOUNT (35) ---------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $28,816 $11,436 ----------- ------------- EXPENSES: Administrative Charges -- -- Mortality and Expense Risk Charges (61,073) (31,523) ----------- ------------- Total Expense (61,073) (31,523) ----------- ------------- Net investment income (loss) (32,257) (20,087) ----------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (199,550) (1,176,469) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 601,652 1,428,875 ----------- ------------- Net gain (loss) on investments 402,102 252,406 ----------- ------------- Net increase (decrease) in net assets resulting from operations $369,845 $232,319 =========== =============
(33) Effective July 16, 2010 Wells Fargo Advantage VT C&B Large Cap Value Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. (34) Effective July 16, 2010 Wells Fargo Advantage VT Equity Income Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. (35) Formerly Wells Fargo Advantage VT International Core Fund. Change effective July 16, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-66 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT WELLS FARGO MONEY SMALL CAP ADVANTAGE VT MARKET FUND GROWTH FUND DISCOVERY FUND SUB-ACCOUNT (36) SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $263 $ -- $ -- --------- ---------- ---------- EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (26,364) (56,429) (28,651) --------- ---------- ---------- Total Expense (26,364) (56,429) (28,651) --------- ---------- ---------- Net investment income (loss) (26,101) (56,429) (28,651) --------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions -- (51,646) 17,915 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year -- 767,139 448,581 --------- ---------- ---------- Net gain (loss) on investments -- 715,493 466,496 --------- ---------- ---------- Net increase (decrease) in net assets resulting from operations $(26,101) $659,064 $437,845 ========= ========== ========== WELLS FARGO WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT SMALL CAP ADVANTAGE VT CORE VALUE FUND OPPORTUNITY FUND EQUITY FUND SUB-ACCOUNT (37) SUB-ACCOUNT SUB-ACCOUNT (38) ----------------------------- ----------------------------------------------------------------- INVESTMENT INCOME: Dividends $8,568 $1,034 $574 --------- --------- --------- EXPENSES: Administrative Charges -- -- -- Mortality and Expense Risk Charges (10,253) (3,140) (1,080) --------- --------- --------- Total Expense (10,253) (3,140) (1,080) --------- --------- --------- Net investment income (loss) (1,685) (2,106) (506) --------- --------- --------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on security transactions (5,648) (874) (6,716) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 91,361 45,585 11,836 --------- --------- --------- Net gain (loss) on investments 85,713 44,711 5,120 --------- --------- --------- Net increase (decrease) in net assets resulting from operations $84,028 $42,605 $4,614 ========= ========= =========
(36) Effective May 1, 2010 Wells Fargo Advantage VT Money Market Fund was liquidated. (37) Formerly Wells Fargo Advantage VT Small/Mid Cap Value Fund. Change effective May 1, 2010. (38) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Core Fund merged with newly created Wells Fargo Advantage VT Core Equity Fund. SA-67 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $301,092 $432,947 Net realized gain (loss) on security transactions 26,200 447,287 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 2,328,585 581,493 ------------- ------------- Net increase (decrease) in net assets resulting from operations 2,655,877 1,461,727 ------------- ------------- UNIT TRANSACTIONS: Purchases 1,488,231 764,827 Net transfers 4,136,392 2,508,435 Surrenders for benefit payments and fees (2,070,169) (2,246,589) Net annuity transactions -- -- Other (250) -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 3,554,204 1,026,673 ------------- ------------- Net increase (decrease) in net assets 6,210,081 2,488,400 NET ASSETS: Beginning of year 28,139,542 37,579,414 ------------- ------------- End of year $34,349,623 $40,067,814 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-68 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS INVESCO V.I. SMALL/MID CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (1) ------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(228,366) $2,437 $21,629 $(1,567,808) Net realized gain (loss) on security transactions (484,790) 11,340 154,628 10,116,732 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,436,725 95,470 829,940 (2,779,580) ------------- ------------ ------------- -------------- Net increase (decrease) in net assets resulting from operations 2,723,569 109,247 1,006,197 5,769,344 ------------- ------------ ------------- -------------- UNIT TRANSACTIONS: Purchases 1,765,610 8,855 116,479 875,306 Net transfers 8,665,074 (49,300) (714,084) (23,803,732) Surrenders for benefit payments and fees (726,185) (29,558) (402,636) (17,162,141) Net annuity transactions -- -- (417) (12,399) Other -- -- -- -- ------------- ------------ ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 9,704,499 (70,003) (1,000,658) (40,102,966) ------------- ------------ ------------- -------------- Net increase (decrease) in net assets 12,428,068 39,244 5,539 (34,333,622) NET ASSETS: Beginning of year 9,182,618 1,211,305 10,578,825 141,583,993 ------------- ------------ ------------- -------------- End of year $21,610,686 $1,250,549 $10,584,364 $107,250,371 ============= ============ ============= ============== INVESCO V.I. INVESCO V.I. INVESCO V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT (2) SUB-ACCOUNT (3) SUB-ACCOUNT (4) -------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(596,279) $(2,097,158) $22,556,265 Net realized gain (loss) on security transactions (1,247,214) 1,530,677 1,578,537 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 8,095,032 16,629,485 4,670,412 ------------- -------------- --------------- Net increase (decrease) in net assets resulting from operations 6,251,539 16,063,004 28,805,214 ------------- -------------- --------------- UNIT TRANSACTIONS: Purchases 490,736 1,138,968 5,574,140 Net transfers (2,258,084) (2,882,158) 2,147,058 Surrenders for benefit payments and fees (7,823,961) (33,233,041) (126,431,138) Net annuity transactions (10,773) (32,028) (97,222) Other -- -- -- ------------- -------------- --------------- Net increase (decrease) in net assets resulting from unit transactions (9,602,082) (35,008,259) (118,807,162) ------------- -------------- --------------- Net increase (decrease) in net assets (3,350,543) (18,945,255) (90,001,948) NET ASSETS: Beginning of year 56,104,041 239,994,420 807,517,157 ------------- -------------- --------------- End of year $52,753,498 $221,049,165 $717,515,209 ============= ============== ===============
(1) Formerly AIM V.I. Basic Value Fund. Change effective April 30, 2010. (2) Formerly AIM V.I. Capital Appreciation Fund. Change effective April 30, 2010. (3) Formerly AIM V.I. Core Equity Fund. Change effective April 30, 2010. (4) Formerly AIM V.I. Government Securities Fund. Change effective April 30, 2010. SA-69 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INTERNATIONAL MID CAP CORE GROWTH FUND EQUITY FUND SUB-ACCOUNT (5) SUB-ACCOUNT (6) ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $884,659 $(3,321,636) Net realized gain (loss) on security transactions (3,724,459) 2,994,356 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 23,494,392 29,125,444 -------------- -------------- Net increase (decrease) in net assets resulting from operations 20,654,592 28,798,164 -------------- -------------- UNIT TRANSACTIONS: Purchases 4,913,241 1,628,398 Net transfers (9,665,274) (3,989,814) Surrenders for benefit payments and fees (19,928,718) (38,149,914) Net annuity transactions (13,155) 20,468 Other -- -- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (24,693,906) (40,490,862) -------------- -------------- Net increase (decrease) in net assets (4,039,314) (11,692,698) NET ASSETS: Beginning of year 224,332,816 275,873,635 -------------- -------------- End of year $220,293,502 $264,180,937 ============== ==============
(5) Formerly AIM V.I. International Growth Fund. Change effective April 30, 2010. (6) Formerly AIM V.I. Mid Cap Core Equity Fund. Change effective April 30, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-70 -------------------------------------------------------------------------------
INVESCO V.I. INVESCO V.I. INVESCO V.I. INVESCO V.I. SMALL CAP LARGE CAP CAPITAL GLOBAL EQUITY FUND GROWTH FUND DEVELOPMENT FUND MULTI-ASSET FUND SUB-ACCOUNT (7) SUB-ACCOUNT (8) SUB-ACCOUNT (9) SUB-ACCOUNT (10) ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,401,058) $(424,748) $(172,542) $(155,892) Net realized gain (loss) on security transactions (1,985,380) 49,150 345,358 788 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 33,926,309 4,550,169 1,288,575 1,314,885 -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 29,539,871 4,174,571 1,461,391 1,159,781 -------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 3,439,911 276,941 154,126 1,684,153 Net transfers 10,075,451 42,137 1,202,181 1,300,608 Surrenders for benefit payments and fees (16,333,698) (4,203,641) (1,150,900) (692,308) Net annuity transactions (1,777) (2) -- -- Other -- -- -- -- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (2,820,113) (3,884,565) 205,407 2,292,453 -------------- ------------- ------------- ------------- Net increase (decrease) in net assets 26,719,758 290,006 1,666,798 3,452,234 NET ASSETS: Beginning of year 120,693,959 32,031,811 8,577,553 10,581,328 -------------- ------------- ------------- ------------- End of year $147,413,717 $32,321,817 $10,244,351 $14,033,562 ============== ============= ============= ============= AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $3,374,750 $4,984,800 $2,563,570 Net realized gain (loss) on security transactions 48,271 (11,409,255) (3,162,695) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 6,079,511 55,457,512 124,094,215 -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from operations 9,502,532 49,033,057 123,495,090 -------------- -------------- ---------------- UNIT TRANSACTIONS: Purchases 2,919,109 3,656,723 5,678,051 Net transfers 24,927,499 (7,624,131) (16,999,074) Surrenders for benefit payments and fees (40,176,978) (54,891,676) (164,165,097) Net annuity transactions 9,761 15,950 (129,367) Other -- -- -- -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (12,320,609) (58,843,134) (175,615,487) -------------- -------------- ---------------- Net increase (decrease) in net assets (2,818,077) (9,810,077) (52,120,397) NET ASSETS: Beginning of year 300,655,023 563,375,596 1,315,830,916 -------------- -------------- ---------------- End of year $297,836,946 $553,565,519 $1,263,710,519 ============== ============== ================
(7) Formerly AIM V.I. Small Cap Equity Fund. Change effective April 30, 2010. (8) Formerly AIM V.I. Large Cap Growth Fund. Change effective April 30, 2010. (9) Formerly AIM V.I. Capital Development Fund. Change effective April 30, 2010. (10) Formerly AIM V.I. PowerShares ETF Allocation Fund. Change effective April 30, 2010. SA-71 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(455,039) $14,524,989 Net realized gain (loss) on security transactions (9,278,317) 3,117,007 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 83,081,999 38,667,029 --------------- ---------------- Net increase (decrease) in net assets resulting from operations 73,348,643 56,309,025 --------------- ---------------- UNIT TRANSACTIONS: Purchases 4,418,376 9,553,850 Net transfers (15,583,527) 33,882,586 Surrenders for benefit payments and fees (96,655,550) (177,035,373) Net annuity transactions (3,341) 55,386 Other -- -- --------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (107,824,042) (133,543,551) --------------- ---------------- Net increase (decrease) in net assets (34,475,399) (77,234,526) NET ASSETS: Beginning of year 802,148,242 1,210,172,832 --------------- ---------------- End of year $767,672,843 $1,132,938,306 =============== ================
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-72 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,471,939) $(28,645,818) $(7,933,354) $1,881,462 Net realized gain (loss) on security transactions 2,775,955 (62,135,045) (53,428,080) (12,886,853) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 43,464,656 498,378,885 298,492,068 49,183,390 -------------- ---------------- ---------------- --------------- Net increase (decrease) in net assets resulting from operations 44,768,672 407,598,022 237,130,634 38,177,999 -------------- ---------------- ---------------- --------------- UNIT TRANSACTIONS: Purchases 3,169,455 16,236,477 15,435,585 6,359,243 Net transfers (30,380,343) (121,154,993) (98,227,836) (23,808,812) Surrenders for benefit payments and fees (60,999,435) (330,399,633) (329,513,095) (97,104,233) Net annuity transactions 75,290 15,086 147,390 142,141 Other -- -- -- -- -------------- ---------------- ---------------- --------------- Net increase (decrease) in net assets resulting from unit transactions (88,135,033) (435,303,063) (412,157,956) (114,411,661) -------------- ---------------- ---------------- --------------- Net increase (decrease) in net assets (43,366,361) (27,705,041) (175,027,322) (76,233,662) NET ASSETS: Beginning of year 564,442,292 2,810,286,971 2,873,227,510 892,966,418 -------------- ---------------- ---------------- --------------- End of year $521,075,931 $2,782,581,930 $2,698,200,188 $816,732,756 ============== ================ ================ =============== WELLS FARGO AMERICAN FUNDS ADVANTAGE VT AMERICAN FUNDS GLOBAL SMALL OMEGA NEW WORLD FUND CAPITALIZATION FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (11) -------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(805,317) $(276,770) $(21,875) Net realized gain (loss) on security transactions 3,038,418 273,673 (78,632) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 57,721,091 68,894,084 329,461 -------------- -------------- ------------ Net increase (decrease) in net assets resulting from operations 59,954,192 68,890,987 228,954 -------------- -------------- ------------ UNIT TRANSACTIONS: Purchases 2,971,502 3,085,518 2,959 Net transfers 22,596,056 (13,455,743) (242,860) Surrenders for benefit payments and fees (48,933,982) (46,177,368) (158,781) Net annuity transactions 60,098 (5,979) -- Other -- -- -- -------------- -------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (23,306,326) (56,553,572) (398,682) -------------- -------------- ------------ Net increase (decrease) in net assets 36,647,866 12,337,415 (169,728) NET ASSETS: Beginning of year 420,801,786 392,264,008 2,210,046 -------------- -------------- ------------ End of year $457,449,652 $404,601,423 $2,040,318 ============== ============== ============
(11) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Growth Fund merged with newly created Wells Fargo Advantage VT Omega Growth Fund. SA-73 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP GROWTH CONTRAFUND PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(59,744) $(440,821) Net realized gain (loss) on security transactions 438,015 1,001,953 Net realized gain on distributions 12,646 39,174 Net unrealized appreciation (depreciation) of investments during the year 416,297 11,499,942 ------------ ------------- Net increase (decrease) in net assets resulting from operations 807,214 12,100,248 ------------ ------------- UNIT TRANSACTIONS: Purchases 22,244 2,878,011 Net transfers (655,885) 2,571,958 Surrenders for benefit payments and fees (260,168) (5,917,543) Net annuity transactions -- -- Other -- -- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (893,809) (467,574) ------------ ------------- Net increase (decrease) in net assets (86,595) 11,632,674 NET ASSETS: Beginning of year 4,141,042 82,127,987 ------------ ------------- End of year $4,054,447 $93,760,661 ============ =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-74 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP FIDELITY VIP DYNAMIC CAPITAL FIDELITY VIP MID CAP VALUE STRATEGIES APPRECIATION STRATEGIC INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (12) --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,190,089) $(102,856) $(21,180) $12,948 Net realized gain (loss) on security transactions 838,610 343,793 74,003 (118) Net realized gain on distributions 264,730 -- -- 8,044 Net unrealized appreciation (depreciation) of investments during the year 19,435,720 947,681 198,796 (5,069) ------------- ------------- ------------ ---------- Net increase (decrease) in net assets resulting from operations 19,348,971 1,188,618 251,619 15,805 ------------- ------------- ------------ ---------- UNIT TRANSACTIONS: Purchases 5,000,083 149,511 6,847 108,345 Net transfers 1,864,092 (1,754,784) 660,967 241,049 Surrenders for benefit payments and fees (4,479,894) (343,384) (67,494) (652) Net annuity transactions -- -- -- -- Other -- -- -- -- ------------- ------------- ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions 2,384,281 (1,948,657) 600,320 348,742 ------------- ------------- ------------ ---------- Net increase (decrease) in net assets 21,733,252 (760,039) 851,939 364,547 NET ASSETS: Beginning of year 72,872,680 6,639,905 1,015,690 -- ------------- ------------- ------------ ---------- End of year $94,605,932 $5,879,866 $1,867,629 $364,547 ============= ============= ============ ========== FRANKLIN FRANKLIN RISING FRANKLIN LARGE CAP DIVIDENDS INCOME GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,060,714) $107,439,150 $(1,391,973) Net realized gain (loss) on security transactions (7,008,439) 1,760,978 (1,946,939) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 129,290,019 110,637,885 15,536,142 -------------- ---------------- -------------- Net increase (decrease) in net assets resulting from operations 121,220,866 219,838,013 12,197,230 -------------- ---------------- -------------- UNIT TRANSACTIONS: Purchases 4,648,951 22,151,239 858,190 Net transfers 27,139,307 (21,786,332) (3,212,781) Surrenders for benefit payments and fees (77,847,831) (249,705,842) (17,763,241) Net annuity transactions 30,987 (121,688) (11,767) Other -- 190 -- -------------- ---------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (46,028,586) (249,462,433) (20,129,599) -------------- ---------------- -------------- Net increase (decrease) in net assets 75,192,280 (29,624,420) (7,932,369) NET ASSETS: Beginning of year 689,906,815 2,216,727,164 144,387,367 -------------- ---------------- -------------- End of year $765,099,095 $2,187,102,744 $136,454,998 ============== ================ ==============
(12) Funded as of February 22, 2010. SA-75 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN GLOBAL SMALL-MID CAP REAL ESTATE GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $101,288 $(5,236,569) Net realized gain (loss) on security transactions (242,711) (831,378) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,670,622 72,583,303 ------------- -------------- Net increase (decrease) in net assets resulting from operations 1,529,199 66,515,356 ------------- -------------- UNIT TRANSACTIONS: Purchases 5,058 2,467,022 Net transfers 18,606 10,411,079 Surrenders for benefit payments and fees (1,310,189) (37,558,725) Net annuity transactions (1,234) 24,408 Other -- -- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (1,287,759) (24,656,216) ------------- -------------- Net increase (decrease) in net assets 241,440 41,859,140 NET ASSETS: Beginning of year 9,000,416 289,505,463 ------------- -------------- End of year $9,241,856 $331,364,603 ============= ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-76 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN TEMPLETON SMALL CAP STRATEGIC DEVELOPING VALUE INCOME MUTUAL SHARES MARKETS SECURITIES FUND SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(791,239) $28,750,209 $(1,960,029) $(186,532) Net realized gain (loss) on security transactions (2,331,229) 8,391,037 (25,044,050) 7,070,260 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 19,173,945 47,390,303 134,188,163 22,808,917 -------------- --------------- ---------------- -------------- Net increase (decrease) in net assets resulting from operations 16,051,477 84,531,549 107,184,084 29,692,645 -------------- --------------- ---------------- -------------- UNIT TRANSACTIONS: Purchases 2,368,401 13,165,762 14,979,750 2,470,673 Net transfers 42,730,493 70,043,206 (29,735,523) 1,108,050 Surrenders for benefit payments and fees (8,398,520) (125,826,402) (145,219,849) (26,261,744) Net annuity transactions 22,865 29,838 67,774 (11,911) Other -- 237 -- -- -------------- --------------- ---------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 36,723,239 (42,587,359) (159,907,848) (22,694,932) -------------- --------------- ---------------- -------------- Net increase (decrease) in net assets 52,774,716 41,944,190 (52,723,764) 6,997,713 NET ASSETS: Beginning of year 55,570,910 925,656,939 1,274,585,592 235,582,011 -------------- --------------- ---------------- -------------- End of year $108,345,626 $967,601,129 $1,221,861,828 $242,579,724 ============== =============== ================ ============== TEMPLETON TEMPLETON TEMPLETON FOREIGN GLOBAL ASSET GROWTH SECURITIES FUND ALLOCATION FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT (13) SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $146,127 $249,414 $(2,202,542) Net realized gain (loss) on security transactions (6,439,586) (7,640,707) (30,006,449) Net realized gain on distributions -- 454,059 -- Net unrealized appreciation (depreciation) of investments during the year 31,390,791 7,129,692 60,443,374 -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 25,097,332 192,458 28,234,383 -------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 5,563,102 83,130 6,308,509 Net transfers 1,177,584 (8,015,020) (22,329,419) Surrenders for benefit payments and fees (56,267,576) (627,888) (68,189,678) Net annuity transactions (28,809) (2,052) (18,066) Other -- -- -- -------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (49,555,699) (8,561,830) (84,228,654) -------------- ------------- -------------- Net increase (decrease) in net assets (24,458,367) (8,369,372) (55,994,271) NET ASSETS: Beginning of year 464,064,550 8,369,372 634,592,844 -------------- ------------- -------------- End of year $439,606,183 $ -- $578,598,573 ============== ============= ==============
(13) Effective April 30, 2010 Templeton Global Asset Allocation Fund was liquidated. SA-77 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
FRANKLIN MUTUAL FLEX CAP GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,753,624) $(961,410) Net realized gain (loss) on security transactions (4,106,194) (209,409) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 65,200,846 8,212,086 --------------- -------------- Net increase (decrease) in net assets resulting from operations 58,341,028 7,041,267 --------------- -------------- UNIT TRANSACTIONS: Purchases 6,969,643 398,657 Net transfers 361,769 2,153,519 Surrenders for benefit payments and fees (62,603,169) (6,121,334) Net annuity transactions 74,758 (11,968) Other 332 -- --------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (55,196,667) (3,581,126) --------------- -------------- Net increase (decrease) in net assets 3,144,361 3,460,141 NET ASSETS: Beginning of year 622,592,616 57,258,381 --------------- -------------- End of year $625,736,977 $60,718,522 =============== ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-78 -------------------------------------------------------------------------------
FRANKLIN HARTFORD LARGE CAP TEMPLETON HARTFORD TOTAL VALUE GLOBAL BOND ADVISERS RETURN BOND SECURITIES FUND SECURITIES FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $33,697 $(180,027) $(4,088) $20,153,372 Net realized gain (loss) on security transactions (82,224) 78,545 103,888 995,188 Net realized gain on distributions -- 310,394 -- -- Net unrealized appreciation (depreciation) of investments during the year 3,060,188 13,534,727 1,178,047 17,169,107 ------------- -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 3,011,661 13,743,639 1,277,847 38,317,667 ------------- -------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 203,946 11,042,453 789,267 52,771,343 Net transfers 3,850,265 20,441,647 1,839,067 87,280,917 Surrenders for benefit payments and fees (2,841,756) (7,680,456) (814,862) (46,907,358) Net annuity transactions (1,618) -- -- (148) Other -- -- (250) -- ------------- -------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 1,210,837 23,803,644 1,813,222 93,144,754 ------------- -------------- ------------- -------------- Net increase (decrease) in net assets 4,222,498 37,547,283 3,091,069 131,462,421 NET ASSETS: Beginning of year 26,397,874 98,263,968 10,831,382 593,460,287 ------------- -------------- ------------- -------------- End of year $30,620,372 $135,811,251 $13,922,451 $724,922,708 ============= ============== ============= ============== HARTFORD HARTFORD CAPITAL DIVIDEND HARTFORD APPRECIATION AND GROWTH GLOBAL RESEARCH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (14) ----------------------------- ---------------------------------------------------------- OPERATIONS: Net investment income (loss) $(4,825,810) $2,739,668 $(2,329) Net realized gain (loss) on security transactions 4,227,570 719,449 4,987 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 105,999,633 48,664,020 79,736 -------------- -------------- ---------- Net increase (decrease) in net assets resulting from operations 105,401,393 52,123,137 82,394 -------------- -------------- ---------- UNIT TRANSACTIONS: Purchases 42,784,565 31,690,132 74,679 Net transfers 45,067,542 49,656,607 58,349 Surrenders for benefit payments and fees (45,495,513) (28,658,556) (56,137) Net annuity transactions (818) (151) -- Other -- -- -- -------------- -------------- ---------- Net increase (decrease) in net assets resulting from unit transactions 42,355,776 52,688,032 76,891 -------------- -------------- ---------- Net increase (decrease) in net assets 147,757,169 104,811,169 159,285 NET ASSETS: Beginning of year 659,065,133 396,534,660 578,301 -------------- -------------- ---------- End of year $806,822,302 $501,345,829 $737,586 ============== ============== ==========
(14) Formerly Hartford Global Equity HLS Fund. Change effective March 1, 2010. SA-79 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD HARTFORD DISCIPLINED GLOBAL GROWTH EQUITY HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(19,737) $(108,661) Net realized gain (loss) on security transactions 32,014 282,034 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 157,735 11,594,560 ------------ -------------- Net increase (decrease) in net assets resulting from operations 170,012 11,767,933 ------------ -------------- UNIT TRANSACTIONS: Purchases 111,206 7,198,811 Net transfers 149,607 11,287,558 Surrenders for benefit payments and fees (84,667) (5,186,718) Net annuity transactions -- -- Other -- -- ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions 176,146 13,299,651 ------------ -------------- Net increase (decrease) in net assets 346,158 25,067,584 NET ASSETS: Beginning of year 1,501,314 78,491,692 ------------ -------------- End of year $1,847,472 $103,559,276 ============ ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-80 -------------------------------------------------------------------------------
HARTFORD HARTFORD GROWTH HARTFORD HARTFORD GROWTH OPPORTUNITIES HIGH YIELD INDEX HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (15) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (16) --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(212,966) $(2,206,480) $(438,828) $1,325 Net realized gain (loss) on security transactions 496,988 759,267 134,561 19 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,340,788 25,902,224 6,320,151 11,619 ------------- -------------- ------------- ---------- Net increase (decrease) in net assets resulting from operations 3,624,810 24,455,011 6,015,884 12,963 ------------- -------------- ------------- ---------- UNIT TRANSACTIONS: Purchases 1,425,644 10,999,270 6,656,197 89,700 Net transfers 5,097,662 13,627,122 17,613,415 14,529 Surrenders for benefit payments and fees (1,457,210) (8,536,912) (3,743,851) (3) Net annuity transactions -- -- -- -- Other -- -- 95 -- ------------- -------------- ------------- ---------- Net increase (decrease) in net assets resulting from unit transactions 5,066,096 16,089,480 20,525,856 104,226 ------------- -------------- ------------- ---------- Net increase (decrease) in net assets 8,690,906 40,544,491 26,541,740 117,189 NET ASSETS: Beginning of year 15,634,716 133,087,759 33,366,703 -- ------------- -------------- ------------- ---------- End of year $24,325,622 $173,632,250 $59,908,443 $117,189 ============= ============== ============= ========== HARTFORD HARTFORD INTERNATIONAL SMALL/MID CAP HARTFORD OPPORTUNITIES EQUITY MONEY MARKET HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (17) SUB-ACCOUNT (18) SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(61,447) $(86,084) $(15,653,112) Net realized gain (loss) on security transactions 49,635 411,083 -- Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,856,181 1,857,223 -- ------------- ------------- ---------------- Net increase (decrease) in net assets resulting from operations 3,844,369 2,182,222 (15,653,112) ------------- ------------- ---------------- UNIT TRANSACTIONS: Purchases 1,684,568 332,836 21,649,359 Net transfers 1,940,181 (203,006) 192,874,079 Surrenders for benefit payments and fees (1,620,868) (420,416) (467,491,141) Net annuity transactions -- -- 274,728 Other -- -- -- ------------- ------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 2,003,881 (290,586) (252,692,975) ------------- ------------- ---------------- Net increase (decrease) in net assets 5,848,250 1,891,636 (268,346,087) NET ASSETS: Beginning of year 28,106,203 9,718,275 1,000,952,621 ------------- ------------- ---------------- End of year $33,954,453 $11,609,911 $732,606,534 ============= ============= ================
(15) Effective April 16, 2010 Hartford Fundamental Growth HLS Fund merged with Hartford Growth HLS Fund. (16) Funded as of March 8, 2010. (17) Effective April 16, 2010 Hartford International Growth HLS Fund merged with Hartford International Opportunities HLS Fund. (18) Formerly Hartford MidCap Growth HLS Fund. Change effective March 1, 2010. SA-81 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
HARTFORD HARTFORD SMALL COMPANY SMALLCAP GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(197,835) $(84,249) Net realized gain (loss) on security transactions 482,580 20,517 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 2,186,182 1,688,405 ------------- ------------ Net increase (decrease) in net assets resulting from operations 2,470,927 1,624,673 ------------- ------------ UNIT TRANSACTIONS: Purchases 461,320 125,715 Net transfers (1,293,800) 2,910,253 Surrenders for benefit payments and fees (789,300) (213,732) Net annuity transactions -- -- Other -- -- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (1,621,780) 2,822,236 ------------- ------------ Net increase (decrease) in net assets 849,147 4,446,909 NET ASSETS: Beginning of year 12,865,101 3,723,172 ------------- ------------ End of year $13,714,248 $8,170,081 ============= ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-82 -------------------------------------------------------------------------------
HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD AMERICAN FUNDS STOCK SECURITIES VALUE ASSET ALLOCATION HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (19)(20) SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(10,084) $1,619,753 $21,464 $32,788 Net realized gain (loss) on security transactions 29,811 (55,947) 1,931,773 327,008 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 214,678 (518,050) 668,972 3,598,634 ------------ ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 234,405 1,045,756 2,622,209 3,958,430 ------------ ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 1,195 1,522,217 1,325,166 1,371,267 Net transfers (156,957) 5,740,551 1,229,270 4,133,460 Surrenders for benefit payments and fees (127,589) (4,173,190) (1,068,364) (2,171,368) Net annuity transactions -- -- -- (332) Other -- -- -- -- ------------ ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (283,351) 3,089,578 1,486,072 3,333,027 ------------ ------------- ------------- ------------- Net increase (decrease) in net assets (48,946) 4,135,334 4,108,281 7,291,457 NET ASSETS: Beginning of year 2,244,934 43,863,750 19,533,865 38,878,300 ------------ ------------- ------------- ------------- End of year $2,195,988 $47,999,084 $23,642,146 $46,169,757 ============ ============= ============= ============= AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS AMERICAN FUNDS GROWTH BOND GLOBAL BOND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $300,130 $1,123,277 $(202,713) Net realized gain (loss) on security transactions 496,529 247,484 67,363 Net realized gain on distributions -- -- 26,995 Net unrealized appreciation (depreciation) of investments during the year 1,690,832 5,544,727 1,102,223 ------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 2,487,491 6,915,488 993,868 ------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 1,031,281 9,824,843 1,144,352 Net transfers 1,774,218 11,938,903 499,963 Surrenders for benefit payments and fees (1,326,819) (10,411,588) (2,475,618) Net annuity transactions -- (2,569) -- Other -- -- -- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 1,478,680 11,349,589 (831,303) ------------- -------------- ------------- Net increase (decrease) in net assets 3,966,171 18,265,077 162,565 NET ASSETS: Beginning of year 23,912,534 148,368,692 33,795,357 ------------- -------------- ------------- End of year $27,878,705 $166,633,769 $33,957,922 ============= ============== =============
(19) Effective March 19, 2010 Hartford Equity Income HLS Fund merged with Hartford Value HLS Fund. (20) Effective March 19, 2010 Hartford Value Opportunities HLS Fund merged with Hartford Value HLS Fund. SA-83 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL GROWTH AMERICAN FUNDS AND INCOME GLOBAL GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $148,869 $(217,910) Net realized gain (loss) on security transactions 1,173,874 252,003 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 4,959,384 2,529,093 ------------- ------------- Net increase (decrease) in net assets resulting from operations 6,282,127 2,563,186 ------------- ------------- UNIT TRANSACTIONS: Purchases 1,597,087 989,465 Net transfers (2,069,313) 548,728 Surrenders for benefit payments and fees (4,209,150) (1,137,924) Net annuity transactions (399) -- Other -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (4,681,775) 400,269 ------------- ------------- Net increase (decrease) in net assets 1,600,352 2,963,455 NET ASSETS: Beginning of year 75,088,531 26,727,214 ------------- ------------- End of year $76,688,883 $29,690,669 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-84 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS CAPITALIZATION GROWTH GROWTH-INCOME INTERNATIONAL HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(886,816) $(2,998,384) $(493,576) $(1,065,622) Net realized gain (loss) on security transactions 879,574 1,963,001 636,760 877,091 Net realized gain on distributions -- -- -- 596,098 Net unrealized appreciation (depreciation) of investments during the year 10,528,921 43,095,108 12,844,348 10,447,933 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 10,521,679 42,059,725 12,987,532 10,855,500 ------------- -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 3,591,811 13,876,459 6,116,413 12,058,076 Net transfers (1,289,991) 5,952,406 1,814,052 17,264,638 Surrenders for benefit payments and fees (3,176,244) (15,700,368) (8,536,472) (9,838,971) Net annuity transactions (968) (2,763) (2,781) (1,411) Other -- 95 -- -- ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (875,392) 4,125,829 (608,788) 19,482,332 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets 9,646,287 46,185,554 12,378,744 30,337,832 NET ASSETS: Beginning of year 53,538,564 248,475,238 139,993,210 165,985,999 ------------- -------------- -------------- -------------- End of year $63,184,851 $294,660,792 $152,371,954 $196,323,831 ============= ============== ============== ============== AMERICAN FUNDS LORD ABBETT LORD ABBETT NEW WORLD FUNDAMENTAL CAPITAL STRUCTURE HLS FUND EQUITY PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT (21) SUB-ACCOUNT (22) ----------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(387,734) $(67) $196,476 Net realized gain (loss) on security transactions 222,063 615 47,935 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 8,108,779 37,290 1,368,348 ------------- ---------- ------------- Net increase (decrease) in net assets resulting from operations 7,943,108 37,838 1,612,759 ------------- ---------- ------------- UNIT TRANSACTIONS: Purchases 3,123,769 188,643 813,273 Net transfers 2,674,614 73,269 1,374,526 Surrenders for benefit payments and fees (2,699,689) -- (722,211) Net annuity transactions -- -- -- Other -- 59 (250) ------------- ---------- ------------- Net increase (decrease) in net assets resulting from unit transactions 3,098,694 261,971 1,465,338 ------------- ---------- ------------- Net increase (decrease) in net assets 11,041,802 299,809 3,078,097 NET ASSETS: Beginning of year 51,022,990 7,609 10,848,407 ------------- ---------- ------------- End of year $62,064,792 $307,418 $13,926,504 ============= ========== =============
(21) Formerly Lord Abbett All Value Portfolio. Change effective May 1, 2010. (22) Formerly Lord Abbett America's Value Portfolio. Change effective May 1, 2010. SA-85 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT GROWTH & BOND-DEBENTURE INCOME PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $3,359,122 $(121,445) Net realized gain (loss) on security transactions 228,896 25,917 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 3,971,013 2,112,576 ------------- ------------- Net increase (decrease) in net assets resulting from operations 7,559,031 2,017,048 ------------- ------------- UNIT TRANSACTIONS: Purchases 1,528,743 245,296 Net transfers 3,266,432 1,357,174 Surrenders for benefit payments and fees (6,946,791) (651,333) Net annuity transactions -- -- Other -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (2,151,616) 951,137 ------------- ------------- Net increase (decrease) in net assets 5,407,415 2,968,185 NET ASSETS: Beginning of year 73,176,274 12,347,559 ------------- ------------- End of year $78,583,689 $15,315,744 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-86 -------------------------------------------------------------------------------
MFS CORE MFS GROWTH MFS GLOBAL MFS HIGH EQUITY SERIES SERIES EQUITY SERIES INCOME SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(122,367) $(872,820) $(181,224) $13,703,300 Net realized gain (loss) on security transactions (799,022) (1,040,083) (139,425) 2,863,222 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,910,368 8,647,251 2,501,014 12,340,036 ------------- ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 2,988,979 6,734,348 2,180,365 28,906,558 ------------- ------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 252,676 878,588 201,383 1,489,692 Net transfers (355,751) 2,271,184 10,718 29,008,814 Surrenders for benefit payments and fees (3,524,111) (7,873,666) (2,983,987) (37,923,465) Net annuity transactions 7,968 24,485 (5,419) (56,494) Other -- -- -- -- ------------- ------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (3,619,218) (4,699,409) (2,777,305) (7,481,453) ------------- ------------- ------------- -------------- Net increase (decrease) in net assets (630,239) 2,034,939 (596,940) 21,425,105 NET ASSETS: Beginning of year 22,258,659 54,840,968 24,208,687 242,007,067 ------------- ------------- ------------- -------------- End of year $21,628,420 $56,875,907 $23,611,747 $263,432,172 ============= ============= ============= ============== MFS INVESTORS GROWTH MFS INVESTORS MFS MID CAP STOCK SERIES TRUST SERIES GROWTH SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(677,390) $(2,204,274) $(1,733,966) Net realized gain (loss) on security transactions (276,402) (2,752,586) (927,387) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 5,798,348 36,230,905 24,915,815 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 4,844,556 31,274,045 22,254,462 -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 359,358 2,606,058 797,166 Net transfers (4,399,129) (7,151,516) 14,967,886 Surrenders for benefit payments and fees (8,818,615) (44,722,263) (12,917,404) Net annuity transactions 77,599 15,881 (7,940) Other -- -- -- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (12,780,787) (49,251,840) 2,839,708 -------------- -------------- -------------- Net increase (decrease) in net assets (7,936,231) (17,977,795) 25,094,170 NET ASSETS: Beginning of year 59,297,756 373,439,008 83,348,406 -------------- -------------- -------------- End of year $51,361,525 $355,461,213 $108,442,576 ============== ============== ==============
SA-87 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
MFS NEW MFS TOTAL DISCOVERY SERIES RETURN SERIES SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(4,573,608) $11,075,673 Net realized gain (loss) on security transactions (2,347,360) (18,436,544) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 78,918,174 88,482,804 -------------- ---------------- Net increase (decrease) in net assets resulting from operations 71,997,206 81,121,933 -------------- ---------------- UNIT TRANSACTIONS: Purchases 1,967,554 9,128,175 Net transfers (13,542,581) 1,776,593 Surrenders for benefit payments and fees (31,833,466) (142,064,263) Net annuity transactions (24,277) 127,737 Other -- (250) -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (43,432,770) (131,032,008) -------------- ---------------- Net increase (decrease) in net assets 28,564,436 (49,910,075) NET ASSETS: Beginning of year 251,682,405 1,108,001,544 -------------- ---------------- End of year $280,246,841 $1,058,091,469 ============== ================
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-88 -------------------------------------------------------------------------------
MFS VALUE MFS RESEARCH MFS RESEARCH MFS RESEARCH SERIES BOND SERIES INTERNATIONAL SERIES SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(758,953) $3,322,567 $(83,930) $(122,410) Net realized gain (loss) on security transactions (2,574,740) 881,242 (1,748,773) 131,652 Net realized gain on distributions -- 909,571 -- -- Net unrealized appreciation (depreciation) of investments during the year 37,261,215 10,363,816 6,254,773 4,314,386 -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 33,927,522 15,477,196 4,422,070 4,323,628 -------------- -------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 10,488,948 18,151,007 473,579 403,713 Net transfers 20,577,206 84,239,184 (882,617) 192,578 Surrenders for benefit payments and fees (35,999,959) (39,748,638) (6,391,848) (4,266,625) Net annuity transactions 6,216 21,843 -- -- Other -- -- -- -- -------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (4,927,589) 62,663,396 (6,800,886) (3,670,334) -------------- -------------- ------------- ------------- Net increase (decrease) in net assets 28,999,933 78,140,592 (2,378,816) 653,294 NET ASSETS: Beginning of year 349,973,875 254,666,493 57,768,376 34,627,175 -------------- -------------- ------------- ------------- End of year $378,973,808 $332,807,085 $55,389,560 $35,280,469 ============== ============== ============= ============= INVESCO BLACKROCK BLACKROCK VAN KAMPEN V. I. GLOBAL LARGE CAP INTERNATIONAL OPPORTUNITIES V.I. FUND GROWTH V.I. FUND GROWTH EQUITY SUB-ACCOUNT (23) SUB-ACCOUNT SUB-ACCOUNT (24) -------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(9,844) $(9,784) $(1,546) Net realized gain (loss) on security transactions 12,298 23,994 (1,601) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 60,365 143,004 33,177 ----------- ------------ ---------- Net increase (decrease) in net assets resulting from operations 62,819 157,214 30,030 ----------- ------------ ---------- UNIT TRANSACTIONS: Purchases 10 10 -- Net transfers (95,049) (24,723) 67,360 Surrenders for benefit payments and fees (100,995) (104,452) (10,234) Net annuity transactions -- -- -- Other -- -- -- ----------- ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions (196,034) (129,165) 57,126 ----------- ------------ ---------- Net increase (decrease) in net assets (133,215) 28,049 87,156 NET ASSETS: Beginning of year 891,650 1,221,554 409,278 ----------- ------------ ---------- End of year $758,435 $1,249,603 $496,434 =========== ============ ==========
(23) Formerly BlackRock Global Growth V.I. Fund. Change effective May 3, 2010. (24) Formerly Van Kampen -- UIF International Growth Equity Portfolio. Change effective June 1, 2010. SA-89 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
INVESCO UIF MID CAP VAN KAMPEN V. I. GROWTH MID CAP PORTFOLIO VALUE FUND SUB-ACCOUNT (25) SUB-ACCOUNT (26) -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(377,479) $(88,612) Net realized gain (loss) on security transactions 1,263,252 334,630 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 6,305,699 2,784,756 ------------- ------------- Net increase (decrease) in net assets resulting from operations 7,191,472 3,030,774 ------------- ------------- UNIT TRANSACTIONS: Purchases 661,955 525,462 Net transfers (1,494,687) (281,605) Surrenders for benefit payments and fees (1,827,750) (925,288) Net annuity transactions -- -- Other -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (2,660,482) (681,431) ------------- ------------- Net increase (decrease) in net assets 4,530,990 2,349,343 NET ASSETS: Beginning of year 25,455,912 14,588,118 ------------- ------------- End of year $29,986,902 $16,937,461 ============= =============
(25) Formerly Van Kampen -- UIF Mid Cap Growth Portfolio. Change effective June 1, 2010. (26) Formerly Van Kampen -- UIF U.S. Mid Cap Value Portfolio. Change effective June 1, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-90 -------------------------------------------------------------------------------
MORGAN STANLEY -- MORGAN STANLEY -- MORGAN STANLEY -- CAPITAL MID CAP MORGAN STANLEY -- FOCUS GROWTH OPPORTUNITIES GROWTH FLEXIBLE INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(17,093) $(52,569) $(12,930) $33,417 Net realized gain (loss) on security transactions 30,970 7,263 5,578 8,031 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 225,558 756,396 210,401 13,497 ------------ ------------ ---------- ---------- Net increase (decrease) in net assets resulting from operations 239,435 711,090 203,049 54,945 ------------ ------------ ---------- ---------- UNIT TRANSACTIONS: Purchases 7,000 18,865 315 4 Net transfers 5,586 (301,623) (56,156) (53,963) Surrenders for benefit payments and fees (37,391) (230,618) (34,816) (24,376) Net annuity transactions -- -- -- -- Other -- -- -- -- ------------ ------------ ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions (24,805) (513,376) (90,657) (78,335) ------------ ------------ ---------- ---------- Net increase (decrease) in net assets 214,630 197,714 112,392 (23,390) NET ASSETS: Beginning of year 935,934 3,200,877 734,230 803,795 ------------ ------------ ---------- ---------- End of year $1,150,564 $3,398,591 $846,622 $780,405 ============ ============ ========== ========== INVESCO V.I. SELECT OPPENHEIMER DIMENSIONS CAPITAL OPPENHEIMER DIVIDEND APPRECIATION GLOBAL SECURITIES GROWTH PORTFOLIO FUND/VA FUND/VA SUB-ACCOUNT (27) SUB-ACCOUNT SUB-ACCOUNT -------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(473) $(45,713) $(93,776) Net realized gain (loss) on security transactions (5,544) 86,584 707,620 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 21,783 136,581 3,359,537 ---------- ------------ ------------- Net increase (decrease) in net assets resulting from operations 15,766 177,452 3,973,381 ---------- ------------ ------------- UNIT TRANSACTIONS: Purchases -- 31,268 476,163 Net transfers (17,648) (238,320) (387,722) Surrenders for benefit payments and fees (5,828) (153,204) (2,128,369) Net annuity transactions -- -- -- Other -- -- -- ---------- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (23,476) (360,256) (2,039,928) ---------- ------------ ------------- Net increase (decrease) in net assets (7,710) (182,804) 1,933,453 NET ASSETS: Beginning of year 199,849 2,983,346 30,069,311 ---------- ------------ ------------- End of year $192,139 $2,800,542 $32,002,764 ========== ============ =============
(27) Formerly Morgan Stanley -- Dividend Growth Portfolio. Change effective June 1, 2010. SA-91 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER MAIN STREET MAIN STREET SMALL CAP FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(14,683) $(343,644) Net realized gain (loss) on security transactions 76,705 601,935 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 230,485 5,799,114 ------------ ------------- Net increase (decrease) in net assets resulting from operations 292,507 6,057,405 ------------ ------------- UNIT TRANSACTIONS: Purchases 192,591 426,784 Net transfers 58,090 (1,048,689) Surrenders for benefit payments and fees (180,317) (1,890,308) Net annuity transactions -- -- Other -- -- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 70,364 (2,512,213) ------------ ------------- Net increase (decrease) in net assets 362,871 3,545,192 NET ASSETS: Beginning of year 2,174,143 29,411,750 ------------ ------------- End of year $2,537,014 $32,956,942 ============ =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-92 -------------------------------------------------------------------------------
OPPENHEIMER PUTNAM VT PUTNAM VT PUTNAM VT VALUE DIVERSIFIED GLOBAL ASSET INTERNATIONAL FUND/VA INCOME FUND ALLOCATION FUND VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (28) ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(9,515) $13,602,268 $278,966 $25,336 Net realized gain (loss) on security transactions 86,971 517,195 788 44,096 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 86,982 (3,184,933) 583,397 10,044 ------------ -------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 164,438 10,934,530 863,151 79,476 ------------ -------------- ------------ ------------ UNIT TRANSACTIONS: Purchases 31,462 2,165,087 116,209 51,916 Net transfers (408,257) (797,196) 170,035 688 Surrenders for benefit payments and fees (196,518) (6,823,147) (237,153) (117,051) Net annuity transactions -- -- -- -- Other -- -- -- -- ------------ -------------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (573,313) (5,455,256) 49,091 (64,447) ------------ -------------- ------------ ------------ Net increase (decrease) in net assets (408,875) 5,479,274 912,242 15,029 NET ASSETS: Beginning of year 1,798,331 101,820,907 6,730,516 1,399,090 ------------ -------------- ------------ ------------ End of year $1,389,456 $107,300,181 $7,642,758 $1,414,119 ============ ============== ============ ============ PUTNAM VT PUTNAM VT INTERNATIONAL PUTNAM VT SMALL CAP EQUITY FUND INVESTORS FUND VALUE SUB-ACCOUNT SUB-ACCOUNT (29) SUB-ACCOUNT -------------------------- --------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $25,899 $27 $(28,086) Net realized gain (loss) on security transactions 5,187 296 1,380 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 69,502 5,571 425,752 ------------ --------- ------------ Net increase (decrease) in net assets resulting from operations 100,588 5,894 399,046 ------------ --------- ------------ UNIT TRANSACTIONS: Purchases 35,472 5,032 39,563 Net transfers 4,166 42,214 396,202 Surrenders for benefit payments and fees (240,715) (499) (162,511) Net annuity transactions -- -- -- Other -- -- -- ------------ --------- ------------ Net increase (decrease) in net assets resulting from unit transactions (201,077) 46,747 273,254 ------------ --------- ------------ Net increase (decrease) in net assets (100,489) 52,641 672,300 NET ASSETS: Beginning of year 1,630,606 -- 1,560,968 ------------ --------- ------------ End of year $1,530,117 $52,641 $2,233,268 ============ ========= ============
(28) Formerly Putnam VT International Growth and Income Fund. Change effective January 1, 2010. (29) Funded as of March 3, 2010. SA-93 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
PUTNAM VT PUTNAM VT EQUITY VOYAGER INCOME FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $788 $275 Net realized gain (loss) on security transactions 1,089 527 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 55,217 37,809 ---------- ---------- Net increase (decrease) in net assets resulting from operations 57,094 38,611 ---------- ---------- UNIT TRANSACTIONS: Purchases 342,816 177,710 Net transfers 118,173 279,804 Surrenders for benefit payments and fees (8,971) (7,660) Net annuity transactions -- -- Other -- -- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 452,018 449,854 ---------- ---------- Net increase (decrease) in net assets 509,112 488,465 NET ASSETS: Beginning of year 4,805 854 ---------- ---------- End of year $513,917 $489,319 ========== ==========
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-94 -------------------------------------------------------------------------------
INVESCO JENNISON 20/20 PRUDENTIAL VAN KAMPEN V. I. FOCUS JENNISON VALUE GROWTH AND PORTFOLIO PORTFOLIO PORTFOLIO INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (30) --------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(8,717) $(2,131) $(4,321) $(561,566) Net realized gain (loss) on security transactions 1,940 (881) 112 322,113 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 34,009 11,362 37,414 6,120,481 ---------- ---------- ---------- ------------- Net increase (decrease) in net assets resulting from operations 27,232 8,350 33,205 5,881,028 ---------- ---------- ---------- ------------- UNIT TRANSACTIONS: Purchases 84 -- 84 1,012,496 Net transfers 18,520 (312) -- 2,734,378 Surrenders for benefit payments and fees (26,921) (19,420) (503) (3,584,236) Net annuity transactions -- -- -- -- Other -- -- -- -- ---------- ---------- ---------- ------------- Net increase (decrease) in net assets resulting from unit transactions (8,317) (19,732) (419) 162,638 ---------- ---------- ---------- ------------- Net increase (decrease) in net assets 18,915 (11,382) 32,786 6,043,666 NET ASSETS: Beginning of year 504,354 118,032 292,267 49,876,282 ---------- ---------- ---------- ------------- End of year $523,269 $106,650 $325,053 $55,919,948 ========== ========== ========== ============= WELLS FARGO WELLS FARGO INVESCO ADVANTAGE VT ADVANTAGE VT VAN KAMPEN V. I. INDEX ASSET TOTAL RETURN COMSTOCK FUND ALLOCATION FUND BOND FUND SUB-ACCOUNT (31) SUB-ACCOUNT (32) SUB-ACCOUNT -------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(45,503) $(2,046) $107,920 Net realized gain (loss) on security transactions (56,388) (13,321) 1,625 Net realized gain on distributions -- -- 205,496 Net unrealized appreciation (depreciation) of investments during the year 477,380 123,680 36,996 ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations 375,489 108,313 352,037 ------------ ------------ ------------- UNIT TRANSACTIONS: Purchases 578 -- 19,147 Net transfers (31,967) 1,272 (199,878) Surrenders for benefit payments and fees (149,935) (96,837) (871,025) Net annuity transactions -- -- -- Other -- -- -- ------------ ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (181,324) (95,565) (1,051,756) ------------ ------------ ------------- Net increase (decrease) in net assets 194,165 12,748 (699,719) NET ASSETS: Beginning of year 2,910,971 1,046,224 7,296,678 ------------ ------------ ------------- End of year $3,105,136 $1,058,972 $6,596,959 ============ ============ =============
(30) Formerly Van Kampen LIT Growth and Income Portfolio. Change effective June 1, 2010. (31) Formerly Van Kampen LIT Comstock Portfolio. Change effective June 1, 2010. (32) Formerly Wells Fargo Advantage VT Asset Allocation Fund. Change effective May 1, 2010. SA-95 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT INTRINSIC INTERNATIONAL VALUE FUND EQUITY FUND SUB-ACCOUNT (33)(34) SUB-ACCOUNT (35) --------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(32,257) $(20,087) Net realized gain (loss) on security transactions (199,550) (1,176,469) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 601,652 1,428,875 ------------ ------------- Net increase (decrease) in net assets resulting from operations 369,845 232,319 ------------ ------------- UNIT TRANSACTIONS: Purchases 1,577 1,607 Net transfers (50,138) (76,079) Surrenders for benefit payments and fees (325,867) (127,581) Net annuity transactions -- -- Other -- -- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (374,428) (202,053) ------------ ------------- Net increase (decrease) in net assets (4,583) 30,266 NET ASSETS: Beginning of year 3,423,848 1,856,144 ------------ ------------- End of year $3,419,265 $1,886,410 ============ =============
(33) Effective July 16, 2010 Wells Fargo Advantage VT C&B Large Cap Value Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. (34) Effective July 16, 2010 Wells Fargo Advantage VT Equity Income Fund merged with newly created Wells Fargo Advantage VT Intrinsic Value Fund. (35) Formerly Wells Fargo Advantage VT International Core Fund. Change effective July 16, 2010. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-96 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT WELLS FARGO MONEY SMALL CAP ADVANTAGE VT MARKET FUND GROWTH FUND DISCOVERY FUND SUB-ACCOUNT (36) SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(26,101) $(56,429) $(28,651) Net realized gain (loss) on security transactions -- (51,646) 17,915 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year -- 767,139 448,581 ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations (26,101) 659,064 437,845 ------------- ------------ ------------ UNIT TRANSACTIONS: Purchases -- 4,323 10,151 Net transfers (4,037,048) (142,803) 268,821 Surrenders for benefit payments and fees (279,274) (295,774) (98,684) Net annuity transactions -- -- -- Other -- -- -- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (4,316,322) (434,254) 180,288 ------------- ------------ ------------ Net increase (decrease) in net assets (4,342,423) 224,810 618,133 NET ASSETS: Beginning of year 4,342,423 3,049,986 1,272,221 ------------- ------------ ------------ End of year $ -- $3,274,796 $1,890,354 ============= ============ ============ WELLS FARGO WELLS FARGO ADVANTAGE VT WELLS FARGO ADVANTAGE VT SMALL CAP ADVANTAGE VT CORE VALUE FUND OPPORTUNITY FUND EQUITY FUND SUB-ACCOUNT (37) SUB-ACCOUNT SUB-ACCOUNT (38) ----------------------------- ----------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,685) $(2,106) $(506) Net realized gain (loss) on security transactions (5,648) (874) (6,716) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 91,361 45,585 11,836 ---------- ---------- --------- Net increase (decrease) in net assets resulting from operations 84,028 42,605 4,614 ---------- ---------- --------- UNIT TRANSACTIONS: Purchases 4,035 -- -- Net transfers 22,810 131,795 -- Surrenders for benefit payments and fees (89,681) (14,458) (5,929) Net annuity transactions -- -- -- Other -- -- -- ---------- ---------- --------- Net increase (decrease) in net assets resulting from unit transactions (62,836) 117,337 (5,929) ---------- ---------- --------- Net increase (decrease) in net assets 21,192 159,942 (1,315) NET ASSETS: Beginning of year 566,482 147,847 54,331 ---------- ---------- --------- End of year $587,674 $307,789 $53,016 ========== ========== =========
(36) Effective May 1, 2010 Wells Fargo Advantage VT Money Market Fund was liquidated. (37) Formerly Wells Fargo Advantage VT Small/Mid Cap Value Fund. Change effective May 1, 2010. (38) Effective July 16, 2010 Wells Fargo Advantage VT Large Company Core Fund merged with newly created Wells Fargo Advantage VT Core Equity Fund. SA-97 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS BALANCED WEALTH INTERNATIONAL STRATEGY PORTFOLIO VALUE PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(147,729) $(64,993) Net realized gain (loss) on security transactions 176,401 193,416 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 4,585,395 9,032,871 ------------- ------------- Net increase (decrease) in net assets resulting from operations 4,614,067 9,161,294 ------------- ------------- UNIT TRANSACTIONS: Purchases 5,241,528 6,461,281 Net transfers 7,388,869 7,941,010 Surrenders for benefit payments and fees (1,190,895) (1,171,898) Net annuity transactions 250 -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 11,439,752 13,230,393 ------------- ------------- Net increase (decrease) in net assets 16,053,819 22,391,687 NET ASSETS: Beginning of year 12,085,723 15,187,727 ------------- ------------- End of year $28,139,542 $37,579,414 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-98 -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS ALLIANCEBERNSTEIN VPS AIM V.I. SMALL/MID CAP ALLIANCEBERNSTEIN VPS INTERNATIONAL BASIC VALUE PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(54,235) $14,389 $225,162 $(88,008) Net realized gain (loss) on security transactions (171,659) (4,036) 57,214 561,629 Net realized gain on distributions 298,055 -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,492,437 184,783 2,471,457 41,096,949 ------------ ------------ ------------- -------------- Net increase (decrease) in net assets resulting from operations 2,564,598 195,136 2,753,833 41,570,570 ------------ ------------ ------------- -------------- UNIT TRANSACTIONS: Purchases 1,425,346 151,631 1,248,802 1,188,347 Net transfers (150,889) 296,244 1,046,415 20,369,433 Surrenders for benefit payments and fees (245,798) (49,962) (287,366) (11,585,485) Net annuity transactions -- -- (335) (11,731) ------------ ------------ ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 1,028,659 397,913 2,007,516 9,960,564 ------------ ------------ ------------- -------------- Net increase (decrease) in net assets 3,593,257 593,049 4,761,349 51,531,134 NET ASSETS: Beginning of year 5,589,361 618,256 5,817,476 90,052,859 ------------ ------------ ------------- -------------- End of year $9,182,618 $1,211,305 $10,578,825 $141,583,993 ============ ============ ============= ============== AIM V.I. AIM V.I. AIM V.I. CAPITAL CORE GOVERNMENT APPRECIATION FUND EQUITY FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(605,692) $(102,038) $24,153,931 Net realized gain (loss) on security transactions (2,443,307) (973,140) 7,889,042 Net realized gain on distributions -- -- 29,361,684 Net unrealized appreciation (depreciation) of investments during the year 11,711,216 51,391,143 (82,204,892) ------------- -------------- ---------------- Net increase (decrease) in net assets resulting from operations 8,662,217 50,315,965 (20,800,235) ------------- -------------- ---------------- UNIT TRANSACTIONS: Purchases 763,303 1,776,500 5,608,685 Net transfers 2,244,759 17,049,970 (159,730,853) Surrenders for benefit payments and fees (5,496,515) (25,347,177) (121,174,912) Net annuity transactions (11,266) (33,345) (112,003) ------------- -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (2,499,719) (6,554,052) (275,409,083) ------------- -------------- ---------------- Net increase (decrease) in net assets 6,162,498 43,761,913 (296,209,318) NET ASSETS: Beginning of year 49,941,543 196,232,507 1,103,726,475 ------------- -------------- ---------------- End of year $56,104,041 $239,994,420 $807,517,157 ============= ============== ================
SA-99 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. INTERNATIONAL MID CAP CORE GROWTH FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(252,759) $(1,132,179) Net realized gain (loss) on security transactions (4,382,015) 1,835,149 Net realized gain on distributions -- 3,150,280 Net unrealized appreciation (depreciation) of investments during the year 57,290,213 56,863,793 -------------- -------------- Net increase (decrease) in net assets resulting from operations 52,655,439 60,717,043 -------------- -------------- UNIT TRANSACTIONS: Purchases 9,337,255 1,437,124 Net transfers 21,876,212 6,095,303 Surrenders for benefit payments and fees (13,287,085) (25,068,571) Net annuity transactions (15,483) (21,934) -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 17,910,899 (17,558,078) -------------- -------------- Net increase (decrease) in net assets 70,566,338 43,158,965 NET ASSETS: Beginning of year 153,766,478 232,714,670 -------------- -------------- End of year $224,332,816 $275,873,635 ============== ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-100 -------------------------------------------------------------------------------
AIM V.I. AIM V.I. AIM V.I. AIM V.I. SMALL CAP LARGE CAP CAPITAL POWERSHARES ETF EQUITY FUND GROWTH FUND DEVELOPMENT FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,760,182) $(463,036) $(139,211) $34,245 Net realized gain (loss) on security transactions (2,455,479) (661,442) 1,028,971 (7,048) Net realized gain on distributions -- -- -- 19,564 Net unrealized appreciation (depreciation) of investments during the year 23,117,329 7,477,918 1,551,950 875,358 -------------- ------------- ------------ ------------- Net increase (decrease) in net assets resulting from operations 18,901,668 6,353,440 2,441,710 922,119 -------------- ------------- ------------ ------------- UNIT TRANSACTIONS: Purchases 3,098,476 270,907 793,898 2,933,366 Net transfers 4,653,522 (839,663) 4,205,282 6,585,746 Surrenders for benefit payments and fees (10,415,354) (2,898,401) (466,502) (115,069) Net annuity transactions (1,255) (2,211) -- -- -------------- ------------- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions (2,664,611) (3,469,368) 4,532,678 9,404,043 -------------- ------------- ------------ ------------- Net increase (decrease) in net assets 16,237,057 2,884,072 6,974,388 10,326,162 NET ASSETS: Beginning of year 104,456,902 29,147,739 1,603,165 255,166 -------------- ------------- ------------ ------------- End of year $120,693,959 $32,031,811 $8,577,553 $10,581,328 ============== ============= ============ ============= AMERICAN FUNDS AMERICAN FUNDS GLOBAL AMERICAN FUNDS GLOBAL GROWTH AND ASSET BOND FUND INCOME FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(584,954) $4,041,554 $7,469,286 Net realized gain (loss) on security transactions (851,970) (11,157,973) (36,244,345) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 20,155,723 160,104,108 269,182,141 -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from operations 18,718,799 152,987,689 240,407,082 -------------- -------------- ---------------- UNIT TRANSACTIONS: Purchases 3,685,137 4,609,598 6,731,772 Net transfers 38,637,820 6,487,759 (33,574,156) Surrenders for benefit payments and fees (30,839,669) (32,990,814) (125,182,172) Net annuity transactions 45,966 19,288 (174,812) -------------- -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 11,529,254 (21,874,169) (152,199,368) -------------- -------------- ---------------- Net increase (decrease) in net assets 30,248,053 131,113,520 88,207,714 NET ASSETS: Beginning of year 270,406,970 432,262,076 1,227,623,202 -------------- -------------- ---------------- End of year $300,655,023 $563,375,596 $1,315,830,916 ============== ============== ================
SA-101 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
AMERICAN FUNDS BLUE CHIP INCOME AND AMERICAN FUNDS GROWTH FUND BOND FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,439,880 $17,294,704 Net realized gain (loss) on security transactions (32,114,109) 1,381,310 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 196,374,658 96,798,278 -------------- ---------------- Net increase (decrease) in net assets resulting from operations 166,700,429 115,474,292 -------------- ---------------- UNIT TRANSACTIONS: Purchases 3,251,351 12,095,206 Net transfers (25,353,420) 160,578,922 Surrenders for benefit payments and fees (68,673,313) (130,191,674) Net annuity transactions (35,867) (113,174) -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions (90,811,249) 42,369,280 -------------- ---------------- Net increase (decrease) in net assets 75,889,180 157,843,572 NET ASSETS: Beginning of year 726,259,062 1,052,329,260 -------------- ---------------- End of year $802,148,242 $1,210,172,832 ============== ================
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-102 -------------------------------------------------------------------------------
AMERICAN FUNDS GLOBAL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH FUND GROWTH FUND GROWTH-INCOME FUND INTERNATIONAL FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(1,416,753) $(27,787,198) $(3,736,510) $(1,826,482) Net realized gain (loss) on security transactions (12,597,393) (103,536,375) (109,731,405) (32,106,981) Net realized gain on distributions -- -- -- 4,107,736 Net unrealized appreciation (depreciation) of investments during the year 178,966,944 919,679,168 775,722,957 294,729,468 -------------- ---------------- ---------------- -------------- Net increase (decrease) in net assets resulting from operations 164,952,798 788,355,595 662,255,042 264,903,741 -------------- ---------------- ---------------- -------------- UNIT TRANSACTIONS: Purchases 3,247,071 17,830,367 16,696,937 7,047,681 Net transfers (10,089,426) (46,637,261) (56,967,085) (21,057,899) Surrenders for benefit payments and fees (44,751,104) (226,132,808) (246,262,963) (70,763,726) Net annuity transactions (32,952) (71,688) (13,852) (37,099) -------------- ---------------- ---------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (51,626,411) (255,011,390) (286,546,963) (84,811,043) -------------- ---------------- ---------------- -------------- Net increase (decrease) in net assets 113,326,387 533,344,205 375,708,079 180,092,698 NET ASSETS: Beginning of year 451,115,905 2,276,942,766 2,497,519,431 712,873,720 -------------- ---------------- ---------------- -------------- End of year $564,442,292 $2,810,286,971 $2,873,227,510 $892,966,418 ============== ================ ================ ============== AMERICAN FUNDS FIDELITY VIP AMERICAN FUNDS GLOBAL SMALL GROWTH NEW WORLD FUND CAPITALIZATION FUND PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(729,434) $(4,614,085) $(58,453) Net realized gain (loss) on security transactions (7,550,886) (9,800,167) 289,178 Net realized gain on distributions -- -- 3,352 Net unrealized appreciation (depreciation) of investments during the year 138,920,953 156,238,736 886,011 -------------- -------------- ------------ Net increase (decrease) in net assets resulting from operations 130,640,633 141,824,484 1,120,088 -------------- -------------- ------------ UNIT TRANSACTIONS: Purchases 2,685,492 2,909,098 927,347 Net transfers 27,274,277 28,721,222 (89,591) Surrenders for benefit payments and fees (28,554,411) (27,926,233) (175,190) Net annuity transactions 14,758 (22,021) -- -------------- -------------- ------------ Net increase (decrease) in net assets resulting from unit transactions 1,420,116 3,682,066 662,566 -------------- -------------- ------------ Net increase (decrease) in net assets 132,060,749 145,506,550 1,782,654 NET ASSETS: Beginning of year 288,741,037 246,757,458 2,358,388 -------------- -------------- ------------ End of year $420,801,786 $392,264,008 $4,141,042 ============== ============== ============
SA-103 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
FIDELITY VIP FIDELITY VIP CONTRAFUND MID CAP PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(183,152) $(543,062) Net realized gain (loss) on security transactions 334,559 423,975 Net realized gain on distributions 19,946 325,090 Net unrealized appreciation (depreciation) of investments during the year 20,647,136 17,197,931 ------------- ------------- Net increase (decrease) in net assets resulting from operations 20,818,489 17,403,934 ------------- ------------- UNIT TRANSACTIONS: Purchases 8,734,600 12,236,897 Net transfers 13,101,218 18,435,648 Surrenders for benefit payments and fees (2,905,065) (2,084,979) Net annuity transactions -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 18,930,753 28,587,566 ------------- ------------- Net increase (decrease) in net assets 39,749,242 45,991,500 NET ASSETS: Beginning of year 42,378,745 26,881,180 ------------- ------------- End of year $82,127,987 $72,872,680 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-104 -------------------------------------------------------------------------------
FIDELITY VIP FRANKLIN FIDELITY VIP DYNAMIC CAPITAL RISING FRANKLIN VALUE STRATEGIES APPRECIATION DIVIDENDS INCOME PORTFOLIO PORTFOLIO SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(39,501) $(13,982) $(1,840,600) $123,121,022 Net realized gain (loss) on security transactions (693,947) (271,548) (29,203,353) (49,702,444) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,866,804 559,482 121,659,243 484,776,999 ------------ ------------ -------------- ---------------- Net increase (decrease) in net assets resulting from operations 1,133,356 273,952 90,615,290 558,195,577 ------------ ------------ -------------- ---------------- UNIT TRANSACTIONS: Purchases 1,020,164 190,238 4,004,456 51,215,001 Net transfers 2,335,633 184,440 (17,894,377) 26,568,875 Surrenders for benefit payments and fees (94,611) (548,974) (53,603,824) (171,135,634) Net annuity transactions -- -- (25,480) (236,700) ------------ ------------ -------------- ---------------- Net increase (decrease) in net assets resulting from unit transactions 3,261,186 (174,296) (67,519,225) (93,588,458) ------------ ------------ -------------- ---------------- Net increase (decrease) in net assets 4,394,542 99,656 23,096,065 464,607,119 NET ASSETS: Beginning of year 2,245,363 916,034 666,810,750 1,752,120,045 ------------ ------------ -------------- ---------------- End of year $6,639,905 $1,015,690 $689,906,815 $2,216,727,164 ============ ============ ============== ================ FRANKLIN FRANKLIN FRANKLIN LARGE CAP GLOBAL SMALL-MID CAP GROWTH REAL ESTATE GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(606,696) $892,613 $(4,428,880) Net realized gain (loss) on security transactions (5,294,664) (965,096) (3,288,426) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 37,772,486 1,245,175 92,662,509 -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 31,871,126 1,172,692 84,945,203 -------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 877,437 41,212 3,687,216 Net transfers (716,011) (516,294) 14,090,193 Surrenders for benefit payments and fees (13,596,957) (1,171,317) (22,250,651) Net annuity transactions (13,068) (1,707) (1,121) -------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (13,448,599) (1,648,106) (4,474,363) -------------- ------------- -------------- Net increase (decrease) in net assets 18,422,527 (475,414) 80,470,840 NET ASSETS: Beginning of year 125,964,840 9,475,830 209,034,623 -------------- ------------- -------------- End of year $144,387,367 $9,000,416 $289,505,463 ============== ============= ==============
SA-105 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
FRANKLIN FRANKLIN SMALL CAP STRATEGIC VALUE INCOME SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(28,245) $48,047,269 Net realized gain (loss) on security transactions (11,555,649) (305,770) Net realized gain on distributions 2,058,084 -- Net unrealized appreciation (depreciation) of investments during the year 17,573,888 119,381,631 -------------- -------------- Net increase (decrease) in net assets resulting from operations 8,048,078 167,123,130 -------------- -------------- UNIT TRANSACTIONS: Purchases 5,984,857 30,159,439 Net transfers (7,413,430) 158,360,037 Surrenders for benefit payments and fees (3,607,518) (82,315,876) Net annuity transactions (1,939) (5,540) -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions (5,038,030) 106,198,060 -------------- -------------- Net increase (decrease) in net assets 3,010,048 273,321,190 NET ASSETS: Beginning of year 52,560,862 652,335,749 -------------- -------------- End of year $55,570,910 $925,656,939 ============== ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-106 -------------------------------------------------------------------------------
TEMPLETON DEVELOPING TEMPLETON TEMPLETON MUTUAL SHARES MARKETS FOREIGN GLOBAL ASSET SECURITIES FUND SECURITIES FUND SECURITIES FUND ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $2,595,682 $3,676,724 $6,484,780 $586,764 Net realized gain (loss) on security transactions (62,712,439) (1,643,260) (6,145,397) (858,447) Net realized gain on distributions -- 572,540 17,490,311 113,225 Net unrealized appreciation (depreciation) of investments during the year 307,826,797 83,280,522 107,649,217 1,451,482 ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 247,710,040 85,886,526 125,478,911 1,293,024 ---------------- -------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 32,387,970 4,875,061 5,148,171 40,272 Net transfers (6,528,420) 46,516,446 (16,130,183) (396,520) Surrenders for benefit payments and fees (103,887,344) (14,274,250) (41,674,137) (1,202,716) Net annuity transactions (42,176) (27,176) (84,900) (174) ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (78,069,970) 37,090,081 (52,741,049) (1,559,138) ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets 169,640,070 122,976,607 72,737,862 (266,114) NET ASSETS: Beginning of year 1,104,945,522 112,605,404 391,326,688 8,635,486 ---------------- -------------- -------------- ------------- End of year $1,274,585,592 $235,582,011 $464,064,550 $8,369,372 ================ ============== ============== ============= FRANKLIN TEMPLETON MUTUAL FLEX CAP GROWTH GLOBAL DISCOVERY GROWTH SECURITIES FUND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT ----------------------------- --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $8,001,486 $(2,857,869) $(842,212) Net realized gain (loss) on security transactions (50,113,773) (6,400,625) (29,423) Net realized gain on distributions -- 15,503,086 -- Net unrealized appreciation (depreciation) of investments during the year 186,386,999 102,402,137 14,323,978 -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 144,274,712 108,646,729 13,452,343 -------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 13,705,148 12,639,424 973,869 Net transfers (31,404,131) 33,766,468 5,417,426 Surrenders for benefit payments and fees (50,043,363) (42,885,590) (2,998,565) Net annuity transactions (23,493) (50,948) (3,345) -------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (67,765,839) 3,469,354 3,389,385 -------------- -------------- ------------- Net increase (decrease) in net assets 76,508,873 112,116,083 16,841,728 NET ASSETS: Beginning of year 558,083,971 510,476,533 40,416,653 -------------- -------------- ------------- End of year $634,592,844 $622,592,616 $57,258,381 ============== ============== =============
(a) Formerly Mutual Discovery Securities Fund. Change effective May 1, 2009. SA-107 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
FRANKLIN LARGE CAP TEMPLETON VALUE GLOBAL BOND SECURITIES FUND SECURITIES FUND SUB-ACCOUNT SUB-ACCOUNT (B) -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $119,403 $8,078,021 Net realized gain (loss) on security transactions 173,626 10,197 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 5,351,513 2,429,095 ------------- ------------- Net increase (decrease) in net assets resulting from operations 5,644,542 10,517,313 ------------- ------------- UNIT TRANSACTIONS: Purchases 207,540 17,534,898 Net transfers 2,051,385 34,381,282 Surrenders for benefit payments and fees (1,965,624) (3,134,453) Net annuity transactions (1,621) -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 291,680 48,781,727 ------------- ------------- Net increase (decrease) in net assets 5,936,222 59,299,040 NET ASSETS: Beginning of year 20,461,652 38,964,928 ------------- ------------- End of year $26,397,874 $98,263,968 ============= =============
(b) Formerly Templeton Global Income Securities Fund. Change effective May 1, 2009. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-108 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD HARTFORD TOTAL CAPITAL DIVIDEND ADVISERS RETURN BOND APPRECIATION AND GROWTH HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $105,792 $15,469,086 $(1,668,650) $3,797,091 Net realized gain (loss) on security transactions 41,726 42,820 1,372,079 289,525 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,653,743 33,810,897 183,694,204 68,203,374 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 1,801,261 49,322,803 183,397,633 72,289,990 ------------- -------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 2,726,086 104,856,646 93,242,264 60,489,744 Net transfers 3,108,083 235,614,081 148,084,957 118,654,649 Surrenders for benefit payments and fees (349,428) (19,692,667) (20,308,213) (12,843,691) Net annuity transactions 250 1,468 868 1,429 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 5,484,991 320,779,528 221,019,876 166,302,131 ------------- -------------- -------------- -------------- Net increase (decrease) in net assets 7,286,252 370,102,331 404,417,509 238,592,121 NET ASSETS: Beginning of year 3,545,130 223,357,956 254,647,624 157,942,539 ------------- -------------- -------------- -------------- End of year $10,831,382 $593,460,287 $659,065,133 $396,534,660 ============= ============== ============== ============== HARTFORD FUNDAMENTAL HARTFORD HARTFORD GROWTH GLOBAL EQUITY GLOBAL GROWTH HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(16,998) $(1,039) $(7,644) Net realized gain (loss) on security transactions (20,422) 2,238 30,887 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 619,082 127,437 316,909 ------------ ---------- ------------ Net increase (decrease) in net assets resulting from operations 581,662 128,636 340,152 ------------ ---------- ------------ UNIT TRANSACTIONS: Purchases 247,278 59,486 267,155 Net transfers 1,308,550 213,835 264,889 Surrenders for benefit payments and fees (34,106) (13,924) (47,276) Net annuity transactions -- -- -- ------------ ---------- ------------ Net increase (decrease) in net assets resulting from unit transactions 1,521,722 259,397 484,768 ------------ ---------- ------------ Net increase (decrease) in net assets 2,103,384 388,033 824,920 NET ASSETS: Beginning of year 894,080 190,268 676,394 ------------ ---------- ------------ End of year $2,997,464 $578,301 $1,501,314 ============ ========== ============
SA-109 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
HARTFORD DISCIPLINED HARTFORD EQUITY GROWTH HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $253,956 $(36,599) Net realized gain (loss) on security transactions 24,757 14,298 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 12,948,562 2,577,924 ------------- ------------- Net increase (decrease) in net assets resulting from operations 13,227,275 2,555,623 ------------- ------------- UNIT TRANSACTIONS: Purchases 17,372,860 1,581,650 Net transfers 22,952,372 5,401,213 Surrenders for benefit payments and fees (2,261,897) (315,794) Net annuity transactions -- -- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 38,063,335 6,667,069 ------------- ------------- Net increase (decrease) in net assets 51,290,610 9,222,692 NET ASSETS: Beginning of year 27,201,082 3,414,560 ------------- ------------- End of year $78,491,692 $12,637,252 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-110 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD GROWTH HARTFORD INTERNATIONAL INTERNATIONAL OPPORTUNITIES HIGH YIELD GROWTH OPPORTUNITIES HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT (C) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(773,761) $2,194,234 $14,940 $132,760 Net realized gain (loss) on security transactions 253,094 193,773 (7,981) 69,131 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 27,497,146 4,201,253 837,006 5,276,480 -------------- ------------- ------------ ------------- Net increase (decrease) in net assets resulting from operations 26,976,479 6,589,260 843,965 5,478,371 -------------- ------------- ------------ ------------- UNIT TRANSACTIONS: Purchases 29,660,623 9,300,498 535,770 4,205,110 Net transfers 31,201,701 14,794,497 834,990 2,861,090 Surrenders for benefit payments and fees (3,743,566) (683,347) (85,699) (592,152) Net annuity transactions 141 -- -- -- -------------- ------------- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 57,118,899 23,411,648 1,285,061 6,474,048 -------------- ------------- ------------ ------------- Net increase (decrease) in net assets 84,095,378 30,000,908 2,129,026 11,952,419 NET ASSETS: Beginning of year 48,992,381 3,365,795 1,985,829 12,038,929 -------------- ------------- ------------ ------------- End of year $133,087,759 $33,366,703 $4,114,855 $23,991,348 ============== ============= ============ ============= HARTFORD MIDCAP HARTFORD HARTFORD GROWTH MONEY MARKET SMALL COMPANY HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(70,266) $(23,900,904) $(152,397) Net realized gain (loss) on security transactions 79,392 -- 99,427 Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,336,174 -- 2,927,855 ------------ ---------------- ------------- Net increase (decrease) in net assets resulting from operations 2,345,300 (23,900,904) 2,874,885 ------------ ---------------- ------------- UNIT TRANSACTIONS: Purchases 1,668,136 60,535,555 1,420,720 Net transfers 3,524,003 (148,222,566) 2,887,568 Surrenders for benefit payments and fees (168,218) (533,819,656) (321,394) Net annuity transactions -- 15,443 -- ------------ ---------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 5,023,921 (621,491,224) 3,986,894 ------------ ---------------- ------------- Net increase (decrease) in net assets 7,369,221 (645,392,128) 6,861,779 NET ASSETS: Beginning of year 2,349,054 1,646,344,749 6,003,322 ------------ ---------------- ------------- End of year $9,718,275 $1,000,952,621 $12,865,101 ============ ================ =============
(c) Effective October 2, 2009, Hartford LargeCap Growth HLS Fund merged with Hartford Growth Opportunities HLS Fund. SA-111 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
HARTFORD HARTFORD SMALLCAP GROWTH STOCK HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(39,923) $4,754 Net realized gain (loss) on security transactions 49,512 31,427 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 865,757 511,005 ------------ ------------ Net increase (decrease) in net assets resulting from operations 875,346 547,186 ------------ ------------ UNIT TRANSACTIONS: Purchases 799,712 511,993 Net transfers 602,245 491,226 Surrenders for benefit payments and fees (33,340) (86,898) Net annuity transactions -- -- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 1,368,617 916,321 ------------ ------------ Net increase (decrease) in net assets 2,243,963 1,463,507 NET ASSETS: Beginning of year 1,479,209 781,427 ------------ ------------ End of year $3,723,172 $2,244,934 ============ ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-112 -------------------------------------------------------------------------------
HARTFORD HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD VALUE EQUITY SECURITIES VALUE OPPORTUNITIES INCOME HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(701,113) $29,219 $(3,487) $146,562 Net realized gain (loss) on security transactions (44,591) (9,287) (231,045) 45,220 Net realized gain on distributions -- -- -- 32,980 Net unrealized appreciation (depreciation) of investments during the year 1,232,845 1,182,569 965,912 1,021,499 ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 487,141 1,202,501 731,380 1,246,261 ------------- ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 13,448,535 1,925,961 425,822 2,229,703 Net transfers 5,145,164 824,515 580,274 3,812,327 Surrenders for benefit payments and fees (3,399,273) (133,377) (76,322) (191,237) Net annuity transactions -- -- -- -- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 15,194,426 2,617,099 929,774 5,850,793 ------------- ------------ ------------ ------------ Net increase (decrease) in net assets 15,681,567 3,819,600 1,661,154 7,097,054 NET ASSETS: Beginning of year 28,182,183 3,451,141 1,650,051 1,854,865 ------------- ------------ ------------ ------------ End of year $43,863,750 $7,270,741 $3,311,205 $8,951,919 ============= ============ ============ ============ AMERICAN FUNDS BLUE CHIP AMERICAN FUNDS INCOME AND AMERICAN FUNDS ASSET ALLOCATION GROWTH BOND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- -------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $63,176 $(38,154) $1,084,924 Net realized gain (loss) on security transactions 8,401 76,307 14,016 Net realized gain on distributions 137,393 109,923 6,288 Net unrealized appreciation (depreciation) of investments during the year 6,395,045 4,918,498 8,789,339 ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 6,604,015 5,066,574 9,894,567 ------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 5,342,993 4,284,905 31,770,770 Net transfers 6,749,549 4,769,651 57,932,491 Surrenders for benefit payments and fees (1,300,512) (882,403) (4,813,586) Net annuity transactions (303) -- (2,434) ------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 10,791,727 8,172,153 84,887,241 ------------- ------------- -------------- Net increase (decrease) in net assets 17,395,742 13,238,727 94,781,808 NET ASSETS: Beginning of year 21,482,558 10,673,807 53,586,884 ------------- ------------- -------------- End of year $38,878,300 $23,912,534 $148,368,692 ============= ============= ==============
SA-113 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH GLOBAL BOND AND INCOME HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $401,564 $156,121 Net realized gain (loss) on security transactions 27,488 156,465 Net realized gain on distributions -- 19,599 Net unrealized appreciation (depreciation) of investments during the year 1,846,754 19,660,490 ------------- ------------- Net increase (decrease) in net assets resulting from operations 2,275,806 19,992,675 ------------- ------------- UNIT TRANSACTIONS: Purchases 3,842,239 6,876,150 Net transfers 9,596,267 13,024,820 Surrenders for benefit payments and fees (1,484,524) (1,917,767) Net annuity transactions -- (351) ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 11,953,982 17,982,852 ------------- ------------- Net increase (decrease) in net assets 14,229,788 37,975,527 NET ASSETS: Beginning of year 19,565,569 37,113,004 ------------- ------------- End of year $33,795,357 $75,088,531 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-114 -------------------------------------------------------------------------------
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS GLOBAL GROWTH CAPITALIZATION GROWTH GROWTH-INCOME HLS FUND HLS FUND HLS FUND HLS FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $12,497 $(546,486) $(2,001,483) $98,541 Net realized gain (loss) on security transactions 172,299 (13,476) 382,594 241,872 Net realized gain on distributions 304,313 309,254 2,102,143 707,434 Net unrealized appreciation (depreciation) of investments during the year 6,747,271 16,571,476 59,967,427 28,688,564 ------------- ------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 7,236,380 16,320,768 60,450,681 29,736,411 ------------- ------------- -------------- -------------- UNIT TRANSACTIONS: Purchases 4,448,325 10,365,152 44,956,035 26,521,107 Net transfers 2,340,578 11,258,576 47,956,362 27,561,672 Surrenders for benefit payments and fees (915,882) (1,380,844) (7,798,549) (4,510,523) Net annuity transactions -- (765) (2,346) (2,465) ------------- ------------- -------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 5,873,021 20,242,119 85,111,502 49,569,791 ------------- ------------- -------------- -------------- Net increase (decrease) in net assets 13,109,401 36,562,887 145,562,183 79,306,202 NET ASSETS: Beginning of year 13,617,813 16,975,677 102,913,055 60,687,008 ------------- ------------- -------------- -------------- End of year $26,727,214 $53,538,564 $248,475,238 $139,993,210 ============= ============= ============== ============== AMERICAN FUNDS AMERICAN FUNDS INTERNATIONAL NEW WORLD LORD ABBETT HLS FUND HLS FUND ALL VALUE FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (D) ----------------------------- -------------------------------------------------------------- OPERATIONS: Net investment income (loss) $42,637 $(152,665) $10 Net realized gain (loss) on security transactions 364,786 (23,670) -- Net realized gain on distributions 1,292,665 290,760 -- Net unrealized appreciation (depreciation) of investments during the year 41,103,427 13,543,637 31 -------------- ------------- ------- Net increase (decrease) in net assets resulting from operations 42,803,515 13,658,062 41 -------------- ------------- ------- UNIT TRANSACTIONS: Purchases 35,732,324 6,989,363 7,568 Net transfers 25,771,777 11,070,974 -- Surrenders for benefit payments and fees (4,770,633) (1,158,303) -- Net annuity transactions (1,260) -- -- -------------- ------------- ------- Net increase (decrease) in net assets resulting from unit transactions 56,732,208 16,902,034 7,568 -------------- ------------- ------- Net increase (decrease) in net assets 99,535,723 30,560,096 7,609 NET ASSETS: Beginning of year 66,450,276 20,462,894 -- -------------- ------------- ------- End of year $165,985,999 $51,022,990 $7,609 ============== ============= =======
(d) From inception August 28, 2009 to December 31, 2009. SA-115 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
LORD ABBETT LORD ABBETT AMERICA'S VALUE BOND-DEBENTURE PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $229,602 $3,448,982 Net realized gain (loss) on security transactions 62,517 46,229 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 1,454,572 9,838,462 ------------- ------------- Net increase (decrease) in net assets resulting from operations 1,746,691 13,333,673 ------------- ------------- UNIT TRANSACTIONS: Purchases 2,408,522 11,997,071 Net transfers 3,536,654 24,451,281 Surrenders for benefit payments and fees (309,911) (2,431,564) Net annuity transactions 250 50 ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 5,635,515 34,016,838 ------------- ------------- Net increase (decrease) in net assets 7,382,206 47,350,511 NET ASSETS: Beginning of year 3,466,201 25,825,763 ------------- ------------- End of year $10,848,407 $73,176,274 ============= =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-116 -------------------------------------------------------------------------------
LORD ABBETT GROWTH & INCOME MFS CORE MFS GROWTH MFS GLOBAL PORTFOLIO EQUITY SERIES SERIES EQUITY SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(35,151) $11,227 $(652,010) $90,254 Net realized gain (loss) on security transactions 38,744 (1,986,343) (2,431,499) (941,834) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 2,115,002 7,243,386 16,574,050 6,387,695 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 2,118,595 5,268,270 13,490,541 5,536,115 ------------- ------------- ------------- ------------- UNIT TRANSACTIONS: Purchases 1,314,646 79,543 629,859 138,201 Net transfers 2,334,635 (865,743) 4,336,402 (880,449) Surrenders for benefit payments and fees (486,983) (2,515,563) (5,207,601) (1,931,812) Net annuity transactions -- (1,243) 4,897 (5,363) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from unit transactions 3,162,298 (3,303,006) (236,443) (2,679,423) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets 5,280,893 1,965,264 13,254,098 2,856,692 NET ASSETS: Beginning of year 7,066,666 20,293,395 41,586,870 21,351,995 ------------- ------------- ------------- ------------- End of year $12,347,559 $22,258,659 $54,840,968 $24,208,687 ============= ============= ============= ============= MFS INVESTORS MFS HIGH GROWTH MFS INVESTORS INCOME SERIES STOCK SERIES TRUST SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------- OPERATIONS: Net investment income (loss) $11,007,952 $(529,237) $(513,571) Net realized gain (loss) on security transactions 1,496,577 (2,316,612) (8,683,666) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 56,781,998 19,172,565 84,373,827 -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations 69,286,527 16,326,716 75,176,590 -------------- ------------- -------------- UNIT TRANSACTIONS: Purchases 2,241,443 65,467 2,360,407 Net transfers 62,177,804 271,374 4,115,419 Surrenders for benefit payments and fees (21,676,783) (5,532,576) (34,023,524) Net annuity transactions 10,160 (1,877) (25,610) -------------- ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 42,752,624 (5,197,612) (27,573,308) -------------- ------------- -------------- Net increase (decrease) in net assets 112,039,151 11,129,104 47,603,282 NET ASSETS: Beginning of year 129,967,916 48,168,652 325,835,726 -------------- ------------- -------------- End of year $242,007,067 $59,297,756 $373,439,008 ============== ============= ==============
SA-117 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
MFS MID CAP MFS NEW GROWTH SERIES DISCOVERY SERIES SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,066,603) $(3,845,598) Net realized gain (loss) on security transactions (2,051,075) (11,460,221) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 26,517,730 111,957,641 ------------- -------------- Net increase (decrease) in net assets resulting from operations 23,400,052 96,651,822 ------------- -------------- UNIT TRANSACTIONS: Purchases 679,876 1,506,645 Net transfers 11,320,340 (367,612) Surrenders for benefit payments and fees (7,210,901) (20,130,143) Net annuity transactions (3,180) (33,883) ------------- -------------- Net increase (decrease) in net assets resulting from unit transactions 4,786,135 (19,024,993) ------------- -------------- Net increase (decrease) in net assets 28,186,187 77,626,829 NET ASSETS: Beginning of year 55,162,219 174,055,576 ------------- -------------- End of year $83,348,406 $251,682,405 ============= ==============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-118 -------------------------------------------------------------------------------
MFS TOTAL MFS VALUE MFS RESEARCH MFS RESEARCH RETURN SERIES SERIES BOND SERIES INTERNATIONAL SERIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $20,150,676 $(1,108,876) $3,653,454 $18,068 Net realized gain (loss) on security transactions (23,422,425) (2,757,927) 224,531 (1,544,254) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 156,330,782 62,582,208 21,018,747 14,869,824 ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 153,059,033 58,715,405 24,896,732 13,343,638 ---------------- -------------- -------------- ------------- UNIT TRANSACTIONS: Purchases 17,872,666 22,176,095 11,241,335 354,225 Net transfers 3,704,700 46,779,238 112,521,656 (1,143,378) Surrenders for benefit payments and fees (103,152,056) (22,526,792) (20,791,809) (4,618,277) Net annuity transactions (103,636) 89,264 (52,182) -- ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from unit transactions (81,678,326) 46,517,805 102,919,000 (5,407,430) ---------------- -------------- -------------- ------------- Net increase (decrease) in net assets 71,380,707 105,233,210 127,815,732 7,936,208 NET ASSETS: Beginning of year 1,036,620,837 244,740,665 126,850,761 49,832,168 ---------------- -------------- -------------- ------------- End of year $1,108,001,544 $349,973,875 $254,666,493 $57,768,376 ================ ============== ============== ============= BLACKROCK BLACKROCK MFS RESEARCH GLOBAL LARGE CAP SERIES GROWTH V.I. FUND GROWTH V.I. FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $36,899 $6,381 $(21,040) Net realized gain (loss) on security transactions (76,631) (51,455) (11,120) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 7,615,060 277,784 267,430 ------------- ----------- ------------ Net increase (decrease) in net assets resulting from operations 7,575,328 232,710 235,270 ------------- ----------- ------------ UNIT TRANSACTIONS: Purchases 70,733 3,804 4,404 Net transfers 4,750,699 64,275 10,072 Surrenders for benefit payments and fees (2,430,812) (155,965) (108,855) Net annuity transactions -- -- -- ------------- ----------- ------------ Net increase (decrease) in net assets resulting from unit transactions 2,390,620 (87,886) (94,379) ------------- ----------- ------------ Net increase (decrease) in net assets 9,965,948 144,824 140,891 NET ASSETS: Beginning of year 24,661,227 746,826 1,080,663 ------------- ----------- ------------ End of year $34,627,175 $891,650 $1,221,554 ============= =========== ============
SA-119 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
VAN KAMPEN -- VAN KAMPEN -- UIF INTERNATIONAL UIF MID CAP GROWTH EQUITY GROWTH PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $(3,655) $(263,988) Net realized gain (loss) on security transactions (96,637) 529,836 Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 211,742 8,516,564 ----------- ------------- Net increase (decrease) in net assets resulting from operations 111,450 8,782,412 ----------- ------------- UNIT TRANSACTIONS: Purchases -- 3,608,285 Net transfers (96,040) 3,737,028 Surrenders for benefit payments and fees (4,628) (750,052) Net annuity transactions -- 82 ----------- ------------- Net increase (decrease) in net assets resulting from unit transactions (100,668) 6,595,343 ----------- ------------- Net increase (decrease) in net assets 10,782 15,377,755 NET ASSETS: Beginning of year 398,496 10,078,157 ----------- ------------- End of year $409,278 $25,455,912 =========== =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-120 -------------------------------------------------------------------------------
VAN KAMPEN -- MORGAN STANLEY -- MORGAN STANLEY -- UIF U.S. MORGAN STANLEY -- CAPITAL MID CAP MID CAP VALUE FOCUS GROWTH OPPORTUNITIES GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(27,500) $(12,030) $(47,291) $(8,804) Net realized gain (loss) on security transactions (19,250) (26,389) (45,415) (22,443) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 3,732,055 406,164 1,465,371 255,985 ------------- ---------- ------------ ---------- Net increase (decrease) in net assets resulting from operations 3,685,305 367,745 1,372,665 224,738 ------------- ---------- ------------ ---------- UNIT TRANSACTIONS: Purchases 1,582,758 7,500 13,030 -- Net transfers 3,211,777 74,696 (282,594) 104,521 Surrenders for benefit payments and fees (372,182) (24,585) (171,737) (24,605) Net annuity transactions -- -- -- -- ------------- ---------- ------------ ---------- Net increase (decrease) in net assets resulting from unit transactions 4,422,353 57,611 (441,301) 79,916 ------------- ---------- ------------ ---------- Net increase (decrease) in net assets 8,107,658 425,356 931,364 304,654 NET ASSETS: Beginning of year 6,480,460 510,578 2,269,513 429,576 ------------- ---------- ------------ ---------- End of year $14,588,118 $935,934 $3,200,877 $734,230 ============= ========== ============ ========== MORGAN STANLEY -- MORGAN STANLEY -- DIVIDEND MORGAN STANLEY -- FLEXIBLE INCOME GROWTH GLOBAL EQUITY PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (E) -------------------------- --------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $38,637 $463 $657 Net realized gain (loss) on security transactions (6,364) 6,531 (382,413) Net realized gain on distributions -- -- 14,508 Net unrealized appreciation (depreciation) of investments during the year 79,996 49,995 344,877 ---------- ---------- ----------- Net increase (decrease) in net assets resulting from operations 112,269 56,989 (22,371) ---------- ---------- ----------- UNIT TRANSACTIONS: Purchases -- -- -- Net transfers 91,495 (45,183) (373,144) Surrenders for benefit payments and fees (11,331) (2,426) (2,416) Net annuity transactions -- -- -- ---------- ---------- ----------- Net increase (decrease) in net assets resulting from unit transactions 80,164 (47,609) (375,560) ---------- ---------- ----------- Net increase (decrease) in net assets 192,433 9,380 (397,931) NET ASSETS: Beginning of year 611,362 190,469 397,931 ---------- ---------- ----------- End of year $803,795 $199,849 $ -- ========== ========== ===========
(e) This fund liquidated April 24, 2009. SA-121 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
OPPENHEIMER CAPITAL OPPENHEIMER APPRECIATION GLOBAL SECURITIES FUND/VA FUND/VA SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(36,896) $43,261 Net realized gain (loss) on security transactions 133,463 222,089 Net realized gain on distributions -- 446,423 Net unrealized appreciation (depreciation) of investments during the year 782,314 7,542,012 ------------ ------------- Net increase (decrease) in net assets resulting from operations 878,881 8,253,785 ------------ ------------- UNIT TRANSACTIONS: Purchases 406,885 3,057,141 Net transfers 755,727 4,099,189 Surrenders for benefit payments and fees (115,380) (1,095,292) Net annuity transactions 91 -- ------------ ------------- Net increase (decrease) in net assets resulting from unit transactions 1,047,323 6,061,038 ------------ ------------- Net increase (decrease) in net assets 1,926,204 14,314,823 NET ASSETS: Beginning of year 1,057,142 15,754,488 ------------ ------------- End of year $2,983,346 $30,069,311 ============ =============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-122 -------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER MAIN STREET OPPENHEIMER PUTNAM VT MAIN STREET SMALL CAP VALUE DIVERSIFIED FUND/VA FUND/VA FUND/VA INCOME FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(4,862) $(214,705) $(8,309) $2,502,988 Net realized gain (loss) on security transactions 67,913 (123,416) 27,613 200,615 Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 446,857 7,101,764 315,766 24,637,592 ------------ ------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations 509,908 6,763,643 335,070 27,341,195 ------------ ------------- ------------ -------------- UNIT TRANSACTIONS: Purchases 317,483 5,881,569 152,910 20,300,003 Net transfers 408,187 6,862,134 248,376 27,010,263 Surrenders for benefit payments and fees (62,913) (869,822) (23,375) (3,222,023) Net annuity transactions -- -- -- -- ------------ ------------- ------------ -------------- Net increase (decrease) in net assets resulting from unit transactions 662,757 11,873,881 377,911 44,088,243 ------------ ------------- ------------ -------------- Net increase (decrease) in net assets 1,172,665 18,637,524 712,981 71,429,438 NET ASSETS: Beginning of year 1,001,478 10,774,226 1,085,350 30,391,469 ------------ ------------- ------------ -------------- End of year $2,174,143 $29,411,750 $1,798,331 $101,820,907 ============ ============= ============ ============== PUTNAM VT PUTNAM VT INTERNATIONAL PUTNAM VT GLOBAL ASSET GROWTH AND INTERNATIONAL ALLOCATION FUND INCOME FUND EQUITY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ---------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $180,423 $(16,183) $(18,919) Net realized gain (loss) on security transactions (43,735) 9,860 (1,239) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 1,375,760 308,767 305,839 ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 1,512,448 302,444 285,681 ------------ ------------ ------------ UNIT TRANSACTIONS: Purchases 2,183,983 128,349 153,780 Net transfers 878,985 315,037 393,002 Surrenders for benefit payments and fees (166,936) (21,190) (20,583) Net annuity transactions -- -- -- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 2,896,032 422,196 526,199 ------------ ------------ ------------ Net increase (decrease) in net assets 4,408,480 724,640 811,880 NET ASSETS: Beginning of year 2,322,036 674,450 818,726 ------------ ------------ ------------ End of year $6,730,516 $1,399,090 $1,630,606 ============ ============ ============
SA-123 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
PUTNAM VT SMALL CAP PUTNAM VT VALUE VOYAGER SUB-ACCOUNT SUB-ACCOUNT (F) --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,399) $(1) Net realized gain (loss) on security transactions 36,443 -- Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 345,709 54 ------------ ------- Net increase (decrease) in net assets resulting from operations 379,753 53 ------------ ------- UNIT TRANSACTIONS: Purchases 273,451 -- Net transfers 281,869 4,752 Surrenders for benefit payments and fees (16,299) -- Net annuity transactions -- -- ------------ ------- Net increase (decrease) in net assets resulting from unit transactions 539,021 4,752 ------------ ------- Net increase (decrease) in net assets 918,774 4,805 NET ASSETS: Beginning of year 642,194 -- ------------ ------- End of year $1,560,968 $4,805 ============ =======
(f) From inception June 30, 2009 to December 31, 2009. THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-124 -------------------------------------------------------------------------------
PUTNAM VT JENNISON 20/20 PRUDENTIAL EQUITY FOCUS JENNISON VALUE INCOME FUND PORTFOLIO PORTFOLIO PORTFOLIO SUB-ACCOUNT (F) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ -- $(7,521) $(1,829) $(345) Net realized gain (loss) on security transactions -- (34,587) (654) (22,584) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year (10) 222,841 37,218 105,765 ----- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations (10) 180,733 34,735 82,836 ----- ---------- ---------- ---------- UNIT TRANSACTIONS: Purchases -- 111 -- 66 Net transfers 864 (30,950) 111 (9,657) Surrenders for benefit payments and fees -- (25,956) (4,821) (18,076) Net annuity transactions -- -- -- -- ----- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions 864 (56,795) (4,710) (27,667) ----- ---------- ---------- ---------- Net increase (decrease) in net assets 854 123,938 30,025 55,169 NET ASSETS: Beginning of year -- 380,416 88,007 237,098 ----- ---------- ---------- ---------- End of year $854 $504,354 $118,032 $292,267 ===== ========== ========== ========== VAN KAMPEN -- WELLS FARGO UIF GROWTH VAN KAMPEN -- ADVANTAGE VT AND INCOME UIF COMSTOCK ASSET PORTFOLIO PORTFOLIO ALLOCATION FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $901,689 $65,494 $499 Net realized gain (loss) on security transactions 72,918 (61,433) (36,442) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year 9,178,769 614,269 148,590 ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 10,153,376 618,330 112,647 ------------- ------------ ------------ UNIT TRANSACTIONS: Purchases 3,465,715 3,283 -- Net transfers 13,378,200 (102,019) (82,939) Surrenders for benefit payments and fees (1,743,136) (91,129) (99,653) Net annuity transactions 91 -- -- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions 15,100,870 (189,865) (182,592) ------------- ------------ ------------ Net increase (decrease) in net assets 25,254,246 428,465 (69,945) NET ASSETS: Beginning of year 24,622,036 2,482,506 1,116,169 ------------- ------------ ------------ End of year $49,876,282 $2,910,971 $1,046,224 ============= ============ ============
(f) From inception June 30, 2009 to December 31, 2009. SA-125 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT TOTAL RETURN EQUITY BOND FUND INCOME FUND SUB-ACCOUNT SUB-ACCOUNT ------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $174,416 $3,783 Net realized gain (loss) on security transactions (903) (72,195) Net realized gain on distributions 27,949 -- Net unrealized appreciation (depreciation) of investments during the year 408,806 318,744 ------------- ------------ Net increase (decrease) in net assets resulting from operations 610,268 250,332 ------------- ------------ UNIT TRANSACTIONS: Purchases 28,764 15,650 Net transfers 1,121,355 69,790 Surrenders for benefit payments and fees (1,245,997) (139,193) Net annuity transactions -- -- ------------- ------------ Net increase (decrease) in net assets resulting from unit transactions (95,878) (53,753) ------------- ------------ Net increase (decrease) in net assets 514,390 196,579 NET ASSETS: Beginning of year 6,782,288 1,765,451 ------------- ------------ End of year $7,296,678 $1,962,030 ============= ============
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-126 -------------------------------------------------------------------------------
WELLS FARGO WELLS FARGO WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT ADVANTAGE VT C&B LARGE CAP LARGE COMPANY INTERNATIONAL LARGE COMPANY VALUE FUND CORE FUND CORE FUND GROWTH FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(1,232) $(113) $21,954 $(30,178) Net realized gain (loss) on security transactions (15,396) (12,769) (11,350) (56,556) Net realized gain on distributions -- -- -- -- Net unrealized appreciation (depreciation) of investments during the year 358,135 25,415 180,748 765,220 ------------ --------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 341,507 12,533 191,352 678,486 ------------ --------- ------------ ------------ UNIT TRANSACTIONS: Purchases 10,630 -- 16,479 14,468 Net transfers 30,186 (3,892) 106,749 (97,329) Surrenders for benefit payments and fees (109,677) (27,316) (134,334) (211,153) Net annuity transactions -- -- -- -- ------------ --------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (68,861) (31,208) (11,106) (294,014) ------------ --------- ------------ ------------ Net increase (decrease) in net assets 272,646 (18,675) 180,246 384,472 NET ASSETS: Beginning of year 1,189,172 73,006 1,675,898 1,825,574 ------------ --------- ------------ ------------ End of year $1,461,818 $54,331 $1,856,144 $2,210,046 ============ ========= ============ ============ WELLS FARGO WELLS FARGO ADVANTAGE VT ADVANTAGE VT WELLS FARGO MONEY SMALL CAP ADVANTAGE VT MARKET FUND GROWTH FUND DISCOVERY FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- ----------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(100,261) $(47,686) $(20,489) Net realized gain (loss) on security transactions -- 7,765 (932) Net realized gain on distributions -- -- -- Net unrealized appreciation (depreciation) of investments during the year -- 1,105,419 375,240 ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations (100,261) 1,065,498 353,819 ------------- ------------ ------------ UNIT TRANSACTIONS: Purchases -- 14,571 6,544 Net transfers 906,919 (123,249) 26,173 Surrenders for benefit payments and fees (2,446,427) (178,768) (49,670) Net annuity transactions -- -- -- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from unit transactions (1,539,508) (287,446) (16,953) ------------- ------------ ------------ Net increase (decrease) in net assets (1,639,769) 778,052 336,866 NET ASSETS: Beginning of year 5,982,192 2,271,934 935,355 ------------- ------------ ------------ End of year $4,342,423 $3,049,986 $1,272,221 ============= ============ ============
SA-127 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 -------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT WELLS FARGO SMALL/MID CAP ADVANTAGE VT VALUE FUND OPPORTUNITY FUND SUB-ACCOUNT SUB-ACCOUNT --------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $(2,802) $(2,344) Net realized gain (loss) on security transactions (234,465) (9,968) Net realized gain on distributions -- -- Net unrealized appreciation (depreciation) of investments during the year 443,100 58,528 ----------- ---------- Net increase (decrease) in net assets resulting from operations 205,833 46,216 ----------- ---------- UNIT TRANSACTIONS: Purchases 3,390 -- Net transfers (184,290) (15,099) Surrenders for benefit payments and fees (26,965) (527) Net annuity transactions -- -- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions (207,865) (15,626) ----------- ---------- Net increase (decrease) in net assets (2,032) 30,590 NET ASSETS: Beginning of year 568,514 117,257 ----------- ---------- End of year $566,482 $147,847 =========== ==========
THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. SA-128 ------------------------------------------------------------------------------- [This page intentionally left blank] SA-129 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS ------------------------------------------------------------------------------- 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 variable annuity contract owners of the Company direct their deposits into various investment options (the "Sub-Accounts") within the Account. The Account is comprised of the following Sub-Accounts: AllianceBernstein VPS Balanced Wealth Strategy Portfolio, AllianceBernstein VPS International Value Portfolio, AllianceBernstein VPS Small/Mid Cap Value Portfolio, AllianceBernstein VPS Value Portfolio, AllianceBernstein VPS International Growth Portfolio, Invesco V.I. Basic Value Fund (formerly AIM V.I. Basic Value Fund), Invesco V.I. Capital Appreciation Fund (formerly AIM V.I. Capital Appreciation Fund), Invesco V.I. Core Equity Fund (formerly AIM V.I. Core Equity Fund), Invesco V.I. Government Securities Fund (formerly AIM V.I. Government Securities Fund), Invesco V.I. International Growth Fund (formerly AIM V.I. International Growth Fund), Invesco V.I. Mid Cap Core Equity Fund (formerly AIM V.I. Mid Cap Core Equity Fund), Invesco V.I. Small Cap Equity Fund (formerly AIM V.I. Small Cap Equity Fund), Invesco V.I. Large Cap Growth Fund (formerly AIM V.I. Large Cap Growth Fund), Invesco V.I. Capital Development Fund (formerly AIM V.I. Capital Development Fund), Invesco V.I. Global Multi-Asset Fund (formerly AIM V.I. PowerShares ETF Allocation 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, Wells Fargo Advantage VT Omega Growth Fund (merged with Wells Fargo Advantage VT Large Company Growth Fund), Fidelity VIP Growth Portfolio, Fidelity VIP Contrafund Portfolio, Fidelity VIP Mid Cap Portfolio, Fidelity VIP Value Strategies Portfolio, Fidelity VIP Dynamic Capital Appreciation Portfolio, Fidelity VIP Strategic Income Portfolio, Franklin Rising Dividends Securities Fund, Franklin Income Securities Fund, Franklin Large Cap Growth Securities Fund, Franklin Global Real Estate Securities Fund, Franklin Small-Mid Cap Growth Securities Fund, Franklin Small Cap Value Securities Fund, Franklin Strategic Income Securities Fund, Mutual Shares Securities Fund, Templeton Developing Markets Securities Fund, Templeton Foreign Securities Fund, *Templeton Global Asset Allocation Fund, Templeton Growth Securities Fund, Mutual Global Discovery Securities Fund, Franklin Flex Cap Growth Securities Fund, Franklin Large Cap Value Securities Fund, Templeton Global Bond Securities Fund, Hartford Advisers HLS Fund, Hartford Total Return Bond HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford Global Research HLS Fund (formerly Hartford Global Equity HLS Fund), Hartford Global Growth HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Growth HLS Fund (merged with Hartford Fundamental Growth HLS Fund), Hartford Growth Opportunities HLS Fund, Hartford High Yield HLS Fund, Hartford Index HLS Fund, Hartford International Opportunities HLS Fund (merged with Hartford International Growth HLS Fund), Hartford Small/Mid Cap Equity HLS Fund (formerly Hartford MidCap Growth HLS Fund), Hartford Money Market HLS Fund, Hartford Small Company HLS Fund, Hartford SmallCap Growth HLS Fund, Hartford Stock HLS Fund, Hartford U.S. Government Securities HLS Fund, Hartford Value HLS Fund (merged with Hartford Value Opportunities HLS Fund)(merged with Hartford Equity Income HLS Fund), American Funds Asset Allocation HLS Fund, American Funds Blue Chip Income and Growth HLS Fund, American Funds Bond HLS Fund, American Funds Global Bond HLS Fund, American Funds Global Growth and Income HLS Fund, American Funds Global Growth HLS Fund, American Funds Global Small Capitalization HLS Fund, American Funds Growth HLS Fund, American Funds Growth-Income HLS Fund, American Funds International HLS Fund, American Funds New World HLS Fund, Lord Abbett Fundamental Equity Portfolio (formerly Lord Abbett All Value Portfolio), Lord Abbett Capital Structure Portfolio (formerly Lord Abbett America's Value Portfolio), Lord Abbett Bond-Debenture Portfolio, Lord Abbett Growth & Income Portfolio, MFS Core Equity Series, MFS 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 Opportunities V.I. Fund (formerly BlackRock Global Growth V.I. Fund), BlackRock Large Cap Growth V.I. Fund, Invesco Van Kampen V. I. International Growth Equity (formerly Van Kampen -- UIF International Growth Equity Portfolio), UIF Mid Cap Growth Portfolio (formerly Van Kampen -- UIF SA-130 ------------------------------------------------------------------------------- Mid Cap Growth Portfolio), Invesco Van Kampen V. I. Mid Cap Value Fund (formerly Van Kampen -- UIF U.S. Mid Cap Value Portfolio), Morgan Stanley -- Focus Growth Portfolio, Morgan Stanley -- Capital Opportunities Portfolio, Morgan Stanley -- Mid Cap Growth Portfolio, Morgan Stanley -- Flexible Income Portfolio, Invesco V.I. Select Dimensions Dividend Growth Portfolio (formerly Morgan Stanley -- Dividend Growth Portfolio), Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Global Securities Fund/VA, Oppenheimer Main Street Fund/VA, Oppenheimer Main Street Small Cap Fund/VA, Oppenheimer Value Fund/VA, Putnam VT Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT International Value Fund (formerly Putnam VT International Growth and Income Fund), Putnam VT International Equity Fund, Putnam VT Investors Fund, Putnam VT Small Cap Value, Putnam VT Voyager, Putnam VT Equity Income Fund, Jennison 20/20 Focus Portfolio, Jennison Portfolio, Prudential Value Portfolio, Invesco Van Kampen V. I. Growth and Income Fund (formerly Van Kampen LIT Growth and Income Portfolio), Invesco Van Kampen V. I. Comstock Fund (formerly Van Kampen LIT Comstock Portfolio), Wells Fargo Advantage VT Index Asset Allocation Fund (formerly Wells Fargo Advantage VT Asset Allocation Fund), Wells Fargo Advantage VT Total Return Bond Fund, Wells Fargo Advantage VT Intrinsic Value Fund (merged with Wells Fargo Advantage VT Equity Income Fund) (merged with Wells Fargo Advantage VT C&B Large Cap Value Fund), Wells Fargo Advantage VT International Equity Fund (formerly Wells Fargo Advantage VT International Core 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 Cap Value Fund (formerly Wells Fargo Advantage VT Small/Mid Cap Value Fund), Wells Fargo Advantage VT Opportunity Fund, and Wells Fargo Advantage VT Core Equity Fund (merged with Wells Fargo Advantage VT Large Company Core Fund). The Sub-Accounts are invested in mutual fund (the "Funds") of the same name. * These funds were liquidated during 2010, as a result, they are not presented in the statements of assets and liabilities. During 2009 the following Sub-Account was liquidated: Morgan Stanley -- Global Equity Portfolio. 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 income is either accrued daily or as of the ex-dividend date based upon the fund. Net realized gain on distributions income is accrued as of the ex-dividend date. Net realized gain on distributions income represents dividends from the Funds, which are characterized as capital gains under tax regulations. b) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values calculated at the close of the business day. c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and are taxed with, the total operations of the Company, which is taxed as an insurance company under the Internal Revenue Code (IRC). Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited under the contracts. Based on this, no charge is being made currently to the Account for federal income taxes. The Company will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the contracts. d) USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. The most significant estimate is fair value measurements. Actual results could vary from the amounts derived from management's estimates. e) SUBSEQUENT EVENTS -- Management has evaluated events subsequent to December 31, 2010 through the issuance date of the Account's financial statements, noting there are no subsequent events requiring accounting or disclosure. f) MORTALITY RISK -- Net assets allocated to contracts in the annuity period are computed according to certain mortality tables. The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the 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. SA-131 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) ------------------------------------------------------------------------------- g) FAIR VALUE MEASUREMENTS -- The Account's investments are carried at fair value in the Account's financial statements. The investments in shares of the Funds are valued at the closing net asset value as determined by the appropriate Fund, which in turn value their investment securities at fair value, as of December 31, 2010. For financial instruments that are carried at fair value a hierarchy is used to place the instruments into three broad levels (Level 1, 2 or 3) by prioritizing the inputs in the valuation techniques used to measure fair value. LEVEL 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Account has the ability to access at the measurement date. Level 1 investments include highly liquid open ended management investment companies ("mutual funds"). LEVEL 2: Observable inputs, other than unadjusted quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 2 investments include those that are model priced by vendors using observable inputs. LEVEL 3: Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Because Level 3 fair values, by their nature, contain unobservable market inputs as there is no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. In certain cases, the inputs used to measure fair value fall into different levels of fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2010, the Account invests in mutual funds which are carried at fair value and represent Level 1 investments under the fair value hierarchy levels. There were no Level 2 or Level 3 investments in the Account. (h) ACCOUNTING FOR UNCERTAIN TAX PROVISIONS -- Management evaluates whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required at December 31, 2010. The 2007 through 2010 tax years generally remain subject to examination by U.S. federal and most state tax authorities. 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, an 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 Sub-Account's average daily net assets. These changes are reflected in the accompanying statement of operations. b) TAX EXPENSE CHARGE -- If applicable, the Company will make deductions at a maximum annual rate of 3.5% of the Sub-Account's average daily net assets 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 charges are a redemption of units and are reflected 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 Sub-Account's average daily net assets for these services. These changes are reflected in the accompanying statement of operations. d) ANNUAL MAINTENANCE FEE -- An annual maintenance fee in the amount of $30 may be charged against the contract's value each contract year. These expenses are deducted through a surrender of units and are included in surrenders for benefit payments and fees in the accompanying statements of changes in net assets. e) DISTRIBUTION CHARGE -- A Distribution Charge of 0.75% may be charged to the contract's value each year at the contract anniversary date. This charge is based on a percentage of remaining gross premiums with each premium payment having its own Distribution Charge schedule. The Distribution Charge is reduced to 0.0% after the completion of eight years after each respective premium payment. There were no distribution charges for the year ended December 31, 2010. f) RIDER CHARGES -- The Company will charge an expense for various Rider charges, which are either included in the mortality and expense risk charges in the accompanying statement of operations or are deducted through a surrender of units and are included in the surrenders for benefit payments and fees in the accompanying statements of changes in net assets. For further detail regarding specific product rider charges, please refer to Footnote 6, Financial Highlights. SA-132 ------------------------------------------------------------------------------- 4. PURCHASES AND SALES OF INVESTMENTS: The cost of purchases and proceeds from sales of investments for the year ended December 31, 2010 were as follows:
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio $8,652,092 $4,796,795 AllianceBernstein VPS International Value Portfolio 8,330,495 6,870,879 AllianceBernstein VPS Small/Mid Cap Value Portfolio 18,304,658 8,828,524 AllianceBernstein VPS Value Portfolio 134,563 202,128 AllianceBernstein VPS International Growth Portfolio 1,199,300 2,178,330 Invesco V.I. Basic Value Fund* 13,636,510 55,307,301 Invesco V.I. Capital Appreciation Fund* 5,119,908 15,318,282 Invesco V.I. Core Equity Fund* 28,864,097 65,969,519 Invesco V.I. Government Securities Fund* 213,725,502 309,976,461 Invesco V.I. International Growth Fund* 28,565,181 52,374,422 Invesco V.I. Mid Cap Core Equity Fund* 32,580,138 76,392,632 Invesco V.I. Small Cap Equity Fund* 50,853,251 56,074,423 Invesco V.I. Large Cap Growth Fund* 3,970,923 8,280,237 Invesco V.I. Capital Development Fund* 5,804,076 5,771,211 Invesco V.I. Global Multi-Asset Fund * 6,720,362 4,583,802 American Funds Global Bond Fund 82,273,659 91,219,523 American Funds Global Growth and Income Fund 48,701,925 102,560,260 American Funds Asset Allocation Fund 76,412,462 249,464,391 American Funds Blue Chip Income and Growth Fund 49,790,018 158,068,878 American Funds Bond Fund 172,707,562 291,726,103 American Funds Global Growth Fund 31,320,284 120,927,254 American Funds Growth Fund 91,968,991 555,966,186 American Funds Growth-Income Fund 103,588,383 523,679,650 American Funds International Fund 64,581,208 177,160,343 American Funds New World Fund 76,617,985 100,729,630 American Funds Global Small Capitalization Fund 53,973,601 110,803,946 Wells Fargo Advantage VT Omega Growth Fund* 2,044,795 2,465,352 Fidelity VIP Growth Portfolio 1,009,372 1,950,279 Fidelity VIP Contrafund Portfolio 11,171,752 12,040,974 Fidelity VIP Mid Cap Portfolio 17,244,804 15,785,887 Fidelity VIP Value Strategies Portfolio 2,624,083 4,675,596 Fidelity VIP Dynamic Capital Appreciation Portfolio 1,189,854 610,715 Fidelity VIP Strategic Income Portfolio 417,672 47,938 Franklin Rising Dividends Securities Fund 63,756,613 110,845,916 Franklin Income Securities Fund 234,593,730 376,617,012 Franklin Large Cap Growth Securities Fund 11,802,966 33,324,535 Franklin Global Real Estate Securities Fund 751,168 1,937,639 Franklin Small-Mid Cap Growth Securities Fund 60,587,924 90,480,705 Franklin Small Cap Value Securities Fund 88,816,299 52,884,301 Franklin Strategic Income Securities Fund 200,292,616 214,129,812 Mutual Shares Securities Fund 68,778,066 230,645,970 Templeton Developing Markets Securities Fund 60,902,947 83,784,413 Templeton Foreign Securities Fund 61,738,388 111,147,978 Templeton Global Asset Allocation Fund* 1,031,663 8,890,020 Templeton Growth Securities Fund 29,134,305 115,565,508 Mutual Global Discovery Securities Fund 53,598,330 111,548,627
SA-133 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- Franklin Flex Cap Growth Securities Fund $11,909,423 $16,451,958 Franklin Large Cap Value Securities Fund 9,732,817 8,488,284 Templeton Global Bond Securities Fund 40,197,994 16,263,984 Hartford Advisers HLS Fund 4,934,836 3,125,702 Hartford Total Return Bond HLS Fund 197,424,212 84,126,073 Hartford Capital Appreciation HLS Fund 110,437,288 72,907,394 Hartford Dividend and Growth HLS Fund 85,643,439 30,215,712 Hartford Global Research HLS Fund* 269,384 194,822 Hartford Global Growth HLS Fund 505,247 348,838 Hartford Disciplined Equity HLS Fund 21,994,702 8,803,712 Hartford Growth HLS Fund* 13,114,652 8,261,523 Hartford Growth Opportunities HLS Fund 31,848,386 17,965,386 Hartford High Yield HLS Fund 44,024,519 23,937,492 Hartford Index HLS Fund 106,583 1,032 Hartford International Opportunities HLS Fund* 11,813,038 9,870,605 Hartford Small/Mid Cap Equity HLS Fund* 3,502,067 3,878,738 Hartford Money Market HLS Fund 513,436,389 781,782,589 Hartford Small Company HLS Fund 2,404,014 4,223,629 Hartford SmallCap Growth HLS Fund 4,462,615 1,724,628 Hartford Stock HLS Fund 398,207 691,641 Hartford U.S. Government Securities HLS Fund 36,279,101 31,569,769 Hartford Value HLS Fund* 19,881,681 18,374,145 American Funds Asset Allocation HLS Fund 10,213,869 6,848,052 American Funds Blue Chip Income and Growth HLS Fund 6,209,389 4,430,577 American Funds Bond HLS Fund 43,654,932 31,182,070 American Funds Global Bond HLS Fund 7,534,140 8,541,162 American Funds Global Growth and Income HLS Fund 8,911,397 13,444,307 American Funds Global Growth HLS Fund 4,236,704 4,054,345 American Funds Global Small Capitalization HLS Fund 11,749,027 13,511,233 American Funds Growth HLS Fund 31,218,870 30,091,429 American Funds Growth-Income HLS Fund 16,741,029 17,843,387 American Funds International HLS Fund 38,736,058 19,723,243 American Funds New world HLS Fund 13,299,468 10,588,509 Lord Abbett Fundamental Equity Portfolio* 284,892 22,987 Lord Abbett Capital Structure Portfolio* 3,847,252 2,185,438 Lord Abbett Bond-Debenture Portfolio 19,571,848 18,364,345 Lord Abbett Growth & Income Portfolio 2,470,871 1,641,179 MFS Core Equity Series 1,994,549 5,736,133 MFS Growth Series 11,879,034 17,451,263 MFS Global Equity Series 3,348,452 6,306,976 MFS High Income Series 110,004,535 103,782,685 MFS Investors Growth Stock Series 3,325,944 16,784,120 MFS Investors Trust Series 28,925,320 80,381,444 MFS Mid Cap Growth Series 32,501,603 31,395,861 MFS New Discovery Series 44,808,496 92,814,876 MFS Total Return Series 87,743,961 207,700,324 MFS Value Series 56,812,245 62,498,784 MFS Research Bond Series 160,724,855 93,829,319 MFS Research International Series 8,026,616 14,911,432
SA-134 -------------------------------------------------------------------------------
PURCHASES PROCEEDS SUB-ACCOUNT AT COST FROM SALES -------------------------------------------------------------------------------- MFS Research Series $8,903,694 $12,696,438 BlackRock Global Opportunities V.I. Fund* 51,207 257,085 BlackRock Large Cap Growth V.I. Fund 49,132 188,081 Invesco Van Kampen V. I. International Growth Equity* 116,073 60,493 UIF Mid Cap Growth Portfolio* 3,184,410 6,222,371 Invesco Van Kampen V. I. Mid Cap Value Fund* 3,558,108 4,328,151 Morgan Stanley -- Focus Growth Portfolio 230,388 272,286 Morgan Stanley -- Capital Opportunities Portfolio 211,434 777,378 Morgan Stanley -- Mid Cap Growth Portfolio 77,315 180,902 Morgan Stanley -- Flexible Income Portfolio 117,482 162,399 Invesco V.I. Select Dimensions Dividend Growth Portfolio* 7,716 31,665 Oppenheimer Capital Appreciation Fund/VA 521,919 927,888 Oppenheimer Global Securities Fund/VA 2,617,245 4,750,949 Oppenheimer Main Street Fund/VA 654,331 598,651 Oppenheimer Main Street Small Cap Fund/VA 4,242,947 7,098,804 Oppenheimer Value Fund/VA 197,858 780,686 Putnam VT Diversified Income Fund 39,005,883 30,858,863 Putnam VT Global Asset Allocation Fund 1,297,006 968,948 Putnam VT International Value Fund* 395,523 434,634 Putnam VT International Equity Fund 503,684 678,863 Putnam VT Investors Fund 55,951 9,177 Putnam VT Small Cap Value 972,104 726,936 Putnam VT Voyager 542,695 89,889 Putnam VT Equity Income Fund 471,943 21,814 Jennison 20/20 Focus Portfolio 19,314 36,349 Jennison Portfolio 16 21,879 Prudential Value Portfolio 1,027 5,766 Invesco Van Kampen V. I. Growth and Income Fund* 6,560,158 6,959,087 Invesco Van Kampen V. I. Comstock Fund* 73,903 300,730 Wells Fargo Advantage VT Index Asset Allocation Fund* 21,134 118,745 Wells Fargo Advantage VT Total Return Bond Fund 1,798,792 2,537,639 Wells Fargo Advantage VT Intrinsic Value Fund* 2,058,732 2,465,416 Wells Fargo Advantage VT International Equity Fund* 1,917,508 2,139,804 Wells Fargo Advantage VT Money Market Fund* 305,415 4,647,838 Wells Fargo Advantage VT Small Cap Growth Fund 464,218 954,902 Wells Fargo Advantage VT Discovery Fund 607,952 456,315 Wells Fargo Advantage VT Small Cap Value Fund* 160,170 224,691 Wells Fargo Advantage VT Opportunity Fund 214,205 98,974 Wells Fargo Advantage VT Core Equity Fund* 51,276 57,712
* See parenthetical for this Sub-Account in Note 1. SA-135 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) ------------------------------------------------------------------------------- 5. CHANGES IN UNITS OUTSTANDING: The changes in units outstanding for the year ended December 31, 2010 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio 852,474 486,903 365,571 AllianceBernstein VPS International Value Portfolio 1,146,402 973,530 172,872 AllianceBernstein VPS Small/Mid Cap Value Portfolio 1,700,586 858,706 841,880 AllianceBernstein VPS Value Portfolio 13,698 24,237 (10,539) AllianceBernstein VPS International Growth Portfolio 134,907 273,208 (138,301) Invesco V.I. Basic Value Fund* 12,851,921 52,992,172 (40,140,251) Invesco V.I. Capital Appreciation Fund* 4,267,010 13,875,283 (9,608,273) Invesco V.I. Core Equity Fund* 2,618,741 5,834,847 (3,216,106) Invesco V.I. Government Securities Fund* 141,223,994 234,636,044 (93,412,050) Invesco V.I. International Growth Fund* 8,283,856 25,349,906 (17,066,050) Invesco V.I. Mid Cap Core Equity Fund* 19,533,497 45,628,554 (26,095,057) Invesco V.I. Small Cap Equity Fund* 4,252,415 4,447,605 (195,190) Invesco V.I. Large Cap Growth Fund* 380,509 791,125 (410,616) Invesco V.I. Capital Development Fund* 792,102 762,589 29,513 Invesco V.I. Global Multi-Asset Fund * 512,570 340,755 171,815 American Funds Global Bond Fund 6,215,594 7,273,032 (1,057,438) American Funds Global Growth and Income Fund 3,850,534 10,137,337 (6,286,803) American Funds Asset Allocation Fund 4,616,343 19,255,124 (14,638,781) American Funds Blue Chip Income and Growth Fund 39,815,144 154,800,797 (114,985,653) American Funds Bond Fund 10,361,926 19,717,604 (9,355,678) American Funds Global Growth Fund 2,027,668 8,601,080 (6,573,412) American Funds Growth Fund 8,022,561 49,692,619 (41,670,058) American Funds Growth-Income Fund 6,275,662 42,463,137 (36,187,475) American Funds International Fund 4,037,537 12,724,640 (8,687,103) American Funds New World Fund 3,058,932 4,145,085 (1,086,153) American Funds Global Small Capitalization Fund 3,027,515 6,485,539 (3,458,024) Wells Fargo Advantage VT Omega Growth Fund* 299,785 2,508,014 (2,208,229) Fidelity VIP Growth Portfolio 123,020 236,907 (113,887) Fidelity VIP Contrafund Portfolio 1,145,039 1,289,780 (144,741) Fidelity VIP Mid Cap Portfolio 1,703,672 1,576,382 127,290 Fidelity VIP Value Strategies Portfolio 290,551 520,015 (229,464) Fidelity VIP Dynamic Capital Appreciation Portfolio 133,909 64,042 69,867 Fidelity VIP Strategic Income Portfolio 33,956 3,921 30,035 Franklin Rising Dividends Securities Fund 4,229,110 7,898,404 (3,669,294) Franklin Income Securities Fund 7,256,052 24,036,452 (16,780,400) Franklin Large Cap Growth Securities Fund 1,110,455 3,089,171 (1,978,716) Franklin Global Real Estate Securities Fund 33,693 122,012 (88,319) Franklin Small-Mid Cap Growth Securities Fund 6,464,302 9,100,858 (2,636,556) Franklin Small Cap Value Securities Fund 10,186,730 6,294,107 3,892,623 Franklin Strategic Income Securities Fund 10,318,743 12,290,829 (1,972,086) Mutual Shares Securities Fund 4,685,280 16,266,159 (11,580,879) Templeton Developing Markets Securities Fund 3,159,460 4,311,353 (1,151,893) Templeton Foreign Securities Fund 5,075,468 9,232,167 (4,156,699) Templeton Growth Securities Fund 2,226,988 9,802,857 (7,575,869) Mutual Global Discovery Securities Fund 2,966,414 5,823,720 (2,857,306) Franklin Flex Cap Growth Securities Fund 1,165,489 1,573,778 (408,289)
SA-136 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Franklin Large Cap Value Securities Fund 987,659 891,823 95,836 Templeton Global Bond Securities Fund 3,221,580 1,272,564 1,949,016 Hartford Advisers HLS Fund 503,856 315,087 188,769 Hartford Total Return Bond HLS Fund 16,272,700 7,539,061 8,733,639 Hartford Capital Appreciation HLS Fund 12,368,080 7,972,397 4,395,683 Hartford Dividend and Growth HLS Fund 8,655,714 3,095,982 5,559,732 Hartford Global Research HLS Fund* 27,569 21,892 5,677 Hartford Global Growth HLS Fund 53,563 43,829 9,734 Hartford Disciplined Equity HLS Fund 2,492,884 950,906 1,541,978 Hartford Growth HLS Fund* 1,445,829 884,328 561,501 Hartford Growth Opportunities HLS Fund 4,148,624 2,147,438 2,001,186 Hartford High Yield HLS Fund 3,629,459 1,988,233 1,641,226 Hartford Index HLS Fund 8,500 58 8,442 Hartford International Opportunities HLS Fund* 1,359,607 1,299,144 60,463 Hartford Small/Mid Cap Equity HLS Fund* 367,737 416,212 (48,475) Hartford Money Market HLS Fund 369,289,901 582,099,698 (212,809,797) Hartford Small Company HLS Fund 264,822 461,577 (196,755) Hartford SmallCap Growth HLS Fund 417,329 165,006 252,323 Hartford Stock HLS Fund 39,235 71,487 (32,252) Hartford U.S. Government Securities HLS Fund 3,424,699 3,106,215 318,484 Hartford Value HLS Fund* 2,113,816 1,922,460 191,356 American Funds Asset Allocation HLS Fund 987,326 710,620 276,706 American Funds Blue Chip Income and Growth HLS Fund 591,580 487,236 104,344 American Funds Bond HLS Fund 4,008,610 2,912,930 1,095,680 American Funds Global Bond HLS Fund 684,865 771,921 (87,056) American Funds Global Growth and Income HLS Fund 861,827 1,568,309 (706,482) American Funds Global Growth HLS Fund 422,044 413,471 8,573 American Funds Global Small Capitalization HLS Fund 1,347,114 1,540,092 (192,978) American Funds Growth HLS Fund 3,635,338 3,303,595 331,743 American Funds Growth-Income HLS Fund 1,783,974 1,983,631 (199,657) American Funds International HLS Fund 4,439,999 2,198,828 2,241,171 American Funds New World HLS Fund 1,341,235 1,133,942 207,293 Lord Abbett Fundamental Equity Portfolio* 25,212 1,876 23,336 Lord Abbett Capital Structure Portfolio* 358,441 206,884 151,557 Lord Abbett Bond-Debenture Portfolio 1,347,323 1,543,499 (196,176) Lord Abbett Growth & Income Portfolio 275,292 172,743 102,549 MFS Core Equity Series 247,663 719,336 (471,673) MFS Growth Series 1,616,035 2,310,355 (694,320) MFS Global Equity Series 240,311 452,684 (212,373) MFS High Income Series 7,009,540 7,643,633 (634,093) MFS Investors Growth Stock Series 481,871 2,324,076 (1,842,205) MFS Investors Trust Series 3,094,154 8,705,443 (5,611,289) MFS Mid Cap Growth Series 6,880,462 6,452,656 427,806 MFS New Discovery Series 3,855,748 7,679,518 (3,823,770) MFS Total Return Series 5,236,334 15,203,236 (9,966,902) MFS Value Series 4,885,033 4,463,632 421,401 MFS Research Bond Series 13,143,734 7,673,274 5,470,460 MFS Research International Series 632,853 1,213,594 (580,741) MFS Research Series 831,318 1,194,567 (363,249)
SA-137 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- BlackRock Global Opportunities V.I. Fund* 3,405 19,913 (16,508) BlackRock Large Cap Growth V.I. Fund 3,918 19,249 (15,331) Invesco Van Kampen V. I. International Growth Equity* 11,530 6,107 5,423 UIF Mid Cap Growth Portfolio* 328,759 598,377 (269,618) Invesco Van Kampen V. I. Mid Cap Value Fund* 378,510 437,941 (59,431) Morgan Stanley -- Focus Growth Portfolio 30,372 32,396 (2,024) Morgan Stanley -- Capital Opportunities Portfolio 46,856 153,437 (106,581) Morgan Stanley -- Mid Cap Growth Portfolio 8,061 17,257 (9,196) Morgan Stanley -- Flexible Income Portfolio 6,576 13,710 (7,134) Invesco V.I. Select Dimensions Dividend Growth Portfolio* 504 2,843 (2,339) Oppenheimer Capital Appreciation Fund/VA 57,114 97,682 (40,568) Oppenheimer Global Securities Fund/VA 245,654 472,971 (227,317) Oppenheimer Main Street Fund/VA 70,047 65,658 4,389 Oppenheimer Main Street Small Cap Fund/VA 451,296 697,926 (246,630) Oppenheimer Value Fund/VA 19,969 89,268 (69,299) Putnam VT Diversified Income Fund 2,090,832 2,587,043 (496,211) Putnam VT Global Asset Allocation Fund 93,225 92,283 942 Putnam VT International Value Fund* 46,359 57,416 (11,057) Putnam VT International Equity Fund 60,738 91,128 (30,390) Putnam VT Investors Fund 4,488 693 3,795 Putnam VT Small Cap Value 105,680 78,600 27,080 Putnam VT Voyager 40,675 6,697 33,978 Putnam VT Equity Income Fund 38,315 1,685 36,630 Jennison 20/20 Focus Portfolio 15,358 20,414 (5,056) Jennison Portfolio -- 23,164 (23,164) Prudential Value Portfolio 80 472 (392) Invesco Van Kampen V. I. Growth and Income Fund* 740,458 659,629 80,829 Invesco Van Kampen V. I. Comstock Fund* 5,194 19,296 (14,102) Wells Fargo Advantage VT Index Asset Allocation Fund* 2,632 89,361 (86,729) Wells Fargo Advantage VT Total Return Bond Fund 924,864 1,215,060 (290,196) Wells Fargo Advantage VT Intrinsic Value Fund* 1,944,009 2,295,158 (351,149) Wells Fargo Advantage VT International Equity Fund* 351,853 2,110,654 (1,758,801) Wells Fargo Advantage VT Small Cap Growth Fund 298,361 648,192 (349,831) Wells Fargo Advantage VT Discovery Fund 44,252 34,316 9,936 Wells Fargo Advantage VT Small Cap Value Fund* 13,066 18,096 (5,030) Wells Fargo Advantage VT Opportunity Fund 18,198 8,530 9,668 Wells Fargo Advantage VT Core Equity Fund* 4,859 63,719 (58,860)
* See parenthetical for this Sub-Account in Note 1. SA-138 ------------------------------------------------------------------------------- The changes in units outstanding for the year ended December 31, 2009 were as follows:
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- AllianceBernstein VPS Balanced Wealth Strategy Portfolio 1,978,831 518,537 1,460,294 AllianceBernstein VPS International Value Portfolio 3,178,428 697,753 2,480,675 AllianceBernstein VPS Small/Mid Cap Value Portfolio 596,810 459,202 137,608 AllianceBernstein VPS Value Portfolio 88,230 27,759 60,471 AllianceBernstein VPS International Growth Portfolio 544,920 213,671 331,249 AIM V.I. Basic Value Fund 40,221,759 29,187,087 11,034,672 AIM V.I. Capital Appreciation Fund 9,591,750 13,237,758 (3,646,008) AIM V.I. Core Equity Fund 4,498,376 5,108,951 (610,575) AIM V.I. Government Securities Fund 165,951,142 392,036,032 (226,084,890) AIM V.I. International Growth Fund 19,245,624 17,766,600 1,479,024 AIM V.I. Mid Cap Core Equity Fund 23,388,903 37,396,066 (14,007,163) AIM V.I. Small Cap Equity Fund 3,081,771 3,322,622 (240,851) AIM V.I. Large Cap Growth Fund 1,328,163 1,747,109 (418,946) AIM V.I. Capital Development Fund 3,134,187 2,256,390 877,797 AIM V.I. PowerShares ETF Allocation Fund 837,955 50,499 787,456 American Funds Global Bond Fund 7,465,182 6,701,133 764,049 American Funds Global Growth and Income Fund 5,621,147 8,857,775 (3,236,628) American Funds Asset Allocation Fund 5,236,214 20,471,611 (15,235,397) American Funds Blue Chip Income and Growth Fund 39,648,953 158,442,266 (118,793,313) American Funds Bond Fund 16,053,977 12,841,724 3,212,253 American Funds Global Growth Fund 4,210,816 9,191,198 (4,980,382) American Funds Growth Fund 12,925,987 43,344,655 (30,418,668) American Funds Growth-Income Fund 7,232,521 38,054,002 (30,821,481) American Funds International Fund 4,696,437 12,844,870 (8,148,433) American Funds New World Fund 3,748,546 3,884,510 (135,964) American Funds Global Small Capitalization Fund 4,845,640 4,787,961 57,679 Fidelity VIP Growth Portfolio 674,806 517,944 156,862 Fidelity VIP Contrafund Portfolio 3,932,988 1,003,702 2,929,286 Fidelity VIP Mid Cap Portfolio 4,736,639 782,422 3,954,217 Fidelity VIP Value Strategies Portfolio 717,940 353,155 364,785 Fidelity VIP Dynamic Capital Appreciation Portfolio 94,964 125,069 (30,105) Franklin Rising Dividends Securities Fund 2,396,018 8,898,489 (6,502,471) Franklin Income Securities Fund 16,820,309 21,825,560 (5,005,251) Franklin Large Cap Growth Securities Fund 1,497,843 3,100,664 (1,602,821) Franklin Global Real Estate Securities Fund 73,627 222,427 (148,800) Franklin Small-Mid Cap Growth Securities Fund 6,101,615 6,676,767 (575,152) Franklin Small Cap Value Securities Fund 4,859,389 6,496,266 (1,636,877) Franklin Strategic Income Securities Fund 17,711,736 7,907,675 9,804,061 Mutual Shares Securities Fund 10,268,564 15,095,120 (4,826,556) Templeton Developing Markets Securities Fund 5,334,643 2,483,244 2,851,399 Templeton Foreign Securities Fund 5,496,467 10,587,189 (5,090,722) Templeton Global Asset Allocation Fund 55,663 184,730 (129,067) Templeton Growth Securities Fund 4,223,592 10,990,834 (6,767,242) Mutual Global Discovery Securities Fund 6,115,130 4,728,510 1,386,620 Franklin Flex Cap Growth Securities Fund 1,886,383 1,437,122 449,261 Franklin Large Cap Value Securities Fund 1,429,162 1,328,900 100,262 Templeton Global Bond Securities Fund 5,104,404 551,668 4,552,736
SA-139 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- Hartford Advisers HLS Fund 921,033 251,366 669,667 Hartford Total Return Bond HLS Fund 34,255,924 1,086,379 33,169,545 Hartford Capital Appreciation HLS Fund 39,094,966 4,722,585 34,372,381 Hartford Dividend and Growth HLS Fund 24,642,031 1,810,198 22,831,833 Hartford Fundamental Growth HLS Fund 235,624 48,281 187,343 Hartford Global Equity HLS Fund 42,214 7,258 34,956 Hartford Global Growth HLS Fund 139,417 59,660 79,757 Hartford Disciplined Equity HLS Fund 5,469,965 252,227 5,217,738 Hartford Growth HLS Fund 1,001,601 88,250 913,351 Hartford Growth Opportunities HLS Fund 10,121,569 1,164,418 8,957,151 Hartford High Yield HLS Fund 3,245,288 784,860 2,460,428 Hartford International Growth HLS Fund 319,907 76,126 243,781 Hartford International Opportunities HLS Fund 1,265,339 296,597 968,742 Hartford MidCap Growth HLS Fund 995,358 278,758 716,600 Hartford Money Market HLS Fund 362,306,312 948,827,127 (586,520,815) Hartford Small Company HLS Fund 808,684 202,688 605,996 Hartford SmallCap Growth HLS Fund 284,472 104,235 180,237 Hartford Stock HLS Fund 170,856 48,076 122,780 Hartford U.S. Government Securities HLS Fund 4,784,238 3,233,998 1,550,240 Hartford Value HLS Fund 480,167 133,686 346,481 Hartford Value Opportunities HLS Fund 274,222 179,957 94,265 Hartford Equity Income HLS Fund 862,691 117,049 745,642 American Funds Asset Allocation HLS Fund 2,047,071 643,083 1,403,988 American Funds Blue Chip Income and Growth HLS Fund 1,519,670 332,941 1,186,729 American Funds Bond HLS Fund 9,780,127 756,440 9,023,687 American Funds Global Bond HLS Fund 1,563,558 358,807 1,204,751 American Funds Global Growth and Income HLS Fund 3,515,994 670,706 2,845,288 American Funds Global Growth HLS Fund 1,313,995 511,728 802,267 American Funds Global small Capitalization HLS Fund 4,087,941 858,025 3,229,916 American Funds Growth HLS Fund 14,902,850 1,846,180 13,056,670 American Funds Growth-Income HLS Fund 8,269,031 995,296 7,273,735 American Funds International HLS Fund 9,861,236 1,505,370 8,355,866 American Funds New world HLS Fund 3,101,171 778,996 2,322,175 Lord Abbett All Value Fund 700 -- 700 Lord Abbett America's Value Portfolio 941,692 259,241 682,451 Lord Abbett Bond-Debenture Portfolio 4,067,173 561,092 3,506,081 Lord Abbett Growth & Income portfolio 655,471 164,864 490,607 MFS Core Equity Series 177,291 748,909 (571,618) MFS Growth Series 2,092,505 2,383,275 (290,770) MFS Global Equity Series 281,394 540,307 (258,913) MFS High Income Series 9,713,215 5,257,851 4,455,364 MFS Investors Growth Stock Series 977,606 1,919,079 (941,473) MFS Investors Trust Series 3,842,905 7,674,511 (3,831,606) MFS Mid Cap Growth Series 6,897,337 5,333,472 1,563,865 MFS New Discovery Series 6,257,012 8,805,560 (2,548,548) MFS Total Return Series 7,585,466 14,229,169 (6,643,703) MFS Value Series 9,749,631 3,303,268 6,446,363 MFS Research Bond Series 13,692,833 3,949,237 9,743,596 MFS Research International Series 886,736 1,418,061 (531,325)
SA-140 -------------------------------------------------------------------------------
UNITS UNITS NET INCREASE SUB-ACCOUNT ISSUED REDEEMED (DECREASE) -------------------------------------------------------------------------------- MFS Research Series 1,134,852 856,116 278,736 BlackRock Global Growth V.I. Fund 24,650 33,960 (9,310) BlackRock Large Cap Growth V.I. Fund 14,198 28,988 (14,790) Van Kampen -- UIF International Growth Equity Portfolio 4,955 18,967 (14,012) Van Kampen -- UIF Mid Cap Growth Portfolio 1,894,586 838,822 1,055,764 Van Kampen -- UIF U.S. Mid Cap Value Portfolio 861,145 213,893 647,252 Morgan Stanley -- Focus Growth Portfolio 26,854 15,776 11,078 Morgan Stanley -- Capital Opportunities Portfolio 86,983 217,009 (130,026) Morgan Stanley -- Mid Cap Growth Portfolio 19,546 13,138 6,408 Morgan Stanley -- Flexible Income Portfolio 12,332 4,090 8,242 Morgan Stanley -- Dividend Growth Portfolio 5,924 9,259 (3,335) Oppenheimer Capital Appreciation Fund/VA 330,828 167,509 163,319 Oppenheimer Global Securities Fund/VA 1,312,340 394,544 917,796 Oppenheimer Main Street Fund/VA 171,476 68,140 103,336 Oppenheimer Main Street Small Cap Fund/VA 1,964,056 374,969 1,589,087 Oppenheimer Value Fund/VA 119,969 79,182 40,787 Putnam VT Diversified Income Fund 6,050,423 1,061,889 4,988,534 Putnam VT Global Asset Allocation Fund 506,689 116,286 390,403 Putnam VT International Growth and Income Fund 102,377 30,862 71,515 Putnam VT International Equity Fund 119,036 39,100 79,936 Putnam VT Small Cap Value 169,140 90,590 78,550 Putnam VT Voyager 375 -- 375 Putnam VT Equity Income Fund 71 -- 71 Jennison 20/20 Focus Portfolio 4,468 64,037 (59,569) Jennison Portfolio 211 5,761 (5,550) Prudential Value Portfolio 3,332 38,329 (34,997) Van Kampen -- UIF Growth and Income Portfolio 2,544,974 353,365 2,191,609 Van Kampen -- UIF Comstock Portfolio 8,611 26,029 (17,418) Wells Fargo Advantage VT Asset Allocation Fund 10,297 215,556 (205,259) Wells Fargo Advantage VT Total Return Bond Fund 705,388 1,370,078 (664,690) Wells Fargo Advantage VT Equity Income Fund 208,482 289,016 (80,534) Wells Fargo Advantage VT C&B Large Cap Value Fund 216,991 263,126 (46,135) Wells Fargo Advantage VT Large Company Core Fund 49,531 (49,531) Wells Fargo Advantage VT International Core Fund 253,932 259,411 (5,479) Wells Fargo Advantage VT Large Company Growth Fund 140,201 543,349 (403,148) Wells Fargo Advantage VT Money Market Fund 1,856,326 3,370,710 (1,514,384) Wells Fargo Advantage VT Small Cap Growth Fund 195,487 466,824 (271,337) Wells Fargo Advantage VT Discovery Fund 8,813 10,655 (1,842) Wells Fargo Advantage VT Small/Mid Cap Value Fund 6,103 34,788 (28,685) Wells Fargo Advantage VT Opportunity Fund 470 2,578 (2,108)
SA-141 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) ------------------------------------------------------------------------------- 6. FINANCIAL HIGHLIGHTS: The following is a summary of units, unit fair value, contract owners' equity, expense ratios, investment income ratios, and total return showing the minimum and maximum contract charges for each Sub-Account that has outstanding units as of and for the year ended December 31, 2010.
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2010 Lowest contract charges 19,651 $13.013398 $255,721 Highest contract charges 4,537 13.657129 61,958 Remaining contract charges 3,438,932 -- 34,031,944 2009 Lowest contract charges 242,124 9.114205 2,206,770 Highest contract charges 4,424 12.721089 56,274 Remaining contract charges 2,851,001 -- 25,876,498 2008 Lowest contract charges 118,324 7.429046 879,041 Highest contract charges 8,609 7.330877 63,109 Remaining contract charges 1,510,322 -- 11,143,573 ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2010 Lowest contract charges 1,370 12.965766 17,767 Highest contract charges 212 14.066329 2,975 Remaining contract charges 5,613,387 -- 40,047,072 2009 Lowest contract charges 509 6.886029 3,508 Highest contract charges 225 13.862706 3,113 Remaining contract charges 5,441,363 -- 37,572,793 2008 Lowest contract charges 2 5.163673 7 Highest contract charges 3,121 5.088962 15,885 Remaining contract charges 2,958,299 -- 15,171,835 ALLIANCEBERNSTEIN VPS SMALL/MID CAP VALUE PORTFOLIO 2010 Lowest contract charges 19,677 16.602960 326,697 Highest contract charges 6 18.656812 106 Remaining contract charges 1,797,326 -- 21,283,883 2009 Lowest contract charges 813 13.181415 10,722 Highest contract charges 259 15.157142 3,928 Remaining contract charges 974,057 -- 9,167,968 2008 Lowest contract charges 15,019 6.725040 101,003 Highest contract charges 1,297 6.627915 8,598 Remaining contract charges 821,205 -- 5,479,760 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO 2010 Lowest contract charges 0.42% 0.97% 9.75% Highest contract charges 2.70% 2.50% 7.36% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.85% 23.40% Highest contract charges 2.64% -- 21.14% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% 1.93% (28.64)% Highest contract charges 2.04% 3.40% (29.40)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO 2010 Lowest contract charges 0.03% 2.59% 3.99% Highest contract charges 2.75% 2.51% 1.47% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.73% 3.21% 33.36% Highest contract charges 2.72% 1.75% 30.72% Remaining contract charges -- -- -- 2008 Lowest contract charges -- -- (52.18)% Highest contract charges 2.08% -- (52.73)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS SMALL/MID CAP VALUE PORTFOLIO 2010 Lowest contract charges 0.50% 0.17% 25.96% Highest contract charges 2.40% 0.27% 23.16% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.04% -- 31.81% Highest contract charges 2.66% -- 38.86% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% -- (37.77)% Highest contract charges 2.09% -- (38.49)% Remaining contract charges -- -- --
SA-142 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2010 Lowest contract charges 17,355 $8.532977 $148,091 Highest contract charges 430 13.306209 5,718 Remaining contract charges 128,739 -- 1,096,740 2009 Lowest contract charges 16,234 7.723828 125,390 Highest contract charges 748 7.500797 5,608 Remaining contract charges 140,081 -- 1,080,307 2008 Lowest contract charges 8,071 6.435801 51,946 Highest contract charges 81 6.363950 513 Remaining contract charges 88,440 -- 565,797 ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2010 Lowest contract charges 815 8.459877 6,891 Highest contract charges 1,089 15.918710 17,331 Remaining contract charges 1,260,562 -- 10,560,142 2009 Lowest contract charges 57,600 7.555373 435,189 Highest contract charges 1,121 14.530519 16,286 Remaining contract charges 1,342,046 -- 10,127,350 2008 Lowest contract charges 2,378 5.477105 13,024 Highest contract charges 1,141 5.397825 6,159 Remaining contract charges 1,065,999 -- 5,798,293 INVESCO V.I. BASIC VALUE FUND+ 2010 Lowest contract charges 1,510,580 1.150245 1,737,538 Highest contract charges 7,847 15.463136 121,331 Remaining contract charges 98,969,919 -- 105,391,502 2009 Lowest contract charges 1,859,836 1.080634 2,009,802 Highest contract charges 664 14.813450 9,839 Remaining contract charges 138,768,097 -- 139,564,352 2008 Lowest contract charges 1,787,631 0.736367 1,316,353 Highest contract charges 429,198 0.665662 285,701 Remaining contract charges 127,377,096 -- 88,450,805 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- ALLIANCEBERNSTEIN VPS VALUE PORTFOLIO 2010 Lowest contract charges 0.85% 1.70% 10.48% Highest contract charges 2.52% 0.13% 8.45% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 3.17% 20.01% Highest contract charges 2.42% 3.54% 18.11% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (39.14)% Highest contract charges 1.88% -- (39.68)% Remaining contract charges -- -- -- ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO 2010 Lowest contract charges 0.56% 1.84% 11.77% Highest contract charges 2.75% 1.86% 9.55% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 4.39% 38.06% Highest contract charges 2.70% -- 35.46% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% -- (47.70)% Highest contract charges 2.06% -- (48.31)% Remaining contract charges -- -- -- INVESCO V.I. BASIC VALUE FUND+ 2010 Lowest contract charges 0.85% 0.59% 6.44% Highest contract charges 2.80% 0.26% 4.39% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.69% 46.75% Highest contract charges 0.39% 1.44% 43.92% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.92% (52.18)% Highest contract charges 2.56% 0.96% (52.98)% Remaining contract charges -- -- -- 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 -- -- --
SA-143 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- INVESCO V.I. CAPITAL APPRECIATION FUND+ 2010 Lowest contract charges 1,460 $8.973628 $13,104 Highest contract charges 2,377 13.631520 32,397 Remaining contract charges 44,203,325 -- 52,707,997 2009 Lowest contract charges 1,461 7.855750 11,477 Highest contract charges 1,181 12.151739 14,346 Remaining contract charges 53,812,794 -- 56,078,218 2008 Lowest contract charges 99 6.563072 655 Highest contract charges 183,914 0.819924 150,796 Remaining contract charges 57,277,430 -- 49,790,095 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 INVESCO V.I. CORE EQUITY FUND+ 2010 Lowest contract charges 5,153 13.102525 67,523 Highest contract charges 16,447 13.533453 222,587 Remaining contract charges 19,187,438 -- 220,759,055 2009 Lowest contract charges 1,415 9.264497 13,111 Highest contract charges 4,392 12.697518 55,765 Remaining contract charges 22,419,337 -- 239,925,544 2008 Lowest contract charges 264 7.300601 1,927 Highest contract charges 8,058 8.328570 67,115 Remaining contract charges 23,027,397 -- 196,163,465 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 INVESCO V.I. GOVERNMENT SECURITIES FUND+ 2010 Lowest contract charges 11,240,405 1.373740 15,441,395 Highest contract charges 7,383 10.291202 75,977 Remaining contract charges 549,576,891 -- 701,997,837 2009 Lowest contract charges 12,780,063 1.314467 16,798,971 Highest contract charges 953 10.041028 9,572 Remaining contract charges 641,455,713 -- 790,708,614 2008 Lowest contract charges 16,381,247 1.325847 21,719,028 Highest contract charges 995,960 1.198564 1,193,722 Remaining contract charges 862,944,412 -- 1,080,813,725 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- INVESCO V.I. CAPITAL APPRECIATION FUND+ 2010 Lowest contract charges 0.85% 0.53% 14.23% Highest contract charges 1.01% 0.55% 12.30% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.44% 19.70% Highest contract charges 0.33% 0.58% 17.85% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.53% -- (37.46)% Highest contract charges 2.56% -- (43.94)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO V.I. CORE EQUITY FUND+ 2010 Lowest contract charges 0.48% 1.00% 8.70% Highest contract charges 2.75% 1.09% 6.58% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.98% 26.90% Highest contract charges 2.71% 4.88% 24.82% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% 15.17% (29.79)% Highest contract charges 2.56% 1.65% (31.90)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO V.I. GOVERNMENT SECURITIES FUND+ 2010 Lowest contract charges 0.85% 4.61% 4.51% Highest contract charges 2.80% 7.34% 2.49% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 4.53% (0.86)% Highest contract charges 0.39% 4.91% (2.77)% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 5.27% 11.36% Highest contract charges 2.54% 5.42% 9.48% Remaining contract charges -- -- -- 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 -- -- --
SA-144 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------------- INVESCO V.I. INTERNATIONAL GROWTH FUND+ 2010 Lowest contract charges 5,741 $13.660318 $78,422 Highest contract charges 3,972 15.377007 61,078 Remaining contract charges 88,797,040 -- 220,154,002 2009 Lowest contract charges 812 12.155095 9,871 Highest contract charges 144 14.004381 2,021 Remaining contract charges 105,871,847 -- 224,320,924 2008 Lowest contract charges 1 6.439210 8 Highest contract charges 158,719 1.289787 204,714 Remaining contract charges 104,235,059 -- 153,561,756 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 INVESCO V.I. MID CAP CORE EQUITY FUND+ 2010 Lowest contract charges 2,840 13.714290 38,944 Highest contract charges 5,989 14.393534 86,208 Remaining contract charges 150,126,252 -- 264,055,785 2009 Lowest contract charges 8,115,436 1.668104 13,537,392 Highest contract charges 2,858 12.978635 37,095 Remaining contract charges 168,111,844 -- 262,299,148 2008 Lowest contract charges 8,072,019 1.291991 10,428,975 Highest contract charges 185,708 1.167979 216,904 Remaining contract charges 181,979,574 -- 222,068,791 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 INVESCO V.I. SMALL CAP EQUITY FUND+ 2010 Lowest contract charges 1,912 14.878357 28,444 Highest contract charges 727 15.407794 11,203 Remaining contract charges 10,231,030 -- 147,374,070 2009 Lowest contract charges 627 11.627684 7,294 Highest contract charges 768 12.333851 9,476 Remaining contract charges 10,427,464 -- 120,677,189 2008 Lowest contract charges 998 7.574625 7,560 Highest contract charges 21,407 9.512314 203,626 Remaining contract charges 10,647,305 -- 104,245,716 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ INVESCO V.I. INTERNATIONAL GROWTH FUND+ 2010 Lowest contract charges 0.19% 1.71% 12.27% Highest contract charges 2.75% 3.51% 9.80% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 2.12% 21.55% Highest contract charges 2.72% 2.08% 31.58% Remaining contract charges -- -- -- 2008 Lowest contract charges -- 0.68% (37.60)% Highest contract charges 2.55% 0.62% (41.88)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO V.I. MID CAP CORE EQUITY FUND+ 2010 Lowest contract charges 0.46% 0.35% 13.21% Highest contract charges 0.94% 0.03% 10.96% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.38% 29.11% Highest contract charges 0.22% 1.00% 26.68% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 1.74% (29.12)% Highest contract charges 2.56% 1.30% (30.32)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO V.I. SMALL CAP EQUITY FUND+ 2010 Lowest contract charges 0.19% -- 27.83% Highest contract charges 1.47% -- 24.99% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 0.23% 16.28% Highest contract charges 0.44% 0.08% 18.00% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% -- (29.50)% Highest contract charges 2.55% -- (33.04)% Remaining contract charges -- -- -- 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 -- -- --
SA-145 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------------- INVESCO V.I. LARGE CAP GROWTH FUND+ 2010 Lowest contract charges 30,976 $11.800925 $365,545 Highest contract charges 1,857 14.467551 26,872 Remaining contract charges 2,878,828 -- 31,929,400 2009 Lowest contract charges 29,540 10.150306 299,839 Highest contract charges 1,702 12.688918 21,593 Remaining contract charges 3,291,035 -- 31,710,379 2008 Lowest contract charges 30,377 8.125049 246,806 Highest contract charges 20,836 7.611709 158,601 Remaining contract charges 3,690,010 -- 28,742,332 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 INVESCO V.I. CAPITAL DEVELOPMENT FUND+ 2010 Lowest contract charges 13,368 8.560390 114,432 Highest contract charges 2,885 16.274216 46,949 Remaining contract charges 1,193,350 -- 10,082,970 2009 Lowest contract charges 8,548 7.268517 62,135 Highest contract charges 3,130 14.112360 44,169 Remaining contract charges 1,168,412 -- 8,471,249 2008 Lowest contract charges 43 5.148920 222 Highest contract charges 14,798 5.041036 74,595 Remaining contract charges 287,452 -- 1,528,348 2007 Lowest contract charges 33 9.802841 325 Highest contract charges 4,650 9.765867 45,409 Remaining contract charges 2,676 -- 26,159 INVESCO V.I. GLOBAL MULTI-ASSET FUND+ 2010 Lowest contract charges 19,497 12.911383 251,729 Highest contract charges 1,166 14.155134 16,511 Remaining contract charges 962,725 -- 13,765,322 2009 Lowest contract charges 387 13.160848 5,089 Highest contract charges 1,098 13.053283 14,329 Remaining contract charges 810,088 -- 10,561,910 2008 Lowest contract charges 1,299 10.593895 13,760 Highest contract charges 3,632 10.571774 38,394 Remaining contract charges 19,186 -- 203,012 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------------- ------------------------------------------------------ INVESCO V.I. LARGE CAP GROWTH FUND+ 2010 Lowest contract charges 0.85% 0.50% 16.26% Highest contract charges 2.80% 0.49% 14.02% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.36% 24.93% Highest contract charges 2.77% 0.88% 22.52% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.01% (38.81)% Highest contract charges 2.56% 0.01% (39.84)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO V.I. CAPITAL DEVELOPMENT FUND+ 2010 Lowest contract charges 0.85% -- 17.77% Highest contract charges 2.70% -- 15.32% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.84% -- 41.17% Highest contract charges 2.68% -- 38.21% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.98% -- (47.48)% Highest contract charges 2.49% -- (48.34)% Remaining contract charges -- -- -- 2007 Lowest contract charges -- -- 2.54% Highest contract charges 0.61% -- 2.35% Remaining contract charges -- -- -- INVESCO V.I. GLOBAL MULTI-ASSET FUND+ 2010 Lowest contract charges 0.48% 0.51% 10.91% Highest contract charges 2.73% 0.43% 8.44% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 1.50% 24.21% Highest contract charges 2.72% 4.46% 21.73% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.13% -- 4.77% Highest contract charges 0.34% 3.19% 4.58% Remaining contract charges -- -- --
SA-146 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL BOND FUND 2010 Lowest contract charges 6,432 $11.142028 $71,663 Highest contract charges 3,963 11.656969 46,193 Remaining contract charges 23,987,626 -- 297,719,090 2009 Lowest contract charges 1,910,299 12.351206 23,594,497 Highest contract charges 3,206 11.391928 36,523 Remaining contract charges 23,141,954 -- 277,024,003 2008 Lowest contract charges 1,827,767 11.355894 20,755,918 Highest contract charges 18,070 10.931491 197,537 Remaining contract charges 22,445,573 -- 249,453,515 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 2010 Lowest contract charges 27,581 13.990010 385,859 Highest contract charges 10,839 15.599767 169,089 Remaining contract charges 52,211,215 -- 553,010,571 2009 Lowest contract charges 9,640,482 9.896204 95,404,179 Highest contract charges 59 14.344043 852 Remaining contract charges 48,895,897 -- 467,970,565 2008 Lowest contract charges 9,970,039 7.143265 71,218,633 Highest contract charges 27,718 6.817920 188,976 Remaining contract charges 51,775,309 -- 360,854,467 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*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS GLOBAL BOND FUND 2010 Lowest contract charges 0.43% 6.43% 4.55% Highest contract charges 2.80% 3.34% 2.33% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.52% 8.77% Highest contract charges 0.29% 1.07% 7.03% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 5.81% 2.61% Highest contract charges 2.54% 6.12% 0.88% Remaining contract charges -- -- -- 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 2010 Lowest contract charges 0.43% 3.98% 11.06% Highest contract charges 2.75% 3.29% 8.75% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 2.45% 38.54% Highest contract charges 2.55% 4.54% 35.93% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 2.41% (41.67)% Highest contract charges 2.55% 2.41% (42.65)% Remaining contract charges -- -- -- 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-147 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS ASSET ALLOCATION FUND 2010 Lowest contract charges 7,672 $13.072647 $100,290 Highest contract charges 6,403 13.551269 86,763 Remaining contract charges 95,468,584 -- 1,263,523,466 2009 Lowest contract charges 2,999 13.181732 39,533 Highest contract charges 12,103 12.386762 149,913 Remaining contract charges 110,106,338 -- 1,315,641,470 2008 Lowest contract charges 1,646 10.837267 17,838 Highest contract charges 62,877 9.236588 580,771 Remaining contract charges 125,292,314 -- 1,227,024,593 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 AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2010 Lowest contract charges 42,046 13.827471 581,390 Highest contract charges 7,944 14.076226 111,818 Remaining contract charges 737,096,722 -- 766,979,635 2009 Lowest contract charges 9,170 1.027151 9,419 Highest contract charges 3,468 12.887096 44,689 Remaining contract charges 852,119,727 -- 802,094,134 2008 Lowest contract charges 10,381 0.817424 8,485 Highest contract charges 1,152,085 0.708958 816,780 Remaining contract charges 969,763,212 -- 725,433,797 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS ASSET ALLOCATION FUND 2010 Lowest contract charges 0.41% 4.11% 11.78% Highest contract charges 2.80% 1.65% 9.40% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.70% 3.14% 23.12% Highest contract charges 2.78% 7.23% 20.56% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 2.61% (29.90)% Highest contract charges 2.55% 2.46% (31.29)% Remaining contract charges -- -- -- 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 -- -- -- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH FUND 2010 Lowest contract charges 0.41% 2.97% 11.60% Highest contract charges 2.80% 3.42% 9.23% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.70% 2.16% 27.08% Highest contract charges 2.77% 6.46% 24.44% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 2.09% (36.85)% Highest contract charges 2.55% 2.00% (38.11)% Remaining contract charges -- -- -- 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 -- -- --
SA-148 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS BOND FUND 2010 Lowest contract charges 113,942 $11.201828 $1,276,361 Highest contract charges 10,985 11.728856 128,845 Remaining contract charges 79,301,971 -- 1,131,533,100 2009 Lowest contract charges 1,963 14.955291 29,352 Highest contract charges 6,145 11.331571 69,631 Remaining contract charges 88,774,468 -- 1,210,073,849 2008 Lowest contract charges 1,963 13.354404 26,210 Highest contract charges 123,833 11.336185 1,403,798 Remaining contract charges 85,444,527 -- 1,050,899,252 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 AMERICAN FUNDS GLOBAL GROWTH FUND 2010 Lowest contract charges 5,747 13.811815 79,381 Highest contract charges 1,608 15.949598 25,654 Remaining contract charges 35,461,349 -- 520,970,896 2009 Lowest contract charges 662 14.414604 9,544 Highest contract charges 4,073 14.678047 59,786 Remaining contract charges 42,037,381 -- 564,372,962 2008 Lowest contract charges 662 10.185296 6,744 Highest contract charges 27,500 7.177236 197,374 Remaining contract charges 46,994,336 -- 450,911,787 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 AMERICAN FUNDS GROWTH FUND 2010 Lowest contract charges 26,599 14.507099 385,871 Highest contract charges 14,883 16.150261 240,359 Remaining contract charges 236,762,061 -- 2,781,955,700 2009 Lowest contract charges 2,168 10.036055 21,757 Highest contract charges 8,590 13.994219 120,214 Remaining contract charges 278,462,843 -- 2,810,145,000 2008 Lowest contract charges 3,371 7.238556 24,401 Highest contract charges 335,051 5.694785 1,908,043 Remaining contract charges 308,553,847 -- 2,275,010,322 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS BOND FUND 2010 Lowest contract charges 0.41% 5.14% 5.76% Highest contract charges 2.80% 4.16% 3.51% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.55% 3.20% 11.99% Highest contract charges 2.79% 10.69% 9.50% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 5.66% (9.85)% Highest contract charges 2.55% 5.59% (11.63)% Remaining contract charges -- -- -- 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 -- -- -- AMERICAN FUNDS GLOBAL GROWTH FUND 2010 Lowest contract charges 0.40% 1.98% 11.02% Highest contract charges 2.80% 1.02% 8.66% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.55% 1.46% 41.52% Highest contract charges 2.72% 2.00% 35.92% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 1.85% (38.73)% Highest contract charges 2.55% 1.68% (39.94)% Remaining contract charges -- -- -- 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 -- -- -- AMERICAN FUNDS GROWTH FUND 2010 Lowest contract charges 0.42% 1.22% 17.91% Highest contract charges 2.80% 0.94% 15.41% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.55% 0.59% 38.65% Highest contract charges 2.73% 1.12% 32.07% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 0.83% (44.28)% Highest contract charges 2.55% 0.80% (45.39)% Remaining contract charges -- -- -- 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 -- -- --
SA-149 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS GROWTH-INCOME FUND 2010 Lowest contract charges 19,640 $13.422867 $263,622 Highest contract charges 21,500 14.196547 305,232 Remaining contract charges 214,327,827 -- 2,697,631,334 2009 Lowest contract charges 2,370 12.679438 30,056 Highest contract charges 13,051 13.102236 170,992 Remaining contract charges 250,541,021 -- 2,873,026,462 2008 Lowest contract charges 3,660 9.714458 35,550 Highest contract charges 267,518 8.412561 2,250,514 Remaining contract charges 281,106,745 -- 2,495,233,367 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 AMERICAN FUNDS INTERNATIONAL FUND 2010 Lowest contract charges 33,444 13.190771 441,151 Highest contract charges 11,254 15.605553 175,628 Remaining contract charges 57,957,660 -- 816,115,977 2009 Lowest contract charges 1,572 14.527484 22,835 Highest contract charges 2,184 14.965713 32,685 Remaining contract charges 66,685,705 -- 892,910,898 2008 Lowest contract charges 1,572 10.209922 16,047 Highest contract charges 84,339 7.140203 602,197 Remaining contract charges 74,751,983 -- 712,255,476 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS GROWTH-INCOME FUND 2010 Lowest contract charges 0.42% 2.30% 10.71% Highest contract charges 2.80% 2.04% 8.35% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.55% 1.39% 30.52% Highest contract charges 2.73% 3.76% 24.90% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 1.76% (38.19)% Highest contract charges 2.55% 1.71% (39.42)% Remaining contract charges -- -- -- 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 -- -- -- AMERICAN FUNDS INTERNATIONAL FUND 2010 Lowest contract charges 0.42% 2.96% 6.54% Highest contract charges 2.80% 4.35% 4.28% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.55% 1.58% 42.29% Highest contract charges 2.72% 3.34% 37.18% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 1.97% (42.44)% Highest contract charges 2.55% 2.09% (43.58)% Remaining contract charges -- -- -- 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 -- -- --
SA-150 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS NEW WORLD FUND 2010 Lowest contract charges 7,663 $14.561933 $111,581 Highest contract charges 17,322 17.504054 303,207 Remaining contract charges 17,220,314 -- 457,034,864 2009 Lowest contract charges 1,240 25.730818 31,913 Highest contract charges 11,993 15.263363 183,058 Remaining contract charges 18,318,219 -- 420,586,815 2008 Lowest contract charges 1,231 17.525901 21,584 Highest contract charges 3,919 14.217246 55,712 Remaining contract charges 18,462,266 -- 288,663,741 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 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2010 Lowest contract charges 3,078 15.393902 47,387 Highest contract charges 3,009 19.761879 59,459 Remaining contract charges 21,658,651 -- 404,494,577 2009 Lowest contract charges 1,240,071 17.875929 22,167,428 Highest contract charges 2,696 16.601381 44,760 Remaining contract charges 23,879,995 -- 370,051,820 2008 Lowest contract charges 1,211,357 11.177252 13,539,641 Highest contract charges 30,599 7.836227 239,781 Remaining contract charges 23,823,127 -- 232,978,036 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 WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND+ 2010 Lowest contract charges 19,855 12.612644 250,423 Highest contract charges 3,343 12.547037 41,943 Remaining contract charges 138,988 -- 1,747,952 FIDELITY VIP GROWTH PORTFOLIO 2010 Lowest contract charges 1,848 9.164587 16,937 Highest contract charges 1,345 15.124416 20,345 Remaining contract charges 443,575 -- 4,017,165 2009 Lowest contract charges 1,908 7.462172 14,239 Highest contract charges 1,245 12.544552 15,619 Remaining contract charges 557,502 -- 4,111,184 2008 Lowest contract charges 2,456 5.886127 14,454 Highest contract charges 1,106 5.800294 6,414 Remaining contract charges 400,231 -- 2,337,520 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS NEW WORLD FUND 2010 Lowest contract charges 0.43% 4.69% 17.11% Highest contract charges 2.75% 1.59% 14.68% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.70% 1.55% 48.61% Highest contract charges 2.72% 2.77% 45.60% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 1.52% (42.69)% Highest contract charges 2.57% 1.32% (43.83)% Remaining contract charges -- -- -- 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 -- -- -- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND 2010 Lowest contract charges 0.39% 1.47% 21.62% Highest contract charges 2.80% 2.09% 19.04% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.28% 59.93% Highest contract charges 2.73% 0.70% 54.15% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% -- (53.92)% Highest contract charges 2.56% -- (54.70)% Remaining contract charges -- -- -- 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 -- -- -- WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND+ 2010 Lowest contract charges 0.61% -- 26.13% Highest contract charges 1.14% -- 25.47% Remaining contract charges -- -- -- FIDELITY VIP GROWTH PORTFOLIO 2010 Lowest contract charges 0.85% 0.03% 22.81% Highest contract charges 2.70% 0.03% 20.57% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.17% 26.88% Highest contract charges 2.67% 0.69% 24.56% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% 0.87% (43.10)% Highest contract charges 2.03% 2.52% (43.76)% Remaining contract charges -- -- --
SA-151 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- FIDELITY VIP CONTRAFUND PORTFOLIO 2010 Lowest contract charges 1,227 $14.515135 $17,803 Highest contract charges 6,360 15.308626 97,363 Remaining contract charges 9,459,550 -- 93,645,495 2009 Lowest contract charges 212 12.438700 2,634 Highest contract charges 6,062 13.457210 81,580 Remaining contract charges 9,605,604 -- 82,043,773 2008 Lowest contract charges 20,429 6.384129 130,423 Highest contract charges 3,637 6.291088 22,879 Remaining contract charges 6,658,526 -- 42,225,443 FIDELITY VIP MID CAP PORTFOLIO 2010 Lowest contract charges 2,578 15.639395 40,313 Highest contract charges 1,914 17.845997 34,148 Remaining contract charges 8,263,760 -- 94,531,471 2009 Lowest contract charges 1,458 12.188298 17,766 Highest contract charges 1,761 14.266791 25,130 Remaining contract charges 8,137,743 -- 72,829,784 2008 Lowest contract charges 4,770 6.466418 30,843 Highest contract charges 4,995 6.372199 31,832 Remaining contract charges 4,176,980 -- 26,818,505 FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2010 Lowest contract charges 18,116 10.478206 189,828 Highest contract charges 7,875 20.200241 159,071 Remaining contract charges 531,032 -- 5,530,967 2009 Lowest contract charges 12,239 8.364557 102,374 Highest contract charges 9,224 16.426200 151,509 Remaining contract charges 765,024 -- 6,386,022 2008 Lowest contract charges 1,949 5.368003 10,460 Highest contract charges 1,056 5.307455 5,604 Remaining contract charges 418,697 -- 2,229,299 FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2010 Lowest contract charges 429 10.121386 4,343 Highest contract charges 176 16.013691 2,819 Remaining contract charges 182,882 -- 1,860,467 2009 Lowest contract charges 456 8.651675 3,947 Highest contract charges 190 13.943700 2,646 Remaining contract charges 112,974 -- 1,009,097 2008 Lowest contract charges 11,709 6.404294 74,982 Highest contract charges 7,979 6.356132 50,718 Remaining contract charges 124,037 -- 790,334 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- FIDELITY VIP CONTRAFUND PORTFOLIO 2010 Lowest contract charges 0.03% 0.90% 16.58% Highest contract charges 2.75% 1.06% 13.76% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.02% -- 24.39% Highest contract charges 2.73% 2.47% 31.79% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% 3.04% (39.91)% Highest contract charges 2.07% 2.19% (40.61)% Remaining contract charges -- -- -- FIDELITY VIP MID CAP PORTFOLIO 2010 Lowest contract charges 0.19% 0.12% 28.19% Highest contract charges 2.75% 0.12% 25.09% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 0.34% 21.88% Highest contract charges 2.73% 0.92% 35.96% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% 0.16% (37.02)% Highest contract charges 2.06% 0.33% (37.75)% Remaining contract charges -- -- -- FIDELITY VIP VALUE STRATEGIES PORTFOLIO 2010 Lowest contract charges 0.85% 0.33% 25.27% Highest contract charges 2.70% 0.28% 22.98% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.61% 55.82% Highest contract charges 2.67% 0.54% 52.97% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% 4.57% (48.73)% Highest contract charges 1.83% 0.79% (49.20)% Remaining contract charges -- -- -- FIDELITY VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO 2010 Lowest contract charges 0.85% 0.22% 16.99% Highest contract charges 2.70% 0.22% 14.85% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.84% 0.02% 34.64% Highest contract charges 0.51% 0.02% 32.17% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.03% 1.62% (37.82)% Highest contract charges 1.78% 1.28% (38.19)% Remaining contract charges -- -- --
SA-152 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- FIDELITY VIP STRATEGIC INCOME PORTFOLIO 2010 Lowest contract charges 90 $12.266327 $1,106 Highest contract charges 17,648 12.074240 213,059 Remaining contract charges 12,297 -- 150,382 FRANKLIN RISING DIVIDENDS SECURITIES FUND 2010 Lowest contract charges 2,206 14.187159 31,299 Highest contract charges 3,620 13.918257 50,377 Remaining contract charges 53,113,367 -- 765,017,419 2009 Lowest contract charges 91 11.785164 1,070 Highest contract charges 952 11.863931 11,294 Remaining contract charges 56,787,444 -- 689,894,451 2008 Lowest contract charges 2,483,337 11.000356 27,317,592 Highest contract charges 47,101 10.091165 475,300 Remaining contract charges 60,760,520 -- 639,017,858 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 FRANKLIN INCOME SECURITIES FUND 2010 Lowest contract charges 3,010 13.446228 40,479 Highest contract charges 1,566 15.442759 24,180 Remaining contract charges 143,342,159 -- 2,187,038,085 2009 Lowest contract charges 2,255 11.971516 26,993 Highest contract charges 1,442 14.094785 20,329 Remaining contract charges 160,123,438 -- 2,216,679,842 2008 Lowest contract charges 1,785 11.827442 21,122 Highest contract charges 79,343 10.385353 824,002 Remaining contract charges 165,051,258 -- 1,751,274,921 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- FIDELITY VIP STRATEGIC INCOME PORTFOLIO 2010 Lowest contract charges 0.02% 4.18% 8.90% Highest contract charges 1.15% 5.85% 7.77% Remaining contract charges -- -- -- FRANKLIN RISING DIVIDENDS SECURITIES FUND 2010 Lowest contract charges 0.02% -- 20.26% Highest contract charges 1.78% -- 17.32% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.01% -- 17.85% Highest contract charges 0.24% -- 14.10% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 1.86% (27.72)% Highest contract charges 2.55% 1.89% (28.94)% Remaining contract charges -- -- -- 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 -- -- -- FRANKLIN INCOME SECURITIES FUND 2010 Lowest contract charges 0.04% -- 12.21% Highest contract charges 2.80% 6.52% 9.56% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.04% -- 19.72% Highest contract charges 0.39% -- 31.85% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 5.39% (30.04)% Highest contract charges 2.55% 5.91% (31.43)% Remaining contract charges -- -- -- 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 -- -- --
SA-153 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 188,298 $11.851458 $2,231,601 Highest contract charges 803 13.889879 11,147 Remaining contract charges 12,197,563 -- 134,212,250 2009 Lowest contract charges 189,165 10.711239 2,026,195 Highest contract charges 778 12.800540 9,958 Remaining contract charges 14,175,437 -- 142,351,214 2008 Lowest contract charges 197,966 8.326926 1,648,444 Highest contract charges 8,543 7.561687 64,600 Remaining contract charges 15,761,692 -- 124,251,796 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 FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2010 Lowest contract charges 8,652 21.316773 184,431 Highest contract charges 766 14.312813 10,963 Remaining contract charges 539,337 -- 9,046,462 2009 Lowest contract charges 9,565 17.789569 170,151 Highest contract charges 13,076 12.309712 160,956 Remaining contract charges 614,433 -- 8,669,309 2008 Lowest contract charges 11,812 15.081477 178,130 Highest contract charges 13,309 10.604290 141,137 Remaining contract charges 760,753 -- 9,156,563 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- FRANKLIN LARGE CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 0.85% 0.82% 10.65% Highest contract charges 2.80% 0.81% 8.51% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.41% 28.63% Highest contract charges 0.39% -- 26.15% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 1.28% (35.08)% Highest contract charges 2.56% 1.33% (36.18)% Remaining contract charges -- -- -- 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 -- -- -- FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND 2010 Lowest contract charges 0.95% 2.90% 19.83% Highest contract charges 0.60% -- 17.63% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.95% 12.89% 17.96% Highest contract charges 2.55% 12.70% 16.08% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.96% 1.08% (42.94)% Highest contract charges 2.54% 1.06% (43.85)% Remaining contract charges -- -- -- 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 -- -- --
SA-154 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 40,715 $15.865896 $645,986 Highest contract charges 7,132 17.412948 124,180 Remaining contract charges 30,112,081 -- 330,594,437 2009 Lowest contract charges 10,818 9.231949 99,867 Highest contract charges 1,829 14.031014 25,665 Remaining contract charges 32,783,837 -- 289,379,931 2008 Lowest contract charges 10,880 6.485092 70,557 Highest contract charges 87,594 4.482015 392,597 Remaining contract charges 33,273,162 -- 208,571,469 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 FRANKLIN SMALL CAP VALUE SECURITIES FUND 2010 Lowest contract charges 1,818 15.801926 28,721 Highest contract charges 2,206 16.659671 36,754 Remaining contract charges 10,630,532 -- 108,280,151 2009 Lowest contract charges 839 12.356241 10,362 Highest contract charges 779 13.354695 10,404 Remaining contract charges 6,740,315 -- 55,550,144 2008 Lowest contract charges 77,654 6.154292 477,909 Highest contract charges 487 6.021529 2,931 Remaining contract charges 8,300,669 -- 52,080,022 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 FRANKLIN STRATEGIC INCOME SECURITIES FUND 2010 Lowest contract charges 4,041 12.310267 49,744 Highest contract charges 18,157 13.909880 252,567 Remaining contract charges 57,882,397 -- 967,298,818 2009 Lowest contract charges 1,305 11.124740 14,520 Highest contract charges 769 12.862796 9,889 Remaining contract charges 59,874,607 -- 925,632,530 2008 Lowest contract charges 761 8.776149 6,668 Highest contract charges 45,738 12.729023 582,206 Remaining contract charges 50,026,121 -- 651,746,875 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 0.47% -- 26.86% Highest contract charges 2.80% -- 24.10% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% -- 42.36% Highest contract charges 2.78% -- 39.61% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% -- (39.50)% Highest contract charges 2.55% -- (43.95)% Remaining contract charges -- -- -- 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 -- -- -- FRANKLIN SMALL CAP VALUE SECURITIES FUND 2010 Lowest contract charges 0.19% 0.60% 27.76% Highest contract charges 2.75% 0.57% 24.75% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.05% -- 23.56% Highest contract charges 0.48% -- 25.65% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.84% 1.00% (33.59)% Highest contract charges 2.42% -- (34.71)% Remaining contract charges -- -- -- 2007 Lowest contract charges 0.15% -- 0.06% Highest contract charges 0.57% -- (0.12)% Remaining contract charges -- -- -- FRANKLIN STRATEGIC INCOME SECURITIES FUND 2010 Lowest contract charges 0.19% 4.02% 10.55% Highest contract charges 2.80% 0.69% 8.14% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 11.25% Highest contract charges 0.39% -- 22.63% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% 0.10% (13.94)% Highest contract charges 2.55% 7.08% (13.27)% Remaining contract charges -- -- -- 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 -- -- --
SA-155 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MUTUAL SHARES SECURITIES FUND 2010 Lowest contract charges 6,640 $13.297008 $88,298 Highest contract charges 15,058 13.681947 206,017 Remaining contract charges 88,736,453 -- 1,221,567,513 2009 Lowest contract charges 2,919 11.997004 35,021 Highest contract charges 7,179 12.653638 90,843 Remaining contract charges 100,328,932 -- 1,274,459,728 2008 Lowest contract charges 1,621 11.313602 18,338 Highest contract charges 80,419 10.174951 818,264 Remaining contract charges 105,083,546 -- 1,104,108,920 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 TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2010 Lowest contract charges 1,486 10.175555 15,121 Highest contract charges 3,895 19.932125 77,641 Remaining contract charges 11,159,090 -- 242,486,962 2009 Lowest contract charges 91 8.732082 797 Highest contract charges 2,770 17.449578 48,333 Remaining contract charges 12,313,503 -- 235,532,881 2008 Lowest contract charges 129,914 14.404613 1,871,353 Highest contract charges 4,409 12.027511 53,033 Remaining contract charges 9,330,642 -- 110,681,018 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 TEMPLETON FOREIGN SECURITIES FUND 2010 Lowest contract charges 5,809 13.526398 78,576 Highest contract charges 1,503 15.029693 22,582 Remaining contract charges 35,141,104 -- 439,505,025 2009 Lowest contract charges 1,143 12.505424 14,293 Highest contract charges 1,739 14.257529 24,792 Remaining contract charges 39,302,233 -- 464,025,465 2008 Lowest contract charges 608,959 9.905208 6,031,862 Highest contract charges 27,716 8.211268 227,585 Remaining contract charges 43,759,162 -- 385,067,241 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MUTUAL SHARES SECURITIES FUND 2010 Lowest contract charges 0.19% 1.59% 10.73% Highest contract charges 2.80% 1.77% 8.13% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 19.97% Highest contract charges 2.78% 1.34% 22.57% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 3.12% (37.55)% Highest contract charges 2.56% 2.94% (38.70)% Remaining contract charges -- -- -- 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 -- -- -- TEMPLETON DEVELOPING MARKETS SECURITIES FUND 2010 Lowest contract charges 0.75% 2.16% 16.53% Highest contract charges 2.75% 1.70% 14.23% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% -- 71.16% Highest contract charges 2.74% -- 67.77% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 3.06% (53.02)% Highest contract charges 2.57% 3.02% (53.82)% Remaining contract charges -- -- -- 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 -- -- -- TEMPLETON FOREIGN SECURITIES FUND 2010 Lowest contract charges 0.19% 1.64% 8.06% Highest contract charges 2.80% 1.83% 5.42% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 25.05% Highest contract charges 0.31% -- 33.26% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 2.45% (40.88)% Highest contract charges 2.56% 2.32% (41.88)% Remaining contract charges -- -- -- 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%
SA-156 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- Remaining contract charges 52,349,740 -- 694,950,519 TEMPLETON GROWTH SECURITIES FUND 2010 Lowest contract charges 29,703 $13.235127 $393,121 Highest contract charges 2,625 14.139739 37,122 Remaining contract charges 49,126,208 -- 578,168,330 2009 Lowest contract charges 295 8.295438 2,447 Highest contract charges 732 13.539810 9,908 Remaining contract charges 56,733,378 -- 634,580,489 2008 Lowest contract charges 3,524,369 9.996674 35,231,964 Highest contract charges 51,024 8.149626 415,825 Remaining contract charges 59,926,254 -- 522,436,182 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 MUTUAL GLOBAL DISCOVERY SECURITIES FUND 2010 Lowest contract charges 10,516 12.649536 133,018 Highest contract charges 7,403 13.233093 97,961 Remaining contract charges 33,067,117 -- 625,505,998 2009 Lowest contract charges 2,483 11.329533 28,127 Highest contract charges 7,386 12.158107 89,796 Remaining contract charges 35,932,473 -- 622,474,693 2008 Lowest contract charges 936 16.272435 15,236 Highest contract charges 34,600 14.666576 507,460 Remaining contract charges 34,520,186 -- 509,953,837 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- Remaining contract charges -- -- -- TEMPLETON GROWTH SECURITIES FUND 2010 Lowest contract charges 0.43% 1.02% 6.78% Highest contract charges 2.80% 1.20% 4.43% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 6.80% 30.00% Highest contract charges 0.39% -- 27.48% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 1.82% (42.81)% Highest contract charges 2.56% 1.86% (43.78)% Remaining contract charges -- -- -- 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 -- -- -- MUTUAL GLOBAL DISCOVERY SECURITIES FUND 2010 Lowest contract charges 0.24% 1.32% 11.54% Highest contract charges 2.75% 1.24% 8.84% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.06% -- 13.30% Highest contract charges 2.73% 1.84% 19.85% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 2.24% (28.95)% Highest contract charges 2.56% 2.13% (30.26)% Remaining contract charges -- -- -- 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 -- -- --
SA-157 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 2,818 $14.164422 $39,920 Highest contract charges 2,187 14.674408 32,096 Remaining contract charges 5,298,624 -- 60,646,506 2009 Lowest contract charges 288,822 10.523196 3,039,329 Highest contract charges 1,617 12.981022 20,989 Remaining contract charges 5,421,479 -- 54,198,063 2008 Lowest contract charges 242,571 7.981607 1,936,101 Highest contract charges 1,054 7.477473 7,880 Remaining contract charges 5,019,032 -- 38,472,672 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 FRANKLIN LARGE CAP VALUE SECURITIES FUND 2010 Lowest contract charges 196,834 10.802373 2,126,278 Highest contract charges 1,266 14.118514 17,870 Remaining contract charges 2,789,873 -- 28,476,224 2009 Lowest contract charges 193,057 9.534345 1,840,676 Highest contract charges 735 12.686720 9,318 Remaining contract charges 2,698,345 -- 24,547,880 2008 Lowest contract charges 209,780 7.585679 1,591,323 Highest contract charges 748 7.106541 5,318 Remaining contract charges 2,581,347 -- 18,865,011 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 TEMPLETON GLOBAL BOND SECURITIES FUND 2010 Lowest contract charges 11,895 12.561085 149,414 Highest contract charges 3,762 13.658852 51,381 Remaining contract charges 10,424,389 -- 135,610,456 2009 Lowest contract charges 19,542 11.012978 215,218 Highest contract charges 4,277 12.284599 52,538 Remaining contract charges 8,467,211 -- 97,996,212 2008 Lowest contract charges 7,641 9.963562 76,130 Highest contract charges 188 9.818817 1,842 Remaining contract charges 3,930,465 -- 38,886,956 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- FRANKLIN FLEX CAP GROWTH SECURITIES FUND 2010 Lowest contract charges 0.41% -- 15.51% Highest contract charges 2.75% -- 13.05% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% -- 31.84% Highest contract charges 0.13% -- 29.36% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.12% (35.86)% Highest contract charges 2.55% 0.15% (36.95)% Remaining contract charges -- -- -- 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 -- -- -- FRANKLIN LARGE CAP VALUE SECURITIES FUND 2010 Lowest contract charges 0.85% 1.87% 13.30% Highest contract charges 1.69% 1.80% 11.23% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 2.03% 25.69% Highest contract charges 0.22% -- 23.32% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% -- (35.72)% Highest contract charges 2.56% -- (36.81)% Remaining contract charges -- -- -- 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 -- -- -- TEMPLETON GLOBAL BOND SECURITIES FUND 2010 Lowest contract charges 0.24% 1.44% 13.94% Highest contract charges 2.75% 2.40% 11.19% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 10.13% Highest contract charges 2.59% 16.79% 15.37% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% -- 0.43% Highest contract charges 2.07% -- (0.73)% Remaining contract charges -- -- --
SA-158 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- HARTFORD ADVISERS HLS FUND 2010 Lowest contract charges 565 $10.438913 $5,898 Highest contract charges 28 14.333781 403 Remaining contract charges 1,349,788 -- 13,916,150 2009 Lowest contract charges 566 9.379221 5,306 Highest contract charges 10,069 9.090703 91,536 Remaining contract charges 1,150,977 -- 10,734,540 2008 Lowest contract charges 567 7.252987 4,109 Highest contract charges 6,243 7.150381 44,641 Remaining contract charges 485,135 -- 3,496,380 HARTFORD TOTAL RETURN BOND HLS FUND 2010 Lowest contract charges 15,318 11.500607 176,167 Highest contract charges 4,620 11.999561 55,442 Remaining contract charges 66,662,060 -- 724,691,099 2009 Lowest contract charges 1,654 10.729090 17,747 Highest contract charges 7,413 11.472136 85,040 Remaining contract charges 57,939,292 -- 593,357,500 2008 Lowest contract charges 8,599 9.067679 77,970 Highest contract charges 4,569 8.935942 40,831 Remaining contract charges 24,765,646 -- 223,239,155 HARTFORD CAPITAL APPRECIATION HLS FUND 2010 Lowest contract charges 11,536 14.628010 168,742 Highest contract charges 11,381 16.766082 190,811 Remaining contract charges 82,418,100 -- 806,462,749 2009 Lowest contract charges 1,408 12.593871 17,733 Highest contract charges 9,119 14.792221 134,883 Remaining contract charges 78,034,807 -- 658,912,517 2008 Lowest contract charges 32,068 5.866837 188,140 Highest contract charges 9,022 5.781273 52,158 Remaining contract charges 43,631,863 -- 254,407,326 HARTFORD DIVIDEND AND GROWTH HLS FUND 2010 Lowest contract charges 6,039 13.681473 82,624 Highest contract charges 1,537 13.809581 21,228 Remaining contract charges 50,481,861 -- 501,241,977 2009 Lowest contract charges 1,434 12.121774 17,386 Highest contract charges 1,369 12.538452 17,163 Remaining contract charges 44,926,902 -- 396,500,111 2008 Lowest contract charges 11,950 7.190301 85,930 Highest contract charges 1,233 7.085590 8,734 Remaining contract charges 22,084,689 -- 157,847,875 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- HARTFORD ADVISERS HLS FUND 2010 Lowest contract charges 0.75% 1.48% 11.30% Highest contract charges 0.23% 1.27% 9.15% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 2.34% 29.32% Highest contract charges 2.45% 2.72% 27.14% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% 5.42% (30.45)% Highest contract charges 2.02% 6.98% (31.24)% Remaining contract charges -- -- -- HARTFORD TOTAL RETURN BOND HLS FUND 2010 Lowest contract charges 0.30% 6.55% 7.19% Highest contract charges 2.75% 2.74% 4.60% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.16% 22.15% 7.29% Highest contract charges 2.73% 5.87% 11.89% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% 29.92% (8.93)% Highest contract charges 2.06% 16.36% (9.98)% Remaining contract charges -- -- -- HARTFORD CAPITAL APPRECIATION HLS FUND 2010 Lowest contract charges 0.30% 1.51% 16.15% Highest contract charges 2.75% 0.81% 13.34% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.15% 4.78% 25.94% Highest contract charges 2.72% 1.66% 41.72% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% 6.32% (44.63)% Highest contract charges 2.07% 5.62% (45.28)% Remaining contract charges -- -- -- HARTFORD DIVIDEND AND GROWTH HLS FUND 2010 Lowest contract charges 0.30% 2.69% 12.87% Highest contract charges 2.75% 1.94% 10.14% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.15% 11.29% 21.22% Highest contract charges 2.59% 5.38% 21.29% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% 9.11% (31.52)% Highest contract charges 2.08% 6.04% (32.31)% Remaining contract charges -- -- --
SA-159 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- HARTFORD GLOBAL RESEARCH HLS FUND+ 2010 Lowest contract charges 4,680 $14.507418 $67,893 Highest contract charges 1,009 16.364089 16,518 Remaining contract charges 65,892 -- 653,175 2009 Lowest contract charges 453 8.721844 3,947 Highest contract charges 1,025 14.491203 14,857 Remaining contract charges 64,426 -- 559,497 2008 Lowest contract charges 82 6.173557 508 Highest contract charges 126 6.106590 768 Remaining contract charges 30,740 -- 188,992 HARTFORD GLOBAL GROWTH HLS FUND 2010 Lowest contract charges 5,922 14.074125 83,347 Highest contract charges 250 15.466292 3,872 Remaining contract charges 209,278 -- 1,760,253 2009 Lowest contract charges 3,780 7.272846 27,494 Highest contract charges 153 13.907338 2,125 Remaining contract charges 201,783 -- 1,471,695 2008 Lowest contract charges 1,579 5.407566 8,536 Highest contract charges 1,148 5.333167 6,121 Remaining contract charges 123,232 -- 661,737 HARTFORD DISCIPLINED EQUITY HLS FUND 2010 Lowest contract charges 7,956 13.610018 108,280 Highest contract charges 1,008 14.134186 14,251 Remaining contract charges 10,739,787 -- 103,436,745 2009 Lowest contract charges 3,020 11.957704 36,108 Highest contract charges 1,031 12.738728 13,139 Remaining contract charges 9,202,722 -- 78,442,445 2008 Lowest contract charges 3 6.866486 22 Highest contract charges 3,409 6.766446 23,064 Remaining contract charges 3,985,623 -- 27,177,996 HARTFORD GROWTH HLS FUND+ 2010 Lowest contract charges 2,989 14.375631 42,961 Highest contract charges 1,242 15.772276 19,586 Remaining contract charges 2,320,145 -- 24,263,075 2009 Lowest contract charges 780 12.103351 9,438 Highest contract charges 1,279 13.588484 17,384 Remaining contract charges 1,429,475 -- 12,610,430 2008 Lowest contract charges 262,769 6.607896 1,736,347 Highest contract charges 2,369 6.519796 15,445 Remaining contract charges 253,045 -- 1,662,768 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- HARTFORD GLOBAL RESEARCH HLS FUND+ 2010 Lowest contract charges 0.44% 2.26% 15.43% Highest contract charges 2.70% 1.24% 12.92% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.84% 2.15% 40.92% Highest contract charges 0.49% 0.87% 38.34% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.01% -- (41.13)% Highest contract charges 1.99% 5.46% (41.64)% Remaining contract charges -- -- -- HARTFORD GLOBAL GROWTH HLS FUND 2010 Lowest contract charges 0.49% 0.39% 13.68% Highest contract charges 2.70% 0.37% 11.21% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.13% 34.49% Highest contract charges 0.10% -- 32.03% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.71% 1.04% (48.61)% Highest contract charges 2.06% 1.65% (49.17)% Remaining contract charges -- -- -- HARTFORD DISCIPLINED EQUITY HLS FUND 2010 Lowest contract charges 0.19% 1.37% 13.70% Highest contract charges 2.75% 1.30% 10.95% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 1.60% 19.58% Highest contract charges 2.73% 2.98% 22.24% Remaining contract charges -- -- -- 2008 Lowest contract charges -- 1.65% (33.10)% Highest contract charges 2.06% 3.79% (33.88)% Remaining contract charges -- -- -- HARTFORD GROWTH HLS FUND+ 2010 Lowest contract charges 0.50% 0.03% 18.77% Highest contract charges 1.95% 0.03% 16.14% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.06% 0.36% 21.03% Highest contract charges 2.69% 0.72% 30.67% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% 1.29% (38.00)% Highest contract charges 2.05% 0.47% (38.66)% Remaining contract charges -- -- --
SA-160 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- HARTFORD GROWTH OPPORTUNITIES HLS FUND 2010 Lowest contract charges 5,768 $14.581705 $84,099 Highest contract charges 2,040 15.200544 31,003 Remaining contract charges 19,058,340 -- 173,517,148 2009 Lowest contract charges 4,255 12.427873 52,885 Highest contract charges 1,874 13.289584 24,899 Remaining contract charges 17,058,833 -- 133,009,975 2008 Lowest contract charges 5,266 6.080213 32,015 Highest contract charges 5,225 5.991598 31,308 Remaining contract charges 7,998,131 -- 48,303,140 HARTFORD HIGH YIELD HLS FUND 2010 Lowest contract charges 4,541 14.300738 64,932 Highest contract charges 1,199 17.173016 20,584 Remaining contract charges 4,537,283 -- 59,822,927 2009 Lowest contract charges 2,028 12.336945 25,016 Highest contract charges 1,364 15.197270 20,735 Remaining contract charges 2,898,405 -- 33,320,952 2008 Lowest contract charges 2,663 7.677483 20,447 Highest contract charges 15,408 7.575364 116,722 Remaining contract charges 423,298 -- 3,228,626 HARTFORD INDEX HLS FUND 2010 Lowest contract charges 8,049 13.883156 111,751 Highest contract charges 393 13.851916 5,438 Remaining contract charges -- -- -- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND+ 2010 Lowest contract charges 1,875 14.098886 26,431 Highest contract charges 520 15.463917 8,037 Remaining contract charges 3,609,339 -- 33,919,985 2009 Lowest contract charges 6,124 12.339469 75,572 Highest contract charges 249 13.883352 3,455 Remaining contract charges 2,893,315 -- 23,912,321 2008 Lowest contract charges 2,203 6.277231 13,832 Highest contract charges 2,521 6.185773 15,595 Remaining contract charges 1,926,222 -- 12,009,502 HARTFORD SMALL/MID CAP EQUITY HLS FUND+ 2010 Lowest contract charges 90,174 10.556605 951,931 Highest contract charges 372 18.151035 6,756 Remaining contract charges 986,964 -- 10,651,224 2009 Lowest contract charges 409 8.476602 3,470 Highest contract charges 388 14.826600 5,756 Remaining contract charges 1,125,188 -- 9,709,049 2008 Lowest contract charges 52,975 5.770819 305,711 Highest contract charges 2,648 5.693823 15,076 Remaining contract charges 353,762 -- 2,028,267 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- HARTFORD GROWTH OPPORTUNITIES HLS FUND 2010 Lowest contract charges 0.19% 0.02% 17.21% Highest contract charges 2.75% 0.02% 14.38% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 0.75% 24.28% Highest contract charges 2.73% 0.93% 26.09% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% 0.66% (40.36)% Highest contract charges 2.07% 1.19% (41.05)% Remaining contract charges -- -- -- HARTFORD HIGH YIELD HLS FUND 2010 Lowest contract charges 0.19% 0.61% 15.80% Highest contract charges 2.75% 0.65% 13.00% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 14.70% 23.37% Highest contract charges 2.74% 14.70% 46.38% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% 46.73% (25.94)% Highest contract charges 2.01% 40.66% (26.72)% Remaining contract charges -- -- -- HARTFORD INDEX HLS FUND 2010 Lowest contract charges 0.41% 2.17% 13.88% Highest contract charges 0.19% 2.31% 13.71% Remaining contract charges -- -- -- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND+ 2010 Lowest contract charges 0.04% 1.26% 14.14% Highest contract charges 2.75% 1.40% 11.39% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.04% 2.57% 23.40% Highest contract charges 2.74% 2.71% 29.84% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% 8.47% (39.78)% Highest contract charges 2.05% 7.20% (40.48)% Remaining contract charges -- -- -- HARTFORD SMALL/MID CAP EQUITY HLS FUND+ 2010 Lowest contract charges 0.85% 0.66% 24.77% Highest contract charges 2.75% 0.70% 22.42% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 0.35% 46.76% Highest contract charges 2.73% 0.72% 43.86% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 1.25% (43.74)% Highest contract charges 2.02% 1.58% (44.34)% Remaining contract charges -- -- --
SA-161 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- HARTFORD MONEY MARKET HLS FUND 2010 Lowest contract charges 12,012 $9.959449 $119,636 Highest contract charges 77,443 9.450894 731,908 Remaining contract charges 582,276,923 -- 731,754,990 2009 Lowest contract charges 2 9.979280 16 Highest contract charges 71,437 9.714418 693,972 Remaining contract charges 790,235,256 -- 1,000,258,633 2008 Lowest contract charges 32,714 10.087274 329,991 Highest contract charges 905,927 1.030094 933,190 Remaining contract charges 1,375,828,315 -- 1,645,081,568 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 HARTFORD SMALL COMPANY HLS FUND 2010 Lowest contract charges 6,068 15.137320 91,855 Highest contract charges 1,111 15.877007 17,641 Remaining contract charges 1,305,526 -- 13,604,752 2009 Lowest contract charges 5,122 8.587429 43,980 Highest contract charges 868 13.146736 11,404 Remaining contract charges 1,503,470 -- 12,809,717 2008 Lowest contract charges 22,783 6.686452 152,336 Highest contract charges 7,741 6.597309 51,071 Remaining contract charges 872,940 -- 5,799,915 HARTFORD SMALLCAP GROWTH HLS FUND 2010 Lowest contract charges 19,606 12.612474 247,278 Highest contract charges 12,769 18.642624 238,055 Remaining contract charges 614,890 -- 7,684,748 2009 Lowest contract charges 6,050 9.314788 56,354 Highest contract charges 12,892 14.024950 180,803 Remaining contract charges 376,000 -- 3,486,015 2008 Lowest contract charges 2,899 6.938674 20,118 Highest contract charges 1,123 6.846178 7,686 Remaining contract charges 210,683 -- 1,451,405 HARTFORD STOCK HLS FUND 2010 Lowest contract charges 557 10.067692 5,610 Highest contract charges 6,139 15.899777 97,607 Remaining contract charges 208,927 -- 2,092,771 2009 Lowest contract charges 558 8.835711 4,930 Highest contract charges 6,029 14.228649 85,780 Remaining contract charges 241,288 -- 2,154,224 2008 Lowest contract charges 559 6.289721 3,514 Highest contract charges 322 6.200603 1,997 Remaining contract charges 124,214 -- 775,916 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- HARTFORD MONEY MARKET HLS FUND 2010 Lowest contract charges 0.24% -- (0.30)% Highest contract charges 2.75% -- (2.71)% Remaining contract charges -- -- -- 2009 Lowest contract charges -- -- (0.21)% Highest contract charges 2.68% -- (2.64)% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.57% 0.49% 0.60% Highest contract charges 2.54% 1.65% (0.44)% Remaining contract charges -- -- -- 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 -- -- -- HARTFORD SMALL COMPANY HLS FUND 2010 Lowest contract charges 0.50% -- 23.51% Highest contract charges 2.75% -- 20.77% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 0.01% 28.32% Highest contract charges 2.72% -- 25.78% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 0.45% (36.17)% Highest contract charges 2.03% 0.32% (36.85)% Remaining contract charges -- -- -- HARTFORD SMALLCAP GROWTH HLS FUND 2010 Lowest contract charges 0.85% -- 35.40% Highest contract charges 2.70% -- 32.93% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.10% 34.24% Highest contract charges 2.69% 0.08% 31.78% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 0.75% (34.82)% Highest contract charges 2.01% 0.64% (35.52)% Remaining contract charges -- -- -- HARTFORD STOCK HLS FUND 2010 Lowest contract charges 0.75% 1.21% 13.94% Highest contract charges 2.70% 1.22% 11.75% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 1.65% 40.48% Highest contract charges 2.67% 2.22% 37.77% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.63% 3.75% (40.94)% Highest contract charges 2.04% 6.34% (41.61)% Remaining contract charges -- -- --
SA-162 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2010 Lowest contract charges 42,956 $10.582456 $454,580 Highest contract charges 2,488 10.179357 25,328 Remaining contract charges 4,761,644 -- 47,519,176 2009 Lowest contract charges 5,035 9.916951 49,935 Highest contract charges 4,628 10.080811 46,654 Remaining contract charges 4,478,941 -- 43,767,161 2008 Lowest contract charges 68,844 9.656858 664,817 Highest contract charges 226 9.524540 2,149 Remaining contract charges 2,869,294 -- 27,515,217 HARTFORD VALUE HLS FUND+ 2010 Lowest contract charges 10,533 13.784560 145,185 Highest contract charges 1,003 13.909418 13,953 Remaining contract charges 2,355,156 -- 23,483,008 2009 Lowest contract charges 247 8.799340 2,173 Highest contract charges 2,471 8.528526 21,075 Remaining contract charges 831,812 -- 7,247,493 2008 Lowest contract charges 13,602 7.122333 96,875 Highest contract charges 1,048 7.042157 7,378 Remaining contract charges 473,399 -- 3,346,888 AMERICAN FUNDS ASSET ALLOCATION HLS FUND 2010 Lowest contract charges 55,546 13.042443 724,461 Highest contract charges 664 13.482401 8,951 Remaining contract charges 4,595,224 -- 45,436,345 2009 Lowest contract charges 55 11.689368 643 Highest contract charges 667 12.358442 8,239 Remaining contract charges 4,374,006 -- 38,869,418 2008 Lowest contract charges 138 7.275350 1,005 Highest contract charges 47,719 7.192825 343,232 Remaining contract charges 2,922,883 -- 21,138,321 AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH HLS FUND 2010 Lowest contract charges 43,241 13.796937 596,598 Highest contract charges 61,080 14.007941 855,605 Remaining contract charges 2,788,745 -- 26,426,502 2009 Lowest contract charges 52 12.382862 642 Highest contract charges 55,489 12.851649 713,129 Remaining contract charges 2,733,181 -- 23,198,763 2008 Lowest contract charges 435,666 6.679716 2,910,123 Highest contract charges 37,007 6.626079 245,213 Remaining contract charges 1,129,320 -- 7,518,471 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND 2010 Lowest contract charges 0.46% 5.94% 3.28% Highest contract charges 2.75% 4.55% 0.98% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.74% 0.04% 2.61% Highest contract charges 2.72% 0.04% 0.58% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 13.82% (1.58)% Highest contract charges 1.95% 19.13% (2.65)% Remaining contract charges -- -- -- HARTFORD VALUE HLS FUND+ 2010 Lowest contract charges 0.42% 1.78% 14.10% Highest contract charges 2.16% 1.19% 11.56% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.73% 2.67% 23.44% Highest contract charges 2.43% 2.58% 21.36% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 6.85% (33.13)% Highest contract charges 1.82% 2.62% (33.74)% Remaining contract charges -- -- -- AMERICAN FUNDS ASSET ALLOCATION HLS FUND 2010 Lowest contract charges 0.50% 2.40% 11.58% Highest contract charges 2.75% 1.75% 9.10% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.03% -- 16.89% Highest contract charges 2.71% 2.60% 20.24% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.51% -- (27.77)% Highest contract charges 1.63% -- (28.59)% Remaining contract charges -- -- -- AMERICAN FUNDS BLUE CHIP INCOME AND GROWTH HLS FUND 2010 Lowest contract charges 0.50% 5.60% 11.42% Highest contract charges 2.70% 2.85% 9.00% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.02% -- 23.83% Highest contract charges 2.68% 1.31% 24.06% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.83% -- (34.65)% Highest contract charges 1.63% -- (35.17)% Remaining contract charges -- -- --
SA-163 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS BOND HLS FUND 2010 Lowest contract charges 7,875 $11.212517 $88,303 Highest contract charges 5,179 11.664880 60,409 Remaining contract charges 16,138,597 -- 166,485,057 2009 Lowest contract charges 6,558 10.583985 69,414 Highest contract charges 5,203 11.295400 58,768 Remaining contract charges 15,044,210 -- 148,240,510 2008 Lowest contract charges 4 8.933982 42 Highest contract charges 2,566 8.829886 22,657 Remaining contract charges 6,029,714 -- 53,564,185 AMERICAN FUNDS GLOBAL BOND HLS FUND 2010 Lowest contract charges 2,350 11.144250 26,192 Highest contract charges 2,345 11.588445 27,172 Remaining contract charges 3,121,133 -- 33,904,558 2009 Lowest contract charges 1,120 10.650417 11,932 Highest contract charges 2,148 11.360991 24,406 Remaining contract charges 3,209,616 -- 33,759,019 2008 Lowest contract charges 714 9.799988 6,999 Highest contract charges 18,759 9.689117 181,754 Remaining contract charges 1,988,660 -- 19,376,816 AMERICAN FUNDS GLOBAL GROWTH AND INCOME HLS FUND 2010 Lowest contract charges 4,839 13.995685 67,730 Highest contract charges 1,419 15.494577 21,986 Remaining contract charges 8,327,378 -- 76,599,167 2009 Lowest contract charges 1,668 12.587813 20,994 Highest contract charges 316 14.295567 4,510 Remaining contract charges 9,038,134 -- 75,063,027 2008 Lowest contract charges 5,828 6.026788 35,121 Highest contract charges 124,965 5.958336 744,583 Remaining contract charges 6,064,037 -- 36,333,300 AMERICAN FUNDS GLOBAL GROWTH HLS FUND 2010 Lowest contract charges 37,834 13.775736 521,193 Highest contract charges 1,122 15.873990 17,812 Remaining contract charges 2,922,716 -- 29,151,664 2009 Lowest contract charges 1,452 12.427257 18,047 Highest contract charges 46,652 14.653651 683,623 Remaining contract charges 2,904,995 -- 26,025,544 2008 Lowest contract charges 1,295 6.372372 8,249 Highest contract charges 233,332 6.300038 1,470,002 Remaining contract charges 1,916,205 -- 12,139,562 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS BOND HLS FUND 2010 Lowest contract charges 0.09% -- 5.83% Highest contract charges 2.75% 2.27% 3.27% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.08% -- 5.84% Highest contract charges 2.74% 3.21% 9.19% Remaining contract charges -- -- -- 2008 Lowest contract charges -- -- (10.82)% Highest contract charges 1.66% -- (11.85)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL BOND HLS FUND 2010 Lowest contract charges 0.24% 1.06% 4.53% Highest contract charges 2.75% 0.99% 2.00% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.02% -- 6.50% Highest contract charges 2.72% 2.78% 6.46% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.48% -- (1.83)% Highest contract charges 1.63% -- (2.93)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH AND INCOME HLS FUND 2010 Lowest contract charges 0.24% 1.71% 11.07% Highest contract charges 2.75% 2.05% 8.39% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.07% -- 25.88% Highest contract charges 2.74% 2.48% 35.59% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% -- (40.20)% Highest contract charges 1.62% -- (40.88)% Remaining contract charges -- -- -- AMERICAN FUNDS GLOBAL GROWTH HLS FUND 2010 Lowest contract charges 0.50% 1.31% 10.85% Highest contract charges 2.50% 0.91% 8.39% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.07% -- 24.27% Highest contract charges 2.69% 1.84% 38.00% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.49% -- (36.64)% Highest contract charges 1.64% -- (37.36)% Remaining contract charges -- -- --
SA-164 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION HLS FUND 2010 Lowest contract charges 1,137 $15.400798 $17,503 Highest contract charges 1,354 19.672721 26,642 Remaining contract charges 6,401,528 -- 63,140,706 2009 Lowest contract charges 1,686 12.642178 21,311 Highest contract charges 398 16.565575 6,589 Remaining contract charges 6,594,913 -- 53,510,664 2008 Lowest contract charges 3,992 5.070685 20,242 Highest contract charges 2,118 5.011352 10,616 Remaining contract charges 3,360,971 -- 16,944,819 AMERICAN FUNDS GROWTH HLS FUND 2010 Lowest contract charges 7,721 14.524331 112,139 Highest contract charges 1,903 16.080226 30,593 Remaining contract charges 31,069,781 -- 294,518,060 2009 Lowest contract charges 7,204 12.295824 88,575 Highest contract charges 1,922 13.964315 26,836 Remaining contract charges 30,738,536 -- 248,359,827 2008 Lowest contract charges 24,290 5.851955 142,147 Highest contract charges 7,706 5.783494 44,566 Remaining contract charges 17,658,996 -- 102,726,342 AMERICAN FUNDS GROWTH-INCOME HLS FUND 2010 Lowest contract charges 87 13.441479 1,166 Highest contract charges 272 14.134195 3,843 Remaining contract charges 16,510,323 -- 152,366,945 2009 Lowest contract charges 3,858 12.121401 46,759 Highest contract charges 321 13.075097 4,195 Remaining contract charges 16,706,160 -- 139,942,256 2008 Lowest contract charges 38,156 6.469048 246,835 Highest contract charges 2,742 6.393426 17,529 Remaining contract charges 9,395,706 -- 60,422,644 AMERICAN FUNDS INTERNATIONAL HLS FUND 2010 Lowest contract charges 6,920 13.207404 91,389 Highest contract charges 1,067 15.531653 16,570 Remaining contract charges 21,616,912 -- 196,215,872 2009 Lowest contract charges 5,317 12.377279 65,810 Highest contract charges 1,066 14.931026 15,911 Remaining contract charges 19,377,345 -- 165,904,278 2008 Lowest contract charges 40,785 6.059340 247,127 Highest contract charges 3,324 5.988522 19,905 Remaining contract charges 10,983,753 -- 66,183,244 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION HLS FUND 2010 Lowest contract charges 0.09% -- 21.70% Highest contract charges 2.75% 0.02% 18.76% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.08% -- 26.42% Highest contract charges 2.74% 0.08% 56.41% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% -- (49.74)% Highest contract charges 1.68% -- (50.32)% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH HLS FUND 2010 Lowest contract charges 0.19% 0.54% 18.01% Highest contract charges 2.75% 0.51% 15.15% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% 0.49% 22.96% Highest contract charges 2.73% 0.81% 35.25% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% 1.57% (41.92)% Highest contract charges 1.66% 2.12% (42.59)% Remaining contract charges -- -- -- AMERICAN FUNDS GROWTH-INCOME HLS FUND 2010 Lowest contract charges 0.08% 5.47% 10.78% Highest contract charges 2.75% 1.19% 8.10% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.08% 1.70% 21.21% Highest contract charges 2.74% 2.02% 27.31% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% 2.90% (36.50)% Highest contract charges 1.66% 2.61% (37.24)% Remaining contract charges -- -- -- AMERICAN FUNDS INTERNATIONAL HLS FUND 2010 Lowest contract charges 0.24% 1.34% 6.60% Highest contract charges 2.75% 0.96% 4.02% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 23.77% Highest contract charges 2.73% 1.30% 38.88% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% -- (39.76)% Highest contract charges 1.66% -- (40.47)% Remaining contract charges -- -- --
SA-165 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- AMERICAN FUNDS NEW WORLD HLS FUND 2010 Lowest contract charges 1,122 $14.573354 $16,350 Highest contract charges 268 17.393936 4,659 Remaining contract charges 5,974,851 -- 62,043,783 2009 Lowest contract charges 1,943 12.423452 24,136 Highest contract charges 274 15.210443 4,163 Remaining contract charges 5,766,731 -- 50,994,691 2008 Lowest contract charges 13,191 5.973191 78,786 Highest contract charges 2,200 5.903393 12,990 Remaining contract charges 3,431,382 -- 20,371,118 LORD ABBETT FUNDAMENTAL EQUITY PORTFOLIO+ 2010 Lowest contract charges 15,806 12.880117 203,578 Highest contract charges 699 11.285819 7,891 Remaining contract charges 7,531 -- 95,949 2009 Lowest contract charges 700 10.875521 7,609 Highest contract charges -- -- -- Remaining contract charges -- -- -- LORD ABBETT CAPITAL STRUCTURE PORTFOLIO+ 2010 Lowest contract charges 256,690 11.009334 2,825,980 Highest contract charges 4,542 13.969711 63,447 Remaining contract charges 1,013,320 -- 11,037,077 2009 Lowest contract charges 227,836 9.674588 2,204,216 Highest contract charges 4,542 12.505226 56,795 Remaining contract charges 890,617 -- 8,587,396 2008 Lowest contract charges 104,657 7.906371 827,455 Highest contract charges 1,643 7.801894 12,820 Remaining contract charges 334,244 -- 2,625,926 LORD ABBETT BOND-DEBENTURE PORTFOLIO 2010 Lowest contract charges 41,484 12.150902 504,062 Highest contract charges 1,912 14.992803 28,670 Remaining contract charges 6,369,494 -- 78,050,957 2009 Lowest contract charges 1,190 10.872900 12,941 Highest contract charges 2,013 13.721049 27,614 Remaining contract charges 6,605,863 -- 73,135,719 2008 Lowest contract charges 3 8.380467 20 Highest contract charges 1,718 8.259432 14,193 Remaining contract charges 3,101,264 -- 25,811,550 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- AMERICAN FUNDS NEW WORLD HLS FUND 2010 Lowest contract charges 0.02% -- 17.19% Highest contract charges 2.75% 0.96% 14.36% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.07% -- 24.24% Highest contract charges 2.72% 1.49% 45.10% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.50% -- (40.58)% Highest contract charges 1.67% -- (41.27)% Remaining contract charges -- -- -- LORD ABBETT FUNDAMENTAL EQUITY PORTFOLIO+ 2010 Lowest contract charges 0.50% 0.67% 18.43% Highest contract charges 0.09% 0.26% 12.86% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.02% 0.15% 8.76% Highest contract charges -- -- -- Remaining contract charges -- -- -- LORD ABBETT CAPITAL STRUCTURE PORTFOLIO+ 2010 Lowest contract charges 0.85% 2.98% 13.80% Highest contract charges 2.70% 2.93% 11.71% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 4.64% 22.36% Highest contract charges 2.66% 10.35% 20.12% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 11.86% (23.83)% Highest contract charges 2.02% 14.59% (24.64)% Remaining contract charges -- -- -- LORD ABBETT BOND-DEBENTURE PORTFOLIO 2010 Lowest contract charges 0.50% 16.58% 11.75% Highest contract charges 2.75% 5.59% 9.27% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.06% 10.06% 8.73% Highest contract charges 2.73% 17.07% 30.67% Remaining contract charges -- -- -- 2008 Lowest contract charges -- 8.63% (18.64)% Highest contract charges 2.06% 18.49% (19.58)% Remaining contract charges -- -- --
SA-166 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- LORD ABBETT GROWTH & INCOME PORTFOLIO 2010 Lowest contract charges 10,762 $12.243627 $131,765 Highest contract charges 6,847 13.675170 93,633 Remaining contract charges 1,598,883 -- 15,090,346 2009 Lowest contract charges 892 8.196534 7,307 Highest contract charges 6,591 11.965883 78,872 Remaining contract charges 1,506,460 -- 12,261,380 2008 Lowest contract charges 750 6.945580 5,207 Highest contract charges 328 6.845272 2,246 Remaining contract charges 1,022,258 -- 7,059,213 MFS CORE EQUITY SERIES 2010 Lowest contract charges 82,963 10.501399 871,228 Highest contract charges 1,228 15.210128 18,684 Remaining contract charges 2,486,639 -- 20,738,508 2009 Lowest contract charges 96,599 9.044579 873,692 Highest contract charges 926 13.344441 12,361 Remaining contract charges 2,944,978 -- 21,372,606 2008 Lowest contract charges 113,923 6.894720 785,467 Highest contract charges 6,652 4.343066 28,890 Remaining contract charges 3,493,546 -- 19,479,038 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 MFS GROWTH SERIES 2010 Lowest contract charges 12,060 14.119829 170,288 Highest contract charges 1,794 15.158747 27,188 Remaining contract charges 6,925,433 -- 56,678,431 2009 Lowest contract charges 52,581 8.914161 468,713 Highest contract charges 541 13.523277 7,310 Remaining contract charges 7,580,485 -- 54,364,945 2008 Lowest contract charges 31,506 6.530042 205,742 Highest contract charges 33,254 3.915227 130,196 Remaining contract charges 7,859,617 -- 41,250,932 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- LORD ABBETT GROWTH & INCOME PORTFOLIO 2010 Lowest contract charges 0.41% 1.16% 16.83% Highest contract charges 2.70% 0.58% 14.29% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 1.15% 18.01% Highest contract charges 2.66% 2.43% 15.73% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% 5.29% (34.12)% Highest contract charges 1.96% 20.93% (34.88)% Remaining contract charges -- -- -- MFS CORE EQUITY SERIES 2010 Lowest contract charges 0.95% 1.06% 16.11% Highest contract charges 2.80% 1.06% 13.98% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.95% 1.71% 31.18% Highest contract charges 2.76% -- 28.78% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.95% 0.81% (39.73)% Highest contract charges 2.55% 0.66% (40.69)% Remaining contract charges -- -- -- 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 -- -- -- MFS GROWTH SERIES 2010 Lowest contract charges 0.47% -- 14.45% Highest contract charges 0.13% -- 12.16% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.25% 36.51% Highest contract charges 0.44% -- 33.94% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.20% (37.95)% Highest contract charges 2.56% 0.23% (39.00)% Remaining contract charges -- -- -- 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 -- -- --
SA-167 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MFS GLOBAL EQUITY SERIES 2010 Lowest contract charges 36,047 $17.177739 $619,213 Highest contract charges 9,512 14.856419 141,314 Remaining contract charges 1,550,542 -- 22,851,220 2009 Lowest contract charges 35,935 15.418702 554,069 Highest contract charges 136 13.590605 1,847 Remaining contract charges 1,772,403 -- 23,652,771 2008 Lowest contract charges 40,762 11.782035 480,252 Highest contract charges 1,324 9.205089 12,191 Remaining contract charges 2,025,301 -- 20,859,552 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 MFS HIGH INCOME SERIES 2010 Lowest contract charges 142,241 15.745804 2,239,699 Highest contract charges 7,646 16.828511 128,669 Remaining contract charges 18,346,801 -- 261,063,804 2009 Lowest contract charges 123,896 13.841030 1,714,852 Highest contract charges 670 15.083900 10,110 Remaining contract charges 19,006,215 -- 240,282,105 2008 Lowest contract charges 81,947 9.590820 785,941 Highest contract charges 32,355 8.508150 275,278 Remaining contract charges 14,561,115 -- 128,906,697 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 MFS INVESTORS GROWTH STOCK SERIES 2010 Lowest contract charges 17,721 9.547958 169,199 Highest contract charges 2,228 15.029221 33,486 Remaining contract charges 6,570,435 -- 51,158,840 2009 Lowest contract charges 32,727 8.561398 280,189 Highest contract charges 1,892 13.734560 25,982 Remaining contract charges 8,397,970 -- 58,991,585 2008 Lowest contract charges 21,867 6.187191 135,294 Highest contract charges 13,842 4.308344 59,636 Remaining contract charges 9,338,353 -- 47,973,722 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MFS GLOBAL EQUITY SERIES 2010 Lowest contract charges 0.85% 0.93% 11.41% Highest contract charges 2.75% 1.05% 9.31% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 2.21% 30.87% Highest contract charges 2.72% 2.92% 28.40% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 1.03% (34.33)% Highest contract charges 2.55% 0.97% (35.44)% Remaining contract charges -- -- -- 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 -- -- -- MFS HIGH INCOME SERIES 2010 Lowest contract charges 0.85% 6.70% 13.76% Highest contract charges 2.80% 1.82% 11.57% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 7.16% 43.85% Highest contract charges 0.39% -- 41.08% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 9.07% (29.10)% Highest contract charges 2.55% 9.21% (30.29)% Remaining contract charges -- -- -- 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 -- -- -- MFS INVESTORS GROWTH STOCK SERIES 2010 Lowest contract charges 0.85% 0.44% 11.52% Highest contract charges 2.75% 0.39% 9.43% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.77% 38.37% Highest contract charges 0.48% -- 35.77% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.59% (37.41)% Highest contract charges 2.55% 0.53% (38.47)% Remaining contract charges -- -- -- 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 -- -- --
SA-168 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MFS INVESTORS TRUST SERIES 2010 Lowest contract charges 6,688 $13.332258 $89,169 Highest contract charges 180 13.620354 2,455 Remaining contract charges 37,666,591 -- 355,369,589 2009 Lowest contract charges 1,283 9.629790 12,359 Highest contract charges 2,865 12.614593 36,134 Remaining contract charges 43,280,600 -- 373,390,514 2008 Lowest contract charges 1,805 7.641920 13,799 Highest contract charges 54,659 6.595768 360,518 Remaining contract charges 47,059,890 -- 325,461,409 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 MFS MID CAP GROWTH SERIES 2010 Lowest contract charges 1,214 6.057099 7,355 Highest contract charges 4,863 17.714186 86,146 Remaining contract charges 19,568,366 -- 108,349,075 2009 Lowest contract charges 1,886 4.704525 8,872 Highest contract charges 1,078 14.057845 15,151 Remaining contract charges 19,143,673 -- 83,324,383 2008 Lowest contract charges 2,400 3.341523 8,019 Highest contract charges 61,478 3.136146 192,804 Remaining contract charges 17,518,894 -- 54,961,396 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 MFS NEW DISCOVERY SERIES 2010 Lowest contract charges 59,390 20.562993 1,221,245 Highest contract charges 1,021 23.146322 23,623 Remaining contract charges 19,171,730 -- 279,001,973 2009 Lowest contract charges 49,579 15.211050 754,148 Highest contract charges 2,817 17.468198 49,202 Remaining contract charges 23,003,515 -- 250,879,055 2008 Lowest contract charges 1,133 6.771751 7,674 Highest contract charges 28,258 5.168903 146,061 Remaining contract charges 25,575,068 -- 173,901,841 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MFS INVESTORS TRUST SERIES 2010 Lowest contract charges 0.42% 0.75% 10.33% Highest contract charges 0.81% -- 8.03% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.70% 1.56% 26.01% Highest contract charges 2.74% 1.87% 23.46% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 0.86% (33.55)% Highest contract charges 2.55% 0.89% (34.77)% Remaining contract charges -- -- -- 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 -- -- -- MFS MID CAP GROWTH SERIES 2010 Lowest contract charges 0.70% -- 28.75% Highest contract charges 1.83% -- 26.08% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.70% 0.30% 40.79% Highest contract charges 0.48% -- 37.93% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (51.90)% Highest contract charges 2.56% -- (52.78)% Remaining contract charges -- -- -- 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 -- -- -- MFS NEW DISCOVERY SERIES 2010 Lowest contract charges 0.85% -- 35.19% Highest contract charges 1.02% -- 32.58% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% -- 61.80% Highest contract charges 2.74% -- 58.76% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.56% -- (39.66)% Highest contract charges 2.56% -- (40.86)% Remaining contract charges -- -- -- 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 -- -- --
SA-169 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MFS TOTAL RETURN SERIES 2010 Lowest contract charges 90 $12.342474 $1,113 Highest contract charges 18,040 12.628741 227,826 Remaining contract charges 78,515,069 -- 1,057,862,530 2009 Lowest contract charges 820 11.280481 9,250 Highest contract charges 5,617 11.814046 66,361 Remaining contract charges 88,493,664 -- 1,107,925,933 2008 Lowest contract charges 1,537 11.412340 17,544 Highest contract charges 56,708 10.592590 600,680 Remaining contract charges 95,085,559 -- 1,036,002,613 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 MFS VALUE SERIES 2010 Lowest contract charges 7,104 13.062233 92,793 Highest contract charges 453 13.429849 6,084 Remaining contract charges 29,233,974 -- 378,874,931 2009 Lowest contract charges 1,881 11.768356 22,131 Highest contract charges 653 12.367556 8,075 Remaining contract charges 28,817,596 -- 349,943,669 2008 Lowest contract charges 3 7.307428 20 Highest contract charges 19,867 11.556828 229,601 Remaining contract charges 22,353,897 -- 244,511,044 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 MFS RESEARCH BOND SERIES 2010 Lowest contract charges 13,759 11.529682 158,635 Highest contract charges 476 12.135843 5,772 Remaining contract charges 27,858,852 -- 332,642,678 2009 Lowest contract charges 7,643 10.776388 82,363 Highest contract charges 1,795 11.587143 20,796 Remaining contract charges 22,393,189 -- 254,563,334 2008 Lowest contract charges 178,111 10.403409 1,852,971 Highest contract charges 15,316 9.750337 149,335 Remaining contract charges 12,465,604 -- 124,848,455 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MFS TOTAL RETURN SERIES 2010 Lowest contract charges 0.02% -- 9.30% Highest contract charges 2.80% 1.88% 6.90% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.06% -- 12.81% Highest contract charges 2.77% -- 14.77% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.55% 3.11% (22.56)% Highest contract charges 2.56% 3.16% (24.10)% Remaining contract charges -- -- -- 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 -- -- -- MFS VALUE SERIES 2010 Lowest contract charges 0.19% -- 10.88% Highest contract charges 0.35% -- 8.46% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 17.68% Highest contract charges 2.73% -- 19.13% Remaining contract charges -- -- -- 2008 Lowest contract charges -- -- (30.68)% Highest contract charges 2.55% 1.34% (34.28)% Remaining contract charges -- -- -- 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 -- -- -- MFS RESEARCH BOND SERIES 2010 Lowest contract charges 0.19% -- 6.88% Highest contract charges 0.35% -- 4.50% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.10% -- 7.76% Highest contract charges 2.73% 1.21% 12.77% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 2.28% (3.19)% Highest contract charges 2.55% 3.10% (4.82)% Remaining contract charges -- -- -- 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 -- -- --
SA-170 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MFS RESEARCH INTERNATIONAL SERIES 2010 Lowest contract charges 62,615 $13.637966 $853,940 Highest contract charges 463 14.770591 6,842 Remaining contract charges 4,214,955 -- 54,528,778 2009 Lowest contract charges 73,678 12.412738 914,542 Highest contract charges 4,005 13.723028 54,959 Remaining contract charges 4,781,091 -- 56,798,875 2008 Lowest contract charges 76,386 9.566686 730,762 Highest contract charges 12,734 8.987191 114,441 Remaining contract charges 5,300,979 -- 48,986,965 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 MFS RESEARCH SERIES 2010 Lowest contract charges 1,283,088 12.357294 15,855,495 Highest contract charges 743 14.630500 10,873 Remaining contract charges 1,648,931 -- 19,414,101 2009 Lowest contract charges 1,416,645 10.753312 15,233,622 Highest contract charges 1,197 9.903811 11,858 Remaining contract charges 1,878,169 -- 19,381,695 2008 Lowest contract charges 1,393,518 8.307570 11,576,754 Highest contract charges 1,453 7.782479 11,306 Remaining contract charges 1,622,304 -- 13,073,167 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MFS RESEARCH INTERNATIONAL SERIES 2010 Lowest contract charges 0.85% 1.61% 9.87% Highest contract charges 0.35% -- 7.75% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.71% 29.75% Highest contract charges 2.69% -- 27.37% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.75% (42.88)% Highest contract charges 2.55% 0.77% (43.85)% Remaining contract charges -- -- -- 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 -- -- -- MFS RESEARCH SERIES 2010 Lowest contract charges 0.85% 0.92% 14.92% Highest contract charges 1.47% -- 12.70% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.47% 29.44% Highest contract charges 2.55% 1.44% 27.26% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.85% 0.51% (36.63)% Highest contract charges 2.56% 0.53% (37.70)% Remaining contract charges -- -- -- 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 -- -- --
SA-171 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- BLACKROCK GLOBAL OPPORTUNITIES V.I. FUND+ 2010 Lowest contract charges 8,378 $12.211586 $102,310 Highest contract charges 6,488 14.385458 93,333 Remaining contract charges 38,859 -- 562,792 2009 Lowest contract charges 14,876 10.770930 160,228 Highest contract charges 6,770 13.965835 94,549 Remaining contract charges 48,587 -- 636,873 2008 Lowest contract charges 23,304 8.323313 193,966 Highest contract charges 77 9.958971 771 Remaining contract charges 56,162 -- 552,089 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 BLACKROCK LARGE CAP GROWTH V.I. FUND 2010 Lowest contract charges 14,091 8.922495 125,723 Highest contract charges 2,929 10.037166 29,396 Remaining contract charges 109,286 -- 1,094,484 2009 Lowest contract charges 17,555 7.795563 136,850 Highest contract charges 1,304 8.857504 11,547 Remaining contract charges 122,778 -- 1,073,157 2008 Lowest contract charges 23,327 6.265303 146,151 Highest contract charges 1,377 7.190320 9,904 Remaining contract charges 131,723 -- 924,608 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- BLACKROCK GLOBAL OPPORTUNITIES V.I. FUND+ 2010 Lowest contract charges 1.40% 3.10% 9.68% Highest contract charges 2.35% 3.11% 8.65% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.40% 2.33% 30.86% Highest contract charges 2.35% 2.87% 29.63% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.40% 0.37% (46.68)% Highest contract charges 2.43% 0.12% (47.21)% Remaining contract charges -- -- -- 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 -- -- -- BLACKROCK LARGE CAP GROWTH V.I. FUND 2010 Lowest contract charges 1.40% 1.14% 13.88% Highest contract charges 2.40% 1.63% 12.75% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.40% 0.01% 24.42% Highest contract charges 2.40% 0.01% 23.19% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.41% 0.45% (41.52)% Highest contract charges 2.41% 0.26% (42.11)% Remaining contract charges -- -- -- 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 -- -- --
SA-172 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- INVESCO VAN KAMPEN V. I. INTERNATIONAL GROWTH EQUITY+ 2010 Lowest contract charges 10,674 $9.777615 $104,367 Highest contract charges 2,669 9.410090 25,120 Remaining contract charges 38,212 -- 366,947 2009 Lowest contract charges 1,903 9.018177 17,162 Highest contract charges 3,549 8.753291 31,064 Remaining contract charges 40,680 -- 361,052 2008 Lowest contract charges 3,789 6.694338 25,360 Highest contract charges 3,839 6.553127 25,160 Remaining contract charges 52,516 -- 347,976 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 UIF MID CAP GROWTH PORTFOLIO+ 2010 Lowest contract charges 271 12.042001 3,261 Highest contract charges 1,127 20.248660 22,820 Remaining contract charges 2,510,147 -- 29,960,821 2009 Lowest contract charges 260 9.172671 2,387 Highest contract charges 984 15.735172 15,476 Remaining contract charges 2,779,919 -- 25,438,049 2008 Lowest contract charges 527,554 5.867795 3,095,578 Highest contract charges 1,565 5.787808 9,059 Remaining contract charges 1,196,280 -- 6,973,520 INVESCO VAN KAMPEN V. I. MID CAP VALUE FUND+ 2010 Lowest contract charges 501,269 10.597346 5,312,120 Highest contract charges 53 17.004157 901 Remaining contract charges 1,063,650 -- 11,624,440 2009 Lowest contract charges 486,226 8.747530 4,253,280 Highest contract charges 55 14.297989 782 Remaining contract charges 1,138,122 -- 10,334,056 2008 Lowest contract charges 220,425 6.339560 1,397,397 Highest contract charges 2,217 6.860736 15,211 Remaining contract charges 754,509 -- 5,067,852 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- INVESCO VAN KAMPEN V. I. INTERNATIONAL GROWTH EQUITY+ 2010 Lowest contract charges 1.35% 1.40% 8.42% Highest contract charges 2.20% 1.46% 7.50% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 0.72% 34.71% Highest contract charges 2.20% 0.85% 33.57% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% -- (49.22)% Highest contract charges 2.21% -- (49.65)% Remaining contract charges -- -- -- 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 -- -- -- UIF MID CAP GROWTH PORTFOLIO+ 2010 Lowest contract charges 0.75% -- 31.28% Highest contract charges 2.75% -- 28.68% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.74% -- 56.19% Highest contract charges 2.71% -- 53.11% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 0.22% (45.31)% Highest contract charges 2.06% -- (45.91)% Remaining contract charges -- -- -- INVESCO VAN KAMPEN V. I. MID CAP VALUE FUND+ 2010 Lowest contract charges 0.85% 0.86% 21.15% Highest contract charges 2.72% 0.83% 18.93% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.16% 37.98% Highest contract charges 2.71% 1.53% 35.46% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% 0.25% (39.56)% Highest contract charges 2.51% 0.80% (42.87)% Remaining contract charges -- -- -- 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 -- -- --
SA-173 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2010 Lowest contract charges 31,697 $8.636505 $273,752 Highest contract charges 1,448 7.978864 11,549 Remaining contract charges 103,363 -- 865,263 2009 Lowest contract charges 31,067 6.888948 214,022 Highest contract charges 1,524 6.437888 9,810 Remaining contract charges 105,941 -- 712,102 2008 Lowest contract charges 24,979 4.073139 101,745 Highest contract charges 1,524 3.850448 5,867 Remaining contract charges 100,951 -- 402,966 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 MORGAN STANLEY -- CAPITAL OPPORTUNITIES PORTFOLIO 2010 Lowest contract charges 152,594 5.678500 866,504 Highest contract charges 724 5.246144 3,797 Remaining contract charges 460,330 -- 2,528,290 2009 Lowest contract charges 169,435 4.542372 769,639 Highest contract charges 2,668 4.244987 11,326 Remaining contract charges 548,126 -- 2,419,912 2008 Lowest contract charges 190,285 2.719763 517,526 Highest contract charges 2,997 2.571081 7,707 Remaining contract charges 656,973 -- 1,744,280 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*** -------------------------------- ---------------------------------------------- MORGAN STANLEY -- FOCUS GROWTH PORTFOLIO 2010 Lowest contract charges 1.35% -- 25.37% Highest contract charges 2.50% -- 23.94% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% -- 69.13% Highest contract charges 2.50% -- 67.20% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.36% 0.07% (52.22)% Highest contract charges 2.51% 0.07% (52.77)% Remaining contract charges -- -- -- 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 -- -- -- MORGAN STANLEY -- CAPITAL OPPORTUNITIES PORTFOLIO 2010 Lowest contract charges 1.35% -- 25.01% Highest contract charges 2.50% -- 23.58% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% -- 67.01% Highest contract charges 2.50% -- 65.11% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% -- (49.84)% Highest contract charges 2.50% -- (50.42)% Remaining contract charges -- -- -- 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-174 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- MORGAN STANLEY -- MID CAP GROWTH PORTFOLIO 2010 Lowest contract charges 15,328 $12.088848 $185,298 Highest contract charges 98 11.168445 1,099 Remaining contract charges 56,559 -- 660,225 2009 Lowest contract charges 22,700 9.249819 209,974 Highest contract charges 67 8.644265 580 Remaining contract charges 58,414 -- 523,676 2008 Lowest contract charges 22,120 5.858325 129,585 Highest contract charges 68 5.538087 377 Remaining contract charges 52,585 -- 299,614 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 MORGAN STANLEY -- FLEXIBLE INCOME PORTFOLIO 2010 Lowest contract charges 27,767 11.672055 324,102 Highest contract charges 3,236 10.783596 34,893 Remaining contract charges 37,184 -- 421,410 2009 Lowest contract charges 29,108 10.869185 316,385 Highest contract charges 3,375 10.157929 34,284 Remaining contract charges 42,838 -- 453,126 2008 Lowest contract charges 31,152 9.222830 287,308 Highest contract charges 3,375 8.718935 29,427 Remaining contract charges 32,552 -- 294,627 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- MORGAN STANLEY -- MID CAP GROWTH PORTFOLIO 2010 Lowest contract charges 1.35% -- 30.69% Highest contract charges 2.46% -- 29.20% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% -- 57.89% Highest contract charges 2.43% -- 56.09% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 0.46% (48.89)% Highest contract charges 2.42% 0.72% (49.48)% Remaining contract charges -- -- -- 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 -- -- -- MORGAN STANLEY -- FLEXIBLE INCOME PORTFOLIO 2010 Lowest contract charges 1.35% 6.00% 7.39% Highest contract charges 2.50% 6.07% 6.16% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 6.93% 17.85% Highest contract charges 2.50% 7.04% 16.50% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 2.12% (22.94)% Highest contract charges 2.50% 1.76% (23.82)% Remaining contract charges -- -- -- 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 -- -- --
SA-175 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- INVESCO V.I. SELECT DIMENSIONS DIVIDEND GROWTH PORTFOLIO+ 2010 Lowest contract charges 6,735 $10.835269 $72,970 Highest contract charges 4,782 10.134682 48,467 Remaining contract charges 6,725 -- 70,702 2009 Lowest contract charges 6,489 9.947209 64,543 Highest contract charges 4,782 9.383400 44,874 Remaining contract charges 9,310 -- 90,432 2008 Lowest contract charges 6,976 8.123951 56,676 Highest contract charges 4,782 7.728932 36,962 Remaining contract charges 12,158 -- 96,831 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 OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2010 Lowest contract charges 19,849 9.383033 186,240 Highest contract charges 639 15.280537 9,765 Remaining contract charges 277,636 -- 2,604,537 2009 Lowest contract charges 27,921 8.670403 242,085 Highest contract charges 696 14.390901 10,017 Remaining contract charges 310,075 -- 2,731,244 2008 Lowest contract charges 9,376 6.066067 56,872 Highest contract charges 841 5.983369 5,033 Remaining contract charges 165,156 -- 995,237 OPPENHEIMER GLOBAL SECURITIES FUND/VA 2010 Lowest contract charges 659 10.440769 6,881 Highest contract charges 486 16.244864 7,886 Remaining contract charges 3,101,709 -- 31,987,997 2009 Lowest contract charges 834 9.091739 7,579 Highest contract charges 507 14.431646 7,310 Remaining contract charges 3,328,830 -- 30,054,422 2008 Lowest contract charges 2,494 6.573235 16,388 Highest contract charges 349 6.478219 2,264 Remaining contract charges 2,409,532 -- 15,735,836 OPPENHEIMER MAIN STREET FUND/VA 2010 Lowest contract charges 13,575 9.879026 134,106 Highest contract charges 549 14.593482 8,005 Remaining contract charges 242,131 -- 2,394,903 2009 Lowest contract charges 16,270 8.602066 139,955 Highest contract charges 572 12.950825 7,412 Remaining contract charges 235,024 -- 2,026,776 2008 Lowest contract charges 10,779 6.777960 73,062 Highest contract charges 856 6.688394 5,723 Remaining contract charges 136,895 -- 922,693 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- INVESCO V.I. SELECT DIMENSIONS DIVIDEND GROWTH PORTFOLIO+ 2010 Lowest contract charges 1.35% 1.51% 8.93% Highest contract charges 2.20% 1.47% 8.01% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 1.91% 22.44% Highest contract charges 2.20% 1.73% 21.41% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 0.43% (37.61)% Highest contract charges 2.21% 0.36% (38.14)% Remaining contract charges -- -- -- 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 -- -- -- OPPENHEIMER CAPITAL APPRECIATION FUND/VA 2010 Lowest contract charges 0.85% -- 8.22% Highest contract charges 2.75% -- 6.18% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% -- 42.93% Highest contract charges 2.73% -- 40.25% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.69% -- (44.29)% Highest contract charges 2.02% -- (44.90)% Remaining contract charges -- -- -- OPPENHEIMER GLOBAL SECURITIES FUND/VA 2010 Lowest contract charges 0.75% 1.24% 14.84% Highest contract charges 2.75% 1.22% 12.56% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 2.27% 38.32% Highest contract charges 2.68% -- 35.58% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.61% -- (38.00)% Highest contract charges 1.94% -- (38.72)% Remaining contract charges -- -- -- OPPENHEIMER MAIN STREET FUND/VA 2010 Lowest contract charges 0.85% 0.67% 14.85% Highest contract charges 2.75% 0.89% 12.68% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 1.36% 26.91% Highest contract charges 2.68% -- 24.53% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (35.85)% Highest contract charges 2.01% -- (36.53)% Remaining contract charges -- -- --
SA-176 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA 2010 Lowest contract charges 969 $11.274242 $10,920 Highest contract charges 189 17.209473 3,246 Remaining contract charges 2,938,078 -- 32,942,776 2009 Lowest contract charges 782 9.230857 7,218 Highest contract charges 223 14.374862 3,202 Remaining contract charges 3,184,861 -- 29,401,330 2008 Lowest contract charges 2 6.794283 8 Highest contract charges 1,017 6.696166 6,810 Remaining contract charges 1,595,760 -- 10,767,408 OPPENHEIMER VALUE FUND/VA 2010 Lowest contract charges 20,601 9.625296 198,294 Highest contract charges 665 9.199060 6,120 Remaining contract charges 121,834 -- 1,185,042 2009 Lowest contract charges 20,718 8.455636 175,184 Highest contract charges 665 8.211525 5,463 Remaining contract charges 191,016 -- 1,617,684 2008 Lowest contract charges 2,462 6.366550 15,672 Highest contract charges 2,234 6.295470 14,066 Remaining contract charges 166,916 -- 1,055,612 PUTNAM VT DIVERSIFIED INCOME FUND 2010 Lowest contract charges 1,407 12.322677 17,335 Highest contract charges 1,350 17.285592 23,342 Remaining contract charges 8,771,796 -- 107,259,504 2009 Lowest contract charges 1,340 11.019201 14,769 Highest contract charges 1,597 15.769223 25,177 Remaining contract charges 9,267,827 -- 101,780,961 2008 Lowest contract charges 549 7.146244 3,923 Highest contract charges 2,789 7.042341 19,641 Remaining contract charges 4,278,892 -- 30,367,905 PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2010 Lowest contract charges 1,616 10.630143 17,176 Highest contract charges 12,547 15.440421 193,724 Remaining contract charges 712,945 -- 7,431,858 2009 Lowest contract charges 466 9.338424 4,355 Highest contract charges 9,110 13.789621 125,621 Remaining contract charges 716,590 -- 6,600,540 2008 Lowest contract charges 4,776 6.952999 33,203 Highest contract charges 7,082 6.877682 48,710 Remaining contract charges 323,905 -- 2,240,123 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- OPPENHEIMER MAIN STREET SMALL CAP FUND/VA 2010 Lowest contract charges 0.75% 0.36% 22.14% Highest contract charges 2.75% 0.42% 19.72% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.73% 0.23% 35.86% Highest contract charges 2.72% -- 33.18% Remaining contract charges -- -- -- 2008 Lowest contract charges -- -- (35.50)% Highest contract charges 2.06% -- (36.25)% Remaining contract charges -- -- -- OPPENHEIMER VALUE FUND/VA 2010 Lowest contract charges 0.85% 0.89% 13.83% Highest contract charges 2.45% 0.89% 12.03% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 0.36% 31.45% Highest contract charges 2.40% 0.16% 29.37% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (40.98)% Highest contract charges 1.72% -- (41.51)% Remaining contract charges -- -- -- PUTNAM VT DIVERSIFIED INCOME FUND 2010 Lowest contract charges 0.75% 13.88% 11.83% Highest contract charges 2.75% 13.81% 9.62% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.75% 4.65% 54.20% Highest contract charges 2.74% -- 51.15% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.62% -- (30.31)% Highest contract charges 2.06% -- (31.12)% Remaining contract charges -- -- -- PUTNAM VT GLOBAL ASSET ALLOCATION FUND 2010 Lowest contract charges 0.75% 2.06% 13.83% Highest contract charges 2.40% 4.63% 11.97% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.74% -- 34.20% Highest contract charges 2.39% -- 32.00% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (32.56)% Highest contract charges 1.79% -- (33.14)% Remaining contract charges -- -- --
SA-177 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL VALUE FUND+ 2010 Lowest contract charges 25,501 $7.851992 $200,234 Highest contract charges 166 13.757115 2,281 Remaining contract charges 149,491 -- 1,211,604 2009 Lowest contract charges 20,315 7.392382 150,176 Highest contract charges 110 13.193438 1,447 Remaining contract charges 165,790 -- 1,247,467 2008 Lowest contract charges 26,336 5.908142 155,597 Highest contract charges 9,937 5.844073 58,073 Remaining contract charges 78,427 -- 460,780 PUTNAM VT INTERNATIONAL EQUITY FUND 2010 Lowest contract charges 206 8.227517 1,691 Highest contract charges 38 13.865393 520 Remaining contract charges 184,305 -- 1,527,906 2009 Lowest contract charges 54,846 7.486362 410,593 Highest contract charges 5,747 13.002746 74,729 Remaining contract charges 154,346 -- 1,145,284 2008 Lowest contract charges 7,294 6.102674 44,515 Highest contract charges 29,191 6.036515 176,211 Remaining contract charges 98,518 -- 598,000 PUTNAM VT INVESTORS FUND 2010 Lowest contract charges 3,795 13.870722 52,641 Highest contract charges -- -- -- Remaining contract charges -- -- -- PUTNAM VT SMALL CAP VALUE 2010 Lowest contract charges 11,499 10.787046 124,042 Highest contract charges 10,624 16.801794 178,505 Remaining contract charges 181,160 -- 1,930,721 2009 Lowest contract charges 680 8.587762 5,838 Highest contract charges 10,624 13.701124 145,563 Remaining contract charges 164,899 -- 1,409,567 2008 Lowest contract charges 134 6.604529 885 Highest contract charges 892 6.532869 5,824 Remaining contract charges 96,627 -- 635,485 PUTNAM VT VOYAGER 2010 Lowest contract charges 27,868 15.402708 429,245 Highest contract charges 2,457 11.118426 27,313 Remaining contract charges 4,028 -- 57,359 2009 Lowest contract charges 375 12.814702 4,805 Highest contract charges -- -- -- Remaining contract charges -- -- -- INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- PUTNAM VT INTERNATIONAL VALUE FUND+ 2010 Lowest contract charges 0.85% 3.41% 6.22% Highest contract charges 2.70% 3.38% 4.27% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% -- 25.12% Highest contract charges 0.22% -- 22.83% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (44.23)% Highest contract charges 1.79% -- (44.71)% Remaining contract charges -- -- -- PUTNAM VT INTERNATIONAL EQUITY FUND 2010 Lowest contract charges 0.63% -- 9.10% Highest contract charges 2.01% -- 7.04% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.25% -- 23.09% Highest contract charges 2.39% -- 21.68% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (41.96)% Highest contract charges 1.79% -- (42.46)% Remaining contract charges -- -- -- PUTNAM VT INVESTORS FUND 2010 Lowest contract charges 0.42% 0.53% 13.35% Highest contract charges -- -- -- Remaining contract charges -- -- -- PUTNAM VT SMALL CAP VALUE 2010 Lowest contract charges 0.53% -- 24.92% Highest contract charges 2.70% 0.30% 22.63% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.15% 1.44% 30.03% Highest contract charges 0.10% -- 28.03% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.99% -- (36.02)% Highest contract charges 2.00% -- (36.58)% Remaining contract charges -- -- -- PUTNAM VT VOYAGER 2010 Lowest contract charges 0.50% 0.89% 20.20% Highest contract charges 0.19% -- 11.18% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.02% -- 28.15% Highest contract charges -- -- -- Remaining contract charges -- -- --
SA-178 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- PUTNAM VT EQUITY INCOME FUND 2010 Lowest contract charges 30,576 $13.389583 $409,399 Highest contract charges 483 10.921139 5,274 Remaining contract charges 5,642 -- 74,646 2009 Lowest contract charges 71 11.950208 854 Highest contract charges -- -- -- Remaining contract charges -- -- -- JENNISON 20/20 FOCUS PORTFOLIO 2010 Lowest contract charges 217,331 1.492525 324,371 Highest contract charges 1,845 1.407108 2,596 Remaining contract charges 136,228 -- 196,302 2009 Lowest contract charges 235,171 1.414006 332,533 Highest contract charges 2,110 1.341763 2,832 Remaining contract charges 123,179 -- 168,989 2008 Lowest contract charges 275,395 0.913715 251,632 Highest contract charges 2,421 0.872678 2,113 Remaining contract charges 142,213 -- 126,671 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 JENNISON PORTFOLIO 2010 Lowest contract charges 19,478 0.924809 18,013 Highest contract charges 9,403 0.897947 8,443 Remaining contract charges 87,753 -- 80,194 2009 Lowest contract charges 22,774 0.873620 19,896 Highest contract charges 9,789 0.825281 8,079 Remaining contract charges 107,235 -- 90,057 2008 Lowest contract charges 28,530 0.623193 17,780 Highest contract charges 9,578 0.592850 5,678 Remaining contract charges 107,240 -- 64,549 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- PUTNAM VT EQUITY INCOME FUND 2010 Lowest contract charges 0.50% 0.95% 12.05% Highest contract charges 0.09% -- 9.21% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.01% -- 19.50% Highest contract charges -- -- -- Remaining contract charges -- -- -- JENNISON 20/20 FOCUS PORTFOLIO 2010 Lowest contract charges 1.70% -- 5.55% Highest contract charges 2.35% -- 4.87% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.70% -- 54.75% Highest contract charges 2.35% -- 53.75% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.70% -- (40.42)% Highest contract charges 2.27% -- (40.81)% Remaining contract charges -- -- -- 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 -- -- -- JENNISON PORTFOLIO 2010 Lowest contract charges 2.05% 0.02% 9.19% Highest contract charges 2.40% 0.02% 8.81% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.70% 0.29% 40.19% Highest contract charges 2.40% 0.28% 39.21% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.71% 0.07% (38.61)% Highest contract charges 2.40% 0.07% (39.04)% Remaining contract charges -- -- -- 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 -- -- --
SA-179 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- PRUDENTIAL VALUE PORTFOLIO 2010 Lowest contract charges 180,847 $1.217103 $220,109 Highest contract charges 56,420 1.176590 66,383 Remaining contract charges 32,145 -- 38,561 2009 Lowest contract charges 180,847 1.091807 197,450 Highest contract charges 56,813 1.059167 60,174 Remaining contract charges 32,144 -- 34,643 2008 Lowest contract charges 180,847 0.785419 142,041 Highest contract charges 7,122 0.750512 5,345 Remaining contract charges 116,832 -- 89,712 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 INVESCO VAN KAMPEN V. I. GROWTH AND INCOME FUND+ 2010 Lowest contract charges 2,966,137 10.023866 29,732,157 Highest contract charges 3,445 13.657326 47,051 Remaining contract charges 2,247,787 -- 26,140,740 2009 Lowest contract charges 2,913,294 9.010887 26,251,360 Highest contract charges 3,102 12.506409 38,799 Remaining contract charges 2,220,144 -- 23,586,123 2008 Lowest contract charges 1,412,074 7.322402 10,339,781 Highest contract charges 12,985 10.893737 141,450 Remaining contract charges 1,519,872 -- 14,140,805 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*** -------------------------------- ---------------------------------------------- PRUDENTIAL VALUE PORTFOLIO 2010 Lowest contract charges 1.70% 0.33% 11.48% Highest contract charges 2.05% 0.34% 11.09% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.70% 1.65% 39.01% Highest contract charges 2.05% 1.74% 38.52% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.71% 1.40% (43.53)% Highest contract charges 2.33% 1.75% (43.89)% Remaining contract charges -- -- -- 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 -- -- -- INVESCO VAN KAMPEN V. I. GROWTH AND INCOME FUND+ 2010 Lowest contract charges 0.85% 0.10% 11.24% Highest contract charges 2.70% 0.10% 9.20% Remaining contract charges -- -- -- 2009 Lowest contract charges 0.85% 3.58% 23.06% Highest contract charges 2.66% 4.54% 20.80% Remaining contract charges -- -- -- 2008 Lowest contract charges 0.70% -- (30.20)% Highest contract charges 2.51% 1.86% (33.89)% Remaining contract charges -- -- -- 2007 Lowest contract charges 1.34% 1.05% 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-180 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- INVESCO VAN KAMPEN V. I. COMSTOCK FUND+ 2010 Lowest contract charges 40,554 $14.988434 $607,842 Highest contract charges 4,933 13.925507 68,697 Remaining contract charges 166,444 -- 2,428,597 2009 Lowest contract charges 44,467 13.131153 583,898 Highest contract charges 5,612 12.341037 69,255 Remaining contract charges 175,954 -- 2,257,818 2008 Lowest contract charges 46,643 10.365093 483,467 Highest contract charges 7,078 9.854026 69,742 Remaining contract charges 189,730 -- 1,929,297 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 INDEX ASSET ALLOCATION FUND+ 2010 Lowest contract charges 53,282 1.247548 66,471 Highest contract charges 5,477 1.134366 6,213 Remaining contract charges 837,122 -- 986,288 2009 Lowest contract charges 64,071 1.116172 71,515 Highest contract charges 7,395 1.026647 7,592 Remaining contract charges 911,144 -- 967,117 2008 Lowest contract charges 73,957 0.979889 72,469 Highest contract charges 9,232 0.911719 8,417 Remaining contract charges 1,104,680 -- 1,035,283 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- INVESCO VAN KAMPEN V. I. COMSTOCK FUND+ 2010 Lowest contract charges 1.35% 0.13% 14.14% Highest contract charges 2.50% 0.14% 12.84% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 4.32% 26.69% Highest contract charges 2.50% 4.20% 25.24% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 2.35% (36.66)% Highest contract charges 2.48% 2.53% (37.39)% Remaining contract charges -- -- -- 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 INDEX ASSET ALLOCATION FUND+ 2010 Lowest contract charges 1.35% 1.73% 11.77% Highest contract charges 2.50% 1.74% 10.49% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 2.04% 13.91% Highest contract charges 2.50% 2.02% 12.61% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 2.44% (30.07)% Highest contract charges 2.51% 2.45% (30.87)% Remaining contract charges -- -- -- 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 -- -- --
SA-181 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2010 Lowest contract charges 826,073 $1.465421 $1,210,545 Highest contract charges 97,934 1.332467 130,494 Remaining contract charges 3,733,927 -- 5,255,920 2009 Lowest contract charges 719,426 1.387455 998,171 Highest contract charges 133,943 1.276163 170,934 Remaining contract charges 4,094,761 -- 6,127,573 2008 Lowest contract charges 786,678 1.255427 987,618 Highest contract charges 135,976 1.168078 158,830 Remaining contract charges 4,690,166 -- 5,635,840 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 WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND+ 2010 Lowest contract charges 713,016 1.156101 824,318 Highest contract charges 47,383 1.051224 49,810 Remaining contract charges 2,280,619 -- 2,545,137 WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND+ 2010 Lowest contract charges 28,300 12.193157 345,066 Highest contract charges 5,463 12.120069 66,206 Remaining contract charges 121,327 -- 1,475,138 2009 Lowest contract charges 325,244 1.000862 325,524 Highest contract charges 65,383 0.920576 60,190 Remaining contract charges 1,523,264 -- 1,470,430 2008 Lowest contract charges 335,265 0.900500 301,906 Highest contract charges 73,796 0.837840 61,830 Remaining contract charges 1,510,309 -- 1,312,162 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND 2010 Lowest contract charges 1.35% 3.37% 5.62% Highest contract charges 2.50% 3.42% 4.41% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 4.52% 10.52% Highest contract charges 2.50% 4.51% 9.25% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 4.81% 1.01% Highest contract charges 2.50% 4.81% (0.15)% Remaining contract charges -- -- -- 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 -- -- -- WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND+ 2010 Lowest contract charges 1.35% 0.53% 12.30% Highest contract charges 2.50% 0.79% 11.02% Remaining contract charges -- -- -- WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND+ 2010 Lowest contract charges 0.61% -- 21.93% Highest contract charges 1.14% -- 21.20% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 3.20% 11.15% Highest contract charges 2.50% 3.01% 9.88% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% 2.05% (44.17)% Highest contract charges 2.51% 1.98% (44.81)% Remaining contract charges -- -- -- 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 -- -- --
SA-182 -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2010 Lowest contract charges 412,757 $1.719780 $709,851 Highest contract charges 39,521 1.563785 61,802 Remaining contract charges 1,496,776 -- 2,503,143 2009 Lowest contract charges 441,999 1.375020 607,757 Highest contract charges 42,489 1.264746 53,737 Remaining contract charges 1,814,397 -- 2,388,492 2008 Lowest contract charges 511,452 0.913021 466,966 Highest contract charges 51,821 0.849501 44,022 Remaining contract charges 2,006,949 -- 1,760,946 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 WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2010 Lowest contract charges 14,457 15.612951 225,719 Highest contract charges 15,141 18.480499 279,811 Remaining contract charges 91,745 -- 1,384,824 2009 Lowest contract charges 7,617 11.675368 88,936 Highest contract charges 1,990 13.972442 27,807 Remaining contract charges 101,800 -- 1,155,478 2008 Lowest contract charges 7,533 8.434447 63,536 Highest contract charges 31,236 8.181197 255,548 Remaining contract charges 74,480 -- 616,271 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 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND 2010 Lowest contract charges 1.35% -- 25.07% Highest contract charges 2.50% -- 23.64% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% -- 50.60% Highest contract charges 2.50% -- 48.88% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% -- (42.21)% Highest contract charges 2.51% -- (42.87)% Remaining contract charges -- -- -- 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 -- -- -- WELLS FARGO ADVANTAGE VT DISCOVERY FUND 2010 Lowest contract charges 1.35% -- 33.73% Highest contract charges 2.45% -- 32.26% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% -- 38.43% Highest contract charges 2.41% -- 36.91% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% -- (45.10)% Highest contract charges 2.20% -- (45.57)% Remaining contract charges -- -- -- 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 -- -- --
SA-183 SEPARATE ACCOUNT SEVEN HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) -------------------------------------------------------------------------------
UNIT CONTRACT SUB-ACCOUNT UNITS FAIR VALUE # OWNERS' EQUITY --------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND+ 2010 Lowest contract charges 11,329 $13.537143 $153,356 Highest contract charges 8,581 12.909634 110,779 Remaining contract charges 24,428 -- 323,539 2009 Lowest contract charges 10,648 11.702245 124,605 Highest contract charges 10,380 11.255012 116,826 Remaining contract charges 28,340 -- 325,051 2008 Lowest contract charges 10,643 7.404895 78,813 Highest contract charges 13,317 7.182592 95,649 Remaining contract charges 54,093 -- 394,052 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 2010 Lowest contract charges 10,016 13.295704 133,170 Highest contract charges 2,164 12.679284 27,443 Remaining contract charges 11,383 -- 147,176 2009 Lowest contract charges 1,244 10.740753 13,365 Highest contract charges 964 10.473260 10,091 Remaining contract charges 11,687 -- 124,391 2008 Lowest contract charges 1,244 7.391000 9,197 Highest contract charges 2,625 7.246621 19,021 Remaining contract charges 12,134 -- 89,039 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 WELLS FARGO ADVANTAGE VT CORE EQUITY FUND+ 2010 Lowest contract charges 33 12.266435 407 Highest contract charges 2,110 12.210912 25,768 Remaining contract charges 2,195 -- 26,841 INVESTMENT EXPENSE INCOME TOTAL SUB-ACCOUNT RATIO* RATIO** RETURN*** -------------------------------- ---------------------------------------------- WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND+ 2010 Lowest contract charges 1.35% 1.48% 15.68% Highest contract charges 2.20% 1.59% 14.70% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.35% 1.22% 58.03% Highest contract charges 2.20% 1.30% 56.70% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.35% -- (45.29)% Highest contract charges 2.20% -- (45.76)% Remaining contract charges -- -- -- 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 2010 Lowest contract charges 0.50% -- 22.10% Highest contract charges 2.20% 0.55% 21.06% Remaining contract charges -- -- -- 2009 Lowest contract charges 1.65% -- 45.32% Highest contract charges 2.21% -- 44.53% Remaining contract charges -- -- -- 2008 Lowest contract charges 1.64% 2.49% (41.08)% Highest contract charges 2.19% 2.73% (41.40)% Remaining contract charges -- -- -- 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 -- -- -- WELLS FARGO ADVANTAGE VT CORE EQUITY FUND+ 2010 Lowest contract charges 0.54% -- 22.66% Highest contract charges 1.07% -- 22.11% Remaining contract charges -- -- --
* This represents the non-annualized expense rate and considers only those expenses that are charged through a reduction of unit values which are presented within the accompanying Statements of Operations. The ratio is calculated by dividing the contract charges incurred by the average daily net assets of the respective contract for the period funded. Annualized expense rates are presented in the footnotes following this disclosure. Excluded are expenses of the Funds and charges made directly to contract owner accounts through the redemption of units. SA-184 ------------------------------------------------------------------------------- ** These amounts represent the dividends, excluding distributions of capital gains, received by the Sub- Account from the Fund, net of management fees assessed by the Fund's manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub- Account is affected by the timing of the declaration of dividends by the Fund in which the Sub- Account invests. *** 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 + See parenthetical for this Sub-Account in Note 1. Summary of the Account's expense charges, including Mortality and Expense Risk Charges, Administrative Charges, Riders (if applicable), Annual Maintenance Fees and Distribution Charges 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 0.10% to 1.55% of the Sub-Account's average daily net assets 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 Sub-Account's average daily net assets 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, and MAV 70 Death Benefit Charge. These deductions range from 0.15% to 0.75%. These charges are a reduction in unit values. The Company will charge an expense for Rider charges related to The Hartford's Income Foundation, The Hartford's Lifetime Income Builder, The Hartford's Lifetime Income Builder II, The Hartford's Lifetime Income Builder Selects, and The Hartford's Lifetime Income Builder Portfolios. The Company initially makes deductions of 0.30%, 0.40%, 0.40%, 0.55% and 0.65%, respectively. The Company has the right to increase both the Lifetime Income Builder and Lifetime Income Builder II to a maximum charge of 0.75% and the right to increase both The Hartford's Lifetime Income Builder Selects and The Hartford's Lifetime Income Builder Portfolios to a maximum charge of 1.50%. The Company also offers a Return of Premium Death Benefit rider. This charge is based on a percentage of premium payments adjusted for surrenders on each contract anniversary. The current rider charge is 0.30%. The Company has a right to increase this charge up to a maximum of 0.75%. These charges are a redemption of units. ANNUAL MAINTENANCE FEE: An annual maintenance fee 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. DISTRIBUTION CHARGE: A Distribution Charge of 0.75% may be charged to the contract's value each year at the contract anniversary date. This charge is based on a percentage of remaining gross premiums with each premium payment having its own Distribution Charge schedule. The Distribution Charge is reduced to 0.0% after the completion of eight years after each respective premium payment. There are no distribution charges for the year ended December 31, 2010. This charge is a redemption of units. SA-185 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATUTORY-BASIS FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT Years Ended December 31, 2010 and 2009 and 2008 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY TABLE OF CONTENTS
PAGE -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT F-3 STATUTORY-BASIS FINANCIAL STATEMENTS: Statements of Admitted Assets, Liabilities and Capital and F-4 Surplus Statements of Operations F-5 Statements of Changes in Capital and Surplus F-6 Statements of Cash Flows F-7 Notes to Statutory-Basis Financial Statements F-8
F-2 [DELOITTE LOGO] DELOITTE & TOUCHE LLP City Place I, 32nd Floor 185 Asylum Street Hartford, CT 06103-3402 USA Tel: +1 860 725 3000 Fax: +1 860 725 3500 www.deloitte.com INDEPENDENT AUDITORS' REPORT To the Board of Directors of Hartford Life and Annuity Insurance Company Hartford, Connecticut We have audited the accompanying statutory-basis statements of admitted assets, liabilities, and surplus of Hartford Life and Annuity Insurance Company (the "Company") as of December 31, 2010 and 2009, 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, 2010. 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 difference 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 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, 2010 and 2009, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2010. 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 Hartford Life and Annuity Insurance Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, on the basis of accounting described in Note 2. As discussed in Note 2 to the statutory-basis financial statements, the Company changed its method of accounting and reporting for deferred income taxes in 2009 and 2008. In 2009, the Company adopted Statement of Statutory Accounting Principle No. 10R and in 2008, the Company received approval from the State of Connecticut Insurance Department for the use of a permitted practice related to the accounting for deferred income taxes, which expired at the end of 2009. /s/ Deloitte & Touche LLP April 11, 2011 MEMBER OF DELOITTE TOUCHE TOHMATSU F-3 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ADMITTED ASSETS, LIABILITIES AND SURPLUS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS)
AS OF DECEMBER 31, 2010 2009 -------------------------------------------------------------------------------- ADMITTED ASSETS Bonds $9,692,232 $8,596,645 Common and preferred stocks 758,303 1,185,816 Mortgage loans 436,752 490,227 Real estate 26,632 27,644 Contract loans 364,509 352,829 Cash and short-term investments 1,573,473 1,582,479 Derivatives 865,863 324,260 Other invested assets 266,361 398,313 -------------- -------------- TOTAL CASH AND INVESTED ASSETS 13,984,125 12,958,213 -------------- -------------- Investment income due and accrued 101,421 157,065 Amounts receivable for reinsurance 129,186 707,096 Federal income taxes recoverable 307,272 -- Deferred tax asset 544,413 401,530 Receivables from parent, subsidiaries and affiliates 26,596 20,453 Other assets 113,920 82,951 Separate Account assets 58,419,988 59,079,204 -------------- -------------- TOTAL ADMITTED ASSETS $73,626,921 $73,406,512 -------------- -------------- LIABILITIES Aggregate reserves future benefits $8,789,732 $8,133,755 Liability for deposit type contracts 67,566 70,613 Policy and contract claim liabilities 41,643 33,983 Asset valuation reserve 16,559 25,564 Interest Maintenance Reserve 43,796 -- Payable to parent, subsidiaries or affiliates 45,866 46,166 Accrued expense allowances and other amounts Due from Separate Account (1,301,618) (1,612,929) Federal income tax due or accrued -- 97,107 Funds held under reinsurance treaties with unauthorized reinsurers 1,999,769 2,154,318 Collateral on derivatives 714,454 243,255 Other liabilities 726,627 1,049,875 Separate Account liabilities 58,419,988 59,079,204 -------------- -------------- TOTAL LIABILITIES 69,564,382 69,320,911 -------------- -------------- CAPITAL AND SURPLUS Common stock -- 3,000 shares authorized, 2,000 shares issued and outstanding 2,500 2,500 Aggregate write-ins for other than special surplus funds 182,105 189,963 Gross paid-in and contributed surplus 2,890,696 2,889,208 Aggregate write-ins for special surplus funds 181,471 266,358 Unassigned funds 805,767 737,572 -------------- -------------- TOTAL CAPITAL AND SURPLUS 4,062,539 4,085,601 -------------- -------------- TOTAL LIABILITIES, CAPITAL AND SURPLUS $73,626,921 $73,406,512 -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS. F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF OPERATIONS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 2010 2009 2008 --------------------------------------------------------------------------------------------------------------------------------- REVENUES Premiums and annuity considerations $1,110,040 $(55,103,285) $9,352,507 Net investment income 651,852 507,049 376,034 Commissions and expense allowances on reinsurance ceded 90,334 210,712 229,723 Reserve adjustments on reinsurance (6,345,615) 56,553,042 (18,161) Fee income 1,452,299 1,345,461 1,602,040 Other revenues 26,437 9,945 71,925 -------------- -------------- -------------- TOTAL REVENUES (3,014,653) 3,522,924 11,614,068 -------------- -------------- -------------- BENEFITS AND EXPENSES Death and annuity benefits 696,946 617,438 648,881 Disability and other benefits 9,295 9,760 9,181 Surrenders and other fund withdrawals 283,346 5,401,796 9,965,053 Commissions 509,399 540,146 834,850 Increase (decrease) in aggregate reserves for life and accident and health policies 648,536 (2,639,943) 4,809,456 General insurance expenses 367,575 398,688 448,657 Net transfers from Separate Account (6,144,421) (3,807,521) (1,671,681) Modified coinsurance adjustment on reinsurance assumed (236,816) (227,647) (339,634) Other expenses 148,320 104,817 99,317 -------------- -------------- -------------- TOTAL BENEFITS AND EXPENSES (3,717,820) 397,534 14,804,080 -------------- -------------- -------------- Net gain (loss) from operations before federal income tax expense 703,167 3,125,390 (3,190,012) Federal income tax (benefit) expense (65,495) 446,708 (245,745) -------------- -------------- -------------- NET GAIN (LOSS) FROM OPERATIONS 768,662 2,678,682 (2,944,267) -------------- -------------- -------------- Net realized capital (losses) gains, after tax (688,718) (270,071) 961,162 -------------- -------------- -------------- NET INCOME (LOSS) $79,944 $2,408,611 $(1,983,105) -------------- -------------- --------------
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 UNLESS OTHERWISE STATED)
FOR THE YEARS ENDED DECEMBER 31, 2010 2009 2008 --------------------------------------------------------------------------------------------------------------------------------- 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, Balance, beginning of year 2,889,208 1,692,530 1,483,869 Capital contribution 1,488 1,196,678 208,661 ------------- ------------- ------------- BALANCE, END OF YEAR 2,890,696 2,889,208 1,692,530 ------------- ------------- ------------- AGGREGATE WRITE-INS FOR OTHER THAN SPECIAL SURPLUS FUNDS Balance, beginning of year 189,963 497,354 194,430 (Loss) gain on inforce reinsurance (7,858) (7,777) 3,310 Permitted practice DTA -- (299,614) 299,614 ------------- ------------- ------------- BALANCE, END OF YEAR 182,105 189,963 497,354 ------------- ------------- ------------- AGGREGATE WRITE-INS FOR SPECIAL SURPLUS FUNDS Balance, beginning of year 266,358 -- -- Change to additional admitted deferred tax asset (84,887) 266,358 -- ------------- ------------- ------------- BALANCE, END OF YEAR 181,471 266,358 -- ------------- ------------- ------------- UNASSIGNED FUNDS Balance, beginning of year 737,572 (14,526) 875,789 Net income (loss) 79,944 2,408,611 (1,983,105) Change in net unrealized capital (losses) gains on common stocks and other invested assets (342,230) (1,127,255) 731,679 Change in net unrealized foreign exchange capital gains (losses) 151,724 31,071 (34,794) Change in net deferred income tax 47,041 (424,460) 669,251 Change in asset valuation reserve 9,005 (19,560) 40,851 Change in non-admitted assets 211,753 (405,548) (182,691) Change in reserve on account of change in valuation basis -- -- 23,935 Cumulative effect of change in accounting principles -- (5,644) -- Change in liability for reinsurance in unauthorized companies 4,737 (4,731) 559 Cumulative effect of permitted practice DTA -- 299,614 -- Dividends to stockholder (72,000) -- (156,000) Correction of prior year error (21,779) -- -- ------------- ------------- ------------- BALANCE, END OF YEAR 805,767 737,572 (14,526) ------------- ------------- ------------- CAPITAL AND SURPLUS, ------------- ------------- ------------- Balance, end of year $4,062,539 $4,085,601 $2,177,858 ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY STATEMENTS OF CASH FLOWS (STATUTORY BASIS) (AMOUNTS IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 2010 2009 2008 --------------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Premiums and annuity considerations $1,167,275 $(55,110,502) $9,351,978 Net investment income 763,046 492,876 408,199 Reserve adjustments on reinsurance (6,345,615) 56,553,042 (18,161) Miscellaneous income 1,553,382 1,567,209 1,904,094 -------------- -------------- -------------- Total income (2,861,912) 3,502,625 11,646,110 -------------- -------------- -------------- Benefits paid 549,412 6,195,957 10,733,727 Federal income tax payments (recoveries) 363,856 174,428 (96,263) Net transfers from separate accounts (6,455,732) (3,836,677) (1,671,681) Other expenses (benefits) 327,669 2,346,022 (2,295,760) -------------- -------------- -------------- Total benefits and expenses (5,214,795) 4,879,730 6,670,023 -------------- -------------- -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,352,883 (1,377,105) 4,976,087 -------------- -------------- -------------- INVESTING ACTIVITIES PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID Bonds 5,961,462 7,400,338 779,818 Common and preferred stocks 133,591 6,812 38,676 Mortgage loans 82,742 124,749 17,014 Derivatives and other 600,108 1,657,337 878,786 -------------- -------------- -------------- Total investment proceeds 6,777,903 9,189,236 1,714,294 -------------- -------------- -------------- COST OF INVESTMENTS ACQUIRED Bonds 6,988,481 7,675,090 3,706,708 Common and preferred stocks 51,046 1,824,388 19,943 Mortgage loans 33,125 51,678 278,706 Real estate 107 -- -- Derivatives and other 1,755,491 297,106 1,529,747 -------------- -------------- -------------- Total investments acquired 8,828,250 9,848,262 5,535,104 -------------- -------------- -------------- Net increase (decrease) in contract loans 11,680 (2,091) 11,147 -------------- -------------- -------------- NET CASH USED FOR INVESTING ACTIVITIES (2,062,027) (656,935) (3,831,957) -------------- -------------- -------------- FINANCING AND MISCELLANEOUS ACTIVITIES Capital contribution -- 486,062 208,661 Dividends to stockholder (72,000) -- (156,000) Funds held under reinsurance treaties with unauthorized reinsurers (154,549) 1,140,679 1,013,639 Net other cash (used) provided (73,313) (336,375) (449,560) -------------- -------------- -------------- NET CASH (USED FOR) PROVIDED BY FINANCING AND MISCELLANEOUS ACTIVITIES (299,862) 1,290,366 616,740 -------------- -------------- -------------- Net increase in cash and short-term investments (9,006) (743,674) 1,760,870 Cash and short-term investments, beginning of year 1,582,479 2,326,153 565,283 -------------- -------------- -------------- CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $1,573,473 $1,582,479 $2,326,153 -------------- -------------- -------------- Note: Supplemental disclosures of cash flow information for non-cash transactions: Capital contribution from Hartford Life Insurance Company to settle intercompany balances related to stock compensation 1,488 4,541 3,815 Capital contribution of subsidiary from Hartford Life insurance Company -- 1,406,075 -- Distribution of White River Life Reinsurance Company shares to Hartford Life Insurance Company -- (700,000) -- Stocks: subsidiary Hartford Life, Ltd. contributed to subsidiary Hartford Life International, Ltd. 29,472 -- --
SEE NOTES TO FINANCIAL STATEMENTS. F-7 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2010 AND 2009 AND 2008 (DOLLAR AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED) -------------------------------------------------------------------------------- 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Hartford Life and Annuity Insurance Company ("HLAI" or the "Company") is a wholly-owned subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly owned by The Hartford Financial Services Group, Inc. ("The Hartford"). Effective September 30, 2009, HLIC contributed the following wholly-owned subsidiaries, including European insurance operations, several broker-dealer entities and investment advisory and service entities to the Company: - Hartford Financial Services, LLC - Hartford Life International, Ltd. - Woodbury Financial Services, Inc. The contribution was made to more closely align entities with the company issuing the business as well as to more efficiently deploy capital across the organization. On September 29, 2010, the Company contributed Hartford Life Ltd., a wholly -- owned subsidiary based in Bermuda, to Hartford Life International, Ltd, also a wholly-owned subsidiary, in order to align all of the Company's foreign subsidiaries under one foreign holding company. The Company offers a complete line of fixed and variable annuities, universal and traditional individual life insurance and benefit products such as disability insurance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying statutory-basis financial statements of HLAI have been prepared in conformity with statutory accounting practices prescribed or permitted by the State of Connecticut Department of Insurance ("the Department"). The Department recognizes only statutory accounting practices prescribed or permitted by the State of Connecticut for determining and reporting the financial condition and results of operations of an insurance company and for determining solvency under the State of Connecticut Insurance Law. The National Association of Insurance Commissioners' Accounting Practices and Procedures Manual ("NAIC SAP") has been adopted as a component of prescribed practices by the State of Connecticut. A difference prescribed by Connecticut state law allows the Company to receive a reinsurance reserve credit for reinsurance treaties that provide 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. For the year ended December 31, 2008, the Company received approval from the Department to utilize a permitted practice to modify the statutory accounting for deferred income taxes prescribed by NAIC SAP by increasing the realization period for deferred tax assets from one year to three years and increasing the asset recognition limit from 10% to 15% of adjusted statutory capital and surplus. The benefits of this permitted practice were not considered by the Company when determining surplus available for dividends. The Company was required to maintain its risk-based capital ratio at or above 250% and submit a quarterly certification of its deferred tax asset calculation to the Department. If the Company had not used this permitted practice, its risk-based capital would not have triggered a regulatory event. For the annual period ending December 31, 2009, the Company adopted Statement of Statutory Accounting Principles ("SSAP") No. 10R, INCOME TAXES -- REVISED, A TEMPORARY REPLACEMENT OF SSAP NO. 10R, which incorporates the modification described in the aforementioned permitted practice. F-8 A reconciliation of the Company's net income and capital and surplus between NAIC SAP and practices prescribed by the Department is shown below: 2010 2009 2008 ------------- ------------- -------------- NET INCOME (LOSS), STATE OF CONNECTICUT BASIS $79,944 $2408,611 $(1,983,105) State prescribed practice: Reinsurance reserve credit 3,087 153,169 (142,389) ------------- ------------- -------------- NET INCOME (LOSS), NAIC SAP $83,031 $2,561,780 $(2,125,494) ------------- ------------- -------------- Statutory capital and surplus, State of Connecticut Basis $4,062,539 $4,085,601 $2,177,858 State permitted and prescribed practice: Reinsurance reserve credit -- prescribed practice (234,315) (237,402) (390,571) Deferred income taxes -- permitted practice -- -- (299,614) ------------- ------------- -------------- STATUTORY CAPITAL AND SURPLUS, NAIC SAP $3,828,224 $3,848,199 $1,487,673 ------------- ------------- --------------
The Company does not follow any other permitted or prescribed statutory accounting practices that have a material effect on statutory surplus, statutory net income or risk-based capital. The preparation of financial statements in conformity with NAIC SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The most significant estimates include those used in determining the liability for aggregate reserves for life and accident and health policies, evaluation of other-than-temporary impairments, valuation of derivatives and contingencies relating to corporate litigation and regulatory matters Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the statutory-basis financial statements. Although some variability is inherent in these estimates, management believes the amounts provided are adequate. Accounting practices and procedures as prescribed and permitted by the Department are different in certain material respects from accounting principles generally accepted in the Unites States of America ("GAAP"). The more significant differences are: (1) treatment of policy acquisition costs (commissions, underwriting and selling expenses, etc.) and sales inducements are charged to expense when incurred for statutory purposes rather than amortized to income as premiums are earned or in relation to gross profits of the underlying 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 National Association of Insurance Commissioners ("NAIC"), which may vary considerably from interest and mortality assumptions used under GAAP. Additionally for GAAP, reserves for guaranteed minimum death benefits ("GMDB") are based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience, and, reserves for guaranteed withdrawal benefits are considered embedded derivatives and reported at fair value; (4) excluding certain assets designated as non-admitted assets from the admitted assets, liabilities and surplus statement for statutory purposes by directly charging surplus; (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. For statutory accounting, the remaining obligation is expected to be recognized ratably over the next 6 years; (6) establishing a formula reserve for realized and unrealized losses due to default and equity risk associated with certain invested assets (Asset Valuation Reserve ("AVR")) for statutory purposes; as well as the deferral and amortization of realized gains and losses, caused by changes in interest rates during the period the asset is held, into income over the original life to maturity of the asset sold (Interest Maintenance Reserve ("IMR")) for statutory purposes; whereas on a F-9 GAAP basis, no such formula reserve is required and realized gains and losses are recognized in the period the asset is sold; (7) the reporting of reserves and benefits, net of reinsurance ceded for statutory purposes; whereas on a GAAP basis, reserves are reported gross of reinsurance with reserve credits presented as recoverable assets; (8) for statutory purposes, investments in unaffiliated bonds other than loan-backed and structured securities, rated in NAIC classes 1 through 5 are carried at amortized cost, and unaffiliated bonds other than loan-backed and structured securities, rated in NAIC class 6 are carried at the lower of amortized cost or fair value. Loan-backed bonds and structured securities are carried at either amortized cost or the lower of amortized cost or fair value in accordance with the provisions of Statement of Statutory Accounting Principles ("SSAP") No. 43 -- Revised ( Loan-backed and Structured Securities). GAAP requires that fixed maturities and loan-backed and structured securities be classified as "held-to maturity", "available-for-sale" or "trading", based on the Company's intentions with respect to the ultimate disposition of the security and its ability to affect those intentions. The Company's bonds and loan-backed securities were classified on a GAAP basis as "available-for-sale" and accordingly, 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 Account 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 the statutory-basis financial statements; (13) for statutory purposes derivative instruments that qualify for hedging, replication, or income generation are accounted for in a manner consistent with the hedged item, cash instrument and covered asset, respectively, typically amortized cost. Derivative instruments held for other investment and risk management activities, which do not receive hedge accounting treatment, receive fair value accounting for statutory purposes and are recorded at fair value with corresponding changes in value reported in unrealized gains and losses within surplus. For GAAP, derivative instruments are recorded at fair value with changes in value reported in earnings, with the exception of cash flow hedges and net investment hedges of a foreign operation, which are carried at fair value with changes in value reported as a separate component of stockholder 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. As of and for the years ended December 31, GAAP basis net income (loss) and stockholder's equity for the Company are as follows:
2010 2009 2008 -------------------------------------------------------------------------------- Net income (loss) $490,291 $(520,467) $(2,431,996) Stockholder's equity 3,928,046 3,562,235 1,543,717
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 and 1980 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"). Accident and health reserves are established using a two year preliminary term method and morbidity tables based primarily on Company experience. For non-interest sensitive ordinary life plans, the Company waives deduction of deferred fractional premiums upon death of insured. Return of the unearned portion of the final premium is governed by the terms of the contract. The Company does not have any forms for which the cash values are in excess of the legally computed reserve. F-10 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 2009, the Company adopted Actuarial Guideline No. 43 ("AG 43"), CARVM for Variable Annuities, which codifies the reserve valuation standards for variable annuity and other contracts involving certain guaranteed benefits. The implementation of AG 43 did not have a material impact on the Company's net income and capital and surplus. During 2008, the Company changed it's reserving methodologies relating to CARVM calculations for two blocks of Fortis Adaptable life policies. The change resulted in a basis change which lowered reserves by $23,935 and was reported as a direct increase to surplus. As of December 31, 2010 and 2009, the Company had $16,735,685 and $15,982,557 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, 2010 and 2009 totaled $75,161 and $70,973, 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. An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal Characteristics as of December 31, 2010 (including general and Separate Account liabilities) are as follows:
% OF AMOUNT TOTAL -------------------------------------------------------------------------------- Subject to discretionary withdrawal with fair value adjustment In a lump sum reflecting changes in $1,748,888 3.01 % interest rates or asset values In installments over 5 years or more, with or w/o reduction in interest rates At book value less current surrender 385,881 0.67 % charge of 5% or more At fair value 53,269,229 91.83 % -------------- -------- --- TOTAL WITH ADJUSTMENT OR AT FAIR VALUE 55,403,998 95.51 % -------------- -------- --- At book value without adjustment (minimal or no charge or adjustment) In a lump sum without adjustment 1,311,559 2.26 % Installments over less than 5 years -- 0.00 % In a lump sum subject to a fixed surrender 891,217 1.54 % charge of less than 5% In a lump sum subject to surrender charge -- 0.00 % All others -- 0.00 % Not subject to discretionary withdrawal 404,733 0.70 % -------------- -------- --- Total (Gross) 58,011,507 100.00 % Reinsurance ceded 159,982 -------------- TOTAL (NET) $57,851,525 -------------- Reconciliation of total annuity actuarial reserves and deposit fund liabilities: Life and Accident & Health Annual Statement: Exhibit 5, Annuities Section, Total (net) $4,404,910 Exhibit 5, Supplementary Contract Section, 3,987 Total (net) Exhibit 7, Deposit-Type Contracts Section, 67,566 Column 1, Line 14 -------------- SUBTOTAL 4,476,463 Separate Account Annual Statement: Exhibit 3, Column 2, Total line 53,375,062 Exhibit 3, Column 2, Total line -- Policyholder dividend and coupon -- accumulations Policyholder premiums -- Guaranteed interest contracts -- Other contract deposit funds, Exhibit 4, -- Line 9 -------------- SUBTOTAL 53,375,062 -------------- COMBINED TOTAL $57,851,525 --------------
F-11 INVESTMENTS Other than loan-backed and structured securities, investments in unaffiliated bonds rated in NAIC classes 1-5 are carried at amortized cost and unaffiliated bonds rated in NAIC class 6 are carried at the lower of amortized cost or fair value. Short-term investments include all investments whose maturities, at the time of acquisition, are one year or less and are stated at amortized cost. Unaffiliated common stocks are carried at fair value. Investments in stocks of uncombined subsidiaries, controlled and affiliated ("SCA") companies are based on the net worth of the subsidiary in accordance with SSAP No. 97 (Investment in Subsidiary, Controlled, and Affiliated Entities, a replacement of SSAP No. 88). The change in the carrying value is recorded as a change in net unrealized capital gains (losses), a component of unassigned surplus. Unaffiliated preferred stocks are carried at cost, lower of cost or amortized cost, or fair value depending on the assigned credit rating and whether the preferred stock is redeemable or non-redeemable. Mortgage loans on real estate are stated at the outstanding principal balance, less any allowances for credit losses. Loan-backed bonds and structured securities are carried at either amortized cost or the lower of amortized cost or fair value in accordance with the provisions of SSAP No. 43 -- Revised. Significant changes in estimated cash flows from the original purchase assumptions are accounted for using the prospective method, except for highly rated fixed rate securities, which use the retrospective method. The Company has ownership interests in joint ventures, investment partnerships and limited liability companies. The Company carries these interests based upon audited financial statements in accordance with SSAP No. 48 (Joint Ventures, Partnerships and Limited Liability Companies). Contract loans are carried at outstanding balance, which approximates fair value. Interest income from fixed maturities and mortgage loans is recognized when earned on the constant effective yield method based on estimated timing of cash flows. The amortization of premium and accretion of discount for fixed maturities also takes into consideration call and maturity dates that produce the lowest yield. For fixed rate securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future repayments using the retrospective method; however, if these investments are impaired, any yield adjustments are made using the prospective method. The Company has not elected under SSAP No. 43 -- Revised to use the book value as of January 1, 1994 as the cost for applying the retrospective adjustment method to securities purchased prior to that date. Investment income on variable rate and interest only securities is determined using the prospective method. Prepayment fees on bonds and mortgage loans are recorded in net investment income when earned. Dividends are recorded as earned on the ex-dividend date. For partnership investments, income is earned when cash distributions of income are received. For impaired debt securities, the Company accretes the new cost basis to the estimated future cash flows over the expected remaining life of the security by prospectively adjusting the security's yield. Due and accrued investment income amounts over 90 days past due are nonadmitted. Net realized gains and losses from investment sales represent the difference between the sales proceeds and the cost or amortized cost of the investment sold, determined on a specific identification basis. Net realized capital gains and losses also result from termination or settlement of derivative contracts that do not qualify, or are not designated, as a hedge for accounting purposes. Impairments are recognized within net realized capital losses when investment losses in value are deemed other-than-temporary. Foreign currency transaction gains and losses are also recognized within net realized capital gains and losses. The AVR is designed to provide a standardized reserving process for realized and unrealized losses due to default and equity risks associated with invested assets. The AVR balances were $16,559 and $25,564 as of December 31, 2010 and 2009, respectively. Additionally, the IMR captures net realized capital gains and losses, net of applicable income taxes, resulting from changes in interest rates and amortizes these gains or losses into income over the life of the bond, preferred stock or mortgage loan sold. The IMR balances as of December 31, 2010 and 2009 were $43,796, and $(9,037) respectively. The 2010 IMR balance was included as a component of other liabilities on the Statement of Admitted Assets, Liabilities and Surplus. The 2009 IMR balance was an asset balance and was reflected as a component of nonadmitted assets in Unassigned Funds in accordance with statutory accounting practices. The net capital gains and (losses) captured in the IMR, net of taxes, in 2010, 2009, and 2008 were $67,930, $(3,242) and $(3,339), respectively. The amount of income and (expense) amortized from the IMR net of taxes in 2010, 2009, and 2008 included in the Company's Statements of Operations, was $15,097, $(1,370) and $(484), 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 below its cost or amortized cost basis be assessed to determine if the decline is other-than-temporary. In addition, for securities expected to be sold, an other-than-temporary impairment charge is recognized if the Company does not expect the fair value of a security to recover to its cost or amortized cost basis prior to the expected date of sale. The impaired value of the other-than-temporarily impaired investment becomes its new cost basis. The Company has a security monitoring process overseen by a committee of investment and accounting professionals that identifies securities that, due to certain characteristics, as described below, are subjected to an enhanced analysis on a quarterly basis. Securities that are in an unrealized loss position are reviewed at least quarterly to determine if an other-than-temporary impairment is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating F-12 whether a decline in value for securities not subject to SSAP No. 43 -- Revised is other-than-temporary include: (a) the length of time and the extent to which the fair value has been less than cost or amortized cost, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, and (c) whether the debtor is current on contractually obligated payments. Once an impairment charge has been recorded, the Company continues to review the other-than-temporarily impaired securities for further other-than-temporary impairments on an ongoing basis. For securities that are not subject to SSAP No. 43 -- Revised, if the decline in value of a bond or equity security is other-than-temporary, a charge is recorded in net realized capital losses equal to the difference between the fair value and cost or amortized cost basis of the security. For certain securitized financial assets with contractual cash flows (including asset-backed securities), SSAP No. 43 -- Revised requires the Company to periodically update its best estimate of cash flows over the life of the security. If management determines that its best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment are less than its amortized cost, then an other-than-temporary impairment charge is recognized equal to the difference between the amortized cost and the Company's best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment. The Company's best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment becomes its new cost basis. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. As a result, actual results may differ from estimates. Projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. In addition, if the Company does not have the intent and ability to hold a security subject to the provisions of SSAP No. 43 -- Revised until the recovery of value, the security is written down to fair value. Net realized capital losses resulting from write-downs for other-than-temporary impairments on corporate and asset-backed bonds were $16,192, $110,124 and $92,544 for the years ended December 31, 2010, 2009 and 2008, respectively. Net realized capital losses resulting from write-downs for other-than-temporary impairments on equities were $0, $16,593 and $20,786 for the years ended December 31, 2010, 2009 and 2008, 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. Additionally, a loss contingency valuation allowance is established for estimated probable credit losses on certain homogenous groups of loans. Changes in valuation allowances are recorded in net unrealized capital gains and losses. Interest income on an impaired loan is accrued to the extent it is deemed collectable and the loan continues to perform under its original or restructured terms. Interest income on defaulted loans is recognized when received. As of December 31, 2010, 2009 and 2008, the Company had impaired mortgage loans with a related allowance for credit losses of $2,561, $42,212 and $0, respectively. The Company may at any time use derivative instruments, including swaps, caps, floors, options, futures and forwards. On the date the derivative contract is entered into, the Company designates the derivative as hedging (fair value, cash flow, or net investment in a foreign operation), replication, income generation, or held for other investment and/or risk management activities, which primarily involves managing asset or liability related risks which do not qualify for hedge accounting under SSAP No. 86 (Accounting for Derivative Instruments and Hedging, Income Generation, and Replication (Synthetic Asset) Transactions). The Company's derivative transactions are permitted uses of derivatives under the derivative use plan required by the 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 balance sheet as a derivative asset or liability, respectively. Periodic cash flows and accruals are recorded in a manner consistent with the hedged item. Upon termination of the derivative, any gain or loss is recognized as a derivative capital gain or loss. Derivatives used in replication relationships are accounted for in a manner consistent with the cash instrument and the replicated asset. Typically, cost paid or consideration received at inception of the contract is recorded on the balance sheet as a derivative asset or liability, respectively. Periodic cash flows and accruals of income/expense are recorded as a component of derivative net investment income. Upon termination of the derivative, any gain or loss is recognized as a derivative capital gain or loss. Derivatives used in income generation relationships are accounted for in a manner consistent with the associated covered asset. Typically, consideration received at inception of the contract is recorded on the balance sheet as a derivative liability. Upon termination, any remaining derivative liability, along with any disposition payments are recorded to derivative capital gain or loss. F-13 Derivatives held for other investment and/or risk management activities receive fair value accounting. The derivatives are carried on the balance sheet at fair value and the changes in fair value are recorded in derivative unrealized gains and losses. Periodic cash flows and accruals of income/expense are recorded as a component of derivative net investment income. ADOPTION OF ACCOUNTING STANDARDS SSAP No. 10R (Income Taxes -- Revised, A Temporary Replacement of SSAP No. 10) was issued in December 2009, and updated in September 2010, and is effective for annual periods ending December 31, 2009 and interim and annual periods of 2010 and 2011. SSAP No. 10R allows for an option to increase the admitted deferred tax assets for companies with a risk-based capital calculation that exceeds a stated threshold. Additional disclosures are required for 2010 and 2011 to the extent tax planning strategies are utilized to admit deferred tax assets. The implementation and financial impact of this on the Company as of December 31, 2010 and 2009 was an increase of $181,471 and $266,358, respectively, in net admitted deferred tax assets with a corresponding increase of $181,471 and $266,358 in surplus in aggregate write-ins for special surplus funds which is included in the Statutory-Basis Statements of Changes in Capital and Surplus for the years ended December 31, 2010 and 2009, respectively. (See Note 5). SSAP No. 43 -- Revised -- was issued by the NAIC in September 2009 and was effective September 30, 2009. SSAP No. 43 -- Revised supersedes SSAP No. 98 (Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, an Amendment of SSAP No. 43 -- Loan-backed and Structured Securities) and paragraph 13 of SSAP No. 99 (Accounting for Certain Securities Subsequent to an Other-Than-Temporary Impairment). SSAP 43 -- Revised establishes statutory accounting principles for investments in loan-backed and structured securities and requires additional disclosures as provided in Note 3, Investments. The implementation of SSAP No. 43 --Revised negatively impacted surplus for other-than-temporary impairments of loan-backed securities by $14,377 in 2009. 3. INVESTMENTS For the years ended December 31, (A) COMPONENTS OF NET INVESTMENT INCOME
2010 2009 2008 -------------------------------------------------------------------------------- Interest income from bonds and $469,730 $440,304 $343,501 short-term investments Interest income from contract loans 20,360 22,025 22,535 Interest income from mortgage loans 27,189 31,264 26,596 Interest and dividends from other 150,668 21,271 (9,818) investments ---------- ---------- ---------- Gross investment income 667,947 514,864 382,814 Less: investment expenses 16,095 7,815 6,780 ---------- ---------- ---------- NET INVESTMENT INCOME $651,852 $507,049 $376,034 ---------- ---------- ----------
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT TERM INVESTMENTS
2010 2009 2008 -------------------------------------------------------------------------------- Gross unrealized capital gains $442,646 $258,827 $89,940 Gross unrealized capital losses (195,775) (400,588) (981,592) ----------- ----------- ----------- Net unrealized capital gains (losses) 246,871 (141,761) (891,652) Balance, beginning of year (141,761) (891,652) (65,887) ----------- ----------- ----------- CHANGE IN NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT TERM INVESTMENTS $388,632 $749,891 $(825,765) ----------- ----------- -----------
(C) COMPONENTS OF NET UNREALIZED CAPITAL LOSSES ON COMMON STOCKS AND PREFERRED STOCKS
2010 2009 2008 -------------------------------------------------------------------------------- Gross unrealized capital gains $2,105 $32,641 $245 Gross unrealized capital losses (337,773) (49,799) (157,708) ----------- ----------- ----------- Net unrealized capital losses (335,668) (17,158) (157,463) Balance, beginning of year (17,158) (157,463) (54,290) ----------- ----------- ----------- CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS AND PREFERRED STOCKS $(318,510) $140,305 $(103,173) ----------- ----------- -----------
F-14 (D) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
2010 2009 2008 -------------------------------------------------------------------------------- Bonds and short-term investments $57,289 $(102,510) $(103,639) Common stocks 10 (611) (784) Preferred stocks -- (12,733) (27,428) Mortgage loans (43,549) (5,911) (733) Derivatives (614,797) (148,011) 988,040 Other invested assets 5,232 (4,599) 108,578 Realized capital (losses) gains (595,815) (274,375) 964,034 Capital gains tax (benefit) 24,973 (1,062) (467) Net realized capital (losses) gains, after tax (620,788) (273,313) 964,501 Less: amounts transferred to IMR 67,930 (3,242) 3,339 ----------- ----------- ----------- NET REALIZED CAPITAL (LOSSES) GAINS, AFTER TAX $(688,718) $(270,071) $961,162 ----------- ----------- -----------
For the years ended December 31, 2010, 2009 and 2008, sales of unaffiliated bonds and short-term investments resulted in proceeds of $6,758,918, $8,402,279 and $1,083,622, gross realized capital gains of $113,537, $126,993 and $13,331, and gross realized capital losses of $40,731, $119,379 and $29,008 respectively, before transfers to the IMR. For the years ended December 31, 2010, 2009 and 2008, sales of unaffiliated common and preferred stocks resulted in proceeds of $10, $6,812 and $18,884, gross realized capital gains of $10, $2,737 and $11, and gross realized capital losses of $0, $76 and $7,437, respectively. (E) INVESTMENTS -- DERIVATIVE INSTRUMENTS OVERVIEW The Company utilizes a variety of derivative instruments, including swaps, caps, floors, forwards, futures and options through one of four Company approved objectives: to hedge risk arising from interest rate, equity market, credit spread including issuer defaults, price or foreign currency exchange rate risk or volatility; to manage liquidity; to control transaction costs; or to enter into income generation or replication transactions. On the date the derivative contract is entered into, the Company designates the derivative as hedging (fair value, cash flow, or net investment in a foreign operation), income generation, replication, or held for other investment and/or risk management activities, which primarily involves managing asset or liability related risks which do not qualify for hedge accounting under SSAP No. 86. The Company's derivative transactions are used in strategies permitted under the derivative use plan required by the State of Connecticut Insurance Department. Interest rate swaps and index swaps involve the periodic exchange of payments with other parties, at specified intervals, calculated using the agreed upon rates or indices and notional principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value. Credit default swaps entitle one party to receive a periodic fee in exchange for an obligation to compensate the other party should a credit event occur on the part of the referenced issuer. Interest rate cap and floor contracts entitle the purchaser to receive from the issuer at specified dates, the amount, if any, by which a specified market rate exceeds the cap strike rate or falls below the floor strike rate, applied to a notional principal amount. A premium payment is made by the purchaser of the contract at its inception, and no principal payments are exchanged. Forward contracts are customized commitments that specify a rate of interest or currency exchange rate to be paid or received on an obligation beginning on a future start date and are typically settled in cash. Financial futures are standardized commitments to either purchase or sell designated financial instruments at a future date for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities or cash, and changes in the futures' contract values are settled daily in cash. Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date. 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. F-15 STRATEGIES The notional value, fair value, and carrying value of derivative instruments used during the year are disclosed in the strategy discussions below. During the years 2010 and 2009, 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 at December 31, 2010 and 2009 were $39,112,849 and $28,636,756, respectively. The fair value of derivative instruments are based upon widely accepted pricing valuation models which utilize independent third party data as inputs or independent broker quotations. The Company did not have any material unrealized gains or losses during the reporting period representing the component of the derivative instruments gain or loss from derivatives that no longer qualify for hedge accounting. The fair value of derivative instruments at December 31, 2010 and 2009 was $988,931 and $113,244, respectively. As of December 31, 2010 and 2009 the average fair value for derivatives held for other investment and/or risk management activities was $816,972 and $840,855, respectively. The carrying value of derivative instruments at December 31, 2010 and 2009 was $797,399 and $132,015, respectively. CASH FLOW HEDGES INTEREST RATE SWAPS: Interest rate swaps are primarily used to convert interest receipts on floating-rate fixed maturity investments to fixed rates. Forward starting swap agreements are used to hedge the interest rate exposure of anticipated future purchases of fixed maturity securities. The maximum length of time over which the Company is hedging exposure to the variability of future cash flows for forecasted transactions, excluding those forecasted transactions related to the payment of variable interest on existing financial instruments, is approximately two years. 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, 2010 and 2009 interest rate swaps used in cash flow hedge relationships had a notional value of $522,000 and $605,000, respectively, a fair value of $9,793 and $(2,845), respectively, and a carrying value of $0. FOREIGN CURRENCY SWAPS: Foreign currency swaps are primarily used to hedge the foreign currency exposure related to certain guaranteed minimum income benefit ("GMIB") fixed liability payments reinsured from a related party. As of December 31, 2010 and 2009 swaps in this strategy had a notional value of $1,997,409 and $2,219,332, respectively, a fair value of $177,154 and $(19,236), respectively, and a carrying value of $0. Foreign currency swaps are also 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 British pounds and are swapped to minimize cash flow fluctuations due to changes in currency rates. As of December 31, 2010 and 2009 foreign currency swaps used to hedge foreign denominated fixed maturity investments in cash flow hedge relationships had a notional value of $72,010 and $80,908, respectively, a fair value of $13,187 and $9,837, respectively, and a carrying value of $8,724 and $6,527, respectively. REPLICATION TRANSACTIONS CREDIT DEFAULT SWAPS: The Company periodically enters into credit default swaps as part of replication transactions. Swaps used in replication transactions had a notional value at December 31, 2010 of $20,500, a fair value of $465, and a carrying value of $343. As of December 31, 2009 the Company did not have any swaps used in replication transactions. OTHER INVESTMENT AND/OR RISK MANAGEMENT ACTIVITIES INTEREST RATE CAPS: The Company is exposed to policyholder surrenders during a rising interest rate environment. Interest rate cap contracts are used to mitigate the Company's loss in a rising interest rate environment. The increase in yield from the cap contracts in a rising interest rate environment may be used to raise credited rates, thereby increasing the Company's competitiveness and reducing the policyholder's incentive to surrender. As of December 31, 2010 and 2009 interest rate caps used to mitigate risk in a rising interest rate environment had a notional value of $54,077, a fair value of $84 and $688, respectively, and a carrying value of $84 and $688, respectively. For the year ended December 31, 2010 there were no realized gains and losses on interest rate caps. For the years ended December 31, 2009 and 2008 derivative contracts in this strategy reported losses of $(230) and $(5,450), respectively, in realized capital 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. As of December 31, 2010 and 2009 credit default swaps, excluding swaps in offsetting relationships, had a notional value of $378,214 and $304,963, respectively, a fair value of $(1,725) and $(6,316), respectively, and a carrying value of $(1,725) and $(6,316), respectively. For the years ended December 31, 2010, 2009 and 2008 credit default swaps reported a gain of $1,329, $802 and $20,185, respectively, in realized capital gains and losses. In addition, the Company may enter into credit default swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value of the original swap. As of December 31, 2010 and 2009 credit default swaps in offsetting relationships had a notional value of $589,715 and $309,134, respectively, a fair value of $(4,120) and $(3,609), respectively, and a carrying value of $(4,120) and $(3,609), respectively. For the years ended December 31, 2010 and 2009 credit default swaps in offsetting relationships F-16 reported a loss of $(4) and a gain of $3, respectively, in realized capital gains and losses. For the year ended December 31, 2008 there were no realized gains and losses on credit default swaps in offsetting relationships. FOREIGN CURRENCY SWAPS AND FORWARDS: The Company enters into foreign currency swaps to hedge the foreign currency exposures in certain of its foreign fixed maturity investments. In addition, foreign currency forward contracts convert euros to yen to U.S. dollars in order to economically hedge the foreign currency risk associated with certain Japanese variable annuity products. As of December 31, 2010 and 2009 foreign currency swaps and forwards had a notional value of $1,743,275 and $2,384,822, respectively, a fair value of $63,965 and $6,900, respectively, and a carrying value of $63,965 and $6,900, respectively. For the years ended December 31, 2010, 2009 and 2008 derivative contracts in this strategy reported gains of $20,764 and $27,207 and a loss of $(773), respectively, in realized capital gains and losses. GMWB HEDGING DERIVATIVES: 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, equity volatility, dividend, and total return Europe, Australasia, and Far East ("EAFE") swap contracts to hedge exposure to the volatility associated with a portion of the guaranteed minimum withdrawal benefit ("GMWB") liabilities which are not reinsured. The Company has also entered into a customized swap contract to hedge certain risk components for the remaining term of certain blocks of non-reinsured GMWB riders. As of December 31, 2010 and 2009 derivative contracts in this strategy had a notional value of $11,930,602 and $9,016,065, respectively, a fair value of $384,420 and $(46,115), respectively, and a carrying value of $384,420 and $(46,115), respectively. For the years ended December 31, 2010, 2009 and 2008, derivative contracts in this strategy reported a loss of $(144,744), and gains of $75,643, and $1,006,992, respectively, in realized capital gains and losses. INTEREST RATE SWAPS AND FUTURES: The Company enters into interest rate swaps and futures to manage duration risk between assets and liabilities. As of December 31, 2010 and 2009 the Company did not have any derivative contracts in this strategy, excluding swaps in offsetting relationships. During 2010 interest rates swaps and futures reported a gain of $5,772 in realized capital gains and losses. The Company enters into interest rates swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value in the original swap. As of December 31, 2010 and 2009 interest rate swaps in offsetting relationships had a notional value of $225,000, a fair value of $(16,943) and $(11,661), respectively, and a carrying value of $(16,943) and $(11,661), respectively. For the year ended December 31, 2010 interest rate swaps in offsetting relationships reported a gain of $5,822 in realized capital gains and losses. For the year ended December 31, 2009 there were no realized gains and losses on interest rate swaps in offsetting relationships. For the year ended December 31, 2008 interest rate swaps in offsetting relationships reported a gain of $2,316 in realized capital gains and losses. MACRO HEDGE PROGRAM: The Company purchases S&P 500 index swaps and options, foreign denominated equity options and forwards, as well as futures contracts to economically hedge the statutory reserve impact of equity volatility arising primarily from guaranteed minimum death benefits ("GMDB") and guaranteed minimum withdrawal benefits ("GMWB") obligations against a decline in the equity markets and changes in foreign currency rates. As of December 31, 2010 and 2009 derivative contracts in this strategy had a notional value $21,580,047 and $13,436,955, respectively, a fair value of $362,651 and $185,534, respectively, and a carrying value of $362,651 and $185,534, respectively. For the years ended December 31, 2010, 2009 and 2008, derivative contracts in this strategy reported losses of $(535,737), $(228,653) and $(13,503), respectively, in realized capital gains and losses. WARRANTS: During 2003, the Company received warrant contracts as part of a reinsurance treaty settlement. During 2010 the Company had terminated the warrant contracts. As of December 31, 2009 the warrants had a notional value of $500, a fair value of $67, and a carrying value of $67. There were no realized gains and losses during the years 2010, 2009 and 2008. CREDIT RISK ASSUMED THROUGH CREDIT DERIVATIVES The Company enters into credit default swaps that assume credit risk from a referenced index or asset pool in order to synthetically replicate investment transactions. In addition, the Company may enter into credit default swaps that assume credit risk to terminate existing credit default swaps that reduce credit risk, thereby offsetting the changes in value of the original swap. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced security issuer's debt obligation. A credit event is generally defined as default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade baskets of up to five corporate issuers and diversified portfolios of corporate issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings. The following tables present the notional amount, fair value, carrying value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amount, fair value and carrying value for credit derivatives in which the Company is assuming credit risk as of December 31, 2010 and 2009. F-17 AS OF DECEMBER 31, 2010
WEIGHTED AVERAGE NOTIONAL CARRYING YEARS TO AMOUNT (2) FAIR VALUE VALUE MATURITY ---------------------------------------------------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $142,872 $(380) $(502) 2 years Below investment grade risk exposure 20,866 (42) (42) 3 years Basket credit default swaps (4) Investment grade risk exposure 243,459 2,239 2,239 5 years Investment grade risk exposure 70,000 (2,961) (2,961) 7 years Credit linked notes Below investment grade risk exposure 50,000 43,400 49,880 6 years --------- ------- ------- -------- TOTAL $527,197 $42,256 $48,614 --------- ------- ------- UNDERLYING REFERENCED CREDIT OBLIGATION(S) (1) AVERAGE CREDIT TYPE RATING ----------------------------- ----------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk Corporate exposure Credit/Foreign Gov. A- Below investment grade risk exposure Corporate Credit BB+ Basket credit default swaps (4) Investment grade risk exposure Corporate Credit BBB+ Investment grade risk exposure CMBS Credit A+ Credit linked notes Below investment grade risk exposure Corporate Credit BB+ ------------------------ --------- TOTAL OFFSETTING OFFSETTING OFFSETTING NOTIONAL FAIR CARRYING AMOUNT (3) VALUE (3) VALUE (3) ----------------------------- -------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $122,372 $(157) $(157) Below investment grade risk exposure 20,866 (3,077) (3,077) Basket credit default swaps (4) Investment grade risk exposure 78,781 (1,136) (1,136) Investment grade risk exposure 70,000 2,961 2,961 Credit linked notes Below investment grade risk exposure -- -- -- -------- ------- ------- TOTAL $292,019 $(1,409) $(1,409) -------- ------- -------
AS OF DECEMBER 31, 2009
WEIGHTED AVERAGE NOTIONAL FAIR CARRYING YEARS TO AMOUNT (2) VALUE VALUE MATURITY --------------------------------------------------------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $35,000 $(13) $(13) 4 years Below investment grade risk exposure 14,453 (194) (194) 4 years Basket credit default swaps (4) Investment grade risk exposure 35,566 1,547 1,547 4 years Investment grade risk exposure 70,000 (11,501) (11,501) 8 years -------- -------- -------- -------- TOTAL $155,019 $(10,161) $(10,161) -------- -------- -------- UNDERLYING REFERENCED CREDIT OBLIGATION(S) (1) AVERAGE CREDIT TYPE RATING ----------------------------- ----------------------------------------------- CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure Corporate Credit AAA Below investment grade risk exposure Corporate Credit BB+ Basket credit default swaps (4) Investment grade risk exposure Corporate Credit A- Investment grade risk exposure CMBS Credit AA+ ------------------------ --------- TOTAL OFFSETTING OFFSETTING OFFSETTING NOTIONAL FAIR CARRYING AMOUNT (3) VALUE (3) VALUE (3) ----------------------------- ------------------------------------------------ CREDIT DERIVATIVE TYPE BY DERIVATIVE RISK EXPOSURE Single name credit default swaps Investment grade risk exposure $35,000 $(833) $(833) Below investment grade risk exposure 14,453 (2,570) (2,570) Basket credit default swaps (4) Investment grade risk exposure 34,661 (1,547) (1,547) Investment grade risk exposure 70,000 11,501 11,501 -------- ------ ------ TOTAL $154,114 $6,551 $6,551 -------- ------ ------
(1) The average credit ratings are based on availability and the midpoint of the applicable ratings among Moody's, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. (2) Notional amount is equal to the maximum potential future loss amount. There is no specific collateral related to these contracts or recourse provisions included in the contracts to offset losses. (3) The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of or losses paid related to the original swap. (4) Includes $313,459 and $105,869 as of December 31, 2010 and 2009, respectively, of standard market indices of diversified portfolios of corporate issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index. CREDIT RISK The Company's derivative counterparty exposure policy establishes market-based credit limits, favors long-term financial stability and creditworthiness of the counterparty and typically requires credit enhancement/credit risk reducing agreements. The Company minimizes the credit risk in derivative instruments by entering into transactions with high quality counterparties rated A2/A or better, which are monitored and evaluated by the Company's risk management team and reviewed by senior management. The Company has developed credit exposure thresholds which are based upon counterparty ratings. Credit exposures are measured using the market value of the derivatives, resulting in amounts owed to the Company by its counterparties or potential payment obligations from the Company to its counterparties. Credit exposures are generally quantified daily based on the prior business day's market value and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of derivatives exceeds the contractual thresholds. In accordance with industry standards and the contractual agreements, collateral is typically settled on the next business day. The Company has exposure to credit risk for amounts below the exposure thresholds which are uncollateralized, as well as for market fluctuations that may occur between contractual settlement periods of collateral movements. Counterparty exposure thresholds are developed for each of the counterparties based upon their ratings. The maximum uncollateralized threshold for a derivative counterparty is $10,000. In addition, the compliance unit monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company also maintains a policy of requiring that all derivative contracts, other than exchange traded contracts and certain currency forward contracts, be governed by an International Swaps and Derivatives Association Master Agreement which is structured by legal entity and by counterparty and permits right of offset. F-18 For the years ended December 31, 2010 and 2009 the Company did not have any losses on derivative instruments due to counterparty nonperformance. For the year ended December 31, 2008 the Company had incurred losses of $(13,838) on derivative instruments due to counterparty default related to the bankruptcy of Lehman Brothers Holdings, Inc. These losses were a result of the contractual collateral threshold amounts and open collateral calls in excess of such amounts immediately prior to the bankruptcy filing, as well as interest rate and credit spread movements from the date of the last collateral call to the date of the bankruptcy filing. (F) CONCENTRATION OF CREDIT RISK The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk. As of December 31, 2010 and 2009, the Company is not exposed to any credit concentration risk of a single issuer, excluding U.S. government and certain U.S. government agencies, wholly owned subsidiaries, and short term investment pool greater than 10% of the Company's capital and surplus. (G) BONDS, SHORT-TERM INVESTMENTS, COMMON STOCKS AND PREFERRED STOCKS
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS DECEMBER 31, 2010 U.S. government and government agencies and authorities: -- Guaranteed and sponsored -- exluding asset-backed $811,351 $2,646 $(38,920) $775,077 -- Guaranteed and sponsored -- asset-backed 842,971 19,961 (4,249) 858,683 States, municipalities and political subdivisions 184,201 1,483 (6,939) 178,745 International governments 104,746 5,004 (546) 109,204 All other corporate -- excluding asset-backed 4,858,817 319,349 (39,143) 5,139,023 All other corporate -- asset-backed 1,378,583 37,862 (94,423) 1,322,022 Hybrid securities 91,948 63 (11,555) 80,456 Short-term investments 1,377,157 -- -- 1,377,157 Affiliate bond 1,419,615 56,278 -- 1,475,893 -------------- ----------- ------------ -------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $11,069,389 $442,646 $(195,775) $11,316,260 -------------- ----------- ------------ --------------
GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS DECEMBER 31, 2010 Common stock -- unaffiliated $5,487 $2,105 $(2) $7,590 Common stock -- affiliated 1,077,880 -- (336,069) 741,811 -------------- ----------- ------------ -------------- TOTAL COMMON STOCKS $1,083,367 $2,105 $(336,071) $749,401 -------------- ----------- ------------ --------------
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS DECEMBER 31, 2010 Preferred stock -- unafiliated $8,902 $ -- $(1,702) $7,200 -------------- ----------- ------------ -------------- TOTAL PREFERED STOCKS $8,902 $ -- $(1,702) $7,200 -------------- ----------- ------------ --------------
F-19
STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- BONDS AND SHORT-TERM INVESTMENTS DECEMBER 31, 2009 U.S. government and government agencies and authorities: -- Guaranteed and sponsored -- excluding asset-backed $700,086 $2,209 $(19,381) $682,914 -- Guaranteed and sponsored -- asset-backed 540,081 15,260 (1,083) 554,258 States, municipalities and political subdivisions 90,420 951 (10,165) 81,206 International governments 82,841 4,614 (1,275) 86,180 All other corporate -- excluding asset-backed 3,933,824 210,001 (43,650) 4,100,175 All other corporate -- asset-backed 1,636,174 25,792 (246,728) 1,415,238 Hybrid securities 144,409 -- (23,365) 121,044 Short-term investments 1,464,800 -- -- 1,464,800 Affiliate bond 1,468,810 -- (54,941) 1,413,869 -------------- ----------- ------------ -------------- TOTAL BONDS AND SHORT-TERM INVESTMENTS $10,061,445 $258,827 $(400,588) $9,919,684 -------------- ----------- ------------ --------------
GROSS GROSS ESTIMATED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS DECEMBER 31, 2009 Common stock -- unaffiliated $5,441 $1,263 $(17) $6,687 Common stock -- affiliated 1,123,632 31,378 (49,782) 1,105,228 ------------- --------- ---------- ------------- TOTAL COMMON STOCKS $1,129,073 $32,641 $(49,799) $1,111,915 ------------- --------- ---------- -------------
GROSS GROSS ESTIMATED STATEMENT UNREALIZED UNREALIZED FAIR VALUE GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS DECEMBER 31, 2009 Prefered stock -- unafiliated $73,901 $4,495 $(10,675) $67,721 --------- -------- ---------- --------- TOTAL PREFERRED STOCKS $73,901 $4,495 $(10,675) $67,721 --------- -------- ---------- ---------
The statement value and estimated fair value of bonds and short-term investments at December 31, 2010 by expected maturity year are shown below. Expected maturities may differ from contractual maturities due to call or prepayment provisions. Asset-backed securities, including mortgage-backed securities and collateralized mortgage obligations, are distributed to maturity year based on the Company's estimate of the rate of future prepayments of principal over the remaining lives of the securities. These estimates are developed using prepayment speeds provided in broker consensus data. Such estimates are derived from prepayment speeds experienced at the interest rate levels projected for the applicable underlying collateral. Actual prepayment experience may vary from these estimates.
STATEMENT ESTIMATED VALUE FAIR VALUE -------------------------------------------------------------------------------- MATURITY Due in one year or less $1,938,947 $1,953,625 Due after one year through five years 2,421,025 2,482,788 Due after five years through ten years 3,997,270 4,098,886 Due after ten years 2,712,147 2,780,961 -------------- -------------- TOTAL $11,069,389 $11,316,260 -------------- --------------
At December 31, 2010 and 2009, securities with a statement value of $3,821 and $3,814, 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 5.36% and 3.50% for loans during 2010 and the lending rate was 7.5% for the one new mortgage loan in 2009. During 2010 and 2009, the Company did not reduce interest rates on any outstanding mortgage loans. For loans held at December 31, 2010 and 2009, 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 75.47% and 79.23%, respectively. There were no taxes, assessments or amounts advanced and not included in the mortgage loan total. As of December 31, 2010 and 2009, the Company did not hold mortgages with interest more than 180 days past due. As of December 31, 2010 and 2009, there were impaired loans with a F-20 related allowance for credit losses of $2,561 and $42,212 with interest income recognized during the period the loans were impaired of $1,593 and $(64), respectively. (I) RESTRUCTURED DEBT IN WHICH THE COMPANY IS A CREDITOR The Company did not have investments in restructured loans as of December 31, 2010, 2009 and 2008. (J) SECURITIES LENDING AND COLLATERAL ARRANGEMENTS In 2009 and 2008, the Company participated in a securities lending program to generate additional income, whereby certain domestic fixed income securities were loaned from the Company's investment portfolio to qualifying third parties. Borrowers of these securities provided collateral of 102% of the market value of the loaned securities. Acceptable collateral was in the form of cash or U.S. Government securities. The market value of the loaned securities was monitored and additional collateral was obtained if the market value of the collateral fell below 100% of the market value of the loaned securities. Under the terms of the securities lending program, the lending agent indemnified the Company against borrower defaults. The Company earned income from the cash collateral or received a fee from the borrower. The Company recorded before-tax income from securities lending transactions, net of lending fees, of $0, $1,232 and $135 for the years ended December 31, 2010, 2009 and 2008, respectively, which was included in net investment income. The Company did not participate in a securities lending program in 2010. 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, 2010 and 2009, collateral pledged of $260,874 and $340,474, respectively, was included in bonds, on the Statements of AdmitTed Assets, Liabilities and Surplus. As of December 31, 2010 and 2009, the Company had accepted collateral relating to the derivative instruments consisting of cash, U.S. Government and U.S. Government agency securities with a statement value of $840,946 and $269,334, respectively. At December 31, 2010 and 2009, cash collateral of $714,131 and $243,019 respectively, was invested and recorded in the Statements of Admitted Assets, Liabilities and Surplus in bonds and cash and short-term investments with a corresponding amount recorded in other liabilities. The fair value of the cash collateral invested in cash and short-term investments was $714,131 and $243,019 as of December 31, 2010 and 2009, respectively. The Company is only permitted by contract to sell or repledge the noncash collateral in the event of a default by the counterparty and none of the collateral has been sold or repledged at December 31, 2010 and 2009. As of December 31, 2010 and 2009, all collateral accepted was held in separate custodial accounts. (K) SECURITY UNREALIZED LOSS AGING The Company has a security monitoring process overseen by a committee of investment and accounting professionals that, on a quarterly basis, identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For further discussion regarding the Company's 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, 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, 2010 and 2009. 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, 2010.
LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ------------------------------------------------------------------------------- U.S. Govt and Govt agencies & authorities -- guaranteed & sponsored $437,967 $399,047 $(38,920) -- guaranteed & sponsored -- asset backed 292,619 288,373 (4,246) States, municipalities & political subdivisions 78,330 76,053 (2,277) International Governments 13,533 13,371 (162) All other corporate including international 1,029,469 993,821 (35,648) All other corporate-asset backed 551,979 489,912 (62,067) Hybrid securities 11,530 11,410 (120) ---------- ---------- --------- TOTAL FIXED MATURITIES 2,415,427 2,271,987 (143,440) Comon stock -- unaffiliated -- -- -- Comon stock -- affiliated 832,517 634,250 (198,267) Preferred stock -- unaffiliated 8,466 6,764 (1,702) ---------- ---------- --------- TOTAL EQUITY 840,983 641,014 (199,969) ---------- ---------- --------- TOTAL SECURITIES $3,256,410 $2,913,001 $(343,409) ---------- ---------- --------- 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ------------------------------- ------------------------------------------------------- U.S. Govt and Govt agencies & authorities -- guaranteed & sponsored $ -- $ -- $ -- -- guaranteed & sponsored -- asset backed 196 193 (3) States, municipalities & political subdivisions 35,000 30,338 (4,662) International Governments 5,000 4,616 (384) All other corporate including international 51,227 47,732 (3,495) All other corporate-asset backed 246,987 214,631 (32,356) Hybrid securities 78,482 67,047 (11,435) --------- --------- --------- TOTAL FIXED MATURITIES 416,892 364,557 (52,335) Comon stock -- unaffiliated 2 -- (2) Comon stock -- affiliated 245,363 107,561 (137,802) Preferred stock -- unaffiliated -- -- -- --------- --------- --------- TOTAL EQUITY 245,365 107,561 (137,804) --------- --------- --------- TOTAL SECURITIES $662,257 $472,118 $(190,139) --------- --------- --------- TOTAL AMORTIZED FAIR UNREALIZED COST VALUE LOSSES ------------------------------- -------------------------------------------------- U.S. Govt and Govt agencies & authorities -- guaranteed & sponsored $437,967 $399,047 $(38,920) -- guaranteed & sponsored -- asset backed 292,815 288,566 (4,249) States, municipalities & political subdivisions 113,330 106,391 (6,939) International Governments 18,533 17,987 (546) All other corporate including international 1,080,696 1,041,553 (39,143) All other corporate-asset backed 798,966 704,543 (94,423) Hybrid securities 90,012 78,457 (11,555) ---------- ---------- --------- TOTAL FIXED MATURITIES 2,832,319 2,636,544 (195,775) Comon stock -- unaffiliated 2 -- (2) Comon stock -- affiliated 1,077,880 741,811 (336,069) Preferred stock -- unaffiliated 8,466 6,764 (1,702) ---------- ---------- --------- TOTAL EQUITY 1,086,348 748,575 (337,773) ---------- ---------- --------- TOTAL SECURITIES $3,918,667 $3,385,119 $(533,548) ---------- ---------- ---------
The following discussion refers to the data presented in the table above, excluding affiliated bond and common stock. The Company holds 100% of the common stock of a foreign insurance subsidiary which is stated at GAAP carrying value adjusted F-21 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, 2010, fixed maturities, comprised of approximately 560 securities, accounted for approximately 99% of the Company's total unrealized loss amount. The securities were primarily related to commercial mortgage-backed securities ("CMBS"), and corporate securities primarily within the financial services and industrial sector which have experienced significant price deterioration. As of December 31, 2010, 96% of securities in an unrealized loss position were depressed less than 20% of amortized cost. The decline in unrealized losses during 2010 was primarily attributable to decline in interest rates and, to a lesser extent, credit spread tightening. The Company does not have an intention to sell the securities outlined above and has the intent and ability to hold these securities until values recover. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2010. 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, 2009.
LESS THAN 12 MONTHS AMORTIZED FAIR UNREALIZED COST VALUE LOSSES -------------------------------------------------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $629,133 $609,752 $(19,381) -- guaranteed & sponsored -- asset backed 82,633 81,554 (1,079) States, municipalities & political subdivisions 27,640 26,382 (1,258) International Governments 11,932 10,657 (1,275) All other corporate including international 408,021 391,755 (16,266) All other corporate-asset backed 683,679 578,444 (105,235) Hybrid securities -- -- -- Affiliate bond 1,468,810 1,413,869 (54,941) ---------- ---------- --------- TOTAL FIXED MATURITIES 3,311,848 3,112,413 (199,435) Common stock -- unaffiliated -- -- -- Common stock -- affiliated 283,115 233,333 (49,782) Preferred stock -- unaffiliated -- -- -- ---------- ---------- --------- TOTAL EQUITY 283,115 233,333 (49,782) ---------- ---------- --------- TOTAL SECURITIES $3,594,963 $3,345,746 $(249,217) ---------- ---------- --------- 12 MONTHS OR MORE AMORTIZED FAIR UNREALIZED COST VALUE LOSSES -------------------------------------- ---------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $ -- $ -- $ -- -- guaranteed & sponsored -- asset backed 122 118 (4) States, municipalities & political subdivisions 36,135 27,228 (8,907) International Governments -- -- -- All other corporate including international 385,451 358,067 (27,384) All other corporate-asset backed 603,351 461,858 (141,493) Hybrid securities 144,409 121,044 (23,365) Affiliate bond -- -- -- ---------- ---------- --------- TOTAL FIXED MATURITIES 1,169,468 968,315 (201,153) Common stock -- unaffiliated 577 560 (17) Common stock -- affiliated -- -- -- Preferred stock -- unaffiliated 53,309 42,634 (10,675) ---------- ---------- --------- TOTAL EQUITY 53,886 43,194 (10,692) ---------- ---------- --------- TOTAL SECURITIES $1,223,354 $1,011,509 $(211,845) ---------- ---------- --------- TOTAL AMORTIZED FAIR UNREALIZED COST VALUE LOSSES -------------------------------------- ---------------------------------------------- U.S. Gov't and Gov't agencies & authorities -- guaranteed & sponsored $629,133 $609,752 $(19,381) -- guaranteed & sponsored -- asset backed 82,755 81,672 (1,083) States, municipalities & political subdivisions 63,775 53,610 (10,165) International Governments 11,932 10,657 (1,275) All other corporate including international 793,472 749,822 (43,650) All other corporate-asset backed 1,287,030 1,040,302 (246,728) Hybrid securities 144,409 121,044 (23,365) Affiliate bond 1,468,810 1,413,869 (54,941) ---------- ---------- --------- TOTAL FIXED MATURITIES 4,481,316 4,080,728 (400,588) Common stock -- unaffiliated 577 560 (17) Common stock -- affiliated 283,115 233,333 (49,782) Preferred stock -- unaffiliated 53,309 42,634 (10,675) ---------- ---------- --------- TOTAL EQUITY 337,001 276,527 (60,474) ---------- ---------- --------- TOTAL SECURITIES $4,818,317 $4,357,255 $(461,062) ---------- ---------- ---------
The following discussion refers to the data presented in the table above, excluding affiliated bond and common stock. The Company holds 100% of the common stock of a foreign insurance subsidiary which is stated at GAAP carrying value adjusted for certain 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, 2009, fixed maturities, comprised of approximately 430 securities, accounted for approximately 97% of the Company's total unrealized loss amount. The securities were primarily related to CMBS, asset-backed securities ("ABS"), and residential mortgage-backed securities ("RMBS") and corporate securities primarily within the financial services sector which have experienced significant price deterioration. As of December 31, 2009, 77% of securities in an unrealized loss position were depressed less than 20% of amortized cost. The decline in unrealized losses during 2009 was primarily attributable to credit spread tightening, impairments and, to a lesser extent, sales, partially offset by rising interest rates. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined above. Furthermore, based upon the Company's cash flow modeling and the expected continuation of contractually required principal and interest payments, the Company has deemed these securities to be temporarily impaired as of December 31, 2009. (L) LOAN-BACKED AND STRUCTURED SECURITIES OTHER-THAN-TEMPORARY IMPAIRMENTS The Company had no other-than-temporary impairments ("OTTI") on loan-backed and structured securities taken as a result of intent to sell or inability or lack of intent to retain such investments for a period of time sufficient to recover the amortized cost basis. F-22 The following table presents details on credit impairments taken on loan-backed and structured securities pursuant to SSAP No. 43 -- Revised.
BOOK/ADJ. CARRYING VALUE DATE OF AMORTIZED FINANCIAL COST BEFORE PRESENT VALUE STATEMENT CURRENT PERIOD OF PROJECTED WHEN INITIALLY OTTI CASH FLOWS REPORTED CUSIP (IN DOLLARS) (IN DOLLARS) --------------------------------------------------------------------------------- 9/30/2009 00503NAB7 $7,535,388 $1,959,990 9/30/2009 00503NAC5 462,707 143,832 9/30/2009 05947UHT8 3,987,817 3,981,363 9/30/2009 059497BW6 9,725,618 9,468,201 9/30/2009 059500BK3 324,723 301,919 9/30/2009 07383FYN2 1,426,119 1,353,732 9/30/2009 07388NAX4 8,656,256 6,740,942 9/30/2009 1248MBAJ4 999,970 837,548 9/30/2009 15188RAB8 985,186 77,012 9/30/2009 15188RAC6 103,020 34,782 9/30/2009 173067AJ8 1,373,631 1,082,028 9/30/2009 22540VV33 2,653,742 2,644,326 9/30/2009 22541NVA4 2,380,022 2,338,979 9/30/2009 22545XBB8 2,034,495 1,474,961 9/30/2009 36158YBE8 929,981 920,612 9/30/2009 361849N65 1,365,928 690,903 9/30/2009 46625MCY3 644,072 572,349 9/30/2009 46625MKQ1 1,741,503 1,562,569 9/30/2009 46625YJP9 787,944 729,302 9/30/2009 46625YWE9 3,076,000 2,571,757 9/30/2009 51804WAC4 1,081,428 30,116 9/30/2009 51804XAU2 742,470 11,524 9/30/2009 55312YBD3 2,224,569 1,767,229 9/30/2009 75970JAU0 10,731 9,123 9/30/2009 75970QAQ3 448,316 395,098 9/30/2009 78402KAA3 769,074 135,713 9/30/2009 78402KAB1 135,046 36,892 9/30/2009 92978TBU4 5,534,393 3,809,262 9/30/2009 93364LAD0 7,945,532 5,903,490 12/31/2009 12669RAC1 999,360 351,328 12/31/2009 23243NAF5 8,660,779 4,126,189 12/31/2009 46627QBD9 1,806,424 1,169,582 12/31/2009 75970JAU0 7,970 344 12/31/2009 75970QAP5 307,481 137,383 12/31/2009 75970QAQ3 319,219 158,497 3/31/2010 00503NAB7 1,693,311 1,186,748 3/31/2010 46627QBD9 1,160,155 1,142,892 6/30/2010 00503NAB7 1,050,813 497,908 6/30/2010 22541NNJ4 5,519,877 4,981,232 6/30/2010 51804XAU2 5,042 -- 9/30/2010 00503NAB7 339,385 -- 12/31/2010 00503NAC5 112,678 -- 12/31/2010 46627QBD9 1,113,437 1,052,711 ------------ ------------ TOTAL $93,181,612 $66,390,368 ------------ ------------ DATE OF FINANCIAL AMORTIZED FAIR STATEMENT RECOGNIZED COST AFTER VALUE AT WHEN INITIALLY OTTI OTTI TIME OF OTTI REPORTED (IN DOLLARS) (IN DOLLARS) (IN DOLLARS) ------------------------------ --------------------------------------------- 9/30/2009 $(5,575,398) $1,959,990 $607,018 9/30/2009 (318,875) 143,832 605,000 9/30/2009 (6,454) 3,981,363 3,980,969 9/30/2009 (257,417) 9,468,201 8,381,882 9/30/2009 (22,804) 301,919 279,440 9/30/2009 (72,387) 1,353,732 1,587,169 9/30/2009 (1,915,314) 6,740,942 6,301,194 9/30/2009 (162,422) 837,548 393,426 9/30/2009 (908,174) 77,012 251,926 9/30/2009 (68,238) 34,782 111,797 9/30/2009 (291,603) 1,082,028 1,532,755 9/30/2009 (9,416) 2,644,326 2,502,017 9/30/2009 (41,043) 2,338,979 2,347,354 9/30/2009 (559,534) 1,474,961 1,358,469 9/30/2009 (9,369) 920,612 866,016 9/30/2009 (675,025) 690,903 946,149 9/30/2009 (71,723) 572,349 526,565 9/30/2009 (178,934) 1,562,569 1,521,277 9/30/2009 (58,642) 729,302 741,670 9/30/2009 (504,243) 2,571,757 3,146,164 9/30/2009 (1,051,312) 30,116 86,608 9/30/2009 (730,946) 11,524 36,450 9/30/2009 (457,340) 1,767,229 1,494,736 9/30/2009 (1,608) 9,123 1,859 9/30/2009 (53,218) 395,098 173,005 9/30/2009 (633,361) 135,713 135,000 9/30/2009 (98,154) 36,892 45,000 9/30/2009 (1,725,131) 3,809,262 4,213,330 9/30/2009 (2,042,042) 5,903,490 2,400,000 12/31/2009 (648,032) 351,328 351,285 12/31/2009 (4,534,590) 4,126,189 2,820,805 12/31/2009 (636,842) 1,169,582 1,055,039 12/31/2009 (7,626) 344 169 12/31/2009 (170,098) 137,383 140,425 12/31/2009 (160,722) 158,497 153,320 3/31/2010 (506,563) 1,186,748 364,211 3/31/2010 (17,263) 1,142,892 1,142,892 6/30/2010 (552,905) 497,908 333,860 6/30/2010 (538,645) 4,981,232 4,846,253 6/30/2010 (5,042) -- -- 9/30/2010 (339,385) -- -- 12/31/2010 (112,678) -- -- 12/31/2010 (60,726) 1,052,711 1,613,441 ------------- ------------ ------------ $(26,791,244) $66,390,368 $59,395,945 ------------- ------------ ------------
F-23 4. FAIR VALUE MEASUREMENTS Certain of the following financial instruments are carried at fair value in the Company's Financial Statements: bonds and stocks, derivatives, and Separate Account assets. The following section applies the fair value hierarchy and disclosure requirements for the Company's financial instruments that are carried at fair value. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2 or 3). Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include open- ended mutual funds reported in Separate Account assets. Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Included in the Level 2 category are derivative instruments that have no significant unobservable market inputs. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities such as lower quality asset-backed securities. Also included in Level 3 are certain complex derivative securities, including a customized GMWB hedging derivative. Because Level 3 fair values, by their nature, contain one or more significant unobservable market inputs as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the Company's best estimate of an amount that could be realized in a current market exchange absent actual market exchanges.
In many situations, inputs used to measure the fair value of an asset or liability position may fall into different levels of the fair value hierarchy. In these situations, the Company will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. Transfers of securities among the levels occur at the beginning of the reporting period. Transfers between Level 1 and Level 2 were not material for the year ended December 31, 2010. In most cases, both observable (e.g., changes in interest rates) and unobservable (e.g., changes in risk assumptions) inputs are used in the determination of fair values that the Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. The Company's bonds included in Level 3 are classified as such as they are primarily priced by independent brokers and/or within illiquid markets. These disclosures provide information as to the extent to which the Company uses fair value to measure financial instruments and information about the inputs used to value those financial instruments to allow users to assess the relative reliability of the measurements. The following table presents assets and liabilities carried at fair value by hierarchy level. F-24
QUOTED PRICES IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE IDENTICAL ASSEDECEMBER 31, 2010PUTS INPUTS TOTAL (LEVEL 1) (LEVEL 2) (LEVEL 3) --------------------------------------------------------------------------------------------------------------------------------- Assets accounted for at fair value All other corporate -- asset-backed $644 $ -- $ -- $644 Common Stocks 7,589 7,585 -- 4 ----------- ----------- --------- --------- TOTAL BONDS AND STOCKS 8,233 7,585 -- 648 Derivative assets Credit derivatives (6,867) -- (6,832) (35) Foreign exchange derivatives 78,416 -- 78,416 -- Interest rate derivatives (11,257) -- (11,342) 85 Variable annuity hedging derivatives and macro hedge program 805,570 -- 117,524 688,046 ----------- ----------- --------- --------- TOTAL DERIVATIVE ASSETS 865,862 -- 177,766 688,096 Separate Account assets (1) 58,399,199 58,399,199 ----------- ----------- TOTAL ASSETS ACCOUNTED FOR AT FAIR VALUE $59,273,294 $58,406,784 $177,766 $688,744 ----------- ----------- --------- --------- Liabilities accounted for at fair value Derivative liabilities Credit derivatives $1,365 $ -- $129 $1,236 Foreign exchange derivatives (5,727) -- (5,727) -- Interest rate derivatives (5,602) -- (5,602) -- Variable annuity hedging derivatives and macro hedge program (58,499) -- (81,298) 22,799 ----------- ----------- --------- --------- TOTAL LIABILITIES ACCOUNTED FOR AT FAIR VALUE $(68,463) $ -- $(92,498) $24,035 ----------- ----------- --------- ---------
(1) Excludes approximately $20.8 million of investment sales receivable net of investment purchases payable that are not subject to these disclosures. DETERMINATION OF FAIR VALUES The valuation methodologies used to determine the fair values of assets and liabilities under the "exit price" notion reflect market-participant objectives and are based on the application of the fair value hierarchy that prioritizes relevant observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices where available and where prices represent a reasonable estimate of fair value. The Company also determines fair value based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, liquidity and, where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments listed in the above tables. Bonds and Stocks The fair value of bonds and stocks in an active and orderly market (e.g. not distressed or forced liquidation) is determined by management after considering one of three primary sources of information: third-party pricing services, independent broker quotations or pricing matrices. Security pricing is applied using a "waterfall" approach whereby publicly available prices are first sought from third-party pricing services, the remaining unpriced securities are submitted to independent brokers for prices, or lastly, securities are priced using a pricing matrix. Based on the typical trading volumes and the lack of quoted market prices for bonds, third-party pricing services will normally derive the security prices from recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recently reported trades, the third-party pricing services and independent brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of certain asset-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. Actual prepayment experience may vary from these estimates. Prices from third-party pricing services are often unavailable for securities that are rarely traded or are traded only in privately negotiated transactions. As a result, certain securities are priced via independent broker quotations which utilize inputs that may be difficult to corroborate with observable market based data. Additionally, the majority of these independent broker quotations are non-binding. F-25 A pricing matrix is used to price private placement securities for which the Company is unable to obtain a price from a third-party pricing service by discounting the expected future cash flows from the security by a developed market discount rate utilizing current credit spreads. Credit spreads are developed each month using market based data for public securities adjusted for credit spread differentials between public and private securities which are obtained from a survey of multiple private placement brokers. The appropriate credit spreads determined through this survey approach are based upon the issuer's financial strength and term to maturity, utilizing an independent public security index and trade information and adjusting for the non-public nature of the securities. The Company performs a monthly analysis of the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. As a part of this analysis, the Company considers trading volume and other factors to determine whether the decline in market activity is significant when compared to normal activity in an active market, and if so, whether transactions may not be orderly considering the weight of available evidence. If the available evidence indicates that pricing is based upon transactions that are stale or not orderly, the Company places little, if any, weight on the transaction price and will estimate fair value utilizing an internal pricing model. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of third-party pricing services' methodologies, review of pricing statistics and trends, back testing recent trades, and monitoring of trading volumes, new issuance activity and other market activities. In addition, the Company ensures that prices received from independent brokers represent a reasonable estimate of fair value through the use of internal and external cash flow models developed based on spreads, and when available, market indices. As a result of this analysis, if the Company determines that there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly. The Company's internal pricing model utilizes the Company's best estimate of expected future cash flows discounted at a rate of return that a market participant would require. The significant inputs to the model include, but are not limited to, current market inputs, such as credit loss assumptions, estimated prepayment speeds and market risk premiums. The Company has analyzed the third-party pricing services' valuation methodologies and related inputs, and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Most prices provided by third-party pricing services are classified into Level 2 because the inputs used in pricing the securities are market observable. Due to a general lack of transparency in the process that brokers use to develop prices, most valuations that are based on brokers' prices are classified as Level 3. Some valuations may be classified as Level 2 if the price can be corroborated with observable market data. DERIVATIVE INSTRUMENTS Derivative instruments are fair valued using pricing valuation models that utilize independent market data inputs, quoted market prices for exchange-traded derivatives, or independent broker quotations. As of December 31, 2010, 97% of derivatives, based upon notional values, were priced by valuation models or quoted market prices. The remaining derivatives were priced by broker quotations. The Company performs a monthly analysis on derivative valuations which includes both quantitative and qualitative analysis. Examples of procedures performed include, but are not limited to, review of pricing statistics and trends, back testing recent trades, analyzing the impacts of changes in the market environment, and review of changes in market value for each derivative including those derivatives priced by brokers. The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated assets and liabilities. Therefore the realized and unrealized gains and losses on derivatives reported in Level 3 may not reflect the offsetting impact of the realized and unrealized gains and losses of the associated assets and liabilities. VALUATION TECHNIQUES AND INPUTS FOR INVESTMENTS Generally, the Company determines the estimated fair value of its bonds and stocks using the market approach. The income approach is used for securities priced using a pricing matrix, as well as for derivative instruments. For Level 1 investments, valuations are based on observable inputs that reflect quoted prices for identical assets in active markets that the Company has the ability to access at the measurement date. For most of the Company's debt securities, the following inputs are typically used in the Company's pricing methods: reported trades, benchmark yields, bids and/or estimated cash flows. Inputs also include issuer spreads, which may consider credit default swaps. Derivative instruments are valued using mid-market inputs that are predominantly observable in the market. A description of additional inputs used in the Company's Level 2 and Level 3 measurements is listed below: Level 2 The fair values of most of the Company's Level 2 investments are determined by management after considering prices received from third party pricing services. These investments include most bonds and preferred stocks. F-26 ASSET-BACKED SECURITIES -- Primary inputs also include monthly payment information, collateral performance, which varies by vintage year and includes delinquency rates, collateral valuation loss severity rates, collateral refinancing assumptions and credit default swap indices. CREDIT DERIVATIVES -- Significant inputs primarily include the swap yield curve and credit curves. FOREIGN EXCHANGE DERIVATIVES -- Significant inputs primarily include the swap yield curve, currency spot and forward rates, and cross currency basis curves. INTEREST RATE DERIVATIVES -- Significant input is primarily the swap yield curve. Level 3 Most of the Company's securities classified as Level 3 are valued based on brokers' prices. Also included in Level 3 are certain derivative instruments that either have significant unobservable inputs or are valued based on broker quotations. Significant inputs for these derivative contracts primarily include the typical inputs used in the Level 1 and Level 2 measurements noted above, but also may include the following: CREDIT DERIVATIVES -- Significant unobservable inputs may include credit correlation and swap yield curve and credit curve extrapolation beyond observable limits. EQUITY DERIVATIVES -- Significant unobservable inputs may include equity volatility. INTEREST RATE CONTRACTS -- Significant unobservable inputs may include swap yield curve extrapolation beyond observable limits and interest rate volatility. SEPARATE ACCOUNT ASSETS Separate Account assets are primarily invested in mutual funds but also have investments in bonds and stocks. The Separate Account investments are valued in the same manner, and using the same pricing sources and inputs, as the bonds and stocks of the Company. ASSETS AND LIABILITIES MEASURED AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) The table below provides a fair value roll-forward of financial instruments measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2010:
TOTAL REALIZED/UNREALIZED FAIR VALUE GAINS (LOSSES) INCLUDED IN: AS OF JAN. 1, NET ASSET (LIABILITY) 2010 INCOME (1) SURPLUS ----------------------------------------------------------------------------------------- ASSETS All other corporate -- $223 $(9) $(341) asset-backed Preferred Stocks 405 -- -- Common Stocks 4 -- -- ---------- ---- ---------- TOTAL BONDS AND STOCKS $ 632 $ (9) $ (341) Derivatives Credit derivatives -- -- 1,079 Interest rate derivatives 688 -- (603) Variable annuity hedging 326,145 -- (362,519) derivatives and macro hedge program ---------- ---- ---------- TOTAL DERIVATIVES (3) $326,833 $ -- $(362,043) ---------- ---- ---------- PURCHASES, FAIR VALUE ISSUANCES TRANSFERS TRANSFERS AS OF AND IN TO OUT OF DECEMBER 31, ASSET (LIABILITY) SETTLEMENTS LEVEL 3 (2) LEVEL 3 (2) 2010 ----------------------------- ----------------------------------------------------------------------------- ASSETS All other corporate -- $408 $381 $(18) $644 asset-backed Preferred Stocks (162) -- (243) -- Common Stocks -- -- -- 4 ---------- ----- ------ ---------- TOTAL BONDS AND STOCKS $ 246 $ 381 $ (261) $ 648 Derivatives Credit derivatives 122 -- -- 1,201 Interest rate derivatives -- -- -- 85 Variable annuity hedging 747,219 -- -- 710,845 derivatives and macro hedge program ---------- ----- ------ ---------- TOTAL DERIVATIVES (3) $747,341 $ -- $ -- $712,131 ---------- ----- ------ ----------
(1) All amounts in these columns are reported in net realized capital gains (losses). All amounts are before income taxes. (2) Transfers in and/or (out) of Level 3 are primarily attributable to changes in the availability of market observable information. (3) Derivative instruments are reported in this table on a net basis for asset/(liability) positions. F-27 The following fair value measurement information as of December 31, 2009 is based on disclosure guidance developed by the NAIC/AICPA Task Force prior to the finalization of SSAP No. 100 (Fair Value Measurements). FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS AS OF DECEMBER 31, 2009 The following tables provide information as of December 31, 2009 about the Company's financial assets and liabilities measured at fair value on a recurring basis.
QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT SIGNIFICANT IDENTICAL OBSERVABLE UNOBSERVABLE ASSETS DECEMBER 31, 2009INPUTS INPUTS TOTAL (LEVEL 1) (LEVEL 2) (LEVEL 3) ----------------------------------------------------------------------------------------------------------------------------- ASSETS ACCOUNTED FOR AT FAIR VALUE All other corporate -- asset-backed $ -- $ -- $ -- $ -- Common Stocks 6,687 6,683 -- 4 -------------- -------------- ------------ ----------- TOTAL BONDS AND STOCKS 6,687 6,683 -- 4 Derivative assets GMWB hedging instruments 140,611 -- -- 140,611 Macro hedge program 177,739 -- 16,038 161,701 Other derivative assets (2,339) -- (12,981) 10,642 -------------- -------------- ------------ ----------- TOTAL DERIVATIVE ASSETS 316,011 -- 3,057 312,954 Separate Account assets (1) 59,063,044 59,063,044 -- -- -------------- -------------- ------------ ----------- TOTAL ASSETS ACCOUNTED FOR AT FAIR VALUE $59,385,742 $59,069,727 $3,057 $312,958 -------------- -------------- ------------ ----------- LIABILITIES ACCOUNTED FOR AT FAIR VALUE Derivative liabilities GMWB hedging instruments $(186,725) $ -- $(186,725) $ -- Macro hedge program 21,139 -- (2,694) 23,833 Other derivative liabilities (24,938) -- (14,984) (9,954) -------------- -------------- ------------ ----------- TOTAL LIABILITIES ACCOUNTED FOR AT FAIR VALUE $(190,524) $ -- $(204,403) $13,879 -------------- -------------- ------------ -----------
(1) Excludes approximately $16.1 million of investment sales receivable net of investment purchases payable that are not subject to these disclosures. CHANGES IN LEVEL 3 ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS AS OF DECEMBER 31, 2009 The table below provides a fair value rollforward for the year ending December 31, 2009 for the financial instruments for which significant unobservable inputs (Level 3) are used in the fair value measurement on a recurring basis. The gains and losses in the table below include changes in fair value due partly to observable and unobservable factors.
COMMON GMWB HEDGING MACRO HEDGE OTHER STOCK INSTRUMENTS PROGRAM DERIVATIVES TOTAL --------------------------------------------------------------------------------------------------------------------------------- Fair value at 1/1/09 $4 $1,577,937 $134,852 $655 $1,713,48 ---- ------------ ------------ --------- ------------ Realized/unrealized gains (losses) included in: Net income -- -- -- -- -- Unrealized gains and losses -- (493,111) (240,114) 241 (732,984) Purchases, issuances, and settlements -- (944,215) 290,796 (208) (653,627) Transfers in (out) of Level 3 -- -- -- -- -- ---- ------------ ------------ --------- ------------ Fair value at 12/31/09 4 140,611 185,534 688 326,837 ---- ------------ ------------ --------- ------------ TOTAL GAINS AND (LOSSES) INCLUDED IN INCOME ATTRIBUTABLE TO INSTRUMENTS HELD AT THE REPORTING DATE $ -- $(249,433) $(192,831) $(1,278) $(443,542) ---- ------------ ------------ --------- ------------
Changes in the value of common stock for realized gains/losses are included in net income, and changes in unrealized gains/losses have been included in surplus. Changes in the value of Separate Account assets for realized and unrealized gains/losses accrue directly to the policyholders and are not included in net income. F-28 ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AS OF DECEMBER 31, 2009 Certain financial assets are measured at fair value on a non-recurring basis, such as certain bonds and preferred stock valued at the lower of amortized cost or fair value, or investments that are impaired during the reporting period and recorded at fair value on the balance sheet at December 31, 2009. The following tables summarize the assets measured at fair value on a non-recurring basis as of December 31, 2009:
AS OF DECEMBER 31, 2009 QUOTED PRICES IN ACTIVE SIGNIFICANT MARKETS FOR IDENTICAL OBSERVABLE INPUTS TOTAL ASSETS (LEVEL 1) (LEVEL 2) ------------------------------------------------------------------------------------------------------------ Bonds $235 $ -- $12 Preferred Stock 5,390 -- 4,985 AS OF DECEMBER 31, 2009 SIGNIFICANT UNOBSERVABLE INPUTS TOTAL GAINS (LEVEL 3) AND (LOSSES) ----------------------------- --------------------------------------------------- Bonds $223 $(5,189) Preferred Stock 405 (16,058)
Bonds include those securities that are ineligible to be carried at amortized cost by the Securities Valuation Office ("SVO") and have a fair value that is less than amortized cost as of December 31, 2009. Also included in bonds are those securities that are eligible to be carried at amortized cost, but have been permanently impaired as of December 31, 2009 due to an other-than-temporary loss in value and as a result are written down to fair value at that time. Level 3 bonds include primarily sub-prime securities and below-investment-grade CMBS securities that are priced by brokers or internally fair valued and are classified as level 3 due to the lack of liquidity in the market. Level 3 preferred stock includes privately placed securities that are classified as Level 3 due to a lack of observability into the inputs used in pricing these types of securities. FAIR VALUE OF FINANCIAL INSTRUMENTS Included in various investment related line items in the financial statements are certain financial instruments carried at fair value. Other financial instruments are periodically measured at fair value, such as when impaired, or, for certain bonds and preferred stock when carried at the lower of cost or market. The following table presents carrying amounts and fair values of the Company's financial instruments as of December 31, 2010 and December 31, 2009.
2010 2009 STATEMENT ESTIMATED STATEMENT ESTIMATED VALUE FAIR VALUE VALUE FAIR VALUE --------------------------------------------------------------------------------------------------------------------------------- Admitted Assets Bonds and short-term investments $11,069,389 11,316,260 $10,061,445 9,919,684 Preferred stocks 8,902 7,200 73,901 67,721 Common stocks 749,401 749,401 1,111,915 1,111,915 Mortgage loans 436,752 446,075 490,227 446,456 Derivative related assets (1) 865,862 870,447 324,260 326,218 Contract loans 364,509 360,979 352,829 352,829 Separate Account assets 58,399,199 58,399,199 59,063,044 59,063,044 Liabilities Liability for deposit type contracts $(67,566) $(67,566) $(70,613) $(70,613) Derivative related liabilities (1) (68,463) (68,463) (192,245) (190,893) Separate Account liabilities (58,399,199) (58,399,199) (59,063,044) (59,063,044)
(1) Includes derivatives held for other investment and/or risk management activities as of December 31, 2010 and 2009, with a fair value asset position of $856,795 and $316,011, respectively, and a liability position of $(68,463) and $(190,524), respectively. Excludes derivative contracts that receive hedge accounting and have a zero statement value at December 31, 2010 and 2009. These derivatives are not reported on the Statement of Admitted Assets, Liabilities and Surplus and have a fair value as of December 31, 2010 and 2009, of $186,947 and $(22,081), respectively. The valuation methodologies used to determine the fair values of bonds, stocks and derivatives are described in the above Fair Value Measurements section of this note. The amortized cost of short-term investments approximates fair value. Fair values for mortgage loans were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans. The carrying amounts of liability for deposit type contracts and Separate Account liabilities approximate their fair values. Fair values for contract loans were estimated using discounted cash flow calculations using current interest rates. F-29 5. INCOME TAXES A. The Components of the Net Deferred Tax Asset/(Liability) at period end and the change in those components are as follows: 1.
2010 ORDINARY CAPITAL TOTAL -------------------------------------------------------------------------------- Gross Deferred Tax Assets (DTA) $1,123,942 $156,549 $1,280,491 Statutory Valuation Allowance -- -- -- ------------ ----------- ------------ Adjusted Gross Deferred Tax Assets 1,123,942 156,549 1,280,491 Gross Deferred Tax Liabilities (DTL) (465,290) -- (465,290) ------------ ----------- ------------ Net Deferred Tax Asset/(Liability) before Admissibility Test $658,652 $156,549 $815,201 ------------ ----------- ------------ Admitted Pursuant to Paragraph 10.a. Carryback Period $ -- $ -- $ -- Paragraph 10.b.i. DTA's Realized within one year 450,572 10,219 460,791 Paragraph 10.b.ii. 10% Surplus Limitation (see Note A below) -- -- 362,942 ------------ ----------- ------------ Admitted Pursuant to Paragraph 10.b. (lesser of i. or ii.) 352,723 10,219 362,942 ------------ ----------- ------------ Admitted Pursuant to Paragraph 10.c. offset against DTL's 465,290 -- 465,290 ------------ ----------- ------------ Paragraph 10.e.i. Additional Carryback Period -- -- -- Paragraph 10.e.ii.a. Additional DTA's Realized within three years 205,146 -- 205,146 Paragraph 10.e.ii.b.Additional 15% Surplus Limitation (see Note A below) -- -- 181,471 ------------ ----------- ------------ Additional Admitted Pursuant to Paragraph 10.e.ii. (lesser of a. or b.) 181,471 -- 181,471 ------------ ----------- ------------ Additional Admitted Pursuant to Paragraph 10.e.iii. Offset against DTL's -- -- -- ------------ ----------- ------------ Admitted Deferred Tax Asset (sum of 10a, b, c, ei, eii and eiii above) 999,484 10,219 1,009,703 Deferred Tax Liability (465,290) -- (465,290) ------------ ----------- ------------ Net Admitted Deferred Tax Asset/(Liability) $534,194 $10,219 $544,413 ------------ ----------- ------------ Non-admitted Deferred Tax Asset $124,458 $146,330 $270,788 ------------ ----------- ------------
2009 ORDINARY CAPITAL TOTAL -------------------------------------------------------------------------------- Gross Deferred Tax Assets (DTA) $914,270 $121,481 $1,035,751 Statutory Valuation Allowance -- -- -- ----------- ---------- ------------ Adjusted Gross Deferred Tax Assets 914,270 121,481 1,035,751 Gross Deferred Tax Liabilities (DTL) (260,641) -- (260,641) ----------- ---------- ------------ Net Deferred Tax Asset/(Liability) before Admissibility Test $653,629 $121,481 $775,110 ----------- ---------- ------------ Admitted Pursuant to Paragraph 10.a. Carryback Period $ -- $ -- $ -- Paragraph 10.b.i. DTA's Realized within one year 129,174 5,998 135,172 Paragraph 10.b.ii. 10% Surplus Limitation (see Note A below) -- -- 464,467 ----------- ---------- ------------ Admitted Pursuant to Paragraph 10.b. (lesser of i. or ii.) 129,174 5,998 135,172 ----------- ---------- ------------ Admitted Pursuant to Paragraph 10.c. offset against DTL's 260,641 -- 260,641 ----------- ---------- ------------ Paragraph 10.e.i. Additional Carryback Period -- -- -- Paragraph 10.e.ii.a. Additional DTA's Realized within three years 266,358 -- 266,358 Paragraph 10.e.ii.b.Additional 15% Surplus Limitation (see Note A below) -- -- 561,528 ----------- ---------- ------------ Additional Admitted Pursuant to Paragraph 10.e.ii. (lesser of a. or b.) 266,358 -- 266,358 ----------- ---------- ------------ Additional Admitted Pursuant to Paragraph 10.e.iii. Offset against DTL's -- -- -- ----------- ---------- ------------ Admitted Deferred Tax Asset (sum of 10a, b, c, ei, eii and eiii above) 656,173 5,998 662,171 Deferred Tax Liability (260,641) -- (260,641) ----------- ---------- ------------ Net Admitted Deferred Tax Asset/(Liability) $395,532 $5,998 $401,530 ----------- ---------- ------------ Non-admitted Deferred Tax Asset $258,097 $115,483 $373,580 ----------- ---------- ------------
F-30
CHANGE DURING 2010 ORDINARY CAPITAL TOTAL -------------------------------------------------------------------------------- Gross Deferred Tax Assets (DTA) $209,672 $35,068 $244,740 Statutory Valuation Allowance -- -- -- ----------- --------- ----------- Adjusted Gross Deferred Tax Assets 209,672 35,068 244,740 Gross Deferred Tax Liabilities (DTL) (204,649) -- (204,649) ----------- --------- ----------- Net Deferred Tax Asset Before Admissibility Test $5,023 $35,068 $40,091 ----------- --------- ----------- Admitted Pursuant to Paragraph 10.a. Carryback Period $ -- $ -- $ -- Paragraph 10.b.i. DTA's Realized within one year 321,398 4,221 325,619 Paragraph 10.b.ii. 10% Surplus Limitation (See Note A below) -- -- (101,525) ----------- --------- ----------- Admitted Pursuant to Paragraph 10.b. 223,549 4,221 227,770 ----------- --------- ----------- Admitted Pursuant to Paragraph 10.c. offset against DTL's 204,649 -- 204,649 ----------- --------- ----------- Paragraph 10.e.i. Additional Carryback period -- -- -- Paragraph 10.e.ii.a. Additional DTA's Realized within three years (61,212) -- (61,212) Paragraph 10.e.ii.b. Additional 15% Surplus Limitation (See Note A below) -- -- (380,057) ----------- --------- ----------- Additional Admitted Pursuant to Paragraph 10.e.ii. (84,887) -- (84,887) ----------- --------- ----------- Additional Admitted Pursuant to Paragraph 10.e.iii. Offset against DTL's -- -- -- ----------- --------- ----------- Admitted Deferred Tax Asset (sum of 10a, b, c, ei, eii and eiii above) 343,311 4,221 347,532 Deferred Tax Liability (204,649) -- (204,649) ----------- --------- ----------- Change in Net Admitted Deferred Tax Asset/(Liability) $138,662 $4,221 $142,883 ----------- --------- ----------- Change in Non-admitted Deferred Tax Asset $(133,639) $30,847 $(102,792) ----------- --------- -----------
Note A -- Not applicable by component, only in total. 2. The Company has elected to admit deferred tax assets pursuant to paragraph 10.e. of SSAP No. 10R for the year ending December 31, 2010. 3. The availability of tax-planning strategies resulted in an increase of the Company's adjusted gross DeferRed Tax Assets by approximately 0% of which approximately 0% and 0% was capital and ordinary for tax purposes, respectively. Available tax planning strategies increased the Company's net admitted deferred tax assets by approximately 14% of which approximately 2% and 12% was capital and ordinary for tax purposes, respectively. 4. Risk Based Capital Level
WITH PARAGRAPHS PARAGRAPH 10.A.-C. 10.E. DIFFERENCE -------------------------------------------------------------------------------- Admitted Deferred Tax Assets $362,942 $544,413 $181,471 Admitted Assets 73,445,450 73,626,921 181,471 Statutory Surplus 3,881,068 4,062,539 181,471 Total Adjusted Capital 3,898,066 4,079,537 181,471 Authorized Control Level used in 10.d. 164,366 168,903 4,537
B. Deferred Tax Liabilities are not recognized for the following amounts: Not applicable C. The Components of Current Income Tax Expense are as follows:
2010 2009 2008 -------------------------------------------------------------------------------- Federal Taxes Before Capital Gains, NOL, and AMT $266,874 $611,746 $(479,071) Foreign Taxes (33,836) -- -- NOL Limitation/(Utilization) (91,112) (219,123) 230,834 Alternative Minimum Tax 2,399 -- (6,233) Prior Period Adjustments and Other (209,820) 54,085 8,725 ----------- ----------- ------------ TOTAL CURRENT FEDERAL INCOME TAXES INCURRED $(65,495) $446,708 $(245,745) ----------- ----------- ------------
F-31 The main components of the period end deferred tax amounts and the change in those components are as follows:
2010 2009 CHANGE -------------------------------------------------------------------------------------------------- DEFERRED TAX ASSETS: ORDINARY ASSETS Reserves $397,746 $338,545 $59,201 Tax Deferred Acquisition Costs 274,393 289,234 (14,841) Employee Benefits 6,407 4,544 1,863 Bonds and Other Investments 241,902 11,245 230,657 Unrealized Ordinary Gains/(Losses) 33,547 73,229 (39,682) Minimum Tax Credit/Foreign Tax Credits 156,094 165,638 (9,544) Other 13,853 31,835 (17,982) ------------- ----------- ----------- SUBTOTAL GROSS ORDINARY DEFERRED TAX ASSET 1,123,942 914,270 209,672 Adjustments to Gross Ordinary Deferred Tax Assets -- -- -- ------------- ----------- ----------- TOTAL ADJUSTED GROSS ORDINARY DEFERRED TAX ASSETS $1,123,942 $914,270 $209,672 ------------- ----------- ----------- Non-admitted Ordinary Deferred Tax Assets $124,458 $258,097 $(133,639) ------------- ----------- ----------- Admitted Ordinary Deferred Tax Assets $999,484 $656,173 $343,311 ------------- ----------- ----------- CAPITAL ASSETS Bonds and Other Investments $108,023 $106,353 $1,670 Unrealized Gains/(Losses) 48,526 15,128 33,398 ------------- ----------- ----------- SUBTOTAL GROSS CAPITAL DEFERRED TAX ASSET 156,549 121,481 35,068 Adjustments to Gross Capital Deferred Tax Assets -- -- -- TOTAL ADJUSTED GROSS CAPITAL DEFERRED TAX ASSETS $ 156,549 $ 121,481 $ 35,068 Nonadmitted Capital Deferred Tax Assets $146,330 $115,483 $30,847 ------------- ----------- ----------- Admitted Capital Deferred Tax Assets $10,219 $5,998 $4,221 ------------- ----------- ----------- TOTAL ADMITTED DEFERRED TAX ASSETS $1,009,703 $662,171 $347,532 ------------- ----------- -----------
2010 2009 CHANGE ------------------------------------------------------------------------------------------------ DEFERRED TAX LIABILITIES: ORDINARY LIABILITIES Bonds and Other Investments $(242,823) $(162,543) $(80,280) Employee Benefits (2,094) (2,380) 286 Deferred and Uncollected (23,194) (24,376) 1,182 Reserves (176,330) (65,192) (111,138) Other (20,849) (6,150) (14,699) ------------- ------------- ------------ TOTAL GROSS ORDINARY DEFERRED TAX LIABILITIES $(465,290) $(260,641) $(204,649) ------------- ------------- ------------ TOTAL ADJUSTED DEFERRED TAX ASSETS $ 1,280,491 $ 1,035,751 $ 244,740 TOTAL DEFERRED TAX LIABILITIES (465,290) (260,641) (204,649) ------------- ------------- ------------ NET ADJUSTED DEFERRED TAX ASSETS/ (LIABILITIES) $815,201 $775,110 40,091 ------------- ------------- ------------ Adjust for the Change in Deferred Tax on Unrealized Gains/Losses 6,285 Adjust for the Stock Compensation Transfer 665 Other Adjustments -- Adjusted Change in Net Deferred Income Tax $47,041
F-32 Reconciliation of Federal Income Tax Rate to Actual Effective Rate: The sum of the income tax incurred and the change in the deferred tax asset/liability is different from the result obtained by applying the statutory federal income tax rate to the pre-tax net income. The significant items causing this difference are as follows:
2010 % OF PRE-TAX 2009 TAX EFFECT INCOME TAX EFFECT --------------------------------------------------------------------------------------------- Statutory Tax -- 35% $13,797 35.00% $998,990 Tax Preferred Investments (92,800) (235.41)% (97,710) Affiliated Dividends (49,000) (124.30)% -- Foreign Tax Credits -- 0.00% -- IMR Adjustments 18,492 46.91% -- IRS Audit Adjustments (887) (2.25)% (17,055) Correction of Deferred Balances 18,171 46.10% -- Gain on Reinsurance Booked to Surplus -- 0.00% -- Change in Basis of Reserves Booked to Surplus -- 0.00% -- All Other 4,664 11.83% (14,118) ---------- -------- ----------- TOTAL STATUTORY INCOME TAX $(87,563) (222.12)% $870,107 ---------- -------- ----------- Federal and Foreign Income Taxes Incurred $(65,495) (166.14)% $446,708 Federal Income Tax on Net Capital Gains 24,973 63.35% (1,061) Change in Net Deferred Income Taxes (47,041) (119.33)% 424,460 ---------- -------- ----------- TOTAL STATUTORY INCOME TAX $(87,563) (222.12)% $870,107 ---------- -------- ----------- % OF PRE-TAX 2008 % OF PRE-TAX INCOME TAX EFFECT INCOME -------------------------------------- -------------------------------------------------- Statutory Tax -- 35% 35.00% $(780,261) 35.00% Tax Preferred Investments (3.42)% (105,214) 4.72% Affiliated Dividends 0.00% -- 0.00% Foreign Tax Credits 0.00% (12,910) 0.58% IMR Adjustments 0.00% -- 0.00% IRS Audit Adjustments (0.60)% -- 0.00% Correction of Deferred Balances 0.00% -- 0.00% Gain on Reinsurance Booked to Surplus 0.00% 2,846 (0.13)% Change in Basis of Reserves Booked to Surplus 0.00% (8,377) 0.38% All Other (0.49)% (11,547) 0.52% ------- ------------ ------- TOTAL STATUTORY INCOME TAX 30.49% $(915,463) 41.07% ------- ------------ ------- Federal and Foreign Income Taxes Incurred 15.66% $(245,745) 11.02% Federal Income Tax on Net Capital Gains (0.04)% (467) 0.02% Change in Net Deferred Income Taxes 14.87% (669,251) 30.03% ------- ------------ ------- TOTAL STATUTORY INCOME TAX 30.49% $(915,463) 41.07% ------- ------------ -------
E. 1. At December 31, 2010, the Company had $0 of net operating loss carryforward and $0 of foreign tax credit carryforward. 2. The amount of federal income taxes incurRed in the current year and prior years that will be available for recoupment in the event of future net losses are: 2010 $168,857 2009 $192,718 2008 $ --
3. The aggregate amounts of deposits reported as admitted assets under Section 6603 of the Internal Revenue Service ("IRS") Code was $0 as of December 31, 2010. F-33 F. 1. The Company's federal income tax return is consolidated within The Hartford consolidated federal income tax return. The consolidated federal income tax return includes the following entities: The Hartford Financial Services Group, Inc. (Parent) Hartford Underwriters General Agency, Inc. Hartford Holdings, Inc. Hartford Integrated Technologies, Inc. Nutmeg Insurance Company Business Management Group, Inc. Heritage Holdings, Inc. Personal Lines Insurance Center, Inc. Hartford Fire Insurance Company Nutmeg Insurance Agency, Inc. Hartford Accident and Indemnity Company Hartford Lloyd's Corporation Hartford Casualty Insurance Company 1st AgChoice, Inc. Hartford Underwriters Insurance Company ClaimPlace, Inc. Twin City Fire Insurance Company Access CoverageCorp, Inc. Pacific Insurance Company, Limited Access CoverageCorp Technologies, Inc. Trumbull Insurance Company Hartford Casualty General Agency, Inc. Hartford Insurance Company of Illinois Hartford Fire General Agency, Inc. Hartford Insurance Company of the Midwest Hartford Strategic Investments LLC Hartford Insurance Company of the Southcast Hartford Life, Inc. Hartford Lloyd's Insurance Company Hartford Life and Accident Insurance Company Property & Casualty Insurance Co. of Hartford Hartford Life International Ltd. Sentinel Insurance Company, Ltd. Hartford Equity Sales Company, Inc. First State Insurance Company Hartford-Comprehensive Employee Benefit Service Co. New England Insurance Company Hartford Securities Distribution Company, Inc. New England Reinsurance Corporation The Evergreen Group, Incorporated Fencourt Reinsurance Company, Ltd. Hartford Administrative Services Company Heritage Reinsurance Co., Ltd. Woodbury Financial Services, Inc. New Ocean Insurance Co., Ltd. Hartford Life, Ltd. Hartford Investment Management Co. Hartford Life Alliance, LLC HARCO Property Services, Inc. Hartford Life Insurance Company Four Thirty Seven Land Company, Inc. Hartford Life and Annuity Insurance Company HRA, Inc. Hartford International Life Reassurance Corp. HRA Brokerage Services. Inc. Hartford Hedge Fund Company, LLC Hartford Technology Services Company American Maturity Life Insurance Company Ersatz Corporation Champlain Life Reinsurance Company Hartford Specialty Company Federal Trust Corporation Federal Trust Bank White River Life Reinsurance Company Federal Trust Mortgage Company Hartford of Texas General Agency, Inc. FTB Financial Services, Inc
2. Federal Income Tax Allocation The Company is included in the consolidated federal income tax return of The Hartford and its includable subsidiaries. Estimated tax payments are made quarterly, at which time intercompany tax settlements are made. In the subsequent year, additional settlements are made on the unextended due date of the return and at the time that the return is filed. The method of allocation among affiliates of the Company is subject to written agreement approved by The Hartford's Board of Directors and based upon separate return calculations with current credit for net losses to the extent the losses provide a benefit in the consolidated tax return. 6. REINSURANCE The amount of reinsurance recoverables from and payables to reinsurers were $30,695 and $263,290 respectively, as of December 31, 2010 and $46,981 and $401,012 respectively, as of December 31, 2009. The effect of reinsurance as of and for the years ended December 31, is summarized as follows:
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2010 Aggregate Reserves for Life and Accident and Health Policies $9,741,575 $3,144,059 $(4,095,902) $8,789,732 Policy and Contract Claim Liabilities 54,934 10,325 (23,616) 41,643 Premium and Annuity Considerations 2,667,556 652,324 (2,209,840) 1,110,040 Death, Annuity, Disability and Other Benefits 487,561 390,966 (172,286) 706,241 Surrenders and Other Fund Withdrawals 8,302,517 209,026 (8,228,197) 283,346
F-34
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2009 Aggregate Reserves for Life and Accident and Health Policies $8,933,892 $2,900,085 $(3,700,222 ) $8,133,755 Policy and Contract Claim Liabilities 57,231 8,119 (31,367 ) 33,983 Premium and Annuity Considerations 3,748,791 332,507 (59,184,583 ) (55,103,285 ) Death, Annuity, Disability and Other Benefits 414,537 348,187 (135,526 ) 627,198 Surrenders and Other Fund Withdrawals 7,148,344 295,272 (2,041,820 ) 5,401,796
DIRECT ASSUMED CEDED NET --------------------------------------------------------------------------------------------------------------------------------- 2008 Aggregate Reserves for Life and Accident and Health Policies $10,813,526 $3,206,736 $(3,222,513) $10,797,749 Policy and Contract Claim Liabilities 55,343 11,186 (32,693) 33,836 Premium and Annuity Considerations 7,861,654 2,322,174 (831,321) 9,352,507 Death, Annuity, Disability and Other Benefits 515,171 343,069 (200,178) 658,062 Surrenders and Other Fund Withdrawals 9,660,930 429,781 (125,658) 9,965,053
a. EXTERNAL 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 $234,315 in 2010, a decrease of $3,087 from the 2009 balance of $237,402. The total amount of reinsurance credits taken for this agreement is $360,485 in 2010, a decrease of $4,749 from the 2009 balance of $365,234. The Company had no external reinsurance-related concentrations of credit risk greater than 10% of the Company's capital and surplus. B. REINSURANCE ASSUMED FROM AFFILIATES The Company has reinsurance arrangements with Hartford Life Insurance K.K.("HLIKK") a Japanese based affiliate and a wholly-owned subsidiary of The Hartford. Under these arrangements, the Company assumed 100% of the risks of covered riders directly written by HLIKK. In the second quarter of 2009, HLIKK ceased issuing new business. As a result, no additional contracts were reinsured by the Company after the second quarter of 2009. The following chronological list describes the reinsurance arrangements: - Effective August 31, 2005, the Company assumed in-force and prospective guaranteed minimum income benefits ("GMIB") riders. - Effective July 31, 2006, the Company assumed GMDB on covered contracts that have an associated GMIB rider. The 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 this Reinsurance Agreement, the Company collected premiums of $160,823, $161,329 and $110,364 for the year ended December 31, 2010, 2009 and 2008, respectively. - Effective September 30, 2007, the Company assumed in-force and prospective "3Win" annuities which bundle GMAB, GMIB and GMDB riders. The GMAB provides the policyholder with GRB if the account value is less than premiums after an accumulation period, generally 10 years, and if the account value has not dropped below 80% of the initial deposit, at which point a GMIB must either be exercised or the policyholder can elect to surrender 80% of the initial deposit without a surrender charge. The GRB is generally equal to premiums less surrenders. As a result of capital markets underperformance, 97% of contracts, a total of $3.1 billion triggered during the fourth quarter of 2008, and of this amount $2.0 billion have elected the payout annuity. The Company received the proceeds of this triggering impact, net of the first annuity payout and will pay the associated benefits to HLIKK over a 12-year payout. As a result, on February 5, 2009, HLIC issued a funding agreement to the Company in the amount of $1,468,810 for the purpose of funding these payments. The funding agreement calls for October 31 scheduled annual payouts with interest at 5.16% through 2019. In connection with this agreement, the Company collected premiums of $824, $11,357 and $2,040,623 for the years ended December 31, 2010, 2009 and 2008, respectively. F-35 - Effective February 29, 2008, the Company assumed in-force and prospective GMWB and GMDB riders. In connection with this agreement, the Company collected premiums of $3,413, $3,398 and $1,203 for the years ended December 31, 2010, 2009 and 2008, respectively. - Effective October 1, 2008, the Company assumed in-force and prospective GMDB riders. In connection with this agreement, the Company collected premiums of $2,952, $2,772 and $696 for the years ended December 31, 2010, 2009 and 2008, respectively. The Company entered into a modified coinsurance ("MODCO") reinsurance agreement with affiliate Hartford Life Limited ("HLL"), a wholly-owned subsidiary of Hartford Life International, Ltd., effective November 1, 2010, where HLL agreed to cede and the Company agreed to assume 100% of the risks associated with GMDB and GMWB riders written by and in-force with HLL. In connection with this agreement, the Company recorded a net receivable of $21,952 and collected premiums of $344,271 for the year ended December 31, 2010. C. REINSURANCE CEDED TO WHITE RIVER LIFE REINSURANCE COMPANY Effective October 1, 2009, the Company entered into a MODCO and coinsurance with funds withheld reinsurance arrangement with an affiliated captive reinsurer, White River Life Reinsurance Company ("WRR"). The agreement provides that the Company will cede, and WRR will assume 100% of the inforce and prospective variable annuities and riders written or reinsured by the Company summarized below: - Direct written variable annuities and the associated GMDB and GMWB riders; - Variable annuity contract rider benefits written by HLIKK, which are reinsured to the Company. - Annuity contracts and riders written by Union Security Insurance Company, that are reinsured to the Company - Annuitizations of and certain other settlement options offered under deferred annuity contracts Under MODCO, the assets and liabilities associated with the reinsured business will remain on the balance sheet of the Company in segregated portfolios, and WRR will receive the economic risks and rewards related to the reinsured business through MODCO adjustments. The Company reported $589,622 in amounts receivable from reinsurers and $380,050, a reinsurance payable, in other liabilities, for a net receivable position from WRR of $209,572 and paid premiums of $58,332,509 for the year ended December 31, 2009. Effective November 1, 2010, the Company amended it's existing MODCO reinsurance agreement and coinsurance with funds withheld reinsurance arrangement with WRR to cede, on a MODCO basis, GMDB and GMWB written by and in force with HLL and assumed by the Company effective November 1, 2010. In connection with the WRR treaties, for the year ended December 31, 2010, the Company recorded a net payable of $247,758 within other liabilities; a liability for funds held under reinsurance treaties of $237,537 and paid premiums of $1,558,884. D. REINSURANCE CEDED TO CHAMPLAIN LIFE REINSURANCE COMPANY Effective November 1, 2007, the Company entered into a coinsurance with funds withheld and a MODCO 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 yearly renewable term ("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 on the effective date was $194,430. 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. The Company reported paid premiums of $348,509, $567,248 and $522,811 for years ended December 31, 2010, 2009 and 2008, respectively. 7. PREMIUM AND ANNUITY CONSIDERATIONS (DEFERRED AND UNCOLLECTED) The following presents premium and annuity considerations (deferred and uncollected) as of December 31,
2010 GROSS NET OF LOADING -------------------------------------------------------------------------------- TYPE Ordinary New Business $2,589 $2,935 Ordinary Renewal 14,840 22,579 Group Life 60 41 --------- --------- TOTAL $17,489 $25,555 --------- ---------
F-36
2009 GROSS NET OF LOADING -------------------------------------------------------------------------------- TYPE Ordinary New Business $3,473 $3,962 Ordinary Renewal 51,538 65,644 Group Life 64 40 --------- --------- TOTAL $55,075 $69,646 --------- ---------
8. RELATED PARTY TRANSACTIONS Transactions between the Company and its affiliates, relate principally to tax settlements, reinsurance, insurance coverages, rental and service fees, capital contributions 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 affiliate Hartford Fire Insurance Company. Direct expenses are allocated using specific identification and indirect expenses are allocated using other applicable methods. Indirect expenses include those for corporate areas which, depending on type, are allocated based on either a percentage of direct expenses or on utilization. At December 31, 2010 and 2009, the Company reported $26,596 and $20,453, respectively, as a receivable from and $45,866 and $46,166, respectively, as a payable to its parent, and subsidiary. 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 5, 6, 9 and 12. Effective September 30, 2009, HLIC contributed the following wholly-owned subsidiaries, including European insurance operations, several broker-dealer entities and investment advisory and service entities to HLAI: - Hartford Financial Services, LLC - Hartford Life International, Ltd. - Woodbury Financial Services, Inc. The contribution was made to closely align entities with company issuing the business as well as to more efficiently deploy capital across the organization. The contribution increased the Company's statutory surplus on the contribution date by $1,406,075. 9. RETIREMENT PLANS, OTHER POSTRETIREMENT BENEFIT PLANS AND POST EMPLOYMENT BENEFITS The Hartford maintains a qualified defined benefit pension plan that covers substantially all employees of the Company. The Hartford also maintains non-qualified pension plans to accrue retirement benefits in excess of Internal Revenue Code limitations. These plans shall be collectively referred to as the "Pension Plans". For the years ended December 31, 2010, 2009 and 2008, the Company incurred expense related to the Pension Plans of approximately $15,266, $19,400 and $10,523, respectively, related to their allocation of the net periodic benefit cost, benefit payments and funding to the Pension Plans. The Hartford also provides certain health care and life insurance benefits for eligible retired employees of the Company. The Hartford's contribution for health care benefits will depend upon the retiree's date of retirement and years of service. In addition, the plan has a defined dollar cap for certain retirees which limits average company contributions. The Hartford has prefunded a portion of the health care obligations through a trust fund where such prefunding can be accomplished on a tax efFective basis. Effective January 1, 2002, company-subsidized retiree medical, retiree dental and retiree life insurance benefits were eliminated for employees with original hire dates with the Company on or after January 1, 2002. For the years ended December 31, 2010, 2009 and 2008, the Company incurRed expense related to the other postretirement benefit plans of approximately $1,568, $2,140 and $1,907, respectively. 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 Hartford. In addition, The Hartford allocates a percentage of base salary to the Hartford Investment and Savings Plan for eligible employees. In 2010, employees whose prior year earnings were less than $110,000 received a contribution of 1.5% of base salary and employees whose prior year earnings were more than $110,000 received a contribution of 0.5% of base salary. The cost allocated to the Company for the years ended December 31, 2010, 2009 and 2008 was $5,756, $5,996 and $4,825, respectively. F-37 10. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS The maximum amount of dividends which can be paid by State of Connecticut life insurance companies to shareholders is restricted to the greater of 10% of surplus as of the preceding December 31st or the net gain from operations 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 not cumulative. Dividends are paid as determined by the Board of Directors in accordance with state statutes and regulations. In 2010 and 2009, ordinary dividends of $72,000 and $0, respectively, were paid. With respect to dividends to HLIC, the Company's dividend limitation under the holding company laws of Connecticut is $768,662 in 2011. 11. SEPARATE ACCOUNTS The Company maintained Separate Account assets totaling $58,419,988 and $59,079,204 as of December 31, 2010 and 2009, respectively. The Company utilizes Separate Accounts to record and account for assets and liabilities for particular lines of business. For the current reporting year, the Company recorded assets and liabilities for individual variable, variable life and variable universal life product lines into a Separate Account. The Separate Account classifications are supported by state statute and are in accordance with the domiciliary state procedures for approving items within the Separate Account. Separate Account assets are segregated from other investments and reported at fair value. Some assets are considered legally insulated whereas others are not legally insulated from the General Account. As of December 31, 2010 and 2009, the Company Separate Account statement included legally insulated assets of $58,419,988 and $59,079,204, respectively. Separate Account liabilities are determined in accordance with prescribed actuarial methodologies, which approximate the market value less applicable surrender charges. The resulting surplus is recorded in the general account Statements of Operations as a component of Net Transfers 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 $1,172,978, $1,165,306 and $1,363,868 for the years ended December 31, 2010, 2009 and 2008, respectively, and are recorded as a component of fee income on the Company's statutory basis Statements of Operations. An analysis of the Separate Accounts as of December 31, 2010 is as follows:
NONINDEXED GUARANTEED NONINDEXED LESS THAN GUARANTEED NONGUARANTEED OR EQUAL MORE THAN SEPARATE INDEXED TO 4% 4% ACCOUNTS TOTAL --------------------------------------------------------------------------------------------------------------------------------- Premium considerations or deposits for the year ended 2010 $ -- $ -- $ -- $1,066,846 $1,066,846 ---- ---- ---- -------------- -------------- Reserves @ year-end: For accounts with assets at: Fair value -- -- -- 57,145,012 57,145,012 Amortized cost -- -- -- -- -- ---- ---- ---- -------------- -------------- TOTAL RESERVES -- -- -- 57,145,012 57,145,012 ---- ---- ---- -------------- -------------- By withdrawal characteristics: Subject to discretionary withdrawal -- -- -- -- -- With FV -- -- -- -- -- At BV without FV adjustment and with surrender charge of 5% or more -- -- -- -- -- At fair value -- -- -- 57,039,179 57,039,179 At BV without FV adjustment and with surrender charge of less than 5% -- -- -- -- -- ---- ---- ---- -------------- -------------- SUBTOTAL -- -- -- 57,039,179 57,039,179 Not subject to discretionary withdrawal -- -- -- 105,833 105,833 ---- ---- ---- -------------- -------------- TOTAL $ -- $ -- $ -- $57,145,012 $57,145,012 ---- ---- ---- -------------- --------------
F-38 Below is the reconciliation of Net Transfers (from) to Separate Accounts as of December 31,
2010 2009 2008 --------------------------------------------------------------------------------------------------------------------------------- Transfer to Separate Accounts $1,066,846 $1,658,014 $3,572,439 Transfer from Separate Accounts (7,208,445 ) (5,464,863 ) (5,260,541 ) -------------- --- -------------- --- -------------- Net Transfer (from) to Separate Accounts (6,141,599 ) (3,806,849 ) (1,688,102 ) Internal Exchanges & Other Separate Account Activity (2,822 ) (672 ) 16,421 -------------- --- -------------- --- -------------- Transfer (from) to Separate Accounts on the Statement of Operations $(6,144,421 ) $(3,807,521 ) $(1,671,681 ) -------------- --- -------------- --- --------------
12. COMMITMENTS AND CONTINGENT LIABILITIES (A) LITIGATION The Company is or may become involved in various legal actions, some of which assert claims for substantial amounts. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses and costs of defense, will not be material to the financial condition of the Company. MUTUAL FUND FEES LITIGATION -- In October 2010, a derivative action was brought on behalf of six Hartford Mutual Funds in the United States District Court for the District of Delaware, alleging that Hartford Investment Financial Services, LLC received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the Investment Company Act of 1940. In February 2011, a nearly identical derivative action was brought against Hartford Investment Financial Services, LLC in the United States District Court for the District of New Jersey on behalf of six additional Hartford Mutual Funds. Plaintiffs in each action seek to rescind the investment management agreements and distribution plans between HIFSCO and the Funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received. In addition, plaintiff in the New Jersey action seeks recovery of lost earnings. HIFSCO disputes the allegations, has moved to dismiss the Delaware action, and intends to move to dismiss the New Jersey action. (B) GUARANTY FUNDS Under insurance guaranty fund laws in each state, the District of Columbia and Puerto Rico, insurers licensed to do business can be assessed by state insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. Part of the assessments paid by/refunded to 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 $169, $(19) and $202 in 2010, 2009 and 2008 respectively, of which $34, $498 and $108 in 2010, 2009 and 2008 respectively, increased the creditable amount against premium taxes. The Company has a guaranty fund receivable of $2,739 and $3,614 as of December 31, 2010 and 2009, respectively. (C) LEASES As discussed in Note 8, transactions with The Hartford include rental facilities and equipment. Rent paid by the Company to The Hartford for space and equipment used by The Hartford's life insurance companies was $6,942, $9,705 and $6,142 in 2010, 2009 and 2008, respectively. Future minimum rental commitments are as follows: 2011 $5,779 2012 4,014 2013 2,921 2014 1,256 2015 186 Thereafter (4) --------- Total $14,152 ---------
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 on a level basis over the term of the primary sublease for the facility located in Simsbury, Connecticut, which expired on December 31, 2009, and amounted to $0, $5,283 and $2,714 in 2010, 2009 and 2008, respectively. In the first quarter of 2010, the Company's indirect parent, Hartford Life and Accident Insurance Company, purchased its headquarters property for $46 million. (D) TAX MATTERS The Company's federal income tax returns are routinely audited by the IRS as part of The Hartford's consolidated tax return. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2007. The IRS examination of the years 2007 - 2009 commenced during 2010 and is expected to conclude by the end of 2012. In addition, The Hartford's management is working with the IRS on a possible settlement of a dividends received deduction ("DRD") issue related to prior periods which, if settled, may result in the booking of tax benefits. Such benefits are not expected to be material to the Statement of Operations. The Company does not anticipate that any of these items will result in a significant change in the balance of unrecognized tax benefits within 12 months. Management believes that adequate F-39 provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years. The Company's unrecognized tax benefits are settled with the parent consistent with the terms of the tax sharing agreement described above. The Separate Account DRD is estimated for the current year using information from the prior year-end, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments. The 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 recorded benefits of $88,631, $113,431 and $112,175 related to the Separate Account DRD in the years ended December 31, 2010, 2009 and 2008, respectively. These amounts included benefits (charges) related to prior years' tax returns of $(4,169), $15,720 and $6,960 in 2010, 2009 and 2008, respectively. In Revenue Ruling 2007-61, issued on September 25, 2007, the IRS announced its intention to issue regulations with respect to certain computational aspects of the DRD on Separate Account assets held in connection with variable annuity contracts. Revenue Ruling 2007-61 suspended Revenue Ruling 2007-54, issued in August 2007 that purported to change accepted industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS may ultimately propose for issuance in this area will be subject to public notice and comment, at which time insurance companies and other members of the public will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown, but they could result in the elimination of some or all of the Separate Account DRD tax benefit that the Company receives. Management believes that it is highly likely that any such regulations would apply prospectively only. The Company receives a foreign tax credit against its U.S. tax liability for foreign taxes paid by the Company including payments from its Separate Account assets. The Separate Account foreign tax credit is estimated for the curRent year using information from the most recent filed return, adjusted for the change in the allocation of Separate Account investments to the international equity markets during the current year. The actual current year foreign tax credit can vary from the estimates due to actual foreign tax credits passed through by the mutual funds. The Company recorded benefits of $2,396, $11,125 and $11,244 related to Separate Account foreign tax credit in the years ended December 31, 2010, 2009 and 2008, respectively. These amounts included benefits (expenses) related to true-ups of prior years' tax returns of $(3,504), $1,541 and $2,772 in 2010, 2009 and 2008, respectively. (E) FUNDING OBLIGATION At December 31, 2010, the Company had outstanding commitments totaling $123,736 of which $6,661 is committed to fund limited partnership investments. These capital commitments can be called by the partnership during the commitment period (on average 2 to 5 years) to fund working capital needs or to purchase new investments. Once the commitment period expires, the Company is under no obligation to fund the remaining unfunded commitment but may elect to do so. The remaining $117,075 of outstanding commitments is related to various private placement and mortgage loan commitments with a commitment period that expires in less than one year. 13. CORRECTION OF ERRORS In 2010, the Company reviewed its approach with regard to the calculation of the deferRed premium asset ("DPA"), utilizing guidance provided by New York Circular No. 11 (2010). As a result of this review, the Company determined that it had overstated the DPA as a result of using statutory net valuation premium for policies with a deficiency reserve where gross premium should have been used as a basis for establishing the DPA as guided by SSAP No. 51 (Life Contracts). This method was the outcome of a 1997 Connecticut Audit. The Company also had not reflected ceded DPA amounts nor established an asset for prepaid reinsurance amounts as guided in SSAP No. 61 (Life, Deposit-Type and Accident and Health Reinsurance). The Company has recorded an adjustment to "Capital and Surplus" of $(7,208) representing the cumulative effect of this change in calculation and accounting for the DPA. The adjustment to "Capital and Surplus" was recorded in "Unassigned Funds" as follows: $14,571 in "Change in Nonadmitted assets" and $(21,779) in "Correction of prior year error". The change in calculation and accounting had an immaterial effect on the Company's net income for the years ending December 31, 2008, 2009 and in 2010 decreased net income by approximately $1,973. The effect was immaterial to the Company's Assets, Liabilities and Capital and Surplus for the periods ending December 31, 2009 and 2010. 14. SALE OF AFFILIATE On November 23, 2009, the Company entered into a Share Purchase Agreement to sell its joint venture interest in ICATU Hartford Seguros, S.A. ("IHS"), its Brazilian insurance operation, to its partner, ICATU Holding S.A., for $135,000. The transaction closed in 2010, and the Company received cash proceeds of $130,000 which was net of capital gains tax withheld of $5,000. As a result of the Share Purchase Agreement, the Company recorded in 2009, an asset impairment charge, net of unrealized capital gains and foreign currency translation adjustments, in net realized capital losses of $44,000 after-tax. F-40 During the fourth quarter of 2010, the Company completed the sales of its indirect wholly-owned subsidiaries Hartford Investments Canada Corporation ("HICC") and Hartford Advantage Investment, Ltd. ("HAIL"). The Company received cash proceeds of $19,704 for the sale of HICC and $20,043 for the sale of HAIL. 15. RECONCILIATION OF AMOUNTS TO THE ANNUAL STATEMENTS, AS FILED The following table presents the reclassification of the SSAP 10R adoption impact from unassigned funds to aggregate write-ins for other than special surplus funds reported on page 3 of the 2010 and 2009 Annual Statements, as filed:
AGGREGATE WRITE-INS FOR OTHER THAN SPECIAL SURPLUS UNASSIGNED TOTAL CAPITAL FUNDS FUNDS AND SURPLUS --------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 2009 PER PAGE 3 OF ANNUAL STATEMENT $189,963 $1,003,929 $4,085,601 Reclassification for SSAP 10R Adoption 266,358 (266,358) -- ---------- ------------ ------------ Per the accompanying financial statements $456,321 $737,571 $4,085,601 ---------- ------------ ------------
The following table presents the reclassification of capital received by the Company to establish WRR on page 5 of the 2010 and 2009 Annual Statements, as filed:
CAPITAL AND COST OF PAID IN NET CASH FROM INVESTMENTS NET CASH SURPLUS, LESS FINANCING AND ACQUIRED -- FROM TREASURY MISCELLANEOUS STOCK INVESTMENTS STOCK SOURCES --------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 2009 PER PAGE 5 OF ANNUAL STATEMENT $(1,124,386) $43,065 $(213,938) $590,366 Receipt of WRR (700,000) (700,000) 700,000 700,000 ------------- ----------- ----------- ------------ Per the accompanying financial statements $(1,824,386) $(656,935) 486,062 $1,290,366 ------------- ----------- ----------- ------------
16. SUBSEQUENT EVENTS The Company has evaluated events subsequent to December 31, 2010, through April 11, 2011, the date the financial statements were available to be issued. The Company has not evaluated subsequent events after that date for presentation in these financial statements. F-41 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) All financial statements are included in Part A and Part B of the Registration Statement. (b) (1) Resolution of the Board of Directors of Hartford Life and Annuity Insurance Company ("Hartford") authorizing the establishment of the Separate Account.(1) (2) Not applicable. (3) (a) Amended and Restated Principal Underwriter Agreement.(2) (3) (b) Form of Dealer Agreement.(3) (4) Form of Individual Flexible Premium Variable Annuity Contract.(4) (5) Form of Application.(5) (6) (a) Certificates of Incorporation of Hartford.(6) (6) (b) Bylaws of Hartford.(6) (7) Form of Reinsurance Agreement.(2) (8) (a) Form of Fund Participation Agreement.(7) (b) Guarantee Agreement, between Hartford Life and Accident Insurance Company and ITT Hartford Life and Annuity Insurance Company, its wholly owned subsidiary, dated as of August 20, 1993 and effective as of August 20, 1993.(5) (c) Guarantee Agreement, between Hartford Life Insurance Company and ITT Hartford Life and Annuity Insurance Company, dated as of May 23, 1997.(5) (9) Opinion and Consent of Richard J. Wirth, Assistant General Counsel. (10) (a) Consent of Deloitte & Touche LLP. (10) (b) Independent Auditors' Consent. (11) Letter regarding unaudited interim financial information. (12) Not applicable. (99) Copy of Power of Attorney. ------------ (1) Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement File No. 333-76419, filed on June 21, 1999. (2) Incorporated by reference to Post-Effective Amendment No. 3, to the Registration Statement File No. 333-148564, filed on February 9, 2009. (3) Incorporated by reference to Pre-Effective Amendment No. 3, to the Registration Statement File No. 033-73568, filed on May 1, 1996. (4) Incorporated by reference to Post-Effective Amendment No. 10 to the Registration Statement on Form N-4, File No. 333-136548, filed on August 14, 2009. (5) Incorporated by reference to Post-Effective Amendment No. 10 to the Registration Statement File No. 333-136547, filed on August 14, 2009. (6) Incorporated by reference to Post-Effective Amendment No. 7, to the Registration Statement File No. 333-136545, filed on May 1, 2009. (7) Incorporated by reference to Post-Effective Amendment No. 7, to the Registration Statement File No. 333-119418, filed September 17, 2008. (8) Incorporated by reference to Post-Effective Amendment No. 9, to the Registration Statement on Form N-4, File No. 333-148565, filed on May 3, 2010. ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME POSITION WITH HARTFORD ------------------------------------------------------------------------------------------------------------------ Lydia M. Anderson Vice President Ricardo Anzaldua Senior Vice President, Assistant Secretary Robert Arena Executive Vice President Thomas S. Barnes Vice President David G. Bedard Chief Financial Officer, Senior Vice President, Director* Beth A. Bombara Chief Accounting Officer John B. Brady Actuary, Vice President David A. Bulin Vice President Thomas A. Campbell Actuary, Vice President David A. Carlson Director of Taxes, Senior Vice President Jennifer Centrone Vice President Michael R. Chesman Senior Vice President Jared A. Collins Vice President Ellen Conway Vice President Robert A. Cornell Actuary, Vice President Rochelle S. Cummings Vice President James Davey Executive Vice President Raymond E. DiDonna Vice President George Eknaian Chief Actuary, Senior Vice President Mark A. Esposito Senior Vice President Michael Fish Actuary, Vice President John W. Gallant Vice President Ronald R. Gendreau Executive Vice President Christopher Graham Vice President Christopher M. Grinnell Vice President Richard Guerrini Vice President Christopher J. Hanlon Senior Vice President James M. Hedreen Actuary, Vice President Elizabeth Horvath Actuary, Vice President Penelope A. Hrib Actuary, Vice President Charles E. Hunt Vice President Jeannie M. Iannello Vice President Anne Iezzi Chief Compliance Officer, Vice President Donna R. Jarvis Actuary, Vice President Kathleen E. Jorens Assistant Treasurer, Vice President Claire Z. Kleckner Vice President Michael Knipper Senior Vice President Alan J. Kreczko Executive Vice President, General Counsel Brian P. Laubacker Vice President/Regional Sales Margaret Lesiak Vice President David N. Levenson Chairman of the Board, Chief Executive Officer, President, Director* Gregory McGreevey Chief Investment Officer, Executive Vice President, Director* William P. Meaney Senior Vice President Craig D. Morrow Appointed Actuary, Vice President Brian Murphy Executive Vice President Mark J. Niland Senior Vice President Brian O'Connell Chief Information Officer, Vice President Robert W. Paiano Senior Vice President, Treasurer Brian Pedersen Vice President Robert E. Primmer Senior Vice President
NAME POSITION WITH HARTFORD ------------------------------------------------------------------------------------------------------------------ Sharon A. Ritchey Executive Vice President David C. Robinson Senior Vice President Michael J. Roscoe Actuary, Senior Vice President Peter F. Sannizzaro Vice President Laura Santirocco Assistant Secretary, Vice President Wade A. Seward Vice President Terence Shields Corporate Secretary, Assistant Vice President Cathleen Shine Chief Compliance Officer of Separate Accounts Mark M. Socha Vice President John Sugar Vice President Martin A. Swanson Vice President Connie Tang Actuary, Vice President Diane E. Tatelman Vice President James P. Van Etten Vice President Charles N. Vest Actuary, Vice President James M. Yanosy Controller, Senior Vice President
Unless otherwise indicated, the principal business address of each of the above individuals is Hartford Plaza, Hartford, CT 06115. * Denotes Board of Directors. ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT. Incorporated by reference to Post-Effective Amendment No. 3 to the Registration Statement File No. 333-168986, filed on April 15, 2011. ITEM 27. NUMBER OF CONTRACT OWNERS As of February 28, 2011, there were 247,435 Contract Owners. ITEM 28. INDEMNIFICATION Section 33-776 of the Connecticut General Statutes states that: "a corporation may provide indemnification of, or advance expenses to, a director, officer, employee or agent only as permitted by sections 33-770 to 33-779, inclusive." ARTICLE VIII, Section 1(a) of the By-laws of the Depositor (as amended and restated effective July 25, 2000) provides that the Corporation, to the fullest extent permitted by applicable law as then in effect, shall indemnify any person who was or is a director or officer of the Corporation and who was or is threatened to be made a defendant or respondent in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (each, a Proceeding"), by reason of the fact that such a person was or is a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan or other entity (a "Covered Entity"), against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement and actually and reasonably incurred by such person in connection with such Proceeding. Any such former or present director or officer of the Corporation finally determined to be entitled to indemnification as provided in this Article VIII is hereinafter called an "Indemnitee". Until such final determination is made such former or present director or officer shall be a "Potential Indemnitee" for purposes of this Article VIII. Notwithstanding the foregoing provisions of this Section 1(a), the Corporation shall not indemnify an Indemnitee with respect to any Proceeding commenced by such Indemnitee unless the commencement of such Proceeding by such Indemnitee has been approved by a majority vote of the Disinterested Directors (as defined in Section 5(d)); provided however, that such approval of a majority of the Disinterested Directors shall not be required with respect to any Proceeding commenced by such Indemnitee after a Change in Control (as defined in Section 5(d)) has occurred. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 29. PRINCIPAL UNDERWRITERS (a) HSD acts as principal underwriter for the following investment companies: Hartford Life Insurance Company - DC Variable Account I Hartford Life Insurance Company - Separate Account One Hartford Life Insurance Company - Separate Account Two Hartford Life Insurance Company - Separate Account Two (DC Variable Account II) Hartford Life Insurance Company - Separate Account Two (QP Variable Account) Hartford Life Insurance Company - Separate Account Two (Variable Account "A") Hartford Life Insurance Company - Separate Account Two (NQ Variable Account) Hartford Life Insurance Company - Separate Account Ten Hartford Life Insurance Company - Separate Account Three Hartford Life Insurance Company - Separate Account Five Hartford Life Insurance Company - Separate Account Seven Hartford Life Insurance Company - Separate Account Eleven Hartford Life Insurance Company - Separate Account Twelve Hartford Life and Annuity Insurance Company - Separate Account One Hartford Life and Annuity Insurance Company - Separate Account Ten Hartford Life and Annuity Insurance Company - Separate Account Three Hartford Life and Annuity Insurance Company - Separate Account Five Hartford Life and Annuity Insurance Company - Separate Account Six Hartford Life and Annuity Insurance Company - Separate Account Seven (b) Directors and Officers of HSD
POSITIONS AND OFFICES NAME WITH UNDERWRITER ---------------------------------------------------------------------------------------------------------------- Robert Arena (1) Executive Vice President/Business Line Principal and Director Diana Benken (1) Chief Financial Officer and Controller/FINOP Stuart M. Carlisle (1) Vice President Jared A. Collins (2) Vice President Christopher S. Conner (3) AML Compliance Officer and Chief Compliance Officer James Davey (1) Director Vernon Meyer (1) Senior Vice President Robert W. Paiano (4) Treasurer Sharon A. Ritchey (1) President, Chief Executive Officer, Chairman of the Board and Director Cathleen Shine (1) Chief Legal Officer -- Broker/Dealer and Secretary Martin A. Swanson (1) Vice President/Marketing Diane E. Tatelman (1) Vice President
------------ (1) Address: 200 Hopmeadow Street, Simsbury, CT 06089 (2) Address: 31 St. James Ave., Suite 600, Boston, MA 02116-4190 (3) Address: 1500 Liberty Ridge Dr., Wayne, PA 19087 (4) Address: One Hartford Plaza, Hartford, CT 06155 ITEM 30. LOCATION OF ACCOUNTS AND RECORDS All of the accounts, books, records or other documents required to be kept by Section 31(a) of the Investment Company Act of 1940 and rules thereunder, are maintained by Hartford at 200 Hopmeadow Street, Simsbury, Connecticut 06089. ITEM 31. MANAGEMENT SERVICES All management contracts are discussed in Part A and Part B of this Registration Statement. ITEM 32. UNDERTAKINGS (a) The Registrant hereby undertakes to file a post-effective amendment to this Registration Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old so long as payments under the variable annuity Contracts may be accepted. (b) The Registrant hereby undertakes to include either (1) as part of any application to purchase a Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) The Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Hartford hereby represents that the aggregate fees and charges under the Contract are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Hartford. The Registrant is relying on the no-action letter issued by the Division of Investment Management to American Counsel of Life Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has complied with conditions one through four of the no-action letter. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf, in the Town of Simsbury, and State of Connecticut on this 15th day of April, 2011. HARTFORD LIFE AND ANNUITY INSURANCE COMPANY - SEPARATE ACCOUNT SEVEN (Registrant) By: David N. Levenson* *By: /s/ Richard J. Wirth --------------------------------------------- --------------------------------------------- David N. Levenson Richard J. Wirth President, Chief Executive Officer, Attorney-in-Fact, Chairman of the Board, Director*
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY (Depositor) By: David N. Levenson* --------------------------------------------- David N. Levenson President, Chief Executive Officer, Chairman of the Board, Director*
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons and in the capacities and on the dates indicated. David G. Bedard, Chief Financial Officer, Senior Vice President, Director* Beth A. Bombara, Chief Accounting Officer* David N. Levenson, Chief Executive Officer, President, Chairman of the Board, Director* *By: /s/ Richard J. Wirth ----------------------------------- Gregory McGreevey, Executive Vice President, Richard J. Wirth Chief Investment Officer, Director* Attorney-in-Fact, Date: April 15, 2011
333-136548 EXHIBIT INDEX (9) Opinion and Consent of Richard J. Wirth, Assistant General Counsel. (10) (a) Consent of Deloitte and Touche LLP (10) (b) Independent Auditors' Consent (99) Powers of Attorney.