HARTFORD LIFE INSURANCE CO - 10-K Annual Report

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FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ______________

Commission file number 2-89516

HARTFORD LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)

CONNECTICUT 06-0974148
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

200 HOPMEADOW STREET, SIMSBURY, CONNECTICUT 06089
(Address of principal executive offices)

(860) 525-8555
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]

As of March 24, 2000, there were outstanding 1,000 shares of Common Stock,
$5,690 par value per share, of the registrant, all of which were directly owned
by Hartford Life and Accident Insurance Company.

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this form with the reduced disclosure
format.
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES

CONTENTS

ITEM DESCRIPTION PAGE

PART I 1 Business of Hartford Life Insurance Company* 3
2 Properties* 10
3 Legal Proceedings 10
4 **

PART II 5 Market for Hartford Life Insurance Company's Common Stock and
Related Stockholder Matters 10
6 **
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations* 11
7A Quantitative and Qualitative Disclosures About Market Risk 23
8 Financial Statements and Supplementary Data 23
9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 23

PART III 10 **
11 **
12 **
13 **

PART IV 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K 23
Signatures II-1
Exhibits Index II-2

* Item prepared in accordance with General Instruction I(2) of Form 10-K
** Item omitted in accordance with General Instruction I(2) of Form 10-K

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PART I

ITEM 1. BUSINESS OF HARTFORD LIFE INSURANCE COMPANY

(Dollar amounts in millions, unless otherwise stated)

GENERAL

Hartford Life Insurance Company and its subsidiaries ("Hartford Life Insurance
Company" or the "Company"), is a direct subsidiary of Hartford Life and Accident
Insurance Company (HLA), a wholly-owned subsidiary of Hartford Life, Inc.
(Hartford Life). The Company, together with HLA, provides (i) investment
products, including variable annuities, fixed market value adjusted (MVA)
annuities and retirement plan services for the savings and retirement needs of
over 1.2 million customers, (ii) life insurance for income protection and estate
planning to approximately 500,000 customers, (iii) employee benefits products
such as group life and group disability insurance for the benefit of millions of
individuals that is directly written by the Company and is substantially ceded
to its parent, HLA, and (iv) corporate owned life insurance. According to the
latest publicly available data, with respect to the United States, the Company,
along with its parent, is the largest writer of individual variable annuities
based on sales for the year ended December 31, 1999; the third largest writer of
group disability insurance based on premiums written for the nine months ended
September 30, 1999; as well as, the third largest consolidated life insurance
company based on statutory assets as of December 31, 1998. The Company's strong
position in each of its core businesses provides an opportunity to increase the
sale of Hartford Life Insurance Company's products and services as individuals
increasingly save and plan for retirement, protect themselves and their families
against disability or death and prepare their estates for an efficient transfer
of wealth between generations.

Hartford Life Insurance Company strives to maintain and enhance its position as
a market leader within the financial services industry. The Company has pursued
a strategy of developing and selling diverse and innovative products through
multiple distribution channels, continuously developing and expanding those
distribution channels, achieving cost efficiencies through economies of scale
and improved technology, maintaining effective risk management and prudent
underwriting techniques and capitalizing on its brand name and customer
recognition of The Hartford Stag Logo, one of the most recognized symbols in the
financial services industry. In the past year, the Company's total assets
increased 14% to $135.0 billion and total stockholder's equity, excluding net
unrealized capital losses on securities, was $2.9 billion as of December 31,
1999. In addition, the Company generated $3.4 billion in revenues and $361 in
net income in 1999. The Company's return on stockholder's equity, excluding net
unrealized capital gains (losses) on securities, was 13.4% in 1999.

ORGANIZATION

Hartford Life Insurance Company, a Connecticut corporation, was organized in
1902. The Company's indirect parent, Hartford Life, is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). Pursuant to an initial
public offering (the "IPO") of 26 million shares of the Company's Class A Common
Stock on May 22, 1997, Hartford Life became a publicly traded company
representing approximately 18.6% of the equity ownership in the Company.
Additional information regarding the organization of the business and the IPO
may be found in Note 1 of Notes to Consolidated Financial Statements.

DISTRIBUTION

Hartford Life Insurance Company utilizes a multiple channel distribution network
which provides a distinct competitive advantage in selling products and services
to a broad cross-section of customers throughout varying economic and market
cycles. In particular, the Company has developed an extensive network of banks
and broker-dealers, which is one of the largest in the industry, including over
1,500 national, regional and independent broker-dealers and approximately 500
banks. Consistent with this strategy, in 1998, the Company's parent, HLA,
purchased all the outstanding shares of PLANCO Financial Services, Inc. and its
affiliate, PLANCO, Incorporated (collectively, "PLANCO"), the nation's largest
wholesaler of individual annuities and the Company's primary wholesale
distributor of its Director(R) variable annuity, thus securing an important
distribution channel. In addition, the Company continues to expand its
opportunity to sell through financial institutions. As of December 31, 1999, the
Company was selling products through twenty-four of the nation's twenty-five
largest retail banks, including proprietary relationships with four of the top
ten. The Company's broad distribution network has enabled the Company to
introduce new products and services in an effective manner and allows the
Company significant opportunity to access its customer base. Hartford Life
Insurance Company sells variable annuities, fixed MVA annuities, variable life
insurance and retirement plan services through its broker-dealer and bank
distribution systems.

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PRODUCTS

It is Hartford Life Insurance Company's belief that, as Americans journey
through life, they have specific needs related to building and preserving their
financial resources. The Company's goal is to be the "official supplier" of that
journey -- the preferred source of financial solutions for both individuals and
employers, as well as the financial professionals who serve them. To achieve
this goal, Hartford Life Insurance Company has focused its efforts on offering
products that provide mechanisms for retirement (e.g. annuities) and protecting
and preserving income and wealth (e.g. individual life, group life and group
disability). To ensure that it is able to meet the emerging opportunities that
will arise for individuals pursuing their dreams in the new millennium, the
Company expects to continue to expend significant resources and development
efforts in creating innovative new products and services.

CUSTOMER SERVICE, TECHNOLOGY AND ECONOMIES OF SCALE

Hartford Life Insurance Company maintains advantageous economies of scale and
operating efficiencies due to its continued growth, attention to expense
management and commitment to customer service and technology. These advantages
allow the Company to competitively price its products for its distribution
network and policyholders. The Company continues to achieve operating
efficiencies in its Investment Products business. Operating expenses associated
with the Company's individual annuity products as a percentage of total
individual annuity account value have been more than cut in half over the past
seven years, declining from 43 basis points in 1992 to 21 basis points in 1999.
In addition, the Company utilizes computer technology to enhance communications
within the Company and throughout its distribution network in order to improve
the Company's efficiency in marketing, selling and servicing its products and,
as a result, provides high-quality customer service. In recognition of
excellence in customer service for variable annuities, Hartford Life Insurance
Company, along with its parent, was awarded the 1999 Annuity Service Award by
DALBAR Inc., a recognized independent financial services research organization,
for the fourth consecutive year. Hartford Life Insurance Company, along with its
parent, is the only company to receive this prestigious award in every year of
its existence. Additional information related to Hartford Life Insurance
Company's technology in respect of Year 2000 issues may be found in the
Regulatory Matters and Contingencies section of the Management's Discussion and
Analysis of Financial Condition and Results of Operations (MD&A).

RISK MANAGEMENT

Hartford Life Insurance Company's product designs, prudent underwriting
standards and risk management techniques protect it against disintermediation
risk and greater than expected mortality and morbidity experience. As of
December 31, 1999, the Company had limited exposure to disintermediation risk on
approximately 98% of its insurance liabilities through the use of non-guaranteed
separate accounts, MVA features, policy loans, surrender charges and
non-surrenderability provisions. The Company effectively utilizes prudent
underwriting to select and price insurance risks and regularly monitors
mortality and morbidity assumptions to determine if experience remains
consistent with these assumptions and to ensure that its product pricing remains
appropriate.

BRAND NAME AND FINANCIAL STRENGTH

The Hartford Stag Logo is one of the most recognized symbols in the insurance
and financial services industry. This brand recognition, coupled with a strong
balance sheet and sound ratings, has enabled the Company to establish the
reputation and financial strength necessary to maintain distribution
relationships, make strategic acquisitions and enhance important alliances, and
generate new customer sales. Pursuant to a Master Intercompany Agreement with
The Hartford, Hartford Life has been granted a perpetual non-exclusive license
to use the Stag Logo in connection with the sale of Hartford Life Insurance
Company's products and services. However, in the event that The Hartford reduces
its beneficial ownership below 50% of the combined voting power of Hartford
Life's then outstanding securities, the license may be revoked upon the later of
the fifth anniversary of the date of consummation of Hartford Life's IPO of its
Class A Common Stock or one year after receipt by the Company of written notice
of The Hartford's intention to revoke the license.

REPORTING SEGMENTS

Hartford Life Insurance Company has the following reportable operating segments:
Investment Products, Individual Life and Corporate Owned Life Insurance (COLI).
The Company includes in "Other" corporate items not directly allocable to any of
its reportable segments, as well as certain employee benefits, including group
life and disability insurance that is directly written by the Company and is
substantially ceded to its parent, HLA. The following is a description of each
segment, including a discussion of principal products, methods of distribution
and competitive environments. Additional information on Hartford Life Insurance
Company's segments may be found in the MD&A on pages 11 to 22 and Note 13 of
Notes to Consolidated Financial Statements.

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INVESTMENT PRODUCTS

The Investment Products segment focuses on the savings and retirement needs of
the growing number of individuals who are preparing for retirement or have
already retired through the sale of individual fixed and variable annuities,
retirement plan services and other investment products. From December 31, 1995
to December 31, 1999, this segment's account values grew to $105.3 billion from
$43.9 billion, a five-year compounded annual growth rate of 24%. This growth has
been driven primarily by strong net cash flow of individual variable annuities,
the result of a high volume of sales and favorable persistency, as well as
equity market appreciation in the separate accounts of the Company's individual
and group variable annuities. Investment Products generated revenues of $1.9
billion and $1.8 billion in 1999 and 1998, respectively. Net income in the
Investment Products segment was $300 in 1999, an 11% increase over 1998.

Hartford Life Insurance Company is the market leader in the annuity industry
and, according to Variable Annuity and Research Data Service (VARDS), was the
number one writer of individual variable annuities in the United States for 1999
and 1998 with sales of $10.3 billion and $9.9 billion, respectively. The Company
sells both variable and fixed individual annuity products through a wide
distribution network of national and regional broker-dealer organizations, banks
and other financial institutions and independent financial advisors. Total
individual annuity sales were $10.9 billion and $10.0 billion in 1999 and 1998,
respectively. The Company was also the number one seller of individual variable
annuities through banks in 1999 and 1998, according to Kenneth Kehrer and
Associates.

The Company's total account value related to individual annuity products was
$89.0 billion as of December 31, 1999. Of this total account value, $80.6
billion, or 91%, related to individual variable annuity products and $8.4
billion, or 9%, related primarily to fixed MVA annuity products.

The Company is among the top providers of retirement products and services,
including asset management and plan administration, to municipalities pursuant
to Section 457 and plans to corporations under Section 401(k) of the Internal
Revenue Code of 1986, as amended (herein after referred to as "Section 457" and
"Section 401(k)", respectively). The Company presently administers over 2,000
Section 457 plans and over 900 Section 401(k) plans. The Company also provides
structured settlement contracts, terminal funding products and other investment
products such as guaranteed investment contracts (GICs).

Products

Individual Variable Annuities -- Hartford Life Insurance Company earns fees for
managing variable annuity assets and maintaining policyholder accounts, which
are based on the policyholders' account values. The Company uses specified
portions of the periodic premiums of a customer to purchase units in one or more
mutual funds, as directed by the customer, who then assumes the investment
performance risks and rewards. As a result, variable annuities permit
policyholders to choose aggressive or conservative investment strategies as they
deem appropriate without affecting the composition and quality of assets in the
Company's general account. These products offer the policyholder a variety of
equity and fixed income options, as well as the ability to earn a guaranteed
rate of interest in the general account of the Company. The Company offers an
enhanced guaranteed rate of interest for a specified period of time (no longer
than twelve months) if the policyholder elects to dollar-cost average (DCA)
funds from the Company's general account into one or more non-guaranteed
separate accounts. Due to this enhanced rate and the volatility experienced in
the overall equity markets, this option has become very popular with
policyholders. Deposits of varying amounts may be made at regular or irregular
intervals and the value of these assets fluctuates in accordance with the
investment performance of the funds selected by the policyholder. To encourage
persistency, many of the Company's individual variable annuities are subject to
withdrawal restrictions and surrender charges ranging initially from 6% to 7% of
the contract's face amount which reduce to zero on a sliding scale, usually
within seven policy years. Volatility experienced by the equity markets in 1998
and 1999 did not cause a significant increase in variable annuity surrenders,
demonstrating that policyholders are aware of the long-term nature of these
products. Individual variable annuity account value of $80.6 billion as of
December 31, 1999, has grown significantly from $13.1 billion as of December 31,
1994 due to strong net cash flow, the result of a high level of sales and low
levels of surrenders, coupled with equity market appreciation in both the equity
and fixed income allocations of the policyholders' account value. Approximately
86% of the individual variable annuity account value was held in non-guaranteed
separate accounts as of December 31, 1999.

The assets underlying the Company's variable annuities are managed both
internally and by outside money managers, while the Company provides all policy
administration services. The Company utilizes a select group of money managers,
such as Wellington Management Company, LLP (Wellington), Putnam Financial
Services, Inc. (Putnam), American Funds, MFS Investment Management (MFS),
Franklin Templeton Group and Morgan Stanley Dean Witter InterCapital, Inc. All
have an interest in the continued growth in sales of the Company's products and
greatly enhance the marketability of the Company's annuities and the strength of
its product offerings. Two of the industry's top ten leading variable annuities,
The Director and Putnam Hartford Capital Manager Variable Annuity (based on
sales for the year ended 1999) are sponsored by Hartford Life Insurance Company
and are managed in part by Wellington and Putnam, respectively. In July 1999,
the Company introduced Hartford Leaders, a new multi-

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manager variable annuity. This new venture combines the product manufacturing,
wholesaling and service capabilities of Hartford Life Insurance Company with the
investment management expertise of three of the nation's most successful
investment management organizations, American Funds, Franklin Templeton Group
and MFS. Hartford Life Insurance Company created a separate division at PLANCO
to wholesale the product in order to ensure that the Company fully capitalizes
on this immense opportunity and, by the end of 1999, the Company had in place a
team of over 30 wholesalers. In a matter of six months, sales of Hartford
Leaders have already reached a $1 billion annualized sales rate, placing this
venture as one of the most successful new product launches in the history of the
variable annuity industry.

Fixed MVA Annuities -- Fixed MVA annuities are fixed rate annuity contracts
which guarantee a specific sum of money to be paid in the future, either as a
lump sum or as monthly income. In the event that a policyholder surrenders a
policy prior to the end of the guarantee period, the MVA feature increases or
decreases the cash surrender value of the annuity in respect of any interest
rate decreases or increases, respectively, thereby protecting the Company from
losses due to higher interest rates at the time of surrender. The amount of
payment will not fluctuate due to adverse changes in the Company's investment
return, mortality experience or expenses. The Company's primary fixed MVA
annuities have terms varying from one to ten years with an average term of
approximately seven years. Sales of the Company's fixed MVA annuities increased
during 1999 as a result of a higher interest rate environment making 1999 the
best sales year for this product since 1995. Account values of fixed MVA
annuities were $8.4 billion and $8.6 billion as of December 31, 1999 and 1998,
respectively.

Retirement Plans -- With respect to retirement products and services, Section
457 plans comprise approximately 80% of the related account values. These assets
have traditionally been held in the Company's general account, but increasingly,
plan beneficiaries are transferring assets into mutual funds held in separate
accounts. The Company offers a number of different funds, both fixed income and
equity, to the employees in Section 457 plans. Generally, the Company manages
the fixed income funds and certain other outside money managers act as advisors
to the equity funds offered in Section 457 plans administered by the Company.
The Company also sells Section 401(k) products targeting the small and medium
case markets since the Company believes these markets are underpenetrated in
comparison to the large case market.

Institutional Liabilities -- Hartford Life Insurance Company also sells
structured settlement contracts which provide for periodic payments to an
injured person or survivor for a generally determinable number of years,
typically in settlement of a claim under a liability policy in lieu of a lump
sum settlement. The Company's structured settlements are sold through The
Hartford's property-casualty insurance operations as well as specialty brokers.
The Company also markets other annuity contracts for special purposes such as
the funding of terminated defined benefit pension plans. In addition, the
Company offers GICs and short term funding agreements.

Marketing and Distribution

The Investment Products distribution network has been developed based on
management's strategy of utilizing multiple and competing distribution channels
in an effort to achieve the broadest distribution to reach target customers. The
success of the Company's marketing and distribution system depends on its
product offerings, fund performance, successful utilization of wholesaling
organizations, relationships with national and regional broker-dealer firms,
banks and other financial institutions, and independent financial advisors
(through which the sale of the Company's individual annuities to customers is
consummated) and quality of customer service.

Hartford Life Insurance Company maintains a network of approximately 1,500
broker-dealers and approximately 500 banks, including 24 of the 25 largest
retail banks in the United States. The Company periodically negotiates
provisions and terms of its relationships with unaffiliated parties and there
can be no assurance that such terms will remain acceptable to the Company or
such third parties. In August 1998, the Company's parent, HLA, completed the
purchase of all outstanding shares of PLANCO, a primary wholesaler of the
Company's individual annuities. PLANCO is the nation's largest wholesaler of
individual annuities and has played a significant role in Hartford Life
Insurance Company's growth over the past decade. As a wholesaler, PLANCO
distributes Hartford Life Insurance Company's fixed and variable annuities, and
single premium variable life insurance by providing sales support to registered
representatives, financial planners and broker-dealers at brokerage firms and
banks across the United States. This acquisition secured an important
distribution channel for the Company and gives the Company a wholesale
distribution platform which it can expand in terms of both the number of
individuals wholesaling its products and the portfolio of products in which they
wholesale. In addition, the Company uses internal personnel with extensive
experience in the Section 457 market, as well as access to the Section 401(k)
market, to sell its products and services in the retirement plan market.

Competition

The Investment Products segment competes with numerous other insurance companies
as well as certain banks, securities brokerage firms, investment advisors and
other financial intermediaries marketing annuities and other retirement-oriented
products. As the industry continues to consolidate, some of these companies have
or will gain greater financial strength and resources than Hartford

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Life Insurance Company. In particular, national banks may become more
significant competitors in the future for insurers who sell annuities as a
result of court decisions and recent regulatory actions. Passage in November
1999 of the Gramm-Leach-Bliley Act (the Financial Services Modernization Act),
which permits affiliations among banks, securities firms and insurance
companies, may have competitive, operational and other implications to the
Company. (For additional information, see the Regulatory Matters and
Contingencies section of the MD&A.) Product sales are affected by competitive
factors such as investment performance ratings, product design, visibility in
the marketplace, financial strength ratings, distribution capabilities, levels
of charges and credited rates, reputation and customer service.

INDIVIDUAL LIFE

The Individual Life segment, which focuses on the high end estate and business
planning markets, sells a variety of products including variable life, universal
life, interest sensitive whole life and term life insurance. Life insurance in
force increased 9% to $66.7 billion as of December 31, 1999 from $61.1 billion
as of December 31, 1998. Account values grew 20% to $5.4 billion as of December
31, 1999 from $4.5 billion as of December 31, 1998. The Individual Life segment
generated revenues of $574 and $543 in 1999 and 1998, respectively. Net income
in the Individual Life segment was $68 in 1999, a 6% increase over 1998.

Products

The recent trend in the individual life industry has been a shift away from
traditional products and fixed universal life insurance towards variable life
(including variable universal life) insurance products. Hartford Life Insurance
Company has been on the leading edge of this industry trend and is a top ten
writer of new variable life sales according to Tillinghast-Towers Perrin. In
1999, of the Company's new sales of individual life insurance, 84% was variable
life and 13% was either universal life or interest sensitive whole life. The
Company also sold a small amount of term life insurance.

Variable Life -- Variable life insurance provides a return linked to an
underlying investment portfolio and the Company allows policyholders to
determine their desired asset mix among a variety of underlying mutual funds. As
the return on the investment portfolio increases or decreases, as the case may
be, the death benefit or surrender value of the variable life policy may
increase or decrease. The Company's single premium variable life product
provides a death benefit to the policy beneficiary based on a single premium
deposit. The Company's second-to-die products are distinguished from other
products in that two lives are insured rather than one, and the policy proceeds
are paid upon the second death of the two insureds. Second-to-die policies are
frequently used in estate planning, often to fund estate taxes for a married
couple. Variable life account values were $2.6 billion and $1.7 billion as of
December 31, 1999 and 1998, respectively.

Universal Life and Interest Sensitive Whole Life -- Universal life and interest
sensitive whole life insurance coverages provide life insurance with adjustable
rates of return based on current interest rates. The Company offers both
flexible and fixed premium policies and provides policyholders with flexibility
in the available coverage, the timing and amount of premium payments and the
amount of the death benefit provided there are sufficient policy funds to cover
all policy charges for the coming period. Universal life and interest sensitive
whole life represented 13% of new annualized premium sales of individual life
insurance in 1999. The Company also sells universal life insurance policies with
a second-to-die feature similar to that of the variable life insurance product
offered. Universal life and interest sensitive whole life account values were
$2.0 billion as of December 31, 1999 and 1998.

Marketing and Distribution

Consistent with the Company's strategy to access multiple distribution outlets,
the Individual Life distribution organization has been developed to penetrate a
multitude of retail sales channels. These include independent life insurance
sales professionals; agents of other companies; national, regional and
independent broker-dealers; banks; and property-casualty insurance
organizations. The primary organization used to wholesale Hartford Life
Insurance Company's products to these outlets is a group of highly qualified
life insurance professionals with specialized training in sophisticated life
insurance sales, particularly as it pertains to estate and business planning.
These individuals are generally employees of the Company, who are managed
through a regional sales office system. The Company has grown this organization
rapidly the past few years, to over 180 individuals, and expects to continue to
increase the number of wholesalers in the future.

Competition

The Individual Life segment competes with approximately 1,600 life insurance
companies in the United States, as well as other financial intermediaries
marketing insurance products. Competitive factors related to this segment are
primarily the breadth and quality of life insurance products offered,
competitiveness of pricing, relationships with third-party distributors and the
quality of underwriting and customer service.

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CORPORATE OWNED LIFE INSURANCE (COLI)

Hartford Life Insurance Company is a leader in the COLI market, which includes
life insurance policies purchased by a company on the lives of its employees,
with the company named as the beneficiary under the policy. Until the Health
Insurance Portability Act of 1996 (HIPA Act of 1996), the Company sold two
principal types of COLI, leveraged and variable products. Leveraged COLI is a
fixed premium life insurance policy owned by a company or a trust sponsored by a
company. The HIPA Act of 1996 phased out the deductibility of interest on policy
loans under leveraged COLI at the end of 1998, thus virtually eliminating all
future sales of leveraged COLI. Variable COLI continues to be a product used by
employers to fund non-qualified benefits or other post-employment benefit
liabilities. Products marketed in this segment also include coverage owned by
employees under business sold through corporate sponsorship. Variable COLI
account values were $12.4 billion and $11.2 billion as of December 31, 1999 and
1998, respectively.

In November 1998, Hartford Life recaptured an in force block of leveraged COLI
business from MBL Life Assurance Co. of New Jersey (MBL Life). The transaction
was consummated through the assignment of a reinsurance arrangement between
Hartford Life and MBL Life to a Hartford Life subsidiary. Hartford Life
originally assumed the life insurance block in 1992 from Mutual Benefit Life
Insurance Company (Mutual Benefit Life), which was placed in court-supervised
rehabilitation in 1991, and reinsured a portion of those policies back to MBL
Life. MBL Life, previously a Mutual Benefit Life subsidiary, operates under the
Rehabilitation Plan for Mutual Benefit Life. The recaptured MBL business
increased revenues and expenses for 1998, however, there was no impact to net
income. Leveraged COLI account values decreased to $5.7 billion as of December
31, 1999 from $9.2 billion as of December 31, 1998, primarily due to the HIPA
Act of 1996. Although COLI revenues decreased in 1999 to $830 from $1,567 in
1998, COLI earnings increased 17%, to $28 in 1999.

OTHER MATTERS

RESERVES

In accordance with applicable insurance regulations under which Hartford Life
Insurance Company operates, life insurance subsidiaries of the Company establish
and carry as liabilities actuarially determined reserves which are calculated to
meet the Company's future obligations. Reserves for life insurance contracts are
based on actuarially recognized methods using prescribed morbidity and mortality
tables in general use in the United States, which are modified to reflect the
Company's actual experience when appropriate. These reserves are computed at
amounts that, with additions from estimated premiums to be received and with
interest on such reserves compounded annually at certain assumed rates, are
expected to be sufficient to meet the Company's policy obligations at their
maturities or in the event of an insured's death. Reserves also include unearned
premiums, premium deposits, claims incurred but not reported and claims reported
but not yet paid. Reserves for assumed reinsurance are computed on bases
essentially comparable to direct insurance reserves.

For Hartford Life Insurance Company's universal life and interest sensitive
whole life policies, reserves are set according to premiums collected, plus
interest credited, less charges. Other fixed death benefit and individual life
reserves are based on assumed investment yield, persistency, mortality and
morbidity as per commonly used actuarial tables, expenses and margins for
adverse deviations.

The persistency of Hartford Life Insurance Company's annuity and other interest
sensitive life insurance reserves is enhanced by policy restrictions on the
withdrawal of funds. Withdrawals in excess of allowable penalty-free amounts are
assessed a surrender charge during a penalty period, which is usually at least
seven years. Such surrender charge is initially a percentage of the accumulation
value, which varies by product, and generally decreases gradually during the
penalty period. Surrender charges are set at levels to protect the Company from
loss on early terminations and to reduce the likelihood of policyholders
terminating their policies during periods of increasing interest rates, thereby
lengthening the effective duration of policy liabilities and improving the
Company's ability to maintain profitability on such policies.

Hartford Life Insurance Company's reserves comply, in all material respects,
with state insurance department statutory accounting practices; however, in the
Company's Consolidated Financial Statements, life insurance reserves are
determined in accordance with generally accepted accounting principles, which
may vary from statutory accounting practices.

REGULATION AND PREMIUM RATES

Insurance companies are subject to comprehensive and detailed regulation and
supervision throughout the United States. The extent of such regulation varies,
but generally has its source in statutes which delegate regulatory, supervisory
and administrative powers to state insurance departments. Such powers relate to,
among other things, the standards of solvency which must be met and maintained;
the licensing of insurers and their agents; the nature of and limitations on
investments; premium rates; claim handling and trade practices; restrictions on
the size of risks which may be insured under a single policy; deposits of
securities for the benefit of

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policyholders; approval of policy forms; periodic examinations of the affairs of
companies; annual and other reports required to be filed on the financial
condition of companies or for other purposes; fixing maximum interest rates on
life insurance policy loans and minimum rates for accumulation of surrender
values; and, the adequacy of reserves and other necessary provisions for
unearned premiums, unpaid claims and claim adjustment expenses and other
liabilities, both reported and unreported.

REINSURANCE

In accordance with normal industry practice, Hartford Life Insurance Company is
involved in both the cession and assumption of insurance with other insurance
and reinsurance companies. As of December 31, 1999, the maximum amount of life
insurance retained on any one life by any of the life operations is
approximately $2.5, excluding accidental death benefits.

INVESTMENT OPERATIONS

Hartford Life Insurance Company's investment operations are managed by its
investment strategy group which reports directly to senior management of the
Company. The Company's investments have been separated into specific portfolios
which support specific classes of product liabilities. The investment strategy
group works closely with the product lines to develop investment guidelines,
including duration targets, asset allocation and convexity constraints,
asset/liability mismatch tolerances and return objectives, to ensure that the
product line's individual risk and return objectives are met. The Company's
primary investment objective for its general account and guaranteed separate
accounts is to maximize after-tax returns consistent with acceptable risk
parameters, including the management of the interest rate sensitivity of
invested assets to that of policyholder obligations.

For further discussion of Hartford Life Insurance Company's investment
operations and the Company's approach to managing investment risk, see the
Investments section of the MD&A, as well as Notes 2(f), 2(g), 2(h) and 3 of
Notes to Consolidated Financial Statements.

RATINGS

Reference is made to the Capital Resources and Liquidity section of the MD&A
under "Ratings".

RISK-BASED CAPITAL

Reference is made to the Capital Resources and Liquidity section of the MD&A
under "Risk-Based Capital".

LEGISLATIVE AND REGULATORY INITIATIVES

Reference is made to the Regulatory Matters and Contingencies section of the
MD&A under "Legislative and Regulatory Initiatives".

INSOLVENCY FUND

Reference is made to the Regulatory Matters and Contingencies section of the
MD&A under "Insolvency Fund".

NAIC PROPOSALS

Reference is made to the Regulatory Matters and Contingencies section of the
MD&A under "NAIC Proposals".

DEPENDENCE ON CERTAIN THIRD PARTY RELATIONSHIPS

Reference is made to the Regulatory Matters and Contingencies section of the
MD&A under "Dependence on Certain Third Party Relationships".

YEAR 2000

Reference is made to the Regulatory Matters and Contingencies section of the
MD&A under "Year 2000".

EMPLOYEES

Hartford Life Insurance Company's parent (Hartford Life) had approximately 5,000
employees at February 29, 2000.

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ITEM 2. PROPERTIES

The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. The home office complex
consists of approximately 615 thousand square feet, and is leased from a third
party by Hartford Fire Insurance Company (Hartford Fire), an indirect subsidiary
of The Hartford. This lease expires in the year 2009. Expenses associated with
these offices are allocated on a direct and indirect basis to Hartford Life
Insurance Company by Hartford Fire.

ITEM 3. LEGAL PROCEEDINGS

Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary and punitive
damages have been asserted. Some of these cases have been filed as purported
class actions and some cases have been filed in certain jurisdictions that
permit punitive damage awards disproportionate to the actual damages incurred.
Although there can be no assurances, at the present time the Company does not
anticipate that the ultimate liability arising from such pending or threatened
litigation, after consideration of provisions made for estimated losses and
costs of defense, will have a material adverse effect on the financial condition
or operating results of the Company.

PART II

ITEM 5. MARKET FOR HARTFORD LIFE INSURANCE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

All of the Company's outstanding shares are ultimately owned by Hartford Life
which is ultimately a subsidiary of The Hartford. As of March 24, 2000, the
Company had issued and outstanding 1,000 shares of common stock at a par value
of $5,690 per share.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(Dollar amounts in millions, unless otherwise stated)

Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Consolidated Financial
Statements and related Notes beginning on page F-1.

Certain statements contained in this discussion, other than statements of
historical fact, are forward-looking statements. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic,
competitive and legislative developments. These forward-looking statements are
subject to change and uncertainty which are, in many instances, beyond the
Company's control and have been made based upon management's expectations and
beliefs concerning future developments and their potential effect on Hartford
Life Insurance Company and subsidiaries ("Hartford Life Insurance Company" or
the "Company"). There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of future
developments on Hartford Life Insurance Company will be those anticipated by
management. Actual results could differ materially from those expected by the
Company, depending on the outcome of certain factors, including the possibility
of general economic, business and legislative conditions that are less favorable
than anticipated, changes in interest rates or the stock markets, stronger than
anticipated competitive activity and those described in the forward-looking
statements.

Certain reclassifications have been made to prior year financial information to
conform to the current year presentation.

INDEX

Consolidated Results of Operations 11 Investments 14
Investment Products 12 Capital Resources and Liquidity 20
Individual Life 13 Regulatory Matters and Contingencies 21
Corporate Owned Life Insurance (COLI) 14 Accounting Standards 22

CONSOLIDATED RESULTS OF OPERATIONS

Hartford Life Insurance Company is a leading financial services and insurance
company providing investment and retirement products such as variable and fixed
annuities and retirement plan services; individual and corporate owned life
insurance; and, employee benefit products such as group life and disability
insurance that is directly written by the Company and is substantially ceded to
its parent, Hartford Life and Accident Insurance Company (HLA).

The Company derives its revenues principally from: (a) asset management fees on
separate account assets and mortality and expense fees; (b) net investment
income on general account assets; (c) cost of insurance charges; (d) fully
insured premiums; and (e) certain other fees earned by the Company. Asset
management fees and mortality and expense fees are primarily generated from
separate account assets, which are deposited with the Company through the sale
of variable annuity products and variable life products. Cost of insurance
charges are assessed on the net amount at risk for investment oriented life
insurance products.

Hartford Life Insurance Company's expenses essentially consist of interest
credited to policyholders on general account liabilities, insurance benefits
provided, dividends to policyholders, costs of selling and servicing the various
products offered by the Company, and other general business expenses.

Hartford Life Insurance Company's profitability depends largely on the amount of
assets, the level of fully insured premiums, the adequacy of product pricing and
underwriting discipline, and its ability to earn target spreads between earned
investment rates on general account assets and credited rates to customers.

OPERATING SUMMARY

1999 1998
---- ----

Total revenues $3,400 $3,975
Total expenses 3,039 3,625
----- -----
NET INCOME $ 361 $ 350
----- -----

Hartford Life Insurance Company has the following reportable segments:
Investment Products, Individual Life and Corporate Owned Life Insurance (COLI).
The Company reports in "Other" corporate items not directly allocable to any of
its segments, as well as certain employee benefits, including group life and
disability insurance that is directly written by the Company and is
substantially ceded to its parent, HLA. For information regarding the Company's
segments, see Note 13 of Notes to Consolidated Financial Statements.

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Revenues decreased $575, or 14%, due primarily to the declining block of
leveraged COLI business. Excluding the COLI segment, revenues increased $162, or
7%, driven mostly by the Investment Products and Individual Life segments, where
revenues increased $105, or 6%, and $31, or 6%, respectively. The revenue growth
in the Investment Products segment was, for the most part, due to higher fee
income in the individual annuity operation, where fee income increased $209, or
24%, due to significant growth in related account values resulting from strong
sales, favorable persistency and equity market appreciation. The growth in
Individual Life was fundamentally due to higher fee income associated with the
growing block of variable life insurance.

Total benefits, claims and expenses decreased $589, or 17%, primarily due to the
declining block of leveraged COLI business. Excluding the COLI segment, total
benefits, claims and expenses increased $155, or 8%, consistent with the revenue
growth described above. Combined net income for Investment Products, Individual
Life and COLI increased $38, or 11%, driven mostly by increased fee income
associated with higher account values in the Investment Products segment, as
well as continued growth in Individual Life and COLI. Net losses in "Other"
increased $27 primarily related to the loss of $16 associated with the
commutation of a reinsurance arrangement as discussed in Note 9 of Notes to
Consolidated Financial Statements.

OUTLOOK

Management believes that it has developed and implemented strategies to maintain
and enhance its position as a market leader within the financial services
industry and to continue the Company's growth in assets. Hartford Life Insurance
Company is well positioned to assist individuals in meeting their financial
goals as they increasingly save and plan for retirement, protect themselves and
their families against disability or death and prepare their estates for an
efficient transfer of wealth between generations. Hartford Life Insurance
Company's strong market position in its primary businesses, which align with
these growing markets, will provide opportunities to increase sales of the
Company's products and services.

Certain proposed legislative initiatives which could impact Hartford Life
Insurance Company are discussed in the Regulatory Matters and Contingencies
section.

SEGMENT RESULTS

Below is a summary of net income (loss) by segment.

1999 1998
---- ----

Investment Products $ 300 $ 270
Individual Life 68 64
Corporate Owned Life Insurance 28 24
Other (35) (8)
----- -----
NET INCOME $ 361 $ 350
----- -----

A description of each segment as well as an analysis of the operating results
summarized above is included on the following pages.

INVESTMENT PRODUCTS

OPERATING SUMMARY

1999 1998
---- ----

Total revenues $ 1,884 $ 1,779
Total expenses 1,584 1,509
----- -----
NET INCOME $ 300 $ 270
----- -----

The Investment Products segment focuses on the savings and retirement needs of
the growing number of individuals who are preparing for retirement or have
already retired through the sale of individual fixed and variable annuities,
retirement plan services and other investment products. The Company, along with
its parent, was ranked the number one writer of individual variable annuities in
the United States for 1999 according to Variable Annuity and Research Data
Service (VARDS) and the number one seller of individual variable annuities
through banks, according to Kenneth Kehrer and Associates.

Revenues increased $105, or 6%, primarily due to higher fee income in the
individual annuity operation. Fees generated by individual annuities increased
$209, or 24%, as related account values increased $18.2 billion, or 26%. The
growth in individual annuity account values was mostly due to significant net
cash flow, resulting from strong sales of $10.9 billion and favorable
persistency, as well as equity market appreciation. Partially offsetting this
growth, was a decline in total revenues of $72 as the non-insurance
subsidiaries, which included fees generated from mutual fund operations, were
transferred to HLA in November 1998 in the form of a dividend

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as discussed in Note 1 of Notes to Consolidated Financial Statements.

Total expenses increased $75, or 5%, as a result of the continued growth in this
segment. This increase was primarily driven by amortization of deferred policy
acquisition costs, which grew $85, or 26%. Additionally, other expenses in the
individual annuity operations increased $37, or 17%, essentially due to growth
in the individual variable annuity operation. Partially offsetting this growth
was a decline in total expenses of $57 related to the transfer of the
non-insurance subsidiaries, which included fees generated from mutual fund
operations, described above.

Net income increased $30, or 11%, for the most part due to the growth in
revenues discussed above. Also contributing to the higher net income were
operating efficiencies that the segment continues to achieve, particularly in
its individual variable annuity operation, where operating expenses as a
percentage of average individual annuity account values decreased from 23 basis
points to 21 basis points. Additionally, the transfer of the non-insurance
subsidiaries, which included fees generated from mutual fund operations,
described above, partially offset the growth in this segment.

OUTLOOK

The market for retirement products continues to expand as individuals
increasingly save and plan for retirement. Demographic trends suggest that as
the baby boom generation matures, a significant portion of the United States
population will allocate a greater percentage of their disposable incomes to
saving for their retirement years due to uncertainty surrounding the Social
Security system and increases in average life expectancy. As this market grows,
particularly for variable annuities and mutual funds, new companies are
continually entering the market and aggressively seeking distribution
capabilities and pursuing market share. This trend is not expected to subside,
particularly in light of the Gramm-Leach-Bliley Act of 1999 (the Financial
Services Modernization Act), which was enacted into law, allowing banks,
securities firms and insurance companies to have ownership affiliation. (For
additional information, see the Regulatory Matters and Contingencies section.)

Management believes that it has developed and implemented strategies to maintain
and enhance its position as a market leader in the financial services industry.

INDIVIDUAL LIFE

OPERATING SUMMARY

1999 1998
---- ----

Total revenues $ 574 $ 543
Total expenses 506 479
--- ---
NET INCOME $ 68 $ 64
--- ---

The Individual Life segment, which focuses on the high end estate and business
planning markets, sells a variety of life insurance products, including variable
life, universal life, interest sensitive whole life and term life insurance.

Revenues increased $31, or 6%, resulting primarily from higher fee income
associated with the growing block of variable life insurance. Fee income
increased $52, or 15%, as variable life account values increased $868, or 50%,
and variable life insurance in force increased $7.5 billion, or 46%. The higher
fee income was partially offset by a decrease of $12, or 7%, in net investment
income. Expenses increased $27, or 6%, primarily as a result of an increase in
amortization of deferred policy acquisition costs and operating expenses of $23,
or 22%, and $10, or 9%, respectively, associated with the growth of this
segment. Partially offsetting these increases was a decrease in benefits, claims
and claim adjustment expenses of $8, or 3%, principally due to lower mortality
costs. Net income increased $4, or 6%, essentially due to the higher fee income
and favorable mortality described above.

OUTLOOK

Management believes that the Company's strong market position will provide
opportunities for growth in this segment as individuals increasingly prepare
their estates for an efficient transfer of wealth between generations.

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CORPORATE OWNED LIFE INSURANCE (COLI)

OPERATING SUMMARY

1999 1998
---- ----

Total revenue $ 830 $ 1,567
Total expenses 802 1,543
--- -----
NET INCOME $ 28 $ 24
--- -----

Hartford Life Insurance Company is a leader in the COLI market, which includes
life insurance policies purchased by a company on the lives of its employees,
with the company named as beneficiary under the policy. Until the Health
Insurance Portability and Accountability Act of 1996 (HIPA Act of 1996), the
Company sold two principal types of COLI business, leveraged and variable
products. Leveraged COLI is a fixed premium life insurance policy owned by a
company or a trust sponsored by a company. The HIPA Act of 1996 phased out the
deductibility of interest on policy loans under leveraged COLI through the end
of 1998, virtually eliminating all future sales of this product. Variable COLI
continues to be a product used by employers to fund non-qualified benefits or
other postemployment benefit liabilities. Products marketed in this segment also
include coverage owned by employees under business sold through corporate
sponsorship.

Revenues decreased $737, or 47%, primarily attributable to the downsizing of the
leveraged COLI business as a result of the HIPA Act of 1996. During 1999,
leveraged COLI account values decreased $3.4 billion, or 37%. Consistent with
the decrease in revenues, expenses decreased $741, or 48%. Net income increased
$4, or 17%, primarily due to growth in the variable COLI business, where related
account values increased $1.2 billion, or 10%. Additionally, leveraged COLI net
income increased due to earnings associated with the MBL business recaptured in
November 1998 (as discussed earlier), which was partially offset by decreases
associated with the downsizing of the overall leveraged COLI business.

OUTLOOK

The focus of this segment is variable COLI, which continues to be a product
generally used by employers to fund non-qualified benefits or other
postemployment benefit liabilities. The leveraged COLI product has been an
important contributor to Hartford Life Insurance Company's profitability in
recent years and will continue to contribute to the profitability of Hartford
Life Insurance Company in the future, although the level of profit is expected
to decline. COLI is subject to a changing legislative and regulatory environment
that could have a material adverse affect on its business. Certain proposed
legislative initiatives could impact COLI and are discussed in the Regulatory
Matters and Contingencies section.

INVESTMENTS

GENERAL

The Company's investments are managed by its investment strategy group which
consists of a risk management unit and a portfolio management unit and reports
directly to senior management of the Company. The risk management unit is
responsible for monitoring and managing the Company's asset/liability profile
and establishing investment objectives and guidelines. The portfolio management
unit is responsible for determining, within specified risk tolerances and
investment guidelines, the appropriate asset allocation, duration, and convexity
characteristics of the Company's general account and guaranteed separate account
investment portfolios. The Hartford Investment Management Company, a wholly
owned subsidiary of The Hartford Financial Services Group, Inc., executes the
investment plan of the investment strategy group including the identification
and purchase of securities that fulfill the objectives of the strategy group.

The primary investment objective of the Company's general account and guaranteed
separate accounts is to maximize after-tax returns consistent with acceptable
risk parameters (including the management of the interest rate sensitivity of
invested assets relative to that of policyholder obligations). The Company does
not hold any financial instruments purchased for trading purposes. The Company
is exposed to two primary sources of investment risk: credit risk, relating to
the uncertainty associated with an obligor's continued ability to make timely
payment of principal and/or interest, and interest rate risk, relating to the
market price and/or cash flow variability associated with changes in market
yield curves. See "Investment Risk Management" for further discussion of the
Company's approach to managing these investment risks.

The Company's separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $110.4 billion and $80.6 billion as of
December 31, 1999 and 1998, respectively wherein the policyholder assumes
substantially all the investment risk and reward, and guaranteed separate
accounts totaling $8.7 billion and $9.7 billion as of December 31, 1999 and
1998, respectively, wherein Hartford Life Insurance Company contractually
guarantees either a minimum return or account value to the policyholder.
Non-guaranteed separate account products include variable annuities, variable
life insurance contracts and variable

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COLI. Guaranteed separate account products primarily consist of modified
guaranteed individual annuities and modified guaranteed life insurance and
generally include market value adjustment features to mitigate the risk of
disintermediation.

The Company's general account consists of a diversified portfolio of
investments. Although all the assets of the general account support the
Company's general account liabilities, the Company's investment strategy group
has developed separate investment portfolios for specific classes of product
liabilities within the general account. The strategy group works closely with
the business lines to develop specific investment guidelines, including duration
targets, asset allocation and convexity constraints, asset/liability mismatch
tolerances and return objectives for each product line in order to achieve each
product line's individual risk and return objectives.

Invested assets in the Company's general account totaled $18.1 billion as of
December 31, 1999 and were comprised of $13.5 billion of fixed maturities, $4.2
billion of policy loans and other investments of $398. As of December 31, 1998,
general account invested assets totaled $21.8 billion and were comprised of
$14.8 billion of fixed maturities, $6.7 billion of policy loans and other
investments of $295. Policy loans, which had a weighted-average interest rate of
7.5% and 9.9%, as of December 31, 1999 and 1998, respectively, increased
primarily as a result of the MBL Recapture. These loans are secured by the cash
value of the underlying life insurance policies and do not mature in a
conventional sense, but expire in conjunction with the related policy
liabilities.

During 1999, the Hartford Life Insurance Company continued its investment
strategy of increasing its allocation to municipal tax-exempt securities with
the objective of increasing after-tax yields, and also increased its allocation
to commercial mortgage backed and mortgage backed securities. Short-term
investments decreased as of December 31, 1999 as compared to 1998 primarily due
to the funding of scheduled liability maturities and reallocation into other
asset sectors.

Approximately 22.2% and 23.3% of the Company's fixed maturity portfolio was
invested in private placement securities (including Rule 144A offerings) as of
December 31, 1999 and 1998, respectively. Private placement securities are
generally less liquid than public securities; however, covenants for private
placements are designed to mitigate liquidity risk. Most of the private
placement securities in the Company's portfolio are rated by nationally
recognized rating organizations.

INVESTMENT RESULTS

The table below summarizes Hartford Life Insurance Company's investment results.

(Before-tax) 1999 1998
------------ ---- ----

Net investment income - excluding policy loan income $ 968 $ 970
Policy loan income 391 789
-------- --------
Net investment income - total $ 1,359 $ 1,759
-------- --------
Yield on average invested assets (1) 6.8% 8.0%
-------- --------
Net realized capital losses $ (4) $ (2)
-------- --------

(1) Represents net investment income (excluding net realized capital losses)
divided by average invested assets at cost (fixed maturities at amortized
cost). In 1998, average invested assets were calculated assuming the MBL
Recapture proceeds were received on January 1, 1998.

Total net investment income, before-tax, decreased $400, or 23%, most notably
due to a decrease in policy loan income of $398 associated with the downsizing
of the leveraged COLI business. Yield on average invested assets declined to
6.8%, as a result of a decline in the policy loan weighted average interest rate
to 7.5% in 1999 from 9.9% in 1998. Net realized capital gains on the sale of
equity securities and fixed maturities offset a $28, after-tax, other than
temporary impairment charge related to asset backed securities securitized and
serviced by Commercial Financial Services, Inc. (CFS) securities, which were
sold in August of 1999.

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INVESTMENT RISK MANAGEMENT

Credit risk and interest rate risk are the primary sources of investment risk to
the Company. The Company manages credit risk through industry and issuer
diversification and asset allocation. Investment credit policies have been
established that focus on the credit quality of obligors and counterparties,
limit credit concentrations, and encourage diversification and require frequent
creditworthiness reviews. The Company invests primarily in securities rated
investment grade and has established exposure limits, diversification standards
and review procedures for all credit risks including borrower, issuer and
counterparty. Also, the Company maintains credit policies regarding the
financial stability and credit standing of its major derivatives' counterparties
and, to the extent the current value of derivatives exceed exposure policy
thresholds, collateral is pledged to or held by the Company. The Company manages
interest rate risk as part of its asset/liability management strategies,
including the use of certain hedging techniques (which may include the use of
certain financial derivatives), product design, such as the use of MVA features
and surrender charges, and proactive monitoring and management of certain
non-guaranteed elements of the Company's products (such as resetting of credited
rates for policies that permit such adjustments). For additional information of
the Company's interest rate risk management techniques see the "Asset/Liability
Management Strategies Used to Manage Market Risk" discussion below.

Upward movement in market interest rates during 1999 resulted in a significant
decline in the fair value of the fixed maturities portfolio over 1998. However,
the Company's asset allocation, and therefore its exposure to market risk, has
not changed materially from its position at December 31, 1998.

The following table reflects the principal amounts of the fixed and variable
rate fixed maturity portfolio, along with the respective weighted average
coupons by estimated maturity year as of December 31, 1999. Comparative totals
are included for December 31, 1998. Expected maturities differ from contractual
maturities due to call or prepayment provisions. The weighted average coupon on
variable rate securities is based on spot rates as of December 31, 1999 and
1998, and is primarily based on the London Interbank Offered Rate (LIBOR).
Callable bonds and notes are distributed to either call dates or maturity,
depending on which date produces the most conservative yield. Asset backed
securities, collateralized mortgage obligations and mortgage backed securities
are distributed to maturity year based on estimates of the rate of future
prepayments of principal over the remaining life of the securities. These
estimates are developed using prepayment speeds provided in broker consensus
data. Such estimates are derived from prepayment speeds previously experienced
at the interest rate levels projected for the underlying collateral. Actual
prepayment experience may vary from these estimates. Financial instruments with
certain leverage features have been included in each of the fixed maturity
categories. These instruments have not been separately displayed because they
were immaterial to the Company's investment portfolio.

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1999 1998
2000 2001 2002 2003 2004 Thereafter TOTAL Total

BONDS AND NOTES - CALLABLE
Fixed Rate
Par value $ 92 $ 54 $ 34 $ 64 $ 3 $ 230 $ 477 $ 480
Weighted average coupon 7.1% 5.8% 7.1% 7.6% 7.5% 5.3% 6.2% 6.3%
Fair value $ 456 $ 480
Variable Rate
Par value $ 126 $ 29 $ 26 $ -- $ 30 $ 1,011 $ 1,222 $ 974
Weighted average coupon 6.6% 6.2% 6.6% -- 7.4% 6.6% 6.6% 6.0%
Fair value $ 1,124 $ 883
BONDS AND NOTES - OTHER
Fixed Rate
Par value $ 3,175 $ 1,663 $ 1,106 $ 1,117 $ 1,132 $ 5,393 $ 13,586 $13,146
Weighted average coupon 6.7% 7.0% 7.3% 6.9% 6.3% 5.5% 6.2% 6.4%
Fair value $ 12,015 $13,655
Variable Rate
Par value $ 222 $ 84 $ 119 $ 73 $ 42 $ 334 $ 874 $ 1,132
Weighted average coupon 6.5% 6.0% 6.1% 5.7% 5.3% 4.9% 5.7% 5.7%
Fair value $ 901 $ 1,096
ASSET BACKED SECURITIES
Fixed Rate
Par value $ 409 $ 565 $ 308 $ 197 $ 172 $ 332 $ 1,983 $ 1,886
Weighted average coupon 6.8% 6.6% 6.5% 6.4% 6.8% 7.3% 6.7% 6.8%
Fair value $ 1,847 $ 1,811
Variable Rate
Par value $ 187 $ 275 $ 222 $ 216 $ 166 $ 421 $ 1,487 $ 1,720
Weighted average coupon 6.4% 6.4% 6.6% 6.7% 6.7% 6.7% 6.6% 6.1%
Fair value $ 1,419 $ 1,622
COLLATERALIZED MORTGAGE OBLIGATIONS
Fixed Rate
Par value $ 349 $ 235 $ 142 $ 75 $ 39 $ 202 $ 1,042 $ 1,342
Weighted average coupon 6.0% 6.1% 6.2% 6.5% 7.1% 7.2% 6.4% 6.3%
Fair value $ 941 $ 1,286
Variable Rate
Par value $ 16 $ 3 $ 1 $ -- $ 1 $ 103 $ 124 $ 276
Weighted average coupon 7.1% 5.0% 6.9% -- 8.1% 5.5% 5.8% 6.2%
Fair value $ 113 $ 260
COMMERCIAL MORTGAGE BACKED SECURITIES
Fixed Rate
Par value $ 106 $ 148 $ 129 $ 50 $ 94 $ 1,234 $ 1,761 $ 1,535
Weighted average coupon 6.7% 7.6% 7.2% 7.1% 7.2% 7.1% 7.1% 7.1%
Fair value $ 1,604 $ 1,578
Variable Rate
Par value $ 237 $ 117 $ 134 $ 178 $ 122 $ 459 $ 1,247 $ 1,046
Weighted average coupon 7.3% 7.6% 7.3% 7.2% 7.5% 7.7% 7.5% 6.7%
Fair value $ 1,073 $ 1,000
MORTGAGE BACKED SECURITIES
Fixed Rate
Par value $ 73 $ 83 $ 82 $ 74 $ 66 $ 698 $ 1,076 $ 654
Weighted average coupon 7.0% 7.0% 7.0% 7.0% 7.0% 7.9% 7.6% 6.8%
Fair value $ 816 $ 615
Variable Rate
Par value $ 1 $ 1 $ -- $ -- $ -- $ 2 $ 4 $ 11
Weighted average coupon 6.6% 6.6% -- -- -- 6.3% 6.4% 8.6%
Fair value $ 4 $ 10

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ASSET/LIABILITY MANAGEMENT STRATEGIES USED TO MANAGE MARKET RISK

The Company employs several risk management tools to quantify and manage market
risk arising from its investments and interest sensitive liabilities. For
certain portfolios, management monitors the changes in present value between
assets and liabilities resulting from various interest rate scenarios using
integrated asset/liability measurement systems and a proprietary system that
simulates the impacts of parallel and non-parallel yield curve shifts. Based on
this current and prospective information, management implements risk reducing
techniques to improve the match between assets and liabilities.

Derivatives play an important role in facilitating the management of interest
rate risk, creating opportunities to efficiently fund obligations, hedge against
risks that affect the value of certain liabilities and adjust broad investment
risk characteristics as a result of any significant changes in market risks. The
Company uses a variety of derivatives, including swaps, caps, floors, forwards
and exchange traded financial futures and options, in order to hedge exposure
primarily to interest rate risk on anticipated investment purchases or existing
assets and liabilities. The Company does not make a market or trade derivatives
for the express purpose of earning trading profits. The Company's derivative
program is monitored by an internal compliance unit and is reviewed frequently
by senior management. The notional amounts of derivative contracts, which
represent the basis upon which pay or receive amounts are calculated and are not
reflective of credit risk, totaled $7.5 billion as of December 31, 1999 ($4.7
billion related to insurance investments and $2.8 related to life insurance
liabilities). As of December 31, 1998, the notional amounts pertaining to
derivatives totaled $9.7 billion ($4.9 billion related to insurance investments
and $4.8 billion related to life insurance liabilities.)

The strategies described below are used to manage the aforementioned risks.

Anticipatory Hedging -- For certain liabilities, the Company commits to the
price of the product prior to receipt of the associated premium or deposit.
Anticipatory hedges are routinely executed to offset the impact of changes in
asset prices arising from interest rate changes pending the receipt of premium
or deposit and the subsequent purchase of an asset. These hedges involve taking
a long position in interest rate futures or entering into an interest rate swap
with duration characteristics equivalent to the associated liabilities or
anticipated investments. The notional amount of anticipatory hedges as of
December 31, 1999 and 1998 was $186 and $235, respectively.

Liability Hedging -- Several products obligate the Company to credit a return to
the contractholder which is indexed to a market rate. To hedge risks associated
with these products, the Company enters into various derivative contracts.
Interest rate swaps are used to convert the contract rate into a rate that
trades in a more liquid and efficient market. This hedging strategy enables the
Company to customize contract terms and conditions to customer objectives and
satisfies Hartford Life Insurance Company's asset/liability matching policy.
Interest rate swaps are also used to convert certain fixed contract rates into
floating rates, thereby allowing them to be appropriately matched against
floating rate assets. Additionally, interest rate caps are used to hedge against
the risk of contractholder disintermediation in a rising interest rate
environment. The notional amount of derivatives used for liability hedges as of
December 31, 1999 and 1998 was $2.8 billion and $4.8 billion, respectively.

Asset Hedging -- To meet the various policyholder obligations and to provide
cost effective prudent investment risk diversification, the Company may combine
two or more financial instruments to achieve the investment characteristics of a
fixed maturity security or that match an associated liability. The use of
derivative instruments in this regard effectively transfers unwanted investment
risks or attributes to others. The selection of the appropriate derivative
instruments depends on the investment risk, the liquidity and efficiency of the
market, and the asset and liability characteristics. The notional amount of
asset hedges as of December 31, 1999 and 1998 was $3.5 billion and $3.2 billion,
respectively.

Portfolio Hedging -- The Company periodically compares the duration and
convexity of its portfolios of assets to their corresponding liabilities and
enters into portfolio hedges to reduce any difference to desired levels.
Portfolio hedges reduce the mismatch between assets and liabilities and offset
the potential impact to cash flows caused by changes in interest rates. The
notional amount of portfolio hedges as of December 31, 1999 and 1998 was $1.0
billion and $1.5 billion, respectively.

LIFE INSURANCE LIABILITY CHARACTERISTICS

Hartford Life Insurance Company's insurance liabilities, other than
non-guaranteed separate accounts, are primarily related to accumulation vehicles
such as fixed or variable annuities and investment contracts and other insurance
products such as long-term disability and term life insurance.

Asset Accumulation Vehicles

While interest rate risk associated with these insurance products has been
reduced through the use of market value adjustment features and surrender
charges, the primary risk associated with these products is that the spread
between investment return and credited rate may not be sufficient to earn
targeted returns.

18
19
Fixed Rate -- Products in this category require the Company to pay a fixed rate
for a certain period of time. The cash flows are not interest sensitive because
the products are written with a market value adjustment feature and the
liabilities have protection against the early withdrawal of funds through
surrender charges. Product examples include fixed rate annuities with a market
value adjustment and fixed rate guaranteed investment contracts. Contract
duration is dependent on the policyholder's choice of guarantee period.

Indexed -- Products in this category are similar to the fixed rate asset
accumulation vehicles but require the Company to pay a rate that is determined
by an external index. The amount and/or timing of cash flows will therefore vary
based on the level of the particular index. The primary risks inherent in these
products are similar to the fixed rate asset accumulation vehicles, with an
additional risk that changes in the index may adversely affect profitability.
Product examples include indexed guaranteed investment contracts with an
estimated duration of up to two years.

Interest Credited -- Products in this category credit interest to policyholders,
subject to market conditions and minimum guarantees. Policyholders may surrender
at book value but are subject to surrender charges for an initial period.
Product examples include universal life contracts and the general account
portion of the Company's variable annuity products. Liability duration is short
to intermediate term.

Other Insurance Products

Long-term Pay Out Liabilities -- Products in this category are long term in
nature and may contain significant actuarial (including mortality and morbidity)
pricing and cash flow risks. The cash flows associated with these policy
liabilities are not interest rate sensitive but do vary based on the timing and
amount of benefit payments. The primary risks associated with these products are
that the benefits will exceed expected actuarial pricing and/or that the actual
timing of the cash flows will differ from those anticipated resulting in an
investment return lower than that assumed in pricing. Product examples include
structured settlement contracts, on-benefit annuities (i.e., the annuitant is
currently receiving benefits thereon) and long-term disability contracts.
Contract duration is generally five to ten years.

Short-term Pay Out Liabilities -- These liabilities are short term in nature
with a duration of less than one year. The primary risks associated with these
products are determined by the non-investment contingencies such as mortality or
morbidity and the variability in the timing of the expected cash flows.
Liquidity is of greater concern than for the long-term pay out liabilities.
Products include individual and group term life insurance contracts and
short-term disability contracts.

Management of the duration of investments with respective policyholder
obligations is an explicit objective of the Company's management strategy. The
estimated cash flows of insurance policy liabilities based upon internal
actuarial assumptions as of December 31, 1999 are reflected in the table below
by expected maturity year.
Comparative totals are included for December 31, 1998.

(Dollars in billions)

1999 1998
DESCRIPTION (1) 2000 2001 2002 2003 2004 Thereafter TOTAL Total

Fixed rate asset accumulation vehicles $ 1.9 $ 1.4 $ 0.7 $ 1.3 $ 2.2 $ 2.1 $ 9.6 $ 10.8
Weighted average credited rate 6.6% 6.8% 6.3% 5.5% 6.9% 6.8% 6.6% 6.6%
Indexed asset accumulation vehicles $ 0.4 $ 0.1 $ - $ - $ - $ - $ 0.5 $ 0.3
Weighted average credited rate 6.2% 6.2% - - - - 6.2% 5.1%
Interest credited asset accumulation $ 4.7 $ 0.6 $ 0.5 $ 0.3 $ 0.3 $ 3.7 $ 10.1 $ 10.7
vehicles
Weighted average credited rate 5.9% 5.5% 5.5% 5.6% 5.6% 5.6% 5.7% 5.7%
Long-term pay out liabilities $ 0.3 $ 0.3 $ 0.3 $ 0.2 $ 0.2 $ 1.9 $ 3.2 $ 2.9
Short-term pay out liabilities $ 0.2 $ - $ - $ - $ - $ - $ 0.2 $ 0.2

(1) As of December 31, 1999 and 1998, the fair value of the Company's investment
contracts including guaranteed separate accounts was $20.4 billion and $21.4
billion, respectively.

19
20
CAPITAL RESOURCES AND LIQUIDITY

RATINGS

The following table summarizes the Company's financial ratings from the major
independent rating organizations as of February 29, 2000:

DUFF & STANDARD &
INSURANCE RATINGS A.M. BEST PHELPS MOODY'S POOR'S
---------------------------------------------------------------------------------------------

Hartford Life Insurance Company A+ AA+ Aa3 AA
Hartford Life and Annuity A+ AA+ Aa3 AA
---------------------------------------------------------------------------------------------

Ratings are an important factor in establishing the competitive position of an
insurance company such as Hartford Life Insurance Company. There can be no
assurance that the Company's ratings will continue for any given period of time
or that they will not be changed. In the event that the Company's ratings are
downgraded, the level of sales or the persistency of the Company's block of in
force business may be adversely impacted.

RISK-BASED CAPITAL

The National Association of Insurance Commissioners (NAIC) has regulations
establishing minimum capitalization requirements based on Risk-Based Capital
(RBC) formulas for life insurance companies. The requirements consist of
formulas which identify companies that are undercapitalized and require specific
regulatory actions. The RBC formula for life insurance companies establishes
capital requirements relating to insurance, business, asset and interest rate
risks. The RBC ratios for each of the life insurance subsidiaries are in excess
of 200% as of December 31, 1999, which are greater than the minimum threshold.

CASH FLOW

1999 1998
---- ----

Cash provided by operating activities $ 325 $ 371
Cash provided by investing activities 2,423 601
Cash used for financing activities (2,710) (1,009)
Cash - end of year 55 17
-- --

In 1999, the decrease in cash provided by operating activities was primarily the
result of timing in the settlement of receivables and payables. The increase in
cash provided by investing activities and the decrease in cash used for
financing activities primarily related to the significant downsizing of the
leveraged COLI block of business, as well as the decrease in the Company's
guaranteed investment contract (GIC) business.

Operating cash flows in the periods presented have been more than adequate to
meet liquidity requirements.

MBL RECAPTURE

On November 10, 1998, the Company recaptured an in force block of COLI business
(referred to as "MBL Recapture") previously ceded to MBL Life Assurance Co. of
New Jersey (MBL Life). The transaction was consummated through the assignment of
a reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. MBL Life,
previously a Mutual Benefit Life subsidiary, operated under the Rehabilitation
Plan for Mutual Benefit Life. The MBL Recapture has been recorded retroactive to
January 1, 1998 with respect to results of operations. The transaction resulted
in a decrease in reinsurance recoverables of $4.8 billion with an offset
primarily in policy loans and other investments.

20
21
REGULATORY MATTERS AND CONTINGENCIES

LEGISLATIVE AND REGULATORY INITIATIVES

The business of insurance is primarily regulated by the states and is also
affected by a range of legislative developments at the state and federal levels.
Passage in November 1999 of the Gramm-Leach-Bliley Act (the Financial Services
Modernization Act), which permits affiliations among banks, insurance companies
and securities firms, may have competitive, operational and other implications
for the Company. In particular, the measure includes privacy protections
requiring all financial services providers to disclose their privacy policies
and restrict the sharing of personal information for marketing purposes. Various
states are considering even more restrictive privacy measures that could
potentially affect the Company's operations. Medical records are also subject to
new privacy safeguards under guidelines proposed by the U.S. Department of
Health and Human Services. These and similar measures proposed at the state
level could affect the Company's ability to manage medical claims.

Enactment of Gramm-Leach-Bliley at the federal level has focused renewed
attention on state regulation of insurance. Elements of the insurance industry
are involved in a countrywide initiative to streamline regulatory procedures.
Such measures could result in reduced transaction costs and improved speed to
market.

Current and proposed federal measures which may significantly affect the life
insurance business include tax law changes affecting the tax treatment of life
insurance products and its impact on the relative desirability of various
personal investment vehicles, medical testing for insurability, and proposed
legislation to prohibit the use of gender in determining insurance and pension
rates and benefits. In particular, President Clinton's 2001 federal budget
proposal currently contains certain recommendations for modifying tax rules
related to the treatment of COLI by contractholders which, if enacted as
described, could have a material adverse impact on the Company's sales of these
products. The budget proposal also includes provisions which would result in a
significant increase in the "DAC tax" on certain of the Company's products and
would apply a tax to the Company's policyholder surplus account. (For further
discussion on policyholder surplus accounts and related tax treatment as of
December 31, 1999, see Note 10 of Notes to Consolidated Financial Statements.)
It is too early to determine whether these tax proposals will ultimately be
enacted by Congress. Therefore, the potential impact to the Company's financial
condition or results of operations cannot be reasonably estimated at this time.

INSOLVENCY FUND

See Note 12 (b) of Notes to Consolidated Financial Statements.

NAIC PROPOSALS

The NAIC has been developing several model laws and regulations, including a
Model Investment Law and amendments to the Model Holding Company System
Regulatory Act (the "Holding Act Amendments"). The Model Investment Law defines
the investments which are permissible for life insurers to hold, and the Holding
Act Amendments address the types of activities in which subsidiaries and
affiliates may engage. The NAIC adopted these models in 1997 and 1996, but the
laws have not been enacted for insurance companies domiciled in the State of
Connecticut, such as Hartford Life Insurance Company. Even if enacted in
Connecticut or other states in which Hartford Life Insurance Company's insurance
subsidiaries are domiciled, it is expected that these laws will neither
significantly change Hartford Life Insurance Company's investment strategies nor
have any material adverse effect on Hartford Life Insurance Company's liquidity
or financial position.

The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The proposed effective date for the statutory accounting guidance is
January 1, 2001. It is expected that each of Hartford Life Insurance Company's
domiciliary states will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of the
insurance subsidiaries of Hartford Life Insurance Company.

DEPENDENCE ON CERTAIN THIRD PARTY RELATIONSHIPS

Hartford Life Insurance Company distributes its annuity and life insurance
products through a variety of distribution channels, including broker-dealers,
banks, wholesalers, its own internal sales force and other third party marketing
organizations. The Company periodically negotiates provisions and renewals of
these relationships and there can be no assurance that such terms will remain
acceptable to the Company or such service providers. An interruption in the
Company's continuing relationship with certain of these third parties could
materially affect the Company's ability to market its products. During the first
quarter of 1999, the Company modified its contract with Putnam Mutual Funds
Corp. (Putnam) to eliminate the exclusivity provision, which will allow both
parties to pursue new market opportunities. Putnam is contractually obligated to
support and service the related annuity in force block of business and to
market, support and service new business. However, there can be no assurance
that this contract modification will not adversely impact the Company's ability
to distribute Putnam-related products.

21
22
YEAR 2000

In General

The Year 2000 issue relates to the ability or inability of computer hardware,
software and other information technology (IT) systems, as well as non-IT
systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the Year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the Year 2000 as "1900," or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.

The integrity and reliability of Hartford Life Insurance Company's IT systems,
as well as the reliability of its non-IT systems, are integral aspects of
Hartford Life Insurance Company's business. Hartford Life Insurance Company
issues insurance policies, annuities, mutual funds and other financial products
to individual and business customers, nearly all of which contain date sensitive
payment dates. In addition, various IT systems support communications and other
systems that integrate Hartford Life Insurance Company's various business
segments and field offices, including Hartford Life Insurance Company's foreign
operations. Hartford Life Insurance Company also has business relationships with
numerous third parties that affect virtually all aspects of Hartford Life
Insurance Company's business, including, without limitation, suppliers, computer
hardware and software vendors, insurance agents and brokers, securities
broker-dealers, banks and other distributors and servicers of financial
products, many of which provide date sensitive data to Hartford Life Insurance
Company and whose operations are important to Hartford Life Insurance Company's
business.

Internal and Third Party Year 2000 Efforts

Beginning in 1990, Hartford Life Insurance Company began working on making its
IT systems Year 2000 ready, either through installing new programs or replacing
systems. These efforts were substantially completed by the end of 1999,
including the internal and external integrated testing of such systems. In
addition, Hartford Life Insurance Company's Year 2000 efforts included assessing
the potential impact on Hartford Life Insurance Company of third parties' Year
2000 readiness.

Status and Contingency Plans

As of February 29, 2000, Hartford Life Insurance Company had not experienced any
Year 2000-related business interruptions arising either from its own systems or
those of third parties. However, Hartford Life Insurance Company has developed
certain contingency plans so that if, despite its Year 2000 efforts, Year 2000
problems ultimately arise, the impact of such problems may be avoided or
minimized. The contingency planning process involved identifying reasonably
likely business disruption scenarios that, if they were to occur, could create
significant problems in the critical functions of each business segment. Each
business segment has developed plans to respond to such problems so that
critical business functions may continue to operate with minimal disruption.
Contingency planning also included assessing the dependency of Hartford Life
Insurance Company's critical business on third parties and their Year 2000
readiness. These plans were reviewed and simulated on an integrated basis, where
appropriate, and will continue to be evaluated. Furthermore, in many contexts,
Year 2000 issues are dynamic, and ongoing assessments of business functions,
vulnerabilities and risks must be made. As such, new contingency plans may be
needed in the future and/or existing plans may need to be modified as
circumstances warrant.

Year 2000 Costs

The after-tax costs of Hartford Life Insurance Company's Year 2000 efforts that
were incurred prior to January 1, 1998 were not material to Hartford Life
Insurance Company's financial condition or results of operations. For the years
ended December 31, 1999 and 1998, the after-tax costs were approximately $2 and
$3, respectively. These costs were expensed as incurred. Hartford Life Insurance
Company does not expect to incur significant costs in the year 2000 related to
its Year 2000 efforts.

ACCOUNTING STANDARDS

For a discussion of accounting standards, see Note 2 of Notes to Consolidated
Financial Statements.

22
23
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to the "Investment Risk Management" discussion of the
Investments section of the Management's Discussion and Analysis of Financial
Condition and Results of Operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Consolidated Financial Statements and Schedules elsewhere herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as a part of this report:

1. CONSOLIDATED FINANCIAL STATEMENTS. See Index to Consolidated Financial
Statements and Schedules elsewhere herein.

2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES. See Index to Consolidated
Financial Statement and Schedules elsewhere herein.

3. EXHIBITS. See Exhibit Index elsewhere herein.

(b) Reports on Form 8-K - None.

(c) See Item 14(a)(3).

(d) See Item 14(a)(2).

23
24
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

Page(s)

Report of Management F-1
Report of Independent Public Accountants F-2
Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997 F-3
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-4
Consolidated Statements of Changes in Stockholder's Equity for the years ended
December 31, 1999, 1998 and 1997 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 F-6
Notes to Consolidated Financial Statements F-7-21
Schedule I -- Summary of Investments - Other Than Investments in Affiliates S-1
Schedule III -- Supplementary Insurance Information S-2
Schedule IV -- Reinsurance S-3

REPORT OF MANAGEMENT

The management of Hartford Life Insurance Company (the "Company") is
responsible for the preparation and integrity of information contained in
the accompanying Consolidated Financial Statements. The Consolidated
Financial Statements are prepared in accordance with generally accepted
accounting principles, and, where necessary, include amounts that are based
on management's informed judgments and estimates. Management believes these
consolidated statements present fairly Hartford Life Insurance Company's
financial position and results of operations.

Management has made available Hartford Life Insurance Company's financial
records and related data to Arthur Andersen LLP, independent public
accountants, in order for them to perform an audit of the Company's
Consolidated Financial Statements. Their report appears on page F-2.

An essential element in meeting management's financial responsibilities is
Hartford Life Insurance Company's system of internal controls. These
controls, which include accounting controls and the internal auditing
program, are designed to provide reasonable assurance that assets are
safeguarded, and transactions are properly authorized, executed and
recorded. The controls, which are documented and communicated to employees
in the form of written codes of conduct and policies and procedures,
provide for careful selection of personnel and for appropriate division of
responsibility. Management continually monitors for compliance, while
Hartford Life Insurance Company's internal auditors independently assess
the effectiveness of the controls and make recommendations for improvement.
Also, Arthur Andersen LLP took into consideration the Company's system of
internal controls in determining the nature, timing and extent of their
audit tests.

Another important element is management's recognition of its responsibility
for fostering a strong, ethical climate, thereby ensuring that Hartford
Life Insurance Company's affairs are transacted according to the highest
standards of personal and professional conduct. Hartford Life Insurance
Company has a long-standing reputation of integrity in business conduct and
utilizes communication and education to create and fortify a strong
compliance culture.

The Audit Committee of the Board of Directors of Hartford Life, Inc. (the
"Committee"), the Company's ultimate parent, composed of independent
directors, meets periodically with the external and internal auditors to
evaluate the effectiveness of work performed by them in discharging their
respective responsibilities and to assure their independence and free
access to the Committee.

F-1
25
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO HARTFORD LIFE INSURANCE COMPANY:

We have audited the accompanying Consolidated Balance Sheets of Hartford
Life Insurance Company and subsidiaries as of December 31, 1999 and 1998,
and the related Consolidated Statements of Income, Changes in Stockholder's
Equity and Cash Flows for each of the three years in the period ended
December 31, 1999. These Consolidated Financial Statements and the
schedules referred to below are the responsibility of Hartford Life
Insurance Company's management. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above
present fairly, in all material respects, the financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1999
and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the
purpose of complying with the Securities and Exchange Commission's rules
and are not part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
January 31, 2000

F-2
26
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31,
-------------------------------------
(In millions) 1999 1998 1997
- ------------- ---- ---- ----

REVENUES
Premiums and other considerations $ 2,045 $ 2,218 $ 1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
------- ------- -------
TOTAL REVENUES 3,400 3,975 3,009
------- ------- -------

BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
------- ------- -------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
------- ------- -------

INCOME BEFORE INCOME TAX EXPENSE 552 538 469
Income tax expense 191 188 167
------- ------- -------

NET INCOME $ 361 $ 350 $ 302
------- ------- -------

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
27
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

As of December 31,
--------------------------
(In millions, except for share data) 1999 1998
--------- ---------

ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
--------- ---------
Total investments 18,084 21,797
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
--------- ---------
TOTAL ASSETS $ 134,965 $ 118,263
--------- ---------

LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
--------- ---------
TOTAL LIABILITIES 132,346 115,566
--------- ---------

STOCKHOLDER'S EQUITY
Common stock - 1,000 shares authorized, issued and outstanding,
par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive income (loss)
Net unrealized capital gains (losses) on securities, net of tax (255) 184
--------- ---------
Total accumulated other comprehensive income (loss) (255) 184
--------- ---------
Retained earnings 1,823 1,462
--------- ---------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 134,965 $ 118,263
--------- ---------

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4
28
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

ACCUMULATED OTHER
COMPREHENSIVE
INCOME (LOSS)
--------------
NET
UNREALIZED
CAPITAL
GAINS (LOSSES) TOTAL
COMMON CAPITAL ON SECURITIES, RETAINED STOCKHOLDER'S
(In millions) STOCK SURPLUS NET OF TAX EARNINGS EQUITY
- ------------------------------------------------------------------------------------------------------------------------------

1999

Balance, December 31, 1998 $ 6 $ 1,045 $ 184 $ 1,462 $ 2,697
Comprehensive income
Net income 361 361
-------
Other comprehensive income (loss),
net of tax (1):
Changes in net unrealized capital
gains (losses) on securities (2) (439) (439)
-------
Total other comprehensive income (loss) (439)
-------
Total comprehensive income (loss) (78)
------- ------- ------- ------- -------
BALANCE, DECEMBER 31, 1999 $ 6 $ 1,045 $ (255) $ 1,823 $ 2,619
------- ------- ------- ------- -------

1998

Balance, December 31, 1997 $ 6 $ 1,045 $ 179 $ 1,113