485BPOS 1 combopostcloseprmos.htm 485BPOS Post Close PRM O-Share TLA 333-174679 Combined Document


As filed with the Securities and Exchange Commission on June 28, 2018
File No. 333-174679
811-09295
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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PRE-EFFECTIVE AMENDMENT NO.
 
/ /
POST-EFFECTIVE AMENDMENT NO.
12
/X/

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO.
623
/X/

TALCOTT RESOLUTION LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT SEVEN

(Exact Name of Registrant)

TALCOTT RESOLUTION LIFE AND ANNUITY INSURANCE COMPANY

(Name of Depositor)

P.O. BOX 2999
HARTFORD, CT 06104-2999

(Address of Depositor's Principal Offices)

(860) 547-4390

(Depositor's Telephone Number, Including Area Code)

LISA PROCH
TALCOTT RESOLUTION LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999

(Name and Address of Agent for Service)
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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 June 28, 2018 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

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PART A


 

PERSONAL RETIREMENT MANAGER
FOUNDATION O-SHARE
talcottresolutionlogovertica.jpg
TALCOTT RESOLUTION LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT SEVEN (EST. 4/1/99)
PO BOX 14293
LEXINGTON, KY 40512-4293
1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (INVESTMENT PROFESSIONALS)
 
www.talcottresolution.com
 
 
 
 
 
 
On May 31, 2018, pursuant to the Stock and Asset Purchase Agreement entered into on December 3, 2017, by and among Hartford Holdings, Inc. (“HHI”) and its parent company, The Hartford Financial Services Group, Inc., Hopmeadow Acquisition, Inc. ("Buyer"), Hopmeadow Holdings, LP, and Hopmeadow Holdings GP, each of which is funded by a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group, HHI sold all of the issued and outstanding equity of Hartford Life, Inc., the parent of Talcott Resolution Life Insurance Company ("Talcott Resolution") (formerly "Hartford Life Insurance Company") to Buyer ("Talcott Resolution Sale Transaction").
Additional information regarding the Talcott Resolution Sale Transaction can be found on the Talcott Resolution website at www.talcottresolution.com/financialinformation.html and in its Current Report on Form 8-K (click on "SEC Filings - Other") filed by Talcott Resolution Life Insurance Company (formerly "Hartford Life Insurance Company") on June 6, 2018, with the Securities and Exchange Commission.
Talcott Resolution will continue to administer and provide all contractual benefits of your annuity. The terms, features and benefits of your insurance contract will NOT change as a result of the sale.
* * * * * * * * * *
The variable annuity product described in this prospectus are no longer for sale. In 2013, we announced that we would no longer be selling or issuing annuity products and part of the company’s long-term strategy is to reduce the liabilities associated with in-force annuity contracts. However, we continue to administer the in force annuity contracts. You should read the terms of your annuity contract, including any riders, as your contract contains the specific terms of the benefits, limitations, restrictions, costs and obligations regarding your annuity.
This prospectus describes information you should know about Personal Retirement Manager Foundation O-Share variable annuity. The prospectus describes a contract between each Owner and joint Owner (“you”) and Talcott Resolution Life and Annuity Insurance Company (“us,” “we” or “our”). This is an individual, deferred, flexible-premium variable annuity. You may own this annuity on a single or joint basis. This variable annuity allows you to allocate your Deposit among the following portfolio companies:
ü
AIM Variable Insurance Funds
 
ü
Franklin Templeton Investments
 
 
 
 
 
ü
AllianceBernstein L.P.
 
ü
Hartford HLS Funds
 
 
 
 
 
ü
American Century Investments
 
ü
Lord, Abbett & Co., LLC
 
 
 
 
 
ü
American Funds
 
ü
MFS Investment Management
 
 
 
 
 
ü
BlackRock
 
ü
PIMCO
 
 
 
 
 
ü
Fidelity Investments
 
ü
Putnam Investments, LLC
At the time you purchased your Contract you were able to allocate some or all of your Deposit to the Personal Pension Account and/or the Fixed Accumulation Feature. As of October 4, 2013, we no longer accept new allocations or Premium Payments to the Fixed Accumulation Feature except for contracts issued in MA. As of October 3, 2014, the Personal Pension Account is closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value) except for contracts issued in CT, FL, NJ and WA.
This prospectus refers to the following Contract share class:
ü
O Share

2
 
 
 

Not every Contract class or optional rider was available from your Financial Intermediary or in your state. Other available Contract share classes offered through select Financial Intermediaries are not described in this Prospectus and may be subject to different charges.
Please read this prospectus carefully and keep it for your records and for future reference. 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”). We have included the Table of Contents for the Statement of Additional Information at the end of this prospectus. 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 be obtained free of charge from us by calling 1-800-862-6668 or from 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 through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account (“IRA”)). Pursuant to IRS Circular 230, you are hereby notified of the following: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax adviser. This product is not intended to provide tax, accounting or legal advice. Please consult with your tax accountant or attorney prior to finalizing or implementing any tax or legal strategy or for any tax, accounting or legal advice concerning your situation.
Four Simple Steps to Safeguard Your Account Against Fraud
We take protection of our customer accounts and information seriously. With the number of security breaches on the rise, it is a good time to remind you, our clients, to increase your awareness and protect yourself from fraud. We recommend four easy ways you can help protect yourself and your investments.
1. Strengthen Your Password
A strong password is your primary line of defense, which is why criminals attempt to acquire them. Passwords should be complex and difficult to guess. In order to ensure their ongoing effectiveness, passwords should be changed on a regular basis.
2. Keep Your Information Current
Make sure your contact information, including mailing address, email address and phone number is up to date with us. This will ensure that you receive your important documents.
3. Be Aware
Learn to recognize phishing emails, suspicious phone calls and texts from individuals posing as legitimate organizations, such as a bank, credit card company and government agencies. Do not click on links or download attachments from unknown sources.
4. Review Your Account Statements and Notify Law Enforcement of Suspicious Activity
As a precautionary measure, we recommend that you remain vigilant by reviewing your account statements and credit reports closely. If you detect any suspicious activity on an account, you should promptly notify the financial institution or company with which the account is maintained. You also should promptly report any fraudulent activity or suspected incidence of identity theft to proper law enforcement authorities or the Federal Trade Commission (FTC).
To file a complaint with the FTC, you may do so at www.ftc.gov/idtheft or call 1-877-ID-THEFT (877-438-4338). The FTC mailing address is 600 Pennsylvania Ave. NW, Washington, DC 20580. Complaints filed with the FTC will be added to the FTC’s Identity Theft Data Clearinghouse, which is a database made available to law enforcement agencies.
Obtain a Copy of Your Credit Report
You may obtain a free copy of your credit report from each of the three major credit reporting agencies once every 12 months by visiting www.annualcreditreport.com, calling toll-free 877-322-8228, or by completing an Annual Credit Report Request Form (found on the website) and mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348.
Or you can elect to purchase a copy of your credit report by contacting one of the three national credit reporting agencies. Contact information for the three national credit reporting agencies is provided below:
Equifax
(800) 685-1111
www.equifax.com
P.O. Box 740241
Atlanta, GA 30374
Experian
(888) 397-3742
www.experian.com
P.O. Box 2002
Allen, TX 75013
Transunion
(800) 888-4213
www.transunion.com
P.O. Box 1000
Chester, PA 19016


3
 
 
 

Additional Free Resources on Identity Theft
You may wish to review the tips provided by the FTC on how to avoid identity theft. For more information, please visit www.consumer.ftc.gov/topics/privacy-identity or call 1-877-ID THEFT (877-438-4338).
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 FEDERAL GOVERNMENT AGENCY
MAY LOSE VALUE
NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE
fdicoshare.jpg
Date of Prospectus: May 1, 2018 as amended on June 28, 2018
Date of Statement of Additional Information: May 1, 2018 as amended on June 28, 2018


4
 
 
 

Table of Contents

 
Page
1.
2.
3.
 
 
 
 
 
4.
 
 
 
 
5.
 
 
 
 
 
6.
 
 
7.
 
 
 
 
 
Appendix E — Model Investment Options


5
 
 
 

1. Introduction
This Contract is closed to new investors.
Contract Version
 
Minimum Initial Deposit
 
Mortality & Expense Risk
and
Administrative
Charges
Maximum
Up-Front
Commission
 
Qualified
Contract
Non-
Qualified
Contract
Sales Related Charges
O Share
$2,000
$5,000
Contingent Deferred Sales Charge (CDSC)
0.70%
5%
 
 
 
Premium Based Charges
 
 
This table does not show Fund expenses, Premium taxes, Annual Maintenance Fee, and optional rider fees.
Investment Options
ü
Sub-Accounts - Funds representing a range of investment strategies, objectives and asset classes.
 
 
ü
Fixed Accumulation Feature - A fixed interest account. As of October 4, 2013, we no longer accept new allocations or Premium Payments to the Fixed Accumulation Feature. (As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value)).
Subject to limitations, you may move your investment among each of these options.
Optional Features Previously Available
Protection for your:
Optional Feature:
Income
Income Foundation Builder*
 
Personal Pension Account
Legacy - Death Benefit
Return of Premium IV
 
Maximum Anniversary Value IV*
* Investment restrictions apply.
Optional features may not have been available through your Financial Intermediary or in all states.
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
 
Contract Year
 
1
2
3
4
5
6
7
8+
Eligible Investments (1)
Surrender
Charge
$0 - $49,999
7
%
7
%
7
%
6
%
5
%
4
%
3
%
0
%
$50,000 - $99,999
6.5
%
6.5
%
6.5
%
5.5
%
4.5
%
3.5
%
2.5
%
0
%
$100,000 - $249,999
5
%
5
%
5
%
4
%
3.5
%
3
%
2
%
0
%
$250,000 - $499,999
3.5
%
3.5
%
3.5
%
3
%
2.5
%
2
%
1
%
0
%
$500,000 - $999,999
3
%
3
%
3
%
2.5
%
2
%
1.5
%
1
%
0
%
$1,000,000+
2
%
2
%
2
%
1.5
%
1.5
%
1
%
1
%
0
%
(1)
Each Deposit has its own CDSC schedule. The CDSC is a percentage of Remaining Gross Premiums. Please see Section 4(b) for more information on how CDSC is calculated. We will consider your Total Expected Premium as a basis to assign this charge.

6
 
 
 

Contract Owner Periodic Expenses
The next table describes the maximum 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.
 
O Share
Annual Maintenance Fee (2)
$30
Premium Based Charge (3)
Eligible
Investment
Charge
 
$0 - $49,999
0.71
%
 
$50,000 - $99,999
0.64
%
 
$ 100,000 - $249,999
0.50
%
 
$ 250,000 - $499,999
0.35
%
 
$ 500,000 - $999,999
0.28
%
 
$1,000,000+
0.17
%
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
 
0.50
%
Administrative Charge
 
0.20
%
Total Separate Account Annual Expenses
 
0.70
%
Maximum Optional Charges (4)
 
 
Maximum Anniversary Value IV (5)
 
1.50
%
Return of Premium IV (6)
 
0.75
%
Income Foundation Builder (7)
 
2.50
%
(2)
Fee waived if Total Balance is $50,000 or more on your Contract Anniversary.
(3)
An annual Premium Based Charge is determined by your Eligible Investments and is applied as a percentage of Remaining Gross Premium. Each Deposit has its own Premium Based Charge. The Premium Based Charge is reduced to 0% after the completion of seven years after each respective Deposit. We will consider your Total Expected Premium as a basis to assign this charge.
(4)
You may only elect one optional death benefit. All optional charges shown are deducted on Contract Anniversary.
(5)
Rider charge is based on the Death Benefit, not including the Personal Pension Account Death Benefit. Current rider charge is 0.35%.
(6)
Rider charge is based on the Death Benefit, not including the Personal Pension Account Death Benefit. Current rider charge is 0.25%.
(7)
Rider charge is based on Payment Base. The Payment Base is initially equal to Premium Payments. It will fluctuate based on sub-sequent Premium Payments, Market Increases, Deferral Credits, partial Surrenders or transfers to or from the Personal Pension Account. Current rider charge is 2.05%.
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
(expenses that are deducted from Sub-Account assets,
including management fees, Premium Based Charges
and/or service fees (12b-1) fees, and other expenses.
0.41%
1.53%


7
 
 
 

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 IV and Income Foundation Builder). 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

$1,445

3 years

$2,967

5 years

$4,323

10 years

$7,622

(2)
If you annuitize at the end of the applicable time period:
1 year

$381

3 years

$1,873

5 years

$3,398

10 years

$7,192

(3)
If you do not Surrender your Contract:
1 year

$747

3 years

$2,269

5 years

$3,824

10 years

$7,622

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.

8
 
 
 

3. Management of the Contract
The Company
We are a stock life insurance company. Talcott Resolution Life and Annuity Insurance Company (formerly "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. Talcott Resolution Life and Annuity Insurance Company is a subsidiary of Talcott Resolution Life Insurance Company. Talcott Resolution Life Insurance Company was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Talcott Resolution Life and Annuity Insurance Company was originally incorporated under the laws of Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Our corporate offices are located in Windsor, Connecticut. Neither company cross guarantees the obligations of the other. We are ultimately controlled by Henry Cornell, David I. Schamis, and Robert E. Diamond.
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 (Talcott Resolution Life Insurance Company only) and/or state insurance departments. For example, Talcott Resolution 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.talcottresolution.com or visiting the SEC’s website at www.sec.gov. You may also obtain reports and other financial information about us by contacting your state insurance department.
The General Account
The Fixed Accumulation Feature and the Personal Pension Account are part of our General Account. Any amounts that we are obligated to pay under the Fixed Accumulation Feature and the Personal Pension Account and any other payment obligation we undertake under the Contract, including Death Benefits and optional withdrawal benefits, 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 Federal Deposit Insurance Corporation (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. As of October 4, 2013, we no longer accept new allocations or Premium Payments to the Fixed Accumulation Feature except for contracts issued in MA. (As of October 3, 2014, the Personal Pension Account is closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value) except for Contracts issued in CT, FL, NJ and WA).
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
At the time you purchased your Contract, you allocated your Deposit to Sub-Accounts. These are subdivisions of our Separate Account, an account that keeps your Contract assets separate from our company assets. The Sub-Accounts then purchase shares of mutual funds set up exclusively for variable annuity or variable life insurance products. These are not the same mutual funds that you buy through your investment professional even though they may have similar investment strategies and the

9
 
 
 

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 charges and operating expenses. “Master-feeder” or “fund of funds” (“feeder funds”) invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Please contact us to obtain a copy of the prospectuses for each Fund (or for any feeder funds). Read these prospectuses carefully before investing. We do not guarantee the investment results of any Fund. Certain Funds may not be available in all states and in all Contract classes. Please see Appendix C for additional information.
Mixed and Shared Funding — Fund shares may be sold to our other Separate Accounts 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 timely instructions received from you, and
•
vote all Fund shares for which no timely voting instructions are received in the same proportion as shares for which timely voting 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 Fund 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. There is no minimum number of shares for which we must receive timely voting instructions before we vote the shares. Therefore, as a result of proportional voting, the instruction of a small number of Owners could determine the outcome of matters 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, at our 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 that are offered through your Contract make payments to us. 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 Premium Based Charges 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. We expect to make a profit on the amount of the fees and payments that exceed our 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

10
 
 
 

investment performance. As of December 31, 2017, 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 Century Investment Services Inc., BlackRock Advisors, LLC, BlackRock Investment, LLC, Columbia Management Distributors, Inc., Fidelity Distributors Corporation, Fidelity Investments Institutional Operations Company, Franklin Templeton Services, 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, 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.
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 us varies by Fund and we 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 0.40% and 0.35%, respectively, in 2017, and are not expected to exceed 0.40% 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 $75 from that Fund). For the fiscal year ended December 31, 2017, revenue sharing payments and Rule 12b-1 fees did not collectively exceed approximately $48.2 million. These fees do not take into consideration indirect benefits received by offering HLS Funds as investment options.
Fixed Accumulation Feature
As of October 4, 2013, we no longer accept new allocations or Premium Payments to the Fixed Accumulation Feature except for contracts issued in Massachusetts. Any Contract Value currently invested in the Fixed Accumulation Feature may remain.
The following information applies only for Contract Value allocated to or in the Fixed Accumulation Feature as of October 4, 2013.
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 credited rates.
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

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from the Personal Pension Account made after that date but before the next Contract Anniversary. These restrictions also apply to systematic transfers; 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.
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.
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.
4. Information on your Account
a. Purchasing a Contract
Who could buy this Contract?
This Contract is no longer available for sale. The Contract is an individual tax-deferred variable annuity Contract. It was designed for retirement planning purposes and was available for purchase 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 were able to purchase Contracts that were not part of a tax qualified retirement plan. These are known as non-qualified Contracts.
If you purchased 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.
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?
The Contract was only available for purchase through a Financial Intermediary.
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 canceled 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 Deposits:
•
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.
We urge you to discuss with your investment professional which share class is suitable for your needs. 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.
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

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contract being considered abandoned property under state law, and remitted to the applicable state and may result in you not receiving important notices about your Contract.
Description of Right to Cancel provision you had when you Purchased your Contract.
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 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.
Replacement of Annuities
A "replacement" occurs when a new contract is purchased and, in connection with the sale, an existing contract is surrendered, lapsed, forfeited, assigned to the replacing insurer, otherwise terminated, or used in a financed purchase. A "financed purchase" occurs when the purchase of a new annuity contract involves the use of the funds obtained from the values of an existing annuity contract through Withdrawal, Surrender or loan.
There are circumstances in which replacing your existing annuity contract can benefit you. However, a replacement may not be in your best interest. Accordingly, you should make a careful comparison of the cost and benefits of your existing contract and the proposed contract with the assistance of your financial and tax advisers to determine whether replacement is in your best interest. You should be aware that the person selling you the new contract will generally earn a commission if you buy the new contract through a replacement. Remember that if you replace a contract with another contract, you might have to pay a surrender charge on the replaced contract, and there may be a new surrender charge period for the new contract. In addition, other charges may be higher (or lower) and the benefits may be different.
You should also note that once you have replaced your variable annuity contract, you generally cannot reinstate it even if you choose not to accept your new variable annuity contract during your "free look" period. The only exception to this rule would be if your previously issued contract was issued in a state that requires the insurer to reinstate the previously surrendered contract if the owner chooses to reject their new variable annuity contract during their "free look" period.
How are Deposits applied to your Contract?
As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value).* Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account as described in your Contract (including applicable riders).
If you are enrolled in any program (e.g., Dollar Cost Averaging Program) that automatically allocates subsequent contributions (Premium Payments) and/or transfers of Contract Value to the Personal Pension Account you MUST provide us with alternative allocation instructions prior to October 3, 2014; otherwise your program will automatically terminate on October 3, 2014*.
*
Contract Owners with Contracts issued in CT, FL, NJ and WA may continue to allocate new Personal Pension Account Contributions after October 3, 2014 and any programs that utilize the Personal Pension Account may remain in place. The Personal Pension Account was never available for Contracts issued in New York and Oregon.
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.
Generally, we receive your order request 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 or any Payment Base associated with an optional benefit. 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

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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.
What other ways can you invest?
You may enroll in the following features (sometimes called a Program) for no additional fee subject to availability. 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.
•
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 complexes. 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 complexes 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. If a model(s) is no longer available for new assets, we will continue to rebalance existing assets in the model(s) at the specified frequency. You may obtain a copy of the current models by contacting your Financial Intermediary. Please see Appendix E for models that are available to you.
You may invest in an asset allocation model through the Dollar Cost Averaging Program when the Fixed Accumulation Feature or Personal Pension Account as 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

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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 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 Employment 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
Dollar Cost Averaging is a program that allows you to systematically make transfers into Funds or into the Personal Pension Account over a period of time. Since the transfer into Funds or into the Personal Pension Account occurs at regularly scheduled intervals, regardless of price fluctuations, you may ultimately have an average cost per share that is lower. We offer two Dollar Cost Averaging Programs:
•
Fixed Amount DCA
•
Earnings/Interest DCA
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 fifteen days unless you instruct us otherwise. You must make at least three transfers in order to remain in this Program. Please note that no additional Premium Payments or Account Value may be allocated to the Fixed Accumulation Feature as of October 4, 2013. Please note that no additional Premium Payments or Account Value may be allocated to the Fixed Accumulation Feature as of October 4, 2013 and effective October 3, 2014 no new Personal Pension Account Contributions will be allowed (both subject to state exclusions).
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) 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

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(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 Annual Withdrawal Amount (AWA) and may be subject to a CDSC. For more information on the AWA, please Section 4.b and the Glossary in Section 7. Amounts received prior to age 59½ 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 “Appendix Tax” 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. Your enrollment authorizes us to 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 (subject to applicable state law).
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 all optional living and death benefits riders have different withdrawal limitations. Please refer to the Glossary in Section 7 for the term Transfer Limit. 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. In addition, there may be investment restrictions applicable to your contract in conjunction with certain riders as described in this prospectus.
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 at the net asset value of each Fund share 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 thirty 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. 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. 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.

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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 (dividing the $10,000 among the other Sub-Accounts however you chose)
Yes
Transfer $10,000 from any number of different Sub-Accounts to any number of other Sub-Accounts
Yes
Transfer $10,000 from a money market Sub-Account to a growth Sub-Account and then, before the end of that same Valuation Day, transfer the same $10,000 from the growth Sub-Account to an international Sub-Account
No
Second, you are allowed to submit a total of twenty Sub-Account transfers each Contract Year (the transfer rule) by 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, 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 tenth Sub-Account transfer to remind you about the transfer rule. After your twentieth transfer request, our computer system will not allow you to do another Sub-Account transfer by telephone or via the internet. You will then be instructed to send your Sub-Account transfer request by U.S. Mail or overnight delivery service.
We reserve the right to aggregate your Contracts (whether currently existing or those recently Surrendered) for the purposes of enforcing these restrictions.
The transfer rule does not apply to Sub-Account transfers that occur automatically as part of a company-sponsored Program, such as a Contract exchange program that may be offered by us from time to time. 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.

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Possibility of undetected abusive trading or market timing. We may not be able to detect or prevent all abusive trading or market timing activities. For instance:
•
Since we net all the purchases and redemptions for a particular Fund for this and many of our other products, transfers by any specific market timer could be inadvertently overlooked.
•
Certain forms of variable annuities and types of Funds may be attractive to market timers. We cannot provide assurances that we will be capable of addressing possible abuses in a timely manner.
•
These policies apply only to individuals and entities that own this Contract or have the right to make transfers (regardless of whether requests are made by you or anyone else acting on your behalf). However, the Funds that make up the Sub-Accounts of this Contract are also available for use with many different variable life insurance policies, variable annuity products and funding agreements, and are offered directly to certain qualified retirement plans. Some of these products and plans may have less restrictive transfer rules or no transfer restrictions at all.
•
In some cases, we are unable to count the number of Sub-Account transfers requested by group annuity participants co-investing in the same Funds (participants) or enforce the Transfer Rule because we do not keep participants’ account records for a Contract. In those cases, the participant account records and participant Sub-Account transfer information are kept by such owners or its third party service provider. These owners and third party service providers may provide us with limited information or no information at all regarding participant Sub-Account transfers.
How are you affected by frequent Sub-Account Transfers?
We are not responsible for losses or lost investment opportunities associated with the effectuation of these policies. Frequent Sub-Account transfers may result in the dilution of the value of the outstanding securities issued by a Fund as a result of increased transaction costs and lost investment opportunities typically associated with maintaining greater cash positions. This can adversely impact Fund performance and, as a result, the performance of your Contract Value. This may also lower the Death Benefit paid to your Beneficiary or lower Annuity Payouts for your Payee as well as reduce the value of other optional benefits available under your Contract.
Separate Account investors could be prevented from purchasing Fund shares if we reach an impasse on the execution of a Fund’s trading instructions. In other words, a Fund complex could refuse to allow new purchases of shares by all our variable product 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 acknowledgment we return to you. If the time and date indicated on the acknowledgment 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 acknowledgment, 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 reconfirmed in writing.
Telephone or Internet transfer requests may currently only be canceled by calling us before the end of the Valuation Day you made the transfer request.
We and our agents 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 copy of a power of attorney (POA) executed by you that meets the requirements of your resident state law. Once we have the POA on file, we will accept transaction requests, including transfer instructions, subject to our transfer restrictions, from your designated agent (attorney-in-fact). We reserve the right to request an affidavit or certification from the agent that the POA is in effect when the agent makes such transactions. You may instruct us to discontinue honoring the POA at any time.

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b. Charges and Fees
In addition to the following charges there are optional riders that if elected, assess an additional charge. Please see Sections 5 and 6 for more information.
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 when any CDSCs would have been applicable. The risk that we bear during this period is that actual mortality rates, in aggregate, may exceed expected mortality rates.
Once Annuity Payouts have begun, we may be required to make Annuity Payouts as long as the Annuitant is living, regardless of how long the Annuitant lives. The risk that we bear during this period is that the actual mortality rates, in aggregate, may be lower than the expected mortality rates.
•
Expense Risk - We also bear an expense risk that the CDSC, if applicable, Premium Based Charges, 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 line of variable annuity Contracts with the Contracts when we combine Total Balance for purposes of this waiver.
Administrative Charge
We apply a daily administrative 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.
Premium Based Charge
Premium Based Charges are based on total Eligible Investment breakpoints described in the Fee Table. The breakpoint schedule referred to in the Fee Table displays the range of Premium Based Charge percentages and the rate of the charge depends on your total Eligible Investments. For more information on breakpoints, please see the table of Contract Owner Periodic Expenses in Section 2, Fee Summary.
We use the amount of Eligible Investments to assign the applicable Premium Based Charges. Eligible Investments are the higher of (a) Deposits less any withdrawals; or (b) your last Valuation Day’s Total 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.

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Any subsequent Deposit that brings your cumulative total Eligible Investments to a new breakpoint will be subject to the applicable breakpoint and all prior Deposits will continue to be subject to the original breakpoint. As a result, you may be subject to different levels of Premium Based Charges based on when and how much you invest. We calculate an annual Premium Based Charge against all Deposits based on the Remaining Gross Premium. The Premium Based Charge is reduced to 0% after the completion of seven years after each respective Deposit.
The Premium Based Charge will be assessed only with respect to Contract Value invested in Sub-Accounts and not investments in the Fixed Accumulation Feature or the Personal Pension Account. Each Deposit has its own Premium Based Charge schedule until year eight when it expires. Deposits allocated to the Fixed Accumulation Feature or Personal Pension Account will retain the original Premium Based Charge amount calculated at the initial investment. However, the charge will never be assessed unless the assets are transferred to the Sub-Accounts. The Premium Based Charge is intended to compensate us for a portion of our acquisition expenses, including promotion and distribution of the Contract. A proportional Premium Based Charge will be deducted upon:
•
partial Surrenders (taken on a first-in, first-out basis) in excess of the AWA;
•
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 and upon a Death Benefit distribution if elected at a later date.
Please see Premium Based Charge Examples 4-6 Appendix A.
Your earnings are considered when calculating your AWA. Please see Annual Withdrawal Amount under Sales Charges below for a description of the AWA and how it is calculated.
We will consider your Total Expected Premium as a basis to assign the Premium Based Charge, subject to state availability. Please see Premium Based Charge Examples 1-3 in Appendix A.
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 Premium Based Charge based on the portion of Remaining Gross Premium applicable for that Beneficiary. The Premium Based Charge is taken proportionally out of the Sub-Accounts.
Premium Taxes
The amount of tax, if any, charged by federal, state, or other governmental entity on Premium Payments or Contract Values. On any contract subject to a Premium Tax, We may deduct the tax on a pro-rata basis from the Sub-Accounts at the time We pay the tax to the applicable taxing authorities, at the time the contract is surrendered, at the time death benefits are paid or on the Annuity Commencement Date. The Premium Tax rate varies by state or municipality. Currently the maximum rate charged by any state is 3.5% and 1.0% in Puerto Rico.
Sales Charges
Contingent Deferred Sales Charges (CDSC)
Subject to the exclusions below, we may deduct a CDSC when you make Surrenders or withdraw Commuted Value or Annuity Payouts under Annuity Payout Options Two, Three, Five, Six and Eight. This charge is designed to recover acquisition expenses that have not yet been recouped from revenue generated by your Contract. Please see Sections 4.c Surrenders, and 4.d Annuity Payouts, for more information regarding when a CDSC may be applied.
This charge is a percentage of Remaining Gross Premiums. The time period for which you may be charged a CDSC is based on the date that each Deposit is received by us according to the schedule shown in the Fee Summary table.
We will consider your Total Expected Premium as a basis to assign CDSCs, subject to state availability.
We use the following general approach to calculating your CDSC:
Step 1.
Deposits that have been invested for longer than the applicable CDSC period can always be taken out free of any CDSC. Please see Section 2. Fee Summary for a description of CDSC.
Step 2.
If the amount of money that you wish to take out is less than your AWA (as described below), plus any amount from step 1, then this sum will also be paid to you without the imposition of a CDSC. No further steps will be applied.
Step 3.
Assuming that steps 1 and 2 do not apply because the amount of money that you wish to take out is more than your AWA and is still subject to a CDSC, then we will deduct your AWA from the amount of the money you wish to take out and then process your request using steps 4-6.
Step 4.
We will then multiply Remaining Gross Premiums, subject to CDSC, by a factor. The factor is equal to the amount of money resulting from step 3 divided by the remaining value of your investment above the AWA. If you take a Surrender during declining markets, Remaining Gross Premiums will have the effect of increasing the percentage of your Contract Value that are subject to a CDSC.
Step 5.
We will then take the amount of money resulting from step 4 and multiply it by the corresponding CDSC percentage as shown in the Fee Summary using the applicable CDSC schedule based on the aggregate amount of Eligible Investments received as of that date. Each Deposit has its own CDSC schedule regardless of whether it has been

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invested in the Personal Pension Account, Sub-Accounts or the Fixed Accumulation Feature. We will presume that the money you took out came from your oldest Deposits to try to minimize your CDSC. This may impact whether subsequent withdrawals might be subject to a CDSC.
Step 6.
We then deduct the CDSC calculated in step 5 from the amount of money in step 4 and pay the remaining balance to you.
These same steps are generally used when a CDSC is charged upon Commuted Value or Annuity Payouts (as applicable under the Annuity Payout Options noted above).
Please refer to Contingent Deferred Sales Charge Examples 1 through 7 in Appendix A for further information about how these formulas will be applied.
The following are NOT subject to a CDSC:
•
Annual Withdrawal Amount - During a period when a CDSC may be applied, you may Surrender up to the greater of:
•
5% of Deposits that would otherwise be subject to a CDSC, or
•
earnings.
We compute the AWA as of the end of the Valuation Day when a partial Surrender or commutation request is received by us In Good Order.
You may not carry over unused portions of your AWA from one year to another.
•
Regularly scheduled Personal Pension Account Payouts.
•
Regularly scheduled Lifetime Benefit Payments and/or Threshold Payments.
•
Transfers to and from the Personal Pension Account.
•
If you are a patient in a certified long-term care facility or other eligible facility - CDSC will be waived for a partial or full Surrender if you, the joint Owner or the Annuitant, are confined for at least 180 calendar days to a:
•
facility recognized as a general hospital by the proper authority of the state in which it is located or the Joint Commission on the Accreditation of Hospitals;
•
facility certified by Medicare 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 twenty-four 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 ninety-one 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 RMDs - CDSC will be waived for any Annuitant age 70½ or older with a Contract held under an IRA who Surrenders an amount equal to the RMD for one year’s RMD for that Contract Year. All requests for RMDs must be in writing.
•
For substantially equal periodic payments - CDSC will be waived if you take partial Surrenders under the Automatic Income Program when you receive a scheduled series of substantially equal periodic payments for the greater of five years or to age 59½.
•
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, at our sole discretion, time-credit CDSC for the time that you held an annuity previously issued by us.
•
Settlements - We may, at 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

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deducted from the assets of the Funds. These charges are described in the Funds’ prospectuses, in Section 2. Fee Summary, and in Appendix C.
Other disclosure specific to Invesco V.I. Government Money Market Fund
The Invesco V.I. Government Money Market Fund will continue to use the amortized cost method of valuation to seek to maintain a stable $1.00 net asset value and does not intend to impose liquidity fees or redemption gates on Fund redemptions. The Fund's board reserves the right to impose a liquidity fee or redemption gate in the future upon prior notice to shareholders and in conformance to Rule 2a-7 of the Investment Company Act of 1940. Further detail regarding these changes is set forth in the fund's prospectus.
Reduced Fees and Charges
We may offer, at our discretion, reduced fees and charges for certain Contracts (including employer-sponsored savings plans) which may result in decreased costs and expenses.
c. Surrenders
What kinds of Surrenders are available?
Before the Annuity Commencement Date:
Full Surrenders/Contract Termination - When you Surrender or terminate your Contract before the Annuity Commencement Date, the Surrender Value of the Contract will be made in a lump sum payment. The Surrender Value is the Contract Value minus any applicable Premium taxes, CDSCs, a pro-rated portion of optional benefit charges, if applicable, Premium Based Charges, if applicable, and the Annual Maintenance Fee. The Surrender Value may be more or less than the amount of the Premium Payments made to a Contract.
For information on how termination of the Contract impacts the Personal Pension Account. Please see “What effect do partial or full Surrenders have on your benefits under the rider?” in Section 6(b).
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 Premium Based Charge, if applicable. However, on a noncumulative basis, you may make partial Surrenders during any Contract Year, up to the Annual Withdrawal Amount allowed and the Contingent Deferred Sales Charge will not be assessed against such amounts. Surrender of Contract Values in excess of the Annual Withdrawal Amount and additional surrenders made in any Contract Year will be subject to the Contingent Deferred Sales Charge. You can request that we deduct these charges in either of two ways. One option, a gross withdrawal, is to deduct the CDSC and Premium Based Charge from the amount that you request. The other option, a net of charges withdrawal, is to Surrender an amount of Contract Value greater than what you requested, but after the deduction of CDSC and Premium Based Charge will result in payment to you of the amount you requested. Because the net of charges withdrawal will Surrender a greater amount of Contract Value, your CDSC and Premium Based Charge may be greater under this method. This is our default option. Please see Contingent Deferred Sales Charge Examples 1-5 in Appendix A.
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. Currently the minimum amount rule for class O share Contracts is $500. We may increase the minimum amount rule from time to time, but in no event shall the minimum amount rule exceed $10,000.
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.
Under certain circumstances we had permitted certain Contract Owners to reinstate their Contracts when a Contract Owner had requested a Surrender (either full or Partial) and returned the forms in good order to us. As of October 4, 2013, we no longer allow Contract Owners to reinstate their Contracts when a Contract Owner requests a Surrender (either full or Partial).
After the Annuity Commencement Date:
Full Surrenders/Contract Termination - You may Surrender and thus terminate your Contract on or after the Annuity Commence- ment Date only if you selected Annuity Payout Options Two, Three, Five, Six or 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

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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 Personal Pension Account Example 4 and footnote 3 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 equivalent 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 Personal Pension Account Payouts have not been terminated based on a death of the Annuitant or Joint Annuitant, if applicable, and you have not terminated your Contract.
Annuity Payout Options may not be available if the Contract is issued to qualify under Code Sections 401, 408, or 457.
What is the Commuted Value?
You may choose to accelerate Annuity Payouts under certain Annuity Payout Options to be received in one lump sum. This is referred to as commuting your Annuity Payout.
The amount that you request to commute must be at least equal to $500. There will be a waiting period of at least thirty days for payment of any lump sum commutation.
Upon commutation, the Annuity Payout Value or the remaining Guaranteed Payout Duration payments, as applicable, will be discounted based on an interest rate that we determine at our sole discretion (the discount rate). The discount rate may be different than the interest rate used to establish Payout Purchase 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. Please see Contingent Deferred Sales Charge Examples 6-7 in Appendix A.
Commuted Value of your Personal Pension Account will be less than your Annuity Payout Value. Except as provided in the immediately preceding section, 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.
Does the Invesco V.I. Government Money Market Fund impose a fee or gate for redemption?
The Invesco V.I. Government Money Market Fund will continue to use the amortized cost method of valuation to seek to maintain a stable $1.00 net asset value and does not intend to impose liquidity fees or redemption gates on Fund redemptions.  The Fund’s board reserves the right to impose a liquidity fee or redemption gate in the future upon prior notice to shareholders and in conformance to Rule 2a-7 of the Investment Company Act of 1940.  Further detail is set forth in the Fund’s prospectus.
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 via 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 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.
We may defer payment of any amounts from the Fixed Accumulation for up to six months from the date of the request to Surrender. If we defer payment for more than thirty days, we will pay interest of at least 3% per annum on the amount deferred.
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 disbursement instructions, including your mailing address.
You may submit this form via mail or fax.

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Unless you specify otherwise, we will provide the dollar amount you want to receive after applicable taxes and charges as the default option.
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 or Internet Requests
To request a partial Surrender by telephone or internet, we must have received your completed Internet Partial Withdrawal/Telephone Redemption Authorization Form. If there are joint Owners, both must sign the form. By signing the form, you authorize us to accept telephone or internet instructions for partial Surrenders from either Owner. Telephone or 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 telephone or 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 and/or internet 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 for another person to act on your behalf may prevent you from making Surrenders via telephone and internet.
What should be considered about taxes?
There are certain tax consequences associated with Surrenders and Personal Pension Account Payouts. Personal Pension Account Payouts shall be considered to be partial annuitizations as such term is defined under the Code. If you make a Surrender or take a Personal Pension Account Payout prior to age 59½, 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 59½ 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 Appendix Tax for more information.
d. Annuity Payouts
Generally speaking, when you annuitize your Contract, you begin the process of converting Accumulation Units into 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. Personal Pension Account Payouts shall be considered to be partial annuitizations as such term is defined under the Code. You may take Personal Pension Account Payouts without annuitizing Contract Value. Once you annuitize your Contract, you may no longer make Personal Pension Account Contributions. You must commence taking Annuity Payouts no later than when you reach your Annuity Commencement Date. Funds allocated to the Personal Pension Account will be paid to you under Annuity Payout Options Two and Eight. Contract Value can only be annuitized under Annuity Payout Options One, Three, Four, Five and Six. Please check with your investment professional to select the Annuity Payout Option that best meets your income needs. All Annuity Payout Options are subject to availability in your state.
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);
•
Tenth Contract Anniversary (subject to state variation); 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.

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As of October 4, 2013 we no longer allow Contract Owners to extend their Annuity Commencement Date even though we may have granted extensions in the past to you or other similarly situated investors.
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 twenty-eight days (i.e. the 31st), the Annuity Payout will be computed on the last Valuation Day of the month.
Proof of Survival
The payment of any annuity benefit will be subject to evidence that the Annuitant is alive on the date such payment is otherwise due.
Which Annuity Payout Option do you want to use?
Your Contract contains the Annuity Payout Options described below. We may at times offer other Annuity Payout Options. We may change these Annuity Payout Options at any time. Once we begin to make Annuity Payouts, the Annuity Payout Option with respect to that portion of your Contract cannot be changed.
•
Option One - Life Annuity
We make Annuity Payouts as long as the Annuitant is living. When the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only one Annuity Payout if the Annuitant dies after the first payout, two Annuity Payouts if the Annuitant dies after the second payout, and so forth.
•
Option Two - Life Annuity with a Cash Refund
In general, we will make Personal Pension Account 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.
As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value), except for Contracts issued in CT, FL, NJ and WA. Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account Payouts (fixed dollar amount Annuity Payout) so if you do not have value in the Personal Pension Account as of October 3, 2014, this Annuity Payout Option will not be available to you. 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 five 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 five 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

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•
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 ten years during the first two Contract Years and five years after the second Contract Anniversary. The maximum period that you can select is 100 years, minus your Annuitant’s age. If, at the death of the Annuitant, Annuity Payouts have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining Annuity Payouts or receive the Commuted Value in one sum. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years.
•
Option Seven - Reserved
•
Option Eight - Joint and Last Survivor Life with Cash Refund
Prior to the Annuity Commencement Date, this Annuity Payout Option provides for Personal Pension Account Payouts at 100% of the applicable scheduled Payout Purchase Rate(s) for as long as the Owner, Annuitant or the Joint Annuitant are alive. The previously established Guarantee Window, Payout Purchase Rate(s), and Credited Interest Rate(s) will continue to apply for the duration of the Personal Pension Account rider. Any remaining Death Benefit shall be payable to the Beneficiary.
On or after the Annuity Commencement Date, this Annuity Payout Option provides for Personal Pension Account Payouts at 100% of the applicable scheduled Payout Purchase Rate(s) for as long as the Annuitant or Joint Annuitant is alive. Any remaining Death Benefit shall be payable to the Beneficiary.
This Annuity Payout Option is only available for fixed dollar Personal Pension Account Payouts and may not be combined with Annuity Payout Option Two - Life Annuity with Cash Refund.
Personal Pension Account Payouts will terminate upon our receipt of due proof of the death of the Owner, Annuitant or Joint Annuitant, whichever shall last occur, provided that the last of such deaths transpired prior to the Annuity Commencement Date. Personal Pension Account Payouts will also terminate upon our receipt of due proof of the death of the Annuitant or Joint Annuitant, whichever shall last occur, provided the last of such deaths transpired after the Annuity Commencement Date. Your Benefit Balance shall always remain in the Personal Pension Account while the Personal Pension Account rider is in effect.
We reserve the right to impose restrictions regarding who can serve as the Annuitant, Joint Annuitant and/or Beneficiary when selecting this Annuity Payout Option. Currently, you must designate your Spouse as the Joint Annuitant and Beneficiary when selecting this Annuity Payout Option. Except as provided below (regarding divorce proceedings), these designations may not be changed by you.
We assume that if you elected Annuity Payout Option Eight that you also intend to elect Spousal Contract continuation in which event no portion of the Death Benefit will be paid until the last Spouse dies. However, if you prefer not to exercise these rights, you may notify us to settle the Death Benefit after the first Spouse dies.
You may make a one time election to convert to Annuity Payout Option Two upon completion of divorce proceedings provided that you become the sole, remaining Owner and Personal Pension Account Payouts have not commenced. In these circumstances,
•
The Target Income Age remains the same if the older Annuitant becomes the remaining Owner. If the younger Annuitant becomes the remaining Owner, then the Target Income Age will be reset to that Annuitant’s age when making an initial investment into the Personal Pension Account plus the difference between the older Annuitant’s age when making an initial investment into the Personal Pension Account and the previously stated Target Income Age. For example, if the older Annuitant was age 70 upon initial Personal Pension Account investment and the Target Income Age selected was 75 (a difference of 5 years), then the new Target Income Age corresponding with the younger remaining Annuitant (spouse) will equal his or her age upon the initial Personal Pension Account investment (assume age 60 in this case) + 5, or age 65.
•
The Credited Interest Rate schedule will only be reset based on the remaining Owner’s age after age 79. Payout Purchase Rates will be reset based on the remaining Owner’s age and gender as of the date of conversion.
This option is only available for Personal Pension Account Payouts (fixed dollar amount Annuity Payout). We reserve the right to approve the designation of the Owner, joint Owner, Annuitant(s) and/or Beneficiary for the purposes of establishing benefits under this Annuity Payout Option.
The Joint Annuitant designated for Annuity Payout Option Eight shall also be the Joint Annuitant under Annuity Payout Options Four and Five, if you elected to annuitize Contract Value. Election of Annuity Payout Option Eight does not mean you are required to elect Annuity Payout Options Four or Five to annuitize any Contract Value portions of your Contract. This Annuity Payout Option will not be available to custodian-owned qualified contracts, or contracts with other non-natural owner types

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(trusts, including charitable remainder trusts, corporations, municipalities, etc.). Please see Section 6.b Personal Pension Account for additional information.
Effective October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value), except for Contracts issued in CT, FL, NJ and WA. Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account Payouts (fixed dollar amount Annuity Payout) so if you do not have value in the Personal Pension Account as of October 3, 2014, this Annuity Payout Option will not be available to you. 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. Please see Contingent Deferred Sales Charge Example 6 in Appendix A.
Annuity Payout Options Two and Eight are 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.
For certain qualified Contracts, if you elect an Annuity Payout Option with a period certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the Annuity Payouts begin. We compute life expectancy using the IRS mortality tables.
Automatic Annuity Payouts
If you do not elect an Annuity Payout Option, monthly Annuity Payouts will automatically begin on the Annuity Commencement Date under Annuity Payout Option Three. Automatic Annuity Payouts will be fixed dollar amount Annuity Payouts, variable dollar amount Annuity Payouts, or a combination of fixed or variable dollar amount Annuity Payouts, depending on the investment allocation of your Account in effect on the Annuity Commencement Date. Automatic variable Annuity Payouts will be based on an Assumed Investment Return equal to 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. When selecting a frequency other than monthly, the Payout Purchase Rate used to determine Annuity Payouts will be adjusted by a factor. The factor accounts for the accelerated Payouts, and will result in a Payout that is less than the sum of each monthly Payout that would have been paid during the same period of time. If you do not make a selection, the Payee will receive monthly Annuity Payouts. You must select a frequency that results in an Annuity Payout of at least $50. If the amount falls below $50, we have the right to change the frequency to bring the Annuity Payout up to at least $50.
Do you want Annuity Payouts to be Fixed Dollar Amount or Variable Dollar Amount?
You may choose an Annuity Payout Option with fixed dollar amounts or variable dollar amounts, depending on your income needs. You may not choose a fixed dollar amount Annuity Payout during the first two Contract Years. If you elect the Personal Pension Account, your Annuity Payout Option may only be a fixed dollar amount.
•
Fixed Dollar Amount Annuity Payouts
Once a fixed dollar amount Annuity Payout begins, you cannot change your selection to receive variable dollar amount Annuity Payouts. You will receive equal fixed dollar amount Annuity Payouts throughout the Annuity Payout period. Fixed dollar amount Annuity Payout amounts are determined by multiplying the Contract Value, minus any applicable Premium taxes, by an annuity rate set by us. Annuity purchase rates may vary based on the aspect of the Contract annuitized.
•
Variable Dollar Amount Annuity Payouts
Once a variable dollar amount Annuity Payout begins, you cannot change your selection to receive a fixed dollar amount Annuity Payout. A variable dollar amount Annuity Payout is based on the investment performance of the Sub-Accounts. The variable dollar amount Annuity Payouts may fluctuate with the performance of the Funds. To begin making variable dollar amount Annuity Payouts, we convert the first Annuity Payout amount to a set number of Annuity Units and then price those units to determine the Annuity Payout amount. The number of Annuity Units that determines the Annuity Payout amount remains fixed unless you transfer units between Sub-Accounts.
The dollar amount of the first variable Annuity Payout depends on:
•
the Annuity Payout Option chosen,

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•
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:
AIR
Annuity
Unit Factor
AIR
Annuity
Unit Factor
AIR
Annuity
Unit Factor
3%
0.999919
5%
0.999866
6%
0.999840
The greater the AIR, the greater the initial Annuity Payout. But a higher AIR may result in a smaller potential growth in future Annuity Payouts when the Sub-Accounts earn more than the AIR. On the other hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity Payouts have the potential to be greater when the Sub-Accounts earn more than the AIR.
For example, if the Sub-Accounts earned exactly the same as the AIR, then the second monthly Annuity Payout is the same as the first. If the Sub-Accounts earned more than the AIR, then the second monthly Annuity Payout is higher than the first. If the Sub-Accounts earned less than the AIR, then the second monthly Annuity Payout is lower than the first.
Level variable dollar amount Annuity Payouts would be produced if the investment returns remained constant and equal to the AIR. In fact, Annuity Payouts will vary up or down as the investment rate varies up or down from the AIR. The degree of variation depends on the AIR you select.
After the Annuity Calculation Date, you may transfer dollar amounts of Annuity Units from one Sub-Account to another. On the day you make a transfer, the dollar amounts are equal for both Sub-Accounts and the number of Annuity Units will be different. We will transfer the dollar amount of your Annuity Units the day we receive your written request if received before the close of the New York Stock Exchange. Otherwise, the transfer will be made on the next Valuation Day. All Sub-Account transfers must comply with applicable transfer restriction policies.
•
Combination Annuity Payout
You may choose to receive a combination of fixed dollar amount and variable dollar amount Annuity Payouts as long as they total 100% of your Annuity Payout. For example, you may choose to use 40% fixed dollar amount and 60% variable dollar amount to meet your income needs. Combination Annuity Payouts are not available during the first two Contract Years.
5. Death Benefits
a. 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, if applicable, dies before we begin to make Annuity Payouts. The Standard Death Benefit is equal to your Total Balance (minus Premium Based Charges, if applicable) 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

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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. In addition, there may be limitations on the aggregate death benefits if you purchased one or more contracts with an initial Premium Payment of less than $5,000,000 but you add Premium Payments or purchased additional contracts such that Premium Payments under the contracts aggregate to $5,000,000 or more. See your contract for more information.
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 IV and/or Maximum Anniversary Value IV 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.
b. Maximum Anniversary Value IV 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. Please consider the following prior to electing this rider:
•
This rider has investment restrictions. Violation of the investment restrictions may result in termination of this rider.
•
Partial Surrenders and excess transfers to the Personal Pension Account will reduce the benefit proportionally, as described below.
When can you buy the rider?
The Maximum Anniversary Value V rider is no longer available for purchase (including adding it to existing Contracts).
How is the charge for this rider calculated?
The fee for the rider is based on the Death Benefit and is taken on each Contract Anniversary. This rider fee will be automatically deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. Even though the amount we charge you for this rider can go up or down, we cannot increase the rider fee once you elect this rider. However, 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. A pro-rated 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 the 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 IV Example 4 in Appendix A.
Is this rider designed to pay you Death Benefits?
Yes. This Death Benefit is equal to the greatest of A, B or C:
A =
Contract Value;
B =
Premium Payments adjusted for partial Surrenders; or
C =
Maximum Anniversary Value.
See Maximum Anniversary Value IV Example 1 in Appendix A.
If we permit you to elect this rider after the Contract has been issued, the starting values for Contract Value, Premium Payments and Maximum Anniversary Value will all be reset to Contract Value 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.
The Maximum Anniversary Value IV Death Benefit is payable in addition to your 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.
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

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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 in Section 5.d “Who will receive the Death Benefit?” for more information.
Does this rider replace the Standard Death Benefit?
Yes, except if you contribute to the Personal Pension Account you will also have a Personal Pension Account Death Benefit payable prior to the Annuity Commencement Date.
Can you terminate this rider?
No. Please see Other Information at the end of this section for conditions which may result in termination of the rider.
What effect do partial Surrenders have on your benefits under the rider?
Partial Surrenders, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis. If you have also elected the Income Foundation Builder partial Surrenders up to a Threshold Payment or Lifetime Benefit Payment, as applicable, will reduce your Death Benefit on a dollar-for-dollar basis and any partial Surrenders in excess of such amounts shall reduce your Death Benefit on a proportionate basis. A partial Surrender may reduce the Death Benefit by an amount greater than the amount Surrendered if the Contract Value is less than your Maximum Anniversary Value. See Maximum Anniversary Value IV Examples 2 and 3 in Appendix A for an illustration of this calculation.
Any and all transfers to the Personal Pension Account will reduce your Death Benefit. Transfers within the Transfer Limit will reduce your Death Benefit on a dollar-for-dollar basis. Transfers to the Personal Pension Account in excess of the Transfer Limit will reduce your Death Benefit on a proportionate basis. A transfer above the Transfer Limit may not reduce your Death Benefit by the same dollar amount as it would reduce your Contract Value. The adjustment to your Death Benefit may be lower or higher than the adjustment to your Contract Value. The Maximum Anniversary Value IV Transfer Limit is equal to 5% of the greatest of (a) Premium Payments adjusted for partial Surrenders, (b) Maximum Anniversary Value; or (c) if an ownership change or Spousal Contract continuation is processed, 5% of the Contract Value on the effective date of such change plus Premium Payment(s) received after the effective date of such change. See Maximum Anniversary Value IV Examples 2 and 3 in Appendix A for illustrations 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 recalculation 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 younger than or equal to 75 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 Contract issue date.
Any ownership change made after the first six months of the Contract issue date (if prior to the Annuity Commencement Date) will cause a recalculation of this Death Benefit. If the Death Benefit is reset, we will disregard the previously established Contract Value, Premium Payment and Maximum Anniversary Value and reset each of these values to your then current Contract Value. If the oldest Owner at the time of the ownership change is older than or equal to age 76, we will terminate this rider and 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?
Generally, yes. If the Owner dies and the sole Beneficiary at the time of death is the deceased Owner’s Spouse, we will increase the Contract Value to the Death Benefit if the Death Benefit is 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 any Owner or the Annuitant is older than or equal to age 76 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 and 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.

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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, at 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 and the Death Benefit terminates.
Are there restrictions on how you must invest?
Yes. You must invest, reinvest and instruct us to periodically rebalance your Contract Value (including future investments) within an approved asset allocation model(s), Fund(s), and other investment program(s) approved and designated by us. As of the date of this prospectus, you must invest in the Investment Strategies Asset Allocation Models or approved Funds listed in Appendix D. These models are rebalanced quarterly.
We may modify, add, delete, or substitute (to the extent permitted by applicable law), the asset allocation models, investment programs, Funds, portfolio rebalancing requirements, and other investment requirements and restrictions that apply while the rider is in effect. For instance, we might amend these asset allocation models if a Fund (i) merges into another fund, (ii) changes investment objectives, (iii) closes to further investments, and/or (iv) fails to meet acceptable risk parameters. We will give you advance notice of these changes. Please refer to “Other Program considerations” under the section entitled “What other ways can you invest?” in Section 4.a for more information regarding the potential impact of fund mergers and liquidations with respect to then existing investments within an asset allocation model. Except as provided below, failure to comply with any applicable investment requirement or restriction will result in termination of the rider.
If the rider is terminated by us for violation of applicable investment requirements or restrictions we will assess a pro-rated share of the rider charge and will no longer assess a rider charge. If the rider is terminated by us due to a failure to comply with these investment restrictions, you will have one opportunity to reinstate the rider by reallocating your Contract Value in accordance with then prevailing investment restrictions. You will have a fifteen day reinstatement period to do this. The reinstatement period will begin upon termination of the rider. Your right to reinstate the rider will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, transfer Contract Value into the Personal Pension Account or make a change in Owner, Annuitant or any Joint Annuitant. Termination of this rider will cause you to be in violation of any concurrent guaranteed withdrawal benefit rider.
Upon reinstatement of your rider, your Premium Payments will be reset to equal the lower of the Contract Value as of the Valuation Day of the reinstatement or the Premium Payments prior to the termination. If applicable, your Maximum Anniversary Value will be reset at the lower of the Contract Value or the Maximum Anniversary Value prior to the revocation as of the date of the reinstatement. We will deduct a pro-rated 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 of this rider.
It may be presumed that investment in any asset allocation model could mitigate losses but also hamper potential gains. The asset allocation models that you must invest in provide very different potential risk/reward characteristics. We are not responsible for lost investment opportunities associated with the implementation and enforcement of these investment requirements and restrictions. Investment restrictions may reduce the overall volatility in investment performance. Such reduced volatility may reduce the returns on investments and mitigate our guarantee obligations under the Contract.
If you elect this rider in combination with Income Foundation Builder, then in the event of a conflict between the investment restrictions above and those set forth in Income Foundation Builder, the investment restrictions in Income Foundation Builder prevail. If you violate the investment restrictions set forth in Income Foundation Builder, or such rider terminates for any reason, you may not revoke the Maximum Anniversary Value IV rider.
Are there restrictions on the amount of subsequent Premium Payments?
Yes. We reserve the right to approve 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. This restriction is not currently enforced. 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 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.

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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.
c. Return of Premium IV Objective
To provide a Death Benefit equal to the greater of Premium Payments adjusted for Surrenders or Contract Value (minus Premium Based Charges, if applicable) that we will pay if the Owner, joint Owner, or the Annuitant dies before we begin to make Annuity Payouts.
Please consider the following prior to electing this rider:
•
Partial Surrenders and excess transfers to the Personal Pension Account will reduce the benefit proportionally, as described below.
When can you buy the rider?
The Return of Premium IV rider is closed to new investors (including existing Owners).
How is the charge for this rider calculated?
The fee for the rider is based on the Death Benefit on each Contract Anniversary. This rider fee will automatically be deducted from your Contract Value on your Contract Anniversary prior to all other financial transactions. A pro-rated 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 the 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.
We cannot increase the rider fee once you elect the rider. However, 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, adjusted for Surrenders.
Is this rider designed to pay you Death Benefits?
Yes. This Death Benefit is equal to the higher of A or B:
A =
Contract Value (minus Premium Based Charges, if applicable) or
B =
Premium Payments adjusted for Surrenders.
See the Return of Premium IV Examples 1 and 2 in Appendix A.
The Return of Premium IV Death Benefit is payable in addition to your Personal Pension Account Death Benefit.
We calculate the Death Benefit 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.

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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, receive any remaining value such as a cash refund, Benefit Balance, or receive the Commuted Value. Please refer to the discussion in Section 5.d “Who will receive the Death Benefit?” for more information.
Does this rider replace the standard Death Benefit?
Yes, except if you contribute to the Personal Pension Account you will also have a Personal Pension Account Death Benefit payable prior to the Annuity Commencement Date.
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. The Death Benefit will be reset to the standard Death Benefit. No other optional death 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 terminate upon election of a Death Benefit option (described in Sections 5.d and 5.e) by the Beneficiary (excluding Spousal Contract continuation).
What effect do partial Surrenders have on your benefits under the rider?
Partial Surrenders, whether individually or in the aggregate, will reduce your Death Benefit on a proportionate basis. If you have also elected Income Foundation Builder, partial Surrenders up to a Threshold Payment or Lifetime Benefit Payment, as applicable, will reduce your Death Benefit on a dollar-for-dollar basis and any partial Surrenders in excess of such amounts shall reduce your Death Benefit on a proportionate basis. A partial Surrender may reduce the Death Benefit by an amount greater than the amount Surrendered if the Contract Value is less than your Premium Payments. See Return of Premium IV Examples 1 and 2 in Appendix A for an illustration of this calculation.
Any and all transfers to the Personal Pension Account will reduce your Death Benefit. Transfers within the Transfer Limit will reduce your Death Benefit on a dollar-for-dollar basis. Transfers to the Personal Pension Account in excess of the Transfer Limit will reduce your Death Benefit on a proportionate basis. A transfer above the Transfer Limit to the Personal Pension Account may reduce the Death Benefit by an amount greater than the amount transferred if the Contract Value is less than your Premium Payment(s) adjusted for Surrenders. The Return of Premium IV Transfer Limit is equal to 5% of the Premium Payment(s) adjusted for Surrenders; or if an ownership change or Spousal Contract continuation is processed, 5% of the Contract Value on the effective date of such change plus Premium Payment(s) received after the effective date of such change. See Return of Premium IV Examples 1 and 2 in Appendix A.
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 recalculation 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 younger than age 81, 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 Contract issue 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 recalculation of this Death Benefit. If the oldest Owner after the change is equal to or older than age 81, we will terminate this rider and 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?
Generally, Yes. If the Owner dies and the sole Beneficiary at the time of death, is the deceased Owner’s Spouse we will increase the Contract Value to the Death Benefit, if the Death Benefit is greater than the Contract Value on the date of due proof of death. The Spouse may continue the Contract and this rider, if then available. This right may be exercised only once during the term of the Contract.

33
 
 
 

If the Owner or the Annuitant is equal to or older than age 81 at the time of the Spousal Contract continuation and and/or this rider (or similar rider, as we determine) is not available for sale, we will terminate this rider and 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 younger than age 81, 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 recalculated as described above. The Premium Payment and Death Benefit components, for purposes of this rider, will be reset to equal the Contract Value on the effective Valuation Day of the Spousal Contract continuation. Any Premium Payments or partial Surrenders after this Valuation Day will adjust the Death Benefit according to the provisions of the rider. 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, at 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.
If you elect this rider in combination with an Income Foundation Builder, the investment restrictions in Income Foundation Builder prevail. If you violate the investment restrictions of Income Foundation Builder and it terminates for any reason, you may not revoke the Return of Premium IV rider other than as described in the section above entitled “Can you terminate this rider?”
Are there restrictions on the amount of subsequent Premium Payments?
Yes. We reserve the right to require approval on all subsequent Premium Payments received after the first twelve months from the date the Contract was issued, excluding transfers from the Personal Pension Account. 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. This restriction is not currently enforced. 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
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.
d. How is the Death Benefit paid?
You may have more than one Death Benefit under your Contract if you have contributed to the Personal Pension Account. For example, you may have elected an optional Death Benefit such as Maximum Anniversary Value IV and made contributions to the Personal Pension Account and have a remaining Personal Pension Account Death Benefit. When payment is taken in one lump sum, payment will be made within seven days of Our receipt of complete instructions, except when We are permitted to defer such payment under the Investment Company Act of 1940. Death Benefit amounts 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 according to the last

34
 
 
 

instructions on file 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 at 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 Talcott Resolution'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 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 whenever 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. Please see Appendix Tax for more information.
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.
e. 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 Owner
The Annuitant is living or deceased
Joint Owner receives the Death Benefit.
Owner
There is no surviving joint
Owner
The Annuitant is living or deceased
Beneficiary receives the Death Benefit.
Owner
There is no surviving joint Owner and the Beneficiary predeceases the Owner
The Annuitant is living or deceased
Owner’s estate receives the
Death Benefit.

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Annuitant
The Owner is living
There is no named Contingent Annuitant
The Owner becomes the 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 living
Contingent Annuitant becomes 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.
6. Optional Withdrawal Benefits
a. Income Foundation Builder
Objective
The objective of the rider is to provide guaranteed income that may periodically increase based on Market Increases or Deferral Credits.
Please consider the following prior to electing the rider:
•
The rider has investment restrictions. Violation of the investment restrictions may result in termination of the rider.
•
The rider’s benefits will be reduced proportionally when partial Surrenders exceed the Threshold Payment, Lifetime Benefit Payment and/or the Transfer Limit.
How does the rider help achieve this goal?
The rider provides an opportunity to receive withdrawals in the form of either Threshold Payments or guaranteed Lifetime Benefit Payments until either the first Covered Life (Single Life Option) or last Covered Life (Joint/Spousal Option) dies. Withdrawals taken prior to the relevant Covered Life’s Lifetime Income Eligibility Date are called Threshold Payments and withdrawals after the Lifetime Income Eligibility Date are called Lifetime Benefit Payments.
Two factors influence the amount of guaranteed withdrawals. First, withdrawals may increase as a result of potential increases to your Payment Base through either Market Increases or Deferral Credits (but not both in the same Contract Year). Second, the amount of withdrawals will vary based on the applicable Withdrawal Percentage. The Withdrawal Percentage varies based on the Covered Life option selected (Single Life Option or Joint/Spousal Option). Please see Income Foundation Builder Examples 1-4 in Appendix A.
When can you buy the rider?
You could buy the rider only at the time you bought your Contract. We reserve the right to permit certain existing Owners to elect this rider after Contract issuance. If this occurs, rider benefits will be calculated from the rider effective date, not the Contract issue date.
The rider may not be available through all investment professionals and may be subject to additional restrictions set by your investment professional. We reserve the right to withdraw the rider, vary rider benefits and/or rider charges or any relevant Covered Life options at any time for new sales. The rider may not be available in all states.
When you buy the rider, you must provide us with the names and dates of birth of the Owner, any joint Owner, Annuitant and Beneficiary. We will then determine who the “relevant Covered Life” and other “Covered Lives” will be for the purposes of the rider.
A Covered Life must be a living person. If you choose the Joint/Spousal Option, we reserve the right to (a) prohibit non-natural entities from being designated as an Owner, (b) prohibit anyone other than your Spouse from being a joint Owner; and (c) impose other designation restrictions from time to time.
Does buying the rider forfeit your ability to buy other riders?
No.

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How is the charge for the rider calculated?
The rider charge is based on your Payment Base. We will deduct the rider charge on each Contract Anniversary on a pro-rated basis from each Sub-Account and the Fixed Accumulation Feature. The rider charge is not applied to the Personal Pension Account Benefit Balance.
We may increase or decrease the rider charge on a prospective basis on each Contract Anniversary up to the maximum described in the Fee Table. The rider charge may increase irrespective of whether you receive either a Market Increase or a Deferral Credit. We will not increase the rider charge by more than 0.50% during any Contract Year. We will provide advance notice of changes to your rider charge. You may decline a rider charge increase, in which event you will no longer be entitled to Market Increases. This declination is irrevocable. However, you will be eligible for any applicable Deferral Credits during the Deferral Credit Period.
If the rider is terminated, or if there is a full Surrender from your Contract, then we will deduct a pro-rated share of the rider charge from your Contract Value based on your Payment Base immediately prior to such termination or full Surrender.
We may also reset the rider charge upon Spousal Contract continuation or a Covered Life change.
Can the benefit base change under the rider?
Yes. The benefit bases used to set Threshold Payments or Lifetime Benefit Payments (Payment Base) and the Deferral Credit (Deferral Credit Base) may fluctuate.
•
Payment Base
Your initial Payment Base is equal to your initial Premium Payment. It will generally fluctuate based on:
•
Market Increases;
•
Deferral Credits;
•
Subsequent Premium Payments; and
•
partial Surrenders.
On each Contract Anniversary until and including the Contract Anniversary immediately following the oldest Covered Life’s 90th birthday, the Payment Base will be reset to equal the greater of your Contract Value (prior to the deduction of the rider charge) as of the Contract Anniversary (this event is referred to as a Market Increase) or your current Payment Base plus any applicable Deferral Credit. You will not receive both a Market Increase and a Deferral Credit in the same Contract Year. We reserve the right to impose an Annual Payment Base Cap on the sale of new contract only. We do not currently enforce an Annual Payment Base Cap.
Please refer to Income Foundation Builder Examples 1-4 in Appendix A for an illustration of ways that your Payment Base may increase based on a Market Increase or Deferral Credit.
Subsequent Premium Payments and transfers from the Personal Pension Account increase your Payment Base by the dollar amount of the Premium Payment. Deposits into the Personal Pension Account do not increase your Payment Base.
Partial Surrenders reduce your Payment Base in different ways depending on whether they exceed the applicable limit (either the Threshold Payment or an annual Lifetime Benefit Payment).
•
Partial Surrenders prior to the Lifetime Income Eligibility Date. If cumulative partial Surrenders taken during any Contract Year are equal to or less than the Threshold Payment, then the cumulative partial Surrenders will reduce the Payment Base on a dollar-for-dollar basis. Alternatively, if cumulative partial Surrenders are greater than the Threshold Payment, then we will reduce the Payment Base on a (i) dollar-for-dollar basis up to the Threshold Payment, and (ii) proportionate basis for the amount in excess of the Threshold Payment. If your Contract Value is less than your Payment Base, reductions on a proportionate basis will be greater than if done on a dollar-for-dollar basis.
•
Partial Surrenders after the Lifetime Income Eligibility Date. If cumulative partial Surrenders taken during any Contract Year are (i) equal to or less than the Lifetime Benefit Payment, or (ii) exceed the Lifetime Benefit Payment only as a result of enrollment in our Automatic Income Program to satisfy RMD requirements, then the cumulative partial Surrenders will not reduce the Payment Base. Any partial Surrenders that exceed the Lifetime Benefit Payment (provided that the RMD exception above does not apply), will reduce the Payment Base on a proportionate basis for the amount in excess of the Lifetime Benefit Payment. If your Contract Value is less than your Payment Base, reductions on a proportionate basis will be greater than if done on a dollar-for-dollar basis. See Income Foundation Builder Example 3 in Appendix A for illustrations of this calculation.
Partial Surrenders taken during a Contract Year that cumulatively exceed the AWA, but do not exceed an annual Threshold Payment or Lifetime Benefit Payment, as the case may be, will be free of any applicable CDSC.
Transfers of Contract Value to the Personal Pension Account will also reduce your Payment Base on a dollar-for-dollar basis if they are less than or equal to the Transfer Limit and proportionally for any cumulative transfers above the Transfer Limit. The Income Foundation Builder Transfer Limit is equal to your applicable Withdrawal Percentage multiplied by your then current Payment Base. See Income Foundation Builder Example 2 in Appendix A for illustrations of this calculation.

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The Transfer Limit and investment restrictions of this rider shall prevail in the event of a conflict between the rider and any guaranteed minimum death benefit rider. For example, if you elect the Maximum Anniversary Value IV rider and the applicable Transfer Limit is 5%, the Transfer Limit for the Income Builder Foundation, Joint/Spousal rider is 4.5% and prevails over the Maximum Anniversary Value IV Transfer Limit. Please refer to Income Foundation Builder Example 4 in Appendix A for an illustration of partial Surrenders and the Transfer Limit and its impact relative to a conflict with the Transfer Limit imposed by a concurrent rider.
Your Payment Base can never be less than $0 or more than $5 million. Any activities that would otherwise increase the Payment Base above $5 million will not be included for any benefits under the rider.
Please refer to this rider’s sections entitled “What happens if you change ownership?” and “Can your Spouse continue your Lifetime Withdrawal Benefit?” for a discussion regarding how your Payment Base resets following a Covered Life change.
•
Deferral Credit Base
On each Contract Anniversary during the Deferral Credit Period, we may apply a Deferral Credit to your Payment Base. The Deferral Credit is equal to 6%. You will not receive a Deferral Credit if your Market Increase is greater than or equal to your Deferral Credit. The Deferral Credit will be calculated as a percentage of the Deferral Credit Base as of the Valuation Day prior to each Contract Anniversary during the Deferral Credit Period. The Deferral Credit Period will cease upon the earlier of the tenth Contract Anniversary, when you take any partial Surrender, or if a transfer is made to the Personal Pension Account that is in excess of the Income Foundation Builder Transfer Limit.
When you elect this rider, your Deferral Credit Base is equal to your initial Premium Payment. Your Deferral Credit Base will be reset on each Contract Anniversary to the greater of the Payment Base when a Market Increase occurs, or the Deferral Credit Base on the Valuation Day prior to each Contract Anniversary during the Deferral Credit Period.
Subsequent Premium Payments or transfers from the Personal Pension Account will increase your Deferral Credit Base by the dollar amount of the Premium Payment or transfer during the Deferral Credit Period.
Transfers to the Personal Pension Account in each Contract Year during the Deferral Credit Period that are equal to or less than the Transfer Limit will reduce your Deferral Credit Base on a dollar-for-dollar basis. Cumulative transfers to the Personal Pension Account during each Contract Year during the Deferral Credit Period that are greater than the rider Transfer Limit, will cause the Deferral Credit Period to end and the Deferral Credit Base will permanently be set to zero. Transfers or Surrenders due to a divorce settlement will end the Deferral Credit Period and the Deferral Credit Base will be set to zero. The Income Foundation Builder Transfer Limit prevails over any other guaranteed minimum death benefit rider. For example, if you elect the Return of Premium IV rider and the applicable Transfer Limit is 5%, the Transfer Limit for the Income Builder Foundation, Joint/Spousal rider is 4.5% and prevails over the Return of Premium IV Transfer Limit.
Please refer to Income Foundation Builder Example 1 in Appendix A for an illustration of a Deferral Credit being applied to increase a Payment Base and when a transfer ends the Deferral Credit Period.
Your Deferral Credit Base can never be less than $0 or more than $5 million. Any activities that would otherwise increase the Deferral Credit Base above $5 million will not be included for any benefits under the rider.
Please refer to this rider’s sections entitled “What happens if you change ownership?” and “Can your Spouse continue your Lifetime Withdrawal Benefit?” for a discussion regarding how your Deferral Credit Base resets following a Covered Life change.
Is the rider designed to pay you withdrawal benefits for your lifetime?
Yes. However, withdrawals taken prior to the Lifetime Income Eligibility Date (Threshold Payments) are not guaranteed to be available throughout your lifetime. Such withdrawals will reduce (and may even eliminate) the Payment Base otherwise available to establish lifetime benefits.
Threshold Payments or Lifetime Benefit Payments are calculated by multiplying your Payment Base by the applicable Withdrawal Percentage. The Withdrawal Percentage varies based on whether you selected either the Single or Joint/Spousal option.
The applicable Withdrawal Percentages are as follows:
Single
 
Joint/Spousal
5.0%
 
4.5%
Is the rider designed to pay you Death Benefits?
No.
Does the rider replace the Standard Death Benefit?
No.
Can you revoke the rider?
No. Please see Other Information at the end of this section for conditions which may result in termination of the rider.

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What effect do partial or full Surrenders have on your benefits under the rider?
Please refer to “Does your benefit base change under the rider?” for the effect of partial Surrenders and transfers to and from the Personal Pension Account. You may make a full Surrender of your entire Contract at any time. However, you will receive your Contract Value with any applicable charges deducted and not your Payment Base, Deferral Credit Base or any future Threshold Payments or Lifetime Benefit Payments.
Prior to the Annuity Commencement Date, if:
(A)
on any Contract Anniversary your Contract Value, due to investment performance, is reduced below an amount equal to the greater of either (i) the Contract minimum rule stated under your Contract or (ii) one of your Lifetime Benefit Payments or such lower amount as we, in our discretion, may establish; or
(B)
on any Valuation Day, as a result of a Partial Surrender, your Contract Value is reduced below (x) an amount equal to the greater of the Contract minimum rule stated under your Contract or (y) one of your Lifetime Benefit Payments or such lower amount as we, in our discretion, may establish, then:
1.
You must transfer your remaining Contract Value to an asset allocation model(s), investment program(s), Sub-Account(s), fund of funds Sub-Account(s), or other investment option(s) approved by us for purposes of the rider Minimum Amount Rule.
a)
One of the approved investment options, as described above, must be elected within 10 days from the date the minimum amount was reached.
b)
If we do not receive your election within the above stated time frame, you will be deemed to have irrevocably authorized us to move your remaining Contract Value into the Money Market Sub-account, or other investment option(s) approved by us.
c)
If you choose not to participate in one of the approved investment options, then we will automatically liquidate your remaining Contract Value. Any applicable CDSC will be assessed and the Contract will be fully terminated.    
2.
Once the Contract Value is transferred to an approved investment option, the following rules will apply:
a)
You will receive your then current Lifetime Benefit Payment, which will be equal to your Lifetime Benefit Payment at the time your Contract Value reduces below the rider Minimum Amount Rule, at the frequency that you select. The frequencies will be among those offered by us at that time but will be no less frequently than annually.
b)
Ongoing Lifetime Benefit Payments will no longer reduce Your Contract Value.
c)
We will no longer accept subsequent Premium Payments or Transfer(s) from Other Account(s).
d)
We will waive the Annual Maintenance Fee and Rider Charge on your Contract.
e)
Market increases and Deferral Bonuses, if applicable, on each Contract Anniversary will no longer apply.
if cumulative partial Surrenders within a Contract Year are requested in excess of the Lifetime Benefit Payment, then we will automatically liquidate your remaining Contract Value. Any applicable CDSC will be assessed and the Contract will be terminated.
What happens if you change ownership?
Inasmuch as the rider is affected only by changes to the relevant Covered Life, only these types of changes are discussed below. We reserve the right to approve all Covered Life changes. Certain approved changes in the designation of a Covered Life may cause a recalculation of the rider benefits.
Any Covered Life change made within the first six months from the Contract issue date will have no impact on the Payment Base or Deferral Credit Base as long as each succeeding Covered Life is younger than age 81 at the time of the change.
•
Single Life Option:
Any Covered Life changes after the first six months from Contract issue date will cause a reset as follows:
A.
If we no longer offer such rider, we will revoke the rider. The charge for the rider then in effect will be assessed on a pro-rata basis on the revocation date and will no longer be assessed; or
B.
If we offer the rider, then we will use the attained age of the new relevant Covered Life as of the date of the Covered Life change to reset the Lifetime Benefit Payment, Threshold Payment and Transfer Limit. The Payment Base will be reset to be the lesser of the Contract Value or the Payment Base effective on the date of the change. If no partial Surrenders or transfers to the Personal Pension Account above the Transfer Limit have been taken, the Deferral Credit Base will be reset to be the lesser of the Contract Value or the Deferral Credit Base effective on the date of the change; or
C.
If we offer such rider and the older Covered Life after the date of the ownership change is equal to or older than age 81, the rider will be terminated and removed from the Contract.

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•
Joint/Spousal Option:
After the first six months from the Contract issue date, if partial Surrenders have not yet been taken, and you and your Spouse become legally divorced, you may add a new Spouse to the Contract provided that the new Spouse is not equal to or older than age 81. The Payment Base and Deferral Credit Base will remain the same. The charge for the rider will remain the same.
Alternatively, if after the first six months from the Contract issue date, if partial Surrenders have been taken and you and your Spouse become legally divorced, you may only remove your ex-Spouse from the Contract. The Payment Base and Deferral Credit Base will remain the same. The rider will continue to be based on the Joint/Spousal Option. You may not convert your Joint/Spousal Option election to a Single Life Option. The charge for the rider will remain the same.
Can your Spouse continue your Lifetime Withdrawal Benefit?
•
Single Life Option:
If a Covered Life dies and the sole Beneficiary at the time of death, is the deceased Covered Life’s Spouse such Spouse may continue the Contract. If the Contract and the rider are continued as described below, we will continue the rider with respect to all Lifetime Withdrawal Benefits at the charge that is currently being assessed for new sales at the time of continuation. The relevant Covered Life will be re-determined on the date of Spousal Contract continuation.
If the relevant Covered Life is younger than age 81 at the time of the Spousal Contract continuation, and such rider (or a similar rider, as we determine) is still available for sale, the benefits will be reset as follows:
•
The Payment Base and Deferral Credit Base will be set equal to the Contract Value; and
•
The Deferral Credit Period will not be reset but will continue, if applicable, uninterrupted.
If the new Covered Life’s age is older than 81 at the time of Spousal Contract continuation, the rider will terminate and the rider charge will no longer be assessed.
If we are no longer offering such rider at the time of Spousal Contract continuation, we will revoke the rider and the rider charge will no longer be assessed.
•
Joint/Spousal Option:
The rider is designed to facilitate the continuation of your rights by your Spouse through the inclusion of a Joint/Spousal Option. If a Covered Life dies and the Contract and the rider are continued as described below, the rider will continue with respect to all benefits at the same rider charge. The benefits will be reset as follows:
•
The Payment Base will be equal to the greater of adjusted Contract Value or the Payment Base on the Spousal Contract continuation date;
•
The Deferral Credit Base will be equal to the greater of adjusted Contract Value or the Deferral Credit Base on the Spousal Contract continuation date;
•
The Deferral Credit Period will not be reset, but will continue, if applicable, uninterrupted;
•
The Lifetime Benefit Payment, Threshold Payment, and Transfer Limit will be reset; and
•
The remaining Covered Life cannot name a new Owner on the Contract. Any new Beneficiary that is added to the Contract will not be taken into consideration as a Covered Life. The rider will terminate upon the death of the remaining Covered Life.
What happens if you annuitize your Contract?
If you elect to annuitize your Contract prior to reaching the Annuity Commencement Date, you may only annuitize your Contract Value, not your Payment Base. If your Contract reaches the Annuity Commencement Date, the Contract must be annuitized. The Contract may be annuitized under our standard annuitization rules or the payment of the Lifetime Benefit Payment may continue under a Life Annuity Option.
Annuity Payout Options under this rider:
Single Life Option:
If you have elected the Single Life Option, we will issue you a Life Annuity (Annuity Payout Option One). The lifetime portion will be based on the relevant Covered Life determined at the Annuity Commencement Date. We treat the Covered Life as the Annuitant for this Annuity Payout Option. If there is more than one Covered Life, then the lifetime portion will be based on both Covered Lives. The lifetime portion will terminate on the first death of the two.
If the older Annuitant is younger than age 59½, we will automatically defer the date the payments begin until the anniversary after the older Annuitant attains age 59½. At that time, you will receive payments in a fixed dollar amount until the death of any Annuitant.
Joint/Spousal Option:
If you have elected the Joint/Spousal Option and both Spouses are alive, we will issue you a Joint and Last Survivor Life Annuity (Annuity Payout Option Four). The Covered Lives will be the Annuitant and Joint Annuitant. The lifetime benefit will terminate on the last death of the two. If only one Spouse is alive, we will issue a Life Annuity (Annuity Payout Option One) based on the surviving relevant Covered Life.

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If the younger Annuitant is younger than age 59½, we will automatically defer the date that payments begin until the anniversary after the younger Annuitant attains age 59½ and is eligible to receive payments in a fixed dollar amount until the death of the last surviving Annuitant.
If the younger Annuitant is age 59½ or older, you will receive payments in a fixed dollar amount until the death of the last surviving Annuitant.
Are there restrictions on how you must invest?
Yes. You must invest, reinvest and instruct us to periodically rebalance your Contract Value (including future investments) within an approved asset allocation model(s), Fund(s), and other investment program(s) approved and designated by us. As of the date of this prospectus, if you elect the rider, you must invest in the Personal Protection Portfolio asset allocation models listed in Appendix D. The Personal Protection Portfolio models are rebalanced monthly. If you elect an optional death benefit in combination with this rider, such as Maximum Anniversary Value IV or Return of Premium IV, then in the event of a conflict between the investment restrictions below and those set for in such optional death benefit riders, the investment restrictions below shall prevail.
We may modify, add, delete, or substitute (to the extent permitted by applicable law), the asset allocation models, investment programs, Funds, portfolio rebalancing requirements, and other investment requirements and restrictions that apply while the rider is in effect. For instance, we might amend these asset allocation models if a Fund (i) merges into another fund, (ii) changes investment objectives, (iii) closes to further investments and/or (iv) fails to meet acceptable risk parameters. We will give you advance notice of these changes. Please refer to “Other Program considerations” under the section entitled “What other ways can you invest?” in Section 4.a for more information regarding the potential impact of Fund mergers and liquidations with respect to then existing investments within an asset allocation model.
Except as provided below, failure to comply with any applicable investment requirement or restriction will result in termination of the rider. If the rider is terminated by us for violation of applicable investment requirements or restrictions, we will assess a pro-rated share of the rider charge and will no longer assess a rider charge. Termination of the rider will not terminate any concurrent guaranteed minimum death benefit rider. In the event of a conflict between the investment requirements and restrictions of this rider and those imposed by any guaranteed minimum death benefit rider, the investment requirements and restrictions of this rider shall prevail.
If the rider is terminated by us due to a failure to comply with these investment restrictions, you will have one opportunity to reinstate the rider by reallocating your Contract Value in accordance with then prevailing investment restrictions. You will have a fifteen day reinstatement period to do this. The reinstatement period will begin upon termination of the rider. Your right to reinstate the rider will be terminated if during the reinstatement period you make a subsequent Premium Payment, take a partial Surrender, transfer Contract Value into the Personal Pension Account or make a Covered Life change. Upon reinstatement, your Payment Base will be reset at the lower of the Payment Base prior to the termination or Contract Value as of the date of reinstatement.
Upon reinstatement, your Deferral Credit Base will be reset at the lower of the Deferral Credit Base prior to the termination or Contract Value as of the date of reinstatement and the Deferral Credit Period, if applicable, will continue uninterrupted.
Investment in any asset allocation model could mitigate losses but also hamper potential gains. The asset allocation models that you must invest in under the rider provide very different potential risk/reward characteristics. We are not responsible for lost investment opportunities associated with the implementation and enforcement of these investment requirements and restrictions. Investment restrictions may reduce the overall volatility in investment performance. Such reduced volatility may reduce the returns on investments and mitigate our guarantee obligations under the Contract.
We are able to offer certain attributes associated with the rider, based on our assumptions that the Personal Protection Portfolios, and particularly, the requirement to maintain 50% of your Contract Value in the BlackRock Managed Volatility V.I. Fund within these models, or 100% in the BlackRock Managed Volatility V.I. Fund, may reduce overall Contract Value volatility and mitigate our guarantee obligations by potentially reducing investment returns that you might have received during favorable market conditions.
The BlackRock Managed Volatility V.I. Fund does not seek to manage volatility based on Contract Owners' allocations to the other Funds within the Personal Protection Portfolios. Instead, the BlackRock Managed Volatility V.I. Fund utilizes a volatility control process that is independent of Contract Owners allocations of Contract Value. The BlackRock Managed Volatility V.I. Fund may reduce investment returns that you might receive during favorable market conditions and may mitigate our guarantee obligations under the Contracts. In addition, the BlackRock Managed Volatility V.I. Fund may fail to achieve its investment objective, which includes managing volatility.
If you desire your Contract Value to be subject to less volatility than the Personal Protection Portfolios asset allocation models, a 100% allocation to the BlackRock Managed Volatility V.I. Fund may be more appropriate for you. You should consult with your investment professional about which investment options are best for you. Some factors you may consider and discuss with your investment professional when reviewing the updated Personal Protection Portfolios and the BlackRock Managed Volatility V.I. Fund are: your investment time horizon and risk appetite, the importance of protecting your Contract Values from

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volatility, the impact that managed volatility may have on your investment returns during favorable market conditions, and the likelihood that you will utilize or realize your rider benefits.
Are there restrictions on the amount of subsequent Premium Payments?
Yes. We require approval of subsequent Premium Payments after the first Contract Anniversary. In addition, we will not accept any subsequent Premium Payments in excess of $100,000 in the aggregate while the rider is in effect without our prior approval.
Can we aggregate Contracts?
Yes. For purposes of determining the Payment Base, Deferral Credit Base and Premium Payment limits, we reserve the right to treat as one all deferred variable annuity Contracts issued by us when you have elected any similar optional withdrawal benefit rider. We will not aggregate contracts with dissimilar optional riders. If we elect to aggregate Contracts, we will reset Lifetime Benefit Payments, partial Surrenders and Transfer Limits across aggregated contracts. We will also reset the date we set these values to operate on a Calendar Year anniversary basis (i.e., January 2 Contract Anniversary) in lieu of multiple Contract Anniversaries.
If we elect to aggregate Contracts, we will change the period over which we measure Surrenders against future Lifetime Benefit Payments. We will treat the effective date of our aggregation election until the end of the applicable calendar year as a Contract Year for the purposes of the Lifetime Benefit Payment limit. A pro-rata rider fee will be taken at the end of that calendar year. After the first calendar year following aggregation, the Lifetime Benefit Payment limits will be aggregated and will be set on a calendar year (i.e., January 2 Contract Anniversary) basis. The rider fee then in effect will be taken at the end of each new Contract Anniversary.
If we aggregate Contracts, partial Surrenders and transfers in excess of the Transfer Limit will terminate the Deferral Credit, if any, on the Contract where the partial Surrender or transfer occurred; however, it will not terminate any applicable Deferral Credit across aggregated Contracts.
Other information
The rider may not be appropriate for all investors. Several factors, among others, should be considered:
•
Your required participation in the Personal Protection Portfolio models end when the Future6 rider terminates. You must provide us with re-allocation instructions at that time. We will contact you and your Financial Intermediary in writing and/or via telephone to seek instructions to re-allocate your Contract Value outside of the Personal Protection Portfolio and BlackRock Managed Volatility V.I. Fund. You may independently invest in the BlackRock Managed Volatility V.I. Fund if you have Future6.
•
If you also invest in the Personal Pension Account, transfers to the Personal Pension Account in excess of the Income Foundation Builder Transfer Limit will end the Deferral Credit Period and the Deferral Credit Base will be zero.
•
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.
•
The Fixed Accumulation Feature is not available if you have elected Income Foundation Builder.
•
Even though the rider is designed to provide living benefits, you should not assume that you will necessarily receive payments for life if you have violated any of the terms of the rider or if you commence taking Threshold Payments prior to your Lifetime Income Eligibility Date.
•
We may terminate the rider based on your violation of benefit rules and may otherwise withdraw the rider (or any survivorship option or other benefits) for new sales at any time.
•
When the Single Life Option is chosen, Spouses may find continuation of the rider to be unavailable or unattractive after the death of the Contract Owner. Continuation of the benefits available in the optional rider is dependent upon its availability at the time of death of the first Covered Life.
•
Certain Covered Life changes may result in a reduction, recalculation or forfeiture of benefits.
•
Annuity Payout Options available subsequent to the Annuity Commencement Date may not necessarily provide a stream of income for your lifetime and may be less than Lifetime Benefit Payments.
•
The fee for the rider may change at every Contract Anniversary. Please carefully review the maximum fee disclosed in the Fee Summary.
•
We do not automatically increase payments under the Automatic Income Program if your Lifetime Benefit Payment increases. If you are enrolled in our Automatic Income Program to make Lifetime Benefit Payments and your eligible Lifetime Benefit Payment increases, you need to request an increase in your Automatic Income Program. We will not individually notify you of this privilege.
•
We will share data regarding your Contract with our affiliates or designees to help us manage our guarantee obligations.
•
The purchase of the rider may not be appropriate for custodial owned contracts, Beneficiary or inherited IRAs or contracts owned by certain types of non-natural entities, including Charitable Trusts. Because these types of owners and many non-natural entities may be required to make certain periodic distributions and those amounts may be different than the withdrawal limits permitted under the rider, you should discuss this with your tax advisor or investment professional to

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determine the appropriateness of this benefit. The Company is not responsible for violations of the rider rules due to required distributions.
•
Withdrawals taken prior to the Lifetime Income Eligibility Date (Threshold Payments) are not guaranteed to be available throughout your lifetime. Such withdrawals will reduce (and may even eliminate) the Payment Base otherwise available to establish lifetime benefits.
•
Income Foundation Builder is referred to as Guaranteed Minimum Withdrawal Benefit Plus II in your Contract.
b. Personal Pension Account
As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value).* Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account as described in your Contract (including applicable riders).
If you are enrolled in any program (e.g., Dollar Cost Averaging Program) that automatically allocates subsequent contributions (Premium Payments) and/or transfers of Contract Value to the Personal Pension Account you MUST provide us with alternative allocation instructions prior to October 3, 2014; otherwise your program will automatically terminate on October 3, 2014*.
*
Contract Owners with Contracts issued in CT, FL, NJ and WA may continue to allocate new Personal Pension Account Contributions after October 3, 2014 and any programs that utilize the Personal Pension Account may remain in place. The Personal Pension Account was never available for Contracts issued in New York and Oregon.
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.
Objective
The objective of the rider is to provide a fixed rate of growth on investments and longevity protection through the certainty of predetermined lifetime payouts during the Guarantee Window and a Death Benefit. Withdrawals from the Personal Pension Account may be subject to commutation, please see below.
How does the rider help achieve this goal?
The Personal Pension Account bears some similarities to a Fixed Accumulation Feature in that you may also receive a fixed interest rate investment return. In this regard, the Personal Pension Account is an alternative to the uncertainty of investing in Funds when your return depends on the investment performance of the Funds you select. However, the Personal Pension Account operates very differently 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 your investment, and you can then withdraw money to meet financial needs as they arise. Until October 3, 2014 you can also transfer some or all of your investment to the Funds 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 that you can use to design your own personal pension plan to provide guaranteed life-long income payouts without having to use the Funds or the Fixed Accumulation Feature for that purpose. You will know at the time of each Personal Pension Account Contribution what you can expect in terms of guaranteed Payout Purchase Rates (provided that Personal Pension Account Payouts are commenced during your Guarantee Window). Crediting rates (which reduce over time bands) are also available at or prior to each Personal Pension Account Contribution. While you can also use the Fixed Accumulation Feature to take systematic withdrawals or Annuity Payouts, 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 rider gives you guaranteed Payout Purchase Rates and more flexibility structuring payouts? In order to give you the guarantees and income payment flexibility, we had to place significant restrictions on how much you can transfer from 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 in the Personal Pension Account, you can get a lump sum payment only by specifying some or all of the payouts you are receiving, and then commuting them into a lump sum. When you commute your Personal Pension Account, you will get less than the sum of the payments you are commuting. 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.
When can you elect to invest in the rider?
You may elect to invest in the rider at any time. Except as noted below (see Personal Pension Account Transfer Programs - Other Considerations), the minimum initial Personal Pension Account Contribution is $10,000 and failure to maintain a minimum

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Accumulation Balance of $5,000 will result in commencement of Personal Pension Account Payouts. Subsequent Premium Payments can be made into Funds and/or the Fixed Accumulation Feature before or after Personal Pension Account Payouts have begun (if received before your Annuity Commencement Date).
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.
Does investing in the rider forfeit your ability to buy other riders?
No.
How is the charge for the rider calculated?
We do not charge a separate rider fee for the Personal Pension Account. Our expenses associated with offering this rider are factored into Credited Interest Rates and Payout Purchase Rates.
Can your benefit base change under the rider?
Yes. You invest in the Personal Pension Account through Personal Pension Account Contributions. Your first Personal Pension Account Contribution becomes your initial Benefit Balance. The Benefit Balance will be increased by the amount of each subsequent Personal Pension Account Contribution and by interest credited. Unlike the Fixed Accumulation Feature, the Benefit Balance is not indicative of what you would receive as a lump sum.
Prior to the start of Personal Pension Account Payouts, the Accumulation Balance equals your Benefit Balance. Once you start taking Personal Pension Account Payouts, 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.
We will credit interest to your Accumulation Balance at a minimum rate of 1.5% (called a Credited Interest Rate) for so long as you have an investment in the Personal Pension Account. We may apply a Credited Interest Rate that is higher than this minimum Credited Interest Rate. Different Credited Interest Rates may apply during the course of your investment in the Personal Pension Account. The Credited Interest Rate may also vary based on the Annuity Payout Option elected.
We may prospectively set new credited rates and time periods over which such Credited Interest Rates shall apply to new Personal Pension Account Contributions. This means that portions of your Accumulation Balance may earn interest at different Credited Interest Rates. See Personal Pension Account Examples 1, 2 and 4 in Appendix A for an illustration of how different Credited Interest Rates may apply during the term of your Contract.
We will confirm your Credited Interest Rate schedule with each Personal Pension Account Contribution. There is no specific formula for determining Credited Interest Rates and no assurances are offered as to future Credited Interest Rates and their applicability to your Contract. Some of the factors that we may consider in determining a Credited Interest Rate 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, mortality risks, and competitive factors. We expect to make a profit in setting Credited Interest Rates.
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 Interest Rates are associated with each Personal Pension Account Contribution.
Is the rider designed to provide withdrawals for your lifetime?
Yes. You may tell us to start paying you Annuity Payouts (called Personal Pension Account Payouts) at any time or at different times until your Annuity Commencement Date. Subsequent Premium Payments can be made into Funds and/or the Fixed Accumulation Feature before or 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.
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 Funds 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 Funds and Fixed Accumulation Feature; and (b) commuting your Annuity Payout Value in your Personal Pension Account thereby giving up your right to future Personal Pension Account Payouts. This may subject your Annuity Payout Value to a CDSC, if applicable. Please see the discussion of commutation under “What effect do partial or full Surrenders have on your benefits under the rider?” in this section for more information. 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

44
 
 
 

the time of investment, the discount rate used for commutation, and how long you receive lifetime Personal Pension Account Payouts.
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 70½.
Personal Pension Account Payouts received prior to the Annuity Commencement Date are considered to be permissible partial annuitizations under the Code. 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?” in Section 4.d.
We will calculate the amount of your Personal Pension Account Payouts by applying the applicable Payout Purchase Rate to your Annuity Payout Value. We will provide you with a guaranteed Payout Purchase Rate corresponding with your Guarantee Window each time that you make a Personal Pension Account Contribution. Payout Purchase Rates are set at our discretion. Minimum guaranteed Payout Purchase Rates are described in your Contract. Payout Purchase Rates may vary based on contract, gender and the Annuity Payout Option selected. There is no specific formula for determining Payout Purchase Rates and, except as specifically provided below, there is no assurance as to future Payout Purchase Rates. Some of the factors that we may consider in determining a Payout Purchase Rate 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, and competitive factors and mortality tables (including age and gender factors). We expect to make a profit in setting Payout Purchase Rates.
When you first make a Personal Pension Account Contribution, you will be required to choose a Target Income Age at which Personal Pension Account Payouts are likely to begin. The Target Income Age cannot exceed twenty years from the oldest Annuitant’s age (Single Life Option) or the oldest Spouse (Joint Life Option) at the time of investment or age 80 (plus 364 days), 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 under Annuity Payout Option Two, the Target Income Age cannot be changed.
We will use a guaranteed Payout Purchase Rate to calculate Personal Pension Account Payouts if you commence taking Personal Pension Account Payouts during the timeframe that begins three years prior to the Target Income Age and ends three years after the Target Income Age. This seven year period is referred to as the Guarantee Window. In the event that you do not establish a Target Income Age that is at least three years from your current age when you make your first Personal Pension Account Contribution, we will automatically reset your Target Income Age to such date and adjust your Guarantee Window accordingly, subject to the maximum Target Income Age provisions stated above. If you elect Annuity Payout Option Eight, we will establish Payout Purchase Rates by deducting the age of the youngest Annuitant from the age of the oldest Annuitant as of the date of your initial Personal Pension Account Contribution. This differential in ages (rounded up to a full year) will also be used for establishing Payout Purchase Rates for any subsequent Personal Pension Account Contributions regardless of when during each calendar year they are made.
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 the lower of (x) then current Payout Purchase Rate or (y) the maximum Payout Purchase Rate set internally at the time of each Contribution that corresponds to the actual time deferred; but, in no event will the Payout Purchase Rate be less than (z) the minimum guaranteed Payout Purchase Rate specified in your Contract. The amount of these Personal Pension Account Payouts taken outside of your Guarantee Window are not guaranteed. The existence of guaranteed a Payout Purchase Rate, among other things, distinguishes the Personal Pension Account from the way we treat annuitization of your Contract Value, which includes investments in the Fixed Accumulation Feature at the end of the accumulation phase of your Contract. See Personal Pension Account Examples 1 and 4 in Appendix A for an illustration of Personal Pension Account Payouts during the Guarantee Window.
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.
Personal Pension Account Payouts will generally terminate upon receipt of due proof of death of the Owner, joint Owner, Annuitant, or Joint Annuitant (if applicable), depending on the Annuity Payout Option then in effect. Please refer to the Annuity Payouts section for more information regarding the cessation of Personal Pension Account Payouts based on the death of an Owner, Annuitant or Joint Annuitant, as applicable, and how these events vary depending upon whether transpiring before or after the Annuity Commencement Date.
Is this rider designed to pay you a Death Benefit?
Yes. The Personal Pension Account includes a Death Benefit that is equal to your Benefit Balance. Your Personal Pension Account Death Benefit increases as a result of additional Personal Pension Account Contributions and credited interest. 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 and may be eliminated

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over time. Benefit Balance transfers to Funds 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 an optional Death Benefit then in effect. The method of payment of the Death Benefit will be subject to the restrictions described in Section 5.a Standard Death Benefit. Personal Pension Account Death Benefits are not subject to commutation or CDSC.
Does the rider replace the Standard Death Benefit?
No. The Personal Pension Account Death Benefit supplements the Standard Death Benefit or any optional Death Benefit then in effect.
Can you revoke the rider?
No.
What effect do partial or full Surrenders have on your benefits under the rider?
Lump Sum Payments - You may commute a part or all of your Annuity Payout Value to get a lump sum payment from the Personal Pension Account. You must therefore initiate Personal Pension Account Payouts to commute your Annuity Payout Value.
We compute your Personal Pension Account Commuted Value by first calculating the number of Personal Pension Account Payouts (corresponding to the Annuity Payout Value that you seek to commute) that when added together will equal the amount of your commutation request. We then compute the time period over which each Annuity Payout Value would have otherwise been paid. This time period is called the Guaranteed Payout Duration. We then use a present value formula to compute the lump sum payable to you using the discount rate then in effect. Please see “What is the Commuted Value?” in the Surrenders section and Personal Pension Account Examples 4a and 4b in Appendix A for more information about how Guaranteed Payout Duration is determined.
Personal Pension Account Payouts based on the remaining, non-commuted portion of your Annuity Payout Value will resume after the Guaranteed Payout Duration based on the same frequency established on your original Personal Pension Account start date provided that Personal Pension Account Payouts have not been terminated based on a death event pursuant to the relevant Annuity Payout Option.
Your Commuted Value may be significantly less than your Annuity Payout Value. This is because your Commuted Value depends on a number of factors, including interest rates movement since each contribution, how long you have invested in the Personal Pension Account and how long Personal Pension Account Payouts are payable pursuant to the relevant Annuity Payout Option. Please refer to “What kinds of Surrenders are available?” and “What is the Commuted Value?” in Section 4.c Surrenders section as well as Personal Pension Account Example 4 in Appendix A for more information about how commutation works.
Transfers - As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value), except for Contracts issued in CT, FL, NJ and WA. Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account Payouts (fixed dollar amount Annuity Payout) so if you do not have value in the Personal Pension Account as of October 3, 2014, this Annuity Payout Option will not be available to you. Please see the Personal Pension Account Death Benefit section for additional information.
Each Contract Year, you may transfer a portion of your Accumulation Balance to the Fixed Accumulation Feature or Funds without having to comply with the annuitization and commutation requirements discussed above. All transfer allocations must be in whole percentages (e.g., 1%), if applicable. 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 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 Funds become part of your Contract Value. You may also transfer Contract Value from your Funds or Fixed Accumulation Feature into the Personal Pension Account. Such transfers will reduce the amount of any Death Benefit, and will result in a recalculation of the AWA and Remaining Gross Premiums associated with your Contract Value and your Personal Pension Account investments. If you have also elected a guaranteed withdrawal benefit, please refer to the section entitled “What effect do partial or full Surrenders have on your benefits under the rider?” within such prospectus sections for more information about the impacts of transfers to and from the Personal Pension Account on such benefits. No CDSC will be applied to Accumulation Balance transferred to Funds or the Fixed Accumulation Feature, or vice versa. No transfers may be

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made to or from the Personal Pension Account after the Annuity Commencement Date. See Personal Pension Account Example 3 in Appendix A for an illustration of transfers into your Personal Pension Account.
As a result of these transfer restrictions, it may take a significant amount of time (i.e., several years) to move Accumulation Balance to Funds or the Fixed Accumulation Feature and therefore this may not provide an effective short term defensive strategy. Please refer to Personal Pension Account Example 3 in Appendix A for an illustration of transfer restrictions.
What happens if you change ownership?
Except as otherwise provided in the Annuity Payouts section, any successor owner must continue to abide by the Target Income Age and Guarantee Window you establish at the time of your first Personal Pension Account Contribution.
Can your Spouse continue your Benefit?
Yes, provided you elect Annuity Payout Option Eight. Please refer to Annuity Payout Options Two and Eight in Section 4.d for further information.
What happens if you annuitize your Contract?
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?” in Section 4.d. You may not make any Personal Pension Account Contributions after the Annuity Commencement Date. No transfers may be made to or from the Personal Pension Account after the Annuity Commencement Date.
Are there restrictions on how you must invest?
Yes. You have no discretion over the management of sums invested in the Personal Pension Account as they are held in our General Account.
Are there restrictions on the amount of subsequent Contributions?
As of October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value).* Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account as described in your Contract (including applicable riders).
If you are enrolled in any program (e.g., Dollar Cost Averaging Program) that automatically allocates subsequent contributions (Premium Payments) and/or transfers of Contract Value to the Personal Pension Account you MUST provide us with alternative allocation instructions prior to October 3, 2014; otherwise your program will automatically terminate on October 3, 2014*.
*
Contract Owners with Contracts issued in CT, FL, NJ and WA may continue to allocate new Personal Pension Account Contributions after October 3, 2014 and any programs that utilize the Personal Pension Account may remain in place. The Personal Pension Account was never available for Contracts issued in New York and Oregon.
Yes. In addition, our prior approval may be required for any single or cumulative Personal Pension Account Contribution of $1 million or more made prior to October 3, 2014. Each subsequent Personal Pension Account Contribution must be at least $1,000.
Can we aggregate Contracts?
No.
Other Information
This rider may not be appropriate for all investors. Several factors, among others, should be considered:
•
Special consideration should be given by Personal Pension Account investors who are under age 40 based on the twenty-year limitation on setting your Target Income Age and the absence of guaranteed Payout Purchase Rates applied if Personal Pension Account Payouts commence outside of your Guarantee Window.
•
Because we impose commutation and transfer limitations, please work with your investment professional to ensure that your investments in the Fixed Accumulation Feature and the Funds (in addition to other available assets) will be adequate to meet your liquidity and/or RMD (if applicable) needs before investing in the Personal Pension Account.
•
Credited Interest Rates available under the Personal Pension Account may be higher or lower than interest rates offered under the Fixed Accumulation Feature.
•
You must select either Annuity Payout Option Two or Eight in order to receive Personal Pension Account Payouts. These Annuity Payout Options include restrictions as to who may serve as Annuitant, Joint Annuitant and Beneficiary.
•
Anyone considering investing their entire Deposit into the Personal Pension Account should first discuss with their investment professional whether a single premium immediate annuity may offer better Payout Purchase Rates.
•
The Personal Pension Account should not be confused with a pension plan under ERISA. Neither we nor any of our affiliates assume any fiduciary duties as such terms are defined under ERISA laws and regulations. The Personal Pension Account

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is not a defined benefit plan guaranteed by the Pension Benefit Guaranty Corporation or any federal or state government agency. This feature is not a corporate pension plan issued by us or our affiliates.
7. 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.
Accumulation Balance — The sum of all Personal Pension Account Contributions increased by credited interest, minus any transfers into any other Accounts 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: Talcott Resolution - Annuity Service Operations, 1338 Indian Mound Drive, Mt. Sterling, KY 40353. Our standard mailing address is Talcott Resolution - Annuity Service Operations, PO Box 14293, Lexington, KY 40512-4293.
Annual Maintenance Fee: An annual charge deducted on a Contract Anniversary or upon full Surrender.
Annual Payment Base Cap: The maximum percentage the Payment Base may be increased annually due to a Market Increase or a Deferral Credit under Income Foundation Builder.
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, excluding any Personal Pension Account Payout pursuant to the Personal Pension Account.
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 Factor: A factor that neutralizes the Assumed Investment Return when determining the Annuity Unit Value. When the Assumed Investment Return is 3%, the daily factor is 0.999919. When the Assumed Investment Return is 5%, the daily factor is 0.999866. And when the Assumed Investment Return is 6%, the daily factor is 0.999840.
Annuity Unit Value: The daily price of Annuity Units on any Valuation Day.
Assumed Investment Return: The investment return you select before we start to make Annuity Payouts. It is a critical assumption for calculating variable dollar amount Annuity Payouts.
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.
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.

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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 value of the Sub-Accounts and Fixed Accumulation Feature.
Contract Year: Any 12 month period between Contract Anniversaries, beginning with the date the Contract was issued.
Covered Life: The governing life or lives used for determining the lifetime withdrawal feature under Income Foundation Builder.
Credited Interest Rate: The interest rates that we agree to credit during different times over the duration of your Contract for the Personal Pension Account.
Deferral Credit: The amount added to your Payment Base on each Contract Anniversary while the Deferral Credit Period is in effect if a Market Increase does not occur on such Contract Anniversary.
Deferral Credit Period: The Deferral Credit Period commences on the date that Income Foundation Builder has been elected and Deferral Credit Period ends when the first of the following events occur: (a) tenth Contract Anniversary from the date that Income Foundation Builder has been elected, (b) the Valuation Day that you take your first Partial Surrender (including your first Lifetime Benefit Payment or Threshold Payment); or (c) the Valuation Day that you first transfer any Contract Value to the Personal Pension Account in excess of the applicable Transfer Limit. Once the Deferral Credit Period ends, it cannot be re-started.
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 all Premium Payments and Personal Pension Account Contributions.
Dollar Cost Averaging: A program that allows you to systematically make transfers into Funds or the Personal Pension Account.
Eligible Investment: The amount we use to assign applicable CDSC and Premium Based Charge amounts. Eligible Investments are the higher of (a) Deposits less any withdrawals; or (b) your last Valuation Day’s Total Balance.
Financial Intermediary: The broker-dealer, bank or other financial institution through whom you bought your Contract.
Fixed Accumulation Feature: Part of our General Account, where you were able to 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 offered contain a Fixed Accumulation Feature. Effective October 4, 2013, we no longer accept new allocations or Premium Payments to the 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 Sub-Accounts.
General Account: The General Account includes our Company assets, including any money you may have invested in the Fixed Accumulation Feature, if available, and the Personal Pension Account.
Guarantee Window: The seven year time period during which we guarantee Personal Pension Account Payouts. You set your Guarantee Window by selecting your Target Income Age (when you make your first Personal Pension Account Contribution). Your Guarantee Window is three years before and after your Target Income Age.
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.
Income Foundation Builder: This rider is referred to as Guaranteed Minimum Withdrawal Benefit Plus II rider in your Contract.
In Good Order: Certain transactions require your authorization and completion of requisite forms. Such transactions will not be considered in good order unless received by us in our Administrative Office or via telephone, facsimile or through an internet transaction. Generally, our request for documentation will be considered in good order when we receive all of the requisite information, on the form required by us.
Joint Annuitant: The person on whose life Annuity Payouts are based if the Annuitant dies after Annuitization. You may name a Joint Annuitant only if your Annuity Payout Option provides for a survivor. The Joint Annuitant may not be changed.
Lifetime Benefit Payment: The maximum guaranteed amount that can be withdrawn each year under Income Foundation Builder.
Lifetime Income Eligibility Date: The Contract Anniversary following the relevant Covered Life’s attaining the age of 59½ or such age we specify within your Contract.
Market Increases: A potential increase to your Payment Base equal to your then current Contract Value prior to the deduction of rider charges based on market performance subject to the applicable Annual Payment Base Cap, if any.
Maximum Anniversary Value: The highest Contract Value as of each Contract Anniversary prior to the date of death of the oldest Owner or the Annuitant’s 81st birthday, whichever first occurs, adjusted for any Premium Payments, or transfers to or from the Personal Pension Account and partial Surrenders occurring after such Contract Anniversary.

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Net Investment Factor: This is used to measure the investment performance of a Sub-Account from one Valuation Day to the next, and is also used to calculate your Annuity Payout amount.
1933 Act: The Securities Act of 1933, as amended.
1934 Act: The Securities Exchange Act of 1934, as amended.
1940 Act: The Investment Company Act of 1940, as amended.
Non-Valuation Day: Any day the New York Stock Exchange is not open for trading.
Payee: The person or party you designate to receive Annuity Payouts.
Payment Base: The amount used to determine the Lifetime Benefit Payments, Threshold Payments, Transfer Limit and rider charge under Income Foundation Builder.
Payout Purchase Rates: The monthly rates per thousand that we agree to apply upon establishing an Annuity Payout Value.
Personal Pension Account Contributions: Sums allocated to the Personal Pension Account. 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 Sub-Accounts and Fixed Accumulation Feature. 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: Equals the Premium Payments adjusted by prior partial Surrenders. During the CDSC period, Premium Payments will be adjusted for partial Surrenders in excess of the AWA; after the CDSC period, Premium Payments will be adjusted for all partial Surrenders.
Required Minimum Distribution: A federal requirement that individuals age 70½ and older must take a distribution from their tax-qualified retirement account by December 31, each year. For employer-sponsored qualified Contracts, the individual must generally begin taking distributions at the age of 70½ or upon retirement, whichever comes later.
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 seven-year Guarantee Window (three years before and after) during which a guaranteed Payout Purchase Rate will be applied to your Accumulation Balance.
Threshold Payments: The amount payable in the form of partial Surrenders under Income Foundation Builder taken prior to the relevant Covered Life’s Lifetime Income Eligibility Date that reduce the rider benefits on a dollar-for-dollar basis. Surrenders taken above this amount will proportionally reduce the rider benefits.
Total Balance: The sum of your Contract Value and Benefit Balance.
Total Expected Premium: Total Expected Premium is a non-binding commitment to invest a certain amount of Deposits within ninety days from the date you purchase your Contract in exchange for which we assign a lower CDSC and a lower Premium Based Charge based on the total Deposits you plan to make over this time period. If you do not make the Deposits as promised, we will recalculate these charges based on your actual Deposits and proportionately deduct these charges, as applicable, from your Sub-Accounts.
Transfer Limit: The threshold amount that you may partially Surrender or move within the Contract without causing your rider benefits to be reduced on a proportionate basis. The Transfer Limit varies by rider.
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.

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We, us or our: Talcott Resolution Life and Annuity Insurance Company or Talcott Resolution Life Insurance Company, as the case may be.
Withdrawal Percentage: The percentage of your Payment Base that you may withdraw each Contract Year in the form of a Lifetime Benefit Payment or Threshold Payment.
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.
California - If you are 60 years old or older you must either elect the Senior Protection Program, or elect to immediately allocate the initial Premium Payments to the other investment options. Under the Senior Protection Program, we will allocate your initial Premium Payment to a money market Fund for the first 35 days your initial Premium Payment is invested. After the 35th day we will automatically allocate your Contract Value according to your most current investment instructions. If you elect the Senior Protection Program you will not be able to participate in any InvestEase (if otherwise available) or Dollar Cost Averaging Program until after the Program has terminated. The Dollar Cost Averaging Plus, the Static Asset Allocation Models and certain Automatic Income Programs are not available if you elect the Senior Protection Program. Under the Senior Protection Program any subsequent Premium Payment received during the 35 days after the initial Premium Payment is invested will also be invested in a money market Fund unless you direct otherwise. You may voluntarily terminate your participation in the Senior Protection Program by contacting us in writing or by telephone. You will automatically terminate your participation in the Senior Protection Program if you allocate a subsequent Premium Payment to any other investment option or transfer Contract Value from a money market Fund to another investment option. When you terminate your participation in the Senior Protection Program you may reallocate your Contract Value in the Program to other investment options; or we will automatically reallocate your Contract Value in the Program according to your original instructions 35 days after your initial Premium Payment was invested. The only AIRs available are 3% and 5%. The assignment restrictions on the living benefits and Death Benefits do not apply.
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.
Connecticut - The assignment restrictions on the living benefits and Death Benefits do not apply.
Florida - If you are age 65 or older on the contract issue date, CDSCs will be capped at 10% of the amount withdrawn.
Massachusetts - We will accept subsequent Premium Payments only until the Annuitant’s 63rd birthday or the third Contract Anniversary, whichever is later. The Nursing Home Waiver is not available. The Fixed Accumulation Feature investment restrictions do not apply to investors.
New Jersey - The Fixed Accumulation Feature is not available. The only AIRs available are 3% and 5%. The Nursing Home Waiver is not available. We will not consider your Total Expected Premium as a basis to assign CDSCs or the Premium Based Charge. We re- serve the right to prohibit subsequent Premium Payments and transfers after the first Contract Year if you have elected the Return of Premium IV. 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.
Ohio - The Fixed Accumulation Feature is not available.
Oklahoma - The only AIRs available are 3% and 5%.
Oregon - We will accept subsequent Premium Payments during the first three Contract Years (B Share Contracts). 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 - We will not consider your Total Expected Premium as a basis to assign CDSCs or the Premium Based Charge.
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 - Except as prohibited by state law, 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 recalculation of the benefits subject to applicable state law. Generally, we will not recalculate the benefits under your Contract so long as the change in ownership does not affect the Owner and does not result in a change

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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.
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 Were Sold
We have entered into a distribution agreement with our affiliate Talcott Resolution Distribution Company, Inc. ("TDC") under which TDC serves as the principal underwriter for the Contracts. TDC 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 TDC is the same as ours.
TDC 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 TDC for sales of the Contracts by Financial Intermediaries. TDC, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2017. Contracts were sold by individuals who were appointed by us as insurance agents and who were investment professionals of Financial Intermediaries.
Contracts may have been 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; and 2) employees and investment professional of Financial Intermediaries.

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.

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We list below types of arrangements that helped to incentivize sales people to sell our suite of variable annuities. Not all arrangements necessarily affected 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 professional according to a Financial Intermediaries’ internal compensation practices.
Affiliated broker-dealers also employed 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.
•
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. We may pay a lower commission for sales to Owners over age 80.
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, Financial Intermediary and insurance rules, we also pay the following types of fees to among other things encourage the sale of this Contract and/or to provide inforce Contract Owner support. 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. In addition, some Financial Intermediaries may make a profit from fees received for inforce Contract Owner support.
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
Allowance
Pay Fund related parties for wholesaler support, training and marketing activities for certain Funds.
Inforce Contract Owner
Support
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.
Training
Educational (due diligence), sales or training seminars, conferences and programs, sales and service desk training.
Volume
Pay for the overall volume of their sales or the amount of money investing in our products.
As of December 31, 2017, 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), Cambridge Investment Research Inc., Cetera Financial Group (Cetera Financial Specialists, LLC, Cetera Investment Services, LLC, Cetera Advisors, LLC, Cetera Advisor Networks, LLC), CCO Investment Services Corp., Citigroup Global Markets, Inc., Commonwealth Financial Network, Crown Capital Securities, LLP, Edward D. Jones & Co., LLP, First Allied Securities, Inc., First Tennessee Brokerage Inc., H.D. Vest Investment Services, Huntington Investment Company, ING Financial Partners, Investacorp, Inc., LPL Financial Corporation, Merrill Lynch Pierce Fenner & Smith, Morgan Stanley Smith Barney, LLC, (various divisions and affiliates),

53
 
 
 

Raymond James & Associates, Inc., Raymond James Financial Services, Robert W. Baird & Co. Inc., Securities America, Inc., UBS Financial Services, Inc., Wells Fargo Advisors LLC (various divisions), Woodbury Financial Services, Inc.
Inclusion on this list does not imply that these sums necessarily constitute “special cash compensation” as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their investment professional is or should be included in any such listing.
As of December 31, 2017, 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: American Funds Distributors & Capital Research and Management Company & Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc. 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, 2017, Additional Payments did not in the aggregate exceed approximately $15.6 million (excluding corporate-sponsorship related perquisites and Marketing Expense Allowances) or approximately 0.04% of average total individual variable annuity assets. Marketing Expense Allowances for this period did not exceed $18,500.

54
 
 
 

Table of Contents to Statement of Additional Information
General Information
Safekeeping of Assets
Experts
Non-Participating
Misstatement of Age or Sex
Principal Underwriter
Operational Risks
Performance Related Information
Total Return for all Sub-Accounts
Yield for Sub-Accounts
Money Market Sub-Accounts
Additional Materials
Performance Comparisons
Financial Statement

APP TAX-1
 
 
 

Appendix Tax
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 "Nonresident Aliens and Foreign Entities" below regarding annuity purchases by, or payments to, non-U.S. persons. Pursuant to IRS Circular 230, you are hereby notified of the following: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. This prospectus is not intended to provide tax, accounting or legal advice. Please consult with your tax accountant or attorney prior to finalizing or implementing any tax or legal strategy or for any tax, accounting or legal advice concerning your situation.
This summary has been prepared by us after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract.
In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements, or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it.
As used in the following sections addressing “Federal Tax Considerations,” the term “spouse” means the person to whom you are legally married, as determined under federal tax law. This may include opposite or same-sex spouses, but does not include those in domestic partnerships or civil unions which are not recognized as married for federal tax purposes. You are encouraged to consult with an accountant, lawyer or other qualified tax advisor about your own situation. Although some sections below discuss certain tax considerations in connection with contract loans, this is provided as general information only. Please refer to your contract to determine if your contract contains a loan provision.
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.

APP TAX-2
 
 
 

Currently, no taxes are due on interest, dividends and short-term or long-term capital gain earned by the Separate Account with respect to the Contracts. The Company is entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account. These tax benefits, which may include the foreign tax credit and the corporate dividends received deduction, are not passed back to you since the Company is the owner of the assets from which the tax benefits are derived.
C. Taxation of Annuities — General Provisions Affecting Contracts Not Held in Tax-Qualified Retirement Plans
Section 72 of the Code governs the taxation of annuities in general.
1. Non-Natural Persons as Owners
Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural Contract Owner generally could be required to include in gross income currently for each taxable year the excess of (a) the sum of the Contract Value as of the close of the taxable year and all previous distributions under the Contract over (b) the sum of net premiums paid for the taxable year and any prior taxable year and the amount includable in gross income for any prior taxable year with respect to the Contract under Section 72(u). However, Section 72(u) does not apply to:
•
A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person),
•
A contract acquired by the estate of a decedent by reason of such decedent’s death,
•
Certain contracts acquired with respect to tax-qualified retirement arrangements,
•
Certain contracts held in structured settlement arrangements that may qualify under Code Section 130, or
•
A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract’s purchase.
A non-natural Contract Owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code Section 72(u).
However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts.
Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person, the primary annuitant is treated as the “holder” in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a “holder.” In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the “holder.” However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements.
For tax years beginning after December 31, 2012, estates and trusts with gross income from annuities may be subject to an additional tax (Unearned Income Medicare Contribution) of 3.8%, depending upon the amount of the estate’s or trust’s adjusted gross income for the taxable year.
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. For tax years beginning after December 31, 2012, individuals with gross income from annuities may be subject to an additional tax (Unearned Income Medicare Contribution) of 3.8%, depending upon the amount of the individual’s modified adjusted gross income for the taxable year.
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.

APP TAX-3
 
 
 

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.
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.”
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.

APP TAX-4
 
 
 

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 recipient has attained the age of 591⁄2.
2. Distributions made on or after the death of the holder or, where the holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the recipient (or the joint lives or life expectancies of the recipient and the recipient’s designated Beneficiary).
5. Distributions made under certain annuities issued in connection with structured settlement agreements.
6. Distributions of amounts which are allocable to the “investment in the contract” prior to August 14, 1982 (see next subparagraph e.).
7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service.
If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 591⁄2 and (b) 5 years have elapsed since the first of these periodic payments.
e.
Special Provisions Affecting Contracts Obtained Through a Tax-Free Exchange of Other Annuity or Life Insurance Contracts Purchased Prior to August 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first from the amount of the “investment in the contract” prior to August 14, 1982 (“pre-8/14/82 investment”) carried over from the prior Contract, (2) then from the portion of the “income on the contract” (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining “income on the contract” and (4) last from the remaining “investment in the contract.” As a result, to the extent that such amount received or deemed received does not exceed such pre-8/14/82 investment, such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the “income on the contract” attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e.
f.
Required Distributions
i.
Death of Contract Owner or Primary Annuitant
Subject to the alternative election or Spouse beneficiary provisions in ii or iii below:
1.
If any Contract Owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death;
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

APP TAX-5
 
 
 

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, rather than the spouse of the Contract Owner, then such designated beneficiary is not permitted to continue the Contract as the succeeding Contract Owner. A designated beneficiary who is a same sex spouse will be permitted to continue the Contract as the succeeding Contract Owner.
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 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"). The IRS in Revenue Procedure 2011-38, indicated that a partial exchange made on or after October 24, 2011 will be treated as a tax-free exchange under Code Section 1035 if there is no distribution from or surrender of, either contract involved in the exchange within 180 days of such exchange. Amounts received as annuity payments for a period of at least 10 years on one or more lives will not be treated as distributions for this purpose. If a transfer does not meet the 180-day test, the IRS will apply general tax rules to determine the substance and treatment of the transfer.
We advise you to consult with a qualified tax adviser as to the potential tax consequences before attempting any partial exchanges.
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 nonqualified 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.

APP TAX-6
 
 
 

4. Tax Ownership of the Assets in the Separate Account.
In order for a variable annuity contract to qualify for tax income deferral, assets in the separate account supporting the contract must be considered to be owned by the insurance company, and not by the contract owner, for tax purposes. The IRS has stated in published rulings that a variable contract owner will be considered the “owner” of separate account assets for income tax purposes if the contract owner possesses sufficient incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the variable contract owner is treated as the “tax owner” of certain separate account assets, income and gain from such assets would be includable in the variable contract owner’s gross income. The Treasury Department indicated in 1986 that it would provide guidance on the extent to which contract owners may direct their investments to particular Sub-Accounts without being treated as tax owners of the underlying shares. Although no such regulations have been issued to date, the IRS has issued a number of rulings that indicate that this issue remains subject to a facts and circumstances test for both variable annuity and life insurance contracts.
Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7, indicates that, where interests in a partnership offered in an insurer’s separate account are not available exclusively through the purchase of a variable insurance contract (e.g., where such interests can be purchased directly by the general public or others without going through such a variable contract), such “public availability” means that such interests should be treated as owned directly by the contract owner (and not by the insurer) for tax purposes, as if such contract owner had chosen instead to purchase such interests directly (without going through the variable contract). None of the shares or other interests in the fund choices offered in our Separate Account for your Contract are available for purchase except through an insurer’s variable contracts or by other permitted entities.
Rev. Rul. 2003-91 indicates that an insurer could provide as many as 20 fund choices for its variable contract owners (each with a general investment strategy, e.g., a small company stock fund or a special industry fund) under certain circumstances, without causing such a contract owner to be treated as the tax owner of any of the Fund assets. The ruling does not specify the number of fund 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 Accont or take a settllement for a Personal Pension Account Payout.
With respect to the Peronal 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.

APP TAX-7
 
 
 

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. Nonresident Aliens and Foreign Entities
The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. persons (such as U.S. citizens or U.S. resident aliens). Purchasers (and payees such as a purchaser’s beneficiary) that are not U.S. persons (such as a Nonresident Alien) will generally be subject to U.S. federal income tax and withholding on taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required information and IRS tax forms (such as IRS Form W-8BEN) are submitted to us. If withholding tax applies, we are generally required to withhold tax at a 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. Foreign entities (such as foreign corporations, foreign partnerships, or foreign trusts) must provide the appropriate IRS tax forms (such as IRS Form W-8BEN-E or other appropriate Form W-8). If required by law, we may withhold 30% from any taxable payment in accordance with applicable requirements such as The Foreign Account Tax Compliance Act (FATCA) and applicable regulations. An updated Form W-8 is generally required to be submitted every three years. Purchasers may also be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser’s country of citizenship or residence.
G. Estate, Gift and Generation-Skipping Tax and Related Tax Considerations
Any amount payable upon a Contract Owner’s death, whether before or after the Annuity Commencement Date, is generally includable in the Contract Owner’s estate for federal estate tax purposes. Similarly, prior to the Contract Owner’s death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-Spouse beneficiary who either is (1) 371⁄2 or more years younger than a Contract Owner or (2) a grandchild (or more remote further descendant) 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 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

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rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract Owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan.
The following is only a general discussion about types of Qualified Plans for which the Contracts may be available. We are not the plan administrator for any Qualified Plan. The plan administrator or custodian, whichever is applicable, (but not us) is responsible for all Plan administrative duties including, but not limited to, notification of distribution options, disbursement of Plan benefits, handling any processing and administration of Qualified Plan loans, compliance with regulatory requirements and federal and state tax reporting of income/distributions from the Plan to Plan participants and, if applicable, beneficiaries of Plan participants and IRA contributions from Plan participants. Our administrative duties are limited to administration of the Contract and any disbursements of any Contract benefits to the Owner, annuitant or beneficiary of the Contract, as applicable. Our tax reporting responsibility is limited to federal and state tax reporting of income/distributions to the applicable payee and IRA contributions from the Owner of a Contract, as recorded on our books and records. If you are purchasing a Contract through a Qualified Plan, you should consult with your Plan administrator and/or a qualified tax adviser. You also should consult with a qualified tax adviser and/or Plan administrator before you withdraw any portion of your Contract Value.
The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law and any applicable Qualified Plan terms. Because of the complexity of these rules, Owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences.
We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future.
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 701⁄2 or dies, as described below, may result in imposition of a 50% additional tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the Owner reaches age 591⁄2 or dies is subject to a 10% additional 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

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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% additional tax for failure to make a full RMD, and to the 10% additional tax on premature distributions, as described below. In addition, the 10% additional tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract’s tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract’s tax qualification.
A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection.
If we do not serve as the Designated Financial Institution for your employer’s SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us.
d. Roth IRAs
Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract Owner’s lifetime. Generally, however, upon the Owner’s death the amount remaining in a Roth IRA must be distributed by the end of the fifth year after such death or distributed over the life expectancy of a designated beneficiary. Prior to January 1, 2018, the Owner of a Traditional IRA or other qualified plan assets could recharacterize a Traditional IRA into a Roth IRA under certain circumstances. Effective January 1, 2018, a Traditional IRA or other qualified plan cannot be recharacterized as a Roth IRA. 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 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

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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 or 100% of the employee’s “includable compensation” for the most recent full year of service, subject to other adjustments.
There are also legal limits on annual elective deferrals that a participant may be permitted to make under a TSA. In certain cases, such as when the participant is age 50 or older, those limits may be increased. A TSA participant should contact his plan administrator to determine applicable elective contribution limits. Special provisions may allow certain employees different overall limitations.
A TSA is subject to a prohibition against distributions from the TSA attributable to contributions made pursuant to a salary reduction agreement, unless such distribution is made:
a.
after the employee reaches age 591⁄2;
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. § 1.403(b)-8(c)(2).
Amounts may be rolled over tax-free from a TSA to another TSA or Qualified Plan (or from a Qualified Plan to a TSA) under certain circumstances, as described below. However, effective for TSA contract exchanges after September 24, 2007, Reg. § 1.403(b)-10(b) allows a TSA contract of a participant or beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA contract under that same TSA Plan, but only if all of the following conditions are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or beneficiary has an accumulated benefit after such exchange that is no less than such participant’s or beneficiary’s accumulated benefit immediately before such exchange (taking into account such participant’s or beneficiary’s accumulated benefit under both TSA contracts immediately before such exchange), (3) the second TSA contract is subject to distribution restrictions with respect to the participant that are no less stringent than those imposed on the TSA contract being exchanged, and (4) the employer for such TSA Plan enters into an agreement with the issuer of the second TSA contract under which such issuer and employer will provide each other from time to time with certain information necessary for such second TSA contract (or any other TSA contract that has contributions from such employer) to satisfy the TSA requirements under Code Section 403(b) and other federal tax requirements (e.g., plan loan conditions under Code Section 72(p) to avoid deemed distributions). Such necessary information could include information about the participant’s employment, information about other Qualified Plans of such employer, and whether a severance has occurred, or hardship rules are satisfied, for purposes of the TSA distribution restrictions. Consequently, you are advised to consult with a qualified tax advisor before attempting any such TSA exchange, particularly because it requires an agreement between the employer and issuer to provide each other with certain information. In addition, the same Regulation provides corresponding rules for a transfer from one TSA

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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 ($18,000 for 2017 and $18,500 for 2018). 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 701⁄2, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations).
Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. However, where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer’s general creditors under Code Section 457(b)(6).
5. Taxation of Amounts Received from Qualified Plans
Except under certain circumstances in the case of Roth IRAs 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, additional 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.
Additional Taxes for Qualified Plans
Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal additional taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions (“RMDs”). Additional 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 additional taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below.
a.
Additional 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 591⁄2. However, this 10% additional 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;

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(iv)
(except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans);
(v)
(except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse);
(vi)
not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year;
(vii)
certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty;
(viii)
made an account of an IRS levy on the Qualified Plan under Code Section 72(t)(2)(A)(vii); or
(ix)
made as a “direct rollover” or other timely rollover to an Eligible Retirement Plan, as described below.
In addition, the 10% additional 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% additional 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% additional tax will be applied retroactively to all the prior periodic payments (i.e., additional tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 591⁄2 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% additional tax rate is increased to 25%.
b.
RMDs and 50% Additional 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% additional 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 701⁄2, 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 701⁄2 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 701⁄2.
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

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may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% additional tax for RMDs if such additional RMD amount is not timely distributed.
7. Tax Withholding for Qualified Plans
Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any “elections out” and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an “eligible rollover distribution” from a Qualified Plan (described below in “Rollover Distributions”). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the “eligible rollover distribution,” to the extent it is not directly rolled over to an IRA or other Eligible Retirement Plan (described below in “Rollover Distributions”). Payees cannot elect out of this mandatory 20% withholding in the case of such an “eligible rollover distribution.”
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 additional 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

APP TAX-14
 
 
 

rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution additional 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% additional tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a “direct rollover” or a “60-day rollover” to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible).
Special rules also apply to transfers or rollovers for the benefit of a spouse (or ex-spouse) or a non-spouse designated beneficiary, Plan distributions of property, and obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS. The Katrina Emergency Tax Relief Act of 2005 (KETRA) allows certain amounts to be re-contributed within three years as a rollover contribution to a plan from which a KETRA distribution was taken. Other rules and exceptions may apply, so please consult with a qualified tax adviser.
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 591⁄2 are generally subject to the additional tax on premature distributions described above, unless such an amount received can qualify for an exception from such a additional 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 additional 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 701⁄2 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. § 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 additional tax, and any deemed contribution back into the contract may be subject to an excise tax on excess contributions, particularly after age 701⁄2. 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.


APP A-1
 
 
 

Appendix A — Examples *
Table of Contents
 
Page
Contingent Deferred Sales Charge (CDSC) Examples
Premium Based Charge Examples
Personal Pension Account (PPA) Examples
Maximum Anniversary Value (MAV) IV Examples
Return of Premium (ROP) IV Examples
Income Foundation Builder Examples
* All example calculations are rounded to the nearest dollar.


APP A-2
 
 
 

Contingent Deferred Sales Charge (CDSC) Examples
All CDSC Examples reflect gross withdrawals that deduct the CDSC and the Premium Based Charge from the amount of the partial Surrenders requested.
Example 1: Illustrates a partial Surrender that is equal to the AWA in a down market. Assume $100,000 was invested in the Sub-Accounts and a partial Surrender taken in Contract Year 2 equals $5,000.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Values immediately prior to the partial Surrender:
•
Deposits subject to CDSC are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $90,000
•
Earnings are $0
•
Your earnings are the greater of (1) Contract Value - Remaining Gross Premiums, or (2) $0
•
AWA is $5,000
•
Your AWA is the greater of (1) 5% of total Deposits subject to CDSC, or (2) earnings
Step 2: As the amount Surrendered is equal to the AWA, there are no CDSC incurred on the transaction. Also, there is no adjustment to Remaining Gross Premiums. The AWA has been exhausted for the duration of the Contract Year. There are no additional steps.
Values after the partial Surrender:
•
Deposits subject to CDSC are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $85,000
•
AWA is $0
Example 2: Illustrates a partial Surrender in excess of the AWA in a down market and impacts to subsequent AWA calculations. Assume $100,000 was invested in the Sub-Accounts and a partial Surrender taken in Contract Year 2 equals $5,000.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Values immediately prior to the first partial Surrender:
•
Deposits subject to CDSC are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $90,000
•
Earnings are $0
•
Your earnings are the greater of (1) Contract Value - Remaining Gross Premiums, or (2) $0
•
AWA is $5,000
•
Your AWA is the greater of (1) 5% of total Deposits subject to CDSC, or (2) earnings
Step 2: As the amount Surrendered is equal to the AWA, there are no CDSC incurred on the transaction. Also, there is no adjustment to Remaining Gross Premiums. The AWA has been exhausted for the duration of the Contract Year. There are no additional steps.
Values after the partial Surrender:
•
Deposits subject to CDSC are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $85,000
•
AWA is $0
Next, assume an additional Surrender during the same Contract Year equals $5,000. The Contract Value has changed due to market fluctuation, but no other transactions have occurred.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Step 2: Determines that the transaction is in excess of the AWA.
Values immediately prior to the second partial Surrender:
•
Deposits are $100,000

APP A-3
 
 
 

•
Remaining Gross Premiums are $100,000
•
Contract Value is $75,000
•
Earnings are $0
•
AWA is $0
Step 3: As the AWA is $0; the entire $5,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $6,667 ($100,000 x [$5,000/$75,000]). The Contract Value minus AWA is less than the Remaining Gross Premiums; therefore the amount subject to CDSC is greater than the amount withdrawn.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $333 [5% x $6,667].
Step 6: We deduct the CDSC of $333 from the excess amount $5,000. The amount paid to you is $4,667. Values after the second partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premium is $93,333 ($100,000 - $6,667)
•
Contract Value is $70,000
•
AWA is $0
Next, assume that a third partial Surrender is taken during Contract Year 3 for an amount equal to $15,000. The Contract Value has changed due to market fluctuation, but no other transactions have occurred.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Step 2: Determines that the transaction is in excess of the AWA. Values prior to the third partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premium is $93,333
•
Contract Value is $78,000
•
Earnings are $0
•
AWA is $5,000
Step 3: We deduct the available AWA of $5,000; the remaining $10,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $12,785 ($93,333 x [$10,000/$73,000]). The Contract Value minus AWA is less than the Remaining Gross Premiums; therefore the amount subject to CDSC is greater than the amount withdrawn.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $639 [5% x $12,785].
Step 6: We deduct the CDSC of $639 from the excess amount $10,000, and combine this with your AWA of $5,000. The amount paid to you is $14,361.
Values after the third partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premium is $80,548 ($93,333 - $12,785)
•
Contract Value is $63,000
•
AWA is $0

APP A-4
 
 
 

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 a partial Surrender is taken in Contract Year 1 for $10,000.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Values prior to the first partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $110,000
•
Earnings are $10,000
•
Your earnings are the greater of (1) Contract Value - Remaining Gross Premiums, or (2) $0
•
AWA is $10,000
•
Your AWA is the greater of (1) 5% of total Deposits subject to CDSC, or (2) earnings
Step 2: As the amount Surrendered is equal to the AWA, there are no CDSC incurred on the transaction. Also, there is no adjustment to Remaining Gross Premiums. The AWA has been exhausted for the duration of the Contract Year. There are no additional steps.
Values after the first partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premium is $100,000
•
Contract Value is $100,000
•
AWA is $0
Next, assume an additional partial Surrender is taken in Contract Year 1 for $10,000. The Contract Value has changed due to market fluctuation, but no other transactions have occurred.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Step 2: Determines that the transaction is in excess of the AWA. Values prior to the second partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $100,000
•
Earnings are $0
•
AWA is $0
Step 3: As the AWA is $0 the entire $10,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums. The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $10,000 ($100,000 x [$10,000/$100,000]). The Contract Value minus AWA is equal to the Remaining Gross Premiums; therefore the amount subject to CDSC is equal to the amount withdrawn.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $500 [5% x $10,000].
Step 6: We deduct the CDSC of $500 from the excess amount $10,000. The amount paid to you is $9,500. Values after the second partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $90,000 ($100,000 - $10,000)
•
Contract Value is $90,000
•
AWA is $0
Next, assume an additional partial Surrender is taken in Contract Year 3 for $15,000. The Contract Value has changed due to market fluctuation, but no other transactions have occurred.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.

APP A-5
 
 
 

Step 2 determines that the transaction is in excess of the AWA. Values prior to the third partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $90,000
•
Contract Value is $99,000
•
Earnings are $9,000
•
AWA is $9,000
Step 3: We deduct the available AWA of $9,000; the remaining $6,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $6,000 ($90,000 x [$6,000/$90,000]). The Contract Value minus AWA is equal to the Remaining Gross Premiums; therefore the amount subject to CDSC is equal to the amount withdrawn.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $300 [5% x $6,000].
Step 6: We deduct the CDSC of $300 from the excess amount $6,000, and combine this with your AWA of $9,000. The amount paid to you is $14,700.
Values after the third partial Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $84,000 ($90,000 - $6,000)
•
Contract Value is $84,000
•
AWA is $0
Example 4: Illustrates a full Surrender calculation with one of two Deposits out of the applicable CDSC schedule. Assume two Deposits were made for $100,000 each invested in the Sub-Accounts. The first was applied at the beginning of Contract Year 1, the second in the beginning of Contract Year 3. A full Surrender is taken in Contract Year 8.
Step 1: Your initial Deposit of $100,000 is available without a CDSC.
Values prior to the full Surrender:
•
Deposits are $200,000
•
Remaining Gross Premiums are $200,000
•
Remaining Gross Premium subject to CDSC is $100,000
•
Contract Value just prior to the full Surrender is $300,000
•
Earnings are $100,000
•
Your earnings are the greater of (1) Contract Value - Remaining Gross Premiums, or (2) $0
•
AWA is $200,000
•
Your AWA is the greater of (1) 5% of total Deposits subject to CDSC, or (2) earnings
Step 2: The full Surrender is in excess of the AWA of $200,000.
Step 3: We deduct the available AWA; the remaining $100,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $100,000 ($100,000 x [$100,000/$100,000]). This is equal to the entire Remaining Gross Premiums subject to CDSC.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 3%, as determined by Eligible Investments at the time of contribution, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $3,000 [3% x $100,000].
Step 6: We deduct the CDSC of $3,000 from the excess amount $100,000, and combine this with your AWA of $200,000. The amount paid to you is $297,000.

APP A-6
 
 
 

Values after the full Surrender:
•
Contract Value is $0
The Contract is terminated.
Example 5: Illustrates a full Surrender calculation in a down market. Assume $100,000 is invested in the Sub-Accounts, and a full Surrender occurs in Contract Year 3.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Step 2: Determines that the full Surrender is in excess of the AWA. Values prior to the full Surrender:
•
Deposits are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value just prior to the full Surrender is $50,000
•
Earnings are $0
•
Your earnings are the greater of (1) Contract Value - Remaining Gross Premiums, or (2) $0
•
AWA is $5,000
•
Your AWA is the greater of (1) 5% of total Deposits subject to CDSC, or (2) earnings
Step 3: We deduct the available AWA of $5,000; the remaining $45,000 is in excess of the AWA.
Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Remaining Gross Premiums.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Contract Value immediately prior to the withdrawal - AWA
The amount subject to CDSC is $100,000 ($100,000 x [$45,000/$45,000]). This is equal to the entire Remaining Gross Premiums subject to CDSC.
Your Remaining Gross Premiums are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $5,000 [5% x $100,000].
Step 6: We deduct the CDSC of $5,000 from the excess amount $45,000, and combine this with your AWA of $5,000. The amount paid to you is $45,000.
Values after the full Surrender:
•
Contract Value is $0
The Contract is terminated.
Example 6: Illustrates a commutation of the PPA Annuity Payout Value. The same concept will apply to the Commuted Value of period certain Annuity Payouts. Assume $100,000 is invested into the PPA and you commence PPA Payouts. One PPA Payout has previously occurred for $420. Then, a commutation of all remaining Annuity Payout Value occurs in Contract Year 1, and life contingent Payouts are waived.
Step 1 does not apply because Deposits have not been invested for longer than the applicable CDSC as referenced in the CDSC section of your prospectus.
Step 2: Determines that the Annuity Payout Value subject to commutation is in excess of the AWA.
Values prior to the full commutation:
•
Contract Value is $0
•
Accumulation Balance is $0
•
Annuity Payout Value is $99,826 ($100,000 plus one month’s proportion of the Credited Interest Rate less prior PPA Payout of $420)
•
Deposit subject to CDSC is $100,000
•
AWA is $4,580
•
Your AWA is 5% of total Deposits subject to CDSC, or (2) earnings
Upon the commutation of remaining PPA Payouts, we reduce the Annuity Payout Value by an adjustment that takes into account the current value of the future Payouts you would have received during your Guaranteed Payout Duration using a discount rate determined in accordance with the factors described in the prospectus. For this commutation, the adjustment is $31,956. Please refer to PPA Example 4a in this Appendix A for a more complete description of commutation.
The resulting value of $67,871 is the Commuted Value for the purposes of CDSC calculation.
Step 3: We deduct the available AWA of $4,580; the remaining $63,291 is in excess of the AWA.

APP A-7
 
 
 

Step 4: We determine the amount that is subject to CDSC by applying a proportional factor to the Deposits still subject to CDSC.
The factor is derived as [A/B]:
A =
The amount in Step 3
B =
Commuted Value of all Annuity Payout Value + Accumulation Balance immediately prior to the withdrawal - AWA
The amount subject to CDSC is $100,000 ($100,000 x [$63,291 /$63,291]). This is equal to the entire Deposit subject to CDSC. Your Deposits, subject to CDSC (as used in the context of Annuity Payouts) are adjusted dollar-for-dollar for the amount subject to CDSC.
Step 5: The applicable CDSC is 5%, as determined by Eligible Investments at the time of Deposit, of the amount subject to CDSC. We apply this to the amount subject to CDSC as determined in Step 4, and the resulting CDSC incurred is $5,000.
Step 6: We deduct the CDSC of $5,000 from the excess amount $63,291, and combine this with your AWA of $4,580. The amount paid to you is $62,871.
Values after the full commutation:
•
Annuity Payout Value is $0
The Contract is terminated.
Example 7: Illustrates the reallocation of Remaining Gross Premium (as used in the context of Annuity Payouts) upon a transfer to the PPA. Assume a transfer of funds equal to $20,000 from Contract Value to the PPA in Contract Year 2.
Values immediately prior to the transfer:
•
Deposits are $100,000
•
Remaining Gross Premiums are $100,000
•
Contract Value is $120,000
•
Accumulation Balance is $0
Remaining Gross Premiums are reallocated proportionally upon a transfer of funds from the Contract Value to the PPA as the portion of Deposits still subject to CDSC.
The amount reallocated is derived by [A/B]:
A =
The amount of the transfer
B =
The Contract Value immediately prior to the transfer
For this transfer, $16,667 is reallocated from the Contract Value.
After the Transfer to the PPA
•
Deposits allocated to Contract Value are $83,333
•
Remaining Gross Premiums are $83,333
•
Deposits subject to CDSC allocated to the PPA are $16,667
•
Contract Value is $100,000
•
Accumulation Balance is $20,000
Generally, the amount subject to CDSC has remained constant.
Premium Based Charge Examples:
Example 1: Assume that you intend to make three Deposits within ninety days after the Contract is issued. The expected amounts, in the order received, are $40,000, $180,000, and $35,000.
When you provide the Total Expected Premium amount of $255,000, we will assign to each Deposit, regardless of the amount of the individual Deposit, the CDSC schedule and Premium Based Charge applicable to a single Deposit amount within the range of $250,000 - $499,999. In this case, however, if the actual amount received during the first ninety days is less than the $250,000, we will reassign these charges based on the actual amount received.
Example 2: Assume that your initial Deposit is equal to $75,000, and the CDSC schedule and Premium Based Charge that correspond to that amount are assigned. You then make an additional Deposit of $90,000 at the beginning of Month 7.
The CDSC schedule and Premium Based Charge assigned to this new Deposit will be based on your Eligible Investments amount assuming you have made no Surrenders and your Contract Value has decreased slightly, and your Eligible Investments is the sum of your two Deposits, or $165,000. This amount is used for the purposes of assigning the CDSC schedule and the Premium Based Charge for this second Deposit only.

APP A-8
 
 
 

Example 3: Assume that your initial Deposit is equal to $100,000 and the AWA is $5,000. On Day 200 of Contract Year 2 you make a partial Surrender of $9,000.
The amount of Remaining Gross Premium subject to Premium Based Charge is $4,000, and based on the breakpoint assigned, your Premium Based Charge is 0.50%. The Premium Based Charge assessed is pro-rated for the number of days (200) since the last Contract Anniversary. Therefore the Premium Based Charge is $10.96 [( $4,000 x 0.50% ) x ( 200 / 365 )].
Example 4: Assume that on two separate occasions during Contract Year 1 you make a Deposit of $75,000, for a total Deposits amount of $150,000. Based on the Eligible Investments at the time of each Deposit, the Premium Based Charge assigned to the first $75,000 is 0.64%, and the Premium Based Charge assigned to the second $75,000 is 0.50%. Assume your AWA is $11,250. On Day 200 of Contract Year 2, you make a partial Surrender of $16,250.
The amount of Remaining Gross Premium subject to Premium Based Charge is $5,000, and because these amounts are reduced on a first in, first out basis, your Premium Based Charge on this transaction is 0.64%. The Premium Based Charge assessed is pro-rated for the number of days (200) since the last Contract Anniversary. Therefore the Premium Based Charge is $17.53 [( $5,000 x 0.64% ) x ( 200 / 365 )].
Example 5: Assume that on two separate occasions you make a Deposit of $75,000, for a total Deposits amount of $150,000. Based on the Eligible Investments at the time of each Deposit, the Premium Based Charge assigned to the first $75,000 is 0.64%, and the Premium Based Charge assigned to the second $75,000 is 0.50%. On Day 100 of Contract Year 3, you fully Surrender your Contract or you annuitize your entire Contract Value.
The amount of Remaining Gross Premium subject to Premium Based Charge is the entire $150,000. The Premium Based Charge is calculated by applying the assigned percentage to the applicable amount of Remaining Gross Premium, and then the amount is pro-rated for the number of days (100) since the last Contract Anniversary. Therefore the Premium Based Charge is $234.25 [( $75,000 x 0.64% ) x ( 100 / 365 )] + [( $75,000 x 0.50% ) x ( 100 / 365 )] or [131.51 + 102.74].
Example 6: Assume the same facts as in Example 5, but instead you annuitize your entire Contract Value on Day 100 of Contract Year 3.
The amount of Remaining Gross Premium subject to Premium Based Charge is the entire $150,000. The Premium Based Charge is calculated by applying the assigned percentage to the applicable amount of Remaining Gross Premium, and then the amount is pro-rated for the number of days (100) since the last Contract Anniversary. Therefore the Premium Based Charge is $234.25 [( $75,000 x 0.64% ) x ( 100 / 365 )] + [( $75,000 x 0.50% ) x ( 100 / 365 )] or [131.51 + 102.74].
Personal Pension Account (PPA) Examples
Effective October 3, 2014, the Personal Pension Account will be closed to new Personal Pension Account Contributions (i.e., subsequent Premium Payments and transfers of Contract Value).* Any sums allocated to the Personal Pension Account as of the close of business on October 3, 2014, can remain in the Personal Pension Account and with respect to these sums Contract Owners can continue to utilize the benefits and features of the Personal Pension Account as described in your Contract (including applicable riders).
If you are enrolled in any program (e.g., Dollar Cost Averaging Program) that automatically allocates subsequent contributions (Premium Payments) and/or transfers of Contract Value to the Personal Pension Account you MUST provide us with alternative allocation instructions prior to October 3, 2014; otherwise your program will automatically terminate on October 3, 2014*.
*
Contract Owners with Contracts issued in CT, FL, NJ and WA may continue to allocate new Personal Pension Account Contributions after October 3, 2014 and any programs that utilize the Personal Pension Account may remain in place. The Personal Pension Account was never available for Contracts issued in New York and Oregon.
Example 1: Standard Illustrations with a Partial Income Stream - Assume the initial PPA Contribution is equal to $100,000 (no sums are invested in the Fixed Accumulation Feature or Sub-Accounts). Assume that in Contract Year 7, the Owner requested to commence an income stream based on $50,000 of Annuity Payout Value during the Guarantee Window. For the purposes of this Example, the Contract Owner chose a Target Income Age of 64. Hypothetical Credited Interest Rate and Payout Purchase Rates are illustrated below.
A.
To understand how your guaranteed Payout Purchase Rates are set during your Guarantee Window (shaded area), see guaranteed Payout Purchase Rates in Contract Years 1 through 7. In this Example, the guaranteed Payout Purchase Rate is locked in at Contract Year 7 when PPA 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.

APP A-9
 
 
 

C.
Please refer to the last column in Contract Year 23 for an example of how PPA Payouts will continue for the life of the Annuitant, Owner or joint Owner even though Annuity Payout Value has been exhausted.
 


Contract
Year
Age


Benefit
Balance
Credited Interest Rate


Accumulation
Balance
Annuity Payout Value
Guaranteed Payout Rates (per 1000)
PPA
 Payouts(2)
0*
60
$100,000
5.00%
$100,000
 
 
 
GuaranteeWindow

1
61
105,000
5.00%
105,000
 
61.99
 
2
62
110,250
5.00%
110,250
 
62.33
 
3
63
115,763
5.00%
115,763
 
62.72
 
4
64
121,551
5.00%
121,551
 
63.16
 
5
65
127,628
5.00%
127,628
 
63.65
 
6
66
134,010
5.00%
134,010
 
64.17
 
7
67
140,710
5.00%
90,710(1)
$50,000
64.73
$3,237
 
8
68
142,009
5.00%
95,246
46,763
 
3,237
9
69
143,535
5.00%
100,008
43,527
 
3,237
10
70
145,299
3.00%
105,008
40,290
 
3,237
11
71
145,212
3.00%
108,158
37,054
 
3,237
12
72
145,220
3.00%
111,403
33,817
 
3,237
13
73
145,326
3.00%
114,745
30,581
 
3,237
14
74
145,532
3.00%
118,188
27,344
 
3,237
15
75
145,841
3.00%
121,733
24,108
 
3,237
16
76
146,256
3.00%
125,385
20,871
 
3,237
17
77
146,781
3.00%
129,147
17,634
 
3,237
18
78
147,419
3.00%
133,021
14,398
 
3,237
19
79
148,173
3.00%
137,012
11,161
 
3,237
20
80
149,047
1.50%
141,122
7,925
 
3,237
21
81
147,927
1.50%
143,239
4,688
 
3,237
22
82
146,839
1.50%
145,388
1,452
 
3,237
23
83
147,568
1.50%
147,568
0
 
3,237
* Contract Year “0” represents your Contract issue date.
(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 PPA Payouts.
(2)
These PPA Payouts will continue for the life of the Annuitant, Owner or joint Owner pursuant to Annuity Payout Option Two.

APP A-10
 
 
 

Example 2: Subsequent PPA Deposits - Assume a $100,000 initial PPA Contribution was made at a time when we declared a hypothetical Credited Interest Rate of 4% and that a $15,000 subsequent PPA Contribution was made when we declared a hypothetical Credited Interest Rate of 3.75%. Your Benefit Balance would increase as follows:
Age
 
PPA
Contribution
Credited
Interest
Rate
 
PPA
Contribution
Credited
Interest
Rate
Total Benefit Balance
55
First
Deposit
$100,000
 
Second
Deposit
 
 
$
100,000

56
 
4.00%
 
 
104,000

57
 
4.00%
 
 
108,160

58
 
4.00%
 
 
112,486

59
 
4.00%
$15,000
 
131,986

60
 
4.00%
 
3.75%
137,228

61
 
4.00%
 
3.75%
142,678

62
 
4.00%
 
3.75%
148,345

63
 
4.00%
 
3.75%
154,237

64
 
4.00%
 
3.75%
160,362

65
 
4.00%
 
3.75%
166,732

Example 3a: Benefit Balance Transfer - The following example illustrates the impact on various values associated with the Contract when a transfer from the Sub-Accounts to the PPA 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 PPA in which event:
 
Transfer from
Sub-Accounts to the
PPA
 
Before Value
After Value
Sub-Account Value (assumed)
$
130,000

$
125,000

ROP IV Transfer Limit
$
5,000

$
0

MAV IV Transfer Limit
$
5,350

$
350

ROP IV
$
100,000

$
95,000

MAV IV - Anniversary Value (Before Value is assumed)
$
107,000

$
102,000

MAV IV - Premium Payments
$
100,000

$
95,000

Benefit Balance
$
0

$
5,000

•
The Sub-Account Value is reduced by the amount of the transfer ($5,000).
•
As a result of the transfer, the ROP IV is reduced. As the amount of the transfer did not exceed the PPA Transfer Limit, the $5,000 transfer results in a dollar-for-dollar reduction in the Premium Payments component of the ROP IV value.
•
As a result of the transfer, the MAV IV Anniversary Value and Premium Payments components are both reduced. As the $5,000 transfer did not exceed the PPA Transfer Limit, both are reduced by the amount of the transfer.
•
Since there were no sums previously invested in the PPA, the Benefit Balance is increased by the amount of the transfer ($5,000).
Example 3b: Transfer from the Benefit Balance - The following example illustrates the impact on various values associated with the Contract when a transfer from the PPA to the Sub-Accounts occurs. Assume that the Owner makes a PPA Contribution of $100,000 and then elects to transfer the maximum available amount from the PPA to the Sub-Accounts. The 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
•
Column A equals 4% of the Accumulation Balance as of the prior Contract Anniversary. Assume that the $100,000 PPA 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.

APP A-11
 
 
 

•
Column C equals the amount of Accumulation Balance transferred to Contract Value during the most recent full Contract Year.
 
Transfer from
PPA to the
Sub-Accounts
End of Year 1
 
Before Value
After Value
Sub-Account Value (assumed)
$
104,000

$
108,120

Annual Withdrawal Amount
$
5,000

$
5,206

ROP IV
$
100,000

$
104,120

MAV IV - Anniversary Value (Before Value is assumed)
$
100,000

$
104,120

MAV IV - Premium Payments
$
100,000

$
104,120

Benefit Balance
$
103,000

$
98,880

•
The Sub-Account Value is increased by the amount of the transfer ($4,120).
•
The Remaining Gross Premium associated with the Sub-Accounts is increased by the proportional amount of the Contributions to the PPA still subject to CDSC. The proportional amount is equal to the transfer from the PPA divided by the Accumulation Balance. ($4,120/$103,000) = $4,000.
•
The ROP IV is increased dollar-for-dollar for the amount of the transfer ($4,120).
•
MAV IV Anniversary Value and Premium Payments are both increased dollar-for-dollar for the amount of the transfer ($4,120).
•
The Benefit Balance is reduced by the amount of the transfer ($4,120).
Example 4a: Full Commutation with Commuted Value - Assume that the Owner desires to start taking all PPA Payouts and then fully commute the PPA Payouts in Contract 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 PPA Payouts will resume after the Guaranteed Payout Duration (assuming that all relevant persons are alive). Also, assume that the initial PPA Contribution is equal to $100,000 and no Deposits have been invested in the Fixed Accumulation Feature or Sub-Accounts.
 

Contract
Year*
Age

Benefit
Balance

Accumulation
Balance
Credited
Interest
Rate
Annuity Payout Value
Payout
Purchase
Rates
(per 1000)(1)

Commuted
Value
Payouts
0
60
$100,000
$100,000
5.00%
$
0

61.68
 
 
GuaranteeWindow

1
61
105,000
105,000
5.00%
0

61.99
 
$
0

2
62
110,250
110,250
5.00%
0

62.33
 
0

3
63
115,763
115,763
5.00%
0

62.72
 
0

4
64
121,551
121,551
5.00%
0

63.16
 
0

5
65
127,628
127,628
5.00%
0

63.65
 
0

6
66
134,010
134,010
5.00%
0

64.17
 
0

7
67
140,710
140,710
5.00%
0

64.73
 
0


APP A-12
 
 
 

 
8
68
147,746
147,746
5.00%
0

65.31
 
0

9
69
155,133
155,133
5.00%
0

65.91
 
0

10
70
162,889
162,889
3.00%
0

66.56
 
0

11
71
167,776
167,776
3.00%
0

69.14
 
0

12
72
172,809
172,809
3.00%
0

71.94
 
0

13
73
177,994
177,994
3.00%
0

74.99
 
0

14
74
183,334
183,334
3.00%
0

78.32
 
0

15
75
188,834
188,834
3.00%
0

81.96
 
0

16
76
194,499
194,499
3.00%
0

85.92
 
0

17
77
200,333
200,333
3.00%
0

90.11
 
0

18
78
206,343
206,343
3.00%
0

94.63
 
0

19
79
212,534
212,534
3.00%
0

99.55
 
0

20
80
218,910
0(2)
1.50%
218,910

111.11(4)
$165,439(5)
0(6)

21
81
n/a
n/a
n/a(3)
n/a

n/a
n/a
n/a

22
82
n/a
n/a
n/a
n/a

n/a
n/a
n/a

23
83
n/a
n/a
n/a
n/a

n/a
n/a
n/a

24
84
n/a
n/a
n/a
n/a

n/a
n/a
n/a

25
85
n/a
n/a
n/a
n/a

n/a
n/a
n/a

26
86
n/a
n/a
n/a
n/a

n/a
n/a
n/a

27
87
n/a
n/a
n/a
n/a

n/a
n/a
n/a

28
88
n/a
n/a
n/a
n/a

n/a
n/a
n/a

29
89
n/a
n/a
n/a
n/a

n/a
n/a
24,323(7)

30
90
n/a
n/a
n/a
n/a

n/a
n/a
24,323(7)

* Contract Year “0” represents your Contract issue date.
(1)
Payout Purchase Rates are only guaranteed if PPA 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 Purchase Rates could be when commencing PPA Payouts outside of the Guarantee Window. These rates may be as high as, but will never be greater than, the Payout Purchase Rates guaranteed for PPA Payouts we set at the time of your PPA Contributions. Payout amounts will be no lower than the non-forfeiture amount described in the Owner’s contract.
(2)
The Accumulation Balance is depleted to $0 based on being converted to Annuity Payout Value. CDSCs and Premium tax are not shown in this Example.
(3)
Interest is no longer credited under the PPA.
(4)
Hypothetical Payout Purchase Rates are used because PPA Payouts and commutation may occur outside of the Guarantee Window.
(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 PPA Payout(s) associated with the Annuity Payout Value over the Guaranteed Payout Duration (i.e., $218,910/$24,323 = 9 years) calculated using this discount rate.
(6)
The PPA Payout is derived by multiplying the Annuity Payout Value by the Payout Purchase Rate applicable to the year in which commutation is requested and dividing by 1,000. In this case, $218,910*$111.11/1,000 = $24,323. However, in this example, PPA Payouts are commuted and paid to the Owner in one lump sum. Life contingent PPA Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living and have not terminated the Contract as illustrated in Contract Years 29 and 30.
(7)
Lifetime PPA Payouts resume because in this Example the Annuitant is still living. The Owner would not receive these lifetime PPA Payouts if he or she terminated the Contract.

APP A-13
 
 
 

Example 4b: Partial Commutation with Commuted Value - Assume that the Owner desires to start taking PPA Payouts and commute half of the PPA Payouts in Contract Year 20, which is outside of their Guarantee Window. In this Example, the Guarantee Window is represented by the shaded area in Contract Years 1 though 7. Contract Year 20 Before illustrates how the Annuity Payout Value is split in half to serve as the basis for PPA Payouts and the Commuted Value. Contract Year 20 After illustrates the amounts paid to the Owner in the form of PPA Payouts and Commuted Value. The Owner does not terminate their Contract and therefore full PPA 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.
Contract
Year*
Age
Benefit
Balance
Accumulation
Balance
Credited
Rate
Annuity
Payout
Value 1
Annuity
Payout
Value 2
Commuted
Payout Rates
(per 1000)(1)
Payouts
0
60
$
100,000

$100,000
5.00%
$
0

$
0

 
61.68
 
1
61
105,000

105,000
5.00%
0

0

 
61.99
$
0

2
62
110,250

110,250
5.00%
0

0

 
62.33
0

3
63
115,763

115,763
5.00%
0

0

 
62.72
0

4
64
121,551

121,551
5.00%
0

0

 
63.16
0

5
65
127,628

127,628
5.00%
0

0

 
63.65
0

6
66
134,010

134,010
5.00%
0

0

 
64.17
0

7
67
140,710

140,710
5.00%
0

0

 
64.73
0

8
68
147,746

147,746
5.00%
0

0

 
65.31
0

9
69
155,133

155,133
5.00%
0

0

 
65.91
0

10
70
162,889

162,889
3.00%
0

0

 
66.56
0

11
71
167,776

167,776
3.00%
0

0

 
69.14
0

12
72
172,809

172,809
3.00%
0

0

 
71.94
0

13
73
177,994

177,994
3.00%
0

0

 
74.99
0

14
74
183,334

183,334
3.00%
0

0

 
78.32
0

15
75
188,834

188,834
3.00%
0

0

 
81.96
0

16
76
194,499

194,499
3.00%
0

0

 
85.92
0

17
77
200,333

200,333
3.00%
0

0

 
90.11
0

18
78
206,343

206,343
3.00%
0

0

 
94.63
0

19
79
212,534

212,534
3.00%
0

0

 
99.55
0

20 Before
80
218,910

0(2)
1.50%
109,455(4)

109,455(4)

 
 
 
20 After
80
97,293

0(2)
n/a
97,293(5)

0

$82,720(7)
111.11(7)
12,162(8)

21
81
85,131

n/a
n/a(3)
85,131

0

n/a
n/a
12,162

22
82
72,969

n/a
n/a
72,969

0

n/a
n/a
12,162

23
83
60,807

n/a
n/a
60,807

0

n/a
n/a
12,162

24
84
48,645

n/a
n/a
48,645

0

n/a
n/a
12,162

25
85
36,483

n/a
n/a
36,483

0

n/a
n/a
12,162

26
86
24,321

n/a
n/a
24,321

0

n/a
n/a
12,162

27
87
12,159

n/a
n/a
12,159

0

n/a
n/a
12,162

28
88
0

n/a
n/a
0

0

n/a
n/a
12,162

29
89
0

n/a
n/a
0

0

n/a
n/a
24,323(9)

30
90
0

n/a
n/a
0

0

n/a
n/a
24,323

31
91
0

n/a
n/a
0

0

n/a
n/a
24,323

* Contract Year “0” represents your Contract issue date.
(1)
Payout Purchase Rates are only guaranteed if PPA Payouts begin within the Guarantee Window. PPA 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 Purchase Rates could be when commencing PPA Payouts outside of the

APP A-14
 
 
 

Guarantee Window. These rates may be as high as, but will never be greater than, the Payout Purchase Rates guaranteed for PPA Payouts we set at the time of your PPA 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 PPA.
(4)
In Contract Year 20, the Owner elected to commute half of their Annuity Payout Value and receive the remaining half in the form of PPA Payouts. Thus, the Accumulation Balance of $218,910 is split in half. $109,455 is converted into Annuity Payout Value and will serve as the basis for PPA 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 PPA Payout of $12,162, leaving an Annuity Payout Value of $97,293 remaining.
(6)
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 PPA Payout(s) associated with the Annuity Payout Value over the remaining Guaranteed Payout Duration (i.e., $109,455/$12,162 = 9) calculated using the discount rate.
(7)
A hypothetical Payout Purchase Rate is used because PPA Payouts and commutation occur outside of the Guarantee Window.
(8)
The PPA Payout is derived by multiplying the Annuity Payout Value by the appropriate Payout Purchase Rate and dividing by 1,000. In this case, $109,455*111.11/1,000 = $12,162. However, in this example, half of the PPA Payouts are commuted and paid to the Owner in one lump sum. Life contingent PPA Payouts may resume after the Guarantee Payout Duration if the Annuitant and Owner are living as illustrated in Contract Years 29, 30, and 31.
(9)
In this case, the lifetime PPA Payouts for each Annuity Payout Value is $12,162 ($109,455*111.11/1000 = $12,162). When combined, these lifetime PPA Payouts equal $24,323. Lifetime PPA Payouts begin because in this Example the Annuitant is still living. The Owner would not receive these lifetime PPA Payouts if he or she terminated the Contract.
Maximum Anniversary Value (MAV) IV Examples
This Death Benefit is equal to the greatest of A, B or C:
A =
Contract Value;
B =
Premium Payments adjusted for partial Surrenders; and
C =
Maximum Anniversary Value.
Example 1: Assume your initial Premium Payment is $100,000.


Contract
Year
Contract
Value(1)
“A”
PPA
Transfer
Limit(2)
Total
Premium Payments
(adjusted by
Surrenders)
“B”
Contract
Value Performance(1)
Anniversary
Value(3)
MAV at End of Each Contract Year
“C”
Guaranteed
Minimum
Death Benefit
at End of
Each Contract Year
Greatest of “A”, “B”,
and “C”
0*
$100,000
$5,000
$100,000
0.00%
—
—
$100,000
1
102,120
5,106
100,000
2.12%
$102,120
$102,120
102,120
2
107,001
5,350
100,000
4.78%
107,001(4)
107,001
107,001
3
105,664
5,350
100,000
-1.25%
1,056,634
107,001
107,001
4
96,260
5,350
100,000
-8.90%
96,260
107,001
107,001
5
106,425
5,350
100,000
10.56%
106,425
107,001
107,001
* Contract Year “0” represents your Contract issue date.
(1)
Assumed 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.
(2)
The Transfer Limit set at each Contract Anniversary will equal 5% of the greater of Premium Payments or MAV.
(3)
Anniversary Value each year is first established as the Contract Value on that Anniversary and is later adjusted by Premium Payments, transfers to and from the PPA, and partial Surrenders, if applicable.
(4)
Is the highest Anniversary Value and therefore is the MAV.

APP A-15
 
 
 

Example 2: 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 3 you transfer $7,850, an amount equal to the PPA Transfer Limit, to the PPA. In Contract Year 5 you take a partial Surrender for $10,000.
Contract
Year
Contract Value
“A”
PPA Transfer
Limit(2)
Premium
Payments
 “B”
Anniversary
Value(3)
MAV
at End of Each Contract Year(1)
"C"
Minimum
Guaranteed Death
Benefit at End of Each Contract Year Greatest of
“A”, “B”, and “C”
0*
$100,000
$5,000
$100,000
—
—
$100,000
1
102,120
5,000
100,000
$ 133,989(4)(5)(6)
$102,120
102,120
2
157,001
5,106
150,000(7)
138,522(4)(5)(6)(8)
157,001
157,001
3
147,189
7,850
142,150(6)
136,700(5)(6)
149,151(4)
149,151
4
134,089
7,458
142,150
124,533(5)
149,151
149,151
5
130,324
7,458
132,020(5)
130,324
138,522
138,522(8)
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value, as well as subsequent Premium Payment, transfer to or from PPA, 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.
(2)
The Transfer Limit set at each Contract Anniversary will equal 5% of the greater of Premium Payments or MAV.
(3)
Anniversary Value each year is first established as the Contract Value on that Anniversary and is later adjusted by subsequent Premium Payments, transfers to and from the PPA, and partial Surrenders, if applicable.
(4)
Contract Year 1 and 2 Anniversary Values are adjusted by the subsequent Premium Payment of $50,000.
(5) The $10,000 partial Surrender results in a factor of 0.92873 being applied to Premium Payments as well as all previous Anniversary Values. The factor of 0.92873 is derived by 1-(partial Surrender $10,000 / Contract Value prior to Surrender $140,325).
(6) The $7,850 transfer to the PPA results in a dollar-for-dollar reduction to Premium Payments as well as all previous Anniversary Values.
(7) Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000.
(8) Is the MAV, adjusted by subsequent Premium Payments, transfers to or from PPA, and partial Surrenders.
Example 3: Assume the same facts as Example 2, except that in Contract Year 3 you transfer $10,000, an amount in excess of the PPA Transfer Limit, to the PPA.
Contract
Year
Contract
Value “A”(1)
PPA
Transfer
Limit(2)
Premium
Payments
“B”
Anniversary
Value(3)
MAV
at End of Each Contract Year(1)
"C"
Minimum
Guaranteed
Death Benefit
at End of
Each Contract Year Greatest of “A”, “B”,
and “C”
0*
$100,000
$5,000
$100,000
—
—
$100,000
1
102,120
5,000
100,000
$ 132,559(4)(5)(6)
$102,120
102,120
2
157,001
5,106
150,000(7)
136,334(4)(5)(6)(8)
157,001
157,001
3
145,039
7,850
140,074
134,550(5)
146,973
146,973
4
132,130
7,349
140,074
122,575(5)
146,973
146,973
5
128,274
7,349
129,943(5)
128,274
136,344
136,344(8)
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value, as well as subsequent Premium Payment, transfer to or from PPA, 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.
(2)
The Transfer Limit set at each Contract Anniversary will equal 5% of the greater of Premium Payments or MAV.
(3)
Anniversary Value each year is first established as the Contract Value on that anniversary and is later adjusted by subsequent Premium Payments, transfers to and from the PPA, and partial Surrenders, if applicable.
(4)
The Contract Year 1 and 2 Anniversary Values are adjusted by the subsequent Premium Payment of $50,000.

APP A-16
 
 
 

(5)
The $10,000 partial Surrender results in a factor of 0.92768 being applied to Premium Payments as well as all previous Anniversary Values. The factor of 0.92768 is derived by 1-(partial Surrender $10,000 / Contract Value prior to Surrender $138,274).
(6)
The $10,000 transfer to the PPA results in a dollar-for-dollar reduction to Premium Payments as well as all previous Anniversary Values up to the PPA Transfer Limit of $7,850 and then a factor of 0.98539 is applied. The factor of 0.98539 is derived by 1-(A/(B-C)); A is the amount transferred in excess of the PPA Transfer Limit $2,150; B is the Contract Value Prior to the Transfer $155,039; and C is the PPA Transfer Limit less any previous transfers to the PPA that Contract Year $7,850.
(7)
Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000.
(8)
Is the MAV adjusted by subsequent Premium Payments, transfers to or from PPA, and partial Surrenders.
Example 4: Assume the Maximum Anniversary Value is $102,120 and Premium Payments are $100,000. The current rider charge is 0.75%.
The current rider charge is assessed on the greater of the MAV or Premium Payments; therefore, the rider charge is $766, or $102,120 x 0.75%.
Return of Premium (ROP) IV Examples
Example 1: Assume your initial Premium Payment is $100,000. In Contract Year 2 you apply a subsequent Premium Payment of $50,000. In Contract Year 3 you transfer $7,500, an amount equal to the PPA Transfer Limit, to the PPA. In Contract Year 5 you take a partial Surrender for $10,000.
Contract
Year
Contract
Value(1)
PPA
Transfer
Limit(6)
Premium
Payments
Guaranteed
Minimum
Death Benefit
at End of
Each Contract Year
0*
$100,000
$0
$100,000
$100,000
1
102,120
5,000
100,000
102,120
2
157,001
5,000
150,000(3)
157,001
3
147,539
7,500
142,500(4)
147,539
4
134,408
7,125
142,500
142,500
5
130,658
7,125
132,369(5)
132,369
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value, as well as subsequent Premium Payment and partial Surrender activity.
(2)
The Transfer Limit set at each Contract Anniversary will equal 5% of Premium Payments.
(3)
Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000.
(4)
Premium Payments of $150,000 are adjusted by the transfer to the PPA of $7,500.
(5)
The $10,000 partial Surrender results in a factor of 0.92890 being applied to Premium Payments. After multiplying the factor of 0.92890 to $142,500, the adjusted Premium Payments equal $132,369. The factor of 0.92890 is derived by 1-(partial Surrender $10,000 / Contract Value prior to Surrender $140,658).
Example 2: Assume the same facts as the example above, except that in Contract Year 3 you transfer $10,000, an amount in excess of the PPA Transfer Limit, to the PPA.
Contract
Year
Contract
Value(1)
PPA
Transfer
Limit(2)
Premium
Payments
Minimum
Guaranteed
Death Benefit
at End of
Each Contract Year
0*
$100,000
$0
$100,000
$100,000
1
102,120
5,000
100,000
102,120
2
157,001
5,000
150,000(3)
157,001
3
145,039
7,500
140,085(4)
145,039
4
132,130
7,004
140,085
140,085
5
128,274
7,004
129,954(5)
129,954
* Contract Year “0” represents your Contract issue date.

APP A-17
 
 
 

(1)
Assumed annual performance on the Contract Value, as well as subsequent Premium Payment and partial Surrender activity.
(2)
The Transfer Limit set at each Contract Anniversary will equal 5% of Premium Payments.
(3)
Premium Payments of $100,000 are adjusted by the subsequent Premium Payment of $50,000.
(4)
The $10,000 transfer to the PPA results in a dollar-for-dollar reduction to Premium Payments as well as all previous Anniversary Values up to the PPA Transfer Limit of $7,500 and then a factor of 0.98305 is applied. The factor of 0.98305 is derived by 1-(A/(B-C)); A is the amount transferred in excess of the PPA Transfer Limit $2,500; B is the Contract Value prior to the transfer $155,039; and C is the PPA Transfer Limit less any previous transfers to the PPA that Contract Year $7,500.
(5)
The $10,000 partial Surrender results in a factor of 0.92890 being applied to Premium Payments. After multiplying the factor of 0.92768 to $140,085, the adjusted Premium Payments equal $129,954. The factor of 0.92768 is derived by 1-(partial Surrender $10,000 / Contract Value prior to Surrender $138,274).
Income Foundation Builder Examples
The Premium Based Charge is not illustrated as part of these Examples.
Example 1: Assume your initial Premium Payment is $100,000. Your Contract Value, Payment Base and Deferral Credit Base are all equal to $100,000. You have elected Income Foundation Builder - Single Life, and based on your Age of 60 you initial Withdrawal Percent is at 5%. In Contract Years 7, 9, 11 and 12 you take partial Surrenders of the amount equal to your available Lifetime Benefit Payment (“LBP”). In Contract Year 10, you take a partial Surrender of $10,000.

Contract
Year
Age
Contract
Value
before
Surrender(1)
Deferral
Credit

Withdrawal
Percent
LBP

Surrender
Amount
Contract
Value
after
Surrender
Payment Base at End of Each Contract Year
Deferral Credit Base at End of Each Contract Year
0*
60
$100,000
$0
5%
$5,000
$0
$100,000
 
 
1
61
93,930
6,000
5%
5,300
0
93,930
$106,000(2)
$100,000
2
62
101,632
6,000
5%
5,600
0
101,632
112,000
100,000
3
63
106,694
6,000
5%
5,900
0
106,694
118,000
100,000
4
64
118,408
6,000
5%
6,200
0
118,408
124,000
100,000
5
65
125,726
6,000
5%
6,500
0
125,726
130,000
100,000
6
66
137,306
6,000
5%
6,865
0
137,306
137,306(3)
137,306(3)
7
67
127,722
8,238
5%
7,277
7,277(4)
120,444
145,544
0(4)
8
68
126,611
0
5%
7,277
0
126,611
145,544
0
9
69
134,461
0
5%
7,277
7,277
127,184
145,544
0
10
70
137,867
0
5%
7,277
10,000(5)
127,867
142,509(5)
0
11
71
140,782
0
5%
7,125
7,125
133,656
142,059
0
12
72
141,061
0
5%
7,125
7,125
133,936
142,059
0
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value 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.
(2)
The Deferral Credit is applied to the Payment Base on Contract Anniversaries 1, 2, 3, 4, 5, and 7.
(3)
Applies a Market Increase to the Payment Base and the Deferral Credit Base on Contract Anniversary 6 because the Contract Value exceeds the Deferral Credit Base.
(4)
A partial Surrender equal to the LBP does not impact the Payment Base or LBP, but as the first Surrender it resets the Deferral Credit Base to $0 and there are no subsequent Deferral Credit opportunities.
(5)
A partial Surrender of $10,000 is in excess of the LBP; the Payment Base is reset by a factor of 0.97914, derived from 1 - ($2,723 / ($137,867 - $7,277)).

APP A-18
 
 
 

Example 2: Income Foundation Builder and MAV IV PPA Transfer Limit Example.
Contract
Year


Contract
Value(1)
Income
Foundation
Builder
Payment
Base at Beginning
of Each
Contract Year
MAV IV Death
Benefit at Beginning of Each
Contract Year
PPA Transfer
Limit / LBP(2)
Transfer to PPA
Payment
 Base at the
End of Each
Contract Year
MAV IV Death
Benefit at
the End of Each Contract Year
0*
$100,000
$100,000
$100,000
$5,000
$0
$100,000
$100,000
1
84,500
106,000
100,000
5,300
0
106,000
100,000
2
102,060
112,000
102,060
5,600
5,600(3)
112,000
96,460
3
102,730
112,064
102,730
5,603
0
112,064
102,730
4
114,010
117,728
114,010
5,886
10,000(4)
107,587(4)
114,010(4)
5
110,250
110,250
110,250
5,513
0
110,250
110,250
6
120,173
120,173
120,173
6,009
0
120,173
120,173
7
111,761
120,173
120,173
6,009
0
120,173
120,173
8
117,349
120,173
120,173
6,009
0
120,173
120,173
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value as well as transfers to or from PPA. Annual performance is only shown for illustration purposes, and is not indicative of the performance you have achieved or will achieve under the rider.
(2)
When Income Foundation Builder and a optional Death Benefit are elected, the Income Foundation Builder PPA Transfer Limits prevail.
(3)
The transfer of $5,600 equals the PPA Transfer Limit; the Income Foundation Builder Payment Base and MAV Death Benefit is reduced by the dollar amount of the transfer.
(4)
The transfer of $10,000 exceeds the PPA Transfer Limit; the Income Foundation Builder Payment Base is first reduced by the dollar amount up to the PPA Transfer Limit, and then by a factor of 0.96195 (Derived from 1 - (($10,000 - $5,886) / ($114,010 - $5,886)). The MAV is similarly reset, first by the dollar amount up to the Transfer Limit, and then by the same factor of 0.96195. This transaction also resets the Deferral Credit Base to $0.
Example 3: A proportional reduction, in the form of a factor, is applied when a transfer is made to the PPA in excess of the PPA Transfer Limit occurs, or when a partial Surrender is taken in excess of the Threshold Payment or LBP, if applicable.
The factor can be calculated as 1 - (A / ( B - C):
A =
The amount of the Surrender or transfer that exceeds the Threshold Payment, LBP, or Transfer Limit,
B =
The Contract Value immediately prior to the transaction, and
C =
The remaining Threshold Payment, LBP or Transfer Limit immediately prior to the transaction.
This example illustrates the impact of a transfer to the PPA in excess of the PPA Transfer Limit with Income Foundation Builder. Assume an amount equal to the PPA Transfer Limit has already been transferred during the Contract Year, and an additional amount of $15,000 is transferred to the PPA during the same Contract year. Assume there have been no Surrenders and no prior excess transfers to the PPA.
Values immediately prior to the partial Surrender:
•
Your Contract Value is $200,000.
•
Your total Premium Payments are $180,000.
•
Your Payment Base is $225,000.
•
Your Deferral Credit Base is $210,000.
•
Your PPA Benefit Balance is $10,000.
The factor for this transaction is 0.9250 and was derived from: 1 - ($15,000/$200,000).
Values after the partial Surrender:
•
Your Contract Value is $185,000.
•
Your total Premium Payments are $180,000.
•
Your Payment Base is $208,125.
•
Your Deferral Credit Base is $0.
•
Your PPA Benefit Balance is $25,000.

APP A-19
 
 
 

Example 4: Income Foundation Builder LBP Reduction to Optional Death Benefit.
All Surrenders reduce the components of ROP IV Death Benefit and MAV IV Death Benefit by a proportionate factor. However, if you have also elected Income Foundation Builder, amounts Surrendered that are not in excess of your LBP or Threshold amount, whichever is applicable, will reduce your optional Death Benefit components on a dollar-for-dollar basis. Surrenders that are fully or partially in excess of the LBP or Threshold amount will adjust the optional Death Benefit components by a factor equal to [ 1 - A/(B-C] ]:
A =
The amount of the partial Surrender in excess of the LBP or Threshold amount, whichever is applicable.
B =
The Contract Value immediately prior to the Surrender.
C =
The LBP or Threshold amount, less any prior Surrenders during the Contract Year, subject to a minimum of zero.
Contract
Year
Age


Contract
Value(1)
Income
Foundation
Builder
Payment
Base at the
Beginning of the
Contract Year
MAV IV Death
Benefit at the Beginning of the
Contract Year
Income
Foundation
Builder
LBP
Surrender
Amount
MAV IV Death
Benefit at
the End of the Contract Year
0*
60
$100,000
$100,000
$100,000
$5,000
—
$100,000
1
61
105,500
106,000
105,500
5,300
5,300
100,200(2)
2
62
108,216
108,216
108,216
5,411
—
108,216
3
63
101,182
108,216
108,216
5,411
15,000
92,512(3)
4
64
95,645
96,886
95,645
48,444
—
95,645
5
65
101,383
101,383
101,383
5,069
—
101,383
6
66
110,508
110,508
110,508
5,525
—
110,508
* Contract Year “0” represents your Contract issue date.
(1)
Assumed annual performance on the Contract Value as well as Surrenders. Annual performance is only shown for illustration purposes, and is not indicative of the performance you have achieved or will achieve under the rider.
(2)
The partial Surrender of $5,300 is equal to the LBP and reduces the MAV IV Death Benefit by the dollar amount of the Surrender.
(3)
The partial Surrender of $15,000 is in excess of the LBP. The MAV IV Death Benefit is first reduced by the dollar amount of the transfer, and then adjusted by a factor of 0.89987, derived from [ 1 - ( $9,589 / ($101,182 - $5,411) ) ].

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 the highest and lowest possible Accumulation Unit Value, assuming you select no optional benefits or assuming you select all optional benefits.

 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
AB VPS Balanced Wealth Strategy Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
13.819

$
13.324

$
13.247

$
12.454

$
10.786

$
9.581

$
9.761

Accumulation Unit Value at end of period
$
15.867

$
13.819

$
13.324

$
13.247

$
12.454

$
10.786

$
9.581

Number of Accumulation Units outstanding at end of period (in thousands)
3

3

3

3

3

3

2

AB VPS Small/Mid Cap Value Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.554

$
14.973

$
15.988

$
14.778

$
10.813

$
9.191

$
9.214

Accumulation Unit Value at end of period
$
20.793

$
18.554

$
14.973

$
15.988

$
14.778

$
10.813

$
9.191

Number of Accumulation Units outstanding at end of period (in thousands)
3

3

3

3

1

1

1

American Century VP Growth Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
16.828

$
16.264

$
15.665

$
14.203

$
11.094

$
9.844

$
9.963

Accumulation Unit Value at end of period
$
21.762

$
16.828

$
16.264

$
15.665

$
14.203

$
11.094

$
9.844

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

—

—

American Century VP Mid Cap Value Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
20.019

$
16.428

$
16.809

$
14.562

$
11.289

$
9.781

$
9.604

Accumulation Unit Value at end of period
$
22.159

$
20.019

$
16.428

$
16.809

$
14.562

$
11.289

$
9.781

Number of Accumulation Units outstanding at end of period (in thousands)
3

3

2

1

1

1

1

American Century VP Value Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.823

$
15.759

$
16.536

$
14.750

$
11.297

$
9.929

$
9.670

Accumulation Unit Value at end of period
$
20.295

$
18.823

$
15.759

$
16.536

$
14.750

$
11.297

$
9.929

Number of Accumulation Units outstanding at end of period (in thousands)
54

59

74

76

96

128

23

American Funds Blue Chip Income and Growth Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
2.192

$
1.859

$
1.929

$
1.684

$
1.275

$
1.127

$
1.125

Accumulation Unit Value at end of period
$
2.547

$
2.192

$
1.859

$
1.929

$
1.684

$
1.275

$
1.127

Number of Accumulation Units outstanding at end of period (in thousands)
562

624

716

772

840

934

185



APP B-2
 
 
 


 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
American Funds Bond Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.776

$
17.389

$
17.463

$
16.704

$
17.192

$
16.430

$
16.399

Accumulation Unit Value at end of period
$
18.299

$
17.776

$
17.389

$
17.463

$
16.704

$
17.192

$
16.430

Number of Accumulation Units outstanding at end of period (in thousands)
41

39

43

48

42

38

6

American Funds Global Bond Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
9.995

$
9.799

$
10.286

$
10.217

$
10.561

$
10.015

$
10.131

Accumulation Unit Value at end of period
$
10.606

$
9.995

$
9.799

$
10.286

$
10.217

$
10.561

$
10.015

Number of Accumulation Units outstanding at end of period (in thousands)
19

19

20

20

19

19

2

American Funds Global Growth and Income Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
14.855

$
13.936

$
14.224

$
13.559

$
11.144

$
9.546

$
9.616

Accumulation Unit Value at end of period
$
18.596

$
14.855

$
13.936

$
14.224

$
13.559

$
11.144

$
9.546

Number of Accumulation Units outstanding at end of period (in thousands)
11

12

14

15

17

14

3

American Funds Global Small Capitalization Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
25.247

$
24.902

$
25.011

$
24.663

$
19.361

$
16.498

$
17.367

Accumulation Unit Value at end of period
$
31.563

$
25.247

$
24.902

$
25.011

$
24.663

$
19.361

$
16.498

Number of Accumulation Units outstanding at end of period (in thousands)
2

1

1

1

1

1

—

American Funds Growth Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
20.852

$
19.179

$
18.074

$
16.774

$
12.984

$
11.091

$
11.315

Accumulation Unit Value at end of period
$
26.565

$
20.852

$
19.179

$
18.074

$
16.774

$
12.984

$
11.091

Number of Accumulation Units outstanding at end of period (in thousands)
165

203

234

256

285

350

136

American Funds Growth-Income Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
25.576

$
23.095

$
22.924

$
20.866

$
15.740

$
13.491

$
13.561

Accumulation Unit Value at end of period
$
31.082

$
25.576

$
23.095

$
22.924

$
20.866

$
15.740

$
13.491

Number of Accumulation Units outstanding at end of period (in thousands)
132

152

178

186

214

271

101

American Funds International Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.373

$
16.898

$
17.823

$
18.438

$
15.265

$
13.037

$
13.613

Accumulation Unit Value at end of period
$
22.797

$
17.373

$
16.898

$
17.823

$
18.438

$
15.265

$
13.037

Number of Accumulation Units outstanding at end of period (in thousands)
85

104

111

112

114

127

48

American Funds New World Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
30.630

$
29.305

$
30.469

$
33.304

$
30.112

$
25.737

$
27.052

Accumulation Unit Value at end of period
$
39.373

$
30.630

$
29.305

$
30.469

$
33.304

$
30.112

$
25.737

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

1

1

BlackRock Capital Appreciation V.I. Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
15.792

$
15.924

$
15.042

$
13.954

$
10.534

$
9.341

$
9.650

Accumulation Unit Value at end of period
$
20.849

$
15.792

$
15.924

$
15.042

$
13.954

$
10.534

$
9.341

Number of Accumulation Units outstanding at end of period (in thousands)
56

73

79

96

107

174

57

BlackRock Equity Dividend V.I. Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.180

$
14.907

$
15.135

$
13.974

$
11.338

$
10.203

$
10.018

Accumulation Unit Value at end of period
$
19.873

$
17.180

$
14.907

$
15.135

$
13.974

$
11.338

$
10.203

Number of Accumulation Units outstanding at end of period (in thousands)
82

94

115

129

143

201

62

BlackRock Global Allocation V.I. Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
12.100

$
11.738

$
11.940

$
11.796

$
10.382

$
9.508

$
9.771

Accumulation Unit Value at end of period
$
13.662

$
12.100

$
11.738

$
11.940

$
11.796

$
10.382

$
9.508

Number of Accumulation Units outstanding at end of period (in thousands)
17

20

20

24

24

8

5

    


APP B-3
 
 
 


 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
Fidelity VIP Contrafund Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.085

$
15.970

$
16.016

$
14.445

$
11.108

$
9.631

$
9.763

Accumulation Unit Value at end of period
$
20.628

$
17.085

$
15.970

$
16.016

$
14.445

$
11.108

$
9.631

Number of Accumulation Units outstanding at end of period (in thousands)
126

156

190

206

240

297

81

Fidelity VIP Mid Cap Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
16.053

$
14.443

$
14.786

$
14.042

$
10.408

$
9.149

$
9.635

Accumulation Unit Value at end of period
$
19.214

$
16.053

$
14.443

$
14.786

$
14.042

$
10.408

$
9.149

Number of Accumulation Units outstanding at end of period (in thousands)
4

5

3

3

5

4

1

Fidelity VIP Strategic Income Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.667

$
10.877

$
11.170

$
10.881

$
10.954

$
10.007

$
10.033

Accumulation Unit Value at end of period
$
12.460

$
11.667

$
10.877

$
11.170

$
10.881

$
10.954

$
10.007

Number of Accumulation Units outstanding at end of period (in thousands)
1

—

—

—

—

1

—

Franklin Income VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
24.647

$
21.768

$
23.584

$
22.702

$
20.064

$
17.936

$
17.894

Accumulation Unit Value at end of period
$
26.842

$
24.647

$
21.768

$
23.584

$
22.702

$
20.064

$
17.936

Number of Accumulation Units outstanding at end of period (in thousands)
23

25

28

28

28

26

5

Franklin Mutual Global Discovery VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
34.070

$
30.586

$
31.967

$
30.453

$
24.031

$
21.348

$
21.240

Accumulation Unit Value at end of period
$
36.741

$
34.070

$
30.586

$
31.967

$
30.453

$
24.031

$
21.348

Number of Accumulation Units outstanding at end of period (in thousands)
14

15

15

15

16

17

3

Franklin Mutual Shares VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
25.695

$
22.295

$
23.618

$
22.202

$
17.432

$
15.366

$
15.114

Accumulation Unit Value at end of period
$
27.646

$
25.695

$
22.295

$
23.618

$
22.202

$
17.432

$
15.366

Number of Accumulation Units outstanding at end of period (in thousands)
61

68

85

94

102

121

31

Franklin Rising Dividends VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
28.041

$
24.335

$
25.433

$
23.557

$
18.292

$
16.452

$
16.002

Accumulation Unit Value at end of period
$
33.571

$
28.041

$
24.335

$
25.433

$
23.557

$
18.292

$
16.452

Number of Accumulation Units outstanding at end of period (in thousands)
30

36

40

44

48

56

14

Franklin Small Cap Value VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.634

$
14.413

$
15.672

$
15.693

$
11.600

$
9.867

$
9.707

Accumulation Unit Value at end of period
$
20.475

$
18.634

$
14.413

$
15.672

$
15.693

$
11.600

$
9.867

Number of Accumulation Units outstanding at end of period (in thousands)
5

5

3

3

3

2

—

Franklin Strategic Income VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.710

$
10.925

$
11.445

$
11.315

$
11.028

$
9.850

$
9.958

Accumulation Unit Value at end of period
$
12.159

$
11.710

$
10.925

$
11.445

$
11.315

$
11.028

$
9.850

Number of Accumulation Units outstanding at end of period (in thousands)
27

29

31

30

29

30

6

Hartford Capital Appreciation HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
16.182

$
15.484

$
15.471

$
14.555

$
10.566

$
9.014

$
9.338

Accumulation Unit Value at end of period
$
19.574

$
16.182

$
15.484

$
15.471

$
14.555

$
10.566

$
9.014

Number of Accumulation Units outstanding at end of period (in thousands)
110

133

151

161

179

213

56

Hartford Disciplined Equity HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
19.450

$
18.567

$
17.541

$
15.246

$
11.333

$
9.727

$
9.751

Accumulation Unit Value at end of period
$
23.492

$
19.450

$
18.567

$
17.541

$
15.246

$
11.333

$
9.727

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

—

—



APP B-4
 
 
 


 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
Hartford Dividend and Growth HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.175

$
15.973

$
16.315

$
14.581

$
11.159

$
9.917

$
9.734

Accumulation Unit Value at end of period
$
21.317

$
18.175

$
15.973

$
16.315

$
14.581

$
11.159

$
9.917

Number of Accumulation Units outstanding at end of period (in thousands)
120

141

165

173

201

228

55

Hartford Global Growth HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.742

$
11.626

$
10.864

$
10.669

$
—

$
—

$
—

Accumulation Unit Value at end of period
$
15.434

$
11.742

$
11.626

$
10.864

$
—

$
—

$
—

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

—

—

Hartford Growth Opportunities HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.750

$
19.029

$
17.191

$
15.210

$
11.310

$
9.001

$
9.648

Accumulation Unit Value at end of period
$
24.231

$
18.750

$
19.029

$
17.191

$
15.210

$
11.310

$
9.001

Number of Accumulation Units outstanding at end of period (in thousands)
24

26

26

30

16

18

7

Hartford High Yield HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
12.934

$
11.426

$
12.057

$
11.867

$
11.256

$
9.940

$
9.939

Accumulation Unit Value at end of period
$
13.783

$
12.934

$
11.426

$
12.057

$
11.867

$
11.256

$
9.940

Number of Accumulation Units outstanding at end of period (in thousands)
7

7

8

8

8

8

2

Hartford International Opportunities HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
12.000

$
11.972

$
11.860

$
12.459

$
10.345

$
8.689

$
9.154

Accumulation Unit Value at end of period
$
14.895

$
12.000

$
11.972

$
11.860

$
12.459

$
10.345

$
8.689

Number of Accumulation Units outstanding at end of period (in thousands)
83

105

111

121

124

139

42

Hartford Total Return Bond HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.467

$
11.080

$
11.249

$
10.719

$
10.976

$
10.304

$
10.214

Accumulation Unit Value at end of period
$
11.933

$
11.467

$
11.080

$
11.249

$
10.719

$
10.976

$
10.304

Number of Accumulation Units outstanding at end of period (in thousands)
57

50

52

53

52

46

13

Hartford U.S. Government Securities HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
10.540

$
10.481

$
10.414

$
10.222

$
10.501

$
10.224

$
10.151

Accumulation Unit Value at end of period
$
10.583

$
10.540

$
10.481

$
10.414

$
10.222

$
10.501

$
10.224

Number of Accumulation Units outstanding at end of period (in thousands)
7

7

7

7

7

7

—

Hartford Ultrashort Bond HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
9.653

$
9.659

$
9.736

$
9.814

$
9.893

$
9.962

$
9.974

Accumulation Unit Value at end of period
$
9.663

$
9.653

$
9.659

$
9.736

$
9.814

$
9.893

$
9.962

Number of Accumulation Units outstanding at end of period (in thousands)
2

3

3

4

—

—

—

Hartford Value HLS Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.491

$
15.524

$
16.176

$
14.662

$
11.216

$
9.679

$
9.566

Accumulation Unit Value at end of period
$
19.980

$
17.491

$
15.524

$
16.176

$
14.662

$
11.216

$
9.679

Number of Accumulation Units outstanding at end of period (in thousands)
55

66

75

80

90

103

21

HIMCO VIT Index Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.550

$
16.778

$
16.758

$
15.471

$
—

$
—

$
—

Accumulation Unit Value at end of period
$
22.312

$
18.550

$
16.778

$
16.758

$
—

$
—

$
—

Number of Accumulation Units outstanding at end of period (in thousands)
61

70

76

86

—

—

—

HIMCO VIT Portfolio Diversifier Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
7.239

$
7.638

$
7.840

$
8.016

$
—

$
—

$
—

Accumulation Unit Value at end of period
$
6.947

$
7.239

$
7.638

$
7.840

$
—

$
—

$
—

Number of Accumulation Units outstanding at end of period (in thousands)
5,064

5,031

5,048

5,465

—

—

—



APP B-5
 
 
 


 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
Invesco V.I. Core Equity Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
15.156

$
13.872

$
14.862

$
13.877

$
10.839

$
9.607

$
9.774

Accumulation Unit Value at end of period
$
16.988

$
15.156

$
13.872

$
14.862

$
13.877

$
10.839

$
9.607

Number of Accumulation Units outstanding at end of period (in thousands)
41

48

55

57

65

87

30

Invesco V.I. Government Money Market Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
9.759

$
9.825

$
9.893

$
9.961

$
9.992

$
—

$
—

Accumulation Unit Value at end of period
$
9.722

$
9.759

$
9.825

$
9.893

$
9.961

$
—

$
—

Number of Accumulation Units outstanding at end of period (in thousands)
21

29

9

1

1

—

—

Invesco V.I. International Growth Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.597

$
11.761

$
12.161

$
12.236

$
10.379

$
9.068

$
9.371

Accumulation Unit Value at end of period
$
14.133

$
11.597

$
11.761

$
12.161

$
12.236

$
10.379

$
9.068

Number of Accumulation Units outstanding at end of period (in thousands)
121

149

155

163

171

193

57

Invesco V.I. Mid Cap Core Equity Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
14.077

$
12.527

$
13.180

$
12.741

$
9.987

$
9.092

$
9.293

Accumulation Unit Value at end of period
$
16.028

$
14.077

$
12.527

$
13.180

$
12.741

$
9.987

$
9.092

Number of Accumulation Units outstanding at end of period (in thousands)
22

24

24

25

27

30

6

Invesco V.I. Small Cap Equity Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
15.348

$
13.820

$
14.764

$
14.564

$
10.699

$
9.480

$
9.414

Accumulation Unit Value at end of period
$
17.333

$
15.348

$
13.820

$
14.764

$
14.564

$
10.699

$
9.480

Number of Accumulation Units outstanding at end of period (in thousands)
17

18

19

21

21

24

5

Lord Abbett Bond-Debenture Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
13.538

$
12.158

$
12.434

$
12.000

$
11.171

$
9.996

$
9.985

Accumulation Unit Value at end of period
$
14.682

$
13.538

$
12.158

$
12.434

$
12.000

$
11.171

$
9.996

Number of Accumulation Units outstanding at end of period (in thousands)
21

17

17

17

17

12

—

Lord Abbett Fundamental Equity Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
16.321

$
14.200

$
14.810

$
13.920

$
10.326

$
9.403

$
9.494

Accumulation Unit Value at end of period
$
18.246

$
16.321

$
14.200

$
14.810

$
13.920

$
10.326

$
9.403

Number of Accumulation Units outstanding at end of period (in thousands)
60

69

84

86

92

121

46

Lord Abbett Growth & Income Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
17.098

$
14.702

$
15.242

$
14.258

$
10.565

$
9.492

$
9.654

Accumulation Unit Value at end of period
$
19.251

$
17.098

$
14.702

$
15.242

$
14.258

$
10.565

$
9.492

Number of Accumulation Units outstanding at end of period (in thousands)
4

4

4

4

4

4

2

MFS Growth Series
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.374

$
18.109

$
16.995

$
15.747

$
11.618

$
9.993

$
10.225

Accumulation Unit Value at end of period
$
23.918

$
18.374

$
18.109

$
16.995

$
15.747

$
11.618

$
9.993

Number of Accumulation Units outstanding at end of period (in thousands)
1

1

1

—

—

—

—

MFS New Discovery Series
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
13.950

$
12.912

$
13.288

$
14.465

$
10.315

$
8.592

$
9.141

Accumulation Unit Value at end of period
$
17.501

$
13.950

$
12.912

$
13.288

$
14.465

$
10.315

$
8.592

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

1

—

—

MFS Total Return Bond Series
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.412

$
11.049

$
11.191

$
10.670

$
10.886

$
10.240

$
10.204

Accumulation Unit Value at end of period
$
11.806

$
11.412

$
11.049

$
11.191

$
10.670

$
10.886

$
10.240

Number of Accumulation Units outstanding at end of period (in thousands)
117

109

114

118

111

114

20



APP B-6
 
 
 


 
As of December 31,
Sub-Account
2017
2016
2015
2014
2013
2012
2011
MFS Total Return Series
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
14.737

$
13.638

$
13.814

$
12.853

$
10.900

$
9.895

$
9.885

Accumulation Unit Value at end of period
$
16.394

$
14.737

$
13.638

$
13.814

$
12.853

$
10.900

$
9.895

Number of Accumulation Units outstanding at end of period (in thousands)
11

17

23

24

24

19

3

MFS Value Series
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.260

$
16.162

$
16.429

$
15.013

$
11.150

$
9.689

$
9.677

Accumulation Unit Value at end of period
$
21.279

$
18.260

$
16.162

$
16.429

$
15.013

$
11.150

$
9.689

Number of Accumulation Units outstanding at end of period (in thousands)
146

173

211

227

260

329

89

PIMCO All Asset Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.186

$
9.977

$
11.064

$
11.091

$
11.156

$
9.786

$
9.928

Accumulation Unit Value at end of period
$
12.594

$
11.186

$
9.977

$
11.064

$
11.091

$
11.156

$
9.786

Number of Accumulation Units outstanding at end of period (in thousands)
6

14

14

14

15

12

3

PIMCO Global Multi-Asset Managed Allocation Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
9.962

$
9.653

$
9.746

$
9.386

$
10.263

$
9.502

$
9.795

Accumulation Unit Value at end of period
$
11.276

$
9.962

$
9.653

$
9.746

$
9.386

$
10.263

$
9.502

Number of Accumulation Units outstanding at end of period (in thousands)
1

7

7

7

7

7

—

PIMCO StocksPLUS Global Portfolio
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
11.538

$
10.784

$
11.936

$
11.912

$
10.064

$
9.232

$
9.324

Accumulation Unit Value at end of period
$
14.092

$
11.538

$
10.784

$
11.936

$
11.912

$
10.064

$
9.232

Number of Accumulation Units outstanding at end of period (in thousands)
73

89

104

107

111

160

51

Putnam VT Equity Income Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.548

$
16.436

$
17.070

$
15.259

$
11.604

$
9.795

$
9.690

Accumulation Unit Value at end of period
$
21.876

$
18.548

$
16.436

$
17.070

$
15.259

$
11.604

$
9.795

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

—

—

Putnam VT Growth Opportunities Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
10.532

$
10.155

$
—

$
—

$
—

$
—

$
—

Accumulation Unit Value at end of period
$
13.690

$
10.532

$
—

$
—

$
—

$
—

$
—

Number of Accumulation Units outstanding at end of period (in thousands)
78

105

—

—

—

—

—

Putnam VT Investors Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.663

$
16.773

$
17.266

$
15.264

$
11.376

$
9.805

$
9.778

Accumulation Unit Value at end of period
$
22.769

$
18.663

$
16.773

$
17.266

$
15.264

$
11.376

$
9.805

Number of Accumulation Units outstanding at end of period (in thousands)
—

—

—

—

—

—

—

Templeton Foreign VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
15.819

$
14.863

$
16.007

$
18.138

$
14.854

$
12.651

$
13.422

Accumulation Unit Value at end of period
$
18.330

$
15.819

$
14.863

$
16.007

$
18.138

$
14.854

$
12.651

Number of Accumulation Units outstanding at end of period (in thousands)
83

100

110

112

105

120

29

Templeton Global Bond VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
10.751

$
10.518

$
11.068

$
10.945

$
10.845

$
9.491

$
9.853

Accumulation Unit Value at end of period
$
10.882

$
10.751

$
10.518

$
11.068

$
10.945

$
10.845

$
9.491

Number of Accumulation Units outstanding at end of period (in thousands)
16

18

20

20

20

13

3

Templeton Growth VIP Fund
 
 
 
 
 
 
 
Without Any Optional Benefits
 
 
 
 
 
 
 
Accumulation Unit Value at beginning of period
$
18.727

$
17.203

$
18.526

$
19.197

$
14.777

$
12.291

$
12.805

Accumulation Unit Value at end of period
$
22.037

$
18.727

$
17.203

$
18.526

$
19.197

$
14.777

$
12.291

Number of Accumulation Units outstanding at end of period (in thousands)
78

95

107

117

117

144

39


APP C-1
 
 
 

Appendix C — Fund Data
Funding
Option
Investment
Objective Summary
Investment
Adviser/Sub-Adviser
Fixed Accumulation Feature*
Preservation of capital
General Account
AB Variable Products Series Fund, Inc.
 
 
AB VPS Balanced Wealth Strategy Portfolio - Class B
Achieve the highest total return consistent with the Adviser’s determination of reasonable risk
AllianceBernstein, L.P.
AB VPS Small/Mid Cap Value Portfolio - Class B
Seeks long-term growth of capital
AllianceBernstein, L.P.
AIM Variable Insurance Funds
 
 
Invesco V.I. Core Equity Fund - Series II
Seeks long-term growth of capital
Invesco Advisers, Inc.
Invesco V.I. International Growth Fund - Series II
Seeks long-term growth of capital
Invesco Advisers, Inc.
Invesco V.I. Mid Cap Core Equity Fund - Series II
Seeks long-term growth of capital
Invesco Advisers, Inc.
Invesco V.I. Government Money Market Fund - Series II**
Seeks to provide current income consistent with preservation of capital and liquidity
Invesco Advisers, Inc.
Invesco V.I. Small Cap Equity Fund - Series II
Seeks long-term growth of capital
Invesco Advisers, Inc.
American Century Variable Portfolios, Inc.
 
 
American Century VP Growth Fund - Class II
Seeks long-term capital growth
American Century Investment Management, Inc.
American Century VP Mid Cap Value Fund - Class II
Seeks long-term capital growth with income as a secondary objective.
American Century Investment Management, Inc.
American Century VP Value Fund - Class II
Seeks long-term capital growth with income as a secondary objective.
American Century Investment Management, Inc.
American Funds Insurance Series
 
 
American Funds Blue Chip Income and Growth Fund - Class 2
Seeks to produce income exceeding the average yield on U.S. stocks generally and to provide an opportunity for growth of principal consistent with sound common stock investing
Capital Research and Management Company
American Funds Bond Fund - Class 2
Seeks to provide as high a level of current income as is consistent with the preservation of capital
Capital Research and Management Company
American Funds Global Bond Fund - Class 2
Seeks over the long term a high level of total return consistent with prudent investment management
Capital Research and Management Company
American Funds Global Growth and Income Fund - Class 2
Seeks to provide long-term growth of capital while providing current income
Capital Research and Management Company
American Funds Global Small Capitalization Fund - Class 2
Seeks to provide long-term growth of capital
Capital Research and Management Company
American Funds Growth Fund - Class 2
Seeks to provide growth of capital
Capital Research and Management Company
American Funds Growth-Income Fund - Class 2
Seeks to achieve long-term growth of capital and income
Capital Research and Management Company
American Funds International Fund - Class 2
Seeks to provide long-term growth of capital
Capital Research and Management Company


APP C-2
 
 
 

Funding
Option
Investment
Objective Summary
Investment
Adviser/Sub-Adviser
American Funds New World Fund - Class 2
Seeks long-term capital appreciation
Capital Research and Management Company
BlackRock Variable Series Funds, Inc.
 
 
BlackRock Capital Appreciation V.I. Fund - Class III
Seeks long-term growth of capital
BlackRock Advisors, LLC
BlackRock Equity Dividend V.I. Fund - Class III
Seeks long-term total return and current income
BlackRock Advisors, LLC
BlackRock Global Allocation V.I. Fund - Class III
Seeks high total investment return
BlackRock Advisors, LLC
BlackRock S&P 500 Index V.I. Fund - Class III
Seeks investment results that, before expenses, correspond to the aggregate price and yield performance of the Standard & Poor’s 500 Index (the “S&P 500”).
BlackRock Advisors, LLC
BlackRock Managed Volatility V.I. Fund - Class III
Seeks a level of current income and degree of stability of principal not normally available from an investment solely in equity securities, as well as the opportunity for capital appreciation greater than is normally available from an investment solely in debt securities.
BlackRock Advisors, LLC, Sub-advised by BlackRock International Limited Edinburgh, United Kingdom, BlackRock Asset Management North Asia Limited, Hong Kong, and BlackRock (Singapore) Limited, 079912 Singapore
Fidelity Variable Insurance Products Funds
 
 
Fidelity® VIP Contrafund® Portfolio - Service Class 2
Seeks long-term capital appreciation
Fidelity Management & Research Company (FMR) (the Advisor), Sub-advised by FMR Co., Inc. (FMRC) and other investment advisers
Fidelity® VIP Value Strategies Portfolio - Service Class 2
Seeks capital appreciation
Fidelity Management & Research Company (FMR) (the Advisor), Sub-advised by FMR Co., Inc. (FMRC) and other investment advisers
Franklin Templeton Variable Insurance Products Trust
 
 
Franklin Income VIP Fund - Class 2
Seeks to maximize income while maintaining prospects for capital appreciation
Franklin Advisers, Inc., Sub-advised by Templeton Investment Counsel, LLC
Franklin Mutual Global Discovery VIP Fund - Class 2
Seeks capital appreciation
Franklin Mutual Advisers, LLC, Sub-advised by Franklin Templeton Investment Management Limited
Franklin Mutual Shares VIP Fund - Class 2
Seeks capital appreciation, with income as a secondary goal
Franklin Mutual Advisers, LLC
Franklin Rising Dividends VIP Fund - Class 2
Seeks long-term capital appreciation, with preservation of capital as an important consideration
Franklin Advisory Services, LLC
Franklin Small Cap Value VIP Fund - Class 2
Seeks long-term total return
Franklin Advisory Services, LLC
Franklin Strategic Income VIP Fund - Class 2
Seeks a high level of current income, with capital appreciation over the long term as a secondary goal
Franklin Advisers, Inc.
Templeton Foreign VIP Fund - Class 2
Seeks long-term capital growth
Templeton Investment Counsel, LLC
Templeton Global Bond VIP Fund - Class 2
Seeks high current income, consistent with preservation of capital, with capital appreciation as a secondary consideration
Franklin Advisers, Inc.


APP C-3
 
 
 

Funding
Option
Investment
Objective Summary
Investment
Adviser/Sub-Adviser
Templeton Growth VIP Fund - Class 2
Seeks long-term capital growth
Templeton Global Advisors Limited
Hartford HLS Series Fund II, Inc.
 
 
Hartford Growth Opportunities HLS Fund - Class IB
Seeks capital appreciation
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford U.S. Government Securities HLS Fund - Class IB
Seeks to maximize total return while providing shareholders with a high level of current income consistent with prudent investment risk
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Series Fund, Inc.
 
 
Hartford Capital Appreciation HLS Fund - Class IB
Seeks growth of capital
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Disciplined Equity HLS Fund - Class IB
Seeks growth of capital
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Dividend and Growth HLS Fund - Class IB
Seeks a high level of current income consistent with growth of capital
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Global Growth HLS Fund - Class IB
Seeks growth of capital
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford High Yield HLS Fund - Class IB
Seeks to provide high current income, and long-term total return
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford International Opportunities HLS Fund - Class IB
Seeks long-term growth of capital
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Total Return Bond HLS Fund - Class IB
Seeks a competitive total return, with income as a secondary objective
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Ultrashort Bond HLS Fund - Class IB
Seeks total return and income consistent with preserving capital and maintaining liquidity
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Hartford Value HLS Fund - Class IB
Seeks long-term total return
Hartford Funds Management Company, LLC, Sub-advised by Wellington Management Company LLP
Lord Abbett Series Fund, Inc.
 
 
Lord Abbett Bond-Debenture Portfolio - Class VC
Seeks high current income and the opportunity for capital appreciation to produce a high total return
Lord, Abbett & Co. LLC
Lord Abbett Fundamental Equity Portfolio - Class VC
Seeks long-term growth of capital and income without excessive fluctuations in market value
Lord, Abbett & Co. LLC
Lord Abbett Growth and Income Portfolio - Class VC
Seeks long-term growth of capital and income without excessive fluctuations in market value
Lord, Abbett & Co. LLC


APP C-4
 
 
 

Funding
Option
Investment
Objective Summary
Investment
Adviser/Sub-Adviser
MFS® Variable Insurance Trust
 
 
MFS® Growth Series - Service Class
Seeks capital appreciation
MFS Investment Management
MFS® New Discovery Series - Service Class
Seeks capital appreciation
MFS Investment Management
MFS® Total Return Bond Series - Service Class
Seeks total return with an emphasis on current income, but also considering capital appreciation
MFS Investment Management
MFS® Total Return Series - Service Class
Seeks total return
MFS Investment Management
MFS® Value Series - Service Class
Seeks capital appreciation
MFS Investment Management
PIMCO Equity Series VIT
 
 
PIMCO StocksPLUS Global Portfolio - Advisor Class
Seeks capital appreciation
Pacific Investment Management Company LLC
PIMCO Variable Insurance Trust
 
 
PIMCO All Asset Portfolio - Advisor Class
Seeks maximum real return, consistent with preservation of real capital and prudent investment management
Pacific Investment Management Company LLC, Sub-advised by Research Affiliates
PIMCO Global Multi-Asset Managed Allocation Portfolio - Advisor Class
Seeks total return which exceeds that of its secondary benchmark index consistent with prudent investment management
Pacific Investment Management Company LLC
Putnam Variable Trust
 
 
Putnam VT Equity Income Fund - Class IB
Capital growth and current income
Putnam Investment Management, LLC, Sub-advised by Putnam Investments Limited
Putnam VT Investors Fund - Class IB§
Long-term growth of capital and any increased income that results from this growth
Putnam Investment Management, LLC, Sub-advised by Putnam Investments Limited
Putnam VT Growth Opportunities Fund - Class IB
Capital appreciation
Putnam Investment Management, LLC, Sub-advised by Putnam Investments Limited
*
The Fixed Accumulation Feature is not a Sub-Account and the Company does not provide investment advice in connection with this feature.
**
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 Contact value to a money market Sub-Account or participate in an Asset Allocation Program where Contact value is allocated to a money market Sub-Account, that portion of the value of your Contract value may decrease in value.
§
Putnam VT Investors Fund will be renamed to Putnam VT Multi-Cap Core Fund effective June 30, 2018.



APP D-1
 
 
 

Appendix D - Optional Rider Investment Restrictions

Investment Restrictions For

•
Income Foundation Builder

Applicable To The Following Product

•
Personal Retirement Manager Foundation O-Share VA 1


If you elect Income Foundation Builder, you must choose one of the following models. The models will be re-balanced monthly.

PERSONAL PROTECTION PORTFOLIOS
Series 8065
BlackRock Managed Volatility V.I. Fund
50%
Hartford Capital Appreciation HLS Fund
20%
Hartford Dividend and Growth HLS Fund
20%
Hartford International Opportunities HLS Fund
10%
Total
100%
Series 8067
BlackRock Managed Volatility V.I. Fund
50%
American Funds Growth Fund
20%
American Funds Growth-Income Fund
20%
American Funds International Fund
10%
Total
100%
Series 8066
BlackRock Managed Volatility V.I. Fund
50%
Templeton Growth VIP Fund
20%
Franklin Mutual Shares VIP Fund
20%
Franklin Rising Dividends VIP Fund
10%
Total
100%
Series 8070
BlackRock Managed Volatility V.I. Fund
50%
American Funds Growth-Income Fund
20%
Invesco V.I. Core Equity Fund
20%
Hartford International Opportunities HLS Fund
10%
Total
100%


APP D-2
 
 
 

Series 8073
BlackRock Managed Volatility V.I. Fund
50%
BlackRock Equity Dividend V.I. Fund
18%
BlackRock Capital Appreciation V.I. Fund
17%
PIMCO StocksPLUS Global Portfolio
15%
Total
100%
Series 8072
BlackRock Managed Volatility V.I. Fund
50%
Lord Abbett Fundamental Equity Portfolio
20%
American Funds Growth Fund
20%
Invesco V.I. International Growth Fund
10%
Total
100%
Series 8071
BlackRock Managed Volatility V.I. Fund
50%
American Funds Blue Chip Income and Growth Fund
20%
Hartford Value HLS Fund
20%
Templeton Foreign VIP Fund
10%
Total
100%
Series 8069
BlackRock Managed Volatility V.I. Fund
50%
Fidelity VIP Contrafund Portfolio
20%
Invesco V.I. International Growth Fund
5%
MFS Value Series
20%
Templeton Foreign VIP Fund
5%
Total
100%
Series 8097
BlackRock Managed Volatility V.I. Fund
50%
American Century VP Value Fund
20%
Putnam VT Growth Opportunities Fund
20%
Invesco V.I. International Growth Fund
5%
Templeton Foreign VIP Fund
5%
Total
100%
Series 8068
BlackRock Managed Volatility V.I. Fund
50%
BlackRock S&P 500 Index V.I. Fund
50%
Total
100%


APP D-3
 
 
 

Investment Restrictions For

•
Maximum Anniversary Value IV

Applicable To The Following Products

•
Personal Retirement Manager Foundation O-Share VA 1


You may choose to invest in either the Portfolio Planner Asset Allocation Models, Foundation Portfolio Planner Asset Allocation Models or the Investment Strategies Models. The Models will be re-balanced quarterly.

PORTFOLIO PLANNER ASSET ALLOCATION MODELS

As of May 2, 2016, the following models are available:
Fund
2016 Series 127
2016 Series 128
2016 Series 214
2016 Series 314
2016 Series 414
American Century VP Mid Cap Value Fund
3%
3%
4%
5%
5%
American Funds New World Fund
3%
4%
6%
7%
9%
Fidelity VIP Mid Cap Portfolio
2%
3%
3%
4%
5%
Franklin Mutual Global Discovery VIP Fund
2%
3%
4%
5%
6%
Hartford Disciplined Equity HLS Fund
5%
6%
7%
8%
9%
Hartford International Opportunities HLS Fund
2%
3%
4%
4%
5%
Hartford Total Return Bond HLS Fund
21%
15%
10%
7%
5%
Invesco V.I. International Growth Fund
2%
2%
3%
4%
5%
Invesco V.I. Small Cap Equity Fund
2%
3%
3%
4%
4%
Lord Abbett Bond-Debenture Portfolio
14%
17%
19%
17%
14%
MFS Growth Series
4%
5%
6%
7%
8%
MFS Total Return Bond Series
20%
14%
10%
7%
4%
Putnam VT Equity Income Fund
4%
6%
7%
8%
9%
Templeton Foreign VIP Fund
1%
2%
3%
4%
5%
Templeton Global Bond VIP Fund
15%
14%
11%
9%
7%
Total
100%
100%
100%
100%
100%


INVESTMENT STRATEGIES ASSET ALLOCATION MODELS

Series 8023
Hartford Capital Appreciation HLS Fund
33%
Hartford Dividend and Growth HLS Fund
33%
Hartford Total Return Bond HLS Fund
34%
Total
100%
Series 8024
Franklin Income VIP Fund
34%
Franklin Mutual Shares VIP Fund
33%
Templeton Growth VIP Fund
33%
Total
100%


APP D-4
 
 
 

Series 8025
American Funds Bond Fund
30%
American Funds Global Small Capitalization Fund
10%
American Funds Global Growth & Income Fund
20%
American Funds Growth Fund
25%
American Funds International Fund
15%
Total
100%
Series 8026
American Funds International Fund
25%
Franklin Income VIP Fund
25%
Hartford Growth Opportunities HLS Fund
25%
Hartford Total Return Bond HLS Fund
25%
Total
100%

INDIVIDUAL SUB-ACCOUNTS

AB VPS Balanced Wealth Strategy Portfolio
BlackRock Global Allocation V.I. Fund
MFS Total Return Series
PIMCO All Asset Portfolio
PIMCO Global Multi-Asset Managed Allocation Portfolio
American Funds Bond Fund
MFS Total Return Bond Series
Hartford Ultrashort Bond HLS Fund
Hartford Total Return Bond HLS Fund
Hartford U.S. Government Securities HLS Fund


APP E-1
 
 
 


Appendix E - Model Investment Options

(Percentage allocations apply to value in the Sub-Accounts)

Applicable To The Following Product

•
Personal Retirement Manager Foundation O-Share


As of May 2, 2016, the following models are available. If you elected one of the optional riders for your contract, please refer to “Appendix D - Optional Rider Investment Restrictions” to determine whether those restrictions may limit your ability to invest in these models.

Portfolio Planner Models

Fund
2016 Series 127
2016 Series 128
2016 Series 214
2016 Series 314
2016 Series 414
American Century VP Mid Cap Value Fund
3%
3%
4%
5%
5%
American Funds New World Fund
3%
4%
6%
7%
9%
Fidelity VIP Mid Cap Portfolio
2%
3%
3%
4%
5%
Franklin Mutual Global Discovery VIP Fund
2%
3%
4%
5%
6%
Hartford Disciplined Equity HLS Fund
5%
6%
7%
8%
9%
Hartford International Opportunities HLS Fund
2%
3%
4%
4%
5%
Hartford Total Return Bond HLS Fund
21%
15%
10%
7%
5%
Invesco V.I. International Growth Fund
2%
2%
3%
4%
5%
Invesco V.I. Small Cap Equity Fund
2%
3%
3%
4%
4%
Lord Abbett Bond-Debenture Portfolio
14%
17%
19%
17%
14%
MFS Growth Series
4%
5%
6%
7%
8%
MFS Total Return Bond Series
20%
14%
10%
7%
4%
Putnam VT Equity Income Fund
4%
6%
7%
8%
9%
Templeton Foreign VIP Fund
1%
2%
3%
4%
5%
Templeton Global Bond VIP Fund
15%
14%
11%
9%
7%
Total
100%
100%
100%
100%
100%






To obtain a Statement of Additional Information, please call us at 800-862-6668 or complete the form below and mail to:
Talcott Resolution Life and Annuity Insurance Company
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




 

Statement of Additional Information
Talcott Resolution Life and Annuity Insurance Company
Separate Account Seven
Personal Retirement Manager Foundation O-Share Variable Annuity
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 Talcott Resolution Life and Annuity Insurance Company, P. O. Box 14293, Lexington, KY 40512-4293.
Date of Prospectus: May 1, 2018 as amended on June 28, 2018
Date of Statement of Additional Information: May 1, 2018 as amended on June 28, 2018

Table of Contents


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 as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unmodified opinion in accordance with accounting practices prescribed or permitted by the Insurance Department of the State of Connecticut and expresses an adverse opinion for the statutory-basis financial statements because the financial statements are not fairly presented in conformity with accounting principles generally accepted in the United States of America), and the statements of assets and liabilities of each of the individual sub-accounts which comprise Hartford Life and Annuity Insurance Company Separate Account Seven as of December 31, 2017, and the related statements of operations for each of the periods 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, 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 CityPlace I, 33rd 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 Talcott Resolution Distribution Company, Inc. (“TDC”). TDC serves as Principal Underwriter for the securities issued with respect to the Separate Account. TDC 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. TDC is an affiliate of ours. Both TDC and Talcott Resolution are ultimately controlled by Henry Cornell, David I. Schamis, and Robert E. Diamond. The principal business address of TDC is the same as ours.
We currently pay TDC 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 TDC in its role as Principal Underwriter has been : 2017 : $ 34,838,270 ; 2016 : $ 35,271,633 ; and 2015 : $ 35,879,567 .
OPERATIONAL RISKS
An investment in a Contract, Separate Account, or Fund can involve operational and information security risks arising from factors such as processing errors, inadequate or failed processes, failure in systems and technology, changes in personnel and errors caused by third-party service providers.  While we seek to minimize such events through controls and oversight, there may still be failures that could adversely affect us and your Contract’s Value. In addition, as the use of technology increases, we, a Contract, a Separate Account, or Fund may be more susceptible to operational risks through breaches in cybersecurity.  A breach in cybersecurity refers to both intentional and unintentional events that may cause us, a Contract, a Separate Account, or Fund to lose proprietary information, suffer data corruption, or operational capacity, and as a result, may incur regulatory penalties, reputational damage, and additional compliance costs associated with corrected measures and/or financial loss.  In addition, cyber security breaches of a Fund’s third party service providers or issuers of securities in which the underlying Funds invest may also subject a Fund to many of the same risks associated with direct cybersecurity breaches.


3
 

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)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 predating 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)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


4
 

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 × (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 we deduct 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)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
To 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
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities as of December 31, 2017, the related statements of operations for the periods then ended, the statements of changes in net assets for each of the periods presented in two years then ended, the financial highlights in Note 6 for each of the periods presented in the five years then ended, and the related notes for each of the individual Sub-Accounts comprising Hartford Life and Annuity Insurance Company Separate Account Seven (the “Account”):

American Century VP Value Fund
MFS® Global Equity Fund
American Century VP Growth Fund
MFS® Investors Trust Fund
AB VPS Balanced Wealth Strategy Portfolio
MFS® Mid Cap Growth Fund
AB VPS International Value Portfolio
MFS® New Discovery Fund
AB VPS Small/Mid Cap Value Portfolio
MFS® Total Return Fund
AB VPS Value Portfolio
MFS® Value Fund
AB VPS International Growth Portfolio
MFS® Total Return Bond Series
Invesco V.I. Value Opportunities Fund
MFS® Research Fund
Invesco V.I. Core Equity Fund
MFS® High Yield Portfolio
Invesco V.I. Government Securities Fund
BlackRock Global Allocation V.I. Fund
Invesco V.I. International Growth Fund
BlackRock Global Opportunities V.I. Fund
Invesco V.I. Mid Cap Core Equity Fund
BlackRock Large Cap Focus Growth V.I. Fund
Invesco V.I. Small Cap Equity Fund
(Formerly BlackRock Large Cap Growth V.I. Fund)
Invesco V.I. Balanced Risk Allocation Fund
BlackRock Equity Dividend V.I. Fund
Invesco V.I. Diversified Dividend Fund
Morgan Stanley VIF Core Plus Fixed Income Portfolio
Invesco V.I. Government Money Market Fund
(Formerly UIF Core Plus Fixed Income Portfolio)
American Century VP Mid Cap Value Fund
Morgan Stanley VIF Growth Portfolio
American Funds Global Bond Fund
(Formerly UIF Growth Portfolio)
American Funds Global Growth and Income Fund
Morgan Stanley VIF Mid Cap Growth Portfolio
American Funds Asset Allocation Fund
(Formerly UIF Mid Cap Growth Portfolio)
American Funds Blue Chip Income and Growth Fund
Invesco V.I. American Value Fund
American Funds Bond Fund
Morgan Stanley Mid Cap Growth Portfolio
American Funds Global Growth Fund
BlackRock Capital Appreciation V.I. Fund
American Funds Growth Fund
Oppenheimer Capital Appreciation Fund/VA
American Funds Growth-Income Fund
Oppenheimer Global Fund/VA
American Funds International Fund
Oppenheimer Main Street Fund®/VA
American Funds New World Fund
(Merged with Oppenheimer Equity Income Fund/VA)
American Funds Global Small Capitalization Fund
Oppenheimer Main Street Small Cap Fund/VA
Wells Fargo VT Omega Growth Fund
Putnam VT Diversified Income Fund
Fidelity® VIP Growth Portfolio
Putnam VT Global Asset Allocation Fund
Fidelity® VIP Contrafund® Portfolio
Putnam VT Growth Opportunities Fund
Fidelity® VIP Mid Cap Portfolio
Putnam VT International Value Fund
Fidelity® VIP Value Strategies Portfolio
Putnam VT International Equity Fund
Fidelity® VIP Dynamic Capital Appreciation Portfolio
Putnam VT Investors Fund
Fidelity® VIP Strategic Income Portfolio
Putnam VT Small Cap Value Fund
Franklin Rising Dividends VIP Fund
Putnam VT Equity Income Fund
Franklin Income VIP Fund
(Merged with Putnam VT Growth and Income Fund)
Franklin Large Cap Growth VIP Fund
PIMCO All Asset Fund
Franklin Global Real Estate VIP Fund
PIMCO StocksPLUS Global Portfolio
Franklin Small-Mid Cap Growth VIP Fund
PIMCO Global Multi-Asset Managed Allocation Portfolio
Franklin Small Cap Value VIP Fund
Jennison 20/20 Focus Fund
Franklin Strategic Income VIP Fund
Prudential Value Portfolio
Franklin Mutual Shares VIP Fund
Invesco V.I. Growth and Income Fund
Templeton Developing Markets VIP Fund
Invesco V.I. Comstock Fund
Templeton Foreign VIP Fund
Invesco V.I. American Franchise Fund
Templeton Growth VIP Fund
Invesco V.I. Mid Cap Growth Fund
Franklin Mutual Global Discovery VIP Fund
Wells Fargo VT Index Asset Allocation Fund
Franklin Flex Cap Growth VIP Fund
Wells Fargo VT International Equity Fund
Templeton Global Bond VIP Fund
Wells Fargo VT Small Cap Growth Fund
Hartford Balanced HLS Fund
Wells Fargo VT Discovery Fund
Hartford Total Return Bond HLS Fund
Wells Fargo VT Opportunity Fund
Hartford Capital Appreciation HLS Fund
HIMCO VIT Index Fund
Hartford Dividend and Growth HLS Fund
HIMCO VIT Portfolio Diversifier Fund
Hartford Global Growth HLS Fund
HIMCO VIT American Funds Asset Allocation Fund
Hartford Disciplined Equity HLS Fund
HIMCO VIT American Funds Blue Chip Income and
Hartford Growth Opportunities HLS Fund
Growth Fund
Hartford High Yield HLS Fund
HIMCO VIT American Funds Bond Fund
Hartford International Opportunities HLS Fund
HIMCO VIT American Funds Global Bond Fund
Hartford Small/Mid Cap Equity HLS Fund
HIMCO VIT American Funds Global Growth and Income
Hartford Ultrashort Bond HLS Fund
Fund
Hartford Small Company HLS Fund
HIMCO VIT American Funds Global Growth Fund
Hartford SmallCap Growth HLS Fund
HIMCO VIT American Funds Global Small Capitalization
Hartford Stock HLS Fund
Fund
Hartford U.S. Government Securities HLS Fund
HIMCO VIT American Funds Growth Fund
Hartford Value HLS Fund
HIMCO VIT American Funds Growth-Income Fund
Lord Abbett Fundamental Equity Fund
HIMCO VIT American Funds International Fund
Lord Abbett Calibrated Dividend Growth Fund
HIMCO VIT American Funds New World Fund
Lord Abbett Bond Debenture Fund
MFS® Core Equity Portfolio
Lord Abbett Growth and Income Fund
MFS® Massachusetts Investors Growth Stock Portfolio
MFS® Growth Fund
MFS® Research International Portfolio

In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the individual Sub-Accounts above as of December 31, 2017, the results of their operations for the periods 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.
Basis for Opinion
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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2017, by correspondence with the fund managers; when replies were not received from fund managers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/ DELOITTE & TOUCHE LLP
Hartford, CT
April 19, 2018

We have served as the auditor of the sub-accounts that comprise Hartford Life and Annuity Insurance Company Separate Account Seven since 2002.




SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Fund
American Century VP Growth Fund
AB VPS Balanced Wealth Strategy Portfolio
AB VPS International Value Portfolio
AB VPS Small/Mid Cap Value Portfolio
AB VPS Value Portfolio
AB VPS International Growth Portfolio
Invesco V.I. Value Opportunities Fund
Invesco V.I. Core Equity Fund
Invesco V.I. Government Securities Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

13,609,392

15,503,505

11,506,066

797,562

2,061,177

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
6,385,210

1,888,933

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

44,043,928

100,031,512

190,728,630

class S2
—

—

—

—

—

—

—

—

5,093,402

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
6,385,210

1,888,933

13,609,392

15,503,505

11,506,066

797,562

2,061,177

44,043,928

105,124,914

190,728,630

  Due from Sponsor Company
—

—

—

—

—

—

—

—

—

—

  Receivable for fund shares sold
1,293

170

3,563

4,704

3,495

106

282

46,514

356,903

48,384

  Other assets
1

—

—

—

—

—

3

—

—

32

 Total assets
6,386,504

1,889,103

13,612,955

15,508,209

11,509,561

797,668

2,061,462

44,090,442

105,481,817

190,777,046

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
1,293

170

3,563

4,704

3,495

106

282

46,514

356,903

48,384

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

—

—

  Other liabilities
—

—

4

5

2

1

—

1

2

—

 Total liabilities
1,293

170

3,567

4,709

3,497

107

282

46,515

356,905

48,384

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
6,385,211

$
1,888,933

$
13,609,388

$
15,503,500

$
11,506,064

$
797,561

$
2,061,180

$
44,043,927

$
105,124,912

$
190,728,662

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

13,609,388

15,503,500

11,506,064

797,561

2,061,180

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
6,385,211

1,888,933

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

44,043,927

100,031,514

190,728,662

class S2
—

—

—

—

—

—

—

—

5,093,398

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
6,385,211

$
1,888,933

$
13,609,388

$
15,503,500

$
11,506,064

$
797,561

$
2,061,180

$
44,043,927

$
105,124,912

$
190,728,662

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

1,160,221

959,969

535,664

46,370

90,403

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
569,092

127,201

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

5,810,545

2,724,169

16,715,918

class S2
—

—

—

—

—

—

—

—

140,780

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
569,092

127,201

1,160,221

959,969

535,664

46,370

90,403

5,810,545

2,864,949

16,715,918

 
 
 
 
 
 
 
 
 
 
 
Cost
$
4,379,394

$
1,539,517

$
12,704,655

$
12,757,634

$
9,832,802

$
591,135

$
1,615,311

$
44,832,770

$
89,036,417

$
200,180,933

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
320,096

96,302

889,614

1,728,132

464,122

51,329

199,202

22,715,303

5,444,239

142,625,401

  Minimum unit fair value #*
$
19.157140

$
19.088573

$
13.437045

$
7.642684

$
20.708518

$
13.516541

$
8.984594

$
1.703629

$
14.856996

$
1.166100

  Maximum unit fair value #*
$
20.503245

$
20.403866

$
21.111615

$
17.289327

$
37.172159

$
22.271004

$
18.096851

$
26.228939

$
23.263545

$
10.004597

  Contract liability
$
6,385,211

$
1,888,933

$
13,609,388

$
15,494,421

$
11,502,322

$
797,561

$
2,061,006

$
43,309,182

$
104,134,600

$
187,946,646

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
—

—

—

542

161

—

17

366,711

49,986

2,035,395

Minimum unit fair value #*
$
—

$
—

$
—

$
16.752424

$
23.300374

$
—

$
10.109732

$
1.943893

$
19.291607

$
1.319798

Maximum unit fair value #*
$
—

$
—

$
—

$
16.752424

$
23.300374

$
—

$
10.109732

$
2.196363

$
21.654146

$
1.503356

Contract liability
$
—

$
—

$
—

$
9,079

$
3,742

$
—

$
174

$
734,745

$
990,312

$
2,782,016

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. International Growth Fund
Invesco V.I. Mid Cap Core Equity Fund
Invesco V.I. Small Cap Equity Fund
Invesco V.I. Balanced Risk Allocation Fund
Invesco V.I. Diversified Dividend Fund
Invesco V.I. Government Money Market Fund
American Century VP Mid Cap Value Fund
American Funds Global Bond Fund
American Funds Global Growth and Income Fund
American Funds Asset Allocation Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

68,321,287

175,006,283

620,598,467

class 4
—

—

—

—

—

—

—

8,206,397

25,817,095

26,248,523

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

1,030,394

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
72,752,056

109,313,225

54,711,813

—

—

110,478,200

—

—

—

—

class S2
40,762,486

1,620,626

14,994,823

10,680,719

280,818

1,728,854

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
113,514,542

110,933,851

69,706,636

10,680,719

280,818

112,207,054

1,030,394

76,527,684

200,823,378

646,846,990

  Due from Sponsor Company
—

—

—

—

—

—

—

66,030

—

—

  Receivable for fund shares sold
31,857

52,067

22,365

2,390

43

204,692

132

—

48,017

882,564

  Other assets
—

—

—

2

—

19

—

—

—

—

 Total assets
113,546,399

110,985,918

69,729,001

10,683,111

280,861

112,411,765

1,030,526

76,593,714

200,871,395

647,729,554

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
31,857

52,067

22,365

2,390

43

204,692

132

—

48,017

882,564

  Payable for fund shares purchased
—

—

—

—

—

—

—

66,030

—

—

  Other liabilities
6

13

—

—

2

—

—

1

1

3

 Total liabilities
31,863

52,080

22,365

2,390

45

204,692

132

66,031

48,018

882,567

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
113,514,536

$
110,933,838

$
69,706,636

$
10,680,721

$
280,816

$
112,207,073

$
1,030,394

$
76,527,683

$
200,823,377

$
646,846,987

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

68,321,286

175,006,282

620,598,464

class 4
—

—

—

—

—

—

—

8,206,397

25,817,095

26,248,523

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

1,030,394

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
72,752,052

109,313,212

54,711,814

—

—

110,478,217

—

—

—

—

class S2
40,762,484

1,620,626

14,994,822

10,680,721

280,816

1,728,856

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
113,514,536

$
110,933,838

$
69,706,636

$
10,680,721

$
280,816

$
112,207,073

$
1,030,394

$
76,527,683

$
200,823,377

$
646,846,987

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

5,794,851

11,090,386

26,419,688

class 4
—

—

—

—

—

—

—

701,401

1,654,942

1,121,732

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

45,272

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
1,823,817

7,585,928

2,732,858

—

—

110,478,200

—

—

—

—

class S2
1,036,422

114,857

787,130

956,197

10,397

1,728,854

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
2,860,239

7,700,785

3,519,988

956,197

10,397

112,207,054

45,272

6,496,252

12,745,328

27,541,420

 
 
 
 
 
 
 
 
 
 
 
Cost
$
83,607,983

$
97,364,526

$
63,322,060

$
11,016,827

$
210,754

$
112,207,054

$
831,925

$
74,439,047

$
153,722,433

$
488,352,039

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
28,776,259

39,625,051

2,893,277

764,822

14,792

11,981,546

47,397

6,190,976

11,938,033

29,277,865

  Minimum unit fair value #*
$
2.407670

$
2.412074

$
17.332838

$
12.798882

$
18.188913

$
8.876326

$
20.869222

$
9.904477

$
10.570853

$
10.369713

  Maximum unit fair value #*
$
21.371473

$
22.762061

$
28.633155

$
14.861220

$
19.666272

$
9.841936

$
22.362747

$
14.019818

$
25.840537

$
27.951597

  Contract liability
$
113,138,258

$
110,074,566

$
69,437,898

$
10,654,273

$
280,816

$
111,343,565

$
1,030,394

$
75,864,933

$
199,548,129

$
638,500,237

 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
123,170

299,423

10,479

1,798

—

92,127

—

50,772

68,974

344,592

Minimum unit fair value #*
$
2.747192

$
2.729918

$
17.332838

$
14.710624

$
—

$
9.293233

$
—

$
10.605609

$
10.636531

$
10.436392

Maximum unit fair value #*
$
19.628674

$
16.027597

$
28.633155

$
14.710624

$
—

$
9.508932

$
—

$
14.019818

$
19.978426

$
27.951597

Contract liability
$
376,278

$
859,272

$
268,738

$
26,448

$
—

$
863,508

$
—

$
662,750

$
1,275,248

$
8,346,750

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

 













SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VT Omega Growth Fund
Fidelity® VIP Growth Portfolio
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
413,490,057

549,941,123

225,682,840

1,310,163,714

1,290,318,995

314,063,469

114,949,945

130,490,254

977,174

—

class 4
30,674,383

105,815,966

15,465,834

180,323,793

106,508,007

105,004,604

15,827,977

28,754,567

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

7,127,388

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
444,164,440

655,757,089

241,148,674

1,490,487,507

1,396,827,002

419,068,073

130,777,922

159,244,821

977,174

7,127,388

  Due from Sponsor Company
—

—

166,533

—

—

—

—

—

—

—

  Receivable for fund shares sold
341,330

276,457

—

1,185,269

1,025,049

215,100

36,550

89,468

214

1,207

  Other assets
—

4

1

5

3

—

—

3

—

—

 Total assets
444,505,770

656,033,550

241,315,208

1,491,672,781

1,397,852,054

419,283,173

130,814,472

159,334,292

977,388

7,128,595

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
341,330

276,457

—

1,185,269

1,025,049

215,100

36,550

89,468

214

1,207

  Payable for fund shares purchased
—

—

166,533

—

—

—

—

—

—

—

  Other liabilities
25

—

—

—

—

4

1

—

—

2

 Total liabilities
341,355

276,457

166,533

1,185,269

1,025,049

215,104

36,551

89,468

214

1,209

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
444,164,415

$
655,757,093

$
241,148,675

$
1,490,487,512

$
1,396,827,005

$
419,068,069

$
130,777,921

$
159,244,824

$
977,174

$
7,127,386

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
413,490,034

549,941,126

225,682,842

1,310,163,717

1,290,318,997

314,063,465

114,949,942

130,490,257

977,174

—

class 4
30,674,381

105,815,967

15,465,833

180,323,795

106,508,008

105,004,604

15,827,979

28,754,567

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

7,127,386

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
444,164,415

$
655,757,093

$
241,148,675

$
1,490,487,512

$
1,396,827,005

$
419,068,069

$
130,777,921

$
159,244,824

$
977,174

$
7,127,386

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
27,938,518

51,444,446

7,463,056

16,938,122

25,956,930

14,519,809

4,585,160

5,278,732

35,012

—

class 4
2,076,803

9,907,862

513,304

2,355,326

2,159,968

4,902,176

633,372

1,154,338

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

97,823

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
30,015,321

61,352,308

7,976,360

19,293,448

28,116,898

19,421,985

5,218,532

6,433,070

35,012

97,823

 
 
 
 
 
 
 
 
 
 
 
Cost
$
333,518,710

$
661,736,165

$
175,852,960

$
1,181,113,928

$
1,106,977,204

$
356,465,901

$
98,503,766

$
130,627,383

$
843,246

$
5,529,293

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
189,847,778

45,075,991

9,822,019

69,794,978

58,322,433

25,930,414

5,076,438

7,519,168

39,225

332,885

  Minimum unit fair value #*
$
1.891730

$
9.933781

$
10.590156

$
10.614809

$
10.719668

$
10.608863

$
10.765927

$
10.790498

$
23.862098

$
18.370181

  Maximum unit fair value #*
$
30.852307

$
18.298787

$
34.080432

$
34.381516

$
32.619326

$
24.442768

$
39.711442

$
33.945507

$
25.996768

$
34.624090

  Contract liability
$
438,474,629

$
650,646,823

$
238,337,445

$
1,477,137,140

$
1,377,273,854

$
416,186,891

$
130,081,894

$
157,828,643

$
962,152

$
7,127,386

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
2,536,159

319,258

97,393

517,325

715,691

142,389

20,388

54,955

593

—

Minimum unit fair value #*
$
2.142459

$
9.997665

$
10.690165

$
10.683069

$
10.788570

$
10.677056

$
31.317768

$
10.857519

$
25.327621

$
—

Maximum unit fair value #*
$
2.444569

$
18.298787

$
34.080432

$
34.381516

$
32.619326

$
24.051776

$
39.711442

$
33.123821

$
25.327621

$
—

Contract liability
$
5,689,786

$
5,110,270

$
2,811,230

$
13,350,372

$
19,553,151

$
2,881,178

$
696,027

$
1,416,181

$
15,022

$
—

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VIP Fund
Franklin Income VIP Fund
Franklin Large Cap Growth VIP Fund
Franklin Global Real Estate VIP Fund
Franklin Small-Mid Cap Growth VIP Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

391,396,142

524,725,293

60,185,339

4,998,111

129,261,820

class 4
—

—

—

—

—

7,715,809

82,102,262

—

—

8,120,675

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
61,032,655

45,581,419

2,017,525

2,518,379

1,766,496

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
61,032,655

45,581,419

2,017,525

2,518,379

1,766,496

399,111,951

606,827,555

60,185,339

4,998,111

137,382,495

  Due from Sponsor Company
—

—

—

—

1,847

—

—

2,092

—

—

  Receivable for fund shares sold
17,920

14,244

463

810

—

408,985

544,642

—

718

50,157

  Other assets
—

—

2

1

—

1

2

1

—

—

 Total assets
61,050,575

45,595,663

2,017,990

2,519,190

1,768,343

399,520,937

607,372,199

60,187,432

4,998,829

137,432,652

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
17,920

14,244

463

810

—

408,985

544,642

—

718

50,157

  Payable for fund shares purchased
—

—

—

—

1,847

—

—

2,092

—

—

  Other liabilities
3

3

—

—

1

—

—

—

—

—

 Total liabilities
17,923

14,247

463

810

1,848

408,985

544,642

2,092

718

50,157

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
61,032,652

$
45,581,416

$
2,017,527

$
2,518,380

$
1,766,495

$
399,111,952

$
606,827,557

$
60,185,340

$
4,998,111

$
137,382,495

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

391,396,141

524,725,294

60,185,340

4,998,111

129,261,820

class 4
—

—

—

—

—

7,715,811

82,102,263

—

—

8,120,675

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
61,032,652

45,581,416

2,017,527

2,518,380

1,766,495

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
61,032,652

$
45,581,416

$
2,017,527

$
2,518,380

$
1,766,495

$
399,111,952

$
606,827,557

$
60,185,340

$
4,998,111

$
137,382,495

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

13,752,499

32,450,544

2,938,737

302,549

7,249,682

class 4
—

—

—

—

—

270,351

4,966,864

—

—

439,668

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
1,647,305

1,206,177

140,301

179,244

154,956

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
1,647,305

1,206,177

140,301

179,244

154,956

14,022,850

37,417,408

2,938,737

302,549

7,689,350

 
 
 
 
 
 
 
 
 
 
 
Cost
$
44,159,584

$
34,157,986

$
1,638,987

$
2,136,116

$
1,769,918

$
297,534,860

$
560,852,703

$
51,461,631

$
4,879,359

$
148,632,352

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
2,827,082

2,170,395

100,333

115,614

121,083

13,885,145

28,207,716

2,896,923

205,481

7,422,834

  Minimum unit fair value #*
$
17.278798

$
17.852726

$
17.539924

$
19.546704

$
12.204593

$
21.579419

$
13.876655

$
18.515448

$
18.591557

$
12.588723

  Maximum unit fair value #*
$
30.862825

$
32.205158

$
37.312800

$
34.125181

$
16.292343

$
33.570516

$
26.842407

$
24.739236

$
31.517252

$
29.834508

  Contract liability
$
60,890,970

$
45,569,833

$
2,017,527

$
2,518,380

$
1,741,022

$
395,401,674

$
599,061,774

$
59,253,251

$
4,929,603

$
136,456,656

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
6,279

566

—

—

1,611

124,531

330,344

42,807

2,745

45,288

Minimum unit fair value #*
$
18.785750

$
20.188732

$
—

$
—

$
15.814675

$
28.778050

$
15.256876

$
20.917763

$
21.956135

$
14.468799

Maximum unit fair value #*
$
30.342536

$
20.998895

$
—

$
—

$
15.814675

$
33.570516

$
25.863286

$
23.759455

$
25.300343

$
27.004721

Contract liability
$
141,682

$
11,583

$
—

$
—

$
25,473

$
3,710,278

$
7,765,783

$
932,089

$
68,508

$
925,839

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 










SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Fund
Franklin Strategic Income VIP Fund
Franklin Mutual Shares VIP Fund
Templeton Developing Markets VIP Fund
Templeton Foreign VIP Fund
Templeton Growth VIP Fund
Franklin Mutual Global Discovery VIP Fund
Franklin Flex Cap Growth VIP Fund
Templeton Global Bond VIP Fund
Hartford Balanced HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
209,959,215

$
—

$
49,544,792

$
—

$
—

$
—

$
—

$
—

$
—

class 2
41,097,574

13,364,899

419,971,936

168,008

161,031,403

163,196,477

183,539,520

19,955,978

5,233,210

—

class 4
17,532,605

53,939,720

78,696,562

5,092,996

26,431,273

26,576,478

27,215,727

2,803,182

41,962,631

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

17,409,771

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
58,630,179

277,263,834

498,668,498

54,805,796

187,462,676

189,772,955

210,755,247

22,759,160

47,195,841

17,409,771

  Due from Sponsor Company
—

—

—

—

—

—

—

—

29

8,734

  Receivable for fund shares sold
16,790

114,000

350,305

13,971

54,470

98,479

90,407

9,800

—

—

  Other assets
—

4

1

3

—

—

4

—

—

2

 Total assets
58,646,969

277,377,838

499,018,804

54,819,770

187,517,146

189,871,434

210,845,658

22,768,960

47,195,870

17,418,507

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
16,790

114,000

350,305

13,971

54,470

98,479

90,407

9,800

—

—

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

29

8,734

  Other liabilities
3

—

—

—

—

1

—

3

—

—

 Total liabilities
16,793

114,000

350,305

13,971

54,470

98,480

90,407

9,803

29

8,734

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
58,630,176

$
277,263,838

$
498,668,499

$
54,805,799

$
187,462,676

$
189,772,954

$
210,755,251

$
22,759,157

$
47,195,841

$
17,409,773

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
209,959,214

$
—

$
49,544,793

$
—

$
—

$
—

$
—

$
—

$
—

class 2
41,097,570

13,364,900

419,971,936

168,009

161,031,403

163,196,475

183,539,524

19,955,973

5,233,209

—

class 4
17,532,606

53,939,724

78,696,563

5,092,997

26,431,273

26,576,479

27,215,727

2,803,184

41,962,632

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

17,409,773

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
58,630,176

$
277,263,838

$
498,668,499

$
54,805,799

$
187,462,676

$
189,772,954

$
210,755,251

$
22,759,157

$
47,195,841

$
17,409,773

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

18,779,893

—

4,805,508

—

—

—

—

—

—

class 2
2,075,635

1,237,491

20,627,305

16,423

10,409,270

10,218,940

9,269,673

2,675,064

316,972

—

class 4
867,092

4,868,206

3,833,247

495,428

1,682,449

1,647,643

1,349,317

388,791

2,487,412

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

561,243

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
2,942,727

24,885,590

24,460,552

5,317,359

12,091,719

11,866,583

10,618,990

3,063,855

2,804,384

561,243

 
 
 
 
 
 
 
 
 
 
 
Cost
$
53,454,112

$
293,478,468

$
418,433,246

$
45,619,344

$
168,683,658

$
146,232,371

$
207,015,902

$
26,791,231

$
49,762,300

$
13,949,343

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
 
  Units owned by participants #
3,073,457

14,419,261

22,275,503

2,399,470

12,666,059

10,506,824

7,552,605

1,149,393

3,466,423

1,009,281

  Minimum unit fair value #*
$
16.510274

$
11.942073

$
13.694595

$
9.296015

$
10.134400

$
12.246020

$
14.263263

$
17.210813

$
10.684534

$
15.544131

  Maximum unit fair value #*
$
32.012289

$
26.225411

$
30.462534

$
31.879178

$
18.613612

$
22.775861

$
36.741404

$
26.977144

$
14.866503

$
24.445608

  Contract liability
$
58,497,468

$
274,300,062

$
494,603,623

$
54,512,844

$
186,026,139

$
187,826,541

$
209,246,351

$
22,635,758

$
47,141,617

$
17,409,773

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
 
Units owned by participants #
7,265

129,741

162,121

10,423

90,703

99,485

45,905

6,016

4,352

—

Minimum unit fair value #*
$
18.018295

$
12.158697

$
23.172525

$
24.140779

$
10.964386

$
18.568318

$
21.062852

$
19.995481

$
10.688847

$
—

Maximum unit fair value #*
$
19.663952

$
26.225411

$
30.462534

$
31.742262

$
18.486970

$
22.775861

$
36.741404

$
22.016242

$
14.847828

$
—

Contract liability
$
132,708

$
2,963,776

$
4,064,876

$
292,955

$
1,436,537

$
1,946,413

$
1,508,900

$
123,399

$
54,224

$
—

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Total Return Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Growth HLS Fund
Hartford Disciplined Equity HLS Fund
Hartford Growth Opportunities HLS Fund
Hartford High Yield HLS Fund
Hartford International Opportunities HLS Fund
Hartford Small/Mid Cap Equity HLS Fund
Hartford Ultrashort Bond HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
409,193,301

348,272,935

270,175,213

4,932,688

69,910,097

103,368,971

24,963,359

26,218,405

5,336,612

135,127,791

class IB
5,985,147

12,026,900

12,047,144

252,457

377,014

2,105,259

2,310,179

5,961,109

—

356,186

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
415,178,448

360,299,835

282,222,357

5,185,145

70,287,111

105,474,230

27,273,538

32,179,514

5,336,612

135,483,977

  Due from Sponsor Company
—

—

—

—

—

—

—

12,362

—

—

  Receivable for fund shares sold
134,082

206,277

127,516

649

19,471

16,735

9,672

—

801

83,835

  Other assets
3

1

3

—

—

9

1

—

—

7

 Total assets
415,312,533

360,506,113

282,349,876

5,185,794

70,306,582

105,490,974

27,283,211

32,191,876

5,337,413

135,567,819

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
134,082

206,277

127,516

649

19,471

16,735

9,672

—

801

83,835

  Payable for fund shares purchased
—

—

—

—

—

—

—

12,362

—

—

  Other liabilities
—

—

—

—

—

—

—

3

—

—

 Total liabilities
134,082

206,277

127,516

649

19,471

16,735

9,672

12,365

801

83,835

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
415,178,451

$
360,299,836

$
282,222,360

$
5,185,145

$
70,287,111

$
105,474,239

$
27,273,539

$
32,179,511

$
5,336,612

$
135,483,984

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
409,193,304

348,272,933

270,175,215

4,932,688

69,910,098

103,368,978

24,963,360

26,218,401

5,336,612

135,127,799

class IB
5,985,147

12,026,903

12,047,145

252,457

377,013

2,105,261

2,310,179

5,961,110

—

356,185

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
415,178,451

$
360,299,836

$
282,222,360

$
5,185,145

$
70,287,111

$
105,474,239

$
27,273,539

$
32,179,511

$
5,336,612

$
135,483,984

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
36,147,818

7,231,580

11,280,803

176,862

4,530,790

2,690,499

3,044,312

1,501,627

605,745

13,432,187

class IB
532,013

253,305

505,121

9,137

24,690

57,038

286,623

337,167

—

35,441

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
36,679,831

7,484,885

11,785,924

185,999

4,555,480

2,747,537

3,330,935

1,838,794

605,745

13,467,628

 
 
 
 
 
 
 
 
 
 
 
Cost
$
402,961,612

$
299,165,989

$
236,694,525

$
4,207,778

$
61,509,184

$
81,262,701

$
27,586,381

$
23,716,556

$
4,995,205

$
134,863,639

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
31,998,937

19,287,390

13,298,772

266,440

3,055,127

4,718,975

1,518,613

2,326,183

253,837

115,785,341

  Minimum unit fair value #*
$
11.576942

$
15.959585

$
18.408515

$
14.981252

$
20.024264

$
18.940434

$
13.292354

$
11.781130

$
17.886437

$
0.837597

  Maximum unit fair value #*
$
14.783073

$
31.565518

$
30.881557

$
32.289161

$
34.465864

$
37.095472

$
24.396691

$
22.309856

$
34.988620

$
9.800911

  Contract liability
$
415,152,884

$
360,116,714

$
281,964,355

$
5,185,145

$
70,269,168

$
105,461,004

$
27,273,539

$
31,988,403

$
5,331,446

$
134,136,469

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
1,935

7,841

10,590

—

633

546

—

9,020

247

1,317,924

Minimum unit fair value #*
$
13.097622

$
18.048084

$
20.817048

$
—

$
23.552455

$
24.231157

$
—

$
21.188012

$
20.935673

$
0.958325

Maximum unit fair value #*
$
13.623101

$
28.687355

$
30.360968

$
—

$
33.884927

$
24.231157

$
—

$
21.188012

$
20.935673

$
1.142179

Contract liability
$
25,567

$
183,122

$
258,005

$
—

$
17,943

$
13,235

$
—

$
191,108

$
5,166

$
1,347,515

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Small Company HLS Fund
Hartford SmallCap Growth HLS Fund
Hartford Stock HLS Fund
Hartford U.S. Government Securities HLS Fund
Hartford Value HLS Fund
Lord Abbett Fundamental Equity Fund
Lord Abbett Calibrated Dividend Growth Fund
Lord Abbett Bond Debenture Fund
Lord Abbett Growth and Income Fund
MFS® Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
9,371,476

7,539,080

2,911,378

19,700,420

10,292,653

—

—

—

—

—

class IB
—

—

—

1,082,045

3,976,011

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

114,171,507

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

15,817,177

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

10,425,364

15,778,134

34,529,632

6,380,449

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
9,371,476

7,539,080

2,911,378

20,782,465

14,268,664

10,425,364

15,778,134

34,529,632

6,380,449

129,988,684

  Due from Sponsor Company
—

—

—

—

—

—

—

—

—

—

  Receivable for fund shares sold
1,399

2,171

373

3,313

2,807

1,482

4,277

56,190

856

12,691

  Other assets
—

—

—

1

—

—

1

1

3

—

 Total assets
9,372,875

7,541,251

2,911,751

20,785,779

14,271,471

10,426,846

15,782,412

34,585,823

6,381,308

130,001,375

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
1,399

2,171

373

3,313

2,808

1,482

4,277

56,190

856

12,691

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

—

—

  Other liabilities
—

1

3

—

3

—

—

—

—

4

 Total liabilities
1,399

2,172

376

3,313

2,811

1,482

4,277

56,190

856

12,695

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
9,371,476

$
7,539,079

$
2,911,375

$
20,782,466

$
14,268,660

$
10,425,364

$
15,778,135

$
34,529,633

$
6,380,452

$
129,988,680

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
9,371,476

7,539,079

2,911,375

19,700,420

10,292,650

—

—

—

—

—

class IB
—

—

—

1,082,046

3,976,010

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

114,171,505

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

15,817,175

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

10,425,364

15,778,135

34,529,633

6,380,452

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
9,371,476

$
7,539,079

$
2,911,375

$
20,782,466

$
14,268,660

$
10,425,364

$
15,778,135

$
34,529,633

$
6,380,452

$
129,988,680

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
458,936

234,643

36,589

1,929,522

641,287

—

—

—

—

—

class IB
—

—

—

106,083

248,190

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

2,334,796

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

—

—

—

—

—

—

—

—

334,613

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

552,776

984,902

2,789,146

171,748

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
458,936

234,643

36,589

2,035,605

889,477

552,776

984,902

2,789,146

171,748

2,669,409

 
 
 
 
 
 
 
 
 
 
 
Cost
$
9,008,326

$
6,182,462

$
2,178,594

$
21,325,507

$
11,333,638

$
10,091,613

$
14,315,920

$
32,386,035

$
4,602,292

$
93,301,242

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
459,894

270,379

142,368

2,014,921

706,916

489,396

744,634

1,939,078

358,117

7,049,780

  Minimum unit fair value #*
$
17.365308

$
24.873776

$
17.800911

$
9.373907

$
17.149985

$
18.245784

$
19.123826

$
14.682259

$
15.159025

$
12.483623

  Maximum unit fair value #*
$
30.398870

$
41.783712

$
32.041093

$
11.737333

$
28.535135

$
24.442408

$
27.573519

$
22.154256

$
25.080187

$
34.637160

  Contract liability
$
9,371,476

$
7,531,894

$
2,911,375

$
20,777,322

$
14,268,660

$
10,425,364

$
15,778,135

$
34,425,846

$
6,380,452

$
129,504,682

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
—

267

—

505

—

—

—

5,860

—

24,438

Minimum unit fair value #*
$
—

$
26.910152

$
—

$
10.191281

$
—

$
—

$
—

$
17.294138

$
—

$
14.154768

Maximum unit fair value #*
$
—

$
26.910152

$
—

$
10.191281

$
—

$
—

$
—

$
18.708721

$
—

$
24.746663

Contract liability
$
—

$
7,185

$
—

$
5,144

$
—

$
—

$
—

$
103,787

$
—

$
483,998

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Global Equity Fund
MFS® Investors Trust Fund
MFS® Mid Cap Growth Fund
MFS® New Discovery Fund
MFS® Total Return Fund
MFS® Value Fund
MFS® Total Return Bond Series
MFS® Research Fund
MFS® High Yield Portfolio
BlackRock Global Allocation V.I. Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 


Assets:
 
 
 
 
 
 
 
 


  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

4,288,315

class INIT
17,955,369

123,784,961

45,491,914

80,986,903

358,202,310

147,664,521

364,441,039

19,827,241

82,430,204

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

2,183,803

—

886,377

34,711,952

100,396,143

137,844,761

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
17,955,369

125,968,764

45,491,914

81,873,280

392,914,262

248,060,664

502,285,800

19,827,241

82,430,204

4,288,315

  Due from Sponsor Company
—

—

—

—

—

—

—

—

9,938

—

  Receivable for fund shares sold
14,832

74,105

6,804

51,881

456,523

107,552

70,708

32,788

—

378

  Other assets
—

—

2

—

—

4

10

—

3

1

 Total assets
17,970,201

126,042,869

45,498,720

81,925,161

393,370,785

248,168,220

502,356,518

19,860,029

82,440,145

4,288,694

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
14,832

74,105

6,804

51,881

456,523

107,552

70,708

32,788

—

378

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

9,938

—

  Other liabilities
4

—

—

—

—

—

—

1

—

—

 Total liabilities
14,836

74,105

6,804

51,881

456,523

107,552

70,708

32,789

9,938

378

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
17,955,365

$
125,968,764

$
45,491,916

$
81,873,280

$
392,914,262

$
248,060,668

$
502,285,810

$
19,827,240

$
82,430,207

$
4,288,316

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

4,288,316

class INIT
17,955,365

123,784,962

45,491,916

80,986,904

358,202,311

147,664,525

364,441,044

19,827,240

82,430,207

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

2,183,802

—

886,376

34,711,951

100,396,143

137,844,766

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
17,955,365

$
125,968,764

$
45,491,916

$
81,873,280

$
392,914,262

$
248,060,668

$
502,285,810

$
19,827,240

$
82,430,207

$
4,288,316

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

288,970

class INIT
816,153

4,116,561

4,783,587

4,029,199

14,502,118

7,058,534

27,567,401

672,110

14,285,997

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
—

73,553

—

47,732

1,429,652

4,885,457

10,611,606

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
816,153

4,190,114

4,783,587

4,076,931

15,931,770

11,943,991

38,179,007

672,110

14,285,997

288,970

 
 
 
 
 
 
 
 
 
 
 
Cost
$
13,763,370

$
92,783,337

$
38,219,717

$
65,716,660

$
326,287,047

$
184,081,547

$
495,054,616

$
16,423,622

$
85,449,015

$
4,198,814

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
668,177

6,578,076

3,958,727

3,342,903

18,716,310

9,241,950

35,726,879

810,638

6,982,344

322,727

  Minimum unit fair value #*
$
22.323313

$
16.951539

$
9.989835

$
16.910671

$
14.394256

$
17.854407

$
11.425059

$
21.541980

$
11.142162

$
12.902316

  Maximum unit fair value #*
$
33.439353

$
28.999979

$
33.935009

$
37.648140

$
26.932336

$
37.043103

$
15.675497

$
28.186248

$
12.166841

$
13.826114

  Contract liability
$
17,678,031

$
124,613,396

$
45,060,987

$
80,802,044

$
387,760,608

$
247,214,461

$
501,065,123

$
19,686,179

$
81,109,858

$
4,288,316

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
9,329

66,927

36,634

38,870

225,960

26,860

84,968

5,487

111,907

—

Minimum unit fair value #*
$
25.541640

$
18.992524

$
11.194284

$
20.237750

$
16.928914

$
19.410378

$
11.806108

$
24.025889

$
11.682739

$
—

Maximum unit fair value #*
$
33.439353

$
24.415010

$
12.638795

$
35.154951

$
26.932336

$
37.043103

$
15.675497

$
26.796181

$
12.166841

$
—

Contract liability
$
277,334

$
1,355,368

$
430,929

$
1,071,236

$
5,153,654

$
846,207

$
1,220,687

$
141,061

$
1,320,349

$
—

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Opportunities V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund
BlackRock Equity Dividend V.I. Fund
Morgan Stanley VIF Core Plus Fixed Income Portfolio
Morgan Stanley VIF Growth Portfolio
Morgan Stanley VIF Mid Cap Growth Portfolio
Invesco V.I. American Value Fund
BlackRock Capital Appreciation V.I. Fund
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Global Fund/VA
 
Sub-Account
Sub-Account (1)
Sub-Account
Sub-Account (2)
Sub-Account (3)
Sub-Account (4)
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
178,238

713,430

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

650,806

2,120,265

10,679,917

—

—

—

—

class III
—

—

7,235,391

—

—

—

—

6,134,935

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

9,762,559

—

—

—

class SRV
—

—

—

—

—

—

—

—

2,143,116

11,748,456

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
178,238

713,430

7,235,391

650,806

2,120,265

10,679,917

9,762,559

6,134,935

2,143,116

11,748,456

  Due from Sponsor Company
—

8,067

—

—

—

—

—

—

—

—

  Receivable for fund shares sold
29,938

—

1,683

404

300

6,692

1,738

1,337

296

4,020

  Other assets
—

—

1

1

2

—

1

—

2

—

 Total assets
208,176

721,497

7,237,075

651,211

2,120,567

10,686,609

9,764,298

6,136,272

2,143,414

11,752,476

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
29,938

—

1,683

404

300

6,692

1,738

1,337

296

4,020

  Payable for fund shares purchased
—

8,067

—

—

—

—

—

—

—

—

  Other liabilities
1

1

—

—

—

1

—

—

—

—

 Total liabilities
29,939

8,068

1,683

404

300

6,693

1,738

1,337

296

4,020

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
178,237

$
713,429

$
7,235,392

$
650,807

$
2,120,267

$
10,679,916

$
9,762,560

$
6,134,935

$
2,143,118

$
11,748,456

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
178,237

713,429

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

650,807

2,120,267

10,679,916

—

—

—

—

class III
—

—

7,235,392

—

—

—

—

6,134,935

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

9,762,560

—

—

—

class SRV
—

—

—

—

—

—

—

—

2,143,118

11,748,456

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
178,237

$
713,429

$
7,235,392

$
650,807

$
2,120,267

$
10,679,916

$
9,762,560

$
6,134,935

$
2,143,118

$
11,748,456

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
10,214

49,168

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

59,489

68,639

901,259

—

—

—

—

class III
—

—

596,980

—

—

—

—

603,238

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

536,404

—

—

—

class SRV
—

—

—

—

—

—

—

—

39,044

250,607

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
10,214

49,168

596,980

59,489

68,639

901,259

536,404

603,238

39,044

250,607

 
 
 
 
 
 
 
 
 
 
 
Cost
$
118,811

$
600,386

$
5,834,760

$
614,820

$
1,796,102

$
8,762,299

$
8,059,934

$
5,417,866

$
1,956,201

$
8,123,234

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
 
  Units owned by participants #
8,645

30,369

365,971

57,811

104,276

566,431

486,864

309,859

116,652

603,990

  Minimum unit fair value #*
$
16.991085

$
19.721825

$
18.964125

$
10.855365

$
19.621835

$
16.192270

$
16.916529

$
18.860184

$
16.026155

$
16.876506

  Maximum unit fair value #*
$
22.208003

$
24.529815

$
20.321731

$
11.433487

$
20.666424

$
31.057303

$
30.842808

$
20.848713

$
27.994739

$
28.763772

  Contract liability
$
178,237

$
660,850

$
7,215,978

$
650,807

$
2,120,267

$
10,679,916

$
9,762,560

$
6,134,935

$
2,143,118

$
11,748,456

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
 
Units owned by participants #
—

2,363

977

—

—

—

—

—

—

—

Minimum unit fair value #*
$
—

$
20.964346

$
19.873158

$
—

$
—

$
—

$
—

$
—

$
—

$
—

Maximum unit fair value #*
$
—

$
24.529815

$
19.873158

$
—

$
—

$
—

$
—

$
—

$
—

$
—

Contract liability
$
—

$
52,579

$
19,414

$
—

$
—

$
—

$
—

$
—

$
—

$
—

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Fund®/VA
Oppenheimer Main Street Small Cap Fund/VA
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Growth Opportunities Fund
Putnam VT International Value Fund
Putnam VT International Equity Fund
Putnam VT Investors Fund
Putnam VT Small Cap Value Fund
Putnam VT Equity Income Fund
 
Sub-Account (5)
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

35,835,823

2,626,171

7,472,965

651,031

1,424,922

405,202

1,228,880

1,762,743

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
4,721,824

13,657,969

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
4,721,824

13,657,969

35,835,823

2,626,171

7,472,965

651,031

1,424,922

405,202

1,228,880

1,762,743

  Due from Sponsor Company
—

—

—

—

—

—

—

—

—

—

  Receivable for fund shares sold
690

6,210

9,591

367

1,359

402

494

32

80

552

  Other assets
1

1

—

—

1

—

—

—

1

1

 Total assets
4,722,515

13,664,180

35,845,414

2,626,538

7,474,325

651,433

1,425,416

405,234

1,228,961

1,763,296

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
690

6,210

9,591

367

1,359

402

494

32

80

552

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

—

—

  Other liabilities
—

—

—

—

—

1

—

—

—

—

 Total liabilities
690

6,210

9,591

367

1,359

403

494

32

80

552

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
4,721,825

$
13,657,970

$
35,835,823

$
2,626,171

$
7,472,966

$
651,030

$
1,424,922

$
405,202

$
1,228,881

$
1,762,744

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

35,835,823

2,626,171

7,472,966

651,030

1,424,922

405,202

1,228,881

1,762,744

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
4,721,825

13,657,970

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
4,721,825

$
13,657,970

$
35,835,823

$
2,626,171

$
7,472,966

$
651,030

$
1,424,922

$
405,202

$
1,228,881

$
1,762,744

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

—

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
—

—

—

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

5,836,453

143,272

749,545

56,172

93,438

19,776

75,857

66,045

class II
—

—

—

—

—

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

—

—

—

class S2
—

—

—

—

—

—

—

—

—

—

class SRV
147,973

537,292

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
147,973

537,292

5,836,453

143,272

749,545

56,172

93,438

19,776

75,857

66,045

 
 
 
 
 
 
 
 
 
 
 
Cost
$
4,157,137

$
10,141,869

$
38,480,485

$
2,134,167

$
5,790,627

$
524,171

$
1,182,854

$
294,051

$
1,133,032

$
1,252,442

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
  Units owned by participants #
229,122

576,630

2,505,893

151,952

547,444

60,117

125,366

14,520

57,518

61,404

  Minimum unit fair value #*
$
17.957499

$
20.448541

$
12.683826

$
16.033429

$
13.517918

$
9.335874

$
10.197950

$
24.168620

$
18.484955

$
21.875871

  Maximum unit fair value #*
$
28.314174

$
35.779936

$
20.397934

$
24.147718

$
13.733316

$
16.935698

$
17.812769

$
32.448772

$
30.704128

$
30.692956

  Contract liability
$
4,721,825

$
13,657,970

$
35,794,300

$
2,626,171

$
7,472,966

$
651,030

$
1,401,622

$
405,202

$
1,221,232

$
1,762,744

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
Units owned by participants #
—

—

2,895

—

—

—

2,076

—

366

—

Minimum unit fair value #*
$
—

$
—

$
14.342901

$
—

$
—

$
—

$
11.142311

$
—

$
19.998643

$
—

Maximum unit fair value #*
$
—

$
—

$
14.342901

$
—

$
—

$
—

$
11.589569

$
—

$
21.636201

$
—

Contract liability
$
—

$
—

$
41,523

$
—

$
—

$
—

$
23,300

$
—

$
7,649

$
—

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 












SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO All Asset Fund
PIMCO StocksPLUS Global Portfolio
PIMCO Global Multi-Asset Managed Allocation Portfolio
Jennison 20/20 Focus Fund
Prudential Value Portfolio
Invesco V.I. Growth and Income Fund
Invesco V.I. Comstock Fund
Invesco V.I. American Franchise Fund
Invesco V.I. Mid Cap Growth Fund
Wells Fargo VT Index Asset Allocation Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

343,670

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
1,242,297

5,309,550

475,756

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

648,894

412,283

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

43,597,856

6,568,550

—

class S2
—

—

—

—

—

28,015,054

1,525,951

1,604,831

1,215,739

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

                   Total investments
1,242,297

5,309,550

475,756

648,894

412,283

28,015,054

1,525,951

45,202,687

7,784,289

343,670

  Due from Sponsor Company
—

—

—

—

—

—

—

—

—

—

  Receivable for fund shares sold
117

1,172

55

104

62

4,289

216

7,916

1,296

57

  Other assets
—

2

—

—

—

—

—

4

—

—

 Total assets
1,242,414

5,310,724

475,811

648,998

412,345

28,019,343

1,526,167

45,210,607

7,785,585

343,727

 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
117

1,172

55

104

62

4,289

216

7,916

1,296

57

  Payable for fund shares purchased
—

—

—

—

—

—

—

—

—

—

  Other liabilities
—

—

—

—

—

1

1

—

1

—

 Total liabilities
117

1,172

55

104

62

4,290

217

7,916

1,297

57

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
1,242,297

$
5,309,552

$
475,756

$
648,894

$
412,283

$
28,015,053

$
1,525,950

$
45,202,691

$
7,784,288

$
343,670

 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

class 2
—

—

—

—

—

—

—

—

—

343,670

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
1,242,297

5,309,552

475,756

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

648,894

412,283

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

43,597,858

6,568,548

—

class S2
—

—

—

—

—

28,015,053

1,525,950

1,604,833

1,215,740

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total contract liabilities
$
1,242,297

$
5,309,552

$
475,756

$
648,894

$
412,283

$
28,015,053

$
1,525,950

$
45,202,691

$
7,784,288

$
343,670

 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—

—

class 2
—

—

—

—

—

—

—

—

—

16,805

class 4
—

—

—

—

—

—

—

—

—

—

class ADV
113,245

557,141

36,909

—

—

—

—

—

—

—

class B
—

—

—

—

—

—

—

—

—

—

class I
—

—

—

—

—

—

—

—

—

—

class IA
—

—

—

—

—

—

—

—

—

—

class IB
—

—

—

—

—

—

—

—

—

—

class II
—

—

—

21,717

13,185

—

—

—

—

—

class III
—

—

—

—

—

—

—

—

—

—

class INIT
—

—

—

—

—

—

—

—

—

—

class S1
—

—

—

—

—

—

—

692,359

1,168,782

—

class S2
—

—

—

—

—

1,236,322

74,292

26,395

219,844

—

class SRV
—

—

—

—

—

—

—

—

—

—

class SRV2
—

—

—

—

—

—

—

—

—

—

class VC
—

—

—

—

—

—

—

—

—

—

class Y
—

—

—

—

—

—

—

—

—

—

  Total shares
113,245

557,141

36,909

21,717

13,185

1,236,322

74,292

718,754

1,388,626

16,805

 
 
 
 
 
 
 
 
 
 
 
Cost
$
1,254,903

$
5,656,609

$
456,485

$
263,609

$
246,876

$
22,601,960

$
1,119,942

$
33,768,051

$
7,281,955

$
258,628

 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
  Units owned by participants #
99,058

375,181

43,195

191,786

186,068

1,312,443

52,795

2,319,531

466,563

107,200

  Minimum unit fair value #*
$
12.265947

$
13.659766

$
10.947978

$
2.419844

$
1.945091

$
17.994307

$
25.989208

$
17.410515

$
15.590526

$
2.067581

  Maximum unit fair value #*
$
13.144011

$
14.637587

$
11.731778

$
27.564086

$
24.396954

$
30.761899

$
30.317055

$
20.796354

$
17.585816

$
22.754105

  Contract liability
$
1,242,297

$
5,309,552

$
475,756

$
648,894

$
412,283

$
28,004,216

$
1,525,950

$
44,674,255

$
7,704,315

$
277,772

 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
Units owned by participants #
—

—

—

—

—

530

—

26,599

4,726

29,485

Minimum unit fair value #*
$
—

$
—

$
—

$
—

$
—

$
20.446817

$
—

$
19.630227

$
16.735169

$
2.234962

Maximum unit fair value #*
$
—

$
—

$
—

$
—

$
—

$
20.446817

$
—

$
20.655652

$
17.080331

$
2.234962

Contract liability
$
—

$
—

$
—

$
—

$
—

$
10,837

$
—

$
528,436

$
79,973

$
65,898

 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 











SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (concluded)
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wells Fargo VT International Equity Fund
Wells Fargo VT Small Cap Growth Fund
Wells Fargo VT Discovery Fund
Wells Fargo VT Opportunity Fund
HIMCO VIT Index Fund
HIMCO VIT Portfolio Diversifier Fund
MFS® Core Equity Portfolio
MFS® Massachusetts Investors Growth Stock Portfolio
MFS® Research International Portfolio

 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account

 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
  Investments, at market value
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—


class 2
562,927

1,147,169

704,195

121,893

—

—

—

—

—


class 4
—

—

—

—

—

—

—

—

—


class ADV
—

—

—

—

—

—

—

—

—


class B
—

—

—

—

—

—

—

—

—


class I
—

—

—

—

—

—

—

—

—


class IA
—

—

—

—

—

—

—

—

—


class IB
—

—

—

—

31,603,235

228,906,384

—

—

—


class II
—

—

—

—

—

—

—

—

—


class III
—

—

—

—

—

—

—

—

—


class INIT
—

—

—

—

—

—

17,755,747

30,561,756

17,198,827


class S1
—

—

—

—

—

—

—

—

—


class S2
—

—

—

—

—

—

—

—

—


class SRV
—

—

—

—

—

—

—

—

—


class SRV2
—

—

—

—

—

—

—

—

—


class VC
—

—

—

—

—

—

—

—

—


class Y
—

—

—

—

—

—

—

—

—


                   Total investments
562,927

1,147,169

704,195

121,893

31,603,235

228,906,384

17,755,747

30,561,756

17,198,827


  Due from Sponsor Company
—

—

—

—

—

—

35,455

—

—


  Receivable for fund shares sold
140

380

124

21

5,432

48,508

—

102

10,557


  Other assets
1

—

—

—

—

—

2

—

1


 Total assets
563,068

1,147,549

704,319

121,914

31,608,667

228,954,892

17,791,204

30,561,858

17,209,385


 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
  Due to Sponsor Company
140

380

124

21

5,432

48,508

—

102

10,557


  Payable for fund shares purchased
—

—

—

—

—

—

35,455

—

—


  Other liabilities
—

3

1

1

—

9

—

—

—


 Total liabilities
140

383

125

22

5,432

48,517

35,455

102

10,557


 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  For contract liabilities
$
562,928

$
1,147,166

$
704,194

$
121,892

$
31,603,235

$
228,906,375

$
17,755,749

$
30,561,756

$
17,198,828


 
 
 
 
 
 
 
 
 
 
 
Contract Liabilities:
 
 
 
 
 
 
 
 
 
 
class 1
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—


class 2
562,928

1,147,166

704,194

121,892

—

—

—

—

—


class 4
—

—

—

—

—

—

—

—

—


class ADV
—

—

—

—

—

—

—

—

—


class B
—

—

—

—

—

—

—

—

—


class I
—

—

—

—

—

—

—

—

—


class IA
—

—

—

—

—

—

—

—

—


class IB
—

—

—

—

31,603,235

228,906,375

—

—

—


class II
—

—

—

—

—

—

—

—

—


class III
—

—

—

—

—

—

—

—

—


class INIT
—

—

—

—

—

—

17,755,749

30,561,756

17,198,828


class S1
—

—

—

—

—

—

—

—

—


class S2
—

—

—

—

—

—

—

—

—


class SRV
—

—

—

—

—

—

—

—

—


class SRV2
—

—

—

—

—

—

—

—

—


class VC
—

—

—

—

—

—

—

—

—


class Y
—

—

—

—

—

—

—

—

—


  Total contract liabilities
$
562,928

$
1,147,166

$
704,194

$
121,892

$
31,603,235

$
228,906,375

$
17,755,749

$
30,561,756

$
17,198,828


 
 
 
 
 
 
 
 
 
 
 
Shares:
 
 
 
 
 
 
 
 
 
 
class 1
—

—

—

—

—

—

—

—

—


class 2
104,633

112,688

22,186

4,491

—

—

—

—

—


class 4
—

—

—

—

—

—

—

—

—


class ADV
—

—

—

—

—

—

—

—

—


class B
—

—

—

—

—

—

—

—

—


class I
—

—

—

—

—

—

—

—

—


class IA
—

—

—

—

—

—

—

—

—


class IB
—

—

—

—

687,326

32,607,747

—

—

—


class II
—

—

—

—

—

—

—

—

—


class III
—

—

—

—

—

—

—

—

—


class INIT
—

—

—

—

—

—

704,314

1,643,105

1,008,729


class S1
—

—

—

—

—

—

—

—

—


class S2
—

—

—

—

—

—

—

—

—


class SRV
—

—

—

—

—

—

—

—

—


class SRV2
—

—

—

—

—

—

—

—

—


class VC
—

—

—

—

—

—

—

—

—


class Y
—

—

—

—

—

—

—

—

—


  Total shares
104,633

112,688

22,186

4,491

687,326

32,607,747

704,314

1,643,105

1,008,729


 
 
 
 
 
 
 
 
 
 
 
Cost
$
503,374

$
1,003,839

$
546,260

$
95,055

$
26,645,600

$
257,360,893

$
16,360,492

$
28,468,761

$
15,303,312


 
 
 
 
 
 
 
 
 
 
 
Deferred contracts in the accumulation period:
 
 
 
 
 
 
 
 
 
 
  Units owned by participants #
35,874

315,193

21,084

5,297

1,185,177

33,423,026

1,273,229

2,263,817

1,467,430


  Minimum unit fair value #*
$
14.872611

$
2.622931

$
29.831842

$
22.007660

$
22.312172

$
6.615585

$
13.226438

$
12.913779

$
11.368649


  Maximum unit fair value #*
$
16.216451

$
34.517721

$
36.385309

$
32.312262

$
31.769789

$
7.159054

$
13.959757

$
13.669582

$
12.034167


  Contract liability
$
559,095

$
1,141,847

$
698,228

$
121,892

$
31,470,174

$
228,906,375

$
17,367,163

$
30,104,654

$
17,123,807


 
 
 
 
 
 
 
 
 
 
 
Contracts in payout (annuitization) period:
 
 
 
 
 
 
 
 
 
 
Units owned by participants #
243

1,797

188

—

4,188

—

28,314

34,084

6,374


Minimum unit fair value #*
$
15.795106

$
2.959151

$
31.768686

$
—

$
31.769789

$
—

$
13.657713

$
13.334870

$
11.739422


Maximum unit fair value #*
$
15.795106

$
2.959151

$
31.768686

$
—

$
31.769789

$
—

$
13.797841

$
13.471689

$
11.859904


Contract liability
$
3,833

$
5,319

$
5,966

$
—

$
133,061

$
—

$
388,586

$
457,102

$
75,021


 
 
 
 
 
 
 
 
 
 
 
# Rounded units/unit fair values
 
 
 
 
 
 
 
 
 
 
* For Sub-Accounts with only one unit fair value, the unit fair value is illustrated in both the minimum and maximum unit fair value rows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 

(1) Formerly BlackRock Large Cap Growth V.I. Fund. Change effective June 12, 2017.
(2) Formerly UIF Core Plus Fixed Income Portfolio. Change effective May 1, 2017.
(3) Formerly UIF Growth Portfolio. Change effective May 1, 2017.
(4) Formerly UIF Mid Cap Growth Portfolio. Change effective May 1, 2017.
(5) Merged with Oppenheimer Equity Income Fund/VA . Change effective April 28, 2017.

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Fund
American Century VP Growth Fund
AB VPS Balanced Wealth Strategy Portfolio
AB VPS International Value Portfolio
AB VPS Small/Mid Cap Value Portfolio
AB VPS Value Portfolio
AB VPS International Growth Portfolio
Invesco V.I. Value Opportunities Fund
Invesco V.I. Core Equity Fund
Invesco V.I. Government Securities Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
100,777

$
13,419

$
258,208

$
292,270

$
28,924

$
8,938

$
17,758

$
163,760

$
1,079,637

$
4,124,892

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

—

—

(58,440
)
(179,696
)
(270,665
)
  Mortality and expense risk charges
(61,139
)
(21,476
)
(217,196
)
(248,614
)
(162,461
)
(13,521
)
(32,756
)
(781,211
)
(1,748,761
)
(3,552,577
)
    Total expenses
(61,139
)
(21,476
)
(217,196
)
(248,614
)
(162,461
)
(13,521
)
(32,756
)
(839,651
)
(1,928,457
)
(3,823,242
)
    Net investment income (loss)
39,638

(8,057
)
41,012

43,656

(133,537
)
(4,583
)
(14,998
)
(675,891
)
(848,820
)
301,650

 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
535,783

133,585

75,249

447,720

344,014

54,523

85,791

(1,387,912
)
3,199,976

(2,084,838
)
  Net realized gain distributions
—

264,119

117,515

—

588,801

—

—

—

5,470,341

—

  Change in unrealized appreciation (depreciation) during the period
(77,817
)
106,338

1,679,583

2,794,721

422,468

39,711

470,667

8,144,501

3,592,411

1,969,735

    Net gain (loss) on investments
457,966

504,042

1,872,347

3,242,441

1,355,283

94,234

556,458

6,756,589

12,262,728

(115,103
)
    Net increase (decrease) in net assets resulting from operations
$
497,604

$
495,985

$
1,913,359

$
3,286,097

$
1,221,746

$
89,651

$
541,460

$
6,080,698

$
11,413,908

$
186,547

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 







SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. International Growth Fund
Invesco V.I. Mid Cap Core Equity Fund
Invesco V.I. Small Cap Equity Fund
Invesco V.I. Balanced Risk Allocation Fund
Invesco V.I. Diversified Dividend Fund
Invesco V.I. Government Money Market Fund
American Century VP Mid Cap Value Fund
American Funds Global Bond Fund
American Funds Global Growth and Income Fund
American Funds Asset Allocation Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
1,540,547

$
576,824

$
—

$
414,278

$
4,221

$
631,955

$
14,818

$
269,679

$
3,998,858

$
9,559,284

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
(105,884
)
(147,913
)
(6,778
)
—

—

—

—

—

—

(943,708
)
  Mortality and expense risk charges
(1,688,880
)
(1,921,984
)
(1,193,547
)
(161,999
)
(5,477
)
(2,018,719
)
(9,607
)
(1,257,009
)
(2,873,732
)
(10,215,232
)
    Total expenses
(1,794,764
)
(2,069,897
)
(1,200,325
)
(161,999
)
(5,477
)
(2,018,719
)
(9,607
)
(1,257,009
)
(2,873,732
)
(11,158,940
)
    Net investment income (loss)
(254,217
)
(1,493,073
)
(1,200,325
)
252,279

(1,256
)
(1,386,764
)
5,211

(987,330
)
1,125,126

(1,599,656
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
5,758,866

2,106,792

932,707

(57,878
)
17,380

—

34,127

223,468

7,941,098

28,593,665

  Net realized gain distributions
—

2,247,434

3,082,649

594,264

9,713

—

21,843

429,506

2,975,385

28,177,891

  Change in unrealized appreciation (depreciation) during the period
16,452,915

10,787,743

5,190,639

85,868

(8,039
)
—

42,160

3,877,889

25,037,820

27,592,048

    Net gain (loss) on investments
22,211,781

15,141,969

9,205,995

622,254

19,054

—

98,130

4,530,863

35,954,303

84,363,604

    Net increase (decrease) in net assets resulting from operations
$
21,957,564

$
13,648,896

$
8,005,670

$
874,533

$
17,798

$
(1,386,764
)
$
103,341

$
3,543,533

$
37,079,429

$
82,763,948

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VT Omega Growth Fund
Fidelity® VIP Growth Portfolio
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
8,337,967

$
12,093,882

$
1,469,154

$
6,847,167

$
18,289,962

$
4,762,569

$
1,103,309

$
565,341

$
106

$
4,625

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
(563,780
)
(943,278
)
(334,627
)
(1,977,680
)
(1,983,596
)
(486,406
)
(170,274
)
(206,971
)
—

—

  Mortality and expense risk charges
(6,830,531
)
(8,265,300
)
(3,467,265
)
(21,544,835
)
(20,451,206
)
(4,984,247
)
(1,852,932
)
(2,091,735
)
(17,944
)
(107,528
)
    Total expenses
(7,394,311
)
(9,208,578
)
(3,801,892
)
(23,522,515
)
(22,434,802
)
(5,470,653
)
(2,023,206
)
(2,298,706
)
(17,944
)
(107,528
)
    Net investment income (loss)
943,656

2,885,304

(2,332,738
)
(16,675,348
)
(4,144,840
)
(708,084
)
(919,897
)
(1,733,365
)
(17,838
)
(102,903
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
20,768,071

(67,564
)
9,796,382

52,462,552

44,712,150

8,335,629

4,938,751

3,819,359

7,401

285,944

  Net realized gain distributions
15,285,238

8,239,681

6,433,651

122,955,958

81,584,495

3,594,134

—

—

27,082

415,730

  Change in unrealized appreciation (depreciation) during the period
22,036,956

577,651

40,792,772

140,776,456

115,972,000

70,346,957

22,436,959

26,062,704

214,390

1,039,547

    Net gain (loss) on investments
58,090,265

8,749,768

57,022,805

316,194,966

242,268,645

82,276,720

27,375,710

29,882,063

248,873

1,741,221

    Net increase (decrease) in net assets resulting from operations
$
59,033,921

$
11,635,072

$
54,690,067

$
299,519,618

$
238,123,805

$
81,568,636

$
26,455,813

$
28,148,698

$
231,035

$
1,638,318

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VIP Fund
Franklin Income VIP Fund
Franklin Large Cap Growth VIP Fund
Franklin Global Real Estate VIP Fund
Franklin Small-Mid Cap Growth VIP Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
465,934

$
217,629

$
25,617

$
15,910

$
51,867

$
6,057,242

$
26,355,945

$
372,289

$
163,453

$
—

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

(543,513
)
(820,336
)
(85,132
)
(8,333
)
(203,690
)
  Mortality and expense risk charges
(880,092
)
(705,368
)
(41,026
)
(43,495
)
(14,702
)
(6,461,046
)
(10,627,598
)
(1,066,315
)
(74,006
)
(2,348,087
)
    Total expenses
(880,092
)
(705,368
)
(41,026
)
(43,495
)
(14,702
)
(7,004,559
)
(11,447,934
)
(1,151,447
)
(82,339
)
(2,551,777
)
    Net investment income (loss)
(414,158
)
(487,739
)
(15,409
)
(27,585
)
37,165

(947,317
)
14,908,011

(779,158
)
81,114

(2,551,777
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
3,695,575

2,159,400

121,806

78,031

1,320

17,365,294

8,104,932

1,695,828

(22,960
)
(4,154,194
)
  Net realized gain distributions
3,402,702

2,168,135

552,205

172,256

8,968

14,433,267

—

4,757,818

—

13,611,136

  Change in unrealized appreciation (depreciation) during the period
4,611,754

3,967,634

(307,496
)
291,109

52,430

36,405,800

24,807,253

7,867,343

376,266

17,538,818

    Net gain (loss) on investments
11,710,031

8,295,169

366,515

541,396

62,718

68,204,361

32,912,185

14,320,989

353,306

26,995,760

    Net increase (decrease) in net assets resulting from operations
$
11,295,873

$
7,807,430

$
351,106

$
513,811

$
99,883

$
67,257,044

$
47,820,196

$
13,541,831

$
434,420

$
24,443,983

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Fund
Franklin Strategic Income VIP Fund
Franklin Mutual Shares VIP Fund
Templeton Developing Markets VIP Fund
Templeton Foreign VIP Fund
Templeton Growth VIP Fund
Franklin Mutual Global Discovery VIP Fund
Franklin Flex Cap Growth VIP Fund
Templeton Global Bond VIP Fund
Hartford Balanced HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
291,743

$
8,756,109

$
11,364,837

$
595,670

$
4,651,423

$
3,105,883

$
3,804,464

$
—

$
—

$
399,706

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

(342,960
)
(708,472
)
(67,952
)
(255,063
)
(265,442
)
(264,568
)
(36,352
)
—

—

  Mortality and expense risk charges
(1,044,728
)
(4,876,034
)
(8,245,830
)
(918,346
)
(3,041,037
)
(3,089,352
)
(3,553,073
)
(380,459
)
(729,421
)
(278,458
)
    Total expenses
(1,044,728
)
(5,218,994
)
(8,954,302
)
(986,298
)
(3,296,100
)
(3,354,794
)
(3,817,641
)
(416,811
)
(729,421
)
(278,458
)
    Net investment income (loss)
(752,985
)
3,537,115

2,410,535

(390,628
)
1,355,323

(248,911
)
(13,177
)
(416,811
)
(729,421
)
121,248

 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
992,606

(3,789,403
)
18,550,920

858,393

2,015,154

7,746,755

1,568,937

(1,883,356
)
(503,839
)
845,757

  Net realized gain distributions
4,174,319

—

20,783,619

—

—

—

12,236,380

53,574

159,965

—

  Change in unrealized appreciation (depreciation) during the period
339,020

8,677,522

(8,478,951
)
15,768,228

22,708,642

22,119,417

731,895

7,374,795

1,365,469

1,197,052

    Net gain (loss) on investments
5,505,945

4,888,119

30,855,588

16,626,621

24,723,796

29,866,172

14,537,212

5,545,013

1,021,595

2,042,809

    Net increase (decrease) in net assets resulting from operations
$
4,752,960

$
8,425,234

$
33,266,123

$
16,235,993

$
26,079,119

$
29,617,261

$
14,524,035

$
5,128,202

$
292,174

$
2,164,057

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Total Return Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Growth HLS Fund
Hartford Disciplined Equity HLS Fund
Hartford Growth Opportunities HLS Fund
Hartford High Yield HLS Fund
Hartford International Opportunities HLS Fund
Hartford Small/Mid Cap Equity HLS Fund
Hartford Ultrashort Bond HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
12,429,634

$
3,845,173

$
4,441,465

$
21,627

$
628,137

$
—

$
1,762,225

$
438,119

$
42,838

$
1,147,144

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

—

—

—

—

(194,467
)
  Mortality and expense risk charges
(5,961,210
)
(5,160,760
)
(3,924,574
)
(59,913
)
(1,063,577
)
(1,566,890
)
(423,739
)
(451,739
)
(82,717
)
(2,402,829
)
    Total expenses
(5,961,210
)
(5,160,760
)
(3,924,574
)
(59,913
)
(1,063,577
)
(1,566,890
)
(423,739
)
(451,739
)
(82,717
)
(2,597,296
)
    Net investment income (loss)
6,468,424

(1,315,587
)
516,891

(38,286
)
(435,440
)
(1,566,890
)
1,338,486

(13,620
)
(39,879
)
(1,450,152
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
2,171,621

11,995,673

8,537,702

117,173

1,750,258

4,803,987

16,000

1,600,466

3,213

261,014

  Net realized gain distributions
—

18,901,440

19,262,825

201,678

7,460,577

1,347,957

—

—

157,419

—

  Change in unrealized appreciation (depreciation) during the period
7,006,159

38,437,067

15,388,007

873,808

4,036,696

22,612,294

362,317

5,197,229

494,934

82,731

    Net gain (loss) on investments
9,177,780

69,334,180

43,188,534

1,192,659

13,247,531

28,764,238

378,317

6,797,695

655,566

343,745

    Net increase (decrease) in net assets resulting from operations
$
15,646,204

$
68,018,593

$
43,705,425

$
1,154,373

$
12,812,091

$
27,197,348

$
1,716,803

$
6,784,075

$
615,687

$
(1,106,407
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Small Company HLS Fund
Hartford SmallCap Growth HLS Fund
Hartford Stock HLS Fund
Hartford U.S. Government Securities HLS Fund
Hartford Value HLS Fund
Lord Abbett Fundamental Equity Fund
Lord Abbett Calibrated Dividend Growth Fund
Lord Abbett Bond Debenture Fund
Lord Abbett Growth and Income Fund
MFS® Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
—

$
3,086

$
51,054

$
477,863

$
233,760

$
108,164

$
253,266

$
1,420,446

$
82,349

$
116,722

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

—

—

—

—

(192,351
)
  Mortality and expense risk charges
(136,491
)
(122,878
)
(44,492
)
(342,436
)
(178,216
)
(106,244
)
(235,449
)
(534,907
)
(94,476
)
(1,921,565
)
    Total expenses
(136,491
)
(122,878
)
(44,492
)
(342,436
)
(178,216
)
(106,244
)
(235,449
)
(534,907
)
(94,476
)
(2,113,916
)
    Net investment income (loss)
(136,491
)
(119,792
)
6,562

135,427

55,544

1,920

17,817

885,539

(12,127
)
(1,997,194
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
(147,832
)
202,815

162,166

(94,388
)
678,879

114,954

204,217

577,845

534,830

8,295,365

  Net realized gain distributions
—

—

—

—

1,035,572

803,757

868,486

334,631

609,857

5,039,071

  Change in unrealized appreciation (depreciation) during the period
2,326,806

1,102,408

309,413

(78,392
)
136,228

258,916

1,379,404

812,862

(425,485
)
21,798,593

    Net gain (loss) on investments
2,178,974

1,305,223

471,579

(172,780
)
1,850,679

1,177,627

2,452,107

1,725,338

719,202

35,133,029

    Net increase (decrease) in net assets resulting from operations
$
2,042,483

$
1,185,431

$
478,141

$
(37,353
)
$
1,906,223

$
1,179,547

$
2,469,924

$
2,610,877

$
707,075

$
33,135,835

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Global Equity Fund
MFS® Investors Trust Fund
MFS® Mid Cap Growth Fund
MFS® New Discovery Fund
MFS® Total Return Fund
MFS® Value Fund
MFS® Total Return Bond Series
MFS® Research Fund
MFS® High Yield Portfolio
BlackRock Global Allocation V.I. Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
146,124

$
883,179

$
53,580

$
—

$
9,114,890

$
4,519,111

$
16,524,084

$
280,432

$
5,532,252

$
53,810

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
(27,905
)
(189,528
)
(65,180
)
(119,841
)
(554,481
)
(208,355
)
(664,267
)
(35,705
)
—

—

  Mortality and expense risk charges
(296,294
)
(2,170,315
)
(775,896
)
(1,385,203
)
(6,705,430
)
(3,702,860
)
(7,030,894
)
(302,342
)
(1,623,277
)
(46,470
)
    Total expenses
(324,199
)
(2,359,843
)
(841,076
)
(1,505,044
)
(7,259,911
)
(3,911,215
)
(7,695,161
)
(338,047
)
(1,623,277
)
(46,470
)
    Net investment income (loss)
(178,075
)
(1,476,664
)
(787,496
)
(1,505,044
)
1,854,979

607,896

8,828,923

(57,615
)
3,908,975

7,340

 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
922,416

6,260,666

1,253,314

2,219,733

11,060,321

13,156,093

1,755,601

775,076

(372,880
)
(23,777
)
  Net realized gain on distributions
658,954

4,787,045

2,565,953

1,475,715

10,696,766

9,714,651

—

1,377,362

—

49,740

  Change in unrealized appreciation (depreciation) during the period
2,075,381

14,250,176

6,593,168

15,145,063

15,104,716

12,779,850

3,609,268

1,850,782

548,855

473,449

    Net gain (loss) on investments
3,656,751

25,297,887

10,412,435

18,840,511

36,861,803

35,650,594

5,364,869

4,003,220

175,975

499,412

    Net increase (decrease) in net assets resulting from operations
$
3,478,676

$
23,821,223

$
9,624,939

$
17,335,467

$
38,716,782

$
36,258,490

$
14,193,792

$
3,945,605

$
4,084,950

$
506,752

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Opportunities V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund
BlackRock Equity Dividend V.I. Fund
Morgan Stanley VIF Core Plus Fixed Income Portfolio
Morgan Stanley VIF Growth Portfolio
Morgan Stanley VIF Mid Cap Growth Portfolio
Invesco V.I. American Value Fund
Morgan Stanley Mid Cap Growth Portfolio
BlackRock Capital Appreciation V.I. Fund
Oppenheimer Capital Appreciation Fund/VA
 
Sub-Account
Sub-Account (1)
Sub-Account
Sub-Account (2)
Sub-Account (3)
Sub-Account (4)
Sub-Account
Sub-Account (5)
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
3,174

$
276

$
112,881

$
18,405

$
—

$
—

$
58,273

$
—

$
—

$
183

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
(282
)
(1,035
)
—

—

—

—

—

(424
)
—

—

  Mortality and expense risk charges
(3,389
)
(11,118
)
(68,266
)
(11,363
)
(35,029
)
(143,687
)
(143,585
)
(3,172
)
(59,445
)
(33,506
)
    Total expenses
(3,671
)
(12,153
)
(68,266
)
(11,363
)
(35,029
)
(143,687
)
(143,585
)
(3,596
)
(59,445
)
(33,506
)
    Net investment income (loss)
(497
)
(11,877
)
44,615

7,042

(35,029
)
(143,687
)
(85,312
)
(3,596
)
(59,445
)
(33,323
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
11,131

22,571

381,900

9,707

35,774

201,496

294,818

4,991

288,089

15,888

  Net realized gain distributions
26,152

114,344

378,144

—

175,986

—

115,264

—

666,582

182,214

  Change in unrealized appreciation (depreciation) during the period
2,278

28,544

272,536

9,274

505,134

3,219,436

430,448

64,245

915,692

266,380

    Net gain (loss) on investments
39,561

165,459

1,032,580

18,981

716,894

3,420,932

840,530

69,236

1,870,363

464,482

    Net increase (decrease) in net assets resulting from operations
$
39,064

$
153,582

$
1,077,195

$
26,023

$
681,865

$
3,277,245

$
755,218

$
65,640

$
1,810,918

$
431,159

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Global Fund/VA
Oppenheimer Main Street Fund®/VA
Oppenheimer Main Street Small Cap Fund/VA
Oppenheimer Equity Income Fund/VA
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Growth Opportunities Fund
Putnam VT International Value Fund
Putnam VT International Equity Fund
Putnam VT Investors Fund
 
Sub-Account
Sub-Account (6)
Sub-Account
Sub-Account (7)
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
81,581

$
49,775

$
94,246

$
52,555

$
2,108,668

$
41,702

$
8,357

$
12,044

$
31,513

$
4,144

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

—

—

—

—

—

  Mortality and expense risk charges
(191,257
)
(66,819
)
(234,335
)
(12,472
)
(601,151
)
(46,177
)
(68,710
)
(12,961
)
(24,668
)
(3,599
)
    Total expenses
(191,257
)
(66,819
)
(234,335
)
(12,472
)
(601,151
)
(46,177
)
(68,710
)
(12,961
)
(24,668
)
(3,599
)
    Net investment income (loss)
(109,676
)
(17,044
)
(140,089
)
40,083

1,507,517

(4,475
)
(60,353
)
(917
)
6,845

545

 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
720,072

88,561

1,014,352

153,211

(750,607
)
73,133

359,211

33,660

54,471

10,678

  Net realized gain distributions
—

81,638

785,986

—

—

98,939

107,707

—

—

20,341

  Change in unrealized appreciation (depreciation) during the period
2,585,188

349,541

(21,748
)
(138,498
)
1,218,904

176,985

1,625,848

118,505

247,669

42,897

    Net gain (loss) on investments
3,305,260

519,740

1,778,590

14,713

468,297

349,057

2,092,766

152,165

302,140

73,916

    Net increase (decrease) in net assets resulting from operations
$
3,195,584

$
502,696

$
1,638,501

$
54,796

$
1,975,814

$
344,582

$
2,032,413

$
151,248

$
308,985

$
74,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 



SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Putnam VT Small Cap Value Fund
Putnam VT Equity Income Fund
PIMCO All Asset Fund
PIMCO StocksPLUS Global Portfolio
PIMCO Global Multi-Asset Managed Allocation Portfolio
Jennison 20/20 Focus Fund
Prudential Value Portfolio
Invesco V.I. Growth and Income Fund
Invesco V.I. Comstock Fund
Invesco V.I. American Franchise Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
13,261

$
29,827

$
55,678

$
184,210

$
11,446

$
—

$
—

$
357,825

$
27,614

$
34,783

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

(679
)
—

(7,777
)
(2,748
)
—

  Mortality and expense risk charges
(26,457
)
(12,693
)
(14,595
)
(50,951
)
(7,503
)
(10,697
)
(6,922
)
(323,654
)
(21,816
)
(882,297
)
    Total expenses
(26,457
)
(12,693
)
(14,595
)
(50,951
)
(7,503
)
(11,376
)
(6,922
)
(331,431
)
(24,564
)
(882,297
)
    Net investment income (loss)
(13,196
)
17,134

41,083

133,259

3,943

(11,376
)
(6,922
)
26,394

3,050

(847,514
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
13,481

73,170

(11,069
)
(277,614
)
(5,460
)
10,471

3,568

1,012,417

57,456

3,326,740

  Net realized gain distributions
75,267

52,830

—

—

—

—

—

1,151,405

60,495

3,516,231

  Change in unrealized appreciation (depreciation) during the period
896

136,733

115,066

1,245,804

64,320

141,032

55,453

1,148,579

90,838

3,938,934

    Net gain (loss) on investments
89,644

262,733

103,997

968,190

58,860

151,503

59,021

3,312,401

208,789

10,781,905

    Net increase (decrease) in net assets resulting from operations
$
76,448

$
279,867

$
145,080

$
1,101,449

$
62,803

$
140,127

$
52,099

$
3,338,795

$
211,839

$
9,934,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 



SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. Mid Cap Growth Fund
Wells Fargo VT Index Asset Allocation Fund
Wells Fargo VT International Equity Fund
Wells Fargo VT Small Cap Growth Fund
Wells Fargo VT Discovery Fund
Wells Fargo VT Opportunity Fund
HIMCO VIT Index Fund
HIMCO VIT Portfolio Diversifier Fund
HIMCO VIT American Funds Asset Allocation Fund
HIMCO VIT American Funds Blue Chip Income and Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account (8)
Sub-Account (9)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
—

$
2,636

$
15,089

$
—

$
—

$
932

$
574,760

$
2,415,677

$
364,217

$
869,301


 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
—

—

—

—

—

—

(66,710
)
—

(24,315
)
(31,535
)
  Mortality and expense risk charges
(168,296
)
(7,522
)
(10,220
)
(21,618
)
(15,936
)
(2,841
)
(284,794
)
(2,295,347
)
(387,638
)
(396,953
)
    Total expenses
(168,296
)
(7,522
)
(10,220
)
(21,618
)
(15,936
)
(2,841
)
(351,504
)
(2,295,347
)
(411,953
)
(428,488
)
    Net investment income (loss)
(168,296
)
(4,886
)
4,869

(21,618
)
(15,936
)
(1,909
)
223,256

120,330

(47,736
)
440,813


 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
92,852

39,148

2,907

8,622

48,405

8,556

1,397,744

(4,426,578
)
(5,497,199
)
(10,295,183
)
  Net realized gain distributions
546,701

15,017

—

32,854

41,002

11,202

1,831,658

—

6,696,910

9,881,040

  Change in unrealized appreciation (depreciation) during the period
1,088,042

(15,270
)
100,489

216,576

105,156

5,321

2,623,116

(6,167,130
)
2,117,060

2,518,484

    Net gain (loss) on investments
1,727,595

38,895

103,396

258,052

194,563

25,079

5,852,518

(10,593,708
)
3,316,771

2,104,341

    Net increase (decrease) in net assets resulting from operations
$
1,559,299

$
34,009

$
108,265

$
236,434

$
178,627

$
23,170

$
6,075,774

$
(10,473,378
)
$
3,269,035

$
2,545,154

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HIMCO VIT American Funds Bond Fund
HIMCO VIT American Funds Global Bond Fund
HIMCO VIT American Funds Global Growth and Income Fund
HIMCO VIT American Funds Global Growth Fund
HIMCO VIT American Funds Global Small Capitalization Fund
HIMCO VIT American Funds Growth Fund
HIMCO VIT American Funds Growth-Income Fund
HIMCO VIT American Funds International Fund
HIMCO VIT American Funds New World Fund
MFS® Core Equity Portfolio
 
Sub-Account (10)
Sub-Account (11)
Sub-Account (12)
Sub-Account (13)
Sub-Account (14)
Sub-Account (15)
Sub-Account (16)
Sub-Account (17)
Sub-Account (18)
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
  Dividends
$
2,950,566

$
34,463

$
368,340

$
120,486

$
48,065

$
805,360

$
1,775,959

$
1,085,493

$
63,722

$
159,707

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
  Administrative charges
(134,840
)
(8,687
)
(21,468
)
(11,165
)
(33,739
)
(219,334
)
(130,256
)
(133,945
)
(14,221
)
—

  Mortality and expense risk charges
(1,299,454
)
(110,550
)
(348,508
)
(204,790
)
(355,955
)
(2,128,605
)
(1,229,298
)
(1,236,268
)
(202,647
)
(292,516
)
    Total expenses
(1,434,294
)
(119,237
)
(369,976
)
(215,955
)
(389,694
)
(2,347,939
)
(1,359,554
)
(1,370,213
)
(216,868
)
(292,516
)
    Net investment income (loss)
1,516,272

(84,774
)
(1,636
)
(95,469
)
(341,629
)
(1,542,579
)
416,405

(284,720
)
(153,146
)
(132,809
)
 
 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
(3,937,333
)
(121,249
)
(8,657,773
)
(2,406,956
)
(8,174,225
)
(82,220,937
)
(44,272,431
)
(18,699,980
)
1,356,543

66,465

  Net realized gain distributions
361,821

—

11,448,787

4,846,579

10,010,673

86,298,254

44,462,842

32,070,666

1,179,049

983,971

  Change in unrealized appreciation (depreciation) during the period
4,114,021

566,577

2,176,230

1,157,824

3,748,953

35,663,007

15,449,183

12,463,015

1,118,444

2,501,789

    Net gain (loss) on investments
538,509

445,328

4,967,244

3,597,447

5,585,401

39,740,324

15,639,594

25,833,701

3,654,036

3,552,225

    Net increase (decrease) in net assets resulting from operations
$
2,054,781

$
360,554

$
4,965,608

$
3,501,978

$
5,243,772

$
38,197,745

$
16,055,999

$
25,548,981

$
3,500,890

$
3,419,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
Statements of Operations (concluded)
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Massachusetts Investors Growth Stock Portfolio
MFS® Research International Portfolio





 
 
Sub-Account
Sub-Account





 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
  Dividends
$
194,373

$
309,011






 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
  Administrative charges
—

—






 
  Mortality and expense risk charges
(542,149
)
(328,693
)





 
    Total expenses
(542,149
)
(328,693
)





 
    Net investment income (loss)
(347,776
)
(19,682
)





 
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
  Net realized gain (loss) on security transactions
(9,697
)
107,501






 
  Net realized gain distributions
1,549,805

—






 
  Change in unrealized appreciation (depreciation) during the period
5,787,570

3,897,906






 
    Net gain (loss) on investments
7,327,678

4,005,407






 
    Net increase (decrease) in net assets resulting from operations
$
6,979,902

$
3,985,725






 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 


(1) Formerly BlackRock Large Cap Growth V.I. Fund. Change effective June 12, 2017.
(2) Formerly UIF Core Plus Fixed Income Portfolio. Change effective May 1, 2017.
(3) Formerly UIF Growth Portfolio. Change effective May 1, 2017.
(4) Formerly UIF Mid Cap Growth Portfolio. Change effective May 1, 2017.
(5) Liquidated as of September 29, 2017.
(6) Merged with Oppenheimer Equity Income Fund/VA . Change effective April 28, 2017.
(7) Merged with Oppenheimer Main Street Fund®/VA . Change effective April 28, 2017.
(8) Liquidated as of November 10, 2017.
(9) Liquidated as of November 10, 2017.
(10) Liquidated as of November 10, 2017.
(11) Liquidated as of November 10, 2017.
(12) Liquidated as of November 10, 2017.
(13) Liquidated as of November 10, 2017.
(14) Liquidated as of November 10, 2017.
(15) Liquidated as of November 10, 2017.
(16) Liquidated as of November 10, 2017.
(17) Liquidated as of November 10, 2017.
(18) Liquidated as of November 10, 2017.




SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Fund
American Century VP Growth Fund
AB VPS Balanced Wealth Strategy Portfolio
AB VPS International Value Portfolio
AB VPS Small/Mid Cap Value Portfolio
AB VPS Value Portfolio
AB VPS International Growth Portfolio
Invesco V.I. Value Opportunities Fund
Invesco V.I. Core Equity Fund
Invesco V.I. Government Securities Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
39,638

$
(8,057
)
$
41,012

$
43,656

$
(133,537
)
$
(4,583
)
$
(14,998
)
$
(675,891
)
$
(848,820
)
$
301,650

  Net realized gain (loss) on security transactions
535,783

133,585

75,249

447,720

344,014

54,523

85,791

(1,387,912
)
3,199,976

(2,084,838
)
  Net realized gain distributions
—

264,119

117,515

—

588,801

—

—

—

5,470,341

—

  Change in unrealized appreciation (depreciation) during the period
(77,817
)
106,338

1,679,583

2,794,721

422,468

39,711

470,667

8,144,501

3,592,411

1,969,735

  Net increase (decrease) in net assets resulting from operations
497,604

495,985

1,913,359

3,286,097

1,221,746

89,651

541,460

6,080,698

11,413,908

186,547

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
37,440

1,836

8,869

82,306

132,758

1,113

2,575

322,618

390,069

1,388,153

  Net transfers
(396,216
)
(352,006
)
(250,014
)
(727,903
)
(464,387
)
(52,857
)
170,788

(767,245
)
144,599

11,087,025

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(701,251
)
(244,355
)
(3,413,568
)
(2,123,878
)
(1,502,042
)
(165,889
)
(351,026
)
(4,684,948
)
(13,843,316
)
(30,837,282
)
  Other transactions
1

1

(1
)
(83
)
(138
)
(1
)
4

1,344

702

7,314

  Death benefits
(52,960
)
(42,162
)
(146,536
)
(275,441
)
(180,794
)
—

(34,326
)
(972,338
)
(2,130,771
)
(6,184,821
)
  Net annuity transactions
—

—

—

(4,692
)
(2,412
)
—

(332
)
(43,131
)
(27,515
)
91,986

  Net increase (decrease) in net assets resulting from unit transactions
(1,112,986
)
(636,686
)
(3,801,250
)
(3,049,691
)
(2,017,015
)
(217,634
)
(212,317
)
(6,143,700
)
(15,466,232
)
(24,447,625
)
  Net increase (decrease) in net assets
(615,382
)
(140,701
)
(1,887,891
)
236,406

(795,269
)
(127,983
)
329,143

(63,002
)
(4,052,324
)
(24,261,078
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
7,000,593

2,029,634

15,497,279

15,267,094

12,301,333

925,544

1,732,037

44,106,929

109,177,236

214,989,740

  End of period
$
6,385,211

$
1,888,933

$
13,609,388

$
15,503,500

$
11,506,064

$
797,561

$
2,061,180

$
44,043,927

$
105,124,912

$
190,728,662

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. International Growth Fund
Invesco V.I. Mid Cap Core Equity Fund
Invesco V.I. Small Cap Equity Fund
Invesco V.I. Balanced Risk Allocation Fund
Invesco V.I. Diversified Dividend Fund
Invesco V.I. Government Money Market Fund
American Century VP Mid Cap Value Fund
American Funds Global Bond Fund
American Funds Global Growth and Income Fund
American Funds Asset Allocation Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(254,217
)
$
(1,493,073
)
$
(1,200,325
)
$
252,279

$
(1,256
)
$
(1,386,764
)
$
5,211

$
(987,330
)
$
1,125,126

$
(1,599,656
)
  Net realized gain (loss) on security transactions
5,758,866

2,106,792

932,707

(57,878
)
17,380

—

34,127

223,468

7,941,098

28,593,665

  Net realized gain distributions
—

2,247,434

3,082,649

594,264

9,713

—

21,843

429,506

2,975,385

28,177,891

  Change in unrealized appreciation (depreciation) during the period
16,452,915

10,787,743

5,190,639

85,868

(8,039
)
—

42,160

3,877,889

25,037,820

27,592,048

  Net increase (decrease) in net assets resulting from operations
21,957,564

13,648,896

8,005,670

874,533

17,798

(1,386,764
)
103,341

3,543,533

37,079,429

82,763,948

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
537,107

509,586

500,421

25,992

—

652,468

5,128

303,277

1,024,801

4,807,764

  Net transfers
(4,911,141
)
(1,844,479
)
(2,139,788
)
(232,906
)
6,110

54,227,871

71,597

11,962,889

23,201,892

31,785,104

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(15,023,392
)
(13,622,396
)
(8,584,304
)
(1,619,822
)
(45,344
)
(65,067,467
)
(116,104
)
(9,677,197
)
(21,739,728
)
(70,336,817
)
  Other transactions
6,741

7,302

5,621

(4
)
(1
)
9,885

—

4,459

1,324

28,123

  Death benefits
(2,066,095
)
(2,352,997
)
(1,454,112
)
(160,885
)
—

(8,253,264
)
(66,814
)
(1,945,984
)
(3,313,495
)
(16,730,112
)
  Net annuity transactions
28,492

(162,703
)
10,978

25,233

—

(84,120
)
—

72,010

68,891

(1,312,392
)
  Net increase (decrease) in net assets resulting from unit transactions
(21,428,288
)
(17,465,687
)
(11,661,184
)
(1,962,392
)
(39,235
)
(18,514,627
)
(106,193
)
719,454

(756,315
)
(51,758,330
)
  Net increase (decrease) in net assets
529,276

(3,816,791
)
(3,655,514
)
(1,087,859
)
(21,437
)
(19,901,391
)
(2,852
)
4,262,987

36,323,114

31,005,618

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
112,985,260

114,750,629

73,362,150

11,768,580

302,253

132,108,464

1,033,246

72,264,696

164,500,263

615,841,369

  End of period
$
113,514,536

$
110,933,838

$
69,706,636

$
10,680,721

$
280,816

$
112,207,073

$
1,030,394

$
76,527,683

$
200,823,377

$
646,846,987

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VT Omega Growth Fund
Fidelity® VIP Growth Portfolio
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
943,656

$
2,885,304

$
(2,332,738
)
$
(16,675,348
)
$
(4,144,840
)
$
(708,084
)
$
(919,897
)
$
(1,733,365
)
$
(17,838
)
$
(102,903
)
  Net realized gain (loss) on security transactions
20,768,071

(67,564
)
9,796,382

52,462,552

44,712,150

8,335,629

4,938,751

3,819,359

7,401

285,944

  Net realized gain distributions
15,285,238

8,239,681

6,433,651

122,955,958

81,584,495

3,594,134

—

—

27,082

415,730

  Change in unrealized appreciation (depreciation) during the period
22,036,956

577,651

40,792,772

140,776,456

115,972,000

70,346,957

22,436,959

26,062,704

214,390

1,039,547

  Net increase (decrease) in net assets resulting from operations
59,033,921

11,635,072

54,690,067

299,519,618

238,123,805

81,568,636

26,455,813

28,148,698

231,035

1,638,318

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
2,010,723

2,605,876

703,912

6,223,780

6,699,655

1,825,007

341,305

1,031,903

1,040

59,573

  Net transfers
21,420,384

144,828,295

16,289,627

145,864,716

79,726,549

94,974,682

17,084,033

24,884,793

136,108

1,438,900

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(52,043,438
)
(71,637,880
)
(24,603,674
)
(150,306,132
)
(141,954,497
)
(35,764,610
)
(12,121,396
)
(15,653,559
)
(65,503
)
(790,173
)
  Other transactions
17,471

22,913

5,445

31,433

48,260

8,015

1,511

1,725

(24
)
(8
)
  Death benefits
(10,439,236
)
(13,530,400
)
(4,731,826
)
(27,747,676
)
(34,351,316
)
(7,563,973
)
(1,928,720
)
(2,473,341
)
(2,275
)
(26,722
)
  Net annuity transactions
(125,720
)
(86,915
)
(286,995
)
(533,643
)
(882,291
)
12,520

5,332

21,757

(2,445
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(39,159,816
)
62,201,889

(12,623,511
)
(26,467,522
)
(90,713,640
)
53,491,641

3,382,065

7,813,278

66,901

681,570

  Net increase (decrease) in net assets
19,874,105

73,836,961

42,066,556

273,052,096

147,410,165

135,060,277

29,837,878

35,961,976

297,936

2,319,888

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
424,290,310

581,920,132

199,082,119

1,217,435,416

1,249,416,840

284,007,792

100,940,043

123,282,848

679,238

4,807,498

  End of period
$
444,164,415

$
655,757,093

$
241,148,675

$
1,490,487,512

$
1,396,827,005

$
419,068,069

$
130,777,921

$
159,244,824

$
977,174

$
7,127,386

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VIP Fund
Franklin Income VIP Fund
Franklin Large Cap Growth VIP Fund
Franklin Global Real Estate VIP Fund
Franklin Small-Mid Cap Growth VIP Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(414,158
)
$
(487,739
)
$
(15,409
)
$
(27,585
)
$
37,165

$
(947,317
)
$
14,908,011

$
(779,158
)
$
81,114

$
(2,551,777
)
  Net realized gain (loss) on security transactions
3,695,575

2,159,400

121,806

78,031

1,320

17,365,294

8,104,932

1,695,828

(22,960
)
(4,154,194
)
  Net realized gain distributions
3,402,702

2,168,135

552,205

172,256

8,968

14,433,267

—

4,757,818

—

13,611,136

  Change in unrealized appreciation (depreciation) during the period
4,611,754

3,967,634

(307,496
)
291,109

52,430

36,405,800

24,807,253

7,867,343

376,266

17,538,818

  Net increase (decrease) in net assets resulting from operations
11,295,873

7,807,430

351,106

513,811

99,883

67,257,044

47,820,196

13,541,831

434,420

24,443,983

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
403,289

419,468

12,494

34,255

198

2,159,603

2,657,563

410,187

3,320

1,015,635

  Net transfers
(2,157,977
)
(641,883
)
(275,801
)
(296,705
)
384,311

(10,791,241
)
(14,233,658
)
913,529

(73,929
)
(3,415,085
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(9,385,096
)
(7,327,448
)
(342,462
)
(364,514
)
(142,356
)
(52,294,565
)
(82,968,027
)
(8,405,351
)
(597,670
)
(17,579,661
)
  Other transactions
(187
)
(207
)
—

1

(1
)
8,983

26,287

12,552

1

1,138

  Death benefits
(687,791
)
(755,122
)
(15,904
)
(718
)
(23,154
)
(7,482,059
)
(15,057,304
)
(1,393,450
)
(48,502
)
(3,261,251
)
  Net annuity transactions
(18,219
)
(5,073
)
—

—

25,323

547,598

(739,175
)
55,780

(10,319
)
(175,061
)
  Net increase (decrease) in net assets resulting from unit transactions
(11,845,981
)
(8,310,265
)
(621,673
)
(627,681
)
244,321

(67,851,681
)
(110,314,314
)
(8,406,753
)
(727,099
)
(23,414,285
)
  Net increase (decrease) in net assets
(550,108
)
(502,835
)
(270,567
)
(113,870
)
344,204

(594,637
)
(62,494,118
)
5,135,078

(292,679
)
1,029,698

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
61,582,760

46,084,251

2,288,094

2,632,250

1,422,291

399,706,589

669,321,675

55,050,262

5,290,790

136,352,797

  End of period
$
61,032,652

$
45,581,416

$
2,017,527

$
2,518,380

$
1,766,495

$
399,111,952

$
606,827,557

$
60,185,340

$
4,998,111

$
137,382,495

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Fund
Franklin Strategic Income VIP Fund
Franklin Mutual Shares VIP Fund
Templeton Developing Markets VIP Fund
Templeton Foreign VIP Fund
Templeton Growth VIP Fund
Franklin Mutual Global Discovery VIP Fund
Franklin Flex Cap Growth VIP Fund
Templeton Global Bond VIP Fund
Hartford Balanced HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(752,985
)
$
3,537,115

$
2,410,535

$
(390,628
)
$
1,355,323

$
(248,911
)
$
(13,177
)
$
(416,811
)
$
(729,421
)
$
121,248

  Net realized gain (loss) on security transactions
992,606

(3,789,403
)
18,550,920

858,393

2,015,154

7,746,755

1,568,937

(1,883,356
)
(503,839
)
845,757

  Net realized gain distributions
4,174,319

—

20,783,619

—

—

—

12,236,380

53,574

159,965

—

  Change in unrealized appreciation (depreciation) during the period
339,020

8,677,522

(8,478,951
)
15,768,228

22,708,642

22,119,417

731,895

7,374,795

1,365,469

1,197,052

  Net increase (decrease) in net assets resulting from operations
4,752,960

8,425,234

33,266,123

16,235,993

26,079,119

29,617,261

14,524,035

5,128,202

292,174

2,164,057

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
449,709

1,843,796

3,004,662

388,108

823,802

921,963

888,247

158,751

229,997

16,523

  Net transfers
(4,395,161
)
6,927,754

(7,323,712
)
1,108,562

(3,195,562
)
(6,274,173
)
(1,802,737
)
(1,310,919
)
1,746,230

2,861,056

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(7,195,744
)
(39,979,083
)
(65,930,982
)
(6,974,139
)
(23,289,540
)
(26,039,970
)
(27,111,042
)
(3,190,783
)
(7,898,036
)
(2,447,561
)
  Other transactions
4,781

11,517

19,061

5,612

7,620

7,357

653

9

117

1

  Death benefits
(1,238,906
)
(7,368,822
)
(10,555,520
)
(751,002
)
(3,645,550
)
(4,134,387
)
(3,633,065
)
(453,011
)
(1,076,448
)
(96,490
)
  Net annuity transactions
(22,994
)
(246,255
)
(163,292
)
(42,799
)
(133,686
)
136,252

179,165

24,421

5,333

—

  Net increase (decrease) in net assets resulting from unit transactions
(12,398,315
)
(38,811,093
)
(80,949,783
)
(6,265,658
)
(29,432,916
)
(35,382,958
)
(31,478,779
)
(4,771,532
)
(6,992,807
)
333,529

  Net increase (decrease) in net assets
(7,645,355
)
(30,385,859
)
(47,683,660
)
9,970,335

(3,353,797
)
(5,765,697
)
(16,954,744
)
356,670

(6,700,633
)
2,497,586

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
66,275,531

307,649,697

546,352,159

44,835,464

190,816,473

195,538,651

227,709,995

22,402,487

53,896,474

14,912,187

  End of period
$
58,630,176

$
277,263,838

$
498,668,499

$
54,805,799

$
187,462,676

$
189,772,954

$
210,755,251

$
22,759,157

$
47,195,841

$
17,409,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Total Return Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Growth HLS Fund
Hartford Disciplined Equity HLS Fund
Hartford Growth Opportunities HLS Fund
Hartford High Yield HLS Fund
Hartford International Opportunities HLS Fund
Hartford Small/Mid Cap Equity HLS Fund
Hartford Ultrashort Bond HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
6,468,424

$
(1,315,587
)
$
516,891

$
(38,286
)
$
(435,440
)
$
(1,566,890
)
$
1,338,486

$
(13,620
)
$
(39,879
)
$
(1,450,152
)
  Net realized gain (loss) on security transactions
2,171,621

11,995,673

8,537,702

117,173

1,750,258

4,803,987

16,000

1,600,466

3,213

261,014

  Net realized gain distributions
—

18,901,440

19,262,825

201,678

7,460,577

1,347,957

—

—

157,419

—

  Change in unrealized appreciation (depreciation) during the period
7,006,159

38,437,067

15,388,007

873,808

4,036,696

22,612,294

362,317

5,197,229

494,934

82,731

  Net increase (decrease) in net assets resulting from operations
15,646,204

68,018,593

43,705,425

1,154,373

12,812,091

27,197,348

1,716,803

6,784,075

615,687

(1,106,407
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
1,561,439

1,654,278

1,166,660

14,978

379,488

538,511

130,184

250,264

28,594

1,073,219

  Net transfers
34,680,353

(19,384,578
)
(13,257,790
)
613,565

(2,020,169
)
(9,061,998
)
317,962

(1,162,599
)
122,974

2,669,642

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(57,782,097
)
(49,060,510
)
(35,878,454
)
(433,219
)
(9,605,103
)
(15,080,799
)
(4,449,243
)
(4,433,543
)
(679,584
)
(26,457,252
)
  Other transactions
(207
)
(268
)
(266
)
(1
)
(172
)
148

20

61

—

2,241

  Death benefits
(7,826,844
)
(5,971,056
)
(5,139,633
)
(21,276
)
(1,166,956
)
(1,772,296
)
(444,788
)
(396,741
)
(40,216
)
(5,298,478
)
  Net annuity transactions
(5,514
)
(39,771
)
(79,020
)
—

(5,623
)
(558
)
—

(30,282
)
(407
)
(260,944
)
  Net increase (decrease) in net assets resulting from unit transactions
(29,372,870
)
(72,801,905
)
(53,188,503
)
174,047

(12,418,535
)
(25,376,992
)
(4,445,865
)
(5,772,840
)
(568,639
)
(28,271,572
)
  Net increase (decrease) in net assets
(13,726,666
)
(4,783,312
)
(9,483,078
)
1,328,420

393,556

1,820,356

(2,729,062
)
1,011,235

47,048

(29,377,979
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
428,905,117

365,083,148

291,705,438

3,856,725

69,893,555

103,653,883

30,002,601

31,168,276

5,289,564

164,861,963

  End of period
$
415,178,451

$
360,299,836

$
282,222,360

$
5,185,145

$
70,287,111

$
105,474,239

$
27,273,539

$
32,179,511

$
5,336,612

$
135,483,984

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Small Company HLS Fund
Hartford SmallCap Growth HLS Fund
Hartford Stock HLS Fund
Hartford U.S. Government Securities HLS Fund
Hartford Value HLS Fund
Lord Abbett Fundamental Equity Fund
Lord Abbett Calibrated Dividend Growth Fund
Lord Abbett Bond Debenture Fund
Lord Abbett Growth and Income Fund
MFS® Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(136,491
)
$
(119,792
)
$
6,562

$
135,427

$
55,544

$
1,920

$
17,817

$
885,539

$
(12,127
)
$
(1,997,194
)
  Net realized gain (loss) on security transactions
(147,832
)
202,815

162,166

(94,388
)
678,879

114,954

204,217

577,845

534,830

8,295,365

  Net realized gain distributions
—

—

—

—

1,035,572

803,757

868,486

334,631

609,857

5,039,071

  Change in unrealized appreciation (depreciation) during the period
2,326,806

1,102,408

309,413

(78,392
)
136,228

258,916

1,379,404

812,862

(425,485
)
21,798,593

  Net increase (decrease) in net assets resulting from operations
2,042,483

1,185,431

478,141

(37,353
)
1,906,223

1,179,547

2,469,924

2,610,877

707,075

33,135,835

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
41,304

74,733

86,989

222,613

20,109

15,998

31,632

157,001

21,505

717,885

  Net transfers
(767,945
)
1,047,827

153,906

1,325,049

(691,779
)
(403,477
)
304,890

2,353,465

(169,945
)
(9,400,005
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(1,098,955
)
(923,739
)
(557,118
)
(3,882,034
)
(1,903,430
)
(1,534,043
)
(1,846,710
)
(5,824,787
)
(844,089
)
(15,281,613
)
  Other transactions
2

(160
)
7

(7
)
81

(11
)
—

(35
)
—

6,368

  Death benefits
(150,403
)
(32,586
)
(200
)
(449,074
)
(154,228
)
(93,132
)
(208,475
)
(831,203
)
(417,186
)
(1,937,990
)
  Net annuity transactions
—

(401
)
—

(316
)
—

—

—

(27,223
)
—

(30,639
)
  Net increase (decrease) in net assets resulting from unit transactions
(1,975,997
)
165,674

(316,416
)
(2,783,769
)
(2,729,247
)
(2,014,665
)
(1,718,663
)
(4,172,782
)
(1,409,715
)
(25,925,994
)
  Net increase (decrease) in net assets
66,486

1,351,105

161,725

(2,821,122
)
(823,024
)
(835,118
)
751,261

(1,561,905
)
(702,640
)
7,209,841

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
9,304,990

6,187,974

2,749,650

23,603,588

15,091,684

11,260,482

15,026,874

36,091,538

7,083,092

122,778,839

  End of period
$
9,371,476

$
7,539,079

$
2,911,375

$
20,782,466

$
14,268,660

$
10,425,364

$
15,778,135

$
34,529,633

$
6,380,452

$
129,988,680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Global Equity Fund
MFS® Investors Trust Fund
MFS® Mid Cap Growth Fund
MFS® New Discovery Fund
MFS® Total Return Fund
MFS® Value Fund
MFS® Total Return Bond Series
MFS® Research Fund
MFS® High Yield Portfolio
BlackRock Global Allocation V.I. Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(178,075
)
$
(1,476,664
)
$
(787,496
)
$
(1,505,044
)
$
1,854,979

$
607,896

$
8,828,923

$
(57,615
)
$
3,908,975

$
7,340

  Net realized gain (loss) on security transactions
922,416

6,260,666

1,253,314

2,219,733

11,060,321

13,156,093

1,755,601

775,076

(372,880
)
(23,777
)
  Net realized gain distributions
658,954

4,787,045

2,565,953

1,475,715

10,696,766

9,714,651

—

1,377,362

—

49,740

  Change in unrealized appreciation (depreciation) during the period
2,075,381

14,250,176

6,593,168

15,145,063

15,104,716

12,779,850

3,609,268

1,850,782

548,855

473,449

  Net increase (decrease) in net assets resulting from operations
3,478,676

23,821,223

9,624,939

17,335,467

38,716,782

36,258,490

14,193,792

3,945,605

4,084,950

506,752

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
28,001

1,219,263

188,719

428,521

2,448,763

1,452,448

1,584,400

114,576

576,199

1,200

  Net transfers
(141,337
)
(4,229,214
)
172,827

(3,497,589
)
5,358,377

(5,056,594
)
41,428,575

(797,181
)
1,950,154

107,266

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(2,682,741
)
(15,156,229
)
(5,939,942
)
(9,637,729
)
(46,688,146
)
(31,381,266
)
(65,662,788
)
(2,794,914
)
(12,729,665
)
(652,577
)
  Other transactions
(33
)
3,574

7,414

3,501

5,763

2,388

5,070

201

7,109

2

  Death benefits
(87,352
)
(3,391,095
)
(713,381
)
(1,437,200
)
(8,702,831
)
(4,964,631
)
(9,828,397
)
(228,844
)
(2,061,307
)
(48,857
)
  Net annuity transactions
73,476

(82,328
)
(114,129
)
(53,624
)
(345,094
)
23,854

350,532

(19,070
)
(34,286
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(2,809,986
)
(21,636,029
)
(6,398,492
)
(14,194,120
)
(47,923,168
)
(39,923,801
)
(32,122,608
)
(3,725,232
)
(12,291,796
)
(592,966
)
  Net increase (decrease) in net assets
668,690

2,185,194

3,226,447

3,141,347

(9,206,386
)
(3,665,311
)
(17,928,816
)
220,373

(8,206,846
)
(86,214
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
17,286,675

123,783,570

42,265,469

78,731,933

402,120,648

251,725,979

520,214,626

19,606,867

90,637,053

4,374,530

  End of period
$
17,955,365

$
125,968,764

$
45,491,916

$
81,873,280

$
392,914,262

$
248,060,668

$
502,285,810

$
19,827,240

$
82,430,207

$
4,288,316

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Opportunities V.I. Fund
BlackRock Large Cap Focus Growth V.I. Fund
BlackRock Equity Dividend V.I. Fund
Morgan Stanley VIF Core Plus Fixed Income Portfolio
Morgan Stanley VIF Growth Portfolio
Morgan Stanley VIF Mid Cap Growth Portfolio
Invesco V.I. American Value Fund
Morgan Stanley Mid Cap Growth Portfolio
BlackRock Capital Appreciation V.I. Fund
Oppenheimer Capital Appreciation Fund/VA
 
Sub-Account
Sub-Account (1)
Sub-Account
Sub-Account (2)
Sub-Account (3)
Sub-Account (4)
Sub-Account
Sub-Account (5)
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(497
)
$
(11,877
)
$
44,615

$
7,042

$
(35,029
)
$
(143,687
)
$
(85,312
)
$
(3,596
)
$
(59,445
)
$
(33,323
)
  Net realized gain (loss) on security transactions
11,131

22,571

381,900

9,707

35,774

201,496

294,818

4,991

288,089

15,888

  Net realized gain distributions
26,152

114,344

378,144

—

175,986

—

115,264

—

666,582

182,214

  Change in unrealized appreciation (depreciation) during the period
2,278

28,544

272,536

9,274

505,134

3,219,436

430,448

64,245

915,692

266,380

  Net increase (decrease) in net assets resulting from operations
39,064

153,582

1,077,195

26,023

681,865

3,277,245

755,218

65,640

1,810,918

431,159

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
—

—

26,516

—

6,895

43,418

35,504

19,002

2,512

12,475

  Net transfers
(43,986
)
33,528

(497,190
)
39,162

(81,343
)
(306,969
)
624,139

(285,545
)
(1,312,210
)
130,985

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(9,294
)
(52,377
)
(1,204,437
)
(41,703
)
(236,765
)
(1,305,132
)
(1,273,804
)
(28,441
)
(1,103,539
)
(225,349
)
  Other transactions
—

—

(1
)
1

57

5

2

3

1

4

  Death benefits
175

175

(3,589
)
—

(30,685
)
(109,968
)
(73,648
)
(37,852
)
98

(1,765
)
  Net annuity transactions
—

(8,710
)
(835
)
—

—

—

—

—

—

—

  Net increase (decrease) in net assets resulting from unit transactions
(53,105
)
(27,384
)
(1,679,536
)
(2,540
)
(341,841
)
(1,678,646
)
(687,807
)
(332,833
)
(2,413,138
)
(83,650
)
  Net increase (decrease) in net assets
(14,041
)
126,198

(602,341
)
23,483

340,024

1,598,599

67,411

(267,193
)
(602,220
)
347,509

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
192,278

587,231

7,837,733

627,324

1,780,243

9,081,317

9,695,149

267,193

6,737,155

1,795,609

  End of period
$
178,237

$
713,429

$
7,235,392

$
650,807

$
2,120,267

$
10,679,916

$
9,762,560

$
—

$
6,134,935

$
2,143,118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Global Fund/VA
Oppenheimer Main Street Fund®/VA
Oppenheimer Main Street Small Cap Fund/VA
Oppenheimer Equity Income Fund/VA
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Growth Opportunities Fund
Putnam VT International Value Fund
Putnam VT International Equity Fund
Putnam VT Investors Fund
 
Sub-Account
Sub-Account (6)
Sub-Account
Sub-Account (7)
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(109,676
)
$
(17,044
)
$
(140,089
)
$
40,083

$
1,507,517

$
(4,475
)
$
(60,353
)
$
(917
)
$
6,845

$
545

  Net realized gain (loss) on security transactions
720,072

88,561

1,014,352

153,211

(750,607
)
73,133

359,211

33,660

54,471

10,678

  Net realized gain distributions
—

81,638

785,986

—

—

98,939

107,707

—

—

20,341

  Change in unrealized appreciation (depreciation) during the period
2,585,188

349,541

(21,748
)
(138,498
)
1,218,904

176,985

1,625,848

118,505

247,669

42,897

  Net increase (decrease) in net assets resulting from operations
3,195,584

502,696

1,638,501

54,796

1,975,814

344,582

2,032,413

151,248

308,985

74,461

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
76,529

20,915

63,569

1,416

196,990

8,972

49,477

259

783

948

  Net transfers
236,356

124,782

(1,562,445
)
169,298

990,416

(78,916
)
(1,503,381
)
12,023

85,316

27,122

  Net interfund transfers due to corporate actions
—

2,423,766

—

(2,423,766
)
—

—

—

—

—

—

  Surrenders for benefit payments and fees
(1,595,213
)
(703,183
)
(1,974,194
)
(167,387
)
(5,535,447
)
(463,327
)
(856,814
)
(263,034
)
(298,117
)
(38,887
)
  Other transactions
(18
)
2

(36
)
2

(89
)
—

5

(1
)
(1
)
—

  Death benefits
(267,736
)
(11,358
)
(243,135
)
(763
)
(676,157
)
(18,931
)
(33,065
)
(784
)
(82,041
)
—

  Net annuity transactions
—

—

—

—

(28,670
)
—

—

—

(12,669
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(1,550,082
)
1,854,924

(3,716,241
)
(2,421,200
)
(5,052,957
)
(552,202
)
(2,343,778
)
(251,537
)
(306,729
)
(10,817
)
  Net increase (decrease) in net assets
1,645,502

2,357,620

(2,077,740
)
(2,366,404
)
(3,077,143
)
(207,620
)
(311,365
)
(100,289
)
2,256

63,644

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
10,102,954

2,364,205

15,735,710

2,366,404

38,912,966

2,833,791

7,784,331

751,319

1,422,666

341,558

  End of period
$
11,748,456

$
4,721,825

$
13,657,970

$
—

$
35,835,823

$
2,626,171

$
7,472,966

$
651,030

$
1,424,922

$
405,202

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Putnam VT Small Cap Value Fund
Putnam VT Equity Income Fund
PIMCO All Asset Fund
PIMCO StocksPLUS Global Portfolio
PIMCO Global Multi-Asset Managed Allocation Portfolio
Jennison 20/20 Focus Fund
Prudential Value Portfolio
Invesco V.I. Growth and Income Fund
Invesco V.I. Comstock Fund
Invesco V.I. American Franchise Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(13,196
)
$
17,134

$
41,083

$
133,259

$
3,943

$
(11,376
)
$
(6,922
)
$
26,394

$
3,050

$
(847,514
)
  Net realized gain (loss) on security transactions
13,481

73,170

(11,069
)
(277,614
)
(5,460
)
10,471

3,568

1,012,417

57,456

3,326,740

  Net realized gain distributions
75,267

52,830

—

—

—

—

—

1,151,405

60,495

3,516,231

  Change in unrealized appreciation (depreciation) during the period
896

136,733

115,066

1,245,804

64,320

141,032

55,453

1,148,579

90,838

3,938,934

  Net increase (decrease) in net assets resulting from operations
76,448

279,867

145,080

1,101,449

62,803

140,127

52,099

3,338,795

211,839

9,934,391

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
1,500

42,650

871

1,515

192

—

—

131,033

3,450

279,491

  Net transfers
(282,718
)
(69,552
)
(379
)
(784,290
)
86,884

(81
)
—

(1,563,986
)
13,281

110,545

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(542,857
)
(116,183
)
(109,522
)
(826,163
)
(176,970
)
(3,266
)
(2,757
)
(3,491,277
)
(139,331
)
(4,935,506
)
  Other transactions
1

—

—

1

—

2

(1
)
(13
)
15

1,164

  Death benefits
(28,780
)
(8,103
)
(130,591
)
86

(71,650
)
(5,511
)
—

(476,714
)
(74,640
)
(923,892
)
  Net annuity transactions
(547
)
—

—

—

—

—

—

(17,730
)
—

(57,853
)
  Net increase (decrease) in net assets resulting from unit transactions
(853,401
)
(151,188
)
(239,621
)
(1,608,851
)
(161,544
)
(8,856
)
(2,758
)
(5,418,687
)
(197,225
)
(5,526,051
)
  Net increase (decrease) in net assets
(776,953
)
128,679

(94,541
)
(507,402
)
(98,741
)
131,271

49,341

(2,079,892
)
14,614

4,408,340

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
2,005,834

1,634,065

1,336,838

5,816,954

574,497

517,623

362,942

30,094,945

1,511,336

40,794,351

  End of period
$
1,228,881

$
1,762,744

$
1,242,297

$
5,309,552

$
475,756

$
648,894

$
412,283

$
28,015,053

$
1,525,950

$
45,202,691

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 



SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. Mid Cap Growth Fund
Wells Fargo VT Index Asset Allocation Fund
Wells Fargo VT International Equity Fund
Wells Fargo VT Small Cap Growth Fund
Wells Fargo VT Discovery Fund
Wells Fargo VT Opportunity Fund
HIMCO VIT Index Fund
HIMCO VIT Portfolio Diversifier Fund
HIMCO VIT American Funds Asset Allocation Fund
HIMCO VIT American Funds Blue Chip Income and Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account (8)
Sub-Account (9)
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(168,296
)
$
(4,886
)
$
4,869

$
(21,618
)
$
(15,936
)
$
(1,909
)
$
223,256

$
120,330

$
(47,736
)
$
440,813

  Net realized gain (loss) on security transactions
92,852

39,148

2,907

8,622

48,405

8,556

1,397,744

(4,426,578
)
(5,497,199
)
(10,295,183
)
  Net realized gain distributions
546,701

15,017

—

32,854

41,002

11,202

1,831,658

—

6,696,910

9,881,040

  Change in unrealized appreciation (depreciation) during the period
1,088,042

(15,270
)
100,489

216,576

105,156

5,321

2,623,116

(6,167,130
)
2,117,060

2,518,484

  Net increase (decrease) in net assets resulting from operations
1,559,299

34,009

108,265

236,434

178,627

23,170

6,075,774

(10,473,378
)
3,269,035

2,545,154

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
53,890

—

1,300

780

—

975

37,114

373,346

160,079

89,536

  Net transfers
(80,903
)
(30,805
)
(17,429
)
(37,169
)
(18,517
)
(808
)
(4,328,385
)
23,011,185

(27,376,785
)
(30,713,708
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(945,227
)
(99,626
)
(49,480
)
(138,564
)
(197,915
)
(35,311
)
(4,464,707
)
(34,428,354
)
(4,185,109
)
(3,371,632
)
  Other transactions
9

3

50

(60
)
(164
)
(11
)
9

(1,493
)
195

146

  Death benefits
(326,902
)
—

(1,685
)
(6,439
)
(10,772
)
—

(809,388
)
(1,984,805
)
(394,675
)
(203,074
)
  Net annuity transactions
37,670

64,588

(771
)
934

2,272

—

(63,219
)
—

(649
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(1,261,463
)
(65,840
)
(68,015
)
(180,518
)
(225,096
)
(35,155
)
(9,628,576
)
(13,030,121
)
(31,796,944
)
(34,198,732
)
  Net increase (decrease) in net assets
297,836

(31,831
)
40,250

55,916

(46,469
)
(11,985
)
(3,552,802
)
(23,503,499
)
(28,527,909
)
(31,653,578
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
7,486,452

375,501

522,678

1,091,250

750,663

133,877

35,156,037

252,409,874

28,527,909

31,653,578

  End of period
$
7,784,288

$
343,670

$
562,928

$
1,147,166

$
704,194

$
121,892

$
31,603,235

$
228,906,375

$
—

$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HIMCO VIT American Funds Bond Fund
HIMCO VIT American Funds Global Bond Fund
HIMCO VIT American Funds Global Growth and Income Fund
HIMCO VIT American Funds Global Growth Fund
HIMCO VIT American Funds Global Small Capitalization Fund
HIMCO VIT American Funds Growth Fund
HIMCO VIT American Funds Growth-Income Fund
HIMCO VIT American Funds International Fund
HIMCO VIT American Funds New World Fund
MFS® Core Equity Portfolio
 
Sub-Account (10)
Sub-Account (11)
Sub-Account (12)
Sub-Account (13)
Sub-Account (14)
Sub-Account (15)
Sub-Account (16)
Sub-Account (17)
Sub-Account (18)
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
1,516,272

$
(84,774
)
$
(1,636
)
$
(95,469
)
$
(341,629
)
$
(1,542,579
)
$
416,405

$
(284,720
)
$
(153,146
)
$
(132,809
)
  Net realized gain (loss) on security transactions
(3,937,333
)
(121,249
)
(8,657,773
)
(2,406,956
)
(8,174,225
)
(82,220,937
)
(44,272,431
)
(18,699,980
)
1,356,543

66,465

  Net realized gain distributions
361,821

—

11,448,787

4,846,579

10,010,673

86,298,254

44,462,842

32,070,666

1,179,049

983,971

  Change in unrealized appreciation (depreciation) during the period
4,114,021

566,577

2,176,230

1,157,824

3,748,953

35,663,007

15,449,183

12,463,015

1,118,444

2,501,789

  Net increase (decrease) in net assets resulting from operations
2,054,781

360,554

4,965,608

3,501,978

5,243,772

38,197,745

16,055,999

25,548,981

3,500,890

3,419,416

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
566,915

18,893

259,478

93,982

168,621

847,823

483,132

517,247

78,688

139,525

  Net transfers
(97,231,508
)
(6,950,051
)
(26,071,571
)
(14,148,011
)
(29,173,284
)
(191,117,827
)
(107,246,889
)
(114,253,392
)
(15,712,315
)
517,245

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(13,437,253
)
(1,500,481
)
(3,007,681
)
(2,235,684
)
(4,052,690
)
(22,711,535
)
(13,797,500
)
(12,913,405
)
(2,414,214
)
(1,534,923
)
  Other transactions
78

3

(16
)
(23
)
(36
)
3,984

862

632

(1
)
(58
)
  Death benefits
(1,702,672
)
(196,866
)
(384,998
)
(40,307
)
(314,885
)
(1,959,278
)
(956,958
)
(1,316,123
)
(63,419
)
(425,015
)
  Net annuity transactions
(62,898
)
—

(15,194
)
(14,847
)
(33,854
)
(116,855
)
(237,409
)
(46,348
)
—

631

  Net increase (decrease) in net assets resulting from unit transactions
(111,867,338
)
(8,628,502
)
(29,219,982
)
(16,344,890
)
(33,406,128
)
(215,053,688
)
(121,754,762
)
(128,011,389
)
(18,111,261
)
(1,302,595
)
  Net increase (decrease) in net assets
(109,812,557
)
(8,267,948
)
(24,254,374
)
(12,842,912
)
(28,162,356
)
(176,855,943
)
(105,698,763
)
(102,462,408
)
(14,610,371
)
2,116,821

 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
109,812,557

8,267,948

24,254,374

12,842,912

28,162,356

176,855,943

105,698,763

102,462,408

14,610,371

15,638,928

  End of period
$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
17,755,749

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
Statements of Changes in Net Assets (concluded)
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Massachusetts Investors Growth Stock Portfolio
MFS® Research International Portfolio





 
 
Sub-Account
Sub-Account





 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(347,776
)
$
(19,682
)





 
  Net realized gain (loss) on security transactions
(9,697
)
107,501






 
  Net realized gain distributions
1,549,805

—






 
  Change in unrealized appreciation (depreciation) during the period
5,787,570

3,897,906






 
  Net increase (decrease) in net assets resulting from operations
6,979,902

3,985,725






 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
  Purchases
229,683

172,521






 
  Net transfers
(308,924
)
(937,889
)





 
  Net interfund transfers due to corporate actions
—

—






 
  Surrenders for benefit payments and fees
(4,066,436
)
(2,766,918
)





 
  Other transactions
29

1,384






 
  Death benefits
(887,908
)
(492,506
)





 
  Net annuity transactions
53,658

8,657






 
  Net increase (decrease) in net assets resulting from unit transactions
(4,979,898
)
(4,014,751
)





 
  Net increase (decrease) in net assets
2,000,004

(29,026
)





 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
  Beginning of period
28,561,752

17,227,854






 
  End of period
$
30,561,756

$
17,198,828






 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 

(1) Formerly BlackRock Large Cap Growth V.I. Fund. Change effective June 12, 2017.
(2) Formerly UIF Core Plus Fixed Income Portfolio. Change effective May 1, 2017.
(3) Formerly UIF Growth Portfolio. Change effective May 1, 2017.
(4) Formerly UIF Mid Cap Growth Portfolio. Change effective May 1, 2017.
(5) Liquidated as of September 29, 2017.
(6) Merged with Oppenheimer Equity Income Fund/VA . Change effective April 28, 2017.
(7) Merged with Oppenheimer Main Street Fund®/VA . Change effective April 28, 2017.
(8) Liquidated as of November 10, 2017.
(9) Liquidated as of November 10, 2017.
(10) Liquidated as of November 10, 2017.
(11) Liquidated as of November 10, 2017.
(12) Liquidated as of November 10, 2017.
(13) Liquidated as of November 10, 2017.
(14) Liquidated as of November 10, 2017.
(15) Liquidated as of November 10, 2017.
(16) Liquidated as of November 10, 2017.
(17) Liquidated as of November 10, 2017.
(18) Liquidated as of November 10, 2017.




































SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Fund
American Century VP Growth Fund
AB VPS Balanced Wealth Strategy Portfolio
AB VPS International Value Portfolio
AB VPS Small/Mid Cap Value Portfolio
AB VPS Value Portfolio
AB VPS International Growth Portfolio
Invesco V.I. Value Opportunities Fund
Invesco V.I. Core Equity Fund
Invesco V.I. Government Securities Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
48,016

$
(26,265
)
$
43,937

$
(91,518
)
$
(118,582
)
$
(1,802
)
$
(38,323
)
$
(610,505
)
$
(1,214,801
)
$
81,101

  Net realized gain (loss) on security transactions
644,680

87,763

(124,601
)
(45,479
)
21,434

30,194

10,859

(2,009,813
)
3,315,344

(1,656,545
)
  Net realized gain distributions
—

9,085

1,102,307

—

685,742

—

—

11,835,658

7,588,150

—

  Change in unrealized appreciation (depreciation) during the period
621,434

14,325

(563,356
)
(230,003
)
1,817,197

46,546

(186,552
)
(3,327,974
)
(607,212
)
538,138

  Net increase (decrease) in net assets resulting from operations
1,314,130

84,908

458,287

(367,000
)
2,405,791

74,938

(214,016
)
5,887,366

9,081,481

(1,037,306
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
8,592

6,193

8,861

97,010

45,980

1,250

5,866

117,193

431,130

1,376,286

  Net transfers
(1,169,905
)
(28,363
)
(113,180
)
365,489

506,687

33,353

(64,101
)
379,050

(4,561,008
)
16,001,999

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(568,727
)
(317,512
)
(2,631,953
)
(2,765,812
)
(2,254,764
)
(164,987
)
(738,184
)
(4,625,268
)
(14,444,520
)
(37,772,485
)
  Other transactions
485

(32
)
4,136

605

342

(1
)
(26
)
257

1,309

12,002

  Death benefits
(160,685
)
(6,329
)
(303,348
)
(413,251
)
(333,777
)
—

(41,815
)
(962,609
)
(2,530,381
)
(5,989,555
)
  Net annuity transactions
—

—

—

(32,271
)
(2,123
)
—

(297
)
94,981

81,373

668,044

  Net increase (decrease) in net assets resulting from unit transactions
(1,890,240
)
(346,043
)
(3,035,484
)
(2,748,230
)
(2,037,655
)
(130,385
)
(838,557
)
(4,996,396
)
(21,022,097
)
(25,703,709
)
  Net increase (decrease) in net assets
(576,110
)
(261,135
)
(2,577,197
)
(3,115,230
)
368,136

(55,447
)
(1,052,573
)
890,970

(11,940,616
)
(26,741,015
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
7,576,703

2,290,769

18,074,476

18,382,324

11,933,197

980,991

2,784,610

43,215,959

121,117,852

241,730,755

  End of period
$
7,000,593

$
2,029,634

$
15,497,279

$
15,267,094

$
12,301,333

$
925,544

$
1,732,037

$
44,106,929

$
109,177,236

$
214,989,740

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. International Growth Fund
Invesco V.I. Mid Cap Core Equity Fund
Invesco V.I. Small Cap Equity Fund
Invesco V.I. Balanced Risk Allocation Fund
Invesco V.I. Diversified Dividend Fund
Invesco V.I. Government Money Market Fund
American Century VP Mid Cap Value Fund
American Funds Global Bond Fund
American Funds Global Growth and Income Fund
American Funds Asset Allocation Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(318,496
)
$
(2,023,674
)
$
(1,246,025
)
$
(153,627
)
$
(1,664
)
$
(2,469,555
)
$
5,319

$
(1,003,237
)
$
169,276

$
(1,432,986
)
  Net realized gain (loss) on security transactions
3,903,012

(116,942
)
(426,848
)
(204,601
)
3,804

—

20,830

179,105

3,841,817

27,243,032

  Net realized gain distributions
—

7,605,051

5,256,707

—

—

—

39,704

148,494

—

15,306,001

  Change in unrealized appreciation (depreciation) during the period
(5,912,292
)
6,863,678

3,353,941

1,474,258

28,453

—

110,751

1,841,035

4,918,602

3,651,043

  Net increase (decrease) in net assets resulting from operations
(2,327,776
)
12,328,113

6,937,775

1,116,030

30,593

(2,469,555
)
176,604

1,165,397

8,929,695

44,767,090

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
475,658

500,561

350,645

62,672

—

1,765,465

5,072

438,915

905,273

3,408,444

  Net transfers
1,686,381

(242,014
)
(426,778
)
284,709

46,537

104,950,872

419,514

1,706,465

(4,039,634
)
62,798

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(16,088,534
)
(12,264,680
)
(9,771,335
)
(1,610,709
)
(9,043
)
(122,292,077
)
(284,281
)
(12,255,329
)
(20,446,598
)
(77,371,346
)
  Other transactions
657

(404
)
715

—

(1
)
(533
)
—

7,372

(346
)
37,311

  Death benefits
(2,366,270
)
(2,447,911
)
(1,151,994
)
(41,168
)
—

(10,954,853
)
(247
)
(2,183,240
)
(3,904,170
)
(17,297,272
)
  Net annuity transactions
(4,130
)
(16,587
)
69,909

—

—

338,598

—

31,804

160,336

48,577

  Net increase (decrease) in net assets resulting from unit transactions
(16,296,238
)
(14,471,035
)
(10,928,838
)
(1,304,496
)
37,493

(26,192,528
)
140,058

(12,254,013
)
(27,325,139
)
(91,111,488
)
  Net increase (decrease) in net assets
(18,624,014
)
(2,142,922
)
(3,991,063
)
(188,466
)
68,086

(28,662,083
)
316,662

(11,088,616
)
(18,395,444
)
(46,344,398
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
131,609,274

116,893,551

77,353,213

11,957,046

234,167

160,770,547

716,584

83,353,312

182,895,707

662,185,767

  End of period
$
112,985,260

$
114,750,629

$
73,362,150

$
11,768,580

$
302,253

$
132,108,464

$
1,033,246

$
72,264,696

$
164,500,263

$
615,841,369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VT Omega Growth Fund
Fidelity® VIP Growth Portfolio
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
733,582

$
103,519

$
(1,878,859
)
$
(13,030,223
)
$
(4,121,563
)
$
(1,151,217
)
$
(1,121,601
)
$
(1,983,251
)
$
(14,268
)
$
(97,689
)
  Net realized gain (loss) on security transactions
16,613,286

1,297,435

7,593,876

33,250,067

34,438,893

898,033

1,744,355

2,608,329

(17,101
)
196,532

  Net realized gain distributions
33,363,460

2,127,437

18,345,589

112,278,562

140,731,427

25,894,989

—

24,588,312

39,416

597,572

  Change in unrealized appreciation (depreciation) during the period
12,730,307

5,675,036

(27,454,021
)
(45,791,464
)
(57,053,055
)
(20,127,015
)
2,750,227

(25,421,724
)
(24,334
)
(784,660
)
  Net increase (decrease) in net assets resulting from operations
63,440,635

9,203,427

(3,393,415
)
86,706,942

113,995,702

5,514,790

3,372,981

(208,334
)
(16,287
)
(88,245
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
2,047,710

2,996,636

783,208

4,452,117

5,497,205

1,042,713

458,744

677,153

1,560

37,316

  Net transfers
6,110,734

25,352,154

(12,078,813
)
(43,934,012
)
(33,438,698
)
(3,752,207
)
(1,655,724
)
(6,784,109
)
(26,371
)
(538,131
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(48,974,328
)
(78,775,166
)
(25,298,691
)
(148,438,281
)
(153,123,974
)
(35,176,462
)
(13,343,232
)
(16,124,277
)
(53,319
)
(802,125
)
  Other transactions
2,155

17,597

5,614

31,300

33,212

3,500

16,931

6,230

2

639

  Death benefits
(10,737,198
)
(13,956,121
)
(4,287,850
)
(25,260,543
)
(27,919,719
)
(6,033,594
)
(1,924,058
)
(2,970,994
)
(86,790
)
(109,556
)
  Net annuity transactions
172,970

635,991

21,826

423,789

1,299,845

271,102

105,165

326,524

(2,068
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(51,377,957
)
(63,728,909
)
(40,854,706
)
(212,725,630
)
(207,652,129
)
(43,644,948
)
(16,342,174
)
(24,869,473
)
(166,986
)
(1,411,857
)
  Net increase (decrease) in net assets
12,062,678

(54,525,482
)
(44,248,121
)
(126,018,688
)
(93,656,427
)
(38,130,158
)
(12,969,193
)
(25,077,807
)
(183,273
)
(1,500,102
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
412,227,632

636,445,614

243,330,240

1,343,454,104

1,343,073,267

322,137,950

113,909,236

148,360,655

862,511

6,307,600

  End of period
$
424,290,310

$
581,920,132

$
199,082,119

$
1,217,435,416

$
1,249,416,840

$
284,007,792

$
100,940,043

$
123,282,848

$
679,238

$
4,807,498

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 VIP Fund
Franklin Income VIP Fund
Franklin Large Cap Growth VIP Fund
Franklin Global Real Estate VIP Fund
Franklin Small-Mid Cap Growth VIP Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(547,952
)
$
(598,192
)
$
(26,854
)
$
(33,071
)
$
37,948

$
(1,501,768
)
$
21,427,143

$
(1,160,687
)
$
(22,125
)
$
(2,628,646
)
  Net realized gain (loss) on security transactions
3,029,981

1,218,415

302,629

(90
)
(7,232
)
16,012,827

(4,698,370
)
(336,182
)
(15,044
)
(7,124,085
)
  Net realized gain distributions
5,621,199

3,173,564

—

145,193

—

48,900,305

—

962,728

—

16,851,485

  Change in unrealized appreciation (depreciation) during the period
(4,237,254
)
675,873

(121,959
)
(136,845
)
40,731

(10,219,996
)
58,730,894

(2,384,048
)
(2,575
)
(4,342,796
)
  Net increase (decrease) in net assets resulting from operations
3,865,974

4,469,660

153,816

(24,813
)
71,447

53,191,368

75,459,667

(2,918,189
)
(39,744
)
2,755,958

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
390,317

236,810

7,293

13,639

204

1,592,967

2,802,567

366,985

2,481

696,149

  Net transfers
(3,397,426
)
(1,535,974
)
(328,583
)
(614,946
)
445,948

(7,446,891
)
(13,361,162
)
(6,639,024
)
(72,262
)
(4,463,012
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(9,527,590
)
(7,924,904
)
(692,421
)
(551,020
)
(145,556
)
(53,402,508
)
(96,099,292
)
(7,667,534
)
(404,294
)
(16,894,428
)
  Other transactions
10

818

6

(3
)
—

28,609

27,072

696

(1
)
7,323

  Death benefits
(739,714
)
(853,266
)
(28,794
)
(223,109
)
(30,448
)
(8,312,258
)
(16,912,876
)
(1,152,311
)
(190,413
)
(3,171,693
)
  Net annuity transactions
(46,351
)
(644
)
—

—

—

32,033

613,888

306,577

(13,829
)
(29,812
)
  Net increase (decrease) in net assets resulting from unit transactions
(13,320,754
)
(10,077,160
)
(1,042,499
)
(1,375,439
)
270,148

(67,508,048
)
(122,929,803
)
(14,784,611
)
(678,318
)
(23,855,473
)
  Net increase (decrease) in net assets
(9,454,780
)
(5,607,500
)
(888,683
)
(1,400,252
)
341,595

(14,316,680
)
(47,470,136
)
(17,702,800
)
(718,062
)
(21,099,515
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
71,037,540

51,691,751

3,176,777

4,032,502

1,080,696

414,023,269

716,791,811

72,753,062

6,008,852

157,452,312

  End of period
$
61,582,760

$
46,084,251

$
2,288,094

$
2,632,250

$
1,422,291

$
399,706,589

$
669,321,675

$
55,050,262

$
5,290,790

$
136,352,797

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Fund
Franklin Strategic Income VIP Fund
Franklin Mutual Shares VIP Fund
Templeton Developing Markets VIP Fund
Templeton Foreign VIP Fund
Templeton Growth VIP Fund
Franklin Mutual Global Discovery VIP Fund
Franklin Flex Cap Growth VIP Fund
Templeton Global Bond VIP Fund
Hartford Balanced HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(514,418
)
$
5,701,264

$
1,268,135

$
(376,720
)
$
404,659

$
583,411

$
(274,838
)
$
(434,006
)
$
(828,159
)
$
180,529

  Net realized gain (loss) on security transactions
(305,866
)
(8,716,864
)
16,413,962

(3,297,594
)
(3,179,868
)
2,608,702

(1,320,785
)
(4,091,744
)
(1,806,513
)
591,764

  Net realized gain distributions
7,879,734

—

44,095,414

—

3,459,768

7,778,007

17,629,016

3,485,803

48,073

—

  Change in unrealized appreciation (depreciation) during the period
6,530,663

22,757,063

9,181,738

9,780,154

9,541,580

3,253,223

5,294,143

(448,586
)
3,156,530

(90,140
)
  Net increase (decrease) in net assets resulting from operations
13,590,113

19,741,463

70,959,249

6,105,840

10,226,139

14,223,343

21,327,536

(1,488,533
)
569,931

682,153

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
220,737

1,478,860

2,526,874

328,830

838,539

1,086,628

848,091

45,731

285,416

60,006

  Net transfers
10,029,282

(5,906,588
)
(21,109,063
)
3,072,460

(1,130,599
)
(7,025,127
)
(10,151,792
)
(2,103,799
)
412,551

916,332

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(6,790,610
)
(47,489,566
)
(65,562,759
)
(6,666,285
)
(25,193,906
)
(24,982,164
)
(29,886,732
)
(3,381,639
)
(9,009,434
)
(2,058,635
)
  Other transactions
2,606

18,488

(904
)
5,016

2,850

(1,500
)
18,420

176

(1,090
)
6

  Death benefits
(980,689
)
(8,289,260
)
(10,261,993
)
(788,626
)
(3,595,908
)
(4,144,830
)
(3,928,273
)
(291,580
)
(1,135,538
)
(138,740
)
  Net annuity transactions
(8,723
)
248,733

188,887

79,035

12,154

210,421

33,832

58,068

(68,150
)
—

  Net increase (decrease) in net assets resulting from unit transactions
2,472,603

(59,939,333
)
(94,218,958
)
(3,969,570
)
(29,066,870
)
(34,856,572
)
(43,066,454
)
(5,673,043
)
(9,516,245
)
(1,221,031
)
  Net increase (decrease) in net assets
16,062,716

(40,197,870
)
(23,259,709
)
2,136,270

(18,840,731
)
(20,633,229
)
(21,738,918
)
(7,161,576
)
(8,946,314
)
(538,878
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
50,212,815

347,847,567

569,611,868

42,699,194

209,657,204

216,171,880

249,448,913

29,564,063

62,842,788

15,451,065

  End of period
$
66,275,531

$
307,649,697

$
546,352,159

$
44,835,464

$
190,816,473

$
195,538,651

$
227,709,995

$
22,402,487

$
53,896,474

$
14,912,187

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Total Return Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Growth HLS Fund
Hartford Disciplined Equity HLS Fund
Hartford Growth Opportunities HLS Fund
Hartford High Yield HLS Fund
Hartford International Opportunities HLS Fund
Hartford Small/Mid Cap Equity HLS Fund
Hartford Ultrashort Bond HLS Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
4,982,759

$
(1,413,908
)
$
1,637,384

$
(30,952
)
$
(478,895
)
$
(1,168,522
)
$
1,475,876

$
61,071

$
(12,423
)
$
(2,376,959
)
  Net realized gain (loss) on security transactions
2,525,364

6,150,104

6,836,449

53,203

2,092,982

2,788,989

(667,109
)
917,949

(283,526
)
119,131

  Net realized gain distributions
1,715,017

36,107,168

32,786,356

427,141

9,197,440

15,859,347

—

—

301,651

—

  Change in unrealized appreciation (depreciation) during the period
4,957,720

(26,934,657
)
(5,001,161
)
(449,351
)
(7,937,637
)
(19,928,559
)
2,753,316

(958,112
)
631,335

814,165

  Net increase (decrease) in net assets resulting from operations
14,180,860

13,908,707

36,259,028

41

2,873,890

(2,448,745
)
3,562,083

20,908

637,037

(1,443,663
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
2,248,045

2,360,438

1,753,453

8,914

429,274

448,607

126,202

207,484

13,349

2,046,268

  Net transfers
7,140,006

(4,809,865
)
(10,455,330
)
(253,619
)
(67,844
)
(4,942,530
)
2,580,745

532,563

214,161

10,389,232

  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(63,774,444
)
(56,777,966
)
(39,153,138
)
(500,627
)
(10,970,307
)
(14,680,266
)
(4,961,234
)
(5,164,961
)
(1,035,947
)
(36,395,665
)
  Other transactions
(233
)
938

14

(8
)
354

1,437

(69
)
(175
)
8

8,788

  Death benefits
(8,012,234
)
(6,724,290
)
(5,587,963
)
(107,355
)
(1,265,506
)
(1,767,905
)
(366,488
)
(493,764
)
(61,491
)
(6,185,170
)
  Net annuity transactions
(4,630
)
31,818

12,793

—

(29,036
)
(496
)
—

127,728

(6,448
)
(354,654
)
  Net increase (decrease) in net assets resulting from unit transactions
(62,403,490
)
(65,918,927
)
(53,430,171
)
(852,695
)
(11,903,065
)
(20,941,153
)
(2,620,844
)
(4,791,125
)
(876,368
)
(30,491,201
)
  Net increase (decrease) in net assets
(48,222,630
)
(52,010,220
)
(17,171,143
)
(852,654
)
(9,029,175
)
(23,389,898
)
941,239

(4,770,217
)
(239,331
)
(31,934,864
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
477,127,747

417,093,368

308,876,581

4,709,379

78,922,730

127,043,781

29,061,362

35,938,493

5,528,895

196,796,827

  End of period
$
428,905,117

$
365,083,148

$
291,705,438

$
3,856,725

$
69,893,555

$
103,653,883

$
30,002,601

$
31,168,276

$
5,289,564

$
164,861,963

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hartford Small Company HLS Fund
Hartford SmallCap Growth HLS Fund
Hartford Stock HLS Fund
Hartford U.S. Government Securities HLS Fund
Hartford Value HLS Fund
Lord Abbett Fundamental Equity Fund
Lord Abbett Calibrated Dividend Growth Fund
Lord Abbett Bond Debenture Fund
Lord Abbett Growth and Income Fund
MFS® Growth Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(146,569
)
$
(97,940
)
$
9,086

$
88,568

$
56,716

$
8,759

$
23,024

$
1,044,912

$
(2,155
)
$
(2,088,225
)
  Net realized gain (loss) on security transactions
(753,686
)
(195,958
)
108,342

9,935

822,375

(256,830
)
68,604

212,075

569,107

4,713,380

  Net realized gain distributions
980,252

269,332

—

—

1,926,062

209,723

913,015

—

93,150

7,890,474

  Change in unrealized appreciation (depreciation) during the period
(79,462
)
530,904

38,132

(110,627
)
(1,037,741
)
1,680,828

738,952

2,332,395

346,537

(9,566,008
)
  Net increase (decrease) in net assets resulting from operations
535

506,338

155,560

(12,124
)
1,767,412

1,642,480

1,743,595

3,589,382

1,006,639

949,621

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
40,048

17,789

1,779

133,000

11,862

19,385

23,298

195,221

13,451

638,478

  Net transfers
(295,296
)
(509,442
)
885,431

5,984,678

(1,314,370
)
(1,319,763
)
2,817,230

2,289,044

(267,821
)
(1,906,623
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(1,653,882
)
(1,107,997
)
(325,549
)
(6,157,483
)
(1,446,277
)
(1,454,245
)
(2,461,808
)
(5,814,535
)
(1,045,731
)
(15,642,490
)
  Other transactions
61

4

5

222

138

(3
)
(2
)
436

7

2,772

  Death benefits
(80,590
)
(156,682
)
(10,054
)
(508,983
)
(310,428
)
(42,765
)
(129,284
)
(868,158
)
(245,966
)
(2,098,297
)
  Net annuity transactions
—

(352
)
—

(335
)
—

—

(9,509
)
(9,367
)
—

95,387

  Net increase (decrease) in net assets resulting from unit transactions
(1,989,659
)
(1,756,680
)
551,612

(548,901
)
(3,059,075
)
(2,797,391
)
239,925

(4,207,359
)
(1,546,060
)
(18,910,773
)
  Net increase (decrease) in net assets
(1,989,124
)
(1,250,342
)
707,172

(561,025
)
(1,291,663
)
(1,154,911
)
1,983,520

(617,977
)
(539,421
)
(17,961,152
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
11,294,114

7,438,316

2,042,478

24,164,613

16,383,347

12,415,393

13,043,354

36,709,515

7,622,513

140,739,991

  End of period
$
9,304,990

$
6,187,974

$
2,749,650

$
23,603,588

$
15,091,684

$
11,260,482

$
15,026,874

$
36,091,538

$
7,083,092

$
122,778,839

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS® Global Equity Fund
MFS® Investors Trust Fund
MFS® Mid Cap Growth Fund
MFS® New Discovery Fund
MFS® Total Return Fund
MFS® Value Fund
MFS® Total Return Bond Series
MFS® Research Fund
MFS® High Yield Portfolio
BlackRock Global Allocation V.I. Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(152,663
)
$
(1,349,400
)
$
(874,943
)
$
(1,503,518
)
$
4,215,630

$
1,074,300

$
9,510,229

$
(181,265
)
$
4,807,431

$
2,279

  Net realized gain (loss) on security transactions
594,170

5,641,403

531,095

(894,884
)
11,689,575

13,976,372

3,700,970

471,671

(1,700,758
)
(99,677
)
  Net realized gain distributions
980,782

13,759,567

3,513,239

3,512,841

13,428,470

20,751,024

—

2,071,007

—

—

  Change in unrealized appreciation (depreciation) during the period
(490,490
)
(10,410,607
)
(2,032,333
)
3,890,874

(718,725
)
(6,457,633
)
1,551,782

(994,237
)
7,573,649

208,501

  Net increase (decrease) in net assets resulting from operations
931,799

7,640,963

1,137,058

5,005,313

28,614,950

29,344,063

14,762,981

1,367,176

10,680,322

111,103

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
90,648

687,736

149,411

283,522

1,607,436

1,026,752

3,331,050

86,085

553,600

1,200

  Net transfers
(112,541
)
(4,167,631
)
(5,311,745
)
(1,834,821
)
(1,858,413
)
(7,760,708
)
17,806,041

(1,318,256
)
8,628,185

(262,677
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(1,886,673
)
(18,306,641
)
(5,147,258
)
(11,131,093
)
(55,999,638
)
(34,470,626
)
(67,114,205
)
(2,382,028
)
(14,715,431
)
(433,712
)
  Other transactions
1,636

2,022

(2
)
3,446

18,548

13,863

10,750

442

2,122

—

  Death benefits
(291,764
)
(2,680,015
)
(726,690
)
(1,346,369
)
(9,154,451
)
(4,591,789
)
(9,868,342
)
(208,027
)
(2,424,175
)
(31,000
)
  Net annuity transactions
(40,777
)
146,161

36,864

64,200

419,416

(17,101
)
117,472

47,104

20,666

—

  Net increase (decrease) in net assets resulting from unit transactions
(2,239,471
)
(24,318,368
)
(10,999,420
)
(13,961,115
)
(64,967,102
)
(45,799,609
)
(55,717,234
)
(3,774,680
)
(7,935,033
)
(726,189
)
  Net increase (decrease) in net assets
(1,307,672
)
(16,677,405
)
(9,862,362
)
(8,955,802
)
(36,352,152
)
(16,455,546
)
(40,954,253
)
(2,407,504
)
2,745,289

(615,086
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
18,594,347

140,460,975

52,127,831

87,687,735

438,472,800

268,181,525

561,168,879

22,014,371

87,891,764

4,989,616

  End of period
$
17,286,675

$
123,783,570

$
42,265,469

$
78,731,933

$
402,120,648

$
251,725,979

$
520,214,626

$
19,606,867

$
90,637,053

$
4,374,530

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Opportunities V.I. Fund
BlackRock Large Cap Growth V.I. Fund
BlackRock Equity Dividend V.I. Fund
UIF Core Plus Fixed Income Portfolio
UIF Growth Portfolio
UIF Mid Cap Growth Portfolio
Invesco V.I. American Value Fund
Morgan Stanley Mid Cap Growth Portfolio
BlackRock Capital Appreciation V.I. Fund
Oppenheimer Capital Appreciation Fund/VA
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
16

$
(7,640
)
$
51,017

$
(1,115
)
$
(33,981
)
$
(139,466
)
$
(127,606
)
$
(5,065
)
$
(68,973
)
$
(33,675
)
  Net realized gain (loss) on security transactions
11,150

24,026

297,832

1,970

(3,220
)
(209,695
)
171,753

(13,457
)
(73,551
)
(33,428
)
  Net realized gain distributions
315

49,174

228,920

—

327,221

497,167

539,498

12,127

199,285

233,406

  Change in unrealized appreciation (depreciation) during the period
(9,692
)
(32,323
)
605,977

21,976

(366,839
)
(1,239,917
)
595,368

(30,684
)
(115,239
)
(274,869
)
  Net increase (decrease) in net assets resulting from operations
1,789

33,237

1,183,746

22,831

(76,819
)
(1,091,911
)
1,179,013

(37,079
)
(58,478
)
(108,566
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
—

—

7,646

—

2,183

34,482

36,272

—

1,512

22,460

  Net transfers
73

(28,486
)
(1,377,218
)
65,201

(225,586
)
(7,713
)
272,127

(19,098
)
(79,679
)
(312,481
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(38,182
)
(74,165
)
(1,361,022
)
(96,661
)
(184,369
)
(1,217,192
)
(1,559,767
)
(20,519
)
(844,349
)
(306,756
)
  Other transactions
25

(1
)
74

—

—

337

(95
)
1

(192
)
—

  Death benefits
—

—

(159,496
)
(2,443
)
(67,987
)
(178,482
)
(232,292
)
(1,910
)
(148,394
)
(9,843
)
  Net annuity transactions
—

(9,563
)
(740
)
—

—

—

—

—

—

—

  Net increase (decrease) in net assets resulting from unit transactions
(38,084
)
(112,215
)
(2,890,756
)
(33,903
)
(475,759
)
(1,368,568
)
(1,483,755
)
(41,526
)
(1,071,102
)
(606,620
)
  Net increase (decrease) in net assets
(36,295
)
(78,978
)
(1,707,010
)
(11,072
)
(552,578
)
(2,460,479
)
(304,742
)
(78,605
)
(1,129,580
)
(715,186
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
228,573

666,209

9,544,743

638,396

2,332,821

11,541,796

9,999,891

345,798

7,866,735

2,510,795

  End of period
$
192,278

$
587,231

$
7,837,733

$
627,324

$
1,780,243

$
9,081,317

$
9,695,149

$
267,193

$
6,737,155

$
1,795,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Global Fund/VA
Oppenheimer Main Street Fund®/VA
Oppenheimer Main Street Small Cap Fund/VA
Oppenheimer Equity Income Fund/VA
Putnam VT Diversified Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Growth Opportunities Fund
Putnam VT International Value Fund
Putnam VT International Equity Fund
Putnam VT Investors Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account (1)
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(105,459
)
$
(21,994
)
$
(212,347
)
$
88,794

$
2,423,242

$
7,847

$
(8,028
)
$
5,285

$
10,734

$
1,113

  Net realized gain (loss) on security transactions
369,117

121,335

559,667

(40,543
)
(1,724,795
)
27,423

2,960

(7,275
)
(24,268
)
5,522

  Net realized gain distributions
794,635

287,243

598,207

—

—

204,083

—

—

—

11,896

  Change in unrealized appreciation (depreciation) during the period
(1,400,504
)
(193,779
)
1,274,864

242,637

638,019

(100,691
)
56,491

(5,392
)
(37,002
)
15,730

  Net increase (decrease) in net assets resulting from operations
(342,211
)
192,805

2,220,391

290,888

1,336,466

138,662

51,423

(7,382
)
(50,536
)
34,261

 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
45,499

7,923

88,230

3,917

228,933

7,624

122

—

3,887

384

  Net transfers
(708,956
)
(544,355
)
(566,855
)
(171,067
)
(310,619
)
(63,497
)
(175,564
)
(9,891
)
541,393

(500
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

7,988,256

—

—

—

  Surrenders for benefit payments and fees
(2,338,945
)
(382,070
)
(2,499,096
)
(400,423
)
(7,236,464
)
(203,561
)
(68,405
)
(90,765
)
(293,355
)
(36,746
)
  Other transactions
(39
)
7

346

—

62

2

1

—

(120
)
—

  Death benefits
(63,474
)
(1,171
)
(294,407
)
(29,218
)
(1,004,899
)
—

(11,502
)
—

(2,764
)
—

  Net annuity transactions
—

—

—

—

(27,345
)
—

—

—

(7,458
)
—

  Net increase (decrease) in net assets resulting from unit transactions
(3,065,915
)
(919,666
)
(3,271,782
)
(596,791
)
(8,350,332
)
(259,432
)
7,732,908

(100,656
)
241,583

(36,862
)
  Net increase (decrease) in net assets
(3,408,126
)
(726,861
)
(1,051,391
)
(305,903
)
(7,013,866
)
(120,770
)
7,784,331

(108,038
)
191,047

(2,601
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
13,511,080

3,091,066

16,787,101

2,672,307

45,926,832

2,954,561

—

859,357

1,231,619

344,159

  End of period
$
10,102,954

$
2,364,205

$
15,735,710

$
2,366,404

$
38,912,966

$
2,833,791

$
7,784,331

$
751,319

$
1,422,666

$
341,558

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Putnam VT Small Cap Value Fund
Putnam VT Equity Income Fund
PIMCO All Asset Fund
PIMCO StocksPLUS Global Portfolio
PIMCO Global Multi-Asset Managed Allocation Portfolio
Jennison 20/20 Focus Fund
Prudential Value Portfolio
Invesco V.I. Growth and Income Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(6,787
)
$
18,400

$
17,499

$
251,373

$
5,746

$
(9,814
)
$
(5,992
)
$
(84,513
)
  Net realized gain (loss) on security transactions
(98,390
)
70,351

(46,044
)
(298,419
)
(10,040
)
13,162

2,209

405,603

  Net realized gain distributions
150,009

28,101

—

1,035,625

—

—

—

2,646,576

  Change in unrealized appreciation (depreciation) during the period
297,914

71,093

178,179

(568,625
)
18,732

(7,296
)
33,583

1,731,782

  Net increase (decrease) in net assets resulting from operations
342,746

187,945

149,634

419,954

14,438

(3,948
)
29,800

4,699,448

 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
  Purchases
45

—

449

540

192

—

—

45,930

  Net transfers
272,918

65,280

(18,943
)
(455,679
)
8,781

33

—

(892,967
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(215,324
)
(224,637
)
(176,387
)
(722,693
)
(91,945
)
(10,308
)
(2,800
)
(3,178,412
)
  Other transactions
(1
)
(56
)
—

5,104

1

1

—

(129
)
  Death benefits
(72,453
)
—

(73,863
)
(130,759
)
—

—

—

(420,836
)
  Net annuity transactions
3,376

—

—

—

—

—

—

(15,240
)
  Net increase (decrease) in net assets resulting from unit transactions
(11,439
)
(159,413
)
(268,744
)
(1,303,487
)
(82,971
)
(10,274
)
(2,800
)
(4,461,654
)
  Net increase (decrease) in net assets
331,307

28,532

(119,110
)
(883,533
)
(68,533
)
(14,222
)
27,000

237,794

 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
  Beginning of period
1,674,527

1,605,533

1,455,948

6,700,487

643,030

531,845

335,942

29,857,151

  End of period
$
2,005,834

$
1,634,065

$
1,336,838

$
5,816,954

$
574,497

$
517,623

$
362,942

$
30,094,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 



SEPARATE ACCOUNT SEVEN
 
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco V.I. Comstock Fund
Invesco V.I. American Franchise Fund
Invesco V.I. Mid Cap Growth Fund
Wells Fargo VT Index Asset Allocation Fund
Wells Fargo VT International Equity Fund
Wells Fargo VT Small Cap Growth Fund
Wells Fargo VT Discovery Fund
 
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(6,907
)
$
(855,342
)
$
(167,553
)
$
(4,454
)
$
4,580

$
(22,517
)
$
(17,105
)
 
  Net realized gain (loss) on security transactions
68,731

2,589,839

(360,074
)
5,138

(17,703
)
(32,721
)
26,003

 
  Net realized gain distributions
109,484

3,838,621

828,978

10,281

41,038

117,131

63,413

 
  Change in unrealized appreciation (depreciation) during the period
18,039

(5,838,847
)
(559,146
)
8,297

(26,114
)
(3,184
)
(30,757
)
 
  Net increase (decrease) in net assets resulting from operations
189,347

(265,729
)
(257,795
)
19,262

1,801

58,709

41,554

 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
  Purchases
2,985

257,051

5,642

—

1,950

1,170

7,500

 
  Net transfers
(52,388
)
(3,159,394
)
(2,609,019
)
10,177

(76,414
)
(38,774
)
(117,706
)
 
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

 
  Surrenders for benefit payments and fees
(175,831
)
(5,478,264
)
(1,150,869
)
(13,079
)
(60,155
)
(199,879
)
(111,341
)
 
  Other transactions
—

187

1,337

—

(11
)
1

—

 
  Death benefits
(155,229
)
(1,161,489
)
(112,566
)
(1,056
)
(16,343
)
(69,660
)
(7,809
)
 
  Net annuity transactions
—

221,501

(6,693
)
—

(573
)
(480
)
(345
)
 
  Net increase (decrease) in net assets resulting from unit transactions
(380,463
)
(9,320,408
)
(3,872,168
)
(3,958
)
(151,546
)
(307,622
)
(229,701
)
 
  Net increase (decrease) in net assets
(191,116
)
(9,586,137
)
(4,129,963
)
15,304

(149,745
)
(248,913
)
(188,147
)
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
  Beginning of period
1,702,452

50,380,488

11,616,415

360,197

672,423

1,340,163

938,810

 
  End of period
$
1,511,336

$
40,794,351

$
7,486,452

$
375,501

$
522,678

$
1,091,250

$
750,663

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 

SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wells Fargo VT Opportunity Fund
HIMCO VIT Index Fund
HIMCO VIT Portfolio Diversifier Fund
HIMCO VIT American Funds Asset Allocation Fund
HIMCO VIT American Funds Blue Chip Income and Growth Fund
HIMCO VIT American Funds Bond Fund
HIMCO VIT American Funds Global Bond Fund
HIMCO VIT American Funds Global Growth and Income Fund
HIMCO VIT American Funds Global Growth Fund
HIMCO VIT American Funds Global Small Capitalization Fund
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
157

$
377,768

$
(2,603,233
)
$
225,770

$
251,555

$
2,129,021

$
(8,383
)
$
54,286

$
14,242

$
(349,448
)
  Net realized gain (loss) on security transactions
12,633

764,446

(2,567,162
)
(177,697
)
(183,852
)
(11,575
)
(113,579
)
(392,205
)
75,719

(484,289
)
  Net realized gain distributions
16,342

2,560,596

—

4,790,162

6,963,097

1,084,132

—

3,484,908

2,312,561

5,802,217

  Change in unrealized appreciation (depreciation) during the period
(14,102
)
5,105

(8,618,547
)
(2,871,291
)
(2,118,555
)
(1,700,796
)
147,900

(1,881,687
)
(2,684,915
)
(4,992,276
)
  Net increase (decrease) in net assets resulting from operations
15,030

3,707,915

(13,788,942
)
1,966,944

4,912,245

1,500,782

25,938

1,265,302

(282,393
)
(23,796
)
 
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
 
 
  Purchases
975

37,142

645,130

161,020

82,421

640,125

53,713

134,788

93,528

365,639

  Net transfers
(317
)
(1,282,698
)
18,401,027

(769,029
)
1,972,502

4,268,665

1,769,265

(1,107,217
)
44,918

(626,442
)
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

—

—

—

  Surrenders for benefit payments and fees
(61,800
)
(3,905,439
)
(28,013,634
)
(4,593,329
)
(6,349,533
)
(17,138,473
)
(1,617,267
)
(5,052,021
)
(2,872,060
)
(4,366,083
)
  Other transactions
—

1,929

(361
)
(1
)
322

(433
)
527

352

260

12

  Death benefits
—

(312,510
)
(2,202,321
)
(405,098
)
(348,032
)
(1,469,452
)
(324,587
)
(404,294
)
(259,494
)
(331,136
)
  Net annuity transactions
—

171,111

—

(399
)
—

(2,384
)
—

(34,279
)
(33,447
)
(1,045
)
  Net increase (decrease) in net assets resulting from unit transactions
(61,142
)
(5,290,465
)
(11,170,159
)
(5,606,836
)
(4,642,320
)
(13,701,952
)
(118,349
)
(6,462,671
)
(3,026,295
)
(4,959,055
)
  Net increase (decrease) in net assets
(46,112
)
(1,582,550
)
(24,959,101
)
(3,639,892
)
269,925

(12,201,170
)
(92,411
)
(5,197,369
)
(3,308,688
)
(4,982,851
)
 
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
 
 
  Beginning of period
179,989

36,738,587

277,368,975

32,167,801

31,383,653

122,013,727

8,360,359

29,451,743

16,151,600

33,145,207

  End of period
$
133,877

$
35,156,037

$
252,409,874

$
28,527,909

$
31,653,578

$
109,812,557

$
8,267,948

$
24,254,374

$
12,842,912

$
28,162,356

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
 


SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
 
 
Statements of Changes in Net Assets (concluded)
 
 
 
 
 
 
 
 
For the Periods Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HIMCO VIT American Funds Growth Fund
HIMCO VIT American Funds Growth-Income Fund
HIMCO VIT American Funds International Fund
HIMCO VIT American Funds New World Fund
MFS® Core Equity Portfolio
MFS® Massachusetts Investors Growth Stock Portfolio
MFS® Research International Portfolio
 
 
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
Sub-Account
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
  Net investment income (loss)
$
(2,224,288
)
$
70,605

$
(165,907
)
$
64,523

$
(154,967
)
$
(355,534
)
$
(51,421
)
 
  Net realized gain (loss) on security transactions
(1,863,009
)
(1,052,052
)
(2,117,374
)
(318,033
)
(337,509
)
(707,435
)
(699,478
)
 
  Net realized gain distributions
73,067,231

31,594,238

12,083,691

630,265

1,279,007

3,538,856

—

 
  Change in unrealized appreciation (depreciation) during the period
(55,905,742
)
(20,597,676
)
(7,558,857
)
54,566

615,040

(1,391,087
)
274,991

 
  Net increase (decrease) in net assets resulting from operations
13,074,192

10,015,115

2,241,553

431,321

1,401,571

1,084,800

(475,908
)
 
 
 
 
 
 
 
 
 
 
Unit transactions:
 
 
 
 
 
 
 
 
  Purchases
1,177,455

542,560

654,718

217,573

98,636

98,547

57,498

 
  Net transfers
(7,756,567
)
(4,269,808
)
(169,077
)
(377,050
)
(407,461
)
579,235

1,114,566

 
  Net interfund transfers due to corporate actions
—

—

—

—

—

—

—

 
  Surrenders for benefit payments and fees
(28,629,528
)
(16,807,227
)
(14,918,846
)
(2,199,852
)
(1,498,743
)
(3,005,411
)
(2,912,302
)
 
  Other transactions
1,686

(310
)
1,284

26

990

365

148

 
  Death benefits
(2,154,977
)
(1,210,432
)
(1,573,199
)
(178,229
)
(254,435
)
(491,400
)
(321,258
)
 
  Net annuity transactions
(4,066
)
(79,533
)
(1,357
)
—

(13,691
)
(66,343
)
(3,519
)
 
  Net increase (decrease) in net assets resulting from unit transactions
(37,365,997
)
(21,824,750
)
(16,006,477
)
(2,537,532
)
(2,074,704
)
(2,885,007
)
(2,064,867
)
 
  Net increase (decrease) in net assets
(24,291,805
)
(11,809,635
)
(13,764,924
)
(2,106,211
)
(673,133
)
(1,800,207
)
(2,540,775
)
 
 
 
 
 
 
 
 
 
 
Net assets:
 
 
 
 
 
 
 
 
  Beginning of period
201,147,748

117,508,398

116,227,332

16,716,582

16,312,061

30,361,959

19,768,629

 
  End of period
$
176,855,943

$
105,698,763

$
102,462,408

$
14,610,371

$
15,638,928

$
28,561,752

$
17,227,854

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 

(1) Funded as of November 18, 2016.





SEPARATE ACCOUNT SEVEN
Hartford Life and Annuity Insurance Company
 
 
 
 
Notes to Financial Statements
 
 
December 31, 2017
 
 
 
 
 

1. Organization:

Separate Account Seven (the “Account”) is a separate investment account established by Hartford Life and Annuity Insurance Company (the “Sponsor Company”) and is registered with the Securities and Exchange Commission (“SEC”) as a unit investment trust under the Investment Company Act of 1940, as amended. Both the Sponsor Company and the Account are subject to supervision and regulation by the Department of Insurance of the State of Connecticut and the SEC. The contract owners of the Sponsor Company direct their deposits into various investment options (the “Sub-Accounts”) within the Account.

On December 3, 2017, a Stock and Asset Purchase Agreement was entered into by and among Hartford Holdings, Inc. (“HHI”) and its parent company, The Hartford Financial Services Group, Inc. (“HFSG”), Hopmeadow Acquisition, Inc. (“Buyer”), Hopmeadow Holdings, LP (“Buyer Parent”) and Hopmeadow Holdings GP LLC (“Buyer Parent GP”), pursuant to which HHI agreed to sell all of the issued and outstanding equity of Hartford Life, Inc. (“HLI”), the parent of the Hartford Life Insurance Company and its indirect wholly owned subsidiary, the Sponsor Company,  to Buyer (the “Talcott Resolution Sale Transaction”).  Buyer, Buyer Parent and Buyer Parent GP are funded by a group of investors (the “Investor Group”) led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group. HHI will also be a member of the Investor Group.

The closing of the Talcott Resolution Sale Transaction is subject to regulatory approvals, and the satisfaction of other closing conditions. The administration, terms, features and benefits of the contracts will not change as a result of the sale. The Talcott Resolution Sale Transaction is expected to close in the first half of 2018.

The Account is comprised of the following Sub-Accounts:

American Century VP Value Fund, American Century VP Growth Fund, AB VPS Balanced Wealth Strategy Portfolio, AB VPS International Value Portfolio, AB VPS Small/Mid Cap Value Portfolio, AB VPS Value Portfolio, AB VPS International Growth Portfolio, Invesco V.I. Value Opportunities Fund, Invesco V.I. Core Equity Fund, Invesco V.I. Government Securities Fund, Invesco V.I. International Growth Fund, Invesco V.I. Mid Cap Core Equity Fund, Invesco V.I. Small Cap Equity Fund, Invesco V.I. Balanced Risk Allocation Fund, Invesco V.I. Diversified Dividend Fund, Invesco V.I. Government Money Market Fund, American Century VP Mid Cap Value 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 VT Omega 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 VIP Fund, Franklin Income VIP Fund, Franklin Large Cap Growth VIP Fund, Franklin Global Real Estate VIP Fund, Franklin Small-Mid Cap Growth VIP Fund, Franklin Small Cap Value VIP Fund, Franklin Strategic Income VIP Fund, Franklin Mutual Shares VIP Fund, Templeton Developing Markets VIP Fund, Templeton Foreign VIP Fund, Templeton Growth VIP Fund, Franklin Mutual Global Discovery VIP Fund, Franklin Flex Cap Growth VIP Fund, Templeton Global Bond VIP Fund, Hartford Balanced HLS Fund, Hartford Total Return Bond HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford Global Growth HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Growth Opportunities HLS Fund, Hartford High Yield HLS Fund, Hartford International Opportunities HLS Fund, Hartford Small/Mid Cap Equity HLS Fund, Hartford Ultrashort Bond HLS Fund, Hartford Small Company HLS Fund, Hartford SmallCap Growth HLS Fund, Hartford Stock HLS Fund, Hartford U.S. Government Securities HLS Fund, Hartford Value HLS Fund, Lord Abbett Fundamental Equity Fund, Lord Abbett Calibrated Dividend Growth Fund, Lord Abbett Bond Debenture Fund, Lord Abbett Growth and Income Fund, MFS® Growth Fund, MFS® Global Equity Fund, MFS® Investors Trust Fund, MFS® Mid Cap Growth Fund, MFS® New Discovery Fund, MFS® Total Return Fund, MFS® Value Fund, MFS® Total Return Bond Series, MFS® Research Fund, MFS® High Yield Portfolio, BlackRock Global Allocation V.I. Fund, BlackRock Global Opportunities V.I. Fund, BlackRock Large Cap Focus Growth V.I. Fund (Formerly BlackRock Large Cap Growth V.I. Fund), BlackRock Equity Dividend V.I. Fund, Morgan Stanley VIF Core Plus Fixed Income Portfolio (Formerly UIF Core Plus Fixed Income Portfolio), Morgan Stanley VIF Growth Portfolio (Formerly UIF Growth Portfolio), Morgan Stanley VIF Mid Cap Growth Portfolio (Formerly UIF Mid Cap Growth Portfolio), Invesco V.I. American Value Fund, Morgan Stanley Mid Cap Growth Portfolio*, BlackRock Capital Appreciation V.I. Fund, Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Global Fund/VA, Oppenheimer Main Street Fund®/VA (Merged with Oppenheimer Equity Income Fund/VA ), Oppenheimer Main Street Small Cap Fund/VA, Oppenheimer Equity Income Fund/VA (Merged with Oppenheimer Main Street Fund®/VA ), Putnam VT Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT Growth Opportunities Fund, Putnam VT International Value Fund, Putnam VT International Equity Fund, Putnam VT Investors Fund, Putnam VT Small Cap Value Fund, Putnam VT Equity Income Fund, PIMCO All Asset Fund, PIMCO StocksPLUS Global Portfolio, PIMCO Global Multi-Asset Managed Allocation Portfolio, Jennison 20/20 Focus Fund, Prudential Value Portfolio, Invesco V.I. Growth and Income Fund, Invesco V.I. Comstock Fund, Invesco V.I. American Franchise Fund, Invesco V.I. Mid Cap Growth Fund, Wells Fargo VT Index Asset Allocation Fund, Wells Fargo VT International Equity Fund, Wells Fargo VT Small Cap Growth Fund, Wells Fargo VT Discovery Fund, Wells Fargo VT Opportunity Fund, HIMCO VIT Index Fund, HIMCO VIT Portfolio Diversifier Fund, HIMCO VIT American Funds Asset Allocation Fund*, HIMCO VIT American Funds Blue Chip Income and Growth Fund*, HIMCO VIT American Funds Bond Fund*, HIMCO VIT American Funds Global Bond Fund*, HIMCO VIT American Funds Global Growth and Income Fund*, HIMCO VIT American Funds Global Growth Fund*, HIMCO VIT American Funds Global Small Capitalization Fund*, HIMCO VIT American Funds Growth Fund*, HIMCO VIT American Funds Growth-Income Fund*, HIMCO VIT American Funds International Fund*, HIMCO VIT American Funds New World Fund*, MFS® Core Equity Portfolio, MFS® Massachusetts Investors Growth Stock Portfolio, MFS® Research International Portfolio.

* During 2017, this Sub-Account was liquidated.

The Sub-Accounts are invested in mutual funds (the “Funds”) of the same name. Each Sub-Account may invest in one or more share classes of a Fund, depending upon the product(s) available in that Sub-Account. A contract owner's unitized performance correlates with the share class associated with the contract owner's product.

If a Fund is subject to a merger by the Fund Manager, the Sub-Account invested in the surviving Fund acquires, at fair value, the net assets of the Sub-Account associated with the merging Fund on the date disclosed. These transfers are reflected in net interfund transfers due to corporate actions on the statements of changes in net assets.

Under applicable insurance law, the assets and liabilities of the Account are clearly identified and distinguished from the Sponsor Company’s other assets and liabilities and are not chargeable with liabilities arising out of any other business the Sponsor Company may conduct.

2. Significant Accounting Policies:

The Account qualifies as an investment company and follows the accounting and reporting guidance as defined in Accounting Standards Codification 946, "Financial Services - Investment Companies." The following is a summary of significant accounting policies of the Account, which are in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"):

a) Security Transactions - Security transactions are recorded on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sales of securities are computed using the average cost method. Dividend income is either accrued daily or as of the ex-dividend date based upon the Fund. Net realized gain distributions are accrued as of the ex-dividend date. Net realized gain distributions represent those dividends from the Funds which are characterized as capital gains under tax regulations.

b) Unit Transactions - Unit transactions are executed based on the unit values calculated at the close of the business day.

c) Federal Income Taxes - The operations of the Account form a part of, and are taxed with, the total operations of the Sponsor Company, which is taxed as an insurance company under the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, the Sponsor Company does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited to the contract owners. Based on this, no charge is being made currently to the Account for federal income taxes. The Sponsor Company will review periodically the status of this policy. In the event of changes in the tax law, a charge may be made in future years for any federal income taxes that would be attributable to the contracts.

d) Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ from those estimates. The most significant estimates contained within the financial statements are the fair value measurements.

e) Mortality Risk - The mortality risk associated with net assets allocated to contracts in the annuity period is determined using certain mortality tables. The mortality risk is fully borne by the Sponsor Company and may result in additional amounts being transferred into the Account by the Sponsor Company to cover greater longevity of contract owners than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Sponsor Company. These amounts are included in net annuity transactions on the accompanying statements of changes in net assets.

f) Fair Value Measurements - The Sub-Accounts' investments are carried at fair value in the Account’s financial statements. The investments in shares of the Funds are valued at the December 31, 2017 closing net asset value as determined by the appropriate Fund Manager. For financial instruments that are carried at fair value, a hierarchy is used to place the instruments into three broad levels (Levels 1, 2 and 3) by prioritizing the inputs in the valuation techniques used to measure fair value.

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Account has the ability to access at the measurement date. Level 1 investments include mutual funds.

Level 2: Observable inputs, other than unadjusted quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 2 investments include those that are model priced by vendors using observable inputs.

Level 3: Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Because Level 3 fair values, by their nature, contain unobservable market inputs, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the best estimate of an amount that could be realized in a current market exchange absent actual market exchanges.

In certain cases, the inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

As of December 31, 2017 the Sub-Accounts invest in mutual funds which are carried at fair value and represent Level 1 investments under the fair value hierarchy levels. There were no Level 2 or Level 3 investments in the Sub-Accounts. The Account’s policy is to recognize transfers of securities among the levels at the beginning of the reporting period. There were no transfers among the levels for the periods ended December 31, 2017 and 2016.

g) Accounting for Uncertain Tax Positions - The federal audit of the years 2012 and 2013 was completed as of March 31, 2017 with no additional adjustments. 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, 2017.

3. Administration of the Account and Related Charges:

Each Sub-Account is charged certain fees, according to contract terms, as follows:

a) Mortality and Expense Risk Charges - The Sponsor Company, as an issuer of variable annuity contracts, assesses mortality and expense risk charges for which it receives a maximum annual fee of 1.55% of the Sub-Account’s average daily net assets. These charges are reflected in the accompanying statements of operations as a reduction in unit value.

b) Tax Expense Charges - If applicable, the Sponsor Company will make deductions up to a maximum rate of 3.50% of the contract’s average daily net assets to meet premium tax requirements. An additional tax charge based on a percentage of the Sub-Account’s average daily net assets may be assessed on partial withdrawals or surrenders. These charges are a redemption of units from applicable contract owners’ accounts and are reflected in surrenders for benefit payments and fees on the accompanying statements of changes in net assets.

c) Administrative Charges - The Sponsor Company provides administrative services to the Account and receives a maximum annual fee of 0.20% of the Sub-Account’s average daily net assets for these services. These charges are reflected in the accompanying statements of operations as a reduction in unit value.

d) Annual Maintenance Fees - An annual maintenance fee up to a maximum of $50 may be charged. These charges are deducted through a redemption of units from applicable contract owners’ accounts and are reflected in surrenders for benefit payments and fees in the accompanying statements of changes in net assets.

e) Rider Charges - The Sponsor Company will make certain deductions (as a percentage of average daily Sub-Account value) for various rider charges:

MAV/EPB Death Benefit Charge maximum of 0.30%
MAV Plus maximum of 0.30%
The Hartford’s Principal First Charge maximum of 0.75%
The Hartford’s Principal First Preferred Charge maximum of 0.20%
MAV 70 Death Benefit Charge maximum of 0.20%
Optional Death Benefit Charge maximum of 0.15%
Earnings Protection Benefit Charge maximum of 0.20%
Return of Premium Death Benefit maximum of 0.75%
MAV III maximum of 1.50%
MAV IV maximum of 1.50%
MAV V maximum of 1.50%
Legacy lock maximum of 1.50%
Daily lock maximum of 2.50%
Return of Premium III maximum of 0.75%
Return of Premium IV maximum of 0.75%
Return of Premium V maximum of 0.75%
Maximum daily value maximum of 1.50%
Safety Plus maximum of 2.50%
Future6 maximum of 2.50%
Future5 maximum of 2.50%
Premium Based Charges maximum of 0.71%
The Hartford’s Lifetime Income Builder Charge maximum of 0.75%
The Hartford’s Lifetime Income Builder II Charge maximum of 0.75%
The Hartford’s Lifetime Income Foundation Charge maximum of 0.30%
The Hartford’s Lifetime Income Builder Selects Charge maximum of 1.50%
The Hartford’s Lifetime Income Builder Portfolios Charge maximum of 1.50%
Income Foundation Builder maximum of 2.50%


These charges can be assessed as a reduction in unit values or a redemption of units from applicable contract owners’ accounts as specified in the product prospectus.

f) Distribution Charge - A Distribution Charge of 0.75% may be charged, by the Sponsor Company, 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 zero after the completion of eight years after each respective premium payment. These charges are deducted through a redemption of units from applicable contract owners’ accounts and are reflected in surrenders for benefit payments and fees in the accompanying statements of changes in net assets.

g) Transactions with Related Parties - The Sponsor and its affiliates receive fees from the HLS and HIMCO VIT funds for services provided to these Funds. The fees received for these services are a maximum of 1.07% and 1.35%, respectively, of the Funds’ average daily net assets.

4. Purchases and Sales of Investments:

The cost of purchases and proceeds from sales of investments for the period ended December 31, 2017 were as follows:

Sub-Account
Purchases at Cost
Proceeds from Sales
American Century VP Value Fund
 
$
732,650

$
1,805,997

American Century VP Growth Fund
 
$
294,170

$
674,795

AB VPS Balanced Wealth Strategy Portfolio
 
$
657,206

$
4,299,929

AB VPS International Value Portfolio
 
$
793,922

$
3,799,955

AB VPS Small/Mid Cap Value Portfolio
 
$
2,050,093

$
3,611,844

AB VPS Value Portfolio
 
$
44,525

$
266,741

AB VPS International Growth Portfolio
 
$
464,996

$
692,313

Invesco V.I. Value Opportunities Fund
 
$
5,115,393

$
11,934,984

Invesco V.I. Core Equity Fund
 
$
9,659,991

$
20,504,701

Invesco V.I. Government Securities Fund
 
$
22,815,585

$
46,961,596

Invesco V.I. International Growth Fund
 
$
5,833,024

$
27,515,518

Invesco V.I. Mid Cap Core Equity Fund
 
$
7,877,295

$
24,588,610

Invesco V.I. Small Cap Equity Fund
 
$
8,773,509

$
18,552,367

Invesco V.I. Balanced Risk Allocation Fund
 
$
1,333,431

$
2,449,279

Invesco V.I. Diversified Dividend Fund
 
$
22,444

$
53,221

Invesco V.I. Government Money Market Fund
 
$
85,849,021

$
105,750,435

American Century VP Mid Cap Value Fund
 
$
146,247

$
225,387

American Funds Global Bond Fund
 
$
15,307,299

$
15,145,676

American Funds Global Growth and Income Fund
 
$
40,367,692

$
37,023,495

American Funds Asset Allocation Fund
 
$
90,497,685

$
115,677,778

American Funds Blue Chip Income and Growth Fund
 
$
67,990,457

$
90,921,342

American Funds Bond Fund
 
$
169,305,796

$
95,978,923

American Funds Global Growth Fund
 
$
33,909,054

$
42,431,652

American Funds Growth Fund
 
$
335,825,115

$
256,012,037

American Funds Growth-Income Fund
 
$
224,321,236

$
237,595,237

American Funds International Fund
 
$
125,788,797

$
69,411,103

American Funds New World Fund
 
$
25,265,072

$
22,802,904

American Funds Global Small Capitalization Fund
 
$
34,692,372

$
28,612,464

Wells Fargo VT Omega Growth Fund
 
$
188,361

$
112,216

Fidelity® VIP Growth Portfolio
 
$
2,631,489

$
1,637,085

Fidelity® VIP Contrafund® Portfolio
 
$
5,993,494

$
14,850,934

Fidelity® VIP Mid Cap Portfolio
 
$
4,387,956

$
11,017,818

Fidelity® VIP Value Strategies Portfolio
 
$
626,883

$
711,759

Fidelity® VIP Dynamic Capital Appreciation Portfolio
 
$
244,627

$
727,637

Fidelity® VIP Strategic Income Portfolio
 
$
445,655

$
155,200

Franklin Rising Dividends VIP Fund
 
$
30,337,190

$
84,702,922

Franklin Income VIP Fund
 
$
39,467,765

$
134,874,067

Franklin Large Cap Growth VIP Fund
 
$
11,426,586

$
15,854,680

Franklin Global Real Estate VIP Fund
 
$
251,563

$
897,550

Franklin Small-Mid Cap Growth VIP Fund
 
$
20,187,108

$
32,542,033

Franklin Small Cap Value VIP Fund
 
$
13,079,039

$
22,056,022

Franklin Strategic Income VIP Fund
 
$
24,963,252

$
60,237,234

Franklin Mutual Shares VIP Fund
 
$
44,915,769

$
102,671,399

Templeton Developing Markets VIP Fund
 
$
8,549,696

$
15,205,986

Templeton Foreign VIP Fund
 
$
9,878,200

$
37,955,793

Templeton Growth VIP Fund
 
$
7,027,421

$
42,659,288

Franklin Mutual Global Discovery VIP Fund
 
$
22,648,768

$
41,904,347

Franklin Flex Cap Growth VIP Fund
 
$
1,631,019

$
6,765,787

Templeton Global Bond VIP Fund
 
$
3,896,063

$
11,458,328

Hartford Balanced HLS Fund
 
$
5,407,242

$
4,952,468

Hartford Total Return Bond HLS Fund
 
$
48,767,670

$
71,672,125

Hartford Capital Appreciation HLS Fund
 
$
24,380,940

$
79,596,994

Hartford Dividend and Growth HLS Fund
 
$
27,485,652

$
60,894,443

Hartford Global Growth HLS Fund
 
$
1,483,786

$
1,146,346

Hartford Disciplined Equity HLS Fund
 
$
9,570,139

$
14,963,537

Hartford Growth Opportunities HLS Fund
 
$
5,383,602

$
30,979,531

Hartford High Yield HLS Fund
 
$
5,897,872

$
9,005,251

Hartford International Opportunities HLS Fund
 
$
2,227,572

$
8,014,028

Hartford Small/Mid Cap Equity HLS Fund
 
$
698,975

$
1,150,073

Hartford Ultrashort Bond HLS Fund
 
$
21,632,542

$
51,354,283

Hartford Small Company HLS Fund
 
$
275,779

$
2,388,265

Hartford SmallCap Growth HLS Fund
 
$
1,925,250

$
1,879,366

Hartford Stock HLS Fund
 
$
438,149

$
748,000

Hartford U.S. Government Securities HLS Fund
 
$
3,423,021

$
6,071,361

Hartford Value HLS Fund
 
$
1,851,388

$
3,489,518

Lord Abbett Fundamental Equity Fund
 
$
1,482,918

$
2,691,906

Lord Abbett Calibrated Dividend Growth Fund
 
$
2,642,993

$
3,475,353

Lord Abbett Bond Debenture Fund
 
$
4,698,006

$
7,650,620

Lord Abbett Growth and Income Fund
 
$
1,088,447

$
1,900,434

MFS® Growth Fund
 
$
13,106,549

$
35,990,660

MFS® Global Equity Fund
 
$
2,167,214

$
4,496,321

MFS® Investors Trust Fund
 
$
9,573,470

$
27,899,119

MFS® Mid Cap Growth Fund
 
$
6,291,591

$
10,911,629

MFS® New Discovery Fund
 
$
5,523,552

$
19,746,998

MFS® Total Return Fund
 
$
34,879,511

$
70,250,928

MFS® Value Fund
 
$
26,066,800

$
55,668,057

MFS® Total Return Bond Series
 
$
63,105,062

$
86,398,765

MFS® Research Fund
 
$
3,910,234

$
6,315,720

MFS® High Yield Portfolio
 
$
13,677,730

$
22,060,552

BlackRock Global Allocation V.I. Fund
 
$
218,721

$
754,609

BlackRock Global Opportunities V.I. Fund
 
$
59,574

$
87,021

BlackRock Large Cap Focus Growth V.I. Fund+
 
$
177,383

$
102,300

BlackRock Equity Dividend V.I. Fund
 
$
833,299

$
2,090,075

Morgan Stanley VIF Core Plus Fixed Income Portfolio+
 
$
212,205

$
207,704

Morgan Stanley VIF Growth Portfolio+
 
$
239,262

$
440,146

Morgan Stanley VIF Mid Cap Growth Portfolio+
 
$
1,078,471

$
2,900,804

Invesco V.I. American Value Fund
 
$
1,444,398

$
2,102,253

Morgan Stanley Mid Cap Growth Portfolio+
 
$
1,193

$
337,623

BlackRock Capital Appreciation V.I. Fund
 
$
793,851

$
2,599,852

Oppenheimer Capital Appreciation Fund/VA
 
$
450,491

$
385,252

Oppenheimer Global Fund/VA
 
$
1,362,033

$
3,021,790

Oppenheimer Main Street Fund®/VA+
 
$
2,825,176

$
905,658

Oppenheimer Main Street Small Cap Fund/VA
 
$
1,312,818

$
4,383,163

Oppenheimer Equity Income Fund/VA+
 
$
297,995

$
2,679,114

Putnam VT Diversified Income Fund
 
$
4,138,001

$
7,683,438

Putnam VT Global Asset Allocation Fund
 
$
153,412

$
611,150

Putnam VT Growth Opportunities Fund
 
$
319,286

$
2,615,709

Putnam VT International Value Fund
 
$
43,979

$
296,432

Putnam VT International Equity Fund
 
$
266,468

$
566,351

Putnam VT Investors Fund
 
$
64,183

$
54,113

Putnam VT Small Cap Value Fund
 
$
542,785

$
1,334,116

Putnam VT Equity Income Fund
 
$
244,574

$
325,799

PIMCO All Asset Fund
 
$
66,323

$
264,860

PIMCO StocksPLUS Global Portfolio
 
$
185,775

$
1,661,369

PIMCO Global Multi-Asset Managed Allocation Portfolio
 
$
99,228

$
256,829

Jennison 20/20 Focus Fund
 
$
1

$
20,231

Prudential Value Portfolio
 
$
1

$
9,680

Invesco V.I. Growth and Income Fund
 
$
2,564,909

$
6,805,792

Invesco V.I. Comstock Fund
 
$
115,334

$
249,014

Invesco V.I. American Franchise Fund
 
$
9,964,904

$
12,822,242

Invesco V.I. Mid Cap Growth Fund
 
$
3,844,241

$
4,727,299

Wells Fargo VT Index Asset Allocation Fund
 
$
90,982

$
146,692

Wells Fargo VT International Equity Fund
 
$
17,593

$
80,739

Wells Fargo VT Small Cap Growth Fund
 
$
39,856

$
209,137

Wells Fargo VT Discovery Fund
 
$
51,549

$
251,580

Wells Fargo VT Opportunity Fund
 
$
14,715

$
40,577

HIMCO VIT Index Fund
 
$
3,756,781

$
11,330,443

HIMCO VIT Portfolio Diversifier Fund
 
$
27,690,854

$
40,600,621

HIMCO VIT American Funds Asset Allocation Fund+
 
$
8,286,703

$
33,434,471

HIMCO VIT American Funds Blue Chip Income and Growth Fund+
 
$
12,280,291

$
36,157,169

HIMCO VIT American Funds Bond Fund+
 
$
13,860,132

$
123,849,375

HIMCO VIT American Funds Global Bond Fund+
 
$
1,501,989

$
10,215,267

HIMCO VIT American Funds Global Growth and Income Fund+
 
$
13,070,825

$
30,843,657

HIMCO VIT American Funds Global Growth Fund+
 
$
6,791,203

$
18,384,982

HIMCO VIT American Funds Global Small Capitalization Fund+
 
$
11,175,399

$
34,912,482

HIMCO VIT American Funds Growth Fund+
 
$
91,406,067

$
221,704,083

HIMCO VIT American Funds Growth-Income Fund+
 
$
50,226,512

$
127,102,025

HIMCO VIT American Funds International Fund+
 
$
36,819,927

$
133,045,366

HIMCO VIT American Funds New World Fund+
 
$
2,673,818

$
19,759,175

MFS® Core Equity Portfolio
 
$
2,743,624

$
3,195,057

MFS® Massachusetts Investors Growth Stock Portfolio
 
$
3,068,692

$
6,846,562

MFS® Research International Portfolio
 
$
1,939,684

$
5,974,116


+ See Note 1 for additional information related to this Sub-Account.


5. Changes in Units Outstanding:


The changes in units outstanding for the period ended December 31, 2017 were as follows:

Sub-Account
 
Units Issued
Units Redeemed
Net Increase/(Decrease)
American Century VP Value Fund
 
34,117

91,899

(57,782
)
American Century VP Growth Fund
 
1,011

38,273

(37,262
)
AB VPS Balanced Wealth Strategy Portfolio
 
20,325

286,579

(266,254
)
AB VPS International Value Portfolio
 
63,203

440,448

(377,245
)
AB VPS Small/Mid Cap Value Portfolio
 
65,024

158,402

(93,378
)
AB VPS Value Portfolio
 
2,557

18,441

(15,884
)
AB VPS International Growth Portfolio
 
50,240

72,897

(22,657
)
Invesco V.I. Value Opportunities Fund
 
2,878,284

6,425,618

(3,547,334
)
Invesco V.I. Core Equity Fund
 
192,256

1,041,819

(849,563
)
Invesco V.I. Government Securities Fund
 
15,327,809

34,310,210

(18,982,401
)
Invesco V.I. International Growth Fund
 
1,261,727

6,992,526

(5,730,799
)
Invesco V.I. Mid Cap Core Equity Fund
 
2,120,435

8,854,966

(6,734,531
)
Invesco V.I. Small Cap Equity Fund
 
262,848

790,646

(527,798
)
Invesco V.I. Balanced Risk Allocation Fund
 
26,894

175,986

(149,092
)
Invesco V.I. Diversified Dividend Fund
 
489

2,591

(2,102
)
Invesco V.I. Government Money Market Fund
 
9,198,936

11,181,309

(1,982,373
)
American Century VP Mid Cap Value Fund
 
5,471

10,584

(5,113
)
American Funds Global Bond Fund
 
1,387,444

1,158,033

229,411

American Funds Global Growth and Income Fund
 
2,963,777

2,133,414

830,363

American Funds Asset Allocation Fund
 
3,926,121

5,017,829

(1,091,708
)
American Funds Blue Chip Income and Growth Fund
 
11,136,538

42,741,801

(31,605,263
)
American Funds Bond Fund
 
13,627,670

5,855,264

7,772,406

American Funds Global Growth Fund
 
1,967,022

1,693,541

273,481

American Funds Growth Fund
 
18,796,404

10,969,516

7,826,888

American Funds Growth-Income Fund
 
11,198,568

9,443,590

1,754,978

American Funds International Fund
 
10,892,983

3,830,434

7,062,549

American Funds New World Fund
 
1,817,920

769,309

1,048,611

American Funds Global Small Capitalization Fund
 
2,975,232

1,147,620

1,827,612

Wells Fargo VT Omega Growth Fund
 
7,797

4,258

3,539

Fidelity® VIP Growth Portfolio
 
112,663

83,884

28,779

Fidelity® VIP Contrafund® Portfolio
 
105,830

719,355

(613,525
)
Fidelity® VIP Mid Cap Portfolio
 
109,595

556,464

(446,869
)
Fidelity® VIP Value Strategies Portfolio
 
2,708

35,837

(33,129
)
Fidelity® VIP Dynamic Capital Appreciation Portfolio
 
2,361

35,650

(33,289
)
Fidelity® VIP Strategic Income Portfolio
 
26,683

11,273

15,410

Franklin Rising Dividends VIP Fund
 
454,419

3,068,639

(2,614,220
)
Franklin Income VIP Fund
 
822,564

6,234,130

(5,411,566
)
Franklin Large Cap Growth VIP Fund
 
365,775

802,158

(436,383
)
Franklin Global Real Estate VIP Fund
 
4,107

36,761

(32,654
)
Franklin Small-Mid Cap Growth VIP Fund
 
447,833

1,800,735

(1,352,902
)
Franklin Small Cap Value VIP Fund
 
509,162

1,228,731

(719,569
)
Franklin Strategic Income VIP Fund
 
952,018

2,978,730

(2,026,712
)
Franklin Mutual Shares VIP Fund
 
723,109

4,522,431

(3,799,322
)
Templeton Developing Markets VIP Fund
 
432,945

769,034

(336,089
)
Templeton Foreign VIP Fund
 
416,973

2,587,116

(2,170,143
)
Templeton Growth VIP Fund
 
277,686

2,442,957

(2,165,271
)
Franklin Mutual Global Discovery VIP Fund
 
296,703

1,448,128

(1,151,425
)
Franklin Flex Cap Growth VIP Fund
 
92,604

355,683

(263,079
)
Templeton Global Bond VIP Fund
 
279,828

787,404

(507,576
)
Hartford Balanced HLS Fund
 
311,216

288,407

22,809

Hartford Total Return Bond HLS Fund
 
2,897,093

5,212,779

(2,315,686
)
Hartford Capital Appreciation HLS Fund
 
94,150

4,405,996

(4,311,846
)
Hartford Dividend and Growth HLS Fund
 
200,448

2,984,765

(2,784,317
)
Hartford Global Growth HLS Fund
 
77,326

73,215

4,111

Hartford Disciplined Equity HLS Fund
 
70,585

673,749

(603,164
)
Hartford Growth Opportunities HLS Fund
 
213,889

1,499,498

(1,285,609
)
Hartford High Yield HLS Fund
 
249,741

515,375

(265,634
)
Hartford International Opportunities HLS Fund
 
142,168

616,204

(474,036
)
Hartford Small/Mid Cap Equity HLS Fund
 
27,051

58,114

(31,063
)
Hartford Ultrashort Bond HLS Fund
 
18,598,444

38,936,932

(20,338,488
)
Hartford Small Company HLS Fund
 
13,284

127,736

(114,452
)
Hartford SmallCap Growth HLS Fund
 
76,914

69,105

7,809

Hartford Stock HLS Fund
 
20,344

38,727

(18,383
)
Hartford U.S. Government Securities HLS Fund
 
290,233

557,707

(267,474
)
Hartford Value HLS Fund
 
30,725

182,149

(151,424
)
Lord Abbett Fundamental Equity Fund
 
29,553

130,492

(100,939
)
Lord Abbett Calibrated Dividend Growth Fund
 
82,079

167,070

(84,991
)
Lord Abbett Bond Debenture Fund
 
174,529

420,603

(246,074
)
Lord Abbett Growth and Income Fund
 
21,469

115,045

(93,576
)
MFS® Growth Fund
 
519,202

2,082,014

(1,562,812
)
MFS® Global Equity Fund
 
58,258

173,316

(115,058
)
MFS® Investors Trust Fund
 
252,492

1,520,236

(1,267,744
)
MFS® Mid Cap Growth Fund
 
364,901

1,011,787

(646,886
)
MFS® New Discovery Fund
 
200,317

869,329

(669,012
)
MFS® Total Return Fund
 
893,277

3,289,587

(2,396,310
)
MFS® Value Fund
 
444,690

2,142,188

(1,697,498
)
MFS® Total Return Bond Series
 
3,482,013

5,818,569

(2,336,556
)
MFS® Research Fund
 
109,083

273,501

(164,418
)
MFS® High Yield Portfolio
 
754,323

1,828,002

(1,073,679
)
BlackRock Global Allocation V.I. Fund
 
9,634

57,930

(48,296
)
BlackRock Global Opportunities V.I. Fund
 
1,682

4,424

(2,742
)
BlackRock Large Cap Focus Growth V.I. Fund+
 
3,392

4,727

(1,335
)
BlackRock Equity Dividend V.I. Fund
 
19,259

111,757

(92,498
)
Morgan Stanley VIF Core Plus Fixed Income Portfolio+
 
17,357

17,818

(461
)
Morgan Stanley VIF Growth Portfolio+
 
4,129

22,741

(18,612
)
Morgan Stanley VIF Mid Cap Growth Portfolio+
 
73,219

167,292

(94,073
)
Invesco V.I. American Value Fund
 
70,950

108,399

(37,449
)
Morgan Stanley Mid Cap Growth Portfolio+
 
99

21,363

(21,264
)
BlackRock Capital Appreciation V.I. Fund
 
7,093

146,636

(139,543
)
Oppenheimer Capital Appreciation Fund/VA
 
16,582

21,974

(5,392
)
Oppenheimer Global Fund/VA
 
72,296

173,276

(100,980
)
Oppenheimer Main Street Fund®/VA+
 
141,858

44,433

97,425

Oppenheimer Main Street Small Cap Fund/VA
 
19,736

192,705

(172,969
)
Oppenheimer Equity Income Fund/VA+
 
17,126

182,221

(165,095
)
Putnam VT Diversified Income Fund
 
145,521

513,858

(368,337
)
Putnam VT Global Asset Allocation Fund
 
843

34,753

(33,910
)
Putnam VT Growth Opportunities Fund
 
16,270

208,836

(192,566
)
Putnam VT International Value Fund
 
3,508

30,644

(27,136
)
Putnam VT International Equity Fund
 
20,979

53,042

(32,063
)
Putnam VT Investors Fund
 
1,581

1,894

(313
)
Putnam VT Small Cap Value Fund
 
22,951

67,974

(45,023
)
Putnam VT Equity Income Fund
 
6,436

12,276

(5,840
)
PIMCO All Asset Fund
 
919

21,514

(20,595
)
PIMCO StocksPLUS Global Portfolio
 
138

126,228

(126,090
)
PIMCO Global Multi-Asset Managed Allocation Portfolio
 
8,665

24,024

(15,359
)
Jennison 20/20 Focus Fund
 
1

3,859

(3,858
)
Prudential Value Portfolio
 
—

122

(122
)
Invesco V.I. Growth and Income Fund
 
54,713

335,034

(280,321
)
Invesco V.I. Comstock Fund
 
1,038

8,592

(7,554
)
Invesco V.I. American Franchise Fund
 
379,865

674,250

(294,385
)
Invesco V.I. Mid Cap Growth Fund
 
222,669

294,961

(72,292
)
Wells Fargo VT Index Asset Allocation Fund
 
32,055

67,265

(35,210
)
Wells Fargo VT International Equity Fund
 
186

4,971

(4,785
)
Wells Fargo VT Small Cap Growth Fund
 
2,396

59,078

(56,682
)
Wells Fargo VT Discovery Fund
 
361

7,921

(7,560
)
Wells Fargo VT Opportunity Fund
 
125

1,672

(1,547
)
HIMCO VIT Index Fund
 
54,735

462,473

(407,738
)
HIMCO VIT Portfolio Diversifier Fund
 
3,657,324

5,562,584

(1,905,260
)
HIMCO VIT American Funds Asset Allocation Fund+
 
71,820

1,863,046

(1,791,226
)
HIMCO VIT American Funds Blue Chip Income and Growth Fund+
 
83,210

1,796,511

(1,713,301
)
HIMCO VIT American Funds Bond Fund+
 
961,053

10,942,099

(9,981,046
)
HIMCO VIT American Funds Global Bond Fund+
 
139,966

939,366

(799,400
)
HIMCO VIT American Funds Global Growth and Income Fund+
 
78,528

1,877,081

(1,798,553
)
HIMCO VIT American Funds Global Growth Fund+
 
109,668

953,703

(844,035
)
HIMCO VIT American Funds Global Small Capitalization Fund+
 
90,915

2,501,947

(2,411,032
)
HIMCO VIT American Funds Growth Fund+
 
224,087

10,754,853

(10,530,766
)
HIMCO VIT American Funds Growth-Income Fund+
 
211,621

6,418,134

(6,206,513
)
HIMCO VIT American Funds International Fund+
 
324,210

10,460,980

(10,136,770
)
HIMCO VIT American Funds New World Fund+
 
120,637

1,513,125

(1,392,488
)
MFS® Core Equity Portfolio
 
138,392

243,264

(104,872
)
MFS® Massachusetts Investors Growth Stock Portfolio
 
128,828

540,817

(411,989
)
MFS® Research International Portfolio
 
158,135

542,625

(384,490
)

+ See Note 1 for additional information related to this Sub-Account.

The changes in units outstanding for the period ended December 31, 2016 were as follows:


Sub-Account
 
Units Issued
Units Redeemed
Net Increase/(Decrease)
American Century VP Value Fund
 
58,219

168,225

(110,006
)
American Century VP Growth Fund
 
52,241

74,030

(21,789
)
AB VPS Balanced Wealth Strategy Portfolio
 
37,286

270,532

(233,246
)
AB VPS International Value Portfolio
 
256,622

642,027

(385,405
)
AB VPS Small/Mid Cap Value Portfolio
 
119,579

236,558

(116,979
)
AB VPS Value Portfolio
 
8,132

19,798

(11,666
)
AB VPS International Growth Portfolio
 
15,969

116,125

(100,156
)
Invesco V.I. Value Opportunities Fund
 
3,041,016

6,872,403

(3,831,387
)
Invesco V.I. Core Equity Fund
 
266,359

1,546,377

(1,280,018
)
Invesco V.I. Government Securities Fund
 
24,164,433

43,547,916

(19,383,483
)
Invesco V.I. International Growth Fund
 
2,930,896

8,055,560

(5,124,664
)
Invesco V.I. Mid Cap Core Equity Fund
 
4,585,206

10,910,319

(6,325,113
)
Invesco V.I. Small Cap Equity Fund
 
380,750

940,382

(559,632
)
Invesco V.I. Balanced Risk Allocation Fund
 
74,174

181,235

(107,061
)
Invesco V.I. Diversified Dividend Fund
 
2,819

671

2,148

Invesco V.I. Government Money Market Fund
 
20,097,797

22,864,544

(2,766,747
)
American Century VP Mid Cap Value Fund
 
28,689

20,470

8,219

American Funds Global Bond Fund
 
730,853

1,714,128

(983,275
)
American Funds Global Growth and Income Fund
 
436,874

2,371,216

(1,934,342
)
American Funds Asset Allocation Fund
 
1,890,766

6,623,812

(4,733,046
)
American Funds Blue Chip Income and Growth Fund
 
16,664,409

46,916,882

(30,252,473
)
American Funds Bond Fund
 
3,409,440

7,494,182

(4,084,742
)
American Funds Global Growth Fund
 
348,268

2,399,508

(2,051,240
)
American Funds Growth Fund
 
1,417,896

13,035,802

(11,617,906
)
American Funds Growth-Income Fund
 
1,274,765

11,474,704

(10,199,939
)
American Funds International Fund
 
998,619

3,924,955

(2,926,336
)
American Funds New World Fund
 
247,491

920,184

(672,693
)
American Funds Global Small Capitalization Fund
 
333,863

1,539,697

(1,205,834
)
Wells Fargo VT Omega Growth Fund
 
750

9,749

(8,999
)
Fidelity® VIP Growth Portfolio
 
52,834

144,859

(92,025
)
Fidelity® VIP Contrafund® Portfolio
 
258,563

1,045,843

(787,280
)
Fidelity® VIP Mid Cap Portfolio
 
145,675

765,529

(619,854
)
Fidelity® VIP Value Strategies Portfolio
 
6,509

77,204

(70,695
)
Fidelity® VIP Dynamic Capital Appreciation Portfolio
 
10,429

95,651

(85,222
)
Fidelity® VIP Strategic Income Portfolio
 
38,399

15,337

23,062

Franklin Rising Dividends VIP Fund
 
919,100

3,922,545

(3,003,445
)
Franklin Income VIP Fund
 
1,174,935

8,000,737

(6,825,802
)
Franklin Large Cap Growth VIP Fund
 
366,311

1,305,433

(939,122
)
Franklin Global Real Estate VIP Fund
 
9,227

38,442

(29,215
)
Franklin Small-Mid Cap Growth VIP Fund
 
540,329

2,158,149

(1,617,820
)
Franklin Small Cap Value VIP Fund
 
1,307,254

1,157,022

150,232

Franklin Strategic Income VIP Fund
 
765,390

4,124,864

(3,359,474
)
Franklin Mutual Shares VIP Fund
 
677,009

5,729,807

(5,052,798
)
Templeton Developing Markets VIP Fund
 
588,890

920,664

(331,774
)
Templeton Foreign VIP Fund
 
1,255,946

3,617,991

(2,362,045
)
Templeton Growth VIP Fund
 
621,975

3,062,708

(2,440,733
)
Franklin Mutual Global Discovery VIP Fund
 
343,162

2,173,731

(1,830,569
)
Franklin Flex Cap Growth VIP Fund
 
142,262

513,434

(371,172
)
Templeton Global Bond VIP Fund
 
326,864

1,067,014

(740,150
)
Hartford Balanced HLS Fund
 
214,902

294,039

(79,137
)
Hartford Total Return Bond HLS Fund
 
2,126,570

7,185,181

(5,058,611
)
Hartford Capital Appreciation HLS Fund
 
867,540

5,413,842

(4,546,302
)
Hartford Dividend and Growth HLS Fund
 
540,834

3,798,460

(3,257,626
)
Hartford Global Growth HLS Fund
 
57,224

125,645

(68,421
)
Hartford Disciplined Equity HLS Fund
 
292,314

945,331

(653,017
)
Hartford Growth Opportunities HLS Fund
 
373,944

1,600,377

(1,226,433
)
Hartford High Yield HLS Fund
 
710,726

844,479

(133,753
)
Hartford International Opportunities HLS Fund
 
388,359

818,377

(430,018
)
Hartford Small/Mid Cap Equity HLS Fund
 
48,814

110,425

(61,611
)
Hartford Ultrashort Bond HLS Fund
 
22,290,937

46,274,189

(23,983,252
)
Hartford Small Company HLS Fund
 
72,039

205,784

(133,745
)
Hartford SmallCap Growth HLS Fund
 
62,387

149,189

(86,802
)
Hartford Stock HLS Fund
 
91,218

57,803

33,415

Hartford U.S. Government Securities HLS Fund
 
1,102,382

1,158,996

(56,614
)
Hartford Value HLS Fund
 
52,999

243,913

(190,914
)
Lord Abbett Fundamental Equity Fund
 
76,652

236,061

(159,409
)
Lord Abbett Calibrated Dividend Growth Fund
 
215,499

204,241

11,258

Lord Abbett Bond Debenture Fund
 
278,052

549,765

(271,713
)
Lord Abbett Growth and Income Fund
 
30,345

139,641

(109,296
)
MFS® Growth Fund
 
967,902

2,372,597

(1,404,695
)
MFS® Global Equity Fund
 
111,652

221,409

(109,757
)
MFS® Investors Trust Fund
 
312,034

1,977,287

(1,665,253
)
MFS® Mid Cap Growth Fund
 
366,652

1,645,778

(1,279,126
)
MFS® New Discovery Fund
 
343,268

1,096,575

(753,307
)
MFS® Total Return Fund
 
1,111,121

4,679,752

(3,568,631
)
MFS® Value Fund
 
770,361

2,980,396

(2,210,035
)
MFS® Total Return Bond Series
 
3,864,275

7,970,850

(4,106,575
)
MFS® Research Fund
 
120,287

318,864

(198,577
)
MFS® High Yield Portfolio
 
3,371,712

4,054,644

(682,932
)
BlackRock Global Allocation V.I. Fund
 
10,175

73,488

(63,313
)
BlackRock Global Opportunities V.I. Fund
 
89

2,609

(2,520
)
BlackRock Large Cap Growth V.I. Fund
 
518

7,344

(6,826
)
BlackRock Equity Dividend V.I. Fund
 
50,187

233,669

(183,482
)
UIF Core Plus Fixed Income Portfolio
 
6,963

10,340

(3,377
)
UIF Growth Portfolio
 
7,917

40,248

(32,331
)
UIF Mid Cap Growth Portfolio
 
52,715

149,721

(97,006
)
Invesco V.I. American Value Fund
 
67,069

162,928

(95,859
)
Morgan Stanley Mid Cap Growth Portfolio
 
427

3,585

(3,158
)
BlackRock Capital Appreciation V.I. Fund
 
63,807

134,423

(70,616
)
Oppenheimer Capital Appreciation Fund/VA
 
19,633

62,798

(43,165
)
Oppenheimer Global Fund/VA
 
53,245

278,783

(225,538
)
Oppenheimer Main Street Fund®/VA
 
21,171

81,157

(59,986
)
Oppenheimer Main Street Small Cap Fund/VA
 
32,403

214,895

(182,492
)
Oppenheimer Equity Income Fund/VA
 
9,740

56,873

(47,133
)
Putnam VT Diversified Income Fund
 
184,737

840,931

(656,194
)
Putnam VT Global Asset Allocation Fund
 
6,593

24,192

(17,599
)
Putnam VT Growth Opportunities Fund
 
764,174

24,164

740,010

Putnam VT International Value Fund
 
3,300

15,058

(11,758
)
Putnam VT International Equity Fund
 
90,344

61,486

28,858

Putnam VT Investors Fund
 
122

2,004

(1,882
)
Putnam VT Small Cap Value Fund
 
42,580

47,780

(5,200
)
Putnam VT Equity Income Fund
 
8,628

16,122

(7,494
)
PIMCO All Asset Fund
 
559

26,510

(25,951
)
PIMCO StocksPLUS Global Portfolio
 
62,413

178,025

(115,612
)
PIMCO Global Multi-Asset Managed Allocation Portfolio
 
907

9,488

(8,581
)
Jennison 20/20 Focus Fund
 
5,088

10,358

(5,270
)
Prudential Value Portfolio
 
—

144

(144
)
Invesco V.I. Growth and Income Fund
 
68,224

341,515

(273,291
)
Invesco V.I. Comstock Fund
 
427

18,549

(18,122
)
Invesco V.I. American Franchise Fund
 
272,201

907,447

(635,246
)
Invesco V.I. Mid Cap Growth Fund
 
95,518

386,930

(291,412
)
Wells Fargo VT Index Asset Allocation Fund
 
5,346

4,890

456

Wells Fargo VT International Equity Fund
 
3,640

16,315

(12,675
)
Wells Fargo VT Small Cap Growth Fund
 
26,991

160,298

(133,307
)
Wells Fargo VT Discovery Fund
 
2,105

11,409

(9,304
)
Wells Fargo VT Opportunity Fund
 
171

3,354

(3,183
)
HIMCO VIT Index Fund
 
263,848

512,747

(248,899
)
HIMCO VIT Portfolio Diversifier Fund
 
5,944,500

7,334,632

(1,390,132
)
HIMCO VIT American Funds Asset Allocation Fund
 
140,438

541,183

(400,745
)
HIMCO VIT American Funds Blue Chip Income and Growth Fund
 
306,945

603,011

(296,066
)
HIMCO VIT American Funds Bond Fund
 
1,074,367

2,294,692

(1,220,325
)
HIMCO VIT American Funds Global Bond Fund
 
237,083

244,355

(7,272
)
HIMCO VIT American Funds Global Growth and Income Fund
 
57,458

580,841

(523,383
)
HIMCO VIT American Funds Global Growth Fund
 
82,834

304,145

(221,311
)
HIMCO VIT American Funds Global Small Capitalization Fund
 
231,347

656,258

(424,911
)
HIMCO VIT American Funds Growth Fund
 
490,375

2,908,877

(2,418,502
)
HIMCO VIT American Funds Growth-Income Fund
 
302,030

1,692,197

(1,390,167
)
HIMCO VIT American Funds International Fund
 
923,028

2,521,547

(1,598,519
)
HIMCO VIT American Funds New World Fund
 
125,312

390,556

(265,244
)
MFS® Core Equity Portfolio
 
95,256

294,532

(199,276
)
MFS® Massachusetts Investors Growth Stock Portfolio
 
429,572

720,939

(291,367
)
MFS® Research International Portfolio
 
335,273

554,426

(219,153
)



6. Financial Highlights:

The following is a summary of units, unit fair values, net assets, expense ratios, investment income ratios, and total return ratios as of or for each of the periods presented for the aggregate of all share classes within each Sub- Account that had outstanding units during the period ended December 31, 2017. The ranges presented are calculated using the results of only the contracts with the highest and lowest expense ratios. A specific unit value or ratio may be outside of the range presented in this table due to the initial assigned unit values, combined with varying performance and/or length of time since inception of the presented expense ratios. Investment income and total return ratios are calculated for the period the related share class within the Sub-Account is active, while the expense ratio is annualized. In the case of fund mergers, the expense, investment income, and total return ratios are calculated using only the results of the surviving fund and exclude the results of the fund merged into the surviving fund. For the fund merged into the surviving fund the results are through the date of the fund merger.

 
 
 Units #
 Unit
Fair Value
Lowest to Highest #
 Net Assets
Expense
Ratio Lowest to Highest*
Investment
Income
Ratio Lowest to Highest**
Total Return Ratio
Lowest to Highest***
American Century VP Value Fund
 
2017
320,096

$19.157140

to
$20.503245
$6,385,211
0.50
%
to
1.50%
1.51
%
to
1.51%
6.96
 %
to
8.03%
 
2016
377,878

$17.910544

to
$18.978389
$7,000,593
0.50
%
to
1.50%
1.58
%
to
1.60%
18.49
 %
to
19.68%
 
2015
487,884

$15.115798

to
$15.857703
$7,576,703
0.50
%
to
1.50%
1.92
%
to
1.95%
(5.45
)%
to
(4.50)%
 
2014
584,586

$15.987670

to
$16.605429
$9,545,899
0.50
%
to
1.50%
1.39
%
to
1.40%
11.21
 %
to
12.33%
 
2013
619,188

$14.375578

to
$14.782510
$9,047,606
0.50
%
to
1.50%
1.43
%
to
1.48%
29.53
 %
to
30.83%
American Century VP Growth Fund
 
2017
96,302

$19.088573

to
$20.403866
$1,888,933
0.50
%
to
1.50%
0.66
%
to
0.68%
28.29
 %
to
29.58%
 
2016
133,564

$14.879553

to
$15.746759
$2,029,634
0.50
%
to
1.50%
—
%
to
—%
2.65
 %
to
3.68%
 
2015
155,353

$14.496026

to
$15.188202
$2,290,769
0.50
%
to
1.50%
0.32
%
to
0.33%
3.00
 %
to
4.03%
 
2014
169,941

$14.074451

to
$14.599722
$2,424,232
0.50
%
to
1.50%
0.17
%
to
0.37%
9.41
 %
to
10.51%
 
2013
196,903

$12.863366

to
$13.210714
$2,556,956
0.50
%
to
1.50%
0.28
%
to
0.32%
27.00
 %
to
28.28%
AB VPS Balanced Wealth Strategy Portfolio
 
2017
889,614

$18.929797

to
$21.039797
$13,609,388
0.50
%
to
2.70%
1.75
%
to
1.82%
12.54
 %
to
15.05%
 
2016
1,155,868

$16.819960

to
$18.288255
$15,497,279
0.50
%
to
2.70%
1.74
%
to
1.81%
1.66
 %
to
3.92%
 
2015
1,389,114

$16.545243

to
$17.598041
$18,074,476
0.50
%
to
2.70%
—
%
to
2.02%
(1.40
)%
to
0.79%
 
2014
1,736,324

$11.822762

to
$17.460347
$22,659,750
0.50
%
to
2.45%
2.38
%
to
2.41%
4.52
 %
to
6.58%
 
2013
2,334,044

$11.311724

to
$16.383105
$28,819,016
0.50
%
to
2.45%
2.24
%
to
2.28%
13.46
 %
to
15.69%
AB VPS International Value Portfolio
 
2017
1,728,674

$15.572737

to
$16.752424
$15,503,500
0.50
%
to
2.75%
1.95
%
to
1.99%
21.70
 %
to
24.47%
 
2016
2,105,919

$12.795637

to
$13.458962
$15,267,094
0.50
%
to
2.75%
1.06
%
to
1.11%
(3.49
)%
to
(1.29)%
 
2015
2,491,324

$13.258615

to
$13.635361
$18,382,324
0.50
%
to
2.75%
2.36
%
to
5.15%
(0.38
)%
to
1.89%
 
2014
2,906,971

$13.308747

to
$13.382284
$21,068,829
0.50
%
to
2.75%
3.10
%
to
3.12%
(9.00
)%
to
(6.93)%
 
2013
3,525,904

$14.508344

to
$14.624692
$27,426,593
0.30
%
to
2.75%
1.97
%
to
6.88%
19.40
 %
to
22.36%
AB VPS Small/Mid Cap Value Portfolio
 
2017
464,283

$33.331456

to
$35.155191
$11,506,064
0.30
%
to
2.70%
—
%
to
0.25%
9.84
 %
to
12.51%
 
2016
557,661

$30.344126

to
$31.245872
$12,301,333
0.30
%
to
2.70%
0.02
%
to
0.34%
21.47
 %
to
24.42%
 
2015
674,640

$24.980735

to
$25.113556
$11,933,197
0.30
%
to
2.70%
0.48
%
to
0.58%
(8.21
)%
to
(5.98)%
 
2014
833,270

$26.709819

to
$27.131691
$15,900,649
0.30
%
to
2.75%
0.46
%
to
0.87%
5.99
 %
to
8.62%
 
2013
1,088,973

$24.590166

to
$25.597968
$19,124,217
0.30
%
to
2.75%
0.46
%
to
0.70%
33.91
 %
to
37.22%
AB VPS Value Portfolio
 
2017
51,329

$15.818629

to
$21.671796
$797,561
0.85
%
to
2.70%
1.10
%
to
1.14%
10.28
 %
to
12.33%
 
2016
67,213

$14.081756

to
$19.652261
$925,544
0.85
%
to
2.70%
1.45
%
to
1.50%
8.32
 %
to
10.35%
 
2015
78,879

$12.761312

to
$18.142012
$980,991
0.85
%
to
2.70%
1.11
%
to
1.91%
(9.64
)%
to
(7.96)%
 
2014
112,141

$13.864322

to
$20.078487
$1,512,883
0.85
%
to
2.70%
1.61
%
to
1.62%
7.82
 %
to
9.84%
 
2013
161,907

$12.622670

to
$18.621528
$1,977,649
0.85
%
to
2.70%
0.91
%
to
2.05%
32.86
 %
to
35.34%
AB VPS International Growth Portfolio
 
2017
199,219

$10.515292

to
$17.371337
$2,061,180
0.85
%
to
2.75%
0.86
%
to
0.94%
30.99
 %
to
33.49%
 
2016
221,876

$7.876919

to
$13.262018
$1,732,037
0.85
%
to
2.75%
—
%
to
—%
(9.59
)%
to
(7.86)%
 
2015
322,032

$8.548528

to
$14.669159
$2,784,610
0.85
%
to
2.75%
0.06
%
to
0.06%
(4.83
)%
to
(3.00)%
 
2014
489,717

$8.813141

to
$15.413530
$4,321,026
0.85
%
to
2.75%
—
%
to
—%
(4.09
)%
to
(2.25)%
 
2013
559,926

$9.015958

to
$16.070726
$5,064,207
0.85
%
to
2.75%
0.71
%
to
0.74%
10.25
 %
to
12.36%
Invesco V.I. Value Opportunities Fund
 
2017
23,082,014

$2.196079

to
$25.756336
$44,043,927
0.85
%
to
2.80%
0.39
%
to
0.41%
14.20
 %
to
16.44%
 
2016
26,629,348

$1.885957

to
$22.554491
$44,106,929
0.85
%
to
2.80%
0.41
%
to
0.42%
15.07
 %
to
17.33%
 
2015
30,460,735

$1.607345

to
$19.600856
$43,215,959
0.85
%
to
2.80%
2.59
%
to
3.46%
(12.88
)%
to
(11.16)%
 
2014
35,937,749

$1.809334

to
$22.498793
$58,450,342
0.85
%
to
2.80%
1.37
%
to
1.37%
3.68
 %
to
5.72%
 
2013
45,017,287

$1.711493

to
$21.701118
$69,438,460
0.85
%
to
2.80%
1.03
%
to
1.36%
30.07
 %
to
32.62%
Invesco V.I. Core Equity Fund
 
2017
5,494,225

$20.789462

to
$23.263545
$105,124,912
0.50
%
to
2.80%
0.75
%
to
0.99%
10.05
 %
to
12.31%
 
2016
6,343,788

$18.890714

to
$21.026178
$109,177,236
0.30
%
to
2.80%
—
%
to
0.75%
7.22
 %
to
9.69%
 
2015
7,623,806

$17.618820

to
$19.168832
$121,117,852
0.30
%
to
2.80%
0.92
%
to
1.85%
(8.37
)%
to
(6.28)%
 
2014
9,179,650

$19.228957

to
$20.454208
$157,357,446
0.30
%
to
2.80%
—
%
to
0.85%
5.16
 %
to
7.52%
 
2013
11,418,595

$18.285248

to
$18.852457
$184,316,927
0.50
%
to
2.80%
1.19
%
to
2.03%
25.68
 %
to
28.29%
Invesco V.I. Government Securities Fund
 
2017
144,660,796

$1.503200

to
$9.824279
$190,728,662
0.85
%
to
2.80%
1.72
%
to
2.11%
(0.86
)%
to
1.09%
 
2016
163,643,197

$1.486940

to
$9.909381
$214,989,740
0.85
%
to
2.80%
2.06
%
to
2.21%
(1.57
)%
to
0.37%
 
2015
183,026,680

$1.481433

to
$10.067115
$241,730,755
0.85
%
to
2.80%
2.20
%
to
2.21%
(2.43
)%
to
(0.50)%
 
2014
216,206,302

$1.488940

to
$10.317394
$289,266,806
0.85
%
to
2.80%
2.41
%
to
2.95%
1.26
 %
to
3.26%
 
2013
266,997,691

$1.441994

to
$10.188828
$348,991,412
0.85
%
to
2.80%
2.19
%
to
4.11%
(5.31
)%
to
(3.45)%
Invesco V.I. International Growth Fund
 
2017
28,899,429

$19.425716

to
$20.221611
$113,514,536
0.30
%
to
2.80%
1.13
%
to
1.44%
19.61
 %
to
22.36%
 
2016
34,630,228

$16.241116

to
$16.526576
$112,985,260
0.30
%
to
2.80%
0.95
%
to
1.39%
(3.20
)%
to
(0.99)%
 
2015
39,754,892

$16.692558

to
$16.778451
$131,609,274
0.30
%
to
2.80%
0.63
%
to
1.81%
(5.04
)%
to
(2.91)%
 
2014
46,542,910

$17.192346

to
$17.669116
$158,952,221
0.30
%
to
2.80%
1.90
%
to
3.62%
(2.44
)%
to
(0.21)%
 
2013
57,768,530

$17.228480

to
$18.110799
$197,701,864
0.30
%
to
2.80%
0.32
%
to
1.79%
15.73
 %
to
18.36%
Invesco V.I. Mid Cap Core Equity Fund
 
2017
39,924,474

$20.685989

to
$22.762061
$110,933,838
0.50
%
to
2.80%
0.31
%
to
0.49%
11.75
 %
to
14.08%
 
2016
46,659,005

$18.511422

to
$20.254163
$114,750,629
0.30
%
to
2.80%
—
%
to
0.08%
10.30
 %
to
12.82%
 
2015
52,984,118

$16.782407

to
$17.952080
$116,893,551
0.30
%
to
2.80%
—
%
to
0.54%
(6.68
)%
to
(4.57)%
 
2014
64,014,209

$17.983581

to
$18.605354
$149,442,498
0.50
%
to
2.80%
—
%
to
0.04%
1.55
 %
to
3.65%
 
2013
76,810,395

$17.708863

to
$17.950074
$174,545,433
0.50
%
to
2.80%
0.53
%
to
0.67%
25.26
 %
to
27.82%
Invesco V.I. Small Cap Equity Fund
 
2017
2,903,756

$24.335556

to
$27.508052
$69,706,636
0.30
%
to
2.80%
—
%
to
—%
10.91
 %
to
13.39%
 
2016
3,431,554

$21.942004

to
$24.260672
$73,362,150
0.30
%
to
2.80%
—
%
to
—%
8.97
 %
to
11.50%
 
2015
3,991,186

$20.135646

to
$21.757791
$77,353,213
0.30
%
to
2.80%
—
%
to
—%
(8.13
)%
to
(6.02)%
 
2014
4,688,533

$21.917230

to
$23.152218
$97,889,375
0.30
%
to
2.80%
—
%
to
—%
(0.47
)%
to
1.78%
 
2013
6,260,948

$22.019679

to
$22.747432
$130,204,555
0.30
%
to
2.80%
—
%
to
0.01%
33.68
 %
to
36.67%
Invesco V.I. Balanced Risk Allocation Fund
 
2017
766,620

$12.798882

to
$14.861220
$10,680,721
0.50
%
to
2.70%
3.56
%
to
3.80%
6.91
 %
to
9.28%
 
2016
915,712

$11.972025

to
$13.757138
$11,768,580
0.30
%
to
2.70%
0.19
%
to
0.19%
8.55
 %
to
11.18%
 
2015
1,022,773

$11.029509

to
$12.255624
$11,957,046
0.50
%
to
2.70%
4.15
%
to
4.15%
(6.95
)%
to
(4.88)%
 
2014
1,176,690

$11.853050

to
$12.883948
$14,602,432
0.50
%
to
2.70%
—
%
to
—%
2.89
 %
to
5.18%
 
2013
1,570,723

$11.503600

to
$12.249085
$18,718,879
0.50
%
to
2.75%
1.36
%
to
1.50%
(1.33
)%
to
0.91%
Invesco V.I. Diversified Dividend Fund
 
2017
14,792

$18.188913

to
$19.666272
$280,816
1.35
%
to
2.50%
0.47
%
to
1.37%
5.67
 %
to
6.89%
 
2016
16,894

$17.212579

to
$18.397906
$302,253
1.35
%
to
2.50%
1.07
%
to
1.15%
11.71
 %
to
13.00%
 
2015
14,746

$15.408296

to
$16.281129
$234,167
1.35
%
to
2.50%
1.11
%
to
1.43%
(0.70
)%
to
0.45%
 
2014
19,121

$15.516592

to
$16.208073
$305,336
1.35
%
to
2.50%
1.45
%
to
1.56%
9.76
 %
to
11.03%
 
2013
20,367

$14.137224

to
$14.598406
$293,702
1.35
%
to
2.50%
—
%
to
2.32%
27.54
 %
to
29.01%
Invesco V.I. Government Money Market Fund
 
2017
12,073,673

$8.876326

to
$9.932618
$112,207,073
0.30
%
to
2.75%
0.52
%
to
0.59%
(2.16
)%
to
0.26%
 
2016
14,056,046

$9.056470

to
$9.906673
$132,108,464
0.30
%
to
2.80%
—
%
to
0.08%
(2.67
)%
to
(0.20)%
 
2015
16,822,793

$9.316811

to
$9.875737
$160,770,547
0.50
%
to
2.75%
0.01
%
to
0.01%
(2.70
)%
to
(0.49)%
 
2014
13,973,329

$9.575557

to
$9.924169
$135,908,765
0.50
%
to
2.75%
0.01
%
to
0.01%
(2.70
)%
to
(0.49)%
 
2013
12,785,917

$9.841269

to
$9.972607
$126,589,751
0.50
%
to
2.75%
—
%
to
0.01%
(1.59
)%
to
(0.27)%
American Century VP Mid Cap Value Fund
 
2017
47,397

$20.869222

to
$22.362747
$1,030,394
0.50
%
to
1.50%
1.31
%
to
1.42%
9.81
 %
to
10.91%
 
2016
52,510

$19.005120

to
$20.402576
$1,033,246
0.30
%
to
1.50%
0.68
%
to
1.47%
20.89
 %
to
22.35%
 
2015
44,291

$15.720890

to
$16.675655
$716,584
0.30
%
to
1.50%
1.49
%
to
1.50%
(3.05
)%
to
(1.87)%
 
2014
48,239

$16.214700

to
$16.994164
$801,413
0.30
%
to
1.50%
1.01
%
to
1.05%
14.51
 %
to
15.89%
 
2013
29,575

$14.160257

to
$14.664038
$424,726
0.30
%
to
1.50%
0.84
%
to
1.18%
27.97
 %
to
29.51%
American Funds Global Bond Fund
 
2017
6,241,749

$9.998043

to
$11.063204
$76,527,683
0.50
%
to
2.80%
0.36
%
to
0.64%
(0.02
)%
to
3.90%
 
2016
6,012,338

$10.647519

to
$11.578507
$72,264,696
0.65
%
to
2.80%
0.53
%
to
0.55%
(0.12
)%
to
2.05%
 
2015
6,995,613

$10.660491

to
$11.346048
$83,353,312
0.65
%
to
2.80%
0.05
%
to
0.05%
(6.72
)%
to
(4.69)%
 
2014
9,116,977

$11.427881

to
$11.903991
$115,218,960
0.65
%
to
2.80%
1.20
%
to
1.21%
(1.41
)%
to
0.73%
 
2013
11,290,616

$11.591365

to
$11.817451
$143,324,592
0.65
%
to
2.80%
—
%
to
—%
(5.27
)%
to
(3.21)%
American Funds Global Growth and Income Fund
 
2017
12,007,007

$10.679784

to
$24.762218
$200,823,377
0.30
%
to
2.80%
1.83
%
to
2.07%
6.80
 %
to
22.59%
 
2016
11,176,644

$20.199758

to
$20.631414
$164,500,263
0.65
%
to
2.80%
1.75
%
to
1.87%
4.38
 %
to
6.65%
 
2015
13,110,986

$19.344990

to
$19.351769
$182,895,707
0.65
%
to
2.80%
1.33
%
to
1.92%
(4.07
)%
to
(1.98)%
 
2014
15,798,685

$19.735829

to
$20.172002
$226,969,193
0.65
%
to
2.80%
3.07
%
to
3.79%
2.72
 %
to
4.96%
 
2013
19,831,073

$18.804035

to
$19.637414
$274,040,478
0.65
%
to
2.80%
3.32
%
to
3.71%
19.15
 %
to
21.74%
American Funds Asset Allocation Fund
 
2017
29,622,457

$10.478833

to
$22.039431
$646,846,987
0.30
%
to
2.80%
1.06
%
to
1.49%
4.79
 %
to
13.02%
 
2016
30,714,165

$19.500036

to
$21.401229
$615,841,369
0.65
%
to
2.80%
1.63
%
to
1.63%
6.39
 %
to
8.70%
 
2015
35,447,211

$18.328943

to
$19.688160
$662,185,767
0.65
%
to
2.80%
1.51
%
to
1.63%
(1.40
)%
to
0.74%
 
2014
42,163,505

$18.589341

to
$19.543111
$791,683,183
0.65
%
to
2.80%
1.44
%
to
2.30%
2.49
 %
to
4.71%
 
2013
51,319,943

$18.138530

to
$18.663515
$931,691,583
0.65
%
to
2.80%
1.45
%
to
1.51%
20.28
 %
to
22.89%
American Funds Blue Chip Income and Growth Fund
 
2017
192,383,937

$10.915463

to
$27.019907
$444,164,415
0.50
%
to
2.80%
1.53
%
to
2.32%
9.15
 %
to
13.81%
 
2016
223,989,200

$23.741193

to
$26.532294
$424,290,310
0.65
%
to
2.80%
1.90
%
to
2.14%
15.42
 %
to
17.93%
 
2015
254,241,673

$20.568725

to
$22.498131
$412,227,632
0.65
%
to
2.80%
1.84
%
to
1.85%
(5.61
)%
to
(3.56)%
 
2014
309,368,792

$21.791408

to
$23.328378
$524,639,657
0.65
%
to
2.80%
2.68
%
to
2.97%
12.18
 %
to
14.61%
 
2013
364,941,508

$19.426118

to
$20.354035
$545,529,305
0.65
%
to
2.80%
1.87
%
to
1.93%
29.33
 %
to
32.14%
American Funds Bond Fund
 
2017
45,395,249

$10.029764

to
$11.881812
$655,757,093
0.50
%
to
2.80%
1.43
%
to
2.12%
0.30
 %
to
0.80%
 
2016
37,622,843

$11.787218

to
$12.807547
$581,920,132
0.65
%
to
2.80%
1.61
%
to
1.82%
0.10
 %
to
2.28%
 
2015
41,707,585

$11.775228

to
$12.522379
$636,445,614
0.65
%
to
2.80%
1.53
%
to
1.70%
(2.49
)%
to
(0.38)%
 
2014
49,995,861

$12.076501

to
$12.569562
$772,885,175
0.65
%
to
2.80%
1.78
%
to
2.50%
2.37
 %
to
4.60%
 
2013
62,429,269

$11.796759

to
$12.017256
$932,642,581
0.65
%
to
2.80%
1.84
%
to
2.05%
(4.86
)%
to
(2.79)%
American Funds Global Growth Fund
 
2017
9,919,412

$10.690165

to
$27.374033
$241,148,675
0.50
%
to
2.80%
0.48
%
to
0.72%
6.90
 %
to
27.84%
 
2016
9,645,931

$21.095554

to
$21.412322
$199,082,119
0.65
%
to
2.80%
0.89
%
to
0.98%
(2.16
)%
to
(0.03)%
 
2015
11,697,171

$21.102098

to
$21.884394
$243,330,240
0.65
%
to
2.80%
0.98
%
to
1.00%
3.98
 %
to
6.24%
 
2014
13,099,940

$19.861896

to
$21.045920
$261,257,937
0.65
%
to
2.80%
1.05
%
to
1.14%
(0.51
)%
to
1.65%
 
2013
16,325,784

$19.539432

to
$21.154257
$325,981,493
0.65
%
to
2.80%
1.24
%
to
1.26%
25.61
 %
to
28.34%
American Funds Growth Fund
 
2017
70,312,303

$10.726522

to
$31.745880
$1,490,487,512
0.30
%
to
2.80%
0.35
%
to
0.49%
7.27
 %
to
24.75%
 
2016
62,485,415

$25.447295

to
$26.005317
$1,217,435,416
0.65
%
to
2.80%
0.73
%
to
0.80%
6.47
 %
to
8.78%
 
2015
74,103,321

$23.902017

to
$23.906739
$1,343,454,104
0.65
%
to
2.80%
0.58
%
to
0.61%
3.91
 %
to
6.17%
 
2014
88,681,039

$22.518307

to
$23.003194
$1,533,269,584
0.65
%
to
2.80%
0.72
%
to
0.87%
5.51
 %
to
7.81%
 
2013
110,847,056

$20.887799

to
$21.801334
$1,806,018,975
0.65
%
to
2.80%
0.97
%
to
1.03%
26.51
 %
to
29.26%
American Funds Growth-Income Fund
 
2017
59,038,124

$10.832443

to
$27.525937
$1,396,827,005
0.30
%
to
2.80%
1.03
%
to
1.44%
8.32
 %
to
19.00%
 
2016
57,283,146

$23.130093

to
$24.880536
$1,249,416,840
0.65
%
to
2.80%
1.44
%
to
1.56%
8.44
 %
to
10.80%
 
2015
67,483,085

$21.329406

to
$22.455693
$1,343,073,267
0.65
%
to
2.80%
1.29
%
to
1.31%
(1.35
)%
to
0.80%
 
2014
81,385,307

$21.620632

to
$22.278013
$1,624,836,107
0.65
%
to
2.80%
1.22
%
to
1.60%
7.58
 %
to
9.92%
 
2013
103,037,858

$20.097293

to
$20.267894
$1,894,684,591
0.65
%
to
2.80%
1.34
%
to
1.60%
29.82
 %
to
32.64%
American Funds International Fund
 
2017
26,072,803

$10.720462

to
$20.126051
$419,068,069
0.30
%
to
2.80%
1.12
%
to
1.31%
7.20
 %
to
28.50%
 
2016
19,010,254

$15.062261

to
$15.662360
$284,007,792
0.65
%
to
2.80%
1.24
%
to
1.25%
0.67
 %
to
2.86%
 
2015
21,936,590

$14.643275

to
$15.557561
$322,137,950
0.65
%
to
2.80%
1.22
%
to
1.46%
(7.16
)%
to
(5.14)%
 
2014
25,478,826

$15.437469

to
$16.758016
$399,232,673
0.65
%
to
2.80%
1.26
%
to
1.79%
(5.34
)%
to
(3.28)%
 
2013
30,923,542

$15.961598

to
$17.703704
$508,181,057
0.65
%
to
2.80%
1.34
%
to
1.43%
18.28
 %
to
20.85%
American Funds New World Fund
 
2017
5,096,826

$10.879165

to
$19.733185
$130,777,921
0.30
%
to
2.80%
0.77
%
to
0.86%
8.79
 %
to
25.87%
 
2016
4,048,215

$14.854052

to
$15.677068
$100,940,043
0.65
%
to
2.80%
0.74
%
to
0.88%
2.35
 %
to
4.58%
 
2015
4,720,908

$14.204159

to
$15.316919
$113,909,236
0.65
%
to
2.80%
0.51
%
to
0.57%
(5.82
)%
to
(3.77)%
 
2014
5,700,776

$14.760859

to
$16.263423
$144,818,397
0.65
%
to
2.80%
0.89
%
to
1.64%
(10.42
)%
to
(8.47)%
 
2013
7,057,351

$16.126396

to
$18.154383
$198,682,325
0.65
%
to
2.80%
1.06
%
to
1.40%
8.30
 %
to
10.66%
American Funds Global Small Capitalization Fund
 
2017
7,574,123

$10.901655

to
$26.205876
$159,244,824
0.30
%
to
2.80%
0.03
%
to
0.43%
9.02
 %
to
22.42%
 
2016
5,746,511

$18.971796

to
$21.406541
$123,282,848
0.65
%
to
2.80%
0.23
%
to
0.25%
(0.72
)%
to
1.44%
 
2015
6,952,345

$18.703056

to
$21.561959
$148,360,655
0.65
%
to
2.80%
—
%
to
—%
(2.50
)%
to
(0.38)%
 
2014
8,231,966

$18.775047

to
$22.115696
$178,438,387
0.65
%
to
2.80%
0.12
%
to
0.14%
(0.70
)%
to
1.46%
 
2013
10,358,695

$18.504640

to
$22.271086
$224,224,571
0.65
%
to
2.80%
0.61
%
to
0.86%
24.74
 %
to
27.45%
Wells Fargo VT Omega Growth Fund
 
2017
39,818

$23.862098

to
$25.996768
$977,174
1.35
%
to
2.50%
0.01
%
to
0.01%
31.28
 %
to
32.79%
 
2016
36,279

$18.176955

to
$19.576908
$679,238
1.35
%
to
2.50%
—
%
to
—%
(1.96
)%
to
(0.83)%
 
2015
45,278

$18.541240

to
$19.740818
$862,511
1.35
%
to
2.50%
—
%
to
—%
(1.16
)%
to
(0.01)%
 
2014
49,932

$18.758542

to
$19.743762
$957,060
1.35
%
to
2.50%
—
%
to
—%
1.30
 %
to
2.47%
 
2013
70,368

$18.517769

to
$19.267475
$1,328,236
1.35
%
to
2.50%
0.11
%
to
0.13%
36.43
 %
to
38.01%
Fidelity® VIP Growth Portfolio
 
2017
332,885

$21.607217

to
$31.186229
$7,127,386
0.85
%
to
2.75%
0.01
%
to
0.09%
31.16
 %
to
33.68%
 
2016
304,106

$16.163987

to
$23.776883
$4,807,498
0.85
%
to
2.75%
—
%
to
—%
(2.18
)%
to
(0.30)%
 
2015
396,131

$16.212806

to
$24.306204
$6,307,600
0.85
%
to
2.75%
0.01
%
to
0.03%
4.00
 %
to
6.00%
 
2014
464,276

$15.295179

to
$23.441676
$6,963,451
0.85
%
to
2.70%
—
%
to
—%
8.06
 %
to
10.07%
 
2013
451,696

$13.895443

to
$21.694064
$6,152,984
0.85
%
to
2.70%
0.04
%
to
0.05%
32.38
 %
to
34.85%
Fidelity® VIP Contrafund® Portfolio
 
2017
2,833,361

$27.420725

to
$30.862825
$61,032,652
0.30
%
to
2.75%
0.49
%
to
0.78%
18.29
 %
to
21.22%
 
2016
3,446,886

$23.180801

to
$25.459673
$61,582,760
0.30
%
to
2.75%
—
%
to
0.63%
4.81
 %
to
7.41%
 
2015
4,234,166

$22.117416

to
$23.703842
$71,037,540
0.30
%
to
2.75%
0.72
%
to
1.08%
(2.31
)%
to
0.11%
 
2014
5,104,483

$22.640127

to
$23.676669
$85,715,982
0.30
%
to
2.75%
0.76
%
to
1.00%
8.63
 %
to
11.32%
 
2013
6,202,099

$20.842283

to
$21.078399
$93,638,207
0.50
%
to
2.75%
0.81
%
to
0.83%
27.40
 %
to
30.30%
Fidelity® VIP Mid Cap Portfolio
 
2017
2,170,961

$28.744400

to
$29.903032
$45,581,416
0.30
%
to
2.75%
0.37
%
to
0.48%
17.27
 %
to
20.18%
 
2016
2,617,830

$24.511615

to
$24.882901
$46,084,251
0.30
%
to
2.75%
0.32
%
to
0.33%
8.89
 %
to
11.59%
 
2015
3,237,684

$22.298947

to
$22.510998
$51,691,751
0.30
%
to
2.75%
0.23
%
to
0.30%
(4.30
)%
to
(1.92)%
 
2014
3,896,587

$22.736200

to
$23.521879
$63,830,530
0.30
%
to
2.75%
0.01
%
to
0.02%
3.16
 %
to
5.71%
 
2013
4,998,451

$21.507218

to
$22.802430
$77,806,071
0.30
%
to
2.75%
0.13
%
to
0.28%
32.19
 %
to
35.46%
Fidelity® VIP Value Strategies Portfolio
 
2017
100,333

$19.933332

to
$33.760175
$2,017,527
0.85
%
to
2.70%
0.62
%
to
1.27%
15.91
 %
to
18.08%
 
2016
133,462

$16.881624

to
$29.125133
$2,288,094
0.85
%
to
2.70%
0.91
%
to
0.97%
6.36
 %
to
8.35%
 
2015
204,157

$15.581038

to
$27.383313
$3,176,777
0.85
%
to
2.70%
0.82
%
to
0.90%
(5.77
)%
to
(4.01)%
 
2014
283,720

$16.231901

to
$29.060046
$4,574,058
0.85
%
to
2.70%
0.50
%
to
0.80%
3.68
 %
to
5.61%
 
2013
369,920

$13.998426

to
$15.369434
$5,633,750
0.85
%
to
2.45%
0.65
%
to
0.73%
27.03
 %
to
29.08%
Fidelity® VIP Dynamic Capital Appreciation Portfolio
 
2017
115,614

$22.432813

to
$30.876583
$2,518,380
0.75
%
to
2.70%
0.29
%
to
0.77%
20.21
 %
to
22.58%
 
2016
148,903

$18.300731

to
$25.684843
$2,632,250
0.75
%
to
2.70%
0.73
%
to
0.74%
(0.08
)%
to
1.89%
 
2015
234,125

$17.960896

to
$25.704296
$4,032,502
0.75
%
to
2.70%
0.59
%
to
0.60%
(1.67
)%
to
0.27%
 
2014
247,751

$17.912598

to
$26.140092
$4,284,335
0.75
%
to
2.70%
0.03
%
to
0.22%
7.71
 %
to
9.83%
 
2013
227,580

$16.308992

to
$24.268557
$3,598,618
0.75
%
to
2.70%
0.09
%
to
0.12%
34.57
 %
to
37.22%
Fidelity® VIP Strategic Income Portfolio
 
2017
122,694

$12.204593

to
$16.292343
$1,766,495
0.30
%
to
1.50%
2.99
%
to
3.00%
5.94
 %
to
7.22%
 
2016
107,284

$11.519829

to
$14.968580
$1,422,291
0.50
%
to
1.50%
3.38
%
to
8.18%
6.41
 %
to
7.48%
 
2015
84,222

$10.825956

to
$13.927036
$1,080,696
0.50
%
to
1.50%
2.43
%
to
2.56%
(3.40
)%
to
(2.42)%
 
2014
102,544

$11.206529

to
$14.273150
$1,332,036
0.50
%
to
1.50%
2.76
%
to
2.87%
1.83
 %
to
2.86%
 
2013
95,919

$11.004604

to
$14.002020
$1,233,705
0.30
%
to
1.50%
0.10
%
to
3.66%
(1.45
)%
to
(0.27)%
Franklin Rising Dividends VIP Fund
 
2017
14,009,676

$25.807302

to
$31.095051
$399,111,952
0.30
%
to
2.80%
1.33
%
to
1.61%
17.23
 %
to
20.04%
 
2016
16,623,896

$22.014024

to
$25.903195
$399,706,589
0.30
%
to
2.80%
0.85
%
to
1.01%
12.84
 %
to
15.59%
 
2015
19,627,341

$19.509293

to
$22.410058
$414,023,269
0.30
%
to
2.80%
1.44
%
to
1.47%
(6.31
)%
to
(4.04)%
 
2014
23,625,692

$20.822970

to
$23.353392
$526,505,475
0.30
%
to
2.80%
1.26
%
to
1.38%
5.72
 %
to
8.29%
 
2013
29,710,602

$19.696171

to
$21.565145
$621,186,179
0.30
%
to
2.80%
1.20
%
to
1.78%
26.11
 %
to
29.19%
Franklin Income VIP Fund
 
2017
28,538,059

$20.285231

to
$20.895917
$606,827,557
0.30
%
to
2.80%
4.21
%
to
8.01%
6.65
 %
to
9.22%
 
2016
33,949,625

$19.021188

to
$19.131689
$669,321,675
0.30
%
to
2.80%
4.34
%
to
10.13%
10.88
 %
to
13.53%
 
2015
40,775,427

$16.851996

to
$17.155407
$716,791,811
0.30
%
to
2.80%
4.43
%
to
4.60%
(9.62
)%
to
(7.42)%
 
2014
50,807,294

$18.203398

to
$18.981745
$979,864,434
0.30
%
to
2.80%
3.04
%
to
4.69%
1.73
 %
to
4.21%
 
2013
63,847,445

$17.468133

to
$18.659483
$1,196,794,237
0.30
%
to
2.80%
2.32
%
to
4.85%
10.80
 %
to
13.51%
Franklin Large Cap Growth VIP Fund
 
2017
2,939,730

$23.759455

to
$24.293354
$60,185,340
0.85
%
to
2.80%
0.46
%
to
0.61%
24.57
 %
to
27.02%
 
2016
3,376,113

$18.704876

to
$19.501475
$55,050,262
0.85
%
to
2.80%
—
%
to
—%
(4.50
)%
to
(2.62)%
 
2015
4,315,235

$19.208827

to
$20.421344
$72,753,062
0.85
%
to
2.80%
0.27
%
to
0.27%
2.71
 %
to
4.73%
 
2014
4,992,901

$18.341304

to
$19.883080
$81,345,950
0.85
%
to
2.80%
1.05
%
to
1.08%
9.36
 %
to
11.51%
 
2013
5,765,894

$16.448279

to
$18.182031
$85,241,546
0.85
%
to
2.80%
1.11
%
to
1.12%
25.08
 %
to
27.55%
Franklin Global Real Estate VIP Fund
 
2017
208,226

$18.591557

to
$31.517252
$4,998,111
0.95
%
to
2.80%
3.01
%
to
3.18%
7.42
 %
to
9.43%
 
2016
240,880

$17.306622

to
$28.801366
$5,290,790
0.95
%
to
2.80%
—
%
to
1.17%
(2.23
)%
to
(0.41)%
 
2015
270,095

$17.701964

to
$28.919703
$6,008,852
0.95
%
to
2.80%
3.12
%
to
3.18%
(2.21
)%
to
(0.38)%
 
2014
329,570

$18.101196

to
$29.029698
$7,397,583
0.95
%
to
2.80%
0.45
%
to
0.46%
11.84
 %
to
13.92%
 
2013
377,266

$16.185507

to
$25.481823
$7,469,531
0.95
%
to
2.80%
4.49
%
to
4.54%
(0.51
)%
to
1.35%
Franklin Small-Mid Cap Growth VIP Fund
 
2017
7,468,122

$27.599807

to
$29.834508
$137,382,495
0.30
%
to
2.80%
—
%
to
—%
18.05
 %
to
20.94%
 
2016
8,821,024

$23.380067

to
$24.668667
$136,352,797
0.30
%
to
2.80%
—
%
to
—%
1.29
 %
to
3.72%
 
2015
10,438,844

$23.081525

to
$23.783036
$157,452,312
0.30
%
to
2.80%
—
%
to
—%
(5.35
)%
to
(3.06)%
 
2014
12,376,717

$24.385128

to
$24.533967
$196,223,167
0.30
%
to
2.80%
—
%
to
—%
4.50
 %
to
7.07%
 
2013
15,807,750

$22.914198

to
$23.334129
$238,352,339
0.30
%
to
2.80%
—
%
to
—%
34.34
 %
to
37.58%
Franklin Small Cap Value VIP Fund
 
2017
3,080,722

$28.621801

to
$32.012289
$58,630,176
0.30
%
to
2.75%
0.04
%
to
0.67%
7.65
 %
to
10.23%
 
2016
3,800,291

$26.587670

to
$29.040831
$66,275,531
0.30
%
to
2.75%
0.46
%
to
0.66%
26.66
 %
to
29.73%
 
2015
3,650,059

$20.991766

to
$22.385491
$50,212,815
0.30
%
to
2.75%
0.09
%
to
0.89%
(9.90
)%
to
(7.80)%
 
2014
4,294,345

$23.298291

to
$24.278304
$64,712,254
0.30
%
to
2.75%
0.08
%
to
0.74%
(2.16
)%
to
0.18%
 
2013
5,683,963

$23.812141

to
$24.235365
$86,274,032
0.30
%
to
2.75%
0.59
%
to
1.09%
32.54
 %
to
35.72%
Franklin Strategic Income VIP Fund
 
2017
14,549,002

$15.357547

to
$15.805359
$277,263,838
0.30
%
to
2.80%
2.69
%
to
3.09%
1.85
 %
to
4.15%
 
2016
16,575,714

$15.079310

to
$15.175713
$307,649,697
0.30
%
to
2.80%
3.21
%
to
3.21%
5.26
 %
to
7.54%
 
2015
19,935,188

$14.111690

to
$14.325250
$347,847,567
0.30
%
to
2.80%
6.11
%
to
6.59%
(6.28
)%
to
(4.26)%
 
2014
24,233,651

$14.740091

to
$15.285334
$449,783,789
0.30
%
to
2.80%
5.54
%
to
5.71%
(0.70
)%
to
1.45%
 
2013
29,798,024

$14.529719

to
$15.392925
$552,057,488
0.30
%
to
2.80%
5.68
%
to
5.76%
0.66
 %
to
2.86%
Franklin Mutual Shares VIP Fund
 
2017
22,437,624

$20.882885

to
$24.016641
$498,668,499
0.30
%
to
2.80%
1.60
%
to
2.17%
5.36
 %
to
7.93%
 
2016
26,236,946

$19.821188

to
$22.252692
$546,352,159
0.30
%
to
2.80%
2.10
%
to
3.48%
12.85
 %
to
15.59%
 
2015
31,289,744

$17.563602

to
$19.250716
$569,611,868
0.30
%
to
2.80%
2.83
%
to
3.05%
(7.56
)%
to
(5.33)%
 
2014
37,084,769

$19.000464

to
$20.335484
$722,392,206
0.30
%
to
2.80%
1.32
%
to
2.02%
4.16
 %
to
6.72%
 
2013
46,988,463

$18.240897

to
$19.054677
$866,111,651
0.30
%
to
2.80%
2.37
%
to
2.42%
24.72
 %
to
27.67%
Templeton Developing Markets VIP Fund
 
2017
2,409,893

$10.988310

to
$19.226779
$54,805,799
0.75
%
to
2.80%
0.82
%
to
0.83%
36.77
 %
to
39.26%
 
2016
2,745,982

$7.890648

to
$14.057444
$44,835,464
0.75
%
to
2.80%
0.64
%
to
1.08%
14.54
 %
to
16.44%
 
2015
3,077,756

$6.776297

to
$12.272687
$42,699,194
0.75
%
to
2.80%
1.80
%
to
2.47%
(21.65
)%
to
(20.30)%
 
2014
3,719,348

$8.502407

to
$15.711905
$64,426,917
0.75
%
to
2.75%
1.27
%
to
1.77%
(10.58
)%
to
(9.17)%
 
2013
4,628,423

$9.360340

to
$17.571473
$88,623,337
0.75
%
to
2.75%
1.48
%
to
2.07%
(3.43
)%
to
(1.81)%
Templeton Foreign VIP Fund
 
2017
12,756,762

$16.682072

to
$17.761339
$187,462,676
0.30
%
to
2.80%
1.03
%
to
2.82%
13.47
 %
to
16.27%
 
2016
14,926,905

$14.701483

to
$15.275854
$190,816,473
0.30
%
to
2.80%
1.63
%
to
1.95%
4.22
 %
to
6.77%
 
2015
17,288,950

$14.106765

to
$14.307226
$209,657,204
0.30
%
to
2.80%
2.09
%
to
3.24%
(9.08
)%
to
(6.93)%
 
2014
19,516,625

$15.372277

to
$15.514908
$257,467,042
0.30
%
to
2.80%
1.45
%
to
1.71%
(13.59
)%
to
(11.49)%
 
2013
22,822,236

$17.367091

to
$17.954390
$344,232,677
0.30
%
to
2.80%
2.10
%
to
2.18%
19.58
 %
to
22.49%
Templeton Growth VIP Fund
 
2017
10,606,309

$20.215726

to
$22.065681
$189,772,954
0.50
%
to
2.80%
1.45
%
to
1.61%
15.23
 %
to
17.79%
 
2016
12,771,580

$17.543805

to
$18.733633
$195,538,651
0.50
%
to
2.80%
1.54
%
to
1.91%
6.59
 %
to
8.92%
 
2015
15,212,313

$16.458720

to
$17.199491
$216,171,880
0.50
%
to
2.80%
2.39
%
to
2.67%
(9.07
)%
to
(7.01)%
 
2014
18,432,369

$18.100487

to
$18.496229
$284,644,288
0.50
%
to
2.80%
1.24
%
to
1.34%
(5.50
)%
to
(3.37)%
 
2013
23,123,937

$19.140368

to
$19.153890
$374,312,587
0.50
%
to
2.80%
2.62
%
to
2.63%
27.21
 %
to
29.99%
Franklin Mutual Global Discovery VIP Fund
 
2017
7,598,510

$18.963990

to
$21.424104
$210,755,251
0.30
%
to
2.80%
—
%
to
2.03%
5.60
 %
to
8.18%
 
2016
8,749,935

$17.958351

to
$19.804647
$227,709,995
0.30
%
to
2.80%
0.02
%
to
1.63%
9.08
 %
to
11.68%
 
2015
10,580,504

$16.463719

to
$17.732712
$249,448,913
0.30
%
to
2.80%
2.61
%
to
2.78%
(6.31
)%
to
(4.03)%
 
2014
12,507,613

$17.572790

to
$18.477426
$311,837,827
0.30
%
to
2.80%
1.57
%
to
2.37%
2.79
 %
to
5.28%
 
2013
15,452,593

$17.095911

to
$17.550648
$370,297,414
0.30
%
to
2.80%
1.79
%
to
2.25%
24.09
 %
to
27.14%
Franklin Flex Cap Growth VIP Fund
 
2017
1,155,409

$23.630633

to
$26.977144
$22,759,157
0.30
%
to
2.75%
—
%
to
—%
23.50
 %
to
26.41%
 
2016
1,418,488

$19.134239

to
$21.023945
$22,402,487
0.50
%
to
2.75%
—
%
to
—%
(5.52
)%
to
(3.47)%
 
2015
1,789,660

$20.252735

to
$21.778839
$29,564,063
0.50
%
to
2.75%
—
%
to
—%
1.53
 %
to
3.80%
 
2014
2,190,538

$19.946646

to
$20.982180
$35,257,492
0.50
%
to
2.75%
—
%
to
—%
3.23
 %
to
5.45%
 
2013
2,644,159

$19.323070

to
$20.077906
$40,741,967
0.30
%
to
2.75%
—
%
to
—%
33.76
 %
to
36.86%
Templeton Global Bond VIP Fund
 
2017
3,470,775

$13.258132

to
$14.473838
$47,195,841
0.30
%
to
2.75%
—
%
to
—%
(1.00
)%
to
1.46%
 
2016
3,978,351

$13.391947

to
$14.266090
$53,896,474
0.30
%
to
2.75%
—
%
to
—%
0.08
 %
to
2.56%
 
2015
4,718,501

$13.381345

to
$13.909852
$62,842,788
0.30
%
to
2.75%
7.45
%
to
9.62%
(6.99
)%
to
(4.68)%
 
2014
5,510,026

$14.386281

to
$14.592335
$77,872,315
0.30
%
to
2.75%
5.06
%
to
5.06%
(1.07
)%
to
1.39%
 
2013
6,466,974

$14.392405

to
$14.541172
$91,465,010
0.30
%
to
2.75%
3.55
%
to
4.69%
(1.22
)%
to
1.23%
Hartford Balanced HLS Fund
 
2017
1,009,281

$18.463892

to
$22.018140
$17,409,773
0.75
%
to
2.75%
2.08
%
to
2.41%
12.46
 %
to
14.73%
 
2016
986,472

$16.093710

to
$19.579225
$14,912,187
0.75
%
to
2.75%
2.74
%
to
2.83%
3.16
 %
to
5.24%
 
2015
1,065,609

$15.291803

to
$19.046884
$15,451,065
0.75
%
to
2.70%
1.90
%
to
3.63%
(2.49
)%
to
(0.57)%
 
2014
1,294,832

$15.379592

to
$19.533503
$19,029,607
0.75
%
to
2.70%
1.81
%
to
1.83%
6.87
 %
to
8.97%
 
2013
1,512,772

$14.113578

to
$18.278484
$20,632,562
0.75
%
to
2.70%
1.56
%
to
1.58%
17.96
 %
to
20.28%
Hartford Total Return Bond HLS Fund
 
2017
32,000,872

$12.993794

to
$14.783073
$415,178,451
0.30
%
to
2.75%
2.48
%
to
3.07%
2.31
 %
to
4.84%
 
2016
34,316,558

$12.700874

to
$14.100157
$428,905,117
0.30
%
to
2.75%
2.54
%
to
2.60%
1.66
 %
to
4.18%
 
2015
39,375,169

$12.493519

to
$13.534310
$477,127,747
0.30
%
to
2.75%
2.64
%
to
3.28%
(3.28
)%
to
(0.88)%
 
2014
46,292,016

$12.917758

to
$13.655147
$571,968,762
0.30
%
to
2.75%
2.68
%
to
3.31%
3.02
 %
to
5.57%
 
2013
62,030,472

$12.539611

to
$12.934646
$733,978,421
0.30
%
to
2.75%
3.60
%
to
5.26%
(4.04
)%
to
(1.66)%
Hartford Capital Appreciation HLS Fund
 
2017
19,295,231

$28.173404

to
$29.179248
$360,299,836
0.30
%
to
2.75%
0.73
%
to
1.18%
18.83
 %
to
21.77%



 
2016
23,607,077

$23.709489

to
$23.962093
$365,083,148
0.30
%
to
2.75%
1.14
%
to
1.17%
2.66
 %
to
5.21%
 
2015
28,153,379

$22.776496

to
$23.095343
$417,093,368
0.30
%
to
2.75%
0.93
%
to
0.99%
(1.72
)%
to
0.71%
 
2014
34,264,581

$22.614953

to
$23.500457
$507,446,086
0.30
%
to
2.75%
0.78
%
to
0.89%
4.40
 %
to
6.99%
 
2013
45,789,660

$21.138320

to
$22.510948
$636,714,458
0.30
%
to
2.75%
0.36
%
to
0.97%
35.31
 %
to
38.66%
Hartford Dividend and Growth HLS Fund
 
2017
13,309,362

$26.258956

to
$30.881557
$282,222,360
0.30
%
to
2.75%
0.92
%
to
2.20%
15.15
 %
to
18.00%
 
2016
16,093,679

$22.804408

to
$26.170193
$291,705,438
0.30
%
to
2.75%
1.57
%
to
2.05%
11.77
 %
to
14.54%
 
2015
19,351,305

$20.402947

to
$22.847762
$308,876,581
0.30
%
to
2.75%
1.47
%
to
1.64%
(3.84
)%
to
(1.45)%
 
2014
23,221,375

$21.217438

to
$23.184705
$379,363,203
0.30
%
to
2.75%
1.04
%
to
2.38%
9.90
 %
to
12.62%
 
2013
32,101,247

$19.306809

to
$20.586382
$469,218,428
0.30
%
to
2.75%
1.42
%
to
1.74%
28.35
 %
to
31.53%
Hartford Global Growth HLS Fund
 
2017
266,440

$28.819467

to
$31.257445
$5,185,145
0.30
%
to
2.75%
—
%
to
0.50%
29.13
 %
to
32.33%
 
2016
262,329

$11.870966

to
$22.318351
$3,856,725
0.30
%
to
2.75%
—
%
to
0.68%
(0.81
)%
to
1.41%
 
2015
330,750

$11.706080

to
$22.501304
$4,709,379
0.30
%
to
2.75%
—
%
to
0.29%
5.11
 %
to
7.44%
 
2014
260,942

$10.895575

to
$21.473127
$3,554,428
0.30
%
to
2.70%
—
%
to
0.56%
3.94
 %
to
8.96%
 
2013
228,334

$20.081546

to
$20.658365
$3,033,315
0.50
%
to
2.70%
0.21
%
to
0.65%
32.67
 %
to
35.62%
Hartford Disciplined Equity HLS Fund
 
2017
3,055,760

$30.153710

to
$34.465864
$70,287,111
0.30
%
to
2.75%
0.87
%
to
0.92%
18.61
 %
to
21.55%
 
2016
3,658,924

$25.422223

to
$28.354952
$69,893,555
0.30
%
to
2.75%
0.92
%
to
0.98%
2.89
 %
to
5.44%
 
2015
4,311,941

$24.707800

to
$26.891203
$78,922,730
0.30
%
to
2.75%
0.76
%
to
1.20%
3.94
 %
to
6.51%
 
2014
5,401,238

$23.771907

to
$25.246540
$93,748,052
0.30
%
to
2.75%
0.39
%
to
1.38%
13.03
 %
to
15.83%
 
2013
7,766,959

$21.031419

to
$21.795609
$116,872,515
0.30
%
to
2.75%
0.29
%
to
1.10%
32.14
 %
to
35.41%
Hartford Growth Opportunities HLS Fund
 
2017
4,719,521

$32.576607

to
$37.095472
$105,474,239
0.30
%
to
2.75%
—
%
to
—%
26.91
 %
to
30.06%
 
2016
6,005,130

$25.668615

to
$28.522519
$103,653,883
0.30
%
to
2.75%
0.43
%
to
0.44%
(3.19
)%
to
(0.79)%
 
2015
7,231,563

$26.514567

to
$28.749309
$127,043,781
0.30
%
to
2.75%
0.13
%
to
0.14%
8.71
 %
to
11.40%
 
2014
9,265,589

$24.391204

to
$25.807052
$147,044,785
0.30
%
to
2.75%
0.19
%
to
0.29%
11.05
 %
to
13.80%
 
2013
11,514,449

$21.964512

to
$22.677114
$159,748,073
0.30
%
to
2.75%
0.01
%
to
0.01%
32.06
 %
to
35.34%
Hartford High Yield HLS Fund
 
2017
1,518,613

$21.525513

to
$21.775628
$27,273,539
0.30
%
to
2.75%
5.18
%
to
6.35%
4.69
 %
to
7.28%
 
2016
1,784,247

$20.064318

to
$20.800753
$30,002,601
0.30
%
to
2.75%
6.07
%
to
6.18%
11.15
 %
to
13.91%
 
2015
1,918,000

$17.614511

to
$18.713796
$29,061,362
0.30
%
to
2.75%
3.76
%
to
7.66%
(6.90
)%
to
(4.59)%
 
2014
2,411,993

$18.462129

to
$20.101003
$38,582,200
0.30
%
to
2.75%
6.58
%
to
9.09%
(0.20
)%
to
2.27%
 
2013
3,095,589

$18.052194

to
$20.142133
$48,924,260
0.30
%
to
2.75%
7.19
%
to
8.49%
3.54
 %
to
6.11%
Hartford International Opportunities HLS Fund
 
2017
2,335,203

$19.912101

to
$21.551337
$32,179,511
0.30
%
to
2.75%
1.38
%
to
1.45%
21.86
 %
to
24.88%
 
2016
2,809,239

$16.340564

to
$17.258079
$31,168,276
0.30
%
to
2.75%
—
%
to
1.69%
(1.49
)%
to
0.95%
 
2015
3,239,257

$16.587690

to
$16.874218
$35,938,493
0.50
%
to
2.75%
1.26
%
to
1.44%
(0.89
)%
to
1.37%
 
2014
3,886,054

$16.736370

to
$16.830703
$42,778,575
0.30
%
to
2.75%
—
%
to
2.15%
(6.48
)%
to
(4.16)%
 
2013
4,717,147

$17.561624

to
$17.896543
$54,368,079
0.30
%
to
2.75%
2.10
%
to
2.94%
18.26
 %
to
21.19%
Hartford Small/Mid Cap Equity HLS Fund
 
2017
254,084

$21.142541

to
$31.513895
$5,336,612
0.75
%
to
2.75%
—
%
to
—%
11.32
 %
to
13.57%
 
2016
285,147

$18.452482

to
$28.423377
$5,289,564
0.85
%
to
2.70%
0.88
%
to
1.48%
13.38
 %
to
15.50%
 
2015
346,758

$15.976238

to
$25.068396
$5,528,895
0.85
%
to
2.70%
1.26
%
to
1.51%
(7.27
)%
to
(5.54)%
 
2014
423,478

$16.913383

to
$27.034635
$7,167,689
0.85
%
to
2.70%
0.84
%
to
1.49%
2.42
 %
to
4.33%
 
2013
532,429

$16.210977

to
$26.328652
$8,835,165
0.85
%
to
2.75%
0.70
%
to
1.35%
33.78
 %
to
36.35%


Hartford Ultrashort Bond HLS Fund
 
2017
117,103,265

$7.932890

to
$9.907999
$135,483,984
0.30
%
to
2.80%
0.50
%
to
0.68%
(1.78
)%
to
0.50%
 
2016
137,441,753

$8.076279

to
$9.858641
$164,861,963
0.30
%
to
2.80%
0.17
%
to
0.47%
(1.82
)%
to
0.34%
 
2015
161,425,005

$8.226209

to
$9.824980
$196,796,827
0.30
%
to
2.80%
—
%
to
0.32%
(2.64
)%
to
(0.39)%
 
2014
201,242,987

$8.449044

to
$9.863416
$245,915,008
0.30
%
to
2.80%
—
%
to
—%
(2.66
)%
to
(0.40)%
 
2013
284,272,584

$8.680299

to
$9.902898
$359,160,633
0.30
%
to
2.80%
—
%
to
—%
(2.76
)%
to
(0.40)%
Hartford Small Company HLS Fund
 
2017
459,894

$26.778910

to
$30.398870
$9,371,476
0.30
%
to
2.75%
—
%
to
—%
22.94
 %
to
25.98%
 
2016
574,346

$21.782727

to
$24.129307
$9,304,990
0.30
%
to
2.75%
—
%
to
—%
(0.72
)%
to
1.74%
 
2015
708,091

$21.941570

to
$23.410469
$11,294,114
0.50
%
to
2.75%
—
%
to
—%
(10.70
)%
to
(8.67)%
 
2014
899,570

$24.571503

to
$25.632868
$15,918,053
0.50
%
to
2.75%
—
%
to
—%
4.17
 %
to
6.54%
 
2013
1,310,809

$23.588625

to
$24.277572
$21,697,890
0.30
%
to
2.75%
0.08
%
to
0.09%
40.47
 %
to
43.95%
Hartford SmallCap Growth HLS Fund
 
2017
270,646

$29.113197

to
$37.806308
$7,539,079
0.85
%
to
2.70%
0.04
%
to
0.04%
16.88
 %
to
19.06%
 
2016
262,837

$24.452916

to
$32.347106
$6,187,974
0.85
%
to
2.70%
0.15
%
to
0.16%
9.38
 %
to
11.42%
 
2015
349,639

$21.946095

to
$29.572946
$7,438,316
0.85
%
to
2.70%
0.06
%
to
0.08%
(3.20
)%
to
(1.39)%
 
2014
386,127

$22.255139

to
$30.456529
$8,426,751
0.85
%
to
2.75%
0.04
%
to
0.07%
2.96
 %
to
4.94%
 
2013
558,459

$21.207706

to
$29.579870
$11,759,718
0.85
%
to
2.75%
—
%
to
0.41%
40.94
 %
to
43.65%
Hartford Stock HLS Fund
 
2017
142,368

$21.041260

to
$28.859313
$2,911,375
0.75
%
to
2.75%
1.81
%
to
1.86%
16.60
 %
to
18.95%
 
2016
160,751

$17.688900

to
$24.751131
$2,749,650
0.75
%
to
2.75%
1.82
%
to
1.90%
4.50
 %
to
6.61%
 
2015
127,336

$16.591820

to
$23.684955
$2,042,478
0.75
%
to
2.75%
1.68
%
to
1.83%
(0.04
)%
to
1.98%
 
2014
135,218

$16.270343

to
$23.767583
$2,184,736
0.75
%
to
2.70%
1.92
%
to
4.56%
8.34
 %
to
10.48%
 
2013
162,836

$14.727613

to
$21.937608
$2,376,059
0.75
%
to
2.70%
1.98
%
to
2.02%
28.73
 %
to
31.26%
Hartford U.S. Government Securities HLS Fund
 
2017
2,015,426

$9.645033

to
$11.938637
$20,782,466
0.30
%
to
2.75%
—
%
to
1.26%
(1.43
)%
to
1.01%
 
2016
2,282,900

$9.784952

to
$11.818688
$23,603,588
0.30
%
to
2.75%
1.52
%
to
2.28%
(1.21
)%
to
1.24%
 
2015
2,339,514

$9.905117

to
$11.674274
$24,164,613
0.30
%
to
2.75%
1.73
%
to
1.82%
(1.19
)%
to
1.26%
 
2014
1,996,216

$10.024703

to
$11.403055
$20,624,542
0.50
%
to
2.75%
2.05
%
to
2.24%
—
 %
to
2.30%
 
2013
2,543,568

$10.022108

to
$11.146482
$25,954,659
0.50
%
to
2.75%
2.06
%
to
2.38%
(4.35
)%
to
(2.17)%
Hartford Value HLS Fund
 
2017
706,916

$24.710029

to
$28.535135
$14,268,660
0.50
%
to
2.70%
1.14
%
to
1.83%
12.37
 %
to
14.86%
 
2016
858,340

$21.990602

to
$24.842421
$15,091,684
0.50
%
to
2.70%
1.71
%
to
1.72%
10.67
 %
to
13.13%
 
2015
1,049,254

$19.871301

to
$21.959894
$16,383,347
0.50
%
to
2.70%
1.54
%
to
1.55%
(5.66
)%
to
(3.56)%
 
2014
1,225,238

$21.064438

to
$22.771698
$19,906,746
0.50
%
to
2.70%
1.47
%
to
1.50%
8.40
 %
to
10.81%
 
2013
1,559,325

$19.382840

to
$20.550139
$22,957,524
0.50
%
to
2.75%
0.72
%
to
1.39%
28.36
 %
to
31.28%
Lord Abbett Fundamental Equity Fund
 
2017
489,396

$19.639304

to
$24.442408
$10,425,364
0.30
%
to
1.50%
1.01
%
to
1.08%
10.90
 %
to
12.24%
 
2016
590,335

$17.709076

to
$21.777355
$11,260,482
0.30
%
to
1.50%
1.13
%
to
1.16%
14.02
 %
to
15.40%
 
2015
749,744

$15.531399

to
$18.871612
$12,415,393
0.30
%
to
1.50%
1.11
%
to
1.18%
(4.88
)%
to
(3.73)%
 
2014
829,970

$16.328531

to
$19.603342
$14,338,556
0.30
%
to
1.50%
0.39
%
to
0.41%
5.55
 %
to
6.82%
 
2013
916,947

$15.470435

to
$18.351660
$14,954,661
0.30
%
to
1.50%
0.22
%
to
0.25%
33.74
 %
to
35.35%
Lord Abbett Calibrated Dividend Growth Fund
 
2017
744,634

$22.380222

to
$24.950037
$15,778,135
0.85
%
to
2.70%
1.39
%
to
1.65%
15.95
 %
to
18.12%
 
2016
829,625

$18.947640

to
$21.517417
$15,026,874
0.85
%
to
2.70%
1.51
%
to
1.73%
12.04
 %
to
14.13%
 
2015
818,367

$16.602197

to
$19.205816
$13,043,354
0.85
%
to
2.70%
1.69
%
to
1.78%
(4.74
)%
to
(2.96)%


 
2014
920,900

$15.338077

to
$17.108718
$15,224,523
0.85
%
to
2.45%
1.61
%
to
1.76%
8.84
 %
to
10.60%
 
2013
1,206,059

$14.091974

to
$15.469389
$18,126,146
0.85
%
to
2.45%
1.26
%
to
1.50%
24.83
 %
to
26.84%
Lord Abbett Bond Debenture Fund
 
2017
1,944,938

$19.074756

to
$19.774784
$34,529,633
0.30
%
to
2.75%
4.24
%
to
5.27%
6.25
 %
to
8.88%
 
2016
2,191,012

$17.518370

to
$18.611543
$36,091,538
0.30
%
to
2.75%
2.34
%
to
4.59%
9.09
 %
to
11.80%
 
2015
2,462,725

$15.669714

to
$17.060285
$36,709,515
0.30
%
to
2.75%
3.52
%
to
5.91%
(4.20
)%
to
(1.83)%
 
2014
2,959,499

$15.961104

to
$17.808571
$45,468,923
0.30
%
to
2.75%
3.54
%
to
4.35%
1.52
 %
to
4.03%
 
2013
3,699,709

$15.342188

to
$17.542552
$55,209,422
0.30
%
to
2.75%
4.15
%
to
4.39%
5.24
 %
to
7.85%
Lord Abbett Growth and Income Fund
 
2017
358,117

$22.488239

to
$23.485274
$6,380,452
0.50
%
to
2.70%
1.30
%
to
1.35%
10.36
 %
to
12.82%
 
2016
451,693

$20.376761

to
$20.817381
$7,083,092
0.50
%
to
2.70%
1.17
%
to
1.38%
13.99
 %
to
16.53%
 
2015
560,989

$17.864529

to
$17.875274
$7,622,513
0.50
%
to
2.70%
1.20
%
to
1.20%
(5.45
)%
to
(3.35)%
 
2014
692,897

$18.483270

to
$18.906066
$9,796,907
0.50
%
to
2.70%
0.53
%
to
0.67%
4.79
 %
to
7.12%
 
2013
855,047

$17.255404

to
$18.042659
$11,416,004
0.50
%
to
2.70%
0.46
%
to
0.61%
32.28
 %
to
35.22%
MFS® Growth Fund
 
2017
7,074,218

$31.474515

to
$34.422833
$129,988,680
0.30
%
to
2.80%
—
%
to
0.10%
27.78
 %
to
30.69%
 
2016
8,637,030

$24.631996

to
$26.339016
$122,778,839
0.30
%
to
2.80%
—
%
to
0.05%
(0.39
)%
to
1.87%
 
2015
10,041,725

$24.727335

to
$25.520887
$140,739,991
0.50
%
to
2.80%
—
%
to
0.20%
4.59
 %
to
6.77%
 
2014
11,391,500

$23.642338

to
$23.903523
$152,064,452
0.50
%
to
2.80%
—
%
to
0.10%
5.94
 %
to
8.14%
 
2013
14,207,698

$22.303628

to
$22.317418
$178,720,894
0.30
%
to
2.80%
—
%
to
0.24%
33.08
 %
to
36.09%
MFS® Global Equity Fund
 
2017
677,506

$25.095961

to
$33.295481
$17,955,365
0.85
%
to
2.80%
0.83
%
to
0.84%
20.65
 %
to
23.02%
 
2016
792,564

$20.801372

to
$27.065192
$17,286,675
0.85
%
to
2.80%
0.94
%
to
1.00%
4.38
 %
to
6.44%
 
2015
902,321

$19.928024

to
$25.428183
$18,594,347
0.85
%
to
2.80%
1.04
%
to
1.09%
(4.14
)%
to
(2.25)%
 
2014
1,054,058

$20.787805

to
$26.012901
$22,414,530
0.85
%
to
2.80%
0.69
%
to
0.73%
1.01
 %
to
2.99%
 
2013
1,299,109

$20.633337

to
$25.256535
$27,230,932
0.85
%
to
2.75%
1.03
%
to
1.07%
24.35
 %
to
26.73%
MFS® Investors Trust Fund
 
2017
6,645,003

$25.683454

to
$28.999979
$125,968,764
0.50
%
to
2.80%
0.55
%
to
0.59%
19.94
 %
to
22.41%
 
2016
7,912,747

$21.413220

to
$23.690084
$123,783,570
0.50
%
to
2.80%
0.59
%
to
0.86%
5.59
 %
to
7.78%
 
2015
9,578,000

$20.279694

to
$21.981049
$140,460,975
0.50
%
to
2.80%
0.69
%
to
0.89%
(2.55
)%
to
(0.55)%
 
2014
11,987,858

$20.810395

to
$22.101507
$178,823,281
0.50
%
to
2.80%
0.81
%
to
1.14%
7.94
 %
to
10.16%
 
2013
15,608,746

$19.279366

to
$20.063384
$213,740,356
0.50
%
to
2.80%
1.00
%
to
1.73%
28.41
 %
to
31.08%
MFS® Mid Cap Growth Fund
 
2017
3,995,361

$13.198596

to
$33.323344
$45,491,916
0.70
%
to
2.80%
0.12
%
to
0.12%
23.49
 %
to
26.11%
 
2016
4,642,247

$10.465894

to
$26.984205
$42,265,469
0.70
%
to
2.80%
—
%
to
—%
2.01
 %
to
4.18%
 
2015
5,921,373

$10.046107

to
$26.451622
$52,127,831
0.70
%
to
2.80%
—
%
to
—%
1.72
 %
to
3.88%
 
2014
6,283,614

$9.670650

to
$26.003493
$53,878,020
0.70
%
to
2.80%
—
%
to
—%
5.86
 %
to
8.10%
 
2013
7,587,420

$8.945794

to
$24.564919
$60,765,890
0.70
%
to
2.80%
—
%
to
—%
33.92
 %
to
36.76%
MFS® New Discovery Fund
 
2017
3,381,773

$18.373911

to
$36.811059
$81,873,280
0.30
%
to
2.80%
—
%
to
—%
23.16
 %
to
25.95%
 
2016
4,050,785

$14.587915

to
$29.888778
$78,731,933
0.30
%
to
2.80%
—
%
to
—%
6.04
 %
to
8.47%
 
2015
4,804,092

$13.448482

to
$28.186188
$87,687,735
0.30
%
to
2.80%
—
%
to
—%
(4.60
)%
to
(2.44)%
 
2014
6,101,489

$13.784625

to
$29.543884
$115,937,160
0.30
%
to
2.80%
—
%
to
—%
(9.82
)%
to
(7.77)%
 
2013
8,386,327

$14.946075

to
$32.761080
$174,807,224
0.30
%
to
2.80%
—
%
to
—%
37.62
 %
to
40.79%
MFS® Total Return Fund
 
2017
18,942,270

$18.531286

to
$20.856045
$392,914,262
0.50
%
to
2.80%
2.18
%
to
2.33%
9.20
 %
to
11.47%


 
2016
21,338,580

$16.970149

to
$18.710636
$402,120,648
0.50
%
to
2.80%
2.72
%
to
3.44%
6.08
 %
to
8.27%
 
2015
24,907,211

$15.997080

to
$17.281075
$438,472,800
0.50
%
to
2.80%
2.36
%
to
2.60%
(3.12
)%
to
(1.08)%
 
2014
29,349,919

$16.512607

to
$17.662229
$529,209,414
0.30
%
to
2.80%
—
%
to
1.87%
5.50
 %
to
7.91%
 
2013
36,646,233

$15.651313

to
$16.367266
$621,611,838
0.30
%
to
2.80%
1.66
%
to
1.86%
15.76
 %
to
18.38%
MFS® Value Fund
 
2017
9,268,810

$25.602921

to
$29.158588
$248,060,668
0.30
%
to
2.80%
1.95
%
to
2.80%
14.40
 %
to
17.00%
 
2016
10,966,308

$22.379369

to
$24.922682
$251,725,979
0.30
%
to
2.80%
1.48
%
to
2.33%
10.94
 %
to
13.43%
 
2015
13,176,343

$20.172589

to
$21.970943
$268,181,525
0.30
%
to
2.80%
1.29
%
to
2.39%
(3.48
)%
to
(1.23)%
 
2014
15,543,246

$20.899410

to
$22.244720
$324,071,207
0.30
%
to
2.80%
1.30
%
to
1.62%
7.46
 %
to
9.87%
 
2013
20,712,600

$19.448755

to
$20.246014
$395,887,084
0.30
%
to
2.80%
1.42
%
to
1.56%
32.14
 %
to
35.19%
MFS® Total Return Bond Series
 
2017
35,811,847

$12.998837

to
$14.454941
$502,285,810
0.30
%
to
2.80%
2.62
%
to
3.40%
1.57
 %
to
3.87%
 
2016
38,148,403

$12.797583

to
$13.916194
$520,214,626
0.30
%
to
2.80%
1.84
%
to
4.02%
1.36
 %
to
3.70%
 
2015
42,254,978

$12.626347

to
$13.419897
$561,168,879
0.30
%
to
2.80%
3.21
%
to
3.38%
(3.06
)%
to
(0.88)%
 
2014
49,619,046

$13.024355

to
$13.538877
$671,404,628
0.30
%
to
2.80%
2.83
%
to
2.84%
2.92
 %
to
5.30%
 
2013
63,104,890

$12.654375

to
$12.857122
$819,089,472
0.30
%
to
2.80%
1.26
%
to
1.66%
(3.77
)%
to
(1.58)%
MFS® Research Fund
 
2017
816,125

$26.796181

to
$27.678174
$19,827,240
0.85
%
to
2.80%
1.33
%
to
1.34%
19.96
 %
to
22.32%
 
2016
980,543

$21.905803

to
$23.072039
$19,606,867
0.85
%
to
2.80%
0.77
%
to
0.78%
5.73
 %
to
7.82%
 
2015
1,179,120

$20.317840

to
$21.820857
$22,014,371
0.85
%
to
2.80%
0.72
%
to
0.72%
(1.98
)%
to
(0.05)%
 
2014
1,450,301

$20.327821

to
$22.261565
$27,188,206
0.85
%
to
2.80%
0.79
%
to
0.81%
7.16
 %
to
9.27%
 
2013
1,683,027

$18.603416

to
$20.774295
$29,265,106
0.85
%
to
2.80%
0.25
%
to
0.32%
28.63
 %
to
31.17%
MFS® High Yield Portfolio
 
2017
7,094,251

$11.142162

to
$12.166841
$82,430,207
0.85
%
to
2.80%
5.99
%
to
6.51%
3.74
 %
to
5.78%
 
2016
8,167,930

$10.740269

to
$11.501580
$90,637,053
0.85
%
to
2.80%
6.80
%
to
7.13%
10.68
 %
to
12.86%
 
2015
8,850,862

$9.703703

to
$10.190929
$87,891,764
0.85
%
to
2.80%
6.61
%
to
7.65%
(6.86
)%
to
(5.03)%
 
2014
11,022,122

$10.418731

to
$10.730506
$116,451,812
0.85
%
to
2.80%
4.36
%
to
5.36%
(0.03
)%
to
1.94%
 
2013
15,078,674

$10.422041

to
$10.526650
$157,908,538
0.85
%
to
2.80%
2.50
%
to
2.72%
4.22
 %
to
5.27%
BlackRock Global Allocation V.I. Fund
 
2017
322,727

$12.902316

to
$14.018676
$4,288,316
0.30
%
to
1.50%
—
%
to
1.26%
12.02
 %
to
13.37%
 
2016
371,023

$11.518333

to
$12.365724
$4,374,530
0.30
%
to
1.50%
0.85
%
to
1.27%
2.26
 %
to
3.49%
 
2015
434,336

$11.263821

to
$11.948258
$4,989,616
0.30
%
to
1.50%
1.02
%
to
1.05%
(2.48
)%
to
(1.30)%
 
2014
409,520

$11.549686

to
$12.105308
$4,807,811
0.30
%
to
1.50%
1.63
%
to
2.25%
0.41
 %
to
1.63%
 
2013
419,306

$11.501993

to
$11.911502
$4,878,497
0.30
%
to
1.50%
1.03
%
to
1.10%
12.71
 %
to
14.07%
BlackRock Global Opportunities V.I. Fund
 
2017
8,645

$18.061574

to
$20.726269
$178,237
1.40
%
to
2.45%
—
%
to
7.19%
22.17
 %
to
23.45%
 
2016
11,387

$14.630141

to
$16.965646
$192,278
1.40
%
to
2.45%
1.45
%
to
2.05%
1.08
 %
to
2.15%
 
2015
13,907

$14.322338

to
$16.784034
$228,573
1.40
%
to
2.45%
0.78
%
to
0.97%
(1.72
)%
to
(0.69)%
 
2014
20,621

$14.421304

to
$17.078460
$340,805
1.40
%
to
2.45%
1.08
%
to
1.16%
(6.47
)%
to
(5.49)%
 
2013
23,118

$15.258286

to
$18.260509
$398,006
1.40
%
to
2.45%
0.34
%
to
0.37%
26.64
 %
to
27.97%
BlackRock Large Cap Focus Growth V.I. Fund+
 
2017
32,732

$20.964346

to
$21.989346
$713,429
1.40
%
to
2.40%
0.04
%
to
0.04%
26.49
 %
to
27.76%
 
2016
34,067

$16.409527

to
$24.847190
$587,231
1.40
%
to
2.60%
—
%
to
0.58%
5.12
 %
to
6.38%
 
2015
40,893

$15.424747

to
$23.637915
$666,209
1.40
%
to
2.60%
0.50
%
to
0.60%
0.09
 %
to
1.30%
 
2014
52,098

$15.226766

to
$23.616209
$847,994
1.40
%
to
2.60%
0.56
%
to
0.61%
11.23
 %
to
12.58%
 
2013
64,446

$13.525591

to
$21.230957
$942,228
1.40
%
to
2.60%
0.72
%
to
0.81%
30.48
 %
to
32.06%


BlackRock Equity Dividend V.I. Fund
 
2017
366,948

$18.964125

to
$20.321731
$7,235,392
0.50
%
to
1.50%
1.52
%
to
1.56%
14.76
 %
to
15.91%
 
2016
459,446

$16.525564

to
$17.741094
$7,837,733
0.30
%
to
1.50%
0.43
%
to
1.57%
14.33
 %
to
15.71%
 
2015
642,928

$14.454091

to
$15.332222
$9,544,743
0.30
%
to
1.50%
1.44
%
to
1.45%
(2.29
)%
to
(1.11)%
 
2014
679,670

$14.793529

to
$15.505077
$10,261,129
0.30
%
to
1.50%
1.52
%
to
1.64%
7.44
 %
to
8.74%
 
2013
768,832

$13.768822

to
$14.258946
$10,732,962
0.30
%
to
1.50%
1.72
%
to
1.97%
22.27
 %
to
23.75%
Morgan Stanley VIF Core Plus Fixed Income Portfolio+
 
2017
57,811

$10.855365

to
$11.433487
$650,807
1.35
%
to
2.50%
2.65
%
to
2.89%
3.28
 %
to
4.47%
 
2016
58,272

$10.510559

to
$10.943776
$627,324
1.35
%
to
2.50%
1.66
%
to
1.66%
3.25
 %
to
4.44%
 
2015
61,649

$10.180099

to
$10.478496
$638,396
1.35
%
to
2.50%
3.20
%
to
3.65%
(3.28
)%
to
(2.16)%
 
2014
80,658

$10.525379

to
$10.710012
$859,890
1.35
%
to
2.50%
2.83
%
to
2.98%
4.91
 %
to
6.12%
 
2013
97,592

$10.032769

to
$10.092052
$983,095
1.35
%
to
2.50%
—
%
to
—%
0.33
 %
to
0.92%
Morgan Stanley VIF Growth Portfolio+
 
2017
104,276

$19.621835

to
$20.666424
$2,120,267
1.35
%
to
2.50%
—
%
to
—%
39.30
 %
to
40.91%
 
2016
122,888

$14.086260

to
$14.666750
$1,780,243
1.35
%
to
2.50%
—
%
to
—%
(4.35
)%
to
(3.24)%
 
2015
155,219

$14.726161

to
$15.157585
$2,332,821
1.35
%
to
2.50%
—
%
to
—%
9.20
 %
to
10.47%
 
2014
200,188

$13.484988

to
$13.721383
$2,732,375
1.35
%
to
2.50%
—
%
to
—%
3.47
 %
to
4.67%
 
2013
255,664

$13.016247

to
$13.109696
$3,346,277
1.35
%
to
2.75%
—
%
to
—%
30.16
 %
to
31.10%
Morgan Stanley VIF Mid Cap Growth Portfolio+
 
2017
566,431

$19.136337

to
$27.975403
$10,679,916
0.75
%
to
2.75%
—
%
to
—%
34.84
 %
to
37.56%
 
2016
660,504

$13.911017

to
$20.746745
$9,081,317
0.75
%
to
2.75%
—
%
to
—%
(11.32
)%
to
(9.52)%
 
2015
757,510

$15.375321

to
$23.394195
$11,541,796
0.75
%
to
2.75%
—
%
to
—%
(8.54
)%
to
(6.69)%
 
2014
882,595

$16.478001

to
$25.578603
$14,440,819
0.75
%
to
2.75%
—
%
to
—%
(0.92
)%
to
1.08%
 
2013
1,071,141

$16.301895

to
$25.816450
$17,333,856
0.75
%
to
2.75%
0.24
%
to
0.35%
33.76
 %
to
36.46%
Invesco V.I. American Value Fund
 
2017
486,864

$19.797010

to
$27.908531
$9,762,560
0.85
%
to
2.70%
0.59
%
to
0.61%
6.76
 %
to
8.75%
 
2016
524,313

$18.203574

to
$26.141135
$9,695,149
0.85
%
to
2.70%
0.12
%
to
0.13%
12.15
 %
to
14.24%
 
2015
620,172

$15.933971

to
$23.308947
$9,999,891
0.85
%
to
2.70%
0.01
%
to
0.01%
(11.78
)%
to
(10.13)%
 
2014
713,051

$17.729300

to
$26.419904
$12,854,092
0.85
%
to
2.70%
0.18
%
to
0.22%
6.56
 %
to
8.55%
 
2013
851,094

$16.332597

to
$24.729846
$14,215,747
0.85
%
to
2.75%
0.52
%
to
0.75%
30.30
 %
to
32.80%
Morgan Stanley Mid Cap Growth Portfolio+
 
2017
—

$16.469337

to
$26.201403
$—
1.35
%
to
2.45%
—
%
to
—%
24.77
 %
to
25.85%
 
2016
21,264

$13.086696

to
$20.999877
$267,193
1.35
%
to
2.45%
—
%
to
—%
(11.62
)%
to
(10.64)%
 
2015
24,422

$14.645554

to
$23.761362
$345,798
1.35
%
to
2.45%
—
%
to
—%
(9.07
)%
to
(8.06)%
 
2014
38,397

$15.929315

to
$26.130248
$594,425
1.35
%
to
2.45%
—
%
to
—%
(1.66
)%
to
(0.57)%
 
2013
45,658

$14.607207

to
$16.020231
$709,839
1.35
%
to
2.20%
0.06
%
to
0.06%
34.37
 %
to
35.52%
BlackRock Capital Appreciation V.I. Fund
 
2017
309,859

$18.860184

to
$20.210434
$6,134,935
0.50
%
to
1.50%
—
%
to
—%
30.97
 %
to
32.28%
 
2016
449,402

$14.400641

to
$15.278228
$6,737,155
0.50
%
to
1.50%
—
%
to
—%
(1.62
)%
to
(0.63)%
 
2015
520,018

$14.637837

to
$15.375355
$7,866,735
0.50
%
to
1.50%
—
%
to
—%
5.02
 %
to
6.08%
 
2014
608,729

$13.937768

to
$14.494328
$8,724,719
0.50
%
to
1.50%
—
%
to
—%
6.94
 %
to
8.01%
 
2013
705,102

$13.033462

to
$13.419051
$9,392,354
0.50
%
to
1.50%
—
%
to
—%
31.41
 %
to
32.73%
Oppenheimer Capital Appreciation Fund/VA
 
2017
116,652

$18.847828

to
$26.872804
$2,143,118
0.85
%
to
2.75%
0.01
%
to
0.01%
23.08
 %
to
25.43%
 
2016
122,044

$15.026166

to
$21.834458
$1,795,609
0.85
%
to
2.75%
0.11
%
to
0.12%
(5.08
)%
to
(3.26)%
 
2015
165,209

$15.531833

to
$23.002491
$2,510,795
0.85
%
to
2.75%
—
%
to
—%
0.47
 %
to
2.39%


 
2014
164,652

$15.168776

to
$22.895896
$2,512,094
0.85
%
to
2.75%
0.21
%
to
0.26%
12.01
 %
to
14.15%
 
2013
170,022

$13.288083

to
$20.441751
$2,252,777
0.85
%
to
2.75%
0.75
%
to
0.88%
25.92
 %
to
28.33%
Oppenheimer Global Fund/VA
 
2017
603,990

$19.848103

to
$27.113411
$11,748,456
0.85
%
to
2.75%
0.73
%
to
0.74%
32.63
 %
to
35.17%
 
2016
704,970

$14.684228

to
$20.443601
$10,102,954
0.85
%
to
2.75%
0.76
%
to
0.79%
(2.87
)%
to
(1.00)%
 
2015
930,508

$14.832940

to
$21.047069
$13,511,080
0.85
%
to
2.75%
1.07
%
to
1.11%
0.86
 %
to
2.79%
 
2014
1,117,461

$14.429674

to
$20.867763
$15,859,465
0.85
%
to
2.75%
0.86
%
to
1.16%
(0.71
)%
to
1.19%
 
2013
1,371,599

$14.259651

to
$21.017468
$19,317,277
0.85
%
to
2.75%
1.13
%
to
1.31%
23.55
 %
to
25.92%
Oppenheimer Main Street Fund®/VA+
 
2017
229,122

$21.015465

to
$27.179393
$4,721,825
0.85
%
to
2.75%
1.28
%
to
1.29%
13.47
 %
to
15.65%
 
2016
131,697

$18.171861

to
$23.952233
$2,364,205
0.85
%
to
2.75%
0.85
%
to
0.86%
8.28
 %
to
10.36%
 
2015
191,683

$16.466604

to
$22.120904
$3,091,066
0.85
%
to
2.75%
0.65
%
to
0.68%
0.31
 %
to
2.23%
 
2014
234,265

$16.106807

to
$22.052784
$3,696,874
0.85
%
to
2.75%
0.48
%
to
0.58%
7.41
 %
to
9.47%
 
2013
262,453

$14.713944

to
$20.532026
$3,800,498
0.85
%
to
2.75%
0.84
%
to
0.87%
27.88
 %
to
30.33%
Oppenheimer Main Street Small Cap Fund/VA
 
2017
576,630

$24.285483

to
$32.229329
$13,657,970
0.75
%
to
2.75%
0.64
%
to
0.65%
10.82
 %
to
13.06%
 
2016
749,599

$21.480284

to
$29.082018
$15,735,710
0.75
%
to
2.75%
0.25
%
to
0.25%
14.48
 %
to
16.79%
 
2015
932,091

$18.391829

to
$25.403315
$16,787,101
0.75
%
to
2.75%
0.63
%
to
0.71%
(8.64
)%
to
(6.80)%
 
2014
1,144,477

$19.732756

to
$27.806365
$22,197,302
0.75
%
to
2.75%
0.56
%
to
0.62%
8.63
 %
to
10.82%
 
2013
1,475,043

$17.806066

to
$25.598128
$25,782,479
0.75
%
to
2.75%
0.68
%
to
1.03%
36.81
 %
to
39.57%
Oppenheimer Equity Income Fund/VA+
 
2017
—

$15.251462

to
$20.577431
$—
0.85
%
to
2.75%
2.17
%
to
2.17%
3.52
 %
to
4.33%
 
2016
165,095

$14.618266

to
$19.878685
$2,366,404
0.85
%
to
2.75%
5.24
%
to
5.27%
12.01
 %
to
14.15%
 
2015
212,228

$12.805787

to
$17.747933
$2,672,307
0.85
%
to
2.75%
2.67
%
to
2.73%
(12.27
)%
to
(10.58)%
 
2014
244,000

$14.321652

to
$20.229882
$3,466,094
0.85
%
to
2.75%
1.48
%
to
1.51%
7.73
 %
to
9.79%
 
2013
285,975

$13.044475

to
$18.827018
$3,689,507
0.85
%
to
2.70%
1.13
%
to
1.19%
25.28
 %
to
27.62%
Putnam VT Diversified Income Fund
 
2017
2,508,788

$15.065752

to
$18.372651
$35,835,823
0.75
%
to
2.75%
5.39
%
to
5.49%
4.22
 %
to
6.32%
 
2016
2,877,125

$14.169873

to
$17.629106
$38,912,966
0.75
%
to
2.75%
6.98
%
to
7.10%
2.56
 %
to
4.63%
 
2015
3,533,319

$13.542501

to
$17.188938
$45,926,832
0.75
%
to
2.75%
8.20
%
to
9.12%
(4.99
)%
to
(3.07)%
 
2014
4,115,124

$13.971545

to
$18.091859
$55,521,261
0.75
%
to
2.75%
7.77
%
to
10.24%
(2.37
)%
to
(0.40)%
 
2013
5,112,542

$14.028001

to
$18.531931
$69,534,219
0.75
%
to
2.75%
3.03
%
to
3.75%
4.89
 %
to
7.01%
Putnam VT Global Asset Allocation Fund
 
2017
151,952

$17.777749

to
$23.929053
$2,626,171
1.15
%
to
2.40%
1.44
%
to
1.60%
12.60
 %
to
14.02%
 
2016
185,862

$13.899996

to
$15.592001
$2,833,791
1.15
%
to
2.45%
—
%
to
1.91%
4.13
 %
to
5.49%
 
2015
203,461

$13.348768

to
$14.780228
$2,954,561
1.15
%
to
2.45%
—
%
to
2.17%
(2.25
)%
to
(0.97)%
 
2014
313,204

$14.925369

to
$20.857346
$4,617,068
1.15
%
to
2.40%
1.98
%
to
2.30%
6.83
 %
to
8.17%
 
2013
370,550

$13.797846

to
$19.524199
$5,048,593
1.15
%
to
2.40%
1.82
%
to
2.16%
16.66
 %
to
18.13%
Putnam VT Growth Opportunities Fund
 
2017
547,444

$13.517918

to
$13.776811
$7,472,966
0.30
%
to
1.50%
0.11
%
to
0.11%
28.96
 %
to
30.51%
 
2016
740,010

$10.482623

to
$10.556110
$7,784,331
0.30
%
to
1.50%
—
%
to
—%
4.83
 %
to
5.56%
Putnam VT International Value Fund
 
2017
60,117

$10.200436

to
$16.782350
$651,030
1.25
%
to
2.40%
1.50
%
to
1.53%
21.74
 %
to
23.15%
 
2016
87,253

$8.283132

to
$13.785379
$751,319
1.25
%
to
2.40%
2.48
%
to
2.52%
(1.29
)%
to
(0.15)%
 
2015
99,011

$8.295657

to
$13.966060
$859,357
1.25
%
to
2.40%
1.07
%
to
1.15%
(4.33
)%
to
(3.22)%
 
2014
107,506

$8.571474

to
$14.597418
$953,508
1.25
%
to
2.40%
1.34
%
to
1.35%
(11.64
)%
to
(10.61)%


 
2013
114,845

$9.589137

to
$16.519571
$1,150,307
1.25
%
to
2.40%
2.74
%
to
3.29%
19.32
 %
to
20.69%
Putnam VT International Equity Fund
 
2017
127,442

$11.704235

to
$17.098285
$1,424,922
0.75
%
to
2.75%
0.92
%
to
2.21%
23.15
 %
to
25.63%
 
2016
159,505

$9.316083

to
$13.884178
$1,422,666
0.75
%
to
2.75%
3.32
%
to
3.38%
(5.10
)%
to
(3.18)%
 
2015
130,647

$9.622323

to
$14.630565
$1,231,619
0.75
%
to
2.75%
—
%
to
1.15%
(2.58
)%
to
(0.61)%
 
2014
130,989

$9.681175

to
$15.341442
$1,243,820
0.75
%
to
2.40%
0.76
%
to
0.92%
(8.99
)%
to
(7.47)%
 
2013
156,042

$10.463205

to
$16.856709
$1,585,939
0.75
%
to
2.40%
—
%
to
1.75%
25.04
 %
to
27.11%
Putnam VT Investors Fund
 
2017
14,520

$24.168620

to
$32.448772
$405,202
0.50
%
to
1.50%
1.13
%
to
1.14%
21.03
 %
to
22.24%
 
2016
14,833

$19.969294

to
$26.544240
$341,558
0.50
%
to
1.50%
1.30
%
to
1.33%
10.38
 %
to
11.49%
 
2015
16,715

$18.090983

to
$23.808151
$344,159
0.50
%
to
1.50%
0.59
%
to
1.19%
(3.63
)%
to
(2.67)%
 
2014
20,939

$18.773146

to
$24.730592
$458,592
0.30
%
to
1.50%
—
%
to
1.25%
12.22
 %
to
13.57%
 
2013
9,920

$16.729294

to
$21.580184
$185,390
0.50
%
to
1.50%
1.41
%
to
1.46%
33.11
 %
to
34.45%
Putnam VT Small Cap Value Fund
 
2017
57,884

$21.850147

to
$29.607146
$1,228,881
0.75
%
to
2.70%
0.69
%
to
0.71%
5.00
 %
to
7.07%
 
2016
102,907

$20.408106

to
$28.197366
$2,005,834
0.75
%
to
2.70%
1.20
%
to
1.22%
24.10
 %
to
26.54%
 
2015
108,107

$16.127762

to
$22.721990
$1,674,527
0.75
%
to
2.70%
0.84
%
to
0.85%
(6.79
)%
to
(4.95)%
 
2014
141,157

$16.968452

to
$24.377401
$2,305,345
0.75
%
to
2.70%
0.46
%
to
1.35%
0.68
 %
to
2.66%
 
2013
202,752

$16.528583

to
$24.213174
$3,280,334
0.75
%
to
2.70%
0.84
%
to
1.03%
35.89
 %
to
38.56%
Putnam VT Equity Income Fund
 
2017
61,404

$23.342323

to
$30.692956
$1,762,744
0.50
%
to
1.50%
1.73
%
to
2.11%
17.01
 %
to
18.18%
 
2016
67,244

$19.949839

to
$25.971361
$1,634,065
0.50
%
to
1.50%
1.37
%
to
1.91%
11.95
 %
to
13.08%
 
2015
74,738

$17.820079

to
$22.967914
$1,605,533
0.50
%
to
1.50%
1.48
%
to
1.49%
(4.49
)%
to
(3.53)%
 
2014
90,508

$18.657115

to
$23.807401
$2,034,168
0.50
%
to
1.50%
1.58
%
to
1.79%
10.98
 %
to
12.10%
 
2013
86,799

$16.810753

to
$21.237933
$1,730,502
0.50
%
to
1.50%
1.85
%
to
2.12%
30.44
 %
to
31.75%
PIMCO All Asset Fund
 
2017
99,058

$12.265947

to
$13.327046
$1,242,297
0.30
%
to
1.50%
—
%
to
4.36%
11.69
 %
to
13.04%
 
2016
119,653

$10.982056

to
$11.789849
$1,336,838
0.30
%
to
1.50%
2.48
%
to
2.55%
11.22
 %
to
12.57%
 
2015
145,604

$9.873838

to
$10.473692
$1,455,948
0.30
%
to
1.50%
3.19
%
to
3.26%
(10.54
)%
to
(9.46)%
 
2014
158,736

$11.037121

to
$11.567924
$1,767,709
0.30
%
to
1.50%
2.96
%
to
4.77%
(1.04
)%
to
—%
 
2013
180,362

$11.153166

to
$11.550113
$2,028,753
0.30
%
to
1.50%
2.74
%
to
4.55%
(1.38
)%
to
(0.19)%
PIMCO StocksPLUS Global Portfolio
 
2017
375,181

$13.659766

to
$14.637587
$5,309,552
0.50
%
to
1.50%
3.32
%
to
3.36%
21.16
 %
to
22.38%
 
2016
501,271

$11.274180

to
$11.961135
$5,816,954
0.50
%
to
1.50%
4.99
%
to
5.00%
6.14
 %
to
7.21%
 
2015
616,883

$10.621657

to
$11.156688
$6,700,487
0.50
%
to
1.50%
5.64
%
to
5.77%
(10.37
)%
to
(9.47)%
 
2014
623,021

$11.850853

to
$12.323864
$7,508,439
0.50
%
to
1.50%
—
%
to
—%
(0.60
)%
to
0.40%
 
2013
676,739

$11.922059

to
$12.274554
$8,157,536
0.50
%
to
1.50%
1.93
%
to
2.06%
17.42
 %
to
18.60%
PIMCO Global Multi-Asset Managed Allocation Portfolio
 
2017
43,195

$10.947978

to
$11.731778
$475,756
0.50
%
to
1.50%
2.11
%
to
2.18%
12.30
 %
to
13.43%
 
2016
58,554

$9.749097

to
$10.343180
$574,497
0.50
%
to
1.50%
2.03
%
to
2.49%
2.37
 %
to
3.40%
 
2015
67,135

$9.523174

to
$10.002941
$643,030
0.50
%
to
1.50%
1.18
%
to
1.91%
(1.74
)%
to
(0.76)%
 
2014
80,259

$9.692213

to
$10.079179
$781,047
0.50
%
to
1.50%
1.37
%
to
2.76%
3.01
 %
to
4.05%
 
2013
81,041

$9.408609

to
$9.686929
$764,413
0.50
%
to
1.50%
3.15
%
to
3.19%
(9.28
)%
to
(8.37)%
Jennison 20/20 Focus Fund
 
2017
191,786

$2.686226

to
$27.564086
$648,894
1.70
%
to
2.60%
—
%
to
—%
26.42
 %
to
27.56%


 
2016
195,644

$2.105864

to
$21.804014
$517,623
1.70
%
to
2.60%
—
%
to
—%
(1.37
)%
to
(0.48)%
 
2015
200,914

$2.115950

to
$22.106585
$531,845
1.70
%
to
2.60%
—
%
to
—%
3.15
 %
to
4.08%
 
2014
224,046

$2.033035

to
$21.432385
$559,117
1.70
%
to
2.60%
—
%
to
—%
3.96
 %
to
4.90%
 
2013
229,655

$1.937982

to
$20.615066
$544,906
1.70
%
to
2.60%
—
%
to
—%
26.04
 %
to
27.18%
Prudential Value Portfolio
 
2017
186,068

$1.994303

to
$24.396954
$412,283
1.70
%
to
2.45%
—
%
to
—%
13.69
 %
to
14.54%
 
2016
186,190

$1.741103

to
$21.459662
$362,942
1.70
%
to
2.45%
—
%
to
—%
8.27
 %
to
9.09%
 
2015
186,334

$1.596097

to
$19.820553
$335,942
1.70
%
to
2.45%
—
%
to
—%
(10.76
)%
to
(10.09)%
 
2014
187,205

$1.775157

to
$22.210273
$378,404
1.70
%
to
2.45%
—
%
to
—%
7.01
 %
to
7.81%
 
2013
188,064

$1.646523

to
$20.755915
$355,503
1.70
%
to
2.45%
—
%
to
—%
29.32
 %
to
30.30%
Invesco V.I. Growth and Income Fund
 
2017
1,312,973

$20.648755

to
$24.475542
$28,015,053
0.75
%
to
2.70%
1.27
%
to
1.34%
11.00
 %
to
13.18%
 
2016
1,593,294

$18.243464

to
$22.050053
$30,094,945
0.75
%
to
2.70%
0.90
%
to
0.93%
16.25
 %
to
18.54%
 
2015
1,866,585

$15.390492

to
$18.967964
$29,857,151
0.75
%
to
2.70%
2.57
%
to
2.63%
(5.89
)%
to
(4.04)%
 
2014
2,183,245

$16.037690

to
$20.155093
$36,691,354
0.75
%
to
2.70%
1.08
%
to
1.64%
7.04
 %
to
9.14%
 
2013
2,893,224

$14.694090

to
$18.782197
$44,729,272
0.75
%
to
2.75%
1.18
%
to
1.23%
30.14
 %
to
32.77%
Invesco V.I. Comstock Fund
 
2017
52,795

$25.989208

to
$30.317055
$1,525,950
1.35
%
to
2.50%
1.87
%
to
1.97%
14.67
 %
to
16.00%
 
2016
60,349

$22.663606

to
$26.135580
$1,511,336
1.35
%
to
2.50%
0.57
%
to
1.30%
14.10
 %
to
15.42%
 
2015
78,471

$19.863059

to
$22.644138
$1,702,452
1.35
%
to
2.50%
1.69
%
to
1.69%
(8.51
)%
to
(7.45)%
 
2014
90,401

$21.711063

to
$24.467663
$2,128,190
1.35
%
to
2.50%
1.02
%
to
1.11%
6.41
 %
to
7.64%
 
2013
122,895

$20.403590

to
$22.731362
$2,702,011
1.35
%
to
2.50%
1.43
%
to
1.46%
32.31
 %
to
33.84%
Invesco V.I. American Franchise Fund
 
2017
2,346,130

$18.217547

to
$20.796354
$45,202,691
0.85
%
to
2.80%
0.08
%
to
0.08%
23.83
 %
to
26.26%
 
2016
2,640,515

$14.711905

to
$16.470522
$40,794,351
0.85
%
to
2.80%
—
%
to
—%
(0.56
)%
to
1.40%
 
2015
3,275,761

$14.794375

to
$16.242854
$50,380,488
0.85
%
to
2.80%
—
%
to
—%
2.11
 %
to
4.12%
 
2014
3,982,108

$14.489106

to
$15.600423
$59,476,691
0.85
%
to
2.80%
0.04
%
to
0.04%
5.45
 %
to
7.52%
 
2013
4,468,382

$13.740793

to
$14.509057
$62,824,449
0.85
%
to
2.80%
0.38
%
to
0.45%
36.27
 %
to
38.95%
Invesco V.I. Mid Cap Growth Fund
 
2017
471,289

$15.740859

to
$17.468796
$7,784,288
0.75
%
to
2.75%
—
%
to
—%
19.17
 %
to
21.23%
 
2016
543,581

$13.208587

to
$14.409714
$7,486,452
0.75
%
to
2.75%
—
%
to
—%
(1.98
)%
to
(0.18)%
 
2015
834,993

$13.475099

to
$14.435561
$11,616,415
0.75
%
to
2.75%
—
%
to
—%
(1.54
)%
to
0.29%
 
2014
762,923

$13.685733

to
$14.394247
$10,699,017
0.75
%
to
2.75%
—
%
to
—%
5.11
 %
to
6.89%
 
2013
1,016,535

$13.020689

to
$13.466679
$13,448,655
0.75
%
to
2.75%
0.20
%
to
0.51%
33.30
 %
to
35.58%
Wells Fargo VT Index Asset Allocation Fund
 
2017
136,685

$2.361191

to
$22.754105
$343,670
1.35
%
to
2.45%
0.74
%
to
0.75%
9.53
 %
to
10.74%
 
2016
171,895

$2.132126

to
$20.773850
$375,501
1.35
%
to
2.45%
0.87
%
to
0.88%
5.06
 %
to
6.23%
 
2015
171,439

$2.007157

to
$19.772457
$360,197
1.35
%
to
2.45%
1.05
%
to
1.22%
(1.20
)%
to
(0.11)%
 
2014
306,834

$1.744947

to
$2.009342
$771,323
1.35
%
to
2.50%
1.36
%
to
1.46%
15.15
 %
to
16.48%
 
2013
392,416

$1.515427

to
$1.725118
$723,530
1.35
%
to
2.50%
1.54
%
to
1.57%
16.68
 %
to
18.03%
Wells Fargo VT International Equity Fund
 
2017
36,117

$14.872611

to
$16.216451
$562,928
1.35
%
to
2.50%
2.79
%
to
2.84%
21.27
 %
to
22.67%
 
2016
40,902

$12.263971

to
$13.219323
$522,678
1.35
%
to
2.50%
2.91
%
to
2.91%
0.74
 %
to
1.91%
 
2015
53,577

$12.173375

to
$12.971555
$672,423
1.35
%
to
2.50%
3.89
%
to
4.01%
(0.71
)%
to
0.44%
 
2014
56,241

$12.260820

to
$12.915291
$707,492
1.35
%
to
2.50%
2.50
%
to
2.61%
(7.69
)%
to
(6.62)%
 
2013
80,929

$13.282386

to
$13.831388
$1,099,723
1.35
%
to
2.50%
2.12
%
to
2.14%
16.57
 %
to
17.92%


Wells Fargo VT Small Cap Growth Fund
 
2017
316,990

$2.622931

to
$3.126305
$1,147,166
1.35
%
to
2.50%
—
%
to
—%
22.75
 %
to
24.17%
 
2016
373,672

$2.136739

to
$2.517721
$1,091,250
1.35
%
to
2.50%
—
%
to
—%
5.09
 %
to
6.30%
 
2015
506,979

$2.033313

to
$2.368461
$1,340,163
1.35
%
to
2.50%
—
%
to
—%
(5.28
)%
to
(4.18)%
 
2014
718,265

$2.146673

to
$2.471908
$1,930,732
1.35
%
to
2.50%
—
%
to
—%
(4.30
)%
to
(3.19)%
 
2013
939,461

$2.243131

to
$2.553438
$2,534,678
1.35
%
to
2.50%
—
%
to
—%
46.53
 %
to
48.22%
Wells Fargo VT Discovery Fund
 
2017
21,272

$33.198862

to
$36.385309
$704,194
1.35
%
to
2.45%
—
%
to
—%
26.01
 %
to
27.40%
 
2016
28,832

$26.058826

to
$28.875454
$750,663
1.35
%
to
2.45%
—
%
to
—%
5.04
 %
to
6.20%
 
2015
38,136

$24.537066

to
$27.489963
$938,810
1.35
%
to
2.45%
—
%
to
—%
(3.85
)%
to
(2.78)%
 
2014
50,650

$25.239790

to
$28.590111
$1,265,555
1.35
%
to
2.45%
—
%
to
—%
(2.07
)%
to
(0.99)%
 
2013
73,497

$25.492367

to
$29.195713
$1,875,011
1.35
%
to
2.45%
0.01
%
to
0.01%
40.33
 %
to
41.88%
Wells Fargo VT Opportunity Fund
 
2017
5,297

$22.007660

to
$24.958614
$121,892
1.35
%
to
2.35%
0.67
%
to
0.67%
17.64
 %
to
18.82%
 
2016
6,844

$18.707191

to
$21.004678
$133,877
1.35
%
to
2.35%
0.04
%
to
2.02%
9.62
 %
to
10.72%
 
2015
10,027

$17.065145

to
$18.970335
$179,989
1.35
%
to
2.35%
0.13
%
to
0.13%
(5.34
)%
to
(4.38)%
 
2014
14,061

$18.027148

to
$19.840186
$270,025
1.35
%
to
2.35%
0.06
%
to
0.09%
7.86
 %
to
8.94%
 
2013
23,226

$16.713448

to
$18.211399
$410,366
1.35
%
to
2.35%
0.20
%
to
0.20%
27.65
 %
to
28.93%
HIMCO VIT Index Fund
 
2017
1,189,365

$23.511254

to
$31.769789
$31,603,235
0.50
%
to
1.50%
1.71
%
to
1.77%
19.33
 %
to
20.52%
 
2016
1,597,103

$19.703335

to
$26.757917
$35,156,037
0.30
%
to
1.50%
—
%
to
2.06%
9.68
 %
to
11.00%
 
2015
1,846,002

$17.964414

to
$24.105494
$36,738,587
0.30
%
to
1.50%
—
%
to
0.34%
(0.68
)%
to
0.52%
 
2014
1,816,005

$18.087087

to
$23.980581
$36,158,079
0.30
%
to
1.50%
—
%
to
—%
4.55
 %
to
5.04%
HIMCO VIT Portfolio Diversifier Fund
 
2017
33,423,026

$6.615585

to
$7.159054
$228,906,375
0.30
%
to
1.50%
1.03
%
to
1.05%
(4.80
)%
to
(3.65)%
 
2016
35,328,286

$6.949282

to
$7.430450
$252,409,874
0.30
%
to
1.50%
—
%
to
—%
(5.97
)%
to
(4.84)%
 
2015
36,718,418

$7.390702

to
$7.808156
$277,368,975
0.30
%
to
1.50%
0.86
%
to
0.91%
(3.35
)%
to
(2.18)%
 
2014
39,550,929

$7.646781

to
$7.982319
$307,580,794
0.30
%
to
1.50%
0.16
%
to
0.16%
(1.71
)%
to
(1.21)%
HIMCO VIT American Funds Asset Allocation Fund+
 
2017
—

$21.324743

to
$24.493822
$—
0.30
%
to
2.75%
1.37
%
to
1.39%
11.50
 %
to
13.95%
 
2016
1,791,226

$19.124912

to
$21.494786
$28,527,909
0.30
%
to
2.75%
2.24
%
to
2.51%
6.15
 %
to
8.78%
 
2015
2,191,971

$18.016593

to
$19.759147
$32,167,801
0.30
%
to
2.75%
1.35
%
to
1.44%
(1.63
)%
to
0.81%
 
2014
2,767,988

$18.314514

to
$19.599713
$40,602,132
0.30
%
to
2.75%
—
%
to
—%
0.74
 %
to
1.76%
HIMCO VIT American Funds Blue Chip Income and Growth Fund+
 
2017
—

$25.085495

to
$29.235710
$—
0.30
%
to
2.70%
—
%
to
2.95%
7.48
 %
to
9.79%
 
2016
1,713,301

$23.339640

to
$26.627915
$31,653,578
0.30
%
to
2.70%
1.64
%
to
2.28%
15.31
 %
to
18.11%
 
2015
2,009,367

$20.241470

to
$22.545865
$31,383,653
0.30
%
to
2.70%
2.96
%
to
3.26%
(5.88
)%
to
(3.59)%
 
2014
2,407,238

$21.505458

to
$23.385569
$39,271,817
0.30
%
to
2.70%
—
%
to
—%
4.60
 %
to
5.67%
HIMCO VIT American Funds Bond Fund+
 
2017
—

$11.650132

to
$13.256709
$—
0.30
%
to
2.75%
0.13
%
to
2.77%
0.78
 %
to
3.00%
 
2016
9,981,046

$11.559895

to
$12.871090
$109,812,557
0.30
%
to
2.75%
3.41
%
to
4.56%
(0.13
)%
to
2.35%
 
2015
11,201,371

$11.574821

to
$12.575800
$122,013,727
0.30
%
to
2.75%
1.13
%
to
1.79%
(2.77
)%
to
(0.36)%
 
2014
13,947,816

$11.904495

to
$12.620909
$154,400,485
0.30
%
to
2.75%
—
%
to
—%
(0.21
)%
to
0.81%
HIMCO VIT American Funds Global Bond Fund+
 
2017
—

$10.782393

to
$12.220189
$—
0.30
%
to
2.70%
—
%
to
0.40%
3.10
 %
to
5.32%
 
2016
799,400

$10.457762

to
$11.602490
$8,267,948
0.30
%
to
2.70%
—
%
to
1.64%
(0.33
)%
to
2.10%


 
2015
806,672

$10.491931

to
$11.217539
$8,360,359
0.50
%
to
2.70%
1.30
%
to
1.42%
(6.94
)%
to
(4.87)%
 
2014
1,082,486

$11.274306

to
$11.791607
$11,925,644
0.50
%
to
2.70%
—
%
to
—%
(4.94
)%
to
(3.98)%
HIMCO VIT American Funds Global Growth and Income Fund+
 
2017
—

$24.016137

to
$25.565242
$—
0.30
%
to
2.70%
1.50
%
to
1.53%
20.85
 %
to
23.45%
 
2016
1,798,553

$19.872892

to
$20.709244
$24,254,374
0.30
%
to
2.70%
1.04
%
to
1.99%
4.17
 %
to
6.70%
 
2015
2,321,936

$19.078079

to
$19.409624
$29,451,743
0.30
%
to
2.70%
3.43
%
to
3.49%
(4.26
)%
to
(1.94)%
 
2014
2,866,829

$19.792626

to
$19.927300
$37,160,327
0.30
%
to
2.70%
—
%
to
—%
(1.64
)%
to
(0.59)%
HIMCO VIT American Funds Global Growth Fund+
 
2017
—

$26.626550

to
$26.859061
$—
0.50
%
to
2.70%
0.82
%
to
0.93%
26.66
 %
to
29.16%
 
2016
844,035

$20.795815

to
$21.021891
$12,842,912
0.50
%
to
2.70%
1.89
%
to
1.97%
(2.52
)%
to
(0.35)%
 
2015
1,065,346

$20.869025

to
$21.565093
$16,151,600
0.50
%
to
2.70%
0.82
%
to
0.88%
3.76
 %
to
6.06%
 
2014
1,221,885

$19.675954

to
$20.784553
$17,528,173
0.50
%
to
2.70%
—
%
to
—%
(0.84
)%
to
0.08%
HIMCO VIT American Funds Global Small Capitalization Fund+
 
2017
—

$23.028381

to
$24.959629
$—
0.30
%
to
2.70%
0.16
%
to
0.17%
18.64
 %
to
21.19%
 
2016
2,411,032

$19.001544

to
$21.038167
$28,162,356
0.30
%
to
2.70%
0.40
%
to
0.48%
(1.04
)%
to
1.36%
 
2015
2,835,943

$18.746027

to
$21.259400
$33,145,207
0.30
%
to
2.70%
—
%
to
—%
(2.69
)%
to
(0.33)%
 
2014
3,435,995

$18.807289

to
$21.847319
$40,560,163
0.30
%
to
2.70%
—
%
to
—%
(3.20
)%
to
(2.20)%
HIMCO VIT American Funds Growth Fund+
 
2017
—

$30.498410

to
$32.610278
$—
0.30
%
to
2.75%
0.20
%
to
0.46%
22.18
 %
to
24.87%
 
2016
10,530,766

$24.960991

to
$26.115777
$176,855,943
0.30
%
to
2.75%
0.26
%
to
0.32%
6.14
 %
to
8.78%
 
2015
12,949,268

$23.516099

to
$24.008732
$201,147,748
0.30
%
to
2.75%
0.86
%
to
0.91%
3.61
 %
to
6.18%
 
2014
16,070,401

$22.611180

to
$22.696589
$236,251,625
0.30
%
to
2.75%
—
%
to
—%
2.65
 %
to
3.72%
HIMCO VIT American Funds Growth-Income Fund+
 
2017
—

$26.114175

to
$29.398575
$—
0.30
%
to
2.75%
1.70
%
to
1.72%
14.97
 %
to
17.50%
 
2016
6,206,513

$22.713550

to
$25.020549
$105,698,763
0.30
%
to
2.75%
1.58
%
to
1.71%
8.19
 %
to
10.88%
 
2015
7,596,680

$20.993642

to
$22.566404
$117,508,398
0.30
%
to
2.75%
—
%
to
1.04%
(1.55
)%
to
0.89%
 
2014
8,967,959

$21.389833

to
$22.367445
$138,122,783
0.30
%
to
2.70%
—
%
to
—%
1.66
 %
to
2.74%
HIMCO VIT American Funds International Fund+
 
2017
—

$19.320956

to
$19.450320
$—
0.30
%
to
2.75%
1.08
%
to
1.30%
25.73
 %
to
28.50%
 
2016
10,136,770

$15.136960

to
$15.366522
$102,462,408
0.30
%
to
2.75%
1.12
%
to
1.38%
0.47
 %
to
2.96%
 
2015
11,735,289

$14.701087

to
$15.294149
$116,227,332
0.30
%
to
2.75%
1.24
%
to
1.55%
(7.42
)%
to
(5.12)%
 
2014
13,408,879

$15.494184

to
$16.519328
$140,857,233
0.30
%
to
2.75%
—
%
to
—%
(6.83
)%
to
(5.87)%
HIMCO VIT American Funds New World Fund+
 
2017
—

$18.910513

to
$19.065247
$—
0.30
%
to
2.75%
0.40
%
to
0.42%
24.32
 %
to
27.05%
 
2016
1,392,488

$14.883842

to
$15.335149
$14,610,371
0.30
%
to
2.75%
—
%
to
2.10%
2.04
 %
to
4.57%
 
2015
1,657,732

$14.233036

to
$15.028271
$16,716,582
0.30
%
to
2.75%
0.95
%
to
1.07%
(6.14
)%
to
(3.81)%
 
2014
2,050,425

$14.796659

to
$16.011178
$21,600,303
0.30
%
to
2.75%
—
%
to
—%
(13.31
)%
to
(12.39)%
MFS® Core Equity Portfolio
 
2017
1,301,543

$13.226438

to
$13.959757
$17,755,749
0.95
%
to
2.80%
0.70
%
to
0.94%
21.38
 %
to
23.65%
 
2016
1,406,415

$10.896598

to
$11.290111
$15,638,928
0.95
%
to
2.80%
0.75
%
to
0.78%
8.30
 %
to
10.32%
 
2015
1,605,691

$10.061368

to
$10.233670
$16,312,061
0.95
%
to
2.80%
0.55
%
to
0.56%
0.61
 %
to
2.34%
MFS® Massachusetts Investors Growth Stock Portfolio
 
2017
2,297,901

$12.913779

to
$13.669582
$30,561,756
0.85
%
to
2.80%
0.62
%
to
0.66%
24.88
 %
to
27.34%
 
2016
2,709,890

$10.340806

to
$10.734831
$28,561,752
0.85
%
to
2.80%
0.54
%
to
0.60%
3.15
 %
to
5.18%
 
2015
3,001,257

$10.025366

to
$10.206394
$30,361,959
0.85
%
to
2.80%
0.36
%
to
0.46%
0.25
 %
to
2.06%
MFS® Research International Portfolio


 
2017
1,473,804

$11.368649

to
$12.034167
$17,198,828
0.85
%
to
2.80%
1.76
%
to
1.86%
24.75
 %
to
27.21%
 
2016
1,858,294

$9.113093

to
$9.460449
$17,227,854
0.85
%
to
2.80%
1.64
%
to
1.66%
(3.44
)%
to
(1.54)%
 
2015
2,077,447

$9.438105

to
$9.608632
$19,768,629
0.85
%
to
2.80%
1.98
%
to
2.08%
(5.62
)%
to
(3.91)%




*Represents the annualized contract expenses of the Sub-Account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the Funds and charges made directly to contract owner accounts through the redemption of units. Where the expense ratio is the same for each unit value, it is presented in both the lowest and highest columns.
**These amounts represent the dividends, excluding distributions of capital gains, received by the Sub-Account from the Fund, net of management fees assessed by the Fund’s manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the Fund in which the Sub-Account invests. Where the investment income ratio is the same for each unit value, it is presented in both the lowest and highest columns.
***Represents the total return for the period 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 in the notes on the Statements of Operations indicate the effective date of that investment option in the Account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period.
# Rounded units/unit fair values. Where only one unit value exists, it is presented in both the lowest and highest columns.

+ See Note 1 for additional information related to this Sub-Account.

7. Subsequent Events:

Management has evaluated events subsequent to December 31, 2017 through the date of issuance noting there are no subsequent events requiring adjustment or disclosure in the financial statements.



 












Hartford Life and Annuity
Insurance Company

Independent Auditors' Report

Financial Statements - Statutory-Basis
As of December 31, 2017 and 2016, and for the
Years Ended December 31, 2017, 2016 and 2015




 
 
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Page:
 
Independent Auditors' Report
 
1-2
 
 
 
 
 
 
Financial Statements - Statutory-Basis:
 
 
 
 
Admitted Assets, Liabilities and Capital and Surplus
 
3
 
 
Statements of Operations
 
4
 
 
Statements of Changes in Capital and Surplus
 
5
 
 
Statements of Cash Flows
 
6
 
 
Notes to Statutory-Basis Financial Statements
 
7-46
 
 
 
 
 




ila2017finalnoschedul_image1.gif
Deloitte & Touche LLP
185 Asylum St.
Hartford, CT 06103
USA
Tel: 1 860 725 3000
Fax: 1 860 725 3300
www.deloitte.com
INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Hartford Life and Annuity Insurance Company Hartford, Connecticut

We have audited the accompanying statutory-basis financial statements of Hartford Life and Annuity Insurance Company (the "Company"), which comprise the statutory-basis statements of admitted assets, liabilities, and capital and surplus as of December 31, 2017 and 2016, 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, 2017, and the related notes to the statutory-basis financial statements.

Management’s Responsibility for the Statutory-Basis Financial Statements

Management is responsible for the preparation and fair presentation of these statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by the Connecticut Insurance Department. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these statutory-basis financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statutory-basis financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statutory-basis financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statutory-basis financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the statutory-basis financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statutory-basis financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

As described in Note 2 to the statutory-basis financial statements, the statutory-basis financial statements are prepared by the Company using the accounting practices prescribed or permitted by the Connecticut Insurance Department, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Connecticut Insurance Department.

The effects on the statutory-basis financial statements of the variances between the statutory-basis of accounting described in Note 2 to the statutory-basis financial statements and accounting principles generally accepted in the



United States of America, although not reasonably determinable, are presumed to be material.

Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America paragraph, the statutory- basis financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2017 and 2016, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2017.

Opinion on Statutory Basis of Accounting

In our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in accordance with the accounting practices prescribed or permitted by the Connecticut Insurance Department as described in Note 2 to the statutory-basis financial statements.


ila2017finalnoschedul_image2.gif

April 10, 2018




HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS
(STATUTORY BASIS)
 
As of December 31,
 
 
 
 
 
2017
 
2016
Admitted assets
 
 
 
Bonds
$
3,696,842,335

 
$
4,689,164,141

Common and preferred stocks
73,838,948

 
45,379,137

Mortgage loans on real estate
464,673,234

 
488,300,660

Contract loans
106,560,855

 
112,280,295

Cash, cash equivalents and short-term investments
547,296,441

 
698,597,125

Derivatives
143,250,641

 
336,978,875

Other invested assets
192,424,442

 
70,093,932

Total cash and invested assets
5,224,886,896

 
6,440,794,165

 
 
 
 
Investment income due and accrued
220,854,519

 
209,085,493

Amounts recoverable for reinsurance
51,967,527

 
54,916,714

Federal income tax recoverable
197,125,732

 
38,825,967

Net deferred tax asset
130,256,000

 
106,306,495

Receivables from parent, subsidiaries and affiliates
—

 
199,732

Other assets
35,993,975

 
60,896,436

Separate Account assets
30,517,487,239

 
29,882,167,087

Total admitted assets
$
36,378,571,888

 
$
36,793,192,089

 
 
 
 
Liabilities
 
 
 
Aggregate reserves for future benefits
$
3,461,094,910

 
$
3,623,418,710

Liability for deposit-type contracts
513,032,575

 
746,581,792

Policy and contract claim liabilities
35,181,233

 
21,113,055

Asset valuation reserve
34,894,589

 
36,012,232

Interest maintenance reserve
20,387,011

 
19,203,402

Payables to parent, subsidiaries and affiliates
13,126,682

 
5,659,200

Accrued expense allowances and amounts
due from Separate Accounts
(89,645,622
)
 
(118,933,449
)
Collateral on derivatives
253,682,064

 
294,569,146

Other liabilities
480,359,519

 
369,642,567

Separate Account liabilities
30,517,487,239

 
29,882,167,087

Total liabilities
35,239,600,200

 
34,879,433,742

 
 
 
 
Capital and surplus
 
 
 
Common stock - par value $1,250 per share, 3,000 shares authorized,
2,000 shares issued and outstanding
2,500,000

 
2,500,000

Aggregate write-ins for other than special surplus funds
197,246,618

 
222,837,141

Gross paid-in and contributed surplus
604,729,448

 
603,493,466

Unassigned surplus
334,495,622

 
1,084,927,740

Total capital and surplus
1,138,971,688

 
1,913,758,347

 
 
 
 
Total liabilities and capital and surplus
$
36,378,571,888

 
$
36,793,192,089


See notes to financial statements.

3


HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY-BASIS)
 
For the years ended December 31,
 
 
 
 
 
 
 
2017
 
2016
 
2015
Revenues
 
 
 
 
 
Premiums and annuity considerations
$
229,944,396

 
$
283,347,850

 
$
313,111,457

Net investment income
190,038,803

 
205,285,053

 
237,932,132

Commissions and expense allowances on reinsurance ceded
50,225,342

 
53,203,614

 
60,644,503

Reserve adjustments on reinsurance ceded
(417,797,985
)
 
(376,823,017
)
 
(228,846,619
)
Fee income
644,400,420

 
665,228,513

 
623,264,983

Other revenues
42,903,753

 
41,305,613

 
(4,452,004
)
Total revenues
739,714,729

 
871,547,626

 
1,001,654,452

 
 
 
 
 
 
 
 
 
 
 
 
Benefits and expenses
 
 
 
 
 
Death and annuity benefits
289,643,427

 
260,507,275

 
418,149,979

Disability and other benefits
2,827,546

 
3,054,035

 
3,042,392

Surrenders and other fund withdrawals
3,751,789,440

 
4,125,077,593

 
5,551,496,373

Commissions and expense allowances
178,558,400

 
181,760,177

 
226,296,463

Decrease in aggregate reserves for life and accident and health policies
(162,421,037
)
 
(81,399,844
)
 
(166,876,864
)
General insurance expenses
123,184,418

 
89,020,118

 
79,333,619

Net transfers from Separate Accounts
(3,630,136,263
)
 
(3,953,787,204
)
 
(5,209,213,386
)
Modified coinsurance adjustment on reinsurance assumed
(116,528,553
)
 
(118,556,247
)
 
(142,665,330
)
Other expenses
32,540,135

 
39,303,474

 
(197,464,468
)
Total benefits and expenses
469,457,513

 
544,979,377

 
562,098,778

 
 
 
 
 
 
Net gain from operations before federal income tax (benefit) expense
270,257,216

 
326,568,249

 
439,555,674

Federal income tax (benefit) expense
(49,931,703
)
 
(21,186,059
)
 
26,748,125

Net gain from operations
320,188,919

 
347,754,308

 
412,807,549

 
 
 
 
 
 
Net realized capital losses, after tax
(149,376,830
)
 
(201,608,212
)
 
(331,893,122
)
Net income
$
170,812,089

 
$
146,146,096

 
$
80,914,427














See notes to financial statements.

4


HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY-BASIS)
 
For the years ended December 31,
 
 
 
 
 
 
 
2017
 
2016
 
2015
 
 
 
 
 
 
Common stock - Par value $1,250 per share, 3,000 shares
authorized, 2,000 shares issued and outstanding
 
 
 
 
 
Balance, beginning and end of year
$
2,500,000

 
$
2,500,000

 
$
2,500,000

 
 
 
 
 
 
Gross paid-in and contributed surplus
 
 
 
 
 
Balance, beginning of year
603,493,466

 
604,455,820

 
1,605,527,920

Capital paid-in (return)
1,235,982

 
(962,354
)
 
(1,001,072,100
)
Balance, end of year
604,729,448

 
603,493,466

 
604,455,820

 
 
 
 
 
 
Aggregate write-ins for other than special surplus funds
 
 
 
 
 
Balance, beginning of year
222,837,141

 
252,083,454

 
315,634,232

Amortization and decreases of gain on inforce reinsurance
(25,590,523
)
 
(29,246,313
)
 
(63,550,778
)
Balance, end of year
197,246,618

 
222,837,141

 
252,083,454

 
 
 
 
 
 
Unassigned funds
 
 
 
 
 
Balance, beginning of year
1,084,927,740

 
1,766,242,402

 
1,485,234,878

 
 
 
 
 
 
Net income
170,812,089

 
146,146,096

 
80,914,427

Change in net unrealized capital (losses) gains on investments, net of tax
(109,722,808
)
 
39,967,504

 
102,292,375

Change in net unrealized foreign exchange capital (losses) gains
(14,980,533
)
 
11,711,836

 
1,376,191

Change in net deferred income tax
(219,472,793
)
 
(80,238,643
)
 
122,153,376

Change in asset valuation reserve
1,117,643

 
21,541,042

 
4,838,272

Change in nonadmitted assets
421,814,284

 
(70,442,497
)
 
(30,567,117
)
Dividends to stockholder
(1,000,000,000
)
 
(750,000,000
)
 
—

Balance, end of year
334,495,622

 
1,084,927,740

 
1,766,242,402

 
 
 
 
 
 
Capital and surplus
 
 
 
 
 
Balance, end of year
$
1,138,971,688

 
$
1,913,758,347

 
$
2,625,281,676














See notes to financial statements.

5


HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY-BASIS)
 
For the years ended December 31,
 
 
 
 
 
 
 
2017
 
2016
 
2015
Operating activities
 
 
 
 
 
Premiums and annuity considerations
$
231,198,846

 
$
283,021,022

 
$
310,103,532

Net investment income
$
199,571,411

 
$
216,241,483

 
$
250,518,416

Reserve adjustments on reinsurance
(417,797,985
)
 
(376,823,017
)
 
(228,846,619
)
Miscellaneous income
704,599,200

 
723,713,529

 
714,984,650

Total income
717,571,472

 
846,153,017

 
1,046,759,979

 
 
 
 
 
 
Benefits paid
4,300,016,692

 
4,581,667,641

 
5,979,381,730

Federal income tax (recoveries) payments
(59,115,506
)
 
(362,056,372
)
 
90,526,623

Net transfers from Separate Accounts
(3,659,424,090
)
 
(4,011,134,849
)
 
(5,303,728,406
)
Other expenses
226,065,484

 
184,298,098

 
165,759,716

Total benefits and expenses
807,542,580

 
392,774,518

 
931,939,663

Net cash (used for) provided by operating activities
(89,971,108
)
 
453,378,499

 
114,820,316

 
 
 
 
 
 
Investing activities
 
 
 
 
 
Proceeds from investments sold, matured or repaid
 
 
 
 
 
Bonds
2,807,162,298

 
2,121,491,466

 
2,365,347,618

Common and preferred stocks
32,840,796

 
300,600,806

 
488,448,905

Mortgage loans
85,176,014

 
74,772,178

 
82,802,818

Derivatives and other
56,804,882

 
95,809,299

 
22,098,147

Total investment proceeds
2,981,983,990

 
2,592,673,749

 
2,958,697,488

 
 
 
 
 
 
Cost of investments acquired
 
 
 
 
 
Bonds
1,819,659,091

 
1,920,657,826

 
2,038,688,138

Common and preferred stocks
55,937,647

 
11,926,941

 
451,838,635

Mortgage loans
61,365,000

 
13,280,000

 
1,829,406

Derivatives and other
251,102,849

 
168,856,082

 
228,276,612

Total investments acquired
$
2,188,064,587

 
$
2,114,720,849

 
$
2,720,632,791

Net (decrease) increase in contract loans
$
(5,719,439
)
 
$
(1,526,220
)
 
$
2,502,310

Net cash provided by investing activities
$
799,638,842

 
$
479,479,120

 
$
235,562,387

 
 
 
 
 
 
Financing and miscellaneous activities
 
 
 
 
 
(Return of) Paid-in surplus
$
—

 
$
—

 
$
(1,000,000,000
)
Dividends to stockholder
$
1,000,000,000

 
$
750,000,000

 
$
—

Other cash provided (used)
$
139,031,582

 
$
(51,161,984
)
 
$
50,633,260

Net cash used for financing and miscellaneous activities
$
(860,968,418
)
 
$
(801,161,984
)
 
$
(949,366,740
)
 
 
 
 
 
 
Net (decrease) increase in cash, cash equivalents and short-term
investments
$
(151,300,684
)
 
$
131,695,635

 
$
(598,984,037
)
Cash, cash equivalents and short-term investments, beginning of year
$
698,597,125

 
$
566,901,490

 
$
1,165,885,527

Cash, cash equivalents and short-term investments, end of year
$
547,296,441

 
$
698,597,125

 
$
566,901,490

 
 
 
 
 
 
Note: Supplemental disclosures of cash flow information for non-cash
transactions:
 
 
 
 
 
Non-cash proceeds from invested asset exchanges - bonds,
common stock and other invested assets
$
(24,411,592
)
 
$
(54,930,983
)
 
$
(83,294,060
)
Non-cash acquisitions from invested asset exchanges - bonds,
common stock and other invested assets
$
(24,411,592
)
 
$
(54,930,983
)
 
$
(83,294,060
)
Capital contribution from parent to settle intercompany balances
related to stock compensation
$
(1,235,984
)
 
$
962,354

 
$
1,072,101

Non-cash impacts of DTA adjustment not yet settled
$
(2,160,604
)
 
$
—

 
$
—

Non-cash impacts of Tax Reform - tax receivable
$
(173,530,179
)
 
$
—

 
$
—

Non-cash impacts of Tax Reform and DTA adjustment not yet
settled - deferred income tax surplus
$
(175,690,783
)
 
$
—

 
$
—



See notes to financial statements.

6
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015


1. Organization and Description of Business

Hartford Life and Annuity Insurance Company (“HLAI” or the “Company”) is a wholly-owned subsidiary of Hartford Life International Holding Company ("HLIHC"), which is a direct subsidiary of Hartford Life Insurance Company (“HLIC”). HLIC is indirectly owned by The Hartford Financial Services Group, Inc. (“The Hartford”).

On March 29, 2016, The Hartford received permission from the State of Connecticut Department of Insurance (“the Department”) to change the ownership structure of certain of its affiliates to re-align affiliates more closely with the businesses they support. As a result, effective April 1, 2016, HLAI sold its former subsidiary, HLIHC to its parent, HLIC, resulting in an immaterial realized loss. In addition, HLIC contributed its ownership interest in HLAI to HLIHC, and therefore HLIHC became HLAI's new parent company. These changes did not result in a material impact to HLAI's surplus or its results of operations.

The Company maintains 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 Department. The Department recognizes only statutory accounting practices prescribed or permitted by the State of Connecticut for determining and reporting the financial condition and results of operations of an insurance company and for determining solvency under the State of Connecticut Insurance Law. The National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual (“NAIC SAP”) has been adopted as a component of prescribed practices by the State of Connecticut.

A difference prescribed by Connecticut state law allows the Company to receive a reinsurance reserve credit for a reinsurance treaty that provides for a limited right of unilateral cancellation by the reinsurer. Even if the Company did not obtain reinsurance reserve credit for this reinsurance treaty, the Company's risk-based capital would not have triggered a regulatory event.

A reconciliation of the Company’s net income and capital and surplus between NAIC SAP and practices prescribed by the Department is shown below for the years ended December 31:
 
SSAP #
F/S Page
2017
2016
2015
Net income
 
 
 
 
 
1. HLAI state basis
 
 
$
170,812,089

$
146,146,096

$
80,914,427

2. State prescribed practices that change NAIC SAP:
 
 
 
 
 
       Less: Reinsurance reserve credit (as described above)
61
4
2,328,071

(16,229,745
)
(8,788,709
)
 
 
 
2,328,071

(16,229,745
)
(8,788,709
)
3. State permitted practices that change NAIC SAP
 
 
—

—

—

4. Net SAP (1-2-3=4)
61
4
$
168,484,018

$
162,375,841

$
89,703,136

Surplus
 
 
 
 
 
5. HLAI state basis
 
 
$
1,138,971,688

$
1,913,758,348

$
2,625,281,676

6. State prescribed practices that change NAIC SAP:
 
 
 
 
 
       Less: Reinsurance reserve credit (as described above)
61
5
122,009,617

119,681,546

135,911,291

 
 
 
122,009,617

119,681,546

135,911,291

7. State permitted practices that change NAIC SAP
 
 
—

—

—

8. NAIC SAP (5-6-7=8)
61
5
$
1,016,962,071

$
1,794,076,802

$
2,489,370,385

    

Had the revised federal corporate tax rate of 21%, which is effective January 1, 2018, been in effect on December 31, 2017, the 2017 impact to surplus would have been $148,288,611.




7
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

The Company does not follow any other prescribed or permitted statutory accounting practices that have a material effect on statutory surplus, statutory net income or risk-based capital of the Company.

The preparation of financial statements in conformity with NAIC SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The most significant estimates include those used in determining the liability for aggregate reserves for life, accident and health, and fixed and variable annuity policies; evaluation of other-than-temporary impairments ("OTTI"); 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 recorded are adequate.

Certain reclassifications have been made to prior year financial information to conform to the current year presentation. 

Accounting practices and procedures as prescribed or permitted by the Department are different in certain material respects from accounting principles generally accepted in the United States of America (“GAAP”). The more significant differences are:

1.
for statutory purposes, policy acquisition costs (commissions, underwriting and selling expenses, etc.) and sales inducements are charged to expense when incurred rather than capitalized and amortized for GAAP purposes;

2.
recognition of premium revenues, which for statutory purposes are generally recorded as collected or when due during the premium paying period of the contract and which for GAAP purposes, for universal life policies and investment products, generally only consist of charges assessed to policy account balances for cost of insurance, policy administration and surrenders. For GAAP, when policy charges received relate to coverage or services to be provided in the future, the charges are recognized as revenue on a pro-rata basis over the expected life and gross profit stream of the policy. Also, for GAAP purposes, premiums for traditional life insurance policies are recognized as revenues when they are due from policyholders;

3.
development of liabilities for future benefits, which for statutory purposes predominantly use interest rate and mortality assumptions prescribed by the National Association of Insurance Commissioners (“NAIC”), which may vary considerably from interest and mortality assumptions used under GAAP. Additionally for GAAP, reserves for guaranteed minimum death benefits (“GMDB”) are based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience, and, reserves for guaranteed withdrawal benefits are considered embedded derivatives and reported at fair value;

4.
exclusion of certain assets designated as nonadmitted assets from the Statements of Admitted Assets, Liabilities and Capital and Surplus for statutory purposes by directly charging surplus;

5.
establishment of a formula reserve for realized and unrealized losses due to default and equity risk associated with certain invested assets (Asset Valuation Reserve (“AVR”)) for statutory purposes; as well as the deferral and amortization of realized gains and losses, caused by changes in interest rates during the period the asset is held, into income over the original life to maturity of the asset sold (Interest Maintenance Reserve (“IMR”)) for statutory purposes; whereas on a GAAP basis, no such formula reserve is required and realized gains and losses are recognized in the period the asset is sold;

6.
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
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

7.
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 ("43R") (Loan-backed and Structured Securities). GAAP requires that fixed maturities and loan-backed and structured securities be classified as "held-to-maturity,” "available-for-sale" or "trading,” based on the Company's intentions with respect to the ultimate disposition of the security and its ability to affect those intentions. The Company's bonds and loan-backed securities were classified on a GAAP basis as "available-for-sale" and accordingly, these investments and common stocks were reflected at fair value with the corresponding impact included as a separate component of Stockholder’s Equity;

8.
for statutory purposes, Separate Account liabilities are calculated using prescribed actuarial methodologies, which approximate the market value of Separate Account assets, less applicable surrender charges. The Separate Account surplus generated by these reserving methods is recorded as an amount due to or from Separate Accounts on the Statements of Admitted Assets, Liabilities and Capital and Surplus, with changes reflected in the Statements of Operations. On a GAAP basis, Separate Account assets and liabilities must meet specific conditions to qualify as a Separate Account asset or liability. Amounts reported for Separate Account assets and liabilities are based upon the fair value of the underlying assets;

9.
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;

10.
deferred income taxes, which provide for statutory/tax temporary differences, are subject to limitation and are charged directly to surplus, whereas, GAAP would include GAAP/tax temporary differences recognized as a component of net income;

11.
comprehensive income and its components are not presented in the statutory-basis financial statements;

12.
for statutory purposes derivative instruments that qualify for hedging, replication, or income generation are accounted for in a manner consistent with the hedged item, cash instrument and covered asset, respectively, which is typically amortized cost. Derivative instruments held for other investment and risk management activities, which do not receive hedge accounting treatment, receive fair value accounting for statutory purposes and are recorded at fair value with corresponding changes in value reported in unrealized gains and losses within surplus. For GAAP, derivative instruments are recorded at fair value with changes in value reported in earnings, with the exception of cash flow hedges and net investment hedges of a foreign operation, which are carried at fair value with changes in value reported as a separate component of Stockholder’s Equity. In addition, statutory accounting does not record the hedge ineffectiveness on qualified hedge positions, whereas, GAAP records the hedge ineffectiveness in earnings; and

13.
embedded derivatives for statutory accounting are not bifurcated from the host contract, whereas, GAAP accounting requires the embedded derivative to be bifurcated from the host instrument, accounted for and reported separately.

Aggregate Reserves for Life and Accident and Health Policies and Contracts and Liability for Deposit-Type Contracts

Aggregate reserves for payment of future life, health and annuity benefits are computed in accordance with applicable actuarial standards. Reserves for life insurance policies are generally based on the 1941, 1958, 1960, 1980 and 2001 Commissioner's Standard Ordinary Mortality Tables and various valuation rates ranging from 2.00% to 6.00%. Accumulation and on-benefit annuity reserves are based principally on individual and group annuity tables at various rates ranging from 2.40% to 11.25% 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.


9
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Extra premiums are charged for substandard lives, in addition to the regular gross premiums for the true age. Mean reserves for traditional insurance products are determined by computing the regular mean reserve for the plan at the true age, and adding one-half (1/2) of the extra premium charge for the year. For plans with explicit mortality charges, mean reserves are based on appropriate multiples of standard rates of mortality.

As of December 31, 2017 and 2016, the Company had $177,490,344 and $4,143,023,889, respectively, of insurance in force, subject to 100% reinsurance to The Prudential Insurance Company of America (“Prudential”), 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, 2017 and 2016 totaled $1,047,651 and $13,621,544, respectively, also subject to 100% reinsurance to Prudential.

The Company has established Separate Accounts to segregate the assets and liabilities of certain life insurance, pension and annuity contracts that must be segregated from the Company's General Account assets under the terms of its contracts. The assets consist primarily of marketable securities and are reported at fair value. Premiums, benefits and expenses relating to these contracts are reported in the Statements of Operations.

An analysis of annuity actuarial reserves and deposit fund liabilities by withdrawal characteristics for General and Separate Account liabilities as of December 31, 2017 is presented below:
 
 
Separate
Separate
 
 
 
General
Accounts with
Accounts
 
% of
 
Account
Guarantees
Nonguaranteed
Total
Total
A. Subject to discretionary withdrawal
 
 
 
 
 
  1. With market value adjustment
$
15,581,705

$
—

$
—

$
15,581,705

0.05
%
  2. At book value less current surrender charge of 5% or more
10,694,581

—

—

10,694,581

0.04
%
  3. At fair value
—

—

25,194,745,201

25,194,745,201

87.70
%
  4. Total with market value adjustment or at fair value
26,276,286

—

25,194,745,201

25,221,021,487

87.79
%
  5. At book value without adjustment (minimal or no charge or adjustment)
2,042,617,542

—

—

2,042,617,542

7.11
%
B. Not subject to discretionary withdrawal
1,068,655,529

—

396,314,401

1,464,969,930

5.10
%
C. Total (gross)
3,137,549,357

—

25,591,059,602

28,728,608,959

100.00
%
D. Reinsurance ceded
62,440

—

—

62,440

 
E. Total (net)
$
3,137,486,917

$
—

$
25,591,059,602

$
28,728,546,519

 
 
 
 
 
 
 
Reconciliation of total annuity actuarial reserves and deposit fund liabilities:
 
 
 
 
 
F. Life and Accident & Health Annual Statement:
 
 
 
 
 
 1. Exhibit 5, Annuities Section, Total (net)
$
2,617,473,813

 
 
 
 
 2. Exhibit 5, Supplementary Contract Section, Total (net)
6,980,528

 
 
 
 
 3. Exhibit 7, Deposit-Type Contracts Section, Total (net)
513,032,576

 
 
 
 
 4. Subtotal
3,137,486,917

 
 
 
 
Separate Account Annual Statement:
 
 
 
 
 
 5. Exhibit 3, Annuities Section, Total (net)
25,591,059,602

 
 
 
 
 6. Exhibit 3, Supplemental Contract Section, Total (net)
—

 
 
 
 
 7. Policyholder dividend and coupon accumulations
—

 
 
 
 
 8. Policyholder premiums
—

 
 
 
 
 9. Guaranteed interest contracts
—

 
 
 
 
10. Exhibit 4, Deposit-Type Contracts Section, Total (net)
—

 
 
 
 
11. Subtotal
25,591,059,602

 
 
 
 
12. Combined total
$
28,728,546,519

 
 
 
 


10
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Investments

Investments in unaffiliated bonds, other than loan-backed and structured securities, rated in NAIC classes 1-5 are carried at amortized cost and unaffiliated bonds rated in NAIC class 6 are carried at the lower of amortized cost or fair value. Short-term investments include all investments whose maturities, at the time of acquisition, are one year or less and are stated at amortized cost. Money market mutual funds, which are included in cash equivalents, are reported at fair value. Unaffiliated common stocks are carried at fair value. Investments in stocks of 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. 43R. 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 balances, which approximates fair value.

Interest income from fixed maturities and mortgage loans on real estate is recognized when earned on the constant effective yield method based on estimated timing of cash flows. The amortization of premium and accretion of discount for fixed maturities also takes into consideration call and maturity dates that produce the lowest yield. For fixed rate securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future repayments using the retrospective method; however, if these investments are impaired, any yield adjustments are made using the prospective method. The Company has not elected under SSAP No. 43R to use the book value as of January 1, 1994 as the cost for applying the retrospective adjustment method to securities purchased prior to that date. Investment income on variable rate and interest only securities is determined using the prospective method. Prepayment fees on bonds and mortgage loans on real estate are recorded in net investment income when earned. Dividends are recorded as earned on the ex-dividend date. For partnership investments, income is earned when cash distributions of income are received. For impaired debt securities, the Company accretes the new cost basis to the estimated future cash flows over the expected remaining life of the security by prospectively adjusting the security’s yield.

Due and accrued investment income amounts over 90 days past due are nonadmitted. There was no investment income due and accrued excluded from surplus at December 31, 2017 and 2016.

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 declines 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 in accordance with SSAP No. 7 (Asset Valuation Reserve and Interest Maintenance Reserve). The AVR balances were $34,894,589 and $36,012,232 as of December 31, 2017 and 2016, 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 or adjusts the IMR when an insurer reinsures a block of its in-force liabilities. The IMR balances as of December 31, 2017 and 2016 were $20,387,011, and $19,203,402, respectively. The net capital gains (losses) captured in the IMR, net of taxes, in 2017, 2016, and 2015 were $8,523,401, $15,726,619 and $(63,512,225), respectively. The amount of income (expense) amortized from the IMR net of taxes in 2017, 2016, and 2015 included in the Company’s Statements of Operations, was $7,339,792, $6,777,899 and $(49,059,968), respectively. Realized capital gains and losses, net of taxes, not included in the IMR are reported in the Statements of Operations.


11
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

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 OTTI charge is recognized if the Company does not expect the fair value of a security to recover to its cost or amortized cost basis prior to the expected date of sale. The previous cost basis less the impairment becomes the new cost basis. The Company has a security monitoring process overseen by a committee of investment and accounting professionals that identifies securities that, due to certain characteristics, as described below, are subjected to an enhanced analysis on a quarterly basis.

Securities that are in an unrealized loss position are reviewed at least quarterly to determine if an OTTI is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether a decline in value for securities not subject to SSAP No. 43R 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 impaired securities for further OTTI on an ongoing basis.

For securities that are not subject to SSAP No. 43R, 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. 43R requires the Company to periodically update its best estimate of cash flows over the life of the security. If management determines that its best estimate of expected future cash flows discounted at the security’s effective yield prior to the impairment are less than its amortized cost, then an OTTI charge is recognized equal to the difference between the amortized cost and the Company’s best estimate of expected future cash flows discounted at the security’s effective yield prior to the impairment. The Company’s best estimate of expected future cash flows discounted at the security’s effective yield prior to the impairment becomes its new cost basis. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third-party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. As a result, actual results may differ from estimates. Projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. In addition, if the Company does not have the intent and ability to hold a security subject to the provisions of SSAP No. 43R until the recovery of value, the security is written down to fair value.

Net realized capital losses resulting from write-downs for OTTI on corporate and asset-backed bonds were $187,586, $5,362,782, and $7,826,222 for the years ended December 31, 2017, 2016 and 2015, respectively. Net realized capital losses resulting from write-downs for OTTI on equities were $1,144,086 and $5,990,918 for the years ended December 31, 2016 and 2015, and were immaterial for the year ended December 31, 2017. See additional information on OTTI in Section J of Note 3.

Mortgage loans on real estate are considered to be impaired when management estimates that, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. For mortgage loans on real estate that are determined to be impaired, a valuation allowance is established for the difference between the carrying amount and the Company’s share of the fair value of the collateral. Additionally, a loss contingency valuation allowance is established for estimated probable credit losses on certain homogenous groups of loans. Changes in valuation allowances are recorded in net unrealized capital gains and losses. Interest income on an impaired loan is accrued to the extent it is deemed collectable and the loan continues to perform under its original or restructured terms. Interest income on defaulted loans is recognized when received. As of December 31, 2017, 2016 and 2015, the Company had immaterial impaired mortgage loans on real estate with related allowances for credit losses.

The Company utilizes a variety of over-the-counter ("OTC"), transactions cleared through a central clearing house ("OTC-cleared"), and exchange-traded derivative instruments as part of its overall risk management strategy. The types of instruments may include swaps, caps, floors, forwards, futures and options to achieve 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 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), 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 (Derivatives). The Company’s derivative transactions are permitted uses of derivatives under the derivative use plans required by the Department.


12
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Derivatives used in hedging relationships are accounted for in a manner consistent with the hedged item. 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.

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 as a derivative capital gain or loss.

Derivatives held for other investment and/or risk management activities receive fair value accounting. The derivatives are carried on the balance sheet at fair value and the changes in fair value are recorded in derivative unrealized gains and losses. Periodic cash flows and accruals of income/expense are recorded as components of derivative net investment income.
                                 
3. Investments

a. Components of Net Investment Income
 
For the years ended December 31,
 
2017
2016
2015
Interest income from bonds and short-term investments
$
175,346,693

$
188,967,631

$
212,173,262

Interest income from contract loans
18,784

24,306

(860,400
)
Interest income from mortgage loans on real estate
19,696,508

22,867,735

27,636,257

Interest and dividends from other investments
4,993,025

2,463,691

9,425,680

Gross investment income
200,055,010

214,323,363

248,374,799

Less: Investment expenses
10,016,207

9,038,310

10,442,667

Net investment income
$
190,038,803

$
205,285,053

$
237,932,132


b. Components of Net Unrealized Capital Gains on Bonds and Short-Term Investments
 
As of December 31,
 
2017
2016
2015
Gross unrealized capital gains
$
209,510,215

$
173,957,790

$
189,327,113

Gross unrealized capital losses
(13,461,424
)
(38,769,844
)
(61,909,343
)
Net unrealized capital gains
196,048,791

135,187,946

127,417,770

Balance, beginning of year
135,187,946

127,417,770

319,943,475

Change in net unrealized capital gains on bonds and
 
 
 
   and short-term investments
$
60,860,845

$
7,770,176

$
(192,525,705
)


13
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

c. Components of Net Unrealized Capital Gains (Losses) on Common and Preferred Stocks
 
As of December 31,
 
2017
2016
2015
Gross unrealized capital gains
$
1,793,624

$
1,930,896

$
3,883,408

Gross unrealized capital losses
(1,118,162
)
(2,700,950
)
(23,475,228
)
Net unrealized capital gains (losses)
675,462

(770,054
)
(19,591,820
)
Balance, beginning of year
(770,054
)
(19,591,820
)
(15,015,722
)
Change in net unrealized capital gains/losses on
 
 
 
   common and preferred stocks
$
1,445,516

$
18,821,766

$
(4,576,098
)

d. Components of Net Realized Capital Losses
 
For the years ended December 31,
 
2017
2016
2015
Bonds and short-term investments
$
26,433,320

$
25,530,969

$
(5,975,818
)
Common stocks - unaffiliated
1,803,956

(49,415,502
)
(13,150,711
)
Common stocks - affiliated
—

(2,280,967
)
—

Mortgage loans on real estate
—

—

(16,111
)
Derivatives
(164,601,714
)
(70,832,408
)
(384,873,378
)
Other invested assets
1,557,619

(84,478,613
)
2,791,047

Net realized capital losses
(134,806,819
)
(181,476,521
)
(401,224,971
)
Capital loss tax expense (benefit)
6,046,610

4,405,072

(5,819,624
)
Net realized capital losses, after tax
(140,853,429
)
(185,881,593
)
(395,405,347
)
   Less: Amounts transferred to IMR
8,523,401

15,726,619

(63,512,225
)
Net realized capital losses, after tax
$
(149,376,830
)
$
(201,608,212
)
$
(331,893,122
)

The following table summarizes sales activity of unaffiliated bond, short-term investments and equity securities before tax and transfers to the IMR (without maturities, calls and impairments):
 
For the years ended December 31,
 
2017
2016
2015
Bonds and short-term investments
 
 
 
   Sale proceeds
$
2,722,996,316

$
1,761,151,435

$
2,154,309,992

   Gross realized capital gains on sales
28,234,411

35,200,706

24,373,425

   Gross realized capital losses on sales
(13,584,556
)
(14,709,927
)
(19,104,209
)
Unaffiliated common and preferred stock
 
 
 
   Sale proceeds
31,036,839

262,867,397

436,339,817

   Gross realized capital gains on sales
2,088,874

15,970,430

12,848,976

   Gross realized capital losses on sales
(284,918
)
(64,241,845
)
(20,611,631
)

Additionally, for the year ended December 31, 2017, there was $3,340,354 of  investment income generated on 42 securities as a result of prepayment penalties and acceleration fees on disposed securities with callable features.


14
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

e. Investments - Derivative Instruments

Overview

The Company utilizes a variety of OTC derivatives, including OTC-cleared transactions, and exchange-traded derivative instruments as part of its overall risk management strategy. The types of instruments may include swaps, caps, floors, forwards, futures and options to achieve one of four Company-approved objectives: to hedge risk arising from interest rate, equity market, credit spread and issuer default, price or currency exchange rate risk or volatility; to manage liquidity; to control transaction costs; or to enter into replication transactions. On the date the derivative contract is entered into, the Company designates the derivative as hedging (fair value, cash flow, or net investment in a foreign operation), 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 plans required by the Department.

Interest rate swaps, equity, and index swaps involve the periodic exchange of payments with other parties, at specified intervals, calculated using agreed upon rates or indices and notional principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value.

Credit default swaps entitle one party to receive a periodic fee in exchange for an obligation to compensate the other party should a credit event occur on the part of the referenced issuer.

Forward contracts are customized commitments that specify a rate of interest or currency exchange rate to be paid or received on an obligation beginning on a future start date and are typically settled in cash.

Financial futures are standardized commitments to either purchase or sell designated financial instruments at a future date for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities or cash, and changes in the futures’ contract values are settled daily in cash.

Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date.

Swaption contracts grant the purchaser, for a premium payment, the right to enter into an interest rate swap with the issuer on a specified future date.

Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be a periodic exchange of payments at specified intervals calculated using agreed upon rates and exchanged principal amounts.

The Company clears interest rate swap and certain credit default swap derivative transactions through central clearing houses. OTC-cleared derivatives require initial collateral at the inception of the trade in the form of cash or highly liquid collateral, such as U.S. Treasuries and government agency investments. Central clearing houses also require additional cash collateral as variation margin based on daily market value movements. In addition, OTC-cleared transactions include price alignment interest either received or paid on the variation margin, which is reflected in net investment income.


15
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Strategies

The notional value, fair value, and carrying value of derivative instruments used during the years 2017 and 2016 are disclosed in the table presented below. During the years 2017 and 2016, the Company did not transact in or hold any positions related to net investment hedges in a foreign operation or income generation transactions. The notional amounts of derivative contracts represent the basis upon which pay or receive amounts are calculated and are not reflective of credit risk. The fair value of derivative instruments are based upon widely accepted pricing valuation models which utilize independent third-party data as inputs or independent broker quotations. For the years ended December 31, 2017 and 2016, the average fair values for derivatives held for other investment and/or risk management activities were $(77,690,974) and $(3,537,318), respectively. The Company did not have any unrealized gains or losses during 2017 and 2016 representing the component of the derivative instruments gain or loss from derivatives that no longer qualify for hedge accounting.
(Amounts in thousands)
As of December 31, 2017
As of December 31, 2016
Derivative type by strategy
Notional Value
Fair Value
Carrying Value
Notional Value
Fair Value
Carrying Value
Cash flow hedges
 
 
 
 
 
 
 
Interest rate swaps
$
25,000

$
(56
)
$
—

$
60,000

$
78

$
—

 
Foreign currency swaps
16,876

(1,587
)
(1,289
)
7,490

58

302

 
Fixed payout annuity hedge
444,032

(169,535
)
—

665,795

(262,855
)
—

Replication transactions
 
 
 
 
 
 
 
Credit default swaps
83,800

2,084

1,693

43,800

407

79

Other investment and/or Risk Management activities
 
 
 
 
 
 
 
Credit default swaps
2,833

(30
)
(30
)
8,793

(84
)
(84
)
 
Credit default swaps - offsetting
10,798

—

—

191,738

(7
)
(7
)
 
Foreign currency swaps and forwards
176,033

(3,415
)
(3,415
)
151,189

8,763

8,763

 
GMWB hedging derivatives
6,810,992

56,231

56,231

7,082,191

87,414

87,414

 
Interest rate swaps - offsetting
371,110

(14,429
)
(14,429
)
392,010

(18,651
)
(18,651
)
 
Macro hedge program
5,919,909

24,331

24,331

5,505,861

155,278

155,278

Total
 
$
13,861,383

$
(106,406
)
$
63,092

$
14,108,867

$
(29,599
)
$
233,094


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. There were no gains and (losses) in unrealized gains and losses related to cash flow hedges for the years ended December 31, 2017 and 2016 that have been discontinued because it was no longer probable that the original forecasted transactions would occur by the end of the originally specified time period.

Foreign currency swaps: Foreign currency swaps are used to convert foreign currency denominated cash flows associated with certain foreign denominated fixed maturity investments and liabilities to U.S. dollars. The foreign fixed maturities and liabilities are hedged to minimize cash flow fluctuations due to changes in currency rates.

Fixed payout annuity hedge: The Company formerly assumed certain variable annuity products with a guaranteed minimum income benefit ("GMIB") and continues to reinsure certain yen denominated fixed payout annuities. The Company invests in U.S. dollar denominated assets to support the reinsurance liability. The Company entered into pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Replication Transactions

Credit default swaps: The Company periodically enters into credit default swaps as part of replication transactions. Credit risk is hedged by buying protection on a specific entity by pairing with highly rated fixed-income securities in order to reproduce the investment characteristics of otherwise permissible investments.
 

16
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Other Investment and/or Risk Management Activities

The table below presents realized capital gains and (losses) on derivative instruments used for other investment and/or risk management activities.
(Amounts in thousands)
Realized Gains (Losses)
By strategy
For the year ended December 31, 2017
For the year ended December 31, 2016
For the year ended December 31, 2015
Credit default swaps
$
(81
)
$
953

$
867

Credit default swaps - offsetting
(1,673
)
(450
)
(564
)
Foreign currency swaps and forwards
5,417

(520
)
—

GMWB hedging derivatives
(62,624
)
(19,968
)
(277,539
)
Equity index swaps, options, and futures
(311
)
57,712

3,006

Commodity options
—

—

(1,020
)
Interest rate swaps and swaptions
2,968

947

(836
)
Interest rate swaps - offsetting
286

9,548

—

Macro hedge program
(106,307
)
(96,490
)
(13,786
)
Total
$
(162,325
)
$
(48,268
)
$
(289,872
)

Credit default swaps: The Company enters into swap agreements in which the Company reduces or assumes credit exposure from an individual entity, referenced index or asset pool. In addition, the Company may enter into credit default swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value of the original swap.

Foreign currency swaps and forwards: The Company enters into foreign currency swaps and forwards to hedge the foreign currency exposures in certain of its foreign fixed maturity investments.

Guaranteed Minimum Withdrawal Benefits (“GMWB”) hedging derivatives: The Company utilizes GMWB hedging derivatives as part of an actively managed program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders due to changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rates swaps and futures, and equity swaps, options and futures, on certain indices including the S&P 500 index, EAFE index and NASDAQ index.

Equity index swaps, options, and futures: The Company enters into equity index swaps and futures to hedge equity risk of equity common stock investments. The Company also enters into equity index options to economically hedge the equity risk associated with various equity indexed products.

Commodity options: During 2015, the Company purchased put option contracts on West Texas Intermediate oil futures in order to partially offset potential losses related to certain fixed maturity securities that could arise if oil prices decline substantially. The Company has since reduced its exposure to the targeted fixed maturity securities, and therefore, these options were terminated at the end of 2015.

Interest rate swaps and swaptions: The Company enters into interest rate swaps and swaptions to manage duration between assets and liabilities. In addition, the Company may enter into interest rate swaps to terminate existing swaps in hedging relationships, thereby offsetting the changes in value in the original swap.

Macro hedge program: The Company utilizes equity options, swaps, futures, and foreign currency options to hedge against a decline in the equity markets and the resulting statutory surplus and capital impact primarily arising from GMDB and GMWB obligations. Included are equity options with financing premiums for which the premium is paid at the end of the derivative contract.


17
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Credit Risk Assumed through Credit Derivatives

The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions that would be permissible under the Company's investment policies. 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 after the occurrence of the credit event. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers and baskets, which include standard diversified portfolios of corporate and commercial mortgage-backed securities ("CMBS") issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings.

The following tables present the notional amount, fair value, carrying value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amount, fair value, and carrying value for credit derivatives in which the Company is assuming credit risk as of December 31:
As of December 31, 2017
 
 
 
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
Underlying Referenced Credit Obligation(s)
 
 
 
Credit Derivative type by derivative risk exposure
Notional Amount [2]
Fair Value
Carrying Value
Weighted Average Years to Maturity
Type
Average Credit Rating [1]
Offsetting Notional Amount [3]
Offsetting Fair Value [3]
Offsetting Carrying Value [3]
 
 
 
 
 
 
 
 
 
 
Single name credit default swaps
 
 
 
 
 
 
 
 
 
Investment grade risk exposure
$
33,800

$
901

$
690

5 year
Corporate Credit/ Foreign Gov.
A-
$
—

$
—

$
—

Basket credit default swaps [4]
 
 
 
 
 
 
 
 
 
Investment grade risk exposure
50,000

5

1,003

5 year
Corporate Credit
BBB+
—

—

—

Below investment grade
4,493

368

368

3 years
Corporate Credit
B+
4,493

(368
)
(368
)
   Investment grade risk exposure
906

(3
)
(3
)
0 year
CMBS Credit
AAA-
906

3

3

Total
$
89,199

$
1,271

$
2,058

 
 
 
$
5,399

$
(365
)
$
(365
)
As of December 31, 2016
 
 
 
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
Underlying Referenced Credit Obligation(s)
 
 
 
Credit Derivative type by derivative risk exposure
Notional Amount [2]
Fair Value
Carrying Value
Weighted Average Years to Maturity
Type
Average Credit Rating [1]
Offsetting Notional Amount [3]
Offsetting Fair Value [3]
Offsetting Carrying Value [3]
 
 
 
 
 
 
 
 
 
 
Single name credit default swaps
 
 
 
 
 
 
 
 
 
Investment grade risk exposure
$
49,600

$
279

$
294

1 year
Corporate Credit/ Foreign Gov.
A+
$
40,800

$
(264
)
$
(264
)
Basket credit default swaps [4]
 
 
 
 
 
 
 
 
 
Investment grade risk exposure
33,000

499

309

5 years
Corporate Credit
BBB+
—

—

—

Below investment grade
4,585

320

320

4 years
Corporate Credit
B
4,585

(321
)
(321
)
   Investment grade risk exposure
52,484

(255
)
(408
)
1 year
CMBS Credit
AA+
50,484

142

142

Total
$
139,669

$
843

$
515

 
 
 
$
95,869

$
(443
)
$
(443
)

[1]
The average credit ratings are based on availability and the midpoint of the applicable ratings among Moody’s, S&P, Fitch, and Morningstar. 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. These derivatives are governed by agreements, clearing house rules, and applicable law which include collateral posting requirements. 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]
Comprised of swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.

18
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015


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 primarily rated A or better, which are monitored and evaluated by the Company’s risk management team and reviewed by senior management. OTC-cleared transactions reduce risk due to their ability to require daily variation margin, monitor the Company's ability to request additional collateral in the event of a counterparty downgrade, and act as an independent valuation source.

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 million. In addition, the Company monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company also generally requires that OTC derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement which is structured by legal entity and by counterparty.

For the years ended December 31, 2017, 2016, and 2015 the Company had no losses on derivative instruments due to counterparty nonperformance.

f. Concentration of Credit Risk

The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk. As of December 31, 2017 and 2016, the Company is not exposed to any credit concentration risk of a single issuer, excluding U.S. government and certain U.S. government agencies and short-term investment pool, greater than 10% of the Company’s capital and surplus.


19
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

g. Bonds, Short-Term Investments, Common Stocks and Preferred Stocks
 
 
Gross
Gross
Estimated
Bonds, Cash Equivalents and Short-Term Investments
Statement
Unrealized
Unrealized
Fair
As of December 31, 2017
Value
Gains
Losses
Value
U.S. government and government agencies and authorities
 
 
 
    Guaranteed and sponsored - excluding asset-backed
$
327,950,036

$
41,043,850

$
(819,813
)
$
368,174,073

    Guaranteed and sponsored - asset-backed
364,393,794

6,045,146

(1,631,931
)
368,807,009

States, municipalities and political subdivisions
84,237,814

12,605,530

(98,718
)
96,744,626

International governments
93,439,858

3,569,134

(396,515
)
96,612,477

All other corporate - excluding asset-backed
2,135,965,912

136,043,736

(7,178,674
)
2,264,830,974

All other corporate - asset-backed
690,438,462

10,061,255

(3,329,942
)
697,169,775

Hybrid securities
416,460

141,344

—

557,804

Short-term investments
153,553,763

220

(5,831
)
153,548,152

Total bonds, cash equivalents and short-term investments
$
3,850,396,099

$
209,510,215

$
(13,461,424
)
$
4,046,444,890

 
 
Gross
Gross
Estimated
Common Stocks
 
Unrealized
Unrealized
Fair
As of December 31, 2017
Cost
Gains
Losses
Value
Common stocks - unaffiliated
$
70,773,518

$
1,716,938

$
(1,118,162
)
$
71,372,294

Total common stocks
$
70,773,518

$
1,716,938

$
(1,118,162
)
$
71,372,294

 
 
Gross
Gross
Estimated
Preferred Stocks
Statement
Unrealized
Unrealized
Fair
As of December 31, 2017
Value
Gains
Losses
Value
Preferred stocks - unaffiliated
$
2,466,654

$
76,686

$
—

$
2,543,340

Total preferred stocks
$
2,466,654

$
76,686

$
—

$
2,543,340

 
 
Gross
Gross
Estimated
Bonds and Short-Term Investments
Statement
Unrealized
Unrealized
Fair
As of December 31, 2016
Value
Gains
Losses
Value
U.S. government and government agencies and authorities:
 
 
 
    Guaranteed and sponsored - excluding asset-backed
$
465,080,828

$
32,198,795

$
(2,719,966
)
$
494,559,657

    Guaranteed and sponsored - asset-backed
581,469,250

9,875,118

(5,724,597
)
585,619,771

States, municipalities and political subdivisions
80,798,916

7,956,662

(201,852
)
88,553,726

International governments
70,782,078

1,339,847

(1,336,688
)
70,785,237

All other corporate - excluding asset-backed
2,709,087,278

114,015,488

(19,467,991
)
2,803,634,775

All other corporate - asset-backed
781,529,331

8,473,282

(9,317,416
)
780,685,197

Hybrid securities
416,460

98,493

—

514,953

Short-term investments
346,727,725

105

(1,334
)
346,726,496

Total bonds and short-term investments
$
5,035,891,866

$
173,957,790

$
(38,769,844
)
$
5,171,079,812

 
 
Gross
Gross
Estimated
Common Stocks
 
Unrealized
Unrealized
Fair
As of December 31, 2016
Cost
Gains
Losses
Value
Common stocks - unaffiliated
$
43,637,332

$
1,884,938

$
(2,700,950
)
$
42,821,320

Total common stocks
$
43,637,332

$
1,884,938

$
(2,700,950
)
$
42,821,320


20
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

 
 
Gross
Gross
Estimated
Preferred Stocks
Statement
Unrealized
Unrealized
Fair
As of December 31, 2016
Value
Gains
Losses
Value
Preferred stocks - unaffiliated
$
2,557,817

$
45,958

$
—

$
2,603,775

Total preferred stocks
$
2,557,817

$
45,958

$
—

$
2,603,775


The statement value and estimated fair value of bonds, cash equivalents and short-term investments at December 31, 2017 by expected maturity year are shown below. Expected maturities may differ from contractual maturities due to call or prepayment provisions. Asset-backed securities (“ABS”), 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
Maturity
Value
Fair Value
Due in one year or less
$
562,502,761

$
566,613,175

Due after one year through five years
1,262,998,519

1,289,639,723

Due after five years through ten years
973,895,960

984,613,411

Due after ten years
1,050,998,859

1,205,578,581

Total
$
3,850,396,099

$
4,046,444,890


At December 31, 2017 and 2016, securities with a statement value of $4,143,111 and $3,981,108, respectively, were on deposit with government agencies as required by law in various jurisdictions in which the Company conducts business.

h. Mortgage Loans on Real Estate

The Company had a maximum and minimum lending rate of 4.37% and 3.32% for loans during 2017 and had a maximum and minimum lending rate of 4.03% and 3.39% during 2016. During 2017 and 2016, the Company did not reduce interest rates on any outstanding mortgage loans on real estate. For loans held as of December 31, 2017 and 2016, the highest loan to value percentage of any one loan at the time of loan origination, exclusive of insured, guaranteed, purchase money mortgages or construction loans was 79% and 74%, respectively. There were no taxes, assessments or amounts advanced and not included in the mortgage loan total. As of December 31, 2017 and 2016, the Company did not hold mortgages with interest more than 180 days past due. As of December 31, 2017 and 2016, there were impaired loans with a related allowance for credit losses of $25,020 and $169,387 with no interest income recognized during the period the loans were impaired.

i. Restructured Debt in which the Company is a Creditor

The Company had recorded immaterial investments in restructured loans in years ended December 31, 2017 and 2016, and $184,551 in 2015. The realized capital losses related to these loans were immaterial in the years ended December 31, 2017 and 2016, and $914,375 in 2015.

j.
Joint Ventures, Partnerships and Limited Liability Companies

The Company has no investments in joint ventures, partnerships or limited liability companies that exceed 10% of admitted assets. OTTI recognized for the years ended December 31, 2017, December 31, 2016 and December 31, 2015 were not material. The limited partnership was impaired because its cost basis sustained a decline in value that the Company determined to be other-than-temporary. The state tax credit LLC was impaired because the Company recovered a portion of the cost of the investment through receipt of tax credits and other tax benefits and not through investment activity. The LLC OTTI was determined as the difference between the remaining expected future tax credits and other tax benefits expected to be received over the life of the investment and the carrying value of the investment.

In November 2016, the Company impaired the carrying value of its affiliated investment, Hartford Financial Service Corp (HFSC), to its current fair value, based on the length of time, the extent to which the value was less than the cost and recent returns of capital further diminishing future prospects, resulting in a realized loss of $76 million offset by an unrealized gain of the same amount.   

21
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015


k. Security Lending, Repurchase Agreements and Other Collateral Transactions

The Company enters into securities financing transactions as a way to earn income on securities loaned (securities lending) or on securities sold and repurchased (repurchase agreements). Under a securities lending program, the Company lends certain bonds within the corporate, foreign government/government agencies, and municipal sectors as well as stocks to qualifying third-party borrowers in return for collateral in the form of cash or securities. For domestic and non-domestic loaned securities, respectively, borrowers provide collateral of 102% and 105% of the fair value of the securities lent at the time of the loan. Borrowers will return the securities to the Company for cash or securities collateral at maturity dates generally of 90 days or less. Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, except in the event of default by the counterparty, and is not reflected on the Company’s financial statements. Additional collateral is obtained if the fair value of the collateral falls below100% of the fair value of the loaned securities. The agreements provide the counterparty the right to sell or re-pledge the securities loaned. If cash, rather than securities, is received as collateral, the cash is typically invested in short-term investments or bonds and is reported as Securities lending reinvested collateral assets on the Statements of Admitted Assets, Liabilities and Capital and Surplus. Income associated with securities lending transactions is reported as a component of net investment income on the Company’s Statements of Operations.

As of December 31, 2017, and 2016, the fair value of loaned securities was approximately $115,602,325 and $7,069,156, respectively, reported in Bonds. As of December 31, 2017 and 2016, the associated liability for cash collateral received was $119,613,212 and $7,369,862, respectively, reported in Other liabilities, in the accompanying Statements of Admitted Assets, Liabilities and Capital and Surplus with no stated maturity date. The Company also received $0 and $1,104,062 of securities collateral as of December 31, 2017 and 2016 respectively, which was not included in the Company's Statements of Admitted Assets, Liabilities and Capital and Surplus. As of December 31, 2017 and 2016, the securities acquired from the use of the collateral in connection with our securities lending program were short term bond investments and cash equivalents with amortized cost approximating fair value of $119,613,212 and $6,265,800, respectively. The Company did not have securities lending transactions that extend beyond one year from the reporting date.

From time to time, the Company enters into repurchase agreements to manage liquidity or to earn incremental spread income. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. A dollar roll is a type of repurchase transaction where a mortgage-backed security is sold with an agreement to repurchase substantially the same security at a specified time in the future. These transactions generally have a contractual maturity of 90 days or less. Therefore, the carrying amounts of these instruments approximate fair value.

Under repurchase agreements, the Company transfers collateral of U.S. government and government agency securities and receives cash. For the repurchase agreements, the Company obtains cash in an amount equal to at least 95% of the fair value of the securities transferred. The agreements require additional collateral to be transferred when necessary and provide the counterparty the right to sell or re-pledge the securities transferred. The cash received from the repurchase program is typically invested in short-term investments or bonds and is reported as an asset on the Company's Statements of Admitted Assets, Liabilities and Capital and Surplus. Repurchase agreements include master netting provisions that provide both counterparties the right to offset claims and apply securities held by them with respect of their obligations in the event of default. The Company accounts for the repurchase agreements as collateralized borrowings. The securities transferred under repurchase agreements are included in bonds, with the obligation to repurchase those securities recorded in other liabilities in the Statements of Admitted Assets, Liabilities and Capital and Surplus. As of December 31, 2017 and 2016, the Company had no outstanding repurchase agreements.

Reinvested proceeds from repurchase agreements and securities lending transactions consist of short-term, high quality investments and U.S. government and government agency securities. These can be sold and used to meet collateral calls in a stress scenario. In addition, the liquidity resources of most of its general account investment portfolio are available to meet any potential cash demand when securities are returned to the Company. The potential impacts of repurchase agreements, dollar repurchase agreements, or securities lending agreements on the Company’s liquidity and capital position are stress tested monthly, under The Hartford's Liquidity Risk Policy.

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, 2017 and 2016, securities pledged of $209,945,649 and $299,680,663, respectively, were included in Bonds and Cash and short-term investments, on the Statements of Admitted Assets, Liabilities and Capital and Surplus. The counterparties have the right to sell or re-pledge these securities. The Company also pledged cash collateral associated with derivative instruments with a statement value of $16,646,250 and $18,954,090, respectively, as of

22
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

December 31, 2017 and 2016, included in Other invested assets, on the Statements of Admitted Assets, Liabilities and Capital and Surplus.

As of December 31, 2017 and 2016, the Company accepted cash collateral associated with derivative instruments with a statement value of $253,682,064 and $294,569,146, respectively, which was invested and recorded in the Statements of Admitted Assets, Liabilities and Capital and Surplus in Bonds and Cash and short-term investments with a corresponding amount recorded in collateral on derivatives. The Company also accepted securities collateral as of December 31, 2017 and 2016 of $986 and $66,074,099, respectively, of which the Company has the ability to sell or repledge $0 and $55,798,989, respectively. As of December 31, 2017 and 2016, the statement value of repledged securities totaled $0 and the Company did not sell any securities. In addition, as of December 31, 2017 and 2016, noncash collateral accepted was held in separate custodial accounts and was not included in the Company’s Statements of Admitted Assets, Liabilities and Capital and Surplus.

l. Security Unrealized Loss Aging

The Company has a security monitoring process overseen by a committee of investment and accounting professionals that, on a quarterly basis, identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For further discussion regarding the Company’s OTTI policy, see Note 2. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, as well as the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believes that the prices of the securities in the sectors identified in the tables below were temporarily depressed as of December 31, 2017 and 2016.


23
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

The following table presents amortized cost or statement value, 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, 2017:
 
Less Than 12 Months
12 Months or More
Total
 
Amortized
 
Unrealized
Amortized
 
Unrealized
Amortized
 
Unrealized
 (Amounts in thousands)
Cost
Fair Value
Losses
Cost
Fair Value
Losses
Cost
Fair Value
Losses
U.S. government and government agencies & authorities:
 
 
 
 
 
 
 
 
 
  Guaranteed & sponsored - excluding asset-backed
$
90,864

$
90,189

$
(675
)
$
11,142

$
10,998

$
(144
)
$
102,006

$
101,187

$
(819
)
  Guaranteed & sponsored - asset-backed
111,536

110,811

(725
)
23,922

23,015

(907
)
135,458

133,826

(1,632
)
States, municipalities & political subdivisions
8,516

8,451

(65
)
705

671

(34
)
9,221

9,122

(99
)
International governments
25,070

24,817

(253
)
2,387

2,244

(143
)
27,457

27,061

(396
)
All other corporate - excluding asset-backed
267,115

265,419

(1,696
)
170,524

165,042

(5,482
)
437,639

430,461

(7,178
)
All other corporate - asset-backed
120,028

119,253

(775
)
81,986

79,431

(2,555
)
202,014

198,684

(3,330
)
Short-term investments
18,975

18,969

(6
)
—

—

—

18,975

18,969

(6
)
    Total fixed maturities
642,104

637,909

(4,195
)
290,666

281,401

(9,265
)
932,770

919,310

(13,460
)
Common stock-unaffiliated
505

502

(3
)
22,597

20,451

(2,146
)
23,102

20,953

(2,149
)
    Total stocks
505

502

(3
)
22,597

20,451

(2,146
)
23,102

20,953

(2,149
)
Total securities
$
642,609

$
638,411

$
(4,198
)
$
313,263

$
301,852

$
(11,411
)
$
955,872

$
940,263

$
(15,609
)
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, 2016:
 
Less Than 12 Months
12 Months or More
Total
 
Amortized
 
Unrealized
Amortized
 
Unrealized
Amortized
 
Unrealized
 (Amounts in thousands)
Cost
Fair Value
Losses
Cost
Fair Value
Losses
Cost
Fair Value
Losses
U.S. government and government agencies & authorities:
 
 
 
 
 
 
 
 
 
  Guaranteed & sponsored - excluding asset-backed
$
91,139

$
88,419

$
(2,720
)
$
—

$
—

$
—

$
91,139

$
88,419

$
(2,720
)
  Guaranteed & sponsored - asset-backed
241,611

236,429

(5,182
)
16,729

16,186

(543
)
258,340

252,615

(5,725
)
States, municipalities & political subdivisions
4,372

4,170

(202
)
—

—

—

4,372

4,170

(202
)
International governments
30,897

29,807

(1,090
)
1,721

1,474

(247
)
32,618

31,281

(1,337
)
All other corporate - excluding asset-backed
557,404

542,874

(14,530
)
75,660

70,722

(4,938
)
633,064

613,596

(19,468
)
All other corporate - asset-backed
364,182

356,112

(8,070
)
84,046

82,799

(1,247
)
448,228

438,911

(9,317
)
Short-term investments
2,852

2,851

(1
)
—

—

—

2,852

2,851

(1
)
    Total fixed maturities
1,292,457

1,260,662

(31,795
)
178,156

171,181

(6,975
)
1,470,613

1,431,843

(38,770
)
Common stock-unaffiliated
1,893

1,893

—

26,806

24,105

(2,701
)
28,699

25,998

(2,701
)
    Total stocks
1,893

1,893

—

26,806

24,105

(2,701
)
28,699

25,998

(2,701
)
Total securities
$
1,294,350

$
1,262,555

$
(31,795
)
$
204,962

$
195,286

$
(9,676
)
$
1,499,312

$
1,457,841

$
(41,471
)

As of December 31, 2017, fixed maturities, comprised of 394 securities, accounted for approximately 98% of the Company’s total unrealized loss amount. The securities were primarily related to commercial mortgage-backed securities ("CMBS"), and corporate securities concentrated in the energy, consumer non-cyclical, and utilities sectors. These sectors were depressed primarily due to an increase in interest rates and/or widening of credit spreads since the securities were purchased. As of December 31, 2017, 99% of the securities in an unrealized loss position were depressed less than 20% of amortized cost. The decrease in unrealized losses during 2017 was primarily attributable to tighter credit spreads.

Most of the securities depressed for twelve months or more primarily related to CMBS, and corporate securities concentrated in the energy, consumer non-cyclical, and utilities sectors. These sectors were primarily depressed because current market spreads are wider than spreads at the securities' respective purchase dates. Certain other corporate securities were depressed because the securities have floating rate coupons and have long-dated maturities, and current credit spreads are wider than when these securities were purchased. As of December 31, 2017, the Company does not have an intention to sell any securities in an unrealized loss position, and for loan-backed and structured securities, 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, 2017.

24
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

m. Loan-backed and Structured Securities OTTI

For the year ended December 31, 2017, the Company did not recognize losses for OTTI on loan-backed and structured securities due to the intent to sell impaired securities or due to the inability or lack of intent to retain an investment in a security for a period of time sufficient to recover the amortized cost basis.

The following table summarizes OTTI recognized during 2017 for loan-backed securities held as of December 31, 2017 recorded because the present value of estimated cash flows expected to be collected was less than the amortized cost of the securities:
1
2
3
4
5
6
7
 
 
 
Book/Adj
 
 
 
 
 
 
 
 
Carrying
 
 
 
 
 
 
 
 
Value
 
 
 
 
Date of
 
 
 
Amortized
Present Value
 
 
 
Financial
 
 
 
Cost Before
of
 
Amortized
Fair
Statement
 
 
 
Current Period
Projected
Recognized
Cost After
Value at
Where
CUSIP
OTTI
Cash Flows
OTTI
OTTI
Time of OTTI
Reported
059497
BW
6
$
471,371

$
347,269

$
124,102

$
347,269

$
459,354

3/31/2017
38379K
QF
8
59,028

56,870

2,158

56,870

58,226

6/30/2017
07388N
AX
4
163,391

115,866

47,525

115,866

69,534

9/30/2017
Total
 
 
 
 
$
173,785

 
 
 

n. Structured Notes

The following tables summarize structured notes as of December 31, 2017 and 2016:
December 31, 2017
CUSIP
Identification
Actual Cost
Fair Value
Book/Adjusted
Carrying Value
Mortgage-
Referenced
Security
(Yes/No)
039483
BB
7

$
8,385,689

$
8,862,853

$
8,347,291

No
V25125
BD
2

1,020,080

1,037,334

1,022,043

No
98417E
AR
1

3,809,405

4,088,285

3,807,618

No
785592
AD
8

2,559,011

2,746,666

2,549,722

No
3137G0
AL
3

860,674

889,982

861,405

Yes
3137G0
FT
1
874,773

900,645

875,745

Yes
3137G0
GT
0

1,130,890

1,170,581

1,130,914

Yes
Total
 
 
$
18,640,522

$
19,696,346

$
18,594,738

 


25
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

December 31, 2016
CUSIP
Identification
Actual Cost
Fair Value
Book/Adjusted
Carrying Value
Mortgage-
Referenced
Security
(Yes/No)
039483
BB
7

$
8,385,689

$
9,019,180

$
8,353,719

NO
30711X
AA
2

506,780

510,946

506,780

YES
V25125
BD
2

1,057,861

996,320

1,059,051

NO
62718Q
AA
3

10,994,565

11,057,310

10,999,435

NO
785592
AD
8

2,559,011

2,657,313

2,557,721

NO
3137G0
AL
3
1,021,208

1,048,601

1,021,646

YES
3137G0
AX
7

217,504

223,141

217,935

YES
3137G0
EW
5

502,520

523,647

502,259

YES
3137G0
FT
1

1,434,891

1,474,306

1,435,653

YES
3137G0
FW
4

2,500,000

2,622,893

2,500,000

YES
3137G0
GT
0
2,464,634

2,536,137

2,464,661

YES
3137G0
HF
9

1,250,000

1,283,020

1,250,000

YES
Total
 
 
$
32,894,663

$
33,952,814

$
32,868,860

 

o. 5* Securities

A 5* is assigned by the NAIC Securities Valuation Office (“SVO”) to certain obligations when an insurer certifies that the documentation necessary to permit a full credit analysis of a security does not exist, that the issuer or Obligator is current on all contracted interest and principal pay downs and that the insurer has the expectation of ultimate payment of all contracted payments.  The 5* securities for the Company are immaterial.

4. Fair Value Measurements

Fair value is determined based on the "exit price" notion which is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Financial instruments carried at fair value in the Company’s financial statements include certain bonds, stocks, derivatives, and Separate Account assets.

The Company's estimates of fair value for financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The Company categorizes its assets and liabilities measured at estimated fair value based on whether the significant inputs into the valuation are observable. The fair value hierarchy categorizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2, or 3)

Level 1
Unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

Level 2
Observable inputs, other than quoted prices included in Level 1, for the asset or liability, or prices for similar assets and liabilities.

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 one or more significant unobservable inputs as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the Company’s best estimate of amounts that could be realized in a current market exchange absent actual market exchanges.


26
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

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. There were no transfers between Level 1 and Level 2 for the years ended December 31, 2017 and 2016. In most cases, both observable (e.g., changes in interest rates) and unobservable (e.g., changes in risk assumptions) inputs are used in the determination of fair values that the Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. The Company’s bonds included in Level 3 are classified as such because these securities are primarily within illiquid markets and/or priced by independent brokers.
  
The following table presents assets and (liabilities) carried at fair value by hierarchy level:
As of December 31, 2017
 
(Amounts in thousands)
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
a.
Assets accounted for at fair value
 
 
 
 
 
All other corporate bonds – asset-backed
$
—

$
—

$
2,824

$
2,824

 
Common stocks - unaffiliated
71,372

—

—

71,372

 
Total bonds and stocks
71,372

—

2,824

74,196

 
Derivative assets
 
 
 
 
 
Credit derivatives
—

2,095

—

2,095

 
Interest rate derivatives
—

1,158

—

1,158

 
GMWB hedging instruments
—

53,717

43,915

97,632

 
Macro hedge program
—

—

42,366

42,366

 
Total derivative assets
—

56,970

86,281

143,251

 
Separate Account assets [1]
30,502,251

—

—

30,502,251

 
Total assets accounted for at fair value
$
30,573,623

$
56,970

$
89,105

$
30,719,698

b.
Liabilities accounted for at fair value
 
 
 
 
 
Derivative liabilities
 
 
 
 
 
Credit derivatives
$
—

$
(432
)
$
—

$
(432
)
 
Foreign exchange derivatives
—

(4,704
)
—

(4,704
)
 
Interest rate derivatives
—

(15,587
)
—

(15,587
)
 
GMWB hedging instruments
—

(17,851
)
(23,550
)
(41,401
)
 
Macro hedge program
—

—

(18,035
)
(18,035
)
 
Total liabilities accounted for at fair value
$
—

$
(38,574
)
$
(41,585
)
$
(80,159
)

[1]
Excludes approximately $15.2 million of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100 (Fair Value Measurements).


27
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

As of December 31, 2016
 
(Amounts in thousands)
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
a.
Assets accounted for at fair value
 
 
 
 
 
All other corporate bonds – asset-backed
$
—

$
—

$
6,881

$
6,881

 
Common stocks - unaffiliated
42,821

—

—

42,821

 
Total bonds and stocks
42,821

—

6,881

49,702

 
Derivative assets
 
 
 
 
 
Credit derivatives
—

1,105

—

1,105

 
Interest rate derivatives
—

2,358

—

2,358

 
Foreign exchange derivatives
—

9,066

—

9,066

 
GMWB hedging instruments
—

66,755

81,033

147,788

 
Macro hedge program
—

9,121

167,541

176,662

 
Total derivative assets
—

88,405

248,574

336,979

 
Separate Account assets [1]
29,866,541

—

—

29,866,541

 
Total assets accounted for at fair value
$
29,909,362

$
88,405

$
255,455

$
30,253,222

b.
Liabilities accounted for at fair value
 
 
 
 
 
Derivative liabilities
 
 
 
 
 
Credit derivatives
$
—

$
(1,117
)
$
—

$
(1,117
)
 
Interest rate derivatives
—

(21,009
)
—

(21,009
)
 
GMWB hedging instruments
—

(25,560
)
(34,814
)
(60,374
)
 
Macro hedge program
—

—

(21,384
)
(21,384
)
 
Total liabilities accounted for at fair value
$
—

$
(47,686
)
$
(56,198
)
$
(103,884
)

[1]
Excludes approximately $15.6 million of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100.

Valuation Techniques, Procedures and Controls

The Company determines the fair values of certain financial assets and liabilities based on quoted market prices where available and where prices represent reasonable estimates of fair value. The Company also determines fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s default spreads, 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 preceding tables.

The fair value process is monitored by the Valuation Committee, which is a cross-functional group of senior management within the Company that meets at least quarterly. The Valuation Committee is co-chaired by the Heads of Investment Operations and Investment Accounting and has representation from various investment sector professionals, accounting, operations, legal, compliance and risk management. The purpose of the committee is to oversee the pricing policy and procedures by ensuring objective and reliable valuation practices and pricing of financial instruments as well as addressing valuation issues and approving changes to valuation methodologies and pricing sources. There are also two working groups under the Valuation Committee, a Securities Fair Value Working Group (“Securities Working Group”) and a Derivatives Fair Value Working Group (“Derivatives Working Group”), which include various investment, operations, accounting and risk management professionals that meet monthly to review market data trends, pricing and trading statistics and results, and any proposed pricing methodology changes.

The Company also has an enterprise-wide Operational Risk Management function, led by the Chief Operational Risk Officer, which is responsible for establishing, maintaining and communicating the framework, principles and guidelines of the Company’s operational risk management program. This includes model risk management which provides an independent review of the suitability, characteristics and reliability of model inputs as well as an analysis of significant changes to current models.


28
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Bonds and Stocks

The fair value of bonds and stocks in an active and orderly market (e.g., not distressed or forced liquidation) are determined by management using a "waterfall" approach after considering the following pricing sources: quoted prices for identical assets or liabilities, prices from third-party pricing services, independent broker quotations, or internal matrix pricing processes. Typical inputs used by these pricing sources include, but are not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and/or estimated cash flows, prepayment speeds, and default rates. Most bonds do not trade daily. Based on the typical trading volumes and the lack of quoted market prices for bonds, third-party pricing services utilize matrix pricing to derive security prices. Matrix pricing relies on securities' relationships to other benchmark quoted securities, which trade more frequently. Pricing services utilize recently reported trades of identical or similar securities making adjustments through the reporting date based on the preceding outlined available market observable information. If there are no recently reported trades, the third-party pricing services may develop a security price using expected future cash flows based upon collateral performance and discounted at an estimated market rate. Both matrix pricing and discounted cash flow techniques develop prices by factoring in the time value for cash flows and risk, including liquidity and credit.

Prices from third-party pricing services may be 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.

The Company utilizes an internally developed matrix pricing process for private placement securities for which the Company is unable to obtain a price from a third-party pricing service. The Company's process is similar to the third-party pricing services. The Company develops credit spreads 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 credit spreads determined through this survey approach are based upon the issuer’s financial strength and term to maturity, utilizing independent public security index and trade information and adjusting for the non-public nature of the securities. Credit spreads combined with risk-free rates are applied to contractual cash flows to develop a price.

The Securities Working Group performs ongoing analyses of the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. This process involves quantitative and qualitative analyses and is overseen by investment and accounting professionals. As a part of these analyses, the Company considers trading volume, new issuance activity and other factors to determine whether the market activity is significantly different than normal activity in an active market, and if so, whether transactions may not be orderly considering the weight of available evidence. If the available evidence indicates that pricing is based upon transactions that are stale or not orderly, the Company places little, if any, weight on the transaction price and will estimate fair value utilizing an internal pricing model. 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 utilizing spreads, and when available, market indices. As a result of these analyses, 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 and approved by the Valuation Committee.

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 observable. Due to the 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 for OTC derivatives that utilize independent market data inputs, quoted market prices for exchange-traded derivatives and OTC-cleared derivatives, or independent broker quotations.

The Derivatives Working Group performs ongoing analyses of the valuations, assumptions, and methodologies used to ensure that the prices represent a reasonable estimate of the fair value. The Company performs various controls on derivative valuations which include both quantitative and qualitative analyses. Analyses are conducted by a dedicated derivative pricing team that works directly with investment sector professionals to analyze impacts of changes in the market environment and investigate variances. On a daily basis, market valuations are compared to counterparty valuations for OTC derivatives. There are monthly analyses to

29
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

identify market value changes greater than pre-defined thresholds, stale prices, missing prices and zero prices. Also on a monthly basis, a second source validation, typically to broker quotations, is performed for certain of the more complex derivatives and all new deals during the month. A model validation review is performed on any new models, which typically includes detailed documentation and validation to a second source. The model validation documentation and results of validation are presented to the Valuation Committee for approval. There is a monthly control to review changes in pricing sources to ensure that new models are not moved to production until formally approved.

The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated assets and liabilities. Therefore the realized and unrealized gains and losses on derivatives reported in Level 3 may not reflect the offsetting impact of the realized and unrealized gains and losses of the associated assets and liabilities.

Valuation Inputs for Investments

For Level 1 investments, which are comprised of exchange-traded securities and open-ended mutual funds, 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 the Company’s Level 2 and 3 debt securities, typical inputs used by pricing techniques include, but are not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and/or estimated cash flows, prepayment speeds, and default rates. 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 included in the following discussion:

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.

ABS, CDOs, CMBS and RMBS - 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. ABS and RMBS prices also include estimates of the rate of future principal prepayments 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.

Credit derivatives - Primary inputs include the swap yield curve and credit default swap curves.

Equity derivatives - Primary inputs include equity index levels.

Foreign exchange derivatives - Primary inputs include the swap yield curve, currency spot and forward rates, and cross currency basis curves.

Interest rate derivatives - Primary input is the swap yield curve.

Level 3
Most of the Company’s securities classified as Level 3 include less liquid securities such as lower quality ABS, CMBS, CDOs and RMBS primarily backed by sub-prime loans. Also included in Level 3 are securities valued based on broker prices or broker spreads, without adjustments. Primary inputs for non-broker priced investments, including structured securities, are consistent with the typical inputs used in Level 2 measurements noted above, but are Level 3 due to their less liquid markets. Additionally, certain long-dated securities are priced based on third-party pricing services, including municipal securities, foreign government/government agency securities, and bank loans. Primary inputs for these long-dated securities are consistent with the typical inputs used in the preceding noted Level 1 and Level 2 measurements, but include benchmark interest rate or credit spread assumptions that are not observable in the marketplace. Also included in Level 3 are certain derivative instruments that either have significant unobservable inputs or are valued based on broker quotations. Significant inputs for these derivative contracts primarily include the typical inputs used in the Level 1 and Level 2 measurements noted above, but also may include equity and interest rate volatility, swap yield curves beyond observable limits, and commodity price curves.

30
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015


Separate Account assets

Separate Account assets are primarily invested in mutual funds but also have investments in bonds and stocks. Separate Account investments are valued in the same manner, and using the same pricing sources and inputs, as the bonds and stocks held in the General Account of the Company.

Significant Unobservable Inputs for Level 3 Assets Measured at Fair Values

The following tables present information about significant unobservable inputs used in Level 3 assets measured at fair value. The tables exclude corporate securities for which fair values are predominantly based on broker quotations.

As of December 31, 2017 and December 31, 2016, the Company did not have any material Level 3 bonds measured at fair value that were not based on broker quotations.

(Amounts in thousands)
December 31, 2017
Free Standing Derivatives
Fair Value
Predominant Valuation Method
Significant Unobservable Input
Minimum
Maximum
Impact of Increase in Input on Fair Value [1]
GMWB hedging instruments
 
 
 
 
 
 
Equity options
$
2,739

Option model
Equity volatility
27%
30%
Increase
Equity variance swaps
(19,800)
Option model
Equity volatility
19%
19%
Increase
Customized swaps
37,426
Discounted cash flows
Equity volatility
7%
26%
Increase
Macro hedge program
 
 
 
 
 
 
Equity options [2]
30,687
Option model
Equity volatility
26%
31%
Increase

[1] The impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.
[2] Level 3 macro hedge derivatives excludes those for which the Company bases fair value on broker quotations as noted in the following discussion.

(Amounts in thousands)
December 31, 2016
Free Standing Derivatives
Fair Value
Predominant Valuation Method
Significant Unobservable Input
Minimum
Maximum
Impact of Increase in Input on Fair Value [1]
GMWB hedging instruments
 
 
 
 
 
 
Equity options
$
18,933

Option model
Equity volatility
27%
30%
Increase
Equity variance swaps
(31,017)
Option model
Equity volatility
20%
23%
Increase
Customized swaps
58,303

Discounted cash flows
Equity volatility
12%
30%
Increase
Macro hedge program
 
 
 
 
 
 
Equity options [2]
165,972

Option model
Equity volatility
17%
27%
Increase

[1] The impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.
[2] Level 3 macro hedge derivatives excludes those for which the Company bases fair value on broker quotations as noted in the following discussion.

Securities and derivatives for which the Company bases fair value on broker quotations predominately include corporate bonds and certain credit derivatives. Due to the lack of transparency in the process brokers use to develop prices for these investments, the Company does not have access to the significant unobservable inputs brokers use to price these securities and derivatives. The Company believes however, the types of inputs brokers may use would likely be similar to those used to price securities and derivatives for which inputs are available to the Company, and therefore may include, but not be limited to, loss severity rates, constant prepayment rates, constant default rates and credit spreads. Therefore, similar to non-broker priced securities and

31
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

derivatives, generally, increases in these inputs would cause fair values to decrease. For the years ended December 31, 2017 and 2016, no significant adjustments were made by the Company to broker prices received.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The tables below provides a roll-forward of financial instruments measured at fair value using significant unobservable inputs (Level 3) for the years ended December 31, 2017 and 2016:
 
 
 
 
Total Realized/
 
 
 
 
 
 
 
 
Unrealized Gains
 
 
 
 
 
Fair Value
Transfers
Transfers
(Losses) Included in:
 
 
 
Fair Value
 
as of
into
out of
Net
 
Purchases/
Sales/
 
as of
(Amounts in thousands)
Jan.1, 2017
Level 3 [2]
Level 3 [2]
Income [1]
Surplus
Increases
Decreases
Settlements
Dec. 31, 2017
Assets
 
 
 
 
 
 
 
 
 
All other corporate bonds – asset-backed
$
6,881

$
547

$
—

$
(6,578
)
$
(180
)
$
2,700

$
—

$
(546
)
$
2,824

Total bonds and stocks
6,881

547

—

(6,578
)
(180
)
2,700

—

(546
)
2,824

Derivatives
 
 
 
 
 
 
 
 
 
GMWB hedging instruments
46,219

—

—

—

(25,854
)
—

—

—

20,365

Macro hedge program
146,157

—

—

—

1,032

 
—

(122,858
)
24,331

Total derivatives [3]
192,376

—

—

—

(24,822
)
—

—

(122,858
)
44,696

Total assets
$
199,257

$
547

$
—

$
(6,578
)
$
(25,002
)
$
2,700

$
—

$
(123,404
)
$
47,520


[1]
All amounts in this column are reported in net realized capital gains (losses). All amounts are before income taxes.
[2]
Transfers in and/or (out) of Level 3 are primarily attributable to changes in the availability of market observable information and changes to the bond and stock carrying value based on the lower of cost and market requirement.
[3]Derivative instruments are reported in this table on a net basis for asset/(liability) positions.

32
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

 
 
 
 
Total Realized/
 
 
 
 
 
 
 
 
Unrealized Gains
 
 
 
 
 
Fair Value
Transfers
Transfers
(Losses) Included in:
 
 
 
Fair Value
 
as of
into
out of
Net
 
Purchases/
Sales/
 
as of
(Amounts in thousands)
Jan. 1, 2016
Level 3 [2]
Level 3 [2]
Income [1]
Surplus
Increases
Decreases
Settlements
Dec. 31, 2016
Assets
 
 
 
 
 
 
 
 
 
All other corporate bonds
$
—

$
15,000

$
—

$
(4,504
)
$
—

$
—

$
(10,500
)
$
4

$
—

All other corporate bonds – asset-backed
9

—

—

—

20

7,144

—

(292
)
6,881

Common stocks - unaffiliated
2

—

—

—

(1
)
—

(1
)
—

—

Total bonds and stocks
11

15,000

—

(4,504
)
19

7,144

(10,501
)
(288
)
6,881

Derivatives
 
 
 
 
 
 
 
 
 
Equity derivatives
—

—

—

—

(1,173
)
1,173

—

—

—

GMWB hedging instruments
84,640

—

6,022

—

(44,443
)
—

—

—

46,219

Macro hedge program
136,597

—

—

—

(28,073
)
46,455

—

(8,822
)
146,157

Total derivatives [3]
221,237

—

6,022

—

(73,689
)
47,628

—

(8,822
)
192,376

Total assets
$
221,248

$
15,000

$
6,022

$
(4,504
)
$
(73,670
)
$
54,772

$
(10,501
)
$
(9,110
)
$
199,257


[1]
All amounts in this column are reported in net realized capital gains (losses). All amounts are before income taxes.
[2]
Transfers in and/or (out) of Level 3 are primarily attributable to changes in the availability of market observable information and changes to the bond and stock carrying value based on the lower of cost and market requirement.
[3]
Derivative instruments are reported in this table on a net basis for asset/(liability) positions.

Fair Values for All Financial Instruments by Levels 1, 2 and 3

The tables below reflects the fair values and admitted values of all admitted assets and liabilities that are financial instruments excluding those accounted for under the equity method (subsidiaries, joint ventures and partnerships). The fair values are also categorized into the three-level fair value hierarchy.
(Amounts in thousands)
December 31, 2017


Type of Financial Instrument
Aggregate Fair Value
Admitted Value
(Level 1)
(Level 2)
(Level 3)
Not Practicable (Carrying Value)
Assets
 
 
 
 
 
 
Bonds - unaffiliated
$
3,892,897

$
3,696,842

$
51,592

$
3,643,186

$
198,119

$
—

Preferred stocks - unaffiliated
2,543

2,467

—

2,543

—

—

Common stocks - unaffiliated
71,372

71,372

71,372

—

—

—

Mortgage loans
474,340

464,673

—

—

474,340

—

Cash, cash equivalents and short-term investments - unaffiliated
547,291

547,296

424,597

122,694

—

—

Derivative related assets
(26,055
)
143,251

—

(112,336
)
86,281

—

Contract loans
106,561

106,561

—

—

106,561

—

Surplus debentures
16,454

13,710

—

16,454

—

—

Low-income housing tax credits
564

564

—

—

564

—

Securities lending reinvested collateral assets
119,609

119,613

—

119,609

—

—

Separate Account assets [1]
30,502,251

30,502,251

30,502,251

—

—

—

Total assets
$
35,707,827

$
35,668,600

$
31,049,812

$
3,792,150

$
865,865

$
—

Liabilities
 
 
 
 
 
 
Liability for deposit-type contracts
$
(513,033
)
$
(513,033
)
$
—

$
—

$
(513,033
)
$
—

Derivative related liabilities
(80,350
)
(80,159
)
—

(38,764
)
(41,586
)
—

Separate Account liabilities
(30,502,251
)
(30,502,251
)
(30,502,251
)
—

—

—

Total liabilities
$
(31,095,634
)
$
(31,095,443
)
$
(30,502,251
)
$
(38,764
)
$
(554,619
)
$
—


[1]
Excludes approximately $15.2 million, at December 31, 2017, of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100.

33
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Amounts in thousands)
December 31, 2016


Type of Financial Instrument
Aggregate Fair Value
Admitted Value
(Level 1)
(Level 2)
(Level 3)
Not Practicable (Carrying Value)
Assets
 
 
 
 
 
 
Bonds and short-term investments - unaffiliated
$
5,171,080

$
5,035,892

$
238,111

$
4,706,898

$
226,071

$
—

Preferred stocks - unaffiliated
2,604

2,558

—

2,604

—

—

Common stocks - unaffiliated
42,821

42,821

42,821

—

—

—

Mortgage loans
495,542

488,301

—

—

495,542

—

Derivative related assets
74,146

336,979

—

(174,427
)
248,573

—

Contract loans
112,280

112,280

—

—

112,280

—

Surplus debentures
14,357

12,846

—

14,357

—

—

Low-income housing tax credits
704

704

—

—

704

—

Securities lending reinvested collateral assets
6,266

6,266

6,266

—

—

—

Separate Account assets [1]
29,866,541

29,866,541

29,866,541

—

—

—

Total assets
$
35,786,341

$
35,905,188

$
30,153,739

$
4,549,432

$
1,083,170

$
—

Liabilities
 
 
 
 
 
 
Liability for deposit-type contracts
$
(746,582
)
$
(746,582
)
$
—

$
—

$
(746,582
)
$
—

Derivative related liabilities
(103,745
)
(103,884
)
—

(47,547
)
(56,198
)
—

Separate Account liabilities
(29,866,541
)
(29,866,541
)
(29,866,541
)
—

—

—

Total liabilities
$
(30,716,868
)
$
(30,717,007
)
$
(29,866,541
)
$
(47,547
)
$
(802,780
)
$
—


[1]
Excludes approximately $15.6 million, at December 31, 2016, of investment sales receivable net of investment purchases payable that are not subject to SSAP No. 100.

The valuation methodologies used to determine the fair values of bonds, stocks and derivatives are described in the above Fair Value Measurements section of this note.

The amortized cost of short-term investments approximates fair value.

Fair values for mortgage loans on real estate were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans.

The carrying amounts of the liability for deposit-type contracts and Separate Account liabilities approximate their fair values.

The fair values of contract loans were determined using current loan coupon rates which reflect the current rates available under the contracts. As a result, the fair values approximate the carrying value of the contract loans.

At December 31, 2017 and 2016 the Company had no investments where it was not practicable to estimate fair value.

5. Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform”).  Tax Reform establishes new tax laws that will affect 2018, including, but not limited to, (1) reduction of the U.S. federal corporate income tax rate from 35% to 21%, (2) elimination of the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized, (3) limitations on the deductibility of certain executive compensation, (4) changes to the discounting of statutory reserves for tax purposes, and (5) limitations on net operating losses (NOLs) generated after December 31, 2017. Additional information regarding the impacts of Tax Reform is disclosed throughout Note 5 below.

The Company's AMT credits of $173,530,180 have been reclassified to Federal income tax recoverable as a current income tax receivable as Tax reform allows for the refund of AMT credits over time but no later than 2022.


34
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015


A The components of the net deferred tax asset/(deferred tax liability) ("DTA"/"(DTL)") at period end and the change in those components are as follows:
1
 
 
 
2017
 
 
 
 
Ordinary
Capital
Total
 
(a)
Gross DTA
$
475,442,749

$
4,265,999

$
479,708,748

 
(b)
Statutory valuation allowance adjustments
—

—

—

 
(c)
Adjusted gross DTA
475,442,749

4,265,999

479,708,748

 
(d)
Deferred tax assets nonadmitted
315,490,484

—

315,490,484

 
(e)
Subtotal net admitted deferred tax assets
159,952,265

4,265,999

164,218,264

 
(f)
Deferred tax liabilities
28,399,486

5,562,778

33,962,264

 
(g)
Net admitted deferred tax asset/(net deferred tax liability)
$
131,552,779

$
(1,296,779
)
$
130,256,000

2
 
 
 
2017
 
 
 
 
Ordinary
Capital
Total
 
Admission Calculation Components SSAP No. 101 :
 
 
 
 
(a)
Federal income taxes paid in prior years recoverable by carrybacks
$
—

$
—

$
—

 
(b)
Adjusted gross DTA expected to be realized
131,552,779

(1,296,779
)
130,256,000

 
 
(1) DTAs expected to be realized after the balance sheet date
131,552,779

(1,296,779
)
130,256,000

 
 
(2) DTAs allowed per limitation threshold
XXX

XXX

151,307,353

 
(c)
DTAs offset against DTLs
28,399,486

5,562,778

33,962,264

 
(d)
DTAs admitted as a result of application of SSAP No. 101
$
159,952,265

$
4,265,999

$
164,218,264

3
(a)
Ratio % used to determine recovery period and threshold limitation
668
%
 
 
 
(b)
Adjusted capital and surplus used to determine 2(b) thresholds
$
1,008,715,688

 
 
4
 
 
2017
 
 
 
 
Ordinary
Capital
 
 
Impact of Tax Planning Strategies:
 
 
 
 
(a)
Determination of adjusted gross DTA and net admitted DTA,
 
 
 
 
 
by tax character as a %.
 
 
 
 
 
(1) Adjusted gross DTAs amount from Note 5A1c
$
475,442,749

$
4,265,999

 
 
 
(2) % of net admitted adjusted gross DTAs by tax character attributable
 
 
 
 
 
to the impact of tax planning strategies
0
%
0
%
 
 
 
(3) Net admitted adj. gross DTAs amount from Note 5A1e
$
159,952,265

$
4,265,999

 
 
 
(4) % of net admitted adjusted gross DTAs by tax character admitted
 
 
 
 
 
because of the impact of planning strategies
66
%
0
%
 
 
(b)
Do the tax planning strategies include the use of reinsurance?
Yes________

No___X_____

 
1
 
 
 
2016
 
 
 
 
Ordinary
Capital
Total
 
(a)
Gross DTA
$
962,373,665

$
6,847,726

$
969,221,391

 
(b)
Statutory valuation allowance adjustments
—

—

—

 
(c)
Adjusted gross DTA
962,373,665

6,847,726

969,221,391

 
(d)
Deferred tax assets nonadmitted
740,325,673

—

740,325,673

 
(e)
Subtotal net admitted deferred tax assets
222,047,992

6,847,726

228,895,718

 
(f)
Deferred tax liabilities
121,363,413

1,225,810

122,589,223

 
(g)
Net admitted deferred tax asset/(net deferred tax liability)
$
100,684,579

$
5,621,916

$
106,306,495


35
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

2
 
 
 
2016
 
 
 
 
Ordinary
Capital
Total
 
Admission Calculation Components SSAP No. 101 :
 
 
 
 
(a)
Federal income taxes paid in prior years recoverable by carrybacks
$
—

$
—

$
—

 
(b)
Adjusted gross DTA expected to be realized
100,684,579

5,621,916

106,306,495

 
 
(1) DTAs expected to be realized after the balance sheet date
100,684,579

5,621,916

106,306,495

 
 
(2) DTAs allowed per limitation threshold
XXX

XXX

271,117,778

 
(c)
DTAs offset against DTLs
121,363,413

1,225,810

122,589,223

 
(d)
DTAs admitted as a result of application of SSAP No. 101
$
222,047,992

$
6,847,726

$
228,895,718

3
(a)
Ratio % used to determine recovery period and threshold limitation
2,215
%
 
 
 
(b)
Adjusted capital and surplus used to determine 2(b) thresholds
$
1,807,451,853

 
 
4
 
 
2016
 
 
 
 
Ordinary
Capital
 
 
Impact of Tax Planning Strategies:
 
 
 
 
(a)
Determination of adjusted gross DTA and net admitted DTA,
 
 
 
 
 
by tax character as a %.
 
 
 
 
 
(1) Adjusted gross DTAs amount from Note 5A1c
$
962,373,665

$
6,847,726

 
 
 
(2) % of net admitted adjusted gross DTAs by tax character attributable
 
 
 
 
 
to the impact of tax planning strategies
0
%
0
%
 
 
 
(3) Net admitted adj. gross DTAs amount from Note 5A1e
$
222,047,992

$
6,847,726

 
 
 
(4) % of net admitted adjusted gross DTAs by tax character admitted
 
 
 
 
 
because of the impact of planning strategies
47
%
8
%
 
 
(b)
Do the tax planning strategies include the use of reinsurance?
Yes________

No___X_____

 
1
 
 
Change During 2017
 
 
 
Ordinary
Capital
Total
 
(a)
Gross DTA
$
(486,930,916
)
$
(2,581,727
)
$
(489,512,643
)
 
(b)
Statutory valuation allowance adjustments
—

—

—

 
(c)
Adjusted gross DTA
(486,930,916
)
(2,581,727
)
(489,512,643
)
 
(d)
Deferred tax assets nonadmitted
(424,835,189
)
—

(424,835,189
)
 
(e)
Subtotal net admitted deferred tax assets
(62,095,727
)
(2,581,727
)
(64,677,454
)
 
(f)
Deferred tax liabilities
(92,963,927
)
4,336,968

(88,626,959
)
 
(g)
Net admitted deferred tax asset/(net deferred tax liability)
$
30,868,200

$
(6,918,695
)
$
23,949,505

2
 
 
Change During 2017
 
 
 
Ordinary
Capital
Total
 
Admission Calculation Components SSAP No. 101 :
 
 
 
 
(a)
Federal income taxes paid in prior years recoverable by carrybacks
$
—

$
—

$
—

 
(b)
Adjusted gross DTA expected to be realized
30,868,200

(6,918,695
)
23,949,505

 
 
(1) DTAs expected to be realized after the balance sheet date
30,868,200

(6,918,695
)
23,949,505

 
 
(2) DTAs allowed per limitation threshold
XXX

XXX

(119,810,425
)
 
(c)
DTAs offset against DTLs
(92,963,927
)
4,336,968

(88,626,959
)
 
(d)
DTAs admitted as a result of application of SSAP No. 101
$
(62,095,727
)
$
(2,581,727
)
$
(64,677,454
)

36
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

3
(a)
Ratio % used to determine recovery period and threshold limitation
(1,546
)%
 
 
 
(b)
Adjusted capital and surplus used to determine 2(b) thresholds
$
(798,736,165
)
 
 
4
 
 
Change During 2017
 
 
 
 
Ordinary
Capital
 
 
Impact of Tax Planning Strategies:
 
 
 
 
(a)
Determination of adjusted gross DTA and net admitted DTA,
 
 
 
 
 
by tax character as a %.
 
 
 
 
 
(1) Adjusted gross DTAs amount from Note 5A1c
$
(486,930,916
)
$
(2,581,727
)
 
 
 
(2) % of net admitted adjusted gross DTAs by tax character attributable
 
 
 
 
 
to the impact of tax planning strategies
0
%
0
 %
 
 
 
(3) Net admitted adj. gross DTAs amount from Note 5A1e
$
(62,095,727
)
$
(2,581,727
)
 
 
 
(4) % of net admitted adjusted gross DTAs by tax character admitted
 
 
 
 
 
because of the impact of planning strategies
19
%
(8
)%
 
B.
DTLs are not recognized for the following amounts:

Not Applicable.

C.
Significant Components of Income Taxes Incurred
1.
The components of current income tax (benefit)/expense are as follows:
 
 
 
 
 
 
2017
2016
Change
 
(a)
Federal
$
(49,931,703
)
$
(21,186,059
)
$
(28,745,644
)
 
(b)
Foreign
—

—

—

 
(c)
Subtotal
(49,931,703
)
(21,186,059
)
(28,745,644
)
 
(d)
Federal income tax on net capital gains
6,046,610

4,405,072

1,641,538

 
(e)
Utilization of capital loss carryforwards
—

—

—

 
(f)
Other
—

—

—

 
(g)
Federal and foreign income taxes incurred
$
(43,885,093
)
$
(16,780,987
)
$
(27,104,106
)
2.
The main components of the period end deferred tax amounts and the change in those components are as follows:
 
 
 
 
2017
2016
Change
 
 
DTA: Ordinary
 
 
 
 
 
Policyholder reserves
$
33,714,025

$
44,234,336

$
(10,520,311
)
 
 
Deferred acquisition costs
42,379,117

70,818,973

(28,439,856
)
 
 
Compensation and benefits
2,320,355

6,372,679

(4,052,324
)
 
 
Investments
850,495

—

850,495

 
 
Net operating loss carryforward
378,696,773

640,182,855

(261,486,082
)
 
 
Tax credit carryforward
12,122,699

191,066,199

(178,943,500
)
 
 
Other
5,359,285

9,698,623

(4,339,338
)
 
 
Subtotal: DTA Ordinary
475,442,749

962,373,665

(486,930,916
)
 
 
Total adjusted gross ordinary DTA
475,442,749

962,373,665

(486,930,916
)
 
 
Nonadmitted ordinary DTA
315,490,484

740,325,673

(424,835,189
)
 
 
Admitted ordinary DTA
159,952,265

222,047,992

(62,095,727
)
 
 
DTA: Capital
 
 
 
 
 
Investments
4,265,999

6,847,726

(2,581,727
)
 
 
Subtotal: DTA Capital
4,265,999

6,847,726

(2,581,727
)
 
 
Total adjusted gross capital DTA
4,265,999

6,847,726

(2,581,727
)
 
 
Admitted capital DTA
4,265,999

6,847,726

(2,581,727
)
 
 
Total Admitted DTA
$
164,218,264

$
228,895,718

$
(64,677,454
)

37
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

 
 
DTL: Ordinary
 
 
 
 
 
Investments
$
2,812,556

$
8,896,439

$
(6,083,883
)
 
 
Deferred and uncollected premium
29,751

1,168,603

(1,138,852
)
 
 
Policyholder reserves
24,927,179

42,517,287

(17,590,108
)
 
 
Other
630,000

68,781,084

(68,151,084
)
 
 
Gross DTL ordinary
28,399,486

121,363,413

(92,963,927
)
 
 
DTL: Capital
 
 
 
 
 
Investments
5,562,778

1,225,810

4,336,968

 
 
Gross DTL capital
5,562,778

1,225,810

4,336,968

 
 
Total DTL
33,962,264

122,589,223

(88,626,959
)
 
 
Net adjusted DTA/(DTL)
$
130,256,000

$
106,306,495

$
23,949,505

 
 
Adjust for the change in deferred tax on unrealized gains/losses
 
 
4,092,863

 
 
Adjust for the stock compensation transfer
 
 
1,629,244

 
 
Adjust for the change in nonadmitted deferred tax
 
 
(424,835,189
)
 
 
AMT receivable reclass
 
 
173,530,180

 
 
Intercompany settlement of DTA
 
 
2,160,604

 
 
Adjusted change in net deferred Income Tax
 
 
$
(219,472,793
)

D.
Reconciliation of federal income tax rate to actual effective rate:

The sum of the income tax incurred and the change in the DTA/DTL is different from the result obtained by applying the statutory federal income tax rate to the pretax income. The significant items causing this difference are as follows:
 
 
% of Pre-tax
 
% of Pre-tax
 
% of Pre-tax
 
2017
income
2016
income
2015
income
 
Tax effect
$
126,926,995

Tax effect
$
129,365,110

Tax effect
$
101,842,924

Statutory tax - 35%
$
44,424,448

35.00
 %
$
45,277,788

35.00
 %
$
35,645,023

35.00
 %
Tax preferred investments
(57,083,258
)
(44.97
)%
(43,690,668
)
(33.77
)%
(87,245,687
)
(85.67
)%
Subsidiary value write down
—

0.00
 %
27,300,293

21.10
 %
—

—
 %
Interest maintenance reserve
414,264

0.33
 %
3,132,052

2.42
 %
19,337,905

18.99
 %
Amortization of inception gain
(8,956,683
)
(7.06
)%
(10,236,210
)
(7.91
)%
(21,619,703
)
(21.23
)%
IRS Audit adjustments
—

0.00
 %
38,226,226

29.54
 %
—

—
 %
VA Hedge Reclass
(42,956,592
)
(33.84
)%
6,712,342

5.19
 %
(44,333,658
)
(43.53
)%
Prior period adjustments
(59,827,603
)
(47.14
)%
—

0.00
 %
—

—
 %
Tax Reform
301,344,827

237.42
 %
—

0.00
 %
—

—
 %
Change in deferred tax on non-admitted assets
840,802

0.66
 %
—

0.00
 %
—

—
 %
Intercompany settlement of DTA
(2,160,604
)
(1.70
)%
—

0.00
 %
—

—
 %
All other
(451,900
)
(0.37
)%
(3,264,167
)
(2.52
)%
(3,008,755
)
(2.95
)%
Total statutory income tax
175,587,701

138.33
 %
63,457,656

49.05
 %
(101,224,875
)
(99.39
)%
Federal and foreign income taxes incurred
(43,885,093
)
(34.58
)%
(16,780,987
)
(12.97
)%
20,928,501

20.56
 %
Change in net deferred income taxes
219,472,794

172.91
 %
80,238,643

62.02
 %
(122,153,376
)
(119.94
)%
Total statutory income tax
$
175,587,701

138.34
 %
$
63,457,656

49.05
 %
$
(101,224,875
)
(99.39
)%

E.
Operating loss and tax credit carryforwards and protective tax deposits

1. At December 31, 2017, the Company had $1,803,317,967 of net operating loss carryforwards which expire between 2023 and 2031, $12,122,699 of foreign tax credit carryforwards which expire between 2023 and 2024, and AMT credits of $173,530,180 which will be refunded through 2022.
 
2. The amount of federal income taxes incurred in the current year and each preceding year that will be available for recoupment in the event of future net losses are:
2017
—

2016
—

2015
—



38
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

3. The aggregate amount of deposits reported as admitted assets under Section 6603 of the IRS Code was $0 as of December 31, 2017.

F.
Consolidated Federal Income Tax Return

1. The Company’s federal income tax return is consolidated within The Hartford’s consolidated federal income tax return. The consolidated federal income tax return includes the following entities:
The Hartford Financial Services Group, Inc. (Parent)
Hartford Life Private Placement, LLC
1stAgChoice, Inc.
Hartford Life, Inc.
Access CoverageCorp Technologies, Inc.
Hartford Life, LTD.
Access CoverageCorp, Inc.
Hartford Lloyd's Corporation
American Maturity Life Insurance Company
Hartford Lloyd's Insurance Company
Business Management Group, Inc.
Hartford of Texas General Agency, Inc.
Cervus Claim Solutions LLC
Hartford Residual Market, LLC
DMS R, LLC
Hartford Securities Distribution Company, Inc.
Fencourt Reinsurance Company, Ltd.
Hartford Specialty Insurance Services of Texas, LLC
First State Insurance Company
Hartford Strategic Investments LLC
Fountain Investors I LLC
Hartford Underwriters General Agency, Inc.
Fountain Investors II LLC
Hartford Underwriters Insurance Company
Fountain Investors III LLC
Hartford-Comprehensive Employee Benefit Service Co.
Fountain Investors IV LLC
Heritage Holdings, Inc.
FP R, LLC
Heritage Reinsurance Company, Ltd.
FTC Resolution Company, LLC
HIMCO Distribution Services Company
Hart Re Group, LLC
HL Investment Advisors, LLC
Hartford Accident and Indemnity Company
HLA LLC
Hartford Administrative Services Company
Horizon Management Group LLC
Hartford Casualty General Agency, Inc.
HRA Brokerage Services. Inc.
Hartford Casualty Insurance Company
Lanidex Class B, LLC (f/ka Lanidex Class B LP, LLC. name changed)
Hartford Financial Services LLC
Lanidex R, LLC
Hartford Fire General Agency, Inc.
Lattice Strategies LLC
Hartford Fire Insurance Company
Maxum Casualty Insurance Company
Hartford Funds Distributors, LLC
Maxum Indemnity Company
Hartford Funds Management Company, LLC
Maxum Specialty Services Corporation
Hartford Funds Management Group, Inc.
MPC Resolution Company LLC (a.k.a. "MPC")
Hartford Group Benefits Holding Company
New England Insurance Company
Hartford Holdings, Inc.
New England Reinsurance Corporation
Hartford Insurance Company of Illinois
New Ocean Insurance Co., Ltd.
Hartford Insurance Company of the Midwest
Northern Homelands Company
Hartford Insurance Company of the Southeast
Nutmeg Insurance Agency, Inc.
Hartford Integrated Technologies, Inc.
Nutmeg Insurance Company
Hartford International Life Reassurance Corp.
Pacific Insurance Company, Limited
Hartford Investment Management Co.
Property & Casualty Insurance Co. of Hartford
Hartford Life and Accident Insurance Company
Sentinel Insurance Company, Ltd.
Hartford Life and Annuity Insurance Company
Trumbull Flood Management, LLC
Hartford Life Insurance Company
Trumbull Insurance Company
Hartford Life International Holding Company
Twin City Fire Insurance Company

2.
Federal Income Tax Allocation

Estimated tax payments are made quarterly, at which time intercompany tax balances are settled. In the subsequent year, additional settlements are made on the unextended due date of the return and at the time that the return is filed. The method of allocation among affiliates of the Company is subject to written agreement approved by the Board of Directors and based upon separate return calculations with current credit for net losses to the extent the losses provide a benefit in the consolidated tax return.
 

39
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

6. Reinsurance

The amount of reinsurance recoverables from and payables to affiliated and unaffiliated reinsurers were $8,863,400 and $43,678,211 respectively, as of December 31, 2017 and $8,148,797 and $48,441,360 respectively, as of December 31, 2016.

The effect of reinsurance as of and for the years ended December 31 is summarized as follows:
2017
Direct
Assumed
Ceded
Net
Aggregate reserves for future benefits
$
14,686,319,652

$
974,679,315

$
(12,199,904,057
)
$
3,461,094,910

Liability for deposit-type contracts
27,322,381

485,714,693

(4,499
)
513,032,575

Policy and contract claim liabilities
170,509,249

32,270,719

(167,598,735
)
35,181,233

Premium and annuity considerations
1,118,219,251

98,793,627

(987,068,482
)
229,944,396

Death, annuity, disability and other benefits
1,049,822,086

115,831,353

(873,182,466
)
292,470,973

Surrenders and other fund withdrawals
4,016,631,491

187,693,017

(452,535,068
)
3,751,789,440

2016
Direct
Assumed
Ceded
Net
Aggregate reserves for future benefits
$
13,737,668,338

$
1,009,814,809

$
(11,124,064,437
)
$
3,623,418,710

Liability for deposit-type contracts
31,932,206

714,653,231

(3,645
)
746,581,792

Policy and contract claim liabilities
144,070,692

20,007,238

(142,964,875
)
21,113,055

Premium and annuity considerations
1,248,178,977

109,299,565

(1,074,130,692
)
283,347,850

Death, annuity, disability and other benefits
921,467,688

106,615,608

(764,521,986
)
263,561,310

Surrenders and other fund withdrawals
4,383,813,770

184,833,390

(443,569,567
)
4,125,077,593

2015
Direct
Assumed
Ceded
Net
Aggregate reserves for future benefits
$
13,096,202,774

$
1,032,533,433

$
(10,423,928,459
)
$
3,704,807,748

Liability for deposit-type contracts
37,351,852

934,859,443

(1,817
)
972,209,478

Policy and contract claim liabilities
173,742,873

19,580,979

(172,841,525
)
20,482,327

Premium and annuity considerations
1,358,118,477

108,221,449

(1,153,228,469
)
313,111,457

Death, annuity, disability and other benefits
990,762,200

267,631,533

(837,201,360
)
421,192,373

Surrenders and other fund withdrawals
5,789,852,802

186,423,521

(424,779,950
)
5,551,496,373


a. External reinsurance

The Company cedes insurance to unaffiliated insurers in order to limit its maximum losses. Such agreements do not relieve the Company from its primary liability to policyholders. The inability or unwillingness of a reinsurer to meet its financial obligations to us, including the impact of any insolvency or rehabilitation proceedings involving a reinsurer that could affect the Company's access to collateral held in trust, could have a material adverse effect on our financial condition, results of operations and liquidity. The Company reduces this risk by evaluating the financial condition of reinsurers and monitoring for possible concentrations of credit risk. As of December 31, 2017, the Company has one reinsurance-related concentration of credit risk greater than 10% of the Company’s capital and surplus. This concentration, which is actively monitored, is as follows: reserve credits totaling $12.1 billion for Prudential offset by $9.0 billion of market value of assets held in trust, for a net exposure of $3.1 billion. As of December 31, 2016, the Company had one reinsurance-related concentration of credit risk greater than 10% of the Company’s capital and surplus. The concentration, which was actively monitored, was as follows: reserve credits totaling $11.0 billion for Prudential offset by $7.6 billion of market value of assets held in trust, for a net exposure of $3.4 billion.

The Company has a reinsurance agreement under which the reinsurer has a limited right to unilaterally cancel the reinsurance for reasons other than for nonpayment of premium or other similar credits. The estimated amount of aggregate reduction in the Company’s surplus of this limited right to unilaterally cancel this reinsurance agreement by the reinsurer for which cancellation results in a net obligation of the Company to the reinsurer, and for which such obligation is not presently accrued is $122.0 million in 2017, an increase of $2.3 million from the 2016 balance of $119.7 million. The total amount of reinsurance credits taken for this agreement was $187.7 million in 2017, an increase of $3.6 million from the 2016 balance of $184.1 million.


40
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

On January 2, 2013, The Hartford completed the sale of its Individual Life insurance business to Prudential. As part of this transaction a reinsurance gain of approximately $600 million, before tax, was deferred and will be amortized over 20 years as earnings are estimated to emerge from the business reinsured. Amortization amounts, which are recorded as Commissions and expense allowances on reinsurance ceded on the Statements of Operations and as Amortization and decreases of gain on inforce reinsurance on the Statements of Changes in Capital and Surplus, totaled $25.6 million, $29.2 million and $63.6 million for 2017, 2016 and 2015, respectively.

On June 30, 2014, HLIC’s parent, HLI, completed the sale of all of the issued and outstanding equity of HLIKK, a Japan affiliate, to ORIX Life Insurance Corporation ("Buyer"), a subsidiary of ORIX Corporation, a Japanese company. Concurrent with the sale, HLIKK recaptured certain risks that had been reinsured to the Company and HLIC by terminating intercompany agreements.

Upon closing, the Buyer is responsible for all liabilities for the recaptured business. The Company continues to provide reinsurance to the Buyer for approximately $0.5 billion of fixed payout annuities, as of December 31, 2017, related to the “3Win” product formerly written by HLIKK.

Under this agreement, the Buyer continues to cede the following: in-force “3Win” annuities which bundled guaranteed minimum accumulation benefits (“GMAB”), GMIB and GMDB product features and risks. The liability for this assumed reinsurance is presented within Liability for deposit-type contracts on the Statements of Admitted Assets, Liabilities and Capital and Surplus. In connection with this reinsurance agreement, the Company collected immaterial premiums for the years ended December 31, 2017, 2016 and 2015.


7. Related Party Transactions

Transactions between the Company and its affiliates, relate principally to tax settlements, reinsurance, insurance coverages, rental and service fees, capital contributions, returns of capital and payments of dividends. Investment management fees are charged by Hartford Investment Management Company and are a component of net investment income. Substantially all general insurance expenses related to the Company, including rent and benefit plan expenses, are initially paid by the 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, 2017 and 2016, the Company reported $0 and $199,732, respectively, as receivables from and $13,126,682 and $5,659,200, respectively, as payables to parent, subsidiaries, and affiliates. The terms of the written settlement agreements require that these amounts be settled generally within 30 days.

The Company participates in an Intercompany Liquidity Agreement (the “Agreement”) that The Hartford entered into with its insurance company subsidiaries that are domiciled in the State of Connecticut. The Agreement allows for short-term advances of funds between Hartford affiliates for liquidity and other general corporate purposes. The Company had no issued and outstanding notes as of December 31, 2017 and 2016.

On October 19, 2017, The Hartford received permission from the Department to pay an extraordinary dividend of $550,000,000 from HLAI to HLIHC. HLAI paid the dividend on October 30, 2017.

On September 1, 2017, The Hartford received permission from the Department to pay an extraordinary dividend of $150,000,000 from HLAI to HLIHC. HLAI paid the dividend on September 14, 2017.

On January 5, 2017, The Hartford received permission from the Department to pay an extraordinary dividend of $300,000,000 from HLAI to HLIHC. HLAI paid the dividend on January 30, 2017.

On June 16, 2016, The Hartford received permission from the Department to pay an extraordinary dividend of $250,000,000 from HLAI to HLIHC. HLAI paid the dividend on July 15, 2016.


41
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

On January 13, 2016, The Hartford received permission from the Department to pay an extraordinary dividend of $500,000,000 from HLAI to HLIC. HLAI paid the dividend on January 29, 2016.

On June 29, 2015, The Hartford received permission from the Department to pay extraordinary dividends (as returns of capital) of $500,000,000 from HLAI to HLIC and $500,000,000 from HLIC to Hartford Life, Inc. ("HLI"). HLAI and HLIC paid these returns of capital on July 15, 2015.

On January 9, 2015, The Hartford received permission from the Department to pay extraordinary dividends (as returns of capital) of $500,000,000 from HLAI to HLIC and $500,000,000 from HLIC to HLI. HLAI and HLIC paid these returns of capital on January 30, 2015.
 
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, 8 and 11.

8. Retirement Plans, Other Postretirement Benefit Plans and Postemployment Benefits
 
The Hartford maintains The Hartford Retirement Plan for U.S. employees, a U.S. qualified defined benefit pension plan (the “Plan”), that covers substantially all U.S. employees of the Company hired prior to January 1, 2013. The Hartford also maintains non-qualified pension plans to provide retirement benefits previously accrued that are in excess of Internal Revenue Code limitations. These plans shall be collectively referred to as the “Pension Plans."

Effective December 31, 2012, The Hartford amended the Plan to freeze participation and benefit accruals. As a result, employees will not accrue further benefits under the Plan, although interest will continue to accrue to existing account balances. Participants as of December 31, 2012 will continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work. The freeze also applies to The Hartford Excess Pension Plan II, The Hartford's non-qualified excess pension benefit plan for certain highly compensated employees.

For the years ended December 31, 2017, 2016 and 2015, the Company incurred expenses related to the Pension Plans of $41,450,436, $4,740,669 and $4,778,327, respectively, related to the allocation of the net periodic benefit cost, benefit payments and funding to the Pension Plans.

On June 30, 2017, The Hartford purchased a group annuity contract to transfer approximately $1.6 billion of its outstanding pension benefit obligations related to certain U.S. retirees, terminated vested participants, and beneficiaries to a third-party. In connection with this transaction, The Hartford made a $280 million contribution to the U.S. qualified pension plan in September, 2017 in order to maintain the plan's pre-transaction funded status.

On January 2, 2018, the assets of the plan previously invested in the separate accounts of HLIC were transferred to a third party custodian.

The Hartford also provides certain health care and life insurance benefits for eligible retired employees. 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 on or after January 1, 2002. As of December 31, 2012, The Hartford’s other postretirement medical, dental and life insurance coverage plans were amended to no longer provide subsidized coverage for current employees who retire on or after January 1, 2014. The expenses allocated to the Company for other postretirement benefits were not material to the results of operations for 2017, 2016 and 2015.


42
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Substantially all U.S. employees of the Company are eligible to participate in The Hartford Investment and Savings Plan under which designated contributions may be invested in a variety of investments including up to 10% in common stock of The Hartford. The Company's contributions include a non-elective contribution of 2% of eligible compensation and a dollar-for-dollar matching contribution of up to 6% of eligible compensation contributed by the employee each pay period. The Hartford also maintains a non-qualified savings plan, The Hartford Excess Savings Plan, with the same level of matching contributions excluding the non-elective contributions with respect to employee compensation in excess of the limit that can be recognized under the tax-qualified Investment and Savings Plan. Eligible compensation includes overtime and bonuses but is limited to a total of $1,000,000 annually. The cost allocated to the Company for the years ended December 31, 2017, 2016, and 2015 was $2,333,035, $1,863,183 and $1,663,096, respectively.

The Company participates in postemployment plans sponsored by, and included in the financial statements of, the Hartford Fire Insurance Company. These plans provide for medical and salary continuation benefits for employees on long-term disability. The expenses allocated to the Company for long term disability were not material to the results of operations for 2017, 2016, and 2015.

9. Capital and Surplus and Shareholder Dividend Restrictions

Dividend Restrictions

The maximum amount of dividends which can be paid to shareholders by Connecticut domiciled insurance companies, without prior approval of the Connecticut Insurance Commissioner (the “Commissioner”), is generally restricted to the greater of 10% of surplus as of the preceding December 31st or the net gain from operations after dividends to policyholders, federal income taxes and before realized capital gains or (losses) for the previous year. In addition, if any dividend exceeds the insurer's earned surplus, it requires the prior approval of the Commissioner. Dividends are paid as determined by the Board of Directors in accordance with state statutes and regulations, and are not cumulative. Dividends paid totaled $1.0 billion in 2017, and $750 million in 2016. No dividends were paid in 2015. For returns of capital, see Note 7. With respect to dividends to its parent HLIHC, the Company’s dividend limitation under the holding company laws of Connecticut is $320,188,919 in 2018. See Note 12 Other.

Unassigned Funds

The portion of unassigned funds reduced by each item below at December 31 was as follows:
 
2017
2016
Unrealized capital losses, gross of tax
$
(228,315,536
)
$
(107,705,057
)
Nonadmitted asset values
331,131,052

752,945,336

Asset valuation reserve
34,894,589

36,012,232


10. Separate Accounts

The Company maintained Separate Account assets totaling $30,517,487,239 and $29,882,167,087 as of December 31, 2017 and 2016, respectively. The Company utilizes Separate Accounts to record and account for assets and liabilities for particular lines of business. For the current reporting year, the Company recorded assets and liabilities for individual variable annuities, variable life and variable universal life product lines in the Separate Accounts.

The Separate Account classifications are supported by state statute and are in accordance with the domiciliary state procedures for approving items within the Separate Accounts. Separate Account assets are segregated from other investments and reported at fair value. Some assets are considered legally insulated whereas others are not legally insulated from the General Account. As of December 31, 2017 and 2016, the Company’s Separate Account statement included legally insulated assets of $30,517,487,239 and $29,882,167,087, respectively.

Separate Account liabilities are determined in accordance with prescribed actuarial methodologies, which approximate the market value less applicable surrender charges. The resulting surplus is recorded in the General Account Statements of Operations as a component of Net transfers from Separate Accounts. The Company’s Separate Accounts are non-guaranteed, wherein the policyholder assumes substantially all the investment risks and rewards. Investment income (including investment gains and losses) and interest credited to policyholders on Separate Account assets are not separately reflected in the Statements of Operations.


43
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Separate Account fees, net of minimum guarantees, were $603,735,208, $620,498,300 and $710,679,585 for the years ended December 31, 2017, 2016 and 2015, respectively, and are recorded as a component of fee income on the Company’s Statements of Operations.

An analysis of the Separate Accounts as of December 31, 2017 is as follows:
 
Indexed
Nonindexed Guaranteed Less Than or Equal to 4%
Nonindexed Guaranteed More Than 4%
Nonguaranteed Separate Accounts
Total
Premium considerations or deposits for the
 
 
 
 
 
year ended December 31, 2017
$
—

$
—

$
—

$
397,893,498

$
397,893,498

Reserves at year-end:
 
 
 
 
 
For accounts with assets at:
 
 
 
 
 
    Fair value
$
—

$
—

$
—

$
30,404,420,780

$
30,404,420,780

    Amortized cost 
—

—

—

—

—

    Total reserves 
$
—

$
—

$
—

$
30,404,420,780

$
30,404,420,780

By withdrawal characteristics:
 
 
 
 
 
    Subject to discretionary withdrawal
$
—

$
—

$
—

$
—

$
—

    With market value adjustment
—

—

—

—

—

    At book value without market value adjustment
 
 
 
 
 
           and with surrender charge of 5% or more
—

—

—

—

—

    At fair value
—

—

—

30,008,106,378

30,008,106,378

    At book value without market value adjustment
 
 
 
 
 
           and with surrender charge of less than 5%
—

—

—

—

—

    Subtotal
—

—

—

30,008,106,378

30,008,106,378

    Not subject to discretionary withdrawal
—

—

—

396,314,402

396,314,402

    Total
$
—

$
—

$
—

$
30,404,420,780

$
30,404,420,780


Below is a reconciliation of net transfers from Separate Accounts as of December 31,
 
December 31, 2017
December 31, 2016
December 31, 2015
Transfer to Separate Accounts
$
397,893,498

$
428,564,804

$
493,301,666

Transfer from Separate Accounts
4,031,435,195

4,436,510,790

5,673,300,519

Net Transfer from Separate Accounts
(3,633,541,697
)
(4,007,945,986
)
(5,179,998,853
)
Internal exchanges and other Separate Account activity
3,405,434

54,158,782

(29,214,533)

Transfer from Separate Accounts on the Statements of Operations
$
(3,630,136,263
)
$
(3,953,787,204
)
$
(5,209,213,386
)

11. Commitments and Contingent Liabilities

a. Litigation

The Company is or may become involved in various legal actions, some of which assert claims for substantial amounts. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses and costs of defense, will not be material to the financial condition of the Company.

b. Guaranty Funds

In all states, insurers licensed to transact certain classes of insurance are required to become members of a guaranty fund. In most states, in the event of the insolvency of an insurer writing any such class of insurance in the state, members of the funds are assessed to pay certain claims of the insolvent insurer. A particular state’s fund assesses its members based on their respective written premiums in the state for the classes of insurance in which the insolvent insurer was engaged. Assessments are generally limited for any year to one or two percent of premiums written per year, depending on the state.

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

44
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

of the associated premium taxes. The Company paid immaterial net guaranty fund assessments in 2017, 2016, and 2015. The Company has a guaranty fund receivable of $363,597 and $637,238 as of December 31, 2017 and 2016, respectively.

c. Leases

As discussed in Note 7, transactions with The Hartford include rental facilities and equipment. Rent paid by the Company to The Hartford for its share of space occupied and equipment used by the Company was $918,538, $786,827 and $6,380,352 in 2017, 2016, and 2015, respectively. Future minimum rental commitments are immaterial.

The principal executive office of the Company, together with its parent and other life insurance affiliates, is located in Hartford, Connecticut.

d. Tax Matters

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years prior to 2014. The federal audit of the years 2012 and 2013 was completed as of March 31, 2017 with no additional adjustments. Management believes that adequate provision has been made in the financial statements for any potential adjustments 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 in Note 5.

The Separate Account dividend received deduction (“DRD”) is estimated for the current year using information from the most recent return, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds, amounts of short-term capital gains at the mutual fund level and the Company’s taxable income before the DRD. The Company recorded benefits of $57,083,258, $43,690,668, and $87,245,687 related to the Separate Account DRD for the years ended December 31, 2017, 2016, and 2015, respectively.

e. Funding Obligations

At December 31, 2017 and 2016 the Company has outstanding commitments totaling $12,683,611 and $15,293,820, of which $625,361 and $849,920 was committed to fund limited partnership and other alternative investments, which may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. Additionally, at December 31, 2017, $8,000,000 is related to commercial whole loans expected to fund in the first half of the following year. At December 31, 2017 and 2016, $4,058,250 and $14,443,900, respectively is related to various funding obligation associated with private placement securities.

12. Other

On December 3, 2017, the Company’s indirect parent, Hartford Holdings, Inc. (HHI) entered into a definitive agreement to sell Hartford Life, Inc. (HLI), the Company's indirect parent, together with HLI’s run-off life and annuity insurance subsidiaries (primarily HLIC and HLAI), to a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group. Under the terms of the purchase and sale agreement (the agreement), the investor group will form a limited partnership that will acquire HLI, a holding company and HLI’s life and annuity operating subsidiaries, including the Company. The transaction is subject to the satisfaction or waiver of customary closing conditions, including regulatory approvals, and certain other conditions, including a pre-closing dividend to HHI expected to be $300 million, partly funded by a dividend from HLAI, in addition to dividends and contribution discussed below.

The agreement contains several provisions that are contingent upon the close of the transaction and, therefore, will be accounted for at the time of the closing of the sale. As a condition of the close, the Company and its affiliates will forego certain deferred tax assets associated with net operating loss carryovers and foreign tax credits that will be retained by The Hartford.

At close, HHI will pay the Company and its affiliates for certain assets that will be transferred to HHI related to the reallocation of alternative minimum tax credits and other tax settlements. Amounts paid to the Company and its affiliates for these assets will

45
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

be returned to HHI in the form of a dividend at the closing date. In addition, as part of the agreement, HHI will reimburse the Company for leakage as defined in the agreement, including making HLIC whole for certain decreases in statutory surplus before closing.

Immediately following the close of the transaction, the Company and HLIC intend to enter into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company, a subsidiary of Global Atlantic Financial Group, to reinsure the majority of the Company’s payout annuity contracts, along with certain structured settlement contracts and variable annuitizations. The net impact of this reinsurance transaction on the Company’s and HLIC’s results of operations and financial condition is expected to approximate the ceding commission to be received.

Following the sale, The Hartford will manage invested assets of the Company for an initial term of five years and provide transition services for an agreed upon time period. In addition, subsequent to closing, the Company will continue to collect revenue sharing fees from The Hartford’s mutual funds business related to Hartford HLS funds held in the Company’s Separate Accounts.



13. Subsequent Events

HLIC and HLAI received approval from the State of Connecticut Department of Insurance on January 22, 2018, to enter into an assumption reinsurance agreement effective February 1, 2018. Under this agreement HLIC will transfer approximately $4.5 billion of reserves and $0.1 billion of associated interest maintenance reserve liability along with cash and invested assets with a book value totaling $4.7 billion, equal to the liabilities, to HLAI. Certain payout annuities included in the reinsurance agreement are covered by guarantees from other affiliates of the Hartford, and these guarantees will transfer to HLAI under the transaction. This is considered a non-economic transaction and HLAI and HLIC expect no material impacts to surplus as a result of this transaction.

The Company has evaluated events subsequent to December 31, 2017, through April 10, 2018, the date the statutory-basis financial statements were available to be issued. The Company has not evaluated subsequent events after that date for presentation in these statutory-basis financial statements.

46
 


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)
 
(4)
(a) Standard Death Benefit Rider II (5)
 
(4)
(b) Maximum Anniversary Value Death Benefit Rider IV (5)
 
(4)
(c) Return of Premium Death Benefit Rider IV (5)
 
(4)
(d) Guaranteed Minimum Withdrawal Benefit Plus Rider II (Single Life) (5)
 
(4)
(e) Guaranteed Minimum Withdrawal Benefit Plus Rider II (Joint Life/ Spousal) (5)
 
(4)
(f) Premium Based Charge Rider (5)
 
(4)
(g) Total Expected Premium Endorsement (5)
 
(5)
Form of Application. (6)
 
(6)
(a) Certificates of Incorporation of Talcott Resolution.
 
(6)
(b) Amended and Restated Bylaws of Talcott Resolution.
 
(7)
Form of Reinsurance Agreement. (2)
 
(8)
Fund Participation Agreements
 
 
(a) Invesco(5)
 
 
(b) BlackRock(5)
 
 
(c) AllianceBernstein, L.P.(5)
 
 
(d) American Century Investments(5)
 
 
(e) American Funds Insurance Series(5)
 
 
(f) Fidelity Investments(5)
 
 
(g) Franklin Templeton Investments(5)
 
 
(h) Hartford HLS Funds(5)
 
 
(i) Lord Abbett & Co., LLC(5)
 
 
(j) MFS Variable Insurance Trust(5)
 
 
(k) PIMCO(5)
 
 
(l) Putnam Investments, LLC(5)
 
 
(m) 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.(6)
 
 
(n) Guarantee Agreement, between Hartford Life Insurance Company and ITT Hartford Life and Annuity Insurance Company, dated as of May 23, 1997.(6)
 
(9)
Opinion and Consent of Lisa Proch, Assistant General Counsel
 
(10)
Consents of Deloitte & Touche LLP
 
(11)
No financial statements are omitted
 
(12)
Not applicable.
 
(99)
Copy of Power of Attorney.

(1)
Incorporated by reference to Item 24(b)(1) in the Pre-Effective Amendment No. 1 to the Registration Statement File No. 333-76419, filed on June 21, 1999.
(2)
Incorporated by reference to Item 24(b)(3)(a) and Item 24(b)(7)), respectively, in Post-Effective Amendment No. 3, to the Registration Statement File No. 333-148564, filed on February 9, 2009.
(3)
Incorporated by reference to Item 24(b)(3)(b) in Pre-Effective Amendment No. 3, to the Registration Statement File No. 033-73568, filed on May 1, 1996.
(4)
Incorporated by reference to Item 24(b)(4) in 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 Items 24(b)(4)(a-g), and Items 24(b)(8)(a-l), respectively, in Post-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-174679, filed on April 23, 2012.
(6)
Incorporated by reference to Items 24(b)(8)(m-n), respectively, in Post-Effective Amendment No. 10 to the Registration Statement File No. 333-136547, filed on August 14, 2009.




ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

NAME
POSITION
Ellen T. Below
Vice President and Chief Communications Officer
Jeremy Billiel
Assistant Vice President and Treasurer
John B. Brady
Vice President and Chief Actuary
Christopher S. Conner
Assistant Vice President, Chief Compliance Officer of Separate Accounts, AML Compliance Officer and Sanctions Compliance Officer
Robert A. Cornell
Vice President and Actuary
Christopher Cramer
Vice President and Director of Tax
Christopher J. Dagnault (1)
Vice President
George Eknaian
Senior Vice President and Chief Risk Officer
Michael R. Hazel
Vice President and Controller
Donna R. Jarvis
Vice President and Actuary
Diane Krajewski
Vice President and Chief Human Resources Officer
Craig D. Morrow
Vice President and Appointed Actuary
Matthew J. Poznar
Senior Vice President and Chief Investment Officer, Director
Lisa M. Proch
Senior Vice President, General Counsel and Chief Compliance Officer
Peter F. Sannizzaro
President and Chief Operating Officer, Director
Robert Siracusa
Vice President and Chief Financial Officer, Director
Leslie T. Soler
Assistant Vice President and Corporate Secretary
Samir Srivastava
Vice President and Chief Technology Officer






















Unless otherwise indicated, the principal business address of each of the above individuals is 1 Griffin Road North, Windsor, CT 06095.

(1)
Address: 500 Bielenberg Dr., Woodbury, MN 55125.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT.

Filed herein as Exhibit 99.26.

ITEM 27. NUMBER OF CONTRACT OWNERS

As of April 30, 2018, there were 67,410 owners of qualified contracts and 56,207 owners of non-qualified contracts.

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."

Provision is made that the Corporation, to the fullest extent permissible by applicable law as then in effect, shall indemnify any individual who is a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, and whether formal or informal (each, a "Proceeding") because such individual is or was (i) a Director, or (ii) an officer or employee of the Corporation (for purposes of the by laws, each an "Officer"), against obligations to pay judgments, settlements, penalties, fines or reasonable expenses (including counsel fees) incurred in a Proceeding if such Director or Officer: (l)(A) conducted him or herself in good faith; (B) reasonably believed (i) in the case of conduct in such person's official capacity, which shall include service at the request of the Corporation as a director, officer or fiduciary of a Covered Entity (as defined below), that his or her conduct was in the best




interests of the Corporation; and (ii) in all other cases, that his or her conduct was at least not opposed to the best interests of the Corporation; and (C) in the case of any criminal proceeding, such person had no reasonable cause to believe his or her conduct was unlawful; or (2) engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the Corporation's Certificate, in each case, as determined in accordance with the procedures set forth in the by laws. For purposes of the by laws, a "Covered Entity" shall mean another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) in respect of which such person is serving at the request of the Corporation as a director, officer or fiduciary.

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) TDC acts as principal underwriter for the following investment companies:

Talcott Resolution Life Insurance Company - Separate Account One
Talcott Resolution Life Insurance Company - Separate Account Two
Talcott Resolution Life Insurance Company - Separate Account Two (DC Variable Account I)
Talcott Resolution Life Insurance Company - Separate Account Two (DC Variable Account II)
Talcott Resolution Life Insurance Company - Separate Account Two (QP Variable Account)
Talcott Resolution Life Insurance Company - Separate Account Two (Variable Account "A")
Talcott Resolution Life Insurance Company - Separate Account Two (NQ Variable Account)
Talcott Resolution Life Insurance Company - Separate Account Ten
Talcott Resolution Life Insurance Company - Separate Account Three
Talcott Resolution Life Insurance Company - Separate Account Five
Talcott Resolution Life Insurance Company - Separate Account Seven
Talcott Resolution Life Insurance Company - Separate Account Eleven
Talcott Resolution Life Insurance Company - Separate Account Twelve
Talcott Resolution Life Insurance Company - Separate Account VL I
Talcott Resolution Life Insurance Company - Separate Account VL II
Talcott Resolution Life and Annuity Insurance Company - Separate Account One
Talcott Resolution Life and Annuity Insurance Company - Separate Account Ten
Talcott Resolution Life and Annuity Insurance Company - Separate Account Three
Talcott Resolution Life and Annuity Insurance Company - Separate Account Five
Talcott Resolution Life and Annuity Insurance Company - Separate Account Six
Talcott Resolution Life and Annuity Insurance Company - Separate Account Seven
Talcott Resolution Life and Annuity Insurance Company - Separate Account VLI
Talcott Resolution Life and Annuity Insurance Company - Separate Account VLII
American Maturity Life Insurance Company Separate Account AMLVA
American Maturity Life Insurance Company - Separate Account One
ICMG Registered Variable Life Separate Account A
ICMG Registered Variable Life Separate Account One
Nutmeg Life Insurance Company - Separate Account One
Union Security Insurance Company - Variable Account C
Union Security Insurance Company - Variable Account D
Union Security Life Insurance Company - Separate Account A

(b) Directors and Officers of TDC
Name
Positions and Offices with Underwriter
Christopher S. Conner
Chief Compliance Officer, Privacy Officer, Secretary
Christopher J. Dagnault (1)
Chief Executive Officer and President, Director
Diane Krajewski
Chairman of the Board, Director
James Anthony Maciolek
FINOP, Chief Financial Officer and Controller
Robert R. Siracusa
Director




















Unless otherwise indicated, the principal business address of each of the above individuals is 1 Griffin Road North, Windsor, CT 06095.

(1) Address: 500 Bielenberg Drive. Woodbury, MN 55125.

(c) Not applicable.

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 Talcott Resolution at 1 Griffin Road North, Windsor, CT 06095.


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)
Talcott Resolution 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 us.







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 Windsor, and State of Connecticut on June 28, 2018.

Talcott Resolution Life and Annuity Insurance Company
Separate Account Seven (Registrant)

By:
Peter F. Sannizzaro*
*By:
/s/ Lisa Proch

Peter F. Sannizzaro

Lisa Proch

President

Attorney-in-Fact






Talcott Resolution Life and Annuity Insurance Company
(Depositor)

By:
Peter F. Sannizzaro*

Peter F. Sannizzaro

President




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.







Peter F. Sannizzaro, President, Director*
*By:
/s/ Lisa Proch
Matthew J. Poznar, Senior Vice President, Director*

Lisa Proch
Robert R. Siracusa, Chief Financial Officer, Director*

Attorney-in-Fact

Date:
June 28, 2018




333-174679






 
EXHIBIT INDEX
6
(a) Certificates of Incorporation of Talcott Resolution.
6
(b) Amended and Restated Bylaws of Talcott Resolution.
(9)
Opinion and Consent of Lisa Proch, Assistant General Counsel
(10)
Consents of Deloitte & Touche LLP
(26)
Organizational Chart
(99)
Power of Attorney