~~Table~~UNITED ofSTATES SECURITIES ~~Contents~~AND EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-K~~ D.C. 20549

~~UNITED~~FORM ~~STATES~~10-K

~~SECURITIES~~(Mark ~~AND EXCHANGE COMMISSION~~One)

~~Washington,~~þ ~~D.C.~~ANNUAL ~~20549~~ REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~(Mark~~For ~~One)~~ the fiscal year ended December 31, 2004

~~ANNUAL REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~o ~~the~~TRANSITION ~~fiscal~~REPORT ~~year~~PURSUANT ~~ended~~TO ~~December~~SECTION ~~31,~~13 ~~2001~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR For the transition period from to

~~TRANSITION~~Commission ~~REPORT~~file ~~PURSUANT~~number ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~001-12749

~~For~~HARTFORD ~~the~~LIFE, ~~transition period from to~~INC.

~~Commission~~(Exact ~~file~~name ~~number~~of ~~1-12749~~ registrant as specified in its charter)

HARTFORD LIFE, INC.


Delaware		06-1470915
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

~~(Exact~~200 ~~name~~Hopmeadow ofStreet, ~~registrant~~Simsbury, asConnecticut ~~specified~~06089 (Address inof ~~its~~principal ~~charter~~executive offices)

~~Delaware~~ (~~State or other jurisdiction of incorporation or organization~~860) 06 547-~~1470915~~ 5000 (~~I.R.S.~~Registrant’s ~~Employer~~telephone ~~Identification~~number, ~~Number~~including area code)

~~200~~Securities ~~Hopmeadow~~registered ~~Street~~pursuant to Section 12(b) of the Act: 7.625% Trust Preferred Securities, ~~Simsbury~~Series B, ~~Connecticut~~issued ~~06089~~ by Hartford Life Capital II Securities registered pursuant to Section 12(g) of the Act: 7.10% Notes due June 15, 2007 7.65% Debentures due June 15, 2027 7.375% Senior Notes due March 1, 2031

Indicate by check mark whether the registrant (~~Address~~1) has filed all reports required to be filed by Section 13 or 15(d) of ~~principal~~the ~~executive~~Securities ~~offices~~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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (~~860)~~as defined in Rule ~~547~~12b-~~5000~~2 of the Act). Yes o No þ

~~(Registrant’s~~The ~~telephone~~aggregate ~~number~~market value of the shares of Common Stock held by non-affiliates of the registrant as of June 30, ~~including~~2004 ~~area~~was ~~code)~~$0, because all of the outstanding shares of Common Stock were owned by Hartford Holdings, Inc., a direct wholly owned subsidiary of The Hartford Financial Services Group, Inc.

~~Securities~~As ~~registered~~of ~~pursuant~~February 18, to2005, ~~section~~there ~~12(b)~~were ofoutstanding ~~the Act: the following~~1, ~~which~~000 ~~are~~shares ~~registered~~of onCommon ~~the~~Stock, ~~New~~$0.01 ~~York~~par ~~Stock~~value ~~Exchange~~per share, ~~Inc~~of the registrant.:

~~7.2%~~The ~~Trust~~registrant ~~Preferred~~meets ~~Securities,~~the ~~Series~~conditions A,set ~~issued~~forth byin ~~Hartford~~General ~~Life~~Instruction ~~Capital~~ (I) ~~7.625%~~(1) ~~Trust~~(a) and ~~Preferred~~(b) of ~~Securities,~~Form 10-K ~~Series~~and B,is ~~issued~~therefore byfiling ~~Hartford~~this ~~Life~~Form ~~Capital~~with IIthe reduced disclosure format.

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

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 No


	ITEM	DESCRIPTION	PAGE
PART I	1	Business of Hartford Life*		3
	2	Properties*		12
	3	Legal Proceedings		12
	4	**

PART II	5	Market for Hartford Life’s Common Stock and Related Stockholder Matters		13
	6	**
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations*		14
	7A	Quantitative and Qualitative Disclosures About Market Risk		57
	8	Financial Statements and Supplementary Data		57
	9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		57
	9A	Controls and Procedures		57

PART III	10	**
	11	**
	12	**
	13	**
	14	Principal Accounting Fees and Services		58

PART IV	15	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		58
		Signatures	II-1
		Exhibits Index	II-2
EX-12.01: COMPUTATION OF RATIO OF EARNINGS
EX-23.01: CONSENT OF DELOITTE & TOUCHE LLP
EX-31.01: CERTIFICATION
EX-31.02: CERTIFICATION
EX-32.01: CERTIFICATION
EX-32.02: CERTIFICATION

As of February 28, 2002 there were outstanding 1,000 shares of Common Stock, $0.01 par value per share, of the registrant, all of which were directly owned by Hartford Fire Insurance Company, a direct wholly-owned subsidiary of The Hartford Financial Services Group, Inc.

*		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

~~The registrant meets the conditions set forth in General Instruction I (1) (a)~~2 ~~and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format.~~

~~TABLE~~PART ~~OF CONTENTS~~I

PART I
	Item 1. BUSINESS OF HARTFORD LIFE
	Item 2. PROPERTIES
	Item 3. LEGAL PROCEEDINGS
PART II
	Item 5. MARKET FOR HARTFORD LIFE’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
	Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART IV
	Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
	SIGNATURES
	EXHIBITS INDEX
Exhibit 12
Exhibit 23

Item 1. BUSINESS OF HARTFORD LIFE
(Dollar amounts in millions, except for share data, unless otherwise stated)

~~Table of Contents~~General

Hartford Life, Inc. and its subsidiaries (“Hartford Life” or the “Company”), an indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”), is headquartered in Simsbury, Connecticut and is a leading financial services and insurance organization. ~~providing~~Hartford Life provides (i) retail and institutional investment products, ~~such~~including as variable annuities, ~~and~~fixed market value adjusted (“MVA”) annuities, mutual funds, ~~individual~~private placement life insurance, which includes life insurance products purchased by a company on the lives of its employees, and retirement ~~corporate~~plan ~~owned~~services for the savings and retirement needs of over 5.0 million customers, (ii) life insurance for wealth protection, accumulation and transfer needs for approximately 738,000 customers, (iii) group benefits products. Asuch ~~subsidiary~~as group life and group disability insurance for the benefit of ~~The~~millions ~~Hartford~~of ~~Financial~~individuals ~~Services~~and ~~Group,~~(iv) fixed ~~Inc~~and variable annuity products through its international operations., ~~Hartford~~The ~~Life~~Company is ~~the~~one ~~nation’s~~of the largest ~~writer~~sellers of individual variable annuities, ~~the~~variable ~~number~~universal ~~three~~life ~~writer~~insurance ofand group disability insurance, ain ~~top~~the ~~provider~~United States. The Company’s strong position in each of ~~individual~~its ~~variable~~core ~~life~~businesses ~~insurance~~provides an opportunity to increase the sale of the Company’s products and ~~offers~~services as individuals increasingly save and plan for retirement, protect themselves and their families against the ~~fastest~~financial ~~growing~~uncertainties ~~non-proprietary~~associated with ~~family~~disability or death and engage in estate planning. (For additional information, see the Capital Resources and Liquidity section of ~~mutual~~the ~~funds~~Management’s Discussion and Analysis (“MD&A”) section).

~~CONTENTS~~Hartford Life is among the largest consolidated life insurance groups in the United States based on statutory assets as of December 31, 2004. In the past year, the Company’s total assets under management, which include $28.1 billion of third-party assets invested in the Company’s mutual funds and 529 College Savings Plans, increased 18% to $248.5 billion at December 31, 2004 from $210.1 billion at December 31, 2003. Hartford Life generated revenues of $11.4 billion, $8.1 billion, and $6.9 billion in 2004, 2003 and 2002, respectively. Additionally, the Company generated net income of $1.3 billion, $769, and $557 in 2004, 2003 and 2002, respectively.

	ITEM		DESCRIPTION	PAGE
PART I		1	Business of Hartford Life*		3
		2	Properties*		9
		3	Legal Proceedings		10
		4	**
PART II		5	Market for Hartford Life’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		33
		8	Financial Statements and Supplementary Data		33
		9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		33
PART III		10	**
		11	**
		12	**
		13	**
PART IV		14	Exhibits, Financial Statements, Schedules and Reports on Form 8-K		33
			Signatures	II-1
			Exhibits Index	II-2

Customer Service, Technology and Economies of Scale

*		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

The Company maintains advantageous economies of scale and operating efficiencies due to its growth, attention to expense and claims management and commitment to customer service and technology. These advantages allow the Company to competitively price its products for its distribution network and policyholders. 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 individual annuities, Hartford Life was awarded the 2004 Annuity Service Award by DALBAR Inc., a recognized independent financial services research organization, for the ninth consecutive year. Hartford Life is the only company to receive this prestigious award in every year of the award’s existence. Also, in 2004 the Company earned its second DALBAR Award for Mutual Fund and Retirement Plan Service which recognizes Hartford Life as the No. 1 service provider of mutual funds and retirement plans in the industry. Additionally, the Company’s Individual Life segment won its fourth consecutive DALBAR award for service of life insurance customers and its third consecutive DALBAR Financial Intermediary Service Award in 2004.

~~Table~~Risk ~~of Contents~~Management

~~PART~~The ICompany’s product designs, prudent underwriting standards and risk management techniques are structured to protect it against disintermediation risk, greater than expected mortality and morbidity experience and, for certain product features, specifically the guaranteed minimum death benefit (“GMDB”) and guaranteed minimum withdrawal benefit (“GMWB”) offered with variable annuity products, equity market volatility. As of December 31, 2004, the Company had limited exposure to disintermediation risk on approximately 97% of its domestic life insurance and annuity 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. The Company also enforces disciplined claims management to protect itself against greater than expected morbidity experience. The Company uses reinsurance structures and has modified benefit features to mitigate the mortality exposure associated with GMDB. The Company also uses reinsurance in combination with derivative instruments to minimize the volatility associated with the GMWB liability.

~~Item 1. BUSINESS OF HARTFORD LIFE~~3

~~(Dollar~~Reporting ~~amounts in millions, except for share data, unless otherwise stated)~~Segments

~~General~~The Company changed its reportable operating segments in 2004 from Investment Products, Individual Life, Group Benefits and Corporate Owned Life Insurance (“COLI”) to Retail Products Group (“Retail”), Institutional Solutions Group (“Institutional”), Individual Life and Group Benefits. Retail offers individual variable and fixed annuities, mutual funds, retirement plan products and services to corporations under Section 401(k) plans and other investment products. Institutional primarily offers retirement plan products and services to municipalities under Section 457 plans, other institutional investment products, structured settlements, and private placement life insurance (formerly referred to as COLI). Individual Life sells a variety of life insurance products, including variable universal life, universal life, interest sensitive whole life and term life insurance. The Group Benefits segment provides employers and associations with group life, accident and disability coverage, along with other products and services, including voluntary benefits, employee assistance programs, travel assistance, group retiree health, and medical stop loss. Life also includes in an Other category its international operations, which are primarily located in Japan and Brazil; net realized capital gains and losses other than periodic net coupon settlements on non-qualifying derivatives and net realized capital gains and losses related to guaranteed minimum withdrawal benefits; corporate items not directly allocated to any of its reportable operating segments; and intersegment eliminations. Periodic net coupon settlements on non-qualifying derivatives and net realized capital gains and losses related to guaranteed minimum withdrawal benefits are reflected in each applicable segment in net realized capital gains and losses.

~~Hartford~~Retail ~~Life,~~Products ~~Inc. and its subsidiaries (“Hartford Life” or the “Company”), an indirect subsidiary of The Hartford Financial Services~~ Group~~, Inc. (“The~~ ~~Hartford”), is headquartered in Simsbury, Connecticut and is a leading~~ ~~financial services and insurance organization. Hartford Life provides (i)~~ investment products, including variable annuities, fixed market value adjusted (“MVA”) annuities, mutual funds and retirement plan services for the savings and retirement needs of over 1.5 million customers, (ii) life insurance for income protection and estate planning to approximately 750,000 customers, (iii) group benefits products such as group life and group disability insurance for the benefit of millions of individuals and (iv) corporate owned life insurance, which includes life insurance policies purchased by a company on the lives of its employees. The Company is one of the largest sellers of individual variable annuities, variable life insurance and group disability insurance in the United States. In addition, in 2001, The Hartford Mutual Fund Family, Inc. reached $12 billion in assets faster than any other retail-oriented mutual fund family in history, according to Strategic Insight. The Company’s strong position in each of its core businesses provides an opportunity to increase the sale of The Hartford’s products and services as individuals increasingly save and plan for retirement, protect themselves and their families against disability or death and engage in estate planning. In an effort to advance the Company’s strategy of growing its life and asset accumulation businesses, The Hartford acquired the individual life insurance, annuity and mutual fund businesses of Fortis, Inc. (“Fortis Financial Group” or “Fortis”) on April 2, 2001. (For additional information, see the Capital Resources and Liquidity section of the MD&A and Note 5 of Notes to Consolidated Financial Statements).

~~Hartford~~The ~~Life~~Retail issegment ~~among~~focuses, through the ~~largest~~sale ~~consolidated~~of ~~life~~individual ~~insurance~~variable ~~groups~~and infixed ~~the~~annuities, mutual ~~United~~funds, ~~States~~retirement ~~based~~plan onservices ~~statutory~~and ~~assets~~other asinvestment ~~of December 31~~products, ~~2000.~~on In the ~~past~~savings and retirement needs ~~year,~~of the ~~Company’s~~growing ~~total~~number ~~assets~~of ~~under~~individuals ~~management,~~who ~~which~~are ~~include~~preparing ~~$16.8 billion of~~for ~~third-party~~retirement ~~assets~~or ~~invested~~who inhave ~~the~~already ~~Company~~retired. This segment’s ~~mutual~~assets ~~funds,~~under ~~increased~~management 9%grew to $~~168~~144.4 billion at December 31, ~~2001~~2004 from $~~155~~123.1 6 billion at December 31, ~~2000~~2003. ~~The~~ ~~Company~~Retail Products generated revenues of $63.52 billion, $62.02 billion and $51.59 billion in ~~2001~~2004, ~~2000~~2003 and ~~1999~~2002, respectively, of which individual annuities accounted for $2.6 billion, ~~Additionally~~$1.8 billion, ~~Hartford~~and ~~Life~~$1.5 billion ~~generated~~for ~~net~~ 2004, 2003 and 2002, respectively. Net income ofin the Retail Products segment was $~~685~~526, $~~575~~430 and $~~467~~356 in ~~2001~~2004, ~~2000,~~2003 and ~~1999~~2002, respectively.

~~Customer~~The ~~Service~~Company sells both variable and fixed individual annuity products through a wide distribution network of national and regional broker-dealer organizations, ~~Technology~~banks and ~~Economies~~other financial institutions and independent financial advisors. The Company is a market leader in the annuity industry with sales of ~~Scale~~$15.7 billion, $16.5 billion, and $11.6 billion in 2004, 2003 and 2002, respectively. The Company was the largest seller of individual retail variable annuities in the United States with sales of $15.0 billion, $15.7 billion, and $10.3 billion in 2004, 2003 and 2002, respectively. In addition, the Company continues to be the largest seller of individual retail variable annuities through banks in the United States.

The Company’s ~~maintains~~total ~~advantageous~~account ~~economies~~value ofrelated ~~scale and operating efficiencies due~~ to ~~its~~individual ~~continued~~annuity ~~growth, attention to expense and claims management and commitment to customer service and technology. These advantages allow the Company to competitively price its~~ products ~~for~~was ~~its distribution network and policyholders~~$111.0 billion ~~The~~as ~~Company continues to achieve operating~~of ~~efficiencies~~December 31, ~~in its Investment Products segment~~2004. ~~Operating~~Of ~~expenses~~this ~~associated with the Company’s individual annuity products as a percentage of~~ total ~~individual~~ ~~annuity~~ account ~~values~~value, ~~reduced~~$99.6 billion, byor ~~nearly half since 1992~~90%, ~~declining from~~related ~~43 basis points~~ to 22individual variable ~~basis~~annuity ~~points~~products inand ~~2001~~$11.4 billion, Inor ~~addition~~10%, ~~the~~related ~~Company utilizes~~primarily ~~computer technology~~ to ~~enhance~~fixed ~~communications~~MVA ~~within the Company and~~annuity ~~throughout~~products. ~~its~~At ~~distribution~~December 31, ~~network~~2003, ~~in order to improve~~ the Company’s ~~efficiency~~ intotal ~~marketing,~~account ~~selling~~value ~~and~~related ~~servicing~~to ~~its~~individual annuity products ~~and,~~was ~~as a result, provides high-quality customer service~~$97.7 billion. InOf ~~recognition~~this oftotal ~~excellence~~account ~~in customer service for variable annuities~~value, ~~Hartford Life was awarded the 2001 Annuity Service Award by DALBAR, Inc~~$86.5 billion, aor ~~recognized independent financial services research organization~~89%, ~~for~~related ~~the sixth consecutive year. Hartford Life is the only company~~ to ~~receive this prestigious award in every year of the~~ ~~award’s~~individual ~~existence.~~variable ~~Also,~~annuity inproducts ~~both 2001~~ and ~~2000~~$11.2 billion, ~~The~~or ~~Hartford Mutual Funds~~11%, ~~Inc.~~ ~~were~~related ~~named~~primarily ~~the leading mid-sized fund complex in the industry for top service providers, according~~ to afixed ~~survey of broker-dealers conducted by DALBAR,~~MVA ~~Inc.~~annuity Additionally, the Company’s Individual Life division won the DALBAR award for service of life insurance customers in 2001 and was the only life insurance operation to be recognized with this prestigious awardproducts.

~~Risk~~In ~~Management~~addition to its leading position in individual annuities, the Company continues to emerge as a significant participant in the mutual fund business. As of December 31, 2004, retail mutual fund assets were $25.2 billion. The Company is also among the top providers of retirement products and services, including asset management and plan administration sold to small and medium size corporations pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (referred to as “401(k)”).

~~The~~Principal ~~Company’s product designs, prudent underwriting standards and risk~~Products ~~management techniques protect it against disintermediation risk and greater~~ ~~than expected mortality and morbidity experience. As of December 31, 2001, the~~ Company had limited exposure to disintermediation risk on approximately 97% of its domestic life insurance and annuity 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 standards 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. The Company also enforces disciplined claims management to protect itself against greater than expected morbidity experience.

~~Reporting~~Individual ~~Segments~~Variable Annuities - The Company earns fees, based on policyholders’ account values, for managing variable annuity assets and maintaining policyholder accounts. The Company uses specified portions of the periodic deposits paid by 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 funds from the Company’s general account into one or more non-guaranteed separate accounts. Additionally, the Retail Products segment sells variable annuity contracts that offer various guaranteed minimum death and withdrawal benefits.

~~Hartford~~Policyholders ~~Life~~may ~~has~~make ~~the~~deposits ~~following~~of ~~reportable~~varying ~~operating~~amounts ~~segments:~~at ~~Investment~~regular or irregular intervals and the value ~~Products,~~of ~~Individual~~these ~~Life,~~assets ~~Group~~fluctuates ~~Benefits~~in ~~(formerly~~accordance ~~Employee~~with ~~Benefits)~~the ~~and Corporate~~investment ~~Owned~~performance ~~Life~~of ~~Insurance~~the ~~(COLI)~~funds selected by the policyholder. ~~The~~To encourage persistency, many of the Company’s ~~includes~~individual invariable ~~“Other”~~annuities ~~corporate~~are ~~items~~subject ~~not~~to ~~directly~~withdrawal ~~allocable~~restrictions and surrender charges. Surrender charges range up to ~~any~~8% of the ~~its~~contract’s ~~reportable~~deposits ~~operating segments~~less withdrawals, ~~principally~~and ~~interest~~reduce ~~expense,~~to aszero ~~well~~on asa ~~its~~sliding ~~international operations~~scale, ~~which~~usually ~~are~~within seven ~~primarily~~years ~~located~~from inthe ~~Latin~~deposit ~~America~~date. ~~and~~Individual ~~Japan.~~variable ~~The following~~annuity isaccount avalues ~~description~~of $99.6 billion as of ~~each~~December 31, ~~segment~~2004, ~~including~~have agrown ~~discussion~~from $86.5.billion as of December ~~principal~~

~~Table~~31, 2003, due to strong net cash flow, resulting from high levels of ~~Contents~~sales, low levels of surrenders and equity market appreciation. Approximately 83% and 80% of the individual variable annuity account values were held in non-guaranteed separate accounts as of December 31, 2004 and 2003, respectively.

~~products~~The assets underlying the Company’s variable annuities are managed both internally and by independent money managers, ~~methods~~while the Company provides all policy administration services. The Company utilizes a select group of ~~distribution~~money managers, such as Wellington Management Company, LLP (“Wellington”); Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford; Putnam Financial Services, Inc. (“Putnam”); American Funds; MFS Investment Management (“MFS”); Franklin Templeton Group; and ~~competitive~~AIM ~~environments~~Investments (“AIM”). All ~~Additional~~have an interest in the continued growth in sales of the Company’s products and enhance the ~~information~~marketability onof ~~Hartford~~the ~~Life~~Company’s ~~segments~~annuities ~~may~~and bethe ~~found~~strength inof its product offerings. Hartford Leaders, which is a multi-manager variable annuity that combines the ~~MD&A~~product manufacturing, wholesaling and ~~Note~~service 19capabilities of the Company with the investment management expertise of four of ~~Notes~~the tonation’s ~~Consolidated~~most ~~Financial~~successful ~~Statements~~investment management organizations: American Funds, Franklin Templeton Group, AIM and MFS, has emerged as the industry leader in terms of retail sales. In addition, the Director variable annuity, which is managed in part by Wellington, ranks second in the industry in terms of retail sales.

~~Investment~~Fixed ~~Products~~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 to maturity of approximately four years. Account values of fixed MVA annuities were $11.4 billion and $11.2 billion as of December 31, 2004 and 2003, respectively.

~~The~~Mutual ~~Investment~~Funds ~~Products~~- ~~segment~~The ~~focuses,~~Company ~~through~~launched ~~the~~a ~~sale~~family of ~~individual variable~~retail ~~and fixed annuities,~~ mutual funds, ~~retirement~~for ~~plan~~which ~~services~~the ~~and~~Company ~~other~~provides investment ~~products,~~management ~~on the savings~~ and ~~retirement~~administrative ~~needs~~services. ofThe ~~the~~fund ~~growing~~family ~~number of~~has ~~individuals~~grown ~~who~~significantly ~~are~~from ~~preparing for retirement or who have already retired.~~8 ~~From~~funds ~~December 31,~~at ~~1996~~inception to ~~December 31,~~the ~~2001,~~current ~~this~~offering ~~segment’s~~of ~~assets~~40 ~~under management grew to $120.3 billion from $55.3 billion~~funds, aincluding ~~five~~the ~~year~~addition ~~compounded annual growth rate~~ of ~~17%.~~the ~~Investment Products generated revenues of $2.5~~Hartford ~~billion,~~Equity ~~$2.4 billion~~Income ~~and~~Fund ~~$2.0 billion~~introduced in ~~2001,~~2003. ~~2000~~The ~~and~~Company’s ~~1999,~~funds ~~respectively,~~are ~~of which,~~managed ~~individual~~by ~~annuities~~Wellington ~~accounted for $1.5 billion in 2001~~ and ~~2000, and~~Hartford $1Investment Management.~~4 billion~~ inThe ~~1999.~~Company ~~Net~~has ~~income~~entered ininto ~~the~~agreements ~~Investment~~with ~~Products~~over ~~segment~~960 ~~was~~financial ~~$463,~~services ~~$424~~firms ~~and~~to ~~$330~~distribute inthese ~~2001,~~mutual ~~2000 and 1999, respectively~~funds.

~~Hartford~~The ~~Life~~Company ~~sells~~charges ~~both~~fees ~~variable~~to ~~and~~the ~~fixed~~shareholders ~~individual~~of ~~annuity~~the ~~products~~mutual ~~through~~funds, which are recorded as revenue by athe ~~wide~~Company. ~~distribution~~Investors ~~network~~can purchase shares in the mutual funds, all of ~~national~~which ~~and~~are ~~regional~~registered ~~broker-dealer~~with ~~organizations,~~the ~~banks~~Securities and ~~other~~Exchange ~~financial~~Commission, ~~institutions~~in ~~and~~accordance ~~independent~~with ~~financial advisors.~~the ~~The~~Investment Company isAct aof ~~market~~1940. ~~leader~~The mutual infunds ~~the~~are ~~annuity~~owned ~~industry~~by ~~with~~the ~~sales~~shareholders of ~~$10.0 billion,~~ ~~$10.7 billion~~those funds and ~~$10~~not by the Company.~~9 billion~~ inAs ~~2001~~such, ~~2000~~the mutual fund assets and ~~1999~~liabilities, ~~respectively.~~ ~~Hartford~~as ~~Life~~well ~~was~~as ~~among~~related ~~the~~investment ~~largest~~returns, ~~sellers~~are ofnot ~~individual variable~~reflected ~~annuities~~ in the Company’s ~~United~~consolidated ~~States~~financial ~~for~~statements. ~~2001,~~Total ~~2000~~retail ~~and~~mutual ~~1999~~fund ~~with~~assets ~~sales~~under ofmanagement were $925.02 billion, ~~$9.0 billion~~ and $1020.3 billion, ~~respectively.~~as Inof ~~addition~~December 31, ~~the Company~~2004 ~~continues~~and to2003, ~~be among the largest sellers of individual variable annuities through banks in the United States~~respectively.

401(k) - The Company’s ~~total~~sells ~~account~~retirement ~~value~~plan ~~related~~products toand ~~individual~~services ~~annuity~~to ~~products~~corporations ~~was~~under Section ~~$84.2 billion~~401(k) asplans oftargeting ~~December 31,~~the ~~2001.~~small Ofand ~~this~~medium ~~total~~case ~~account value, $74~~markets.~~6 billion,~~ orThe ~~89%,~~Company ~~related~~believes tothese ~~individual~~markets ~~variable annuity products and $9.6~~are ~~billion,~~under-penetrated orin ~~11%,~~comparison ~~related primarily~~ to ~~fixed~~the ~~MVA~~large ~~annuity~~case ~~products~~market. InAs ~~2000~~of December 31, 2004, the Company’s administered ~~total~~over ~~account~~8,200 ~~values~~Section ~~related~~401(k) toplans. ~~individual~~Total ~~annuity~~401(k) ~~products~~assets ~~was~~under management were $877.23 billion. Ofand ~~the total account value~~ $785.2 billion, oras ~~90%~~of ~~related~~December 31, ~~to individual~~2004 ~~variable annuity products~~ and ~~$9.0 billion~~2003, ~~or 10% related primarily to fixed MVA annuity products~~respectively.

InMarketing ~~addition to its leading position in individual annuities, the Company continues to emerge as a significant participant in the mutual fund business~~ and ~~is among the top providers of retirement products and services, including~~Distribution ~~asset management and plan administration sold to corporations pursuant to~~ ~~Section 401 of the Internal Revenue Code (the “Code”), as amended (referred to~~ as “401(k)”) and to municipalities pursuant to Section 457 of the Code, (referred to as “Section 457”). The Company also provides structured settlement contracts, terminal funding products and other investment products such as guaranteed investment contracts (“GICs”).

AsThe ~~previously~~Retail ~~mentioned,~~Products ~~The~~distribution ~~Hartford~~network ~~acquired~~is ~~the~~based ~~individual~~on ~~annuity~~management’s ~~and~~strategy of utilizing multiple ~~mutual~~and ~~fund~~competing ~~businesses~~distribution ofchannels ~~Fortis,~~to ~~Inc.~~achieve inthe ~~2001.~~broadest ~~This~~distribution ~~acquisition~~to ~~increased assets~~reach ~~under~~target ~~management~~customers. The insuccess of the Company’s ~~fast~~marketing ~~growing~~and ~~mutual~~distribution system depends on its product offerings, fund ~~business~~performance, bysuccessful utilization of wholesaling organizations, quality of customer service, ~~20%~~and relationships with national and regional broker-dealer firms, banks and ~~helped~~other ~~solidify~~financial institutions, and independent financial advisors (through which the sale of the Company’s ~~strong~~retail investment ~~position~~products into ~~variable~~customers ~~annuities~~is consummated).

~~Principal~~The ~~Products~~Company maintains a distribution network of approximately 1,500 broker-dealers and approximately 500 banks. As of December 31, 2004, the Company was selling products through 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. The Company’s primary wholesaler of its individual annuities is PLANCO Financial Services, Inc. and its affiliate, PLANCO, Incorporated (collectively “PLANCO”) a wholly owned subsidiary of Hartford Life and Accident Insurance Company (“HLA”). PLANCO is one of the nation’s largest wholesalers of individual annuities and has played a significant role in The Hartford’s growth over the past decade. As a wholesaler, PLANCO distributes the Company’s fixed and variable annuities, and 401(k) plans, mutual funds and 529 plans by providing sales support to registered representatives, financial planners and broker-dealers at brokerage firms and banks across the United States. Owning PLANCO secures 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 which they wholesale. In addition, the Company uses internal personnel with extensive experience in the Section 401(k) market, to sell its products and services in the retirement plan market.

Individual Variable Annuities — Hartford Life earns fees, based on policyholders’ account values, for managing variable annuity assets and maintaining policyholder accounts. The Company uses specified portions of the periodic deposits paid by 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 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 continues to be popular with policyholders. Policyholders may make deposits of varying amounts 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. Surrender charges range initially from 5~~% to 8% of the contract’s initial deposit less withdrawals and~~ reduce to zero on a sliding scale, usually within seven policy years. Volatility experienced by the equity markets over the past few years did not cause a significant increase in variable annuity surrenders, demonstrating that policyholders are generally aware of the long-term nature of these products. Individual variable annuity account values of $74.6 billion as of December 31, 2001, have grown significantly from $13.1 billion as of December 31, 1994, due to strong net cash flow, resulting from high levels of sales, low levels of surrenders and equity market appreciation. Approximately 94% and 96% of the individual variable annuity account values were held in non-guaranteed separate accounts as of December 31, 2001 and 2000, respectively.

~~The assets underlying the Company’s variable annuities are managed both~~Competition ~~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, AIM Investments (“AIM”) and Morgan Stanley Investment Advisors, Inc. All

4The Retail segment competes with numerous other insurance companies as well as certain banks, securities brokerage firms, independent financial advisors and other financial intermediaries marketing annuities, mutual funds and other retirement-oriented products. 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.

~~Table~~Institutional ofSolutions ~~Contents~~Group

~~have~~The anCompany ~~interest~~is inamong the ~~continued~~top ~~growth~~providers ~~in sales~~ of ~~the~~retirement ~~Company’s~~ products and ~~greatly~~services, ~~enhance~~including ~~the marketability of the~~asset ~~Company’s~~management ~~annuities~~ and ~~the~~plan ~~strength~~administration ofsold ~~its~~to ~~product~~municipalities ~~offerings.~~pursuant ~~The~~to ~~Director variable~~Section 457 ~~annuity,~~and ~~which~~403(b) isof ~~managed in part by Wellington, continues to~~the beInternal anRevenue ~~industry~~Code ~~leader in terms~~ of ~~sales. In addition~~1986, ~~The~~as ~~Hartford~~amended ~~Leaders, which~~(referred isto aas ~~multi-manager~~“Section 457” ~~variable annuity that combines the product manufacturing, wholesaling~~ and ~~service capabilities of Hartford Life with the~~“403(b)”, ~~investment~~respectively). ~~management~~The ~~expertise~~Company ofalso ~~four~~provides ofstructured ~~the~~settlement ~~nations most successful investment management organizations~~contracts, ~~American~~institutional ~~Funds~~annuities, institutional ~~Franklin~~mutual ~~Templeton~~funds ~~Group, AIM~~ and ~~MFS,~~stable ~~has~~value ~~quickly~~investment ~~emerged~~products such as afunding ~~strong~~agreements ~~selling~~and guaranteed ~~product~~investment ~~for~~contracts ~~the Company~~(“GICs”).

~~Fixed~~Additionally, ~~MVA~~the ~~Annuities~~Company —is ~~Fixed MVA annuities are fixed rate annuity contracts which guarantee~~ a ~~specific~~leader ~~sum~~in ofthe ~~money~~private toplacement belife ~~paid~~insurance in(“PPLI”) ~~the future~~market, ~~either as a~~ ~~lump~~which ~~sum~~includes orlife asinsurance ~~monthly~~policies ~~income.~~purchased Inby ~~the event that~~ a ~~policyholder~~company ~~surrenders~~or a ~~policy~~ ~~prior~~trust toon the ~~end~~lives of ~~the guarantee period~~employees, with the ~~MVA~~company ~~feature increases~~ or ~~decreases~~ ~~the~~a ~~cash~~trust ~~surrender~~sponsored ~~value~~by of the ~~annuity~~company innamed ~~respect~~as ofthe ~~any~~beneficiary ~~interest rate~~under ~~decreases or increases, respectively, thereby protecting~~ the ~~Company from~~policy. ~~losses~~Until ~~due to higher interest rates at~~ the ~~time~~passage of ~~surrender.~~Health ~~The~~Insurance ~~amount~~Portability ~~of payment~~and ~~will~~Accountability ~~not~~Act ~~fluctuate~~of ~~due~~1996 to(“HIPAA”), ~~adverse changes in~~ the ~~Company’s investment~~ ~~return, mortality experience or expenses. The~~ Company’s ~~primary~~sold ~~fixed~~two ~~MVA annuities~~principal ~~have~~types ~~terms varying from one to ten years with an average term~~ of ~~approximately~~ ~~eight~~PPLI, ~~years.~~leveraged ~~Account~~COLI ~~values of fixed MVA annuities were $9.6 billion~~ and ~~$9.0 billion~~variable ~~as of December 31, 2001 and 2000, respectively~~products.

~~Mutual~~The ~~Funds~~Company —has Inrecently ~~September~~introduced ~~1996,~~two ~~Hartford~~products ~~Life~~for ~~launched a family of retail mutual funds in which~~ the ~~Company~~High ~~provides~~Net ~~investment~~Worth ~~management and administrative services~~markets. ~~The~~One ~~fund~~is ~~family has grown significantly from 8 funds~~a atspecialized ~~inception~~life toinsurance ~~the~~contract ~~current~~for ~~offering~~ultra-wealthy, ofHigh 21Net ~~funds.~~Worth ~~These~~investors, ~~funds~~the ~~are~~other ~~managed~~is bya ~~Wellington~~hedge ~~and~~fund ~~Hartford~~designed ~~Investment~~to ~~Management~~leverage ~~Company,~~the astrengths ~~wholly-owned subsidiary~~ of ~~The~~ Hartford. ~~The~~Life’s ~~Company~~award ~~has~~winning ~~entered~~customer ~~into~~service ~~agreements with over~~and ~~750~~distribution ~~financial services firms to distribute these mutual funds~~capability.

The Company’s ~~charges~~total ~~fees~~account tovalues ~~the~~related ~~shareholders~~to ofinstitutional ~~the~~investment ~~mutual~~products ~~funds,~~were ~~which are~~$14.6 billion ~~recorded~~and $12.7 billion as ~~revenue~~of byDecember 31, ~~the~~2004 ~~Company.~~and ~~Investors~~2003, ~~can~~respectively. ~~purchase~~Governmental ~~shares~~account invalues ~~the~~were ~~mutual~~$10.0 billion ~~funds,~~and ~~all~~$9.0 billion as of ~~which~~December 31, ~~are~~2004 ~~registered~~and ~~with~~2003, ~~the~~respectively. ~~Securities~~Variable ~~and Exchange~~PPLI ~~Commission,~~products inaccount ~~accordance~~values ~~with~~were ~~the~~$22.5 billion ~~Investment~~and ~~Company~~$21.0 billion ~~Act~~as of ~~1940.~~December 31, ~~The~~2004 ~~mutual~~and 2003, ~~funds~~respectively. ~~are~~Leveraged ~~owned~~COLI byaccount ~~the~~values ~~shareholders~~were $2.5 billion as of ~~those~~December 31, ~~funds~~2004 and ~~not by the Company~~2003. AsThe ~~such,~~Institutional ~~the~~segment ~~mutual~~generated ~~fund~~revenues ~~assets~~of ~~and liabilities~~$1.8 billion, as$2.1 billion ~~well~~and as$1.8 billion ~~related~~for ~~investment~~the ~~returns,~~years ~~are~~ended ~~not~~December 31, ~~reflected~~2004, in2003 ~~the~~and ~~Company’s~~2002, ~~consolidated~~respectively ~~financial~~and ~~statements. Total~~net ~~retail~~income ~~mutual~~of ~~fund sales were~~ $~~5.7 billion~~124, $~~5.2 billion~~83 and $~~3.3 billion in~~108 ~~2001~~in 2004, ~~2000~~2003 and ~~1999~~2002, respectively.

~~Governmental~~Principal ~~— The Company sells retirement plan products and services to~~Products ~~municipalities under Section 457 plans. The Company offers a number of~~ ~~different investment products, including fixed and variable annuities, to the~~ employees in Section 457 plans. Generally, with the variable products, 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. As of December 31, 2001, the Company administered over 3,000 Section 457 plans.

~~Corporate~~Institutional —Investment Products - The Company sells ~~retirement~~the ~~plan~~following ~~products~~institutional ~~and services to~~investment ~~corporations~~products: ~~under~~structured ~~Section 401(k)~~settlements, ~~plans~~institutional ~~targeting~~mutual ~~the~~funds, ~~small~~GICs and ~~medium~~other ~~case~~short-term funding ~~markets~~agreements, ~~since~~and ~~the~~other ~~Company~~annuity ~~believes~~contracts ~~these~~for ~~markets~~special ~~are~~purposes ~~underpenetrated~~such ~~in comparison~~as tofunding ~~the large case market. As~~ of ~~December 31,~~terminated ~~2001, the Company~~defined ~~administered~~benefit ~~over~~pension ~~2,400~~plans ~~Section 401~~(k)institutional ~~plans~~annuities arrangements).

~~Institutional~~Structured ~~Liabilities~~Settlements —- ~~The~~Structured ~~Company sells structured~~ settlement annuity 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.~~

~~Section 529~~Institutional ~~Plans~~Mutual —Funds - The Company issells ~~introducing~~its ainstitutional ~~tax~~mutual ~~advantaged~~funds, ~~college~~the ~~savings~~Hartford HLS ~~product~~Funds ~~(529~~and ~~Plan)~~the inHartford ~~early~~HLS ~~2002~~Series II ~~called~~Funds, ~~SMART~~to ~~529.~~qualified ~~SMART~~retirement ~~529~~plans is(i.e., aSection 401(k) and ~~state-sponsored~~457 ~~education~~plans) ~~savings~~on ~~program~~an ~~established~~“investment byonly” basis. That means that the ~~State~~funds ofare ~~West Virginia~~sold individually, ~~which~~with ~~offers~~no recordkeeping anservices ~~easy~~included ~~way~~and ~~for~~not ~~both~~as ~~the~~a ~~residents~~part of ~~West~~any ~~Virginia~~bundled ~~and~~retirement program. The Hartford’s ~~out~~wholly-~~of-state~~owned ~~participants~~subsidiary, toHL ~~invest~~Investment ~~for~~Advisors, aLLC, ~~college~~serves ~~education.~~as Inthe ~~1996,~~investment ~~Congress~~advisor to these ~~created~~funds aand ~~tax-advantaged~~contracts ~~college~~with ~~savings~~sub-advisors ~~program~~to asperform ~~part~~the ofday-to-day ~~Section 529~~management of the ~~Code~~ funds. The ~~529~~two primary ~~Plan~~sub-advisors isto anthe ~~investment~~Hartford ~~plan~~HLS ~~operated~~Funds byare aWellington ~~state~~Management ~~designed~~Company, toLLP, ~~help~~of Boston, ~~families~~Massachusetts ~~save~~ for ~~future~~most ~~college~~of ~~costs.~~the Onequity ~~January 1,~~funds ~~2002,~~and ~~529~~Hartford ~~Plans~~Investment ~~became federal~~Management, ~~tax exempt~~ for ~~qualified~~the ~~withdrawals~~fixed income funds.

~~SMART~~Stable ~~529~~Value isProducts ~~designed~~-GICs toare begroup ~~flexible~~annuity bycontracts ~~allowing~~issued ~~investors~~ to ~~choose~~sponsors ~~from a wide variety~~ of ~~investment~~qualified ~~portfolio’s~~pension toor profit-sharing ~~match~~plans ~~their~~or ~~risk~~stable ~~preference~~value topooled ~~help investors~~fund ~~accumulate~~managers. ~~savings~~Under ~~for~~these ~~college.~~contracts, Anthe ~~individual~~client deposits ~~can~~a ~~open~~lump asum ~~SMART~~with ~~529 account~~the Hartford for ~~anyone,~~a atspecified ~~any~~period ~~age.~~of ~~The~~time ~~SMART~~for ~~529~~a ~~product~~guaranteed ~~complements Hartford~~interest ~~Life’s~~rate. ~~existing~~At ~~offering~~the end of ~~investment~~the ~~products~~specified ~~(mutual funds~~period, ~~variable annuities,~~the ~~401~~client ~~(k),~~receives ~~457~~principal ~~and~~plus ~~403~~interest ~~(b) plans)~~earned. Funding Itagreements ~~also~~are ~~leverages~~investment ~~the~~contracts ~~Company’s capabilities~~that inperform ~~distribution,~~a ~~service~~similar ~~and~~function ~~fund~~for ~~performance~~non-qualified assets. ~~The~~Also ~~Company believes~~during ~~this~~2004, isthe aCompany ~~significant~~began ~~market~~issuing ~~opportunity~~fixed ~~and~~rate ~~the~~funding ~~benefits~~agreements ofto ~~investing~~Hartford Life inGlobal ~~529~~Funding ~~plans~~trusts ~~will~~that, bein ~~well~~turn, ~~received~~issue byregistered ~~many~~notes ~~Americans~~to ~~saving~~institutional ~~for~~and ~~college~~retail investors.

~~Marketing~~Institutional ~~and~~Annuities ~~Distribution~~- Institutional annuities arrangements are group annuity contracts used to fund pension liabilities that exist when a qualified retirement plan sponsor decides to terminate an existing defined benefit pension plan. Group annuity contracts are very long-term in nature, since they must pay the pension liabilities typically on a monthly basis to all participants covered under the pension plan which is being terminated.

Governmental - The ~~Investment~~Company ~~Products~~sells ~~distribution~~retirement ~~network~~plan isproducts ~~based~~and onservices ~~management’s~~to ~~strategy~~municipalities under ofSection 457 ~~utilizing~~plans. ~~multiple~~The ~~and~~Company ~~competing~~offers ~~distribution~~a ~~channels~~number toof ~~achieve~~different ~~the broadest~~investment ~~distribution~~products, toincluding ~~reach~~variable annuities ~~target~~and ~~customers.~~fixed ~~The~~products, ~~success~~to of the ~~Company’s marketing~~employees ~~and~~in ~~distribution~~Section 457

~~Table~~plans. Generally, with the variable products, 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. As of ~~Contents~~December 31, 2004, the Company administered over 3,600 plans under Sections 457 and 403(b).

~~system~~Variable ~~depends~~PPLI onproducts ~~its~~- ~~product~~Private ~~offerings,~~Placement Variable Life Insurance (“PPVLI”) products continue to be used by employers to fund non-qualified benefits or other post-employment benefit liabilities. A ~~performance,~~key ~~successful~~advantage ~~utilization~~to ofplan ~~wholesaling~~sponsors ~~organizations,~~is ~~quality~~the opportunity to select from a range of tax deferred investment ~~customer~~allocations. ~~service,~~Recent ~~and~~clarifications ~~relationships~~in ~~with~~regulatory ~~national~~policy ~~and~~have ~~regional~~made ~~broker-dealer~~PPVLI products particularly ~~firms,~~attractive to banks ~~and~~with ~~other~~postretirement ~~financial~~medical ~~institutions~~obligations. PPVLI has also been widely used in the high net worth marketplace due to its low costs, range of investment choices and ~~independent~~ability ~~financial~~to ~~advisors~~accommodate ~~(through~~a ~~which~~fund ~~the~~of ~~sale~~funds ofmanagement style. This institutionally priced hedge fund product is aimed at the ~~Company’s~~rapidly ~~individual~~growing ~~annuities~~market composed of affluent investors unable to participate in the ~~customers~~higher isminimums ~~consummated)~~of some hedge funds.

~~Hartford~~Leveraged ~~Life~~COLI ~~maintains a distribution network of approximately 1,500 broker~~-~~dealers~~ ~~and~~Leveraged ~~approximately~~COLI 500 banks. As of September 30, 2001, the Company was selling products through 24 of the 25 largest retail banks in the United States, including proprietary relationships with 10 of the top 25. 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. The Company’s primary wholesaler of it’s individual annuities and mutual funds is its wholly-owned subsidiary, PLANCO Financial Services, Inc. and its affiliate, PLANCO, Incorporated (collectively “PLANCO”). PLANCO is one of the nation’s largest wholesalers of individual annuities and has played a ~~significant role in The Hartford’s growth over the past decade. As a wholesaler, PLANCO distributes the Company’s~~ fixed ~~and variable annuities, mutual funds, 401(k) and single~~ premium ~~variable~~ life insurance bypolicy ~~providing~~owned ~~sales~~by ~~support~~a tocompany ~~registered representatives,~~or ~~financial planners and broker-dealers at brokerage firms and~~a ~~banks~~trust ~~across~~sponsored ~~the~~by ~~United~~a ~~States~~company. ~~Owning~~HIPAA ~~PLANCO~~phased ~~secures~~out ~~an important distribution channel for~~ the ~~Company~~deductibility ~~and~~of ~~gives~~interest ~~the~~on ~~Company~~policy aloans ~~wholesale~~under ~~distribution~~leveraged ~~platform~~COLI ~~which~~at ~~it can expand in terms of both~~ the ~~number~~end of ~~individuals~~ ~~wholesaling~~1998, ~~its~~virtually ~~products~~eliminating ~~and~~all ~~the~~future ~~portfolio~~sales of ~~products~~leveraged ~~which they wholesale~~COLI. ~~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~~Marketing and Distribution

~~The~~In ~~Investment~~the ~~Products~~Section 457 ~~segment~~market, ~~competes~~the ~~with~~Institutional ~~numerous~~segment ~~other~~distribution ~~insurance companies~~network asuses ~~well~~internal aspersonnel with ~~certain~~extensive ~~banks,~~experience ~~securities~~to ~~brokerage~~sell ~~firms,~~its ~~investment advisors~~products and ~~other~~services ~~financial~~in ~~intermediaries~~the ~~marketing~~retirement ~~annuities,~~plan ~~mutual funds~~ and institutional ~~other retirement-oriented products~~markets. The ~~1999~~success ~~Gramm-Leach-Bliley~~of ~~Act (“~~the ~~Financial~~ ~~Services~~Company’s ~~Modernization~~marketing ~~Act”),~~and ~~which~~distribution ~~allows~~system ~~affiliations~~depends ~~among banks,~~on ~~insurance~~its ~~companies~~product ~~and~~offerings, ~~securities~~fund ~~firms~~performance, ~~has~~successful ~~not~~utilization ~~precipitated any significant changes in bank ownership~~ of ~~insurance~~wholesaling ~~companies. (For additional information~~organizations, ~~see~~quality ~~the Regulatory Matters and Contingencies section~~ of ~~the~~customer ~~MD&A.) Product sales are affected by competitive factors such as investment performance ratings~~service, ~~product~~and ~~design,~~relationships ~~visibility~~with innational ~~the~~and ~~marketplace,~~regional ~~financial~~broker-dealer ~~strength ratings~~firms, ~~distribution capabilities, levels of charges and credited rates,~~ ~~reputation~~banks and ~~customer~~other ~~service~~financial institutions.

~~Individual~~In ~~Life~~the structured settlement market, the Institutional segment sells individual fixed immediate annuity products through a small number of specialty brokerage firms that work closely with The Hartford’s Property and Casualty claim operations. The Company also works directly with the brokerage firms on cases that do not involve The Hartford’s Property and Casualty operations.

~~The~~In ~~Individual~~the ~~Life~~institutional ~~segment~~mutual ~~sells~~fund ~~a variety of products including variable life~~market, ~~universal~~the ~~life,~~Institutional ~~interest~~segment ~~sensitive~~typically ~~whole~~sells ~~life~~it ~~and term life insurance~~products ~~primarily~~though toinvestment ~~the~~consulting ~~high~~firms ~~end~~employed ~~estate~~by ~~and~~retirement ~~business~~plan ~~planning markets~~sponsors. ~~The individual life business acquired from Fortis added significant scale to the Company~~Institutional’s products ~~Individual~~are ~~Life~~also ~~segment,~~sold ~~contributing~~through to401(k) ~~the~~record ~~significant~~keeping ~~increase~~firms inthat ~~life insurance~~offer ina ~~force.~~“platform” As of ~~December 31,~~mutual ~~2001,~~funds ~~life~~to ~~insurance in force increased~~their ~~60%~~plan tosponsor ~~$120~~clients.~~3 billion,~~ ~~from~~A ~~$75.1 billion~~third assales ofchannel ~~December 31,~~is ~~2000~~direct ~~and~~sales ~~account values grew 35%~~ to ~~$7.9 billion~~qualified asplan ~~of December 31~~sponsors, ~~2001 from $5.8 billion as of~~using ~~December 31,~~registered ~~2000.~~representatives ~~Revenues~~employed ~~were~~by ~~$890,~~Hartford ~~$640~~Equity ~~and~~Sales ~~$584 in 2001~~Company, ~~2000 and 1999, respectively~~Inc. ~~Net income in the Individual Life segment was $121, $79 and $71~~ ~~in 2001, 2000 and 1999, respectively.~~

~~Principal~~In ~~Products~~the stable value marketplace, the Institutional segment sells GICs, funding agreements, and investor notes to retirement plan sponsors either through investment management firms or directly, using Hartford employees.

~~The~~In ~~trend in~~ the ~~individual~~institutional ~~life~~annuities ~~insurance~~market, ~~industry~~the ~~has~~company ~~been~~sells aits ~~shift~~group ~~away~~annuity ~~from traditional~~ products ~~towards~~to ~~variable life (including variable universal life)~~retirement ~~insurance~~plan ~~products,~~sponsors inthrough ~~which~~three ~~the~~different ~~Company~~channels ~~has~~(1) a ~~been~~small onnumber ~~the leading edge. In 2001,~~ of ~~the~~specialty ~~Company’s new sales of individual life insurance~~brokers, ~~82%~~(2) large benefits ~~was~~consulting ~~variable life~~firms and ~~15%~~(3) directly, ~~was~~using ~~either~~Hartford ~~universal life or interest sensitive whole life~~employees. ~~The~~ ~~Company also sold a small amount of term life insurance.~~

~~Variable~~In ~~Life — Variable life insurance provides a return linked to an underlying investment portfolio and~~ the ~~Company~~PPVLI ~~allows~~market, ~~policyholders~~specialized ~~to determine~~strategic ~~their~~alliance ~~desired~~partners ~~asset~~with ~~mix~~expertise ~~among~~in ~~a variety of underlying mutual funds. As~~ the ~~return~~large ~~on the investment portfolio increases or decreases, as the~~ case ~~may~~market ~~be,~~assist 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~~placement ~~proceeds are paid upon the death~~ of ~~both~~many ~~insureds~~cases. ~~Second-to-die~~High ~~policies~~Net ~~are frequently~~Worth ~~used~~PPVLI inis ~~estate planning,~~ often toplaced ~~fund~~with ~~estate taxes for a married~~the ~~couple.~~assistance ~~Variable~~of ~~life~~investment ~~account~~banking ~~values were $4.0 billion~~ and ~~$2.9 billion~~wealth asmanagement ~~of December 31, 2001 and 2000, respectively~~specialists.

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~~hedge ~~offers~~fund ~~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~~product ~~all~~is ~~policy~~positioned ~~charges for the coming period. The Company also sells universal life insurance policies with a second-~~to~~-die~~ ~~feature~~be ~~similar~~sold tothrough ~~that of~~family ~~the~~offices, ~~variable~~wealth ~~life insurance product offered. Universal life and interest~~management ~~sensitive~~platforms ~~whole life account values were $3.1 billion~~ and ~~$2.1 billion~~other asspecialists ~~of December 31,~~in ~~2001~~the ~~and~~mass-affluent ~~2000, respectively~~market.

6Competition

~~Table~~The Institutional segment competes with numerous other insurance companies as well as certain banks, securities brokerage firms, independent financial advisors and other financial intermediaries marketing annuities, mutual funds and other retirement-oriented products. 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 ~~Contents~~and credited rates, reputation and customer service.

~~Marketing~~For institutional product lines offering fixed annuity products (i.e., institutional annuities, structured settlements and ~~Distribution~~stable value), financial strength, stability and credit ratings are key buying factors. As a result, the competitors in those marketplaces tend to be other large, long-established insurance companies.

~~Consistent~~For ~~with~~product ~~the~~lines ~~Company’s~~offering ~~strategy~~mutual tofunds ~~access~~– ~~multiple~~either ~~distribution~~unbundled ~~outlets, the~~(institutional ~~Individual~~mutual ~~Life~~funds) ~~distribution~~or ~~organization~~wrapped in ~~has been developed to penetrate~~ a ~~multitude~~ ofvariable ~~retail~~annuity ~~sales~~or ~~channels.~~mutual ~~These~~fund ~~include~~retirement ~~independent~~program ~~life~~(government ~~insurance sales~~markets) ~~professionals;~~– ~~agents~~the ofvariety ~~other companies; national, regional and~~of ~~independent~~available ~~broker-dealers;~~funds ~~banks~~ and ~~property~~their ~~and~~performance ~~casualty insurance organizations. The primary organization used to wholesale Hartford Life’s products to these outlets~~ is amost ~~group~~important ~~of highly qualified life insurance professionals with specialized training in sophisticated life insurance sales, particularly as it pertains~~ to ~~estate~~plan ~~and business planning~~sponsors. ~~These~~ ~~individuals are generally employees of~~ The ~~Hartford~~competitors ~~who~~tend ~~are managed through a regional sales office system. The Company has grown this organization rapidly the past few years~~ to ~~over 225 individuals and expects to~~ ~~continue~~be ~~to increase~~ the ~~number~~major ofmutual ~~wholesalers~~fund ~~in the future~~companies. ~~The acquisition~~ ~~of the United States individual life insurance business of Fortis has broadened~~ ~~the Company’s reach in the emerging affluent market with the addition of a~~ ~~retail broker-dealer consisting of approximately 2,300 registered~~ ~~representatives.~~

~~Competition~~7

~~The~~For ~~Individual Life segment competes with approximately 1~~PPVLI,~~800~~ ~~life~~competition ~~insurance companies~~ in the ~~United~~large ~~States,~~case asmarket ~~well~~comes asfrom other ~~financial intermediaries marketing~~ insurance ~~products.~~carriers, ~~Competitive~~and ~~factors~~from specialized ~~related~~agents towith ~~this~~expertise ~~segment~~in ~~are primarily~~ the ~~breadth~~benefit ~~and~~funding ~~quality~~marketplace. ofFor ~~life~~high ~~insurance~~net ~~products~~worth ~~offered~~programs, ~~pricing,~~ ~~relationships~~the ~~with~~competition ~~third-party~~is ~~distributors~~often ~~and~~from ~~the~~other ~~quality~~investment ofbanking ~~underwriting~~firms ~~and customer~~allied ~~service~~with other insurance carriers.

~~Group~~The ~~Benefits~~hedge fund of funds product competes against a range of similar products from respected vendors, including investment banking firms and wire houses. It is distributed by former members of the PLANCO team which assisted in The Hartford’s successful annuity business.

~~The~~Individual ~~Group Benefits segment sells group life and group disability insurance, as~~Life ~~well as other products, including stop loss and supplementary medical coverage~~ ~~to employers and employer sponsored plans, accidental death and dismemberment,~~ travel accident and other special risk coverage to employers and associations. The Company also offers disability underwriting, administration, claims processing services and reinsurance to other insurers and self-funded employer plans. Generally, policies sold in this segment are term insurance, typically with one or two year rate guarantees. This allows the Company to make adjustments to rates or terms of its policies in order to minimize the adverse effect of various market trends. In the disability market, the Company focuses on strong underwriting and claims management to derive a competitive advantage. As of December 31, 2001 and 2000, the Company had group disability reserves of $2.4 billion and $2.0 billion and group life reserves of $706 and $684, respectively. The Group Benefits segment generated revenues of $2.5 billion, $2.2 billion and $2.0 billion in 2001, 2000 and 1999, respectively, of which, group disability insurance accounted for $1.1 billion, $939 and $860 and group life insurance accounted for $763, $687 and $654, respectively. Net income in the Group Benefits segment was $106, $90 and $79 in 2001, 2000 and 1999, respectively.

~~Principal~~The ~~Products~~Individual Life segment provides life insurance solutions to a wide array of partners to solve the wealth protection, accumulation and transfer needs of its affluent, emerging affluent and business insurance clients. As of December 31, 2004, life insurance in force increased 7% to $139.9 billion, from $130.8 billion as of December 31, 2003. Account values increased 9% to $9.5 billion as of December 31, 2004 from $8.7 billion as of December 31, 2003. Revenues were $1,048, $982 and $958 for the years ended December 31, 2004, 2003 and 2002, respectively. Net income in the Individual Life segment was $153, $145 and $133 for the years ended December 31, 2004, 2003 and 2002, respectively.

~~Group~~Principal ~~Disability — Hartford Life is one of the largest participants in the~~Products ~~“large case” market of the group disability insurance business. The large case~~ ~~market, as defined by the Company, generally consists of group disability~~ policies covering over 500 employees in a particular company. The Company is continuing its focus on the “small case” and “medium case” group markets, emphasizing name recognition and reputation as well as the Company’s managed disability approach to claims and administration. The Company’s efforts in the group disability market focus on early intervention, return-to-work programs, reduction of long-term disability claims and successful rehabilitation. Over the last several years, the focus of new disability products introduced is to provide incentives for employees to return to independence. The Company also works with disability claimants to improve the receipt rate of Social Security offsets (i.e., reducing payment of benefits by the amount of Social Security payments received).

The Company ~~has~~holds ~~concentrated on~~ a ~~managed~~significant ~~disability~~market ~~approach,~~share ~~which emphasizes early claimant intervention~~ in anthe ~~effort~~variable touniversal ~~facilitate~~life aproduct ~~disabled~~market ~~claimant’s~~and was ~~return~~the tonumber ~~work~~one ~~and,~~seller ~~thereby,~~of ~~contain~~variable ~~costs.~~life ~~This approach~~insurance, ~~coupled~~according ~~with an individualized approach~~ to ~~claim~~the ~~servicing,~~Tillinghast ~~and~~VALUE ~~an incentive to contain costs~~Survey, ~~leads~~ ~~to an overall reduction~~ in 2004, ~~the cost of disability coverage~~ for ~~employers. The~~the ~~Company’s~~third ~~short-term~~year ~~disability~~in ~~benefit plans provide~~ a ~~weekly~~row. ~~benefit amount~~In ~~(typically~~2004, ~~60% to 70% of~~ the ~~employee~~Company’s ~~earned~~sales ~~income~~of upindividual tolife ~~a specified maximum benefit) to insured employees when they are unable to work due to an accident or illness. Long-term disability~~ insurance ~~provides a monthly benefit~~were ~~for~~50% ~~those~~variable ~~extended~~universal ~~periods~~life, of44% ~~time~~universal ~~not~~life covered by a short-term disability benefit plan when insured employees are unable to work due to disability. Employees may receive total or partial disability benefits. Most of these policies begin providing benefits following a 90 or 180 day waiting period and ~~generally~~ ~~continue~~other, ~~providing benefits until the employee reaches age 65. Long-term disability benefits are paid monthly~~ and ~~are limited to a portion, generally 50-70~~6%, ofterm ~~the~~life ~~employee’s earned income up to a specified maximum benefit~~insurance.

~~Group~~Variable Universal Life —- ~~Group~~Variable ~~term~~universal life provides life insurance ~~provides~~with ~~term~~a ~~coverage~~return linked to an ~~employees~~underlying investment portfolio and ~~their~~ ~~dependents~~the ~~for~~Company aallows ~~specified~~policyholders ~~period~~to ~~and~~determine ~~has~~their nodesired asset ~~accumulation~~mix among a variety of ~~cash~~underlying ~~values~~mutual funds. As the return on the investment portfolio ~~The~~increases ~~Company~~or ~~offers~~decreases, ~~options~~the ~~for~~surrender ~~its~~value ~~basic~~of ~~group~~the variable universal life ~~insurance~~policy ~~coverage,~~will increase or ~~including~~decrease, ~~portability~~and, ofunder ~~coverage~~certain ~~and~~policyholder aoptions ~~living~~or ~~benefit~~market ~~option~~conditions, ~~whereby terminally~~the ~~ill~~death ~~policyholders~~benefit ~~can~~may ~~receive~~also increase ~~death~~or ~~benefits~~decrease. ~~prior~~The Company’s second-to-die ~~their~~products ~~deaths.~~are distinguished from other products Inin ~~addition~~that two lives are insured rather than one, and the ~~Company~~policy ~~offers~~proceeds ~~premium~~are ~~waivers~~paid ~~and~~upon ~~accidental~~the death ~~and~~of ~~dismemberment~~both ~~coverage~~insureds. Second-to-die ~~employee~~policies ~~groups~~are frequently used in estate planning for a married couple. Variable universal life account values were $5.4 billion and $4.7 billion as of December 31, 2004 and 2003, respectively.

~~Other~~Universal —Life ~~The~~and ~~Company~~Interest ~~provides~~Sensitive ~~excess~~Whole ofLife ~~loss~~- ~~medical~~Universal ~~coverage~~life ~~(known~~and asinterest ~~stop~~sensitive whole life ~~loss~~insurance coverages provide life insurance) towith ~~employers~~adjustable ~~who~~rates ~~self-fund~~of ~~their~~return ~~medical~~based ~~plans~~on current interest rates. Universal life provides policyholders with flexibility in the timing and ~~pay~~amount ~~claims~~of ~~using~~premium payments and the ~~services~~amount of athe ~~third~~death ~~party~~benefit, ~~administrator.~~provided ~~The~~there ~~Company~~are ~~also~~sufficient ~~provides~~policy funds to ~~Medicare~~cover ~~supplement~~all ~~insurance,~~policy ~~travel~~charges ~~accident~~for the coming period, ~~hospital~~unless ~~indemnity~~guaranteed ~~and~~no-lapse ~~other~~ coverage ~~(including~~is ~~group~~in effect. At December 31, 2004, guaranteed no-lapse universal life ~~and~~represents ~~disability)~~less ~~primarily~~than to2% ~~individual~~of ~~members~~life insurance ofin-force. ~~various~~The ~~associations,~~Company asalso ~~well~~sells assecond-to-die ~~employee~~universal ~~groups.~~life Ainsurance ~~significant~~policies. ~~Medicare~~Universal life ~~supplement~~and ~~customer~~interest sensitive whole life account values were $3.4 billion and $3.3 billion as of ~~the~~December 31, ~~Company~~2004 ~~has~~and ~~been~~2003, ~~the~~respectively.

7Marketing and Distribution

~~Table~~Consistent with the Company’s strategy to access multiple distribution outlets, the Individual Life distribution organization has been developed to penetrate a multitude of ~~Contents~~retail sales channels. The Company sells both variable and fixed individual life products through a wide distribution network of national and regional broker-dealer organizations, banks and independent financial advisors. The Company is a market leader in selling individual life insurance through national stockbroker and financial institutions. In addition, the Company distributes individual life products through independent life and property-casualty agents and Woodbury Financial Services, a subsidiary retail broker dealer. To wholesale the Company’s products, the Company has a group of highly qualified life insurance professionals with specialized training in sophisticated life insurance sales. These individuals are generally employees of the Company who are managed through a regional sales office system.

~~members of the Retired Officers~~Competition ~~Association, an organization consisting of retired military officers. Congress~~ ~~recently passed legislation, effective in the fourth quarter of 2001, whereby~~ retired military officers age 65 and older will receive full medical insurance, eliminating the need for Medicare supplement insurance. This legislation will reduce the Company’s premium revenue by approximately $131 in 2002.

~~Marketing~~The Individual Life segment competes with approximately 1,200 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 ~~Distribution~~quality of life insurance products offered, pricing, relationships with third-party distributors, effectiveness of wholesaling support, pricing and availability of reinsurance, and the quality of underwriting and customer service.

~~Hartford~~Group Life uses an experienced group of Company employees, managed through a regional sales office system, to distribute its group insurance products and services through a variety of distribution outlets. The Company intends to continue to expand the system over the coming years in areas that have the highest growth potential and will also continue to develop alternative distribution channels to sell its products, such as sales to employers through brokers, consultants and third-party administrators as well as to multiple employer groups through its relationships with trade associations. In keeping with its strategy of developing multiple distribution channels, the Company signed an agreement in January 2001 with Wausau Benefits~~, Inc., to sell its~~ ~~group life and group disability products.~~

~~Competition~~The Group Benefits segment provides employers, associations, affinity groups and financial institutions with group life, accident and disability coverage, along with other products and services, including voluntary benefits, employee assistance programs, travel assistance, group retiree health, and medical stop loss. The Hartford’s Group Benefits segment ranks number two in fully-insured group disability premium and number five in fully-insured life premium of U.S. group carriers according to LIMRA. The Company

~~Competitive factors primarily affecting Group Benefits are the variety and~~8 quality of products offered, the price quoted for coverage and services, the Company’s relationships with its third-party distributors and the quality of customer service. Group Benefits competes with numerous other insurance companies and other financial intermediaries marketing insurance products. However, many of these businesses have relatively high barriers to entry and there have been very few new entrants over the past few years, while other major carriers have exited the market.

~~Corporate~~also ~~Owned~~offers ~~Life~~disability ~~Insurance~~underwriting, ~~(“COLI”)~~administration, claims processing services and reinsurance to other insurers and self-funded employer plans. Generally, policies sold in this segment are term insurance. This allows the Company to adjust the rates or terms of its policies in order to minimize the adverse effect of various market trends, including declining interest rates and other factors. Typically policies are sold with one, two or three year rate guarantees depending upon the product. In the disability market, the Company focuses on its risk management expertise and on efficiencies and economies of scale to derive a competitive advantage. The Group Benefits segment generated fully insured ongoing premiums of $3.6 billion for the year ended December 31, 2004, and $2.3 billion for the years ended December 31, 2003 and 2002, respectively, of which group disability insurance accounted for $1.6 billion, $963, $961 in 2004, 2003 and 2002, respectively, and group life insurance accounted for $1.7 billion, $984 and $965 for the year ended December 31, 2004, 2003, and 2002, respectively. The Company held group disability reserves of $4.2 billion and $4.0 billion and group life reserves of $1.3 billion and $1.3 billion, as of December 31, 2004 and 2003, respectively. Net income in the Group Benefits segment was $229, $148 and $128 for the years ended December 31, 2004, 2003 and 2002, respectively.

The Company isacquired ~~a leader in~~ the ~~COLI~~group ~~market, which includes~~ life ~~insurance policies~~and ~~purchased by a company on the lives of its employees~~accident, ~~with~~and ~~the~~short-term ~~company or a trust sponsored by the company named as the beneficiary under the policy. Until the Health Insurance Portability~~ and ~~Accountability~~long-term ~~Act of 1996 (“HIPA~~disability ~~Act~~businesses of ~~1996”),~~CNA ~~the~~Financial ~~Company~~Corporation ~~sold~~on ~~two principal types of COLI~~December 31, ~~leveraged and variable products~~2003. ~~Leveraged~~This ~~COLI~~acquisition isincreased athe ~~fixed premium life insurance policy~~scale ~~owned by a company or a trust sponsored by a company. The HIPA Act~~ of ~~1996 phased out~~ the ~~deductibility~~Company’s ofgroup ~~interest~~life, ondisability ~~policy~~and ~~loans~~accident ~~under~~operations, ~~leveraged~~expanded ~~COLI at~~ the ~~end of 1998, virtually eliminating all future sales of leveraged COLI.~~Company’s ~~Variable~~distribution ~~COLI~~and ~~continues~~enhanced tothe beCompany’s acapability ~~product used by employers~~ to ~~fund~~deliver ~~non-qualified benefits~~outstanding orproducts ~~other~~and ~~postemployment benefit liabilities~~services.

~~Variable~~Principal ~~COLI account values were $18.0 billion and $15.9 billion as of~~Products ~~December 31, 2001 and 2000, respectively. Leveraged COLI account values~~ ~~decreased to $4.3 billion as of December 31, 2001 from $5.0 billion as of~~ December 31, 2000, primarily due to the continuing effects of the HIPA Act of 1996. COLI generated revenues of $719, $767 and $831 in 2001, 2000 and 1999, respectively. COLI generated net income of $37, $34 and $30 in 2001, 2000 and 1999 respectively.

~~Reserves~~Group Disability - The Company is one of the largest carriers in the “large case” market of the group disability insurance business. The large case market, as defined by the Company, generally consists of group disability policies covering over 5,000 employees in a particular company. The Company is continuing its focus on the “small case” and “medium case” group markets, as well as its association/affinity market, emphasizing name recognition and reputation, financial strength and stability and the Company’s functional approach to claims management. The Company also offers voluntary, or employee-paid, short-term and long-term disability group benefits. The Company’s efforts in the group disability market focus on early intervention, return-to-work programs and successful rehabilitation, offering the support to help claimants return to an active, productive life after a disability. The Company also works with disability claimants to improve their approval rate for Social Security Assistance (i.e., reducing payment of benefits by the amount of Social Security payments received).

InThe ~~accordance~~Company’s ~~with~~short-term ~~applicable~~disability ~~insurance~~benefit ~~regulations~~plans ~~under~~provide ~~which~~a ~~Hartford~~weekly ~~Life operates,~~benefit ~~life~~amount ~~insurance~~(typically ~~subsidiaries~~60% ~~of Hartford Life establish and carry as~~to ~~liabilities,~~70% ~~actuarially~~of ~~determined~~the ~~reserves which are calculated to meet The Hartford~~insured’s ~~future~~earned ~~obligations.~~income ~~Reserves~~up ~~for~~to ~~life~~a ~~insurance~~specified ~~and~~maximum ~~disability contracts~~benefit) ~~are~~to ~~based~~insureds onwhen ~~actuarially~~they ~~recognized methods using prescribed morbidity and mortality tables in general use in the United States, which~~ are ~~modified~~unable to ~~reflect~~work ~~the~~due ~~Company’s~~to ~~actual~~an ~~experience~~accident ~~when~~or ~~appropriate~~illness. ~~These reserves~~Long-term ~~are~~disability ~~computed~~insurance atprovides ~~amounts~~a ~~that,~~monthly benefit ~~with~~for ~~additions~~those ~~from~~extended ~~estimated~~periods ~~premiums to~~of betime ~~received~~not ~~and~~covered ~~with~~by ~~interest~~a onshort-term ~~such~~disability ~~reserves~~benefit ~~compounded~~plan ~~annually at~~when ~~certain~~insureds ~~assumed rates,~~ are ~~expected~~unable to bework ~~sufficient~~due to ~~meet~~disability. ~~the~~Insureds ~~Company’s policy~~may ~~obligations~~receive attotal ~~their maturities~~ or inpartial ~~the~~disability benefits. ~~event~~Most of anthese ~~insured’s~~policies ~~death. Reserves~~begin ~~also~~providing ~~include~~benefits ~~unearned~~following ~~premiums,~~a ~~premium~~90 ~~deposits,~~or ~~claims~~180 day ~~incurred~~waiting ~~but~~period ~~not~~and ~~reported~~generally ~~and~~continue ~~claims~~providing ~~reported~~benefits ~~but~~until ~~not~~the ~~yet~~insured ~~paid.~~reaches ~~Reserves~~age ~~for~~65. ~~assumed~~Long-term disability ~~reinsurance~~benefits are ~~computed~~paid inmonthly aand ~~manner~~are ~~that~~limited ~~is comparable~~ to ~~direct~~a ~~insurance reserves.~~portion, ~~Additional~~generally ~~information~~50-70%, onof ~~reserves may be found in~~ the ~~Deferred~~insured’s earned ~~Acquisition~~income ~~Costs~~up ~~(DAC)~~to ~~and~~a ~~Reserves~~specified ~~section~~maximum ~~of the MD&A~~benefit.

~~Regulation~~Group Life and ~~Premium~~Accident ~~Rates~~- Group term life insurance provides term coverage to employees and members of associations, affinity groups and financial institutions and their dependents for a specified period and has no accumulation of cash values. The Company offers options for its basic group life insurance coverage, including portability of coverage and a living benefit and critical illness option, whereby terminally ill policyholders can receive death benefits in advance. The Company also offers voluntary, or employee-paid, life group benefits and accidental death and dismemberment coverage either packaged with life insurance or on a stand-alone basis.

~~Insurance~~Other ~~companies~~- ~~are~~The ~~subject~~Company tooffers ~~comprehensive~~a ~~and~~host ~~detailed~~of ~~regulation~~other products and ~~supervision~~ ~~throughout~~services, ~~the~~such ~~United~~as ~~States.~~Family ~~The~~and ~~extent~~Medical ~~of such regulation~~Leave ~~varies~~Act Administration, ~~but~~Travel ~~generally has its source in statutes which delegate regulatory~~Assistance, ~~supervisory~~ ~~and~~GuidanceResources ~~administrative~~(an ~~powers~~enhanced toemployee ~~state~~assistance ~~insurance departments. Such~~and ~~powers~~work/life ~~relate to~~program), ~~among~~group ~~other~~retiree ~~things~~health, ~~the~~and ~~standards~~specialized ofinsurance ~~solvency~~products ~~that~~for ~~must~~physicians. beThe ~~met~~ Company ~~and~~provides ~~maintained;~~excess ~~the licensing~~ of ~~insurers~~loss ~~and~~medical ~~their~~coverage ~~agents;~~(known ~~the~~as ~~nature~~stop ~~of and~~loss ~~limitations~~insurance) onto ~~investments;~~employers ~~premium~~who self-fund ~~rates;~~their ~~claim~~medical ~~handling~~plans and ~~trade practices;~~pay ~~restrictions~~claims onusing the ~~size~~services of ~~risks which may be insured under~~ a ~~single~~ ~~policy;~~third ~~deposits~~party ~~of securities for the benefit of policyholders;~~administrator. ~~approval~~The ofCompany ~~policy~~also ~~forms;~~provides ~~periodic~~travel ~~examinations~~accident, ofhospital ~~the~~indemnity, ~~affairs~~supplemental ofhealth ~~companies; annual~~insurance ~~and other reports required to be filed on the financial condition of companies or~~ for ~~other purposes; fixing maximum interest rates on life~~ ~~insurance~~military ~~policy~~personnel ~~loans~~ and ~~minimum~~their ~~rates~~families ~~for~~and ~~accumulation~~other ofcoverages ~~surrender~~to ~~values; and~~individual ~~the~~members ~~adequacy~~ of ~~reserves and other necessary provisions for unearned~~various ~~premiums~~associations, ~~unpaid~~affinity ~~claims~~groups, ~~and~~financial ~~claim~~institutions ~~adjustment expenses~~ and ~~other~~employee ~~liabilities, both reported and unreported~~groups.

8Marketing and Distribution

~~Table~~The Company uses an experienced group of ~~Contents~~Company employees, managed through a regional sales office system, to distribute its group insurance products and services through a variety of distribution outlets, including brokers, consultants, third-party administrators and trade associations. The Company increased its distribution channel in 2004 through the acquisition of CNA Group Benefits and intends to continue to expand the system in areas that offer the highest growth potential.

~~Most states have enacted legislation that regulates insurance holding company~~Competition ~~systems such as Hartford Life. This legislation provides that each insurance~~ ~~company in the system is required to register with the insurance department of~~ its state of domicile and furnish information concerning the operations of companies within the holding company system which may materially affect the operations, management or financial condition of the insurers within the system. All transactions within a holding company system affecting insurers must be fair and equitable. Notice to the insurance departments is required prior to the consummation of transactions affecting the ownership or control of an insurer and of certain material transactions between an insurer and any entity in its holding company system. In addition, certain of such transactions cannot be consummated without the applicable insurance department’s prior approval.

~~Reinsurance~~The Group Benefits business remains highly competitive. Competitive factors primarily affecting Group Benefits are the variety and quality of products and services offered, the price quoted for coverage and services, the Company’s relationships with its third-party

~~In accordance with normal industry practice, Hartford Life is involved in both~~9 the cession and assumption of insurance with other insurance and reinsurance companies. As of December 31, 2001, the maximum amount of life insurance retained on any one life by any one of the life operations was approximately $2.5.

~~Investment~~distributors, ~~Operations~~and the quality of customer service. Group Benefits competes with numerous other insurance companies and other financial intermediaries marketing insurance products. However, many of these businesses have relatively high barriers to entry and there have been very few new entrants into the group benefits insurance market over the past few years.

~~The Company’s investment operations are managed by its investment strategy~~Other ~~group which reports directly to senior management of the Company. Hartford~~ ~~Life’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~~The ~~further~~Company ~~discussion~~includes ofin ~~Hartford~~an ~~Life’s~~Other ~~approach~~category toits ~~managing~~international ~~risks~~operations, ~~see~~which ~~the~~are primarily located ~~Investments~~in Japan and ~~Capital~~Brazil; ~~Markets~~net ~~Risk~~realized ~~Management~~capital ~~sections~~gains ofand ~~the~~losses ~~MD&A,~~other asthan ~~well~~periodic net coupon assettlements ~~Notes~~on ~~2(d),~~non-qualifying ~~2(e)~~derivatives and 7net realized capital gains and losses related to guaranteed minimum withdrawal benefits; corporate items not directly allocated to any of ~~Notes~~its reportable operating segments; and intersegment eliminations. Periodic net coupon settlements on non-qualifying derivatives and net realized capital gains and losses related to ~~Consolidated~~guaranteed ~~Financial~~minimum withdrawal ~~Statements~~benefits are reflected in each applicable segment in net realized capital gains and losses.

~~Ratings~~The Company sells variable individual annuity products through a wide distribution network of Japan’s broker-dealer organizations, banks and other financial institutions and independent financial advisors. The Company’s Japanese operation achieved $7.3 billion, $3.7 billion and $1.4 billion in variable annuity sales for the years ended December 31, 2004, 2003 and 2002, respectively. During the third quarter of 2004, Life introduced MVA fixed annuity products to provide a diversified product portfolio to customers in Japan. Japan fixed annuity sales for the year ended December 31, 2004 were $522. The growth in sales was the primary reason for the increased account values related to Japan, which grew to $14.7 billion as of December 31, 2004 up from $6.2 billion as of December 31, 2003.

~~Reference~~In isaddition ~~made~~ to the ~~Capital~~established ~~Resources~~operations in Japan and ~~Liquidity~~Brazil, ~~section~~Life has started a European operation, which is called Hartford Life Limited that will focus on selling investment and retirement accumulation products known as unit-linked bonds in the U.K. in the later part of 2005. Unit-linked bonds are similar to variable annuities marketed in the ~~MD&A~~United States and Japan. ~~under~~Hartford ~~“Ratings”~~Life has established operations in London, as well as Dublin, Ireland to help market and service its new business.

~~Risk-Based Capital~~Reserves

~~Reference~~Life isinsurance ~~made~~subsidiaries of the Company establish and carry as liabilities, predominantly, three types of reserves: (1) a liability equal to the ~~Capital~~balance ~~Resources~~that accrues to the benefit of the policyholder as of the financial statement date, otherwise known as the account value, (2) a liability for unpaid claims, including those that have been incurred but not yet reported, and ~~Liquidity~~(3) a liability for future policy benefits, representing the present value of future benefits to be paid to or on behalf of policyholders less the present value of future net premiums. The liabilities for unpaid claims and future policy benefits are calculated based on actuarially recognized methods using morbidity and mortality tables, which are modified to reflect the Company’s actual experience when appropriate. Liabilities for unpaid claims include estimates of amounts to fully settle known reported claims as well as claims related to insured events that the Company estimates have been incurred but have not yet been reported. Future policy benefit 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 disability or death. Other insurance liabilities include those for unearned premiums and benefits in excess of account value. Reserves for assumed reinsurance are computed in a manner that is comparable to direct insurance reserves. Additional information on reserves may be found in the Critical Accounting Estimates section of the MD&A under “~~Risk-Based Capital~~Reserves”.

~~Legislative~~Ceded ~~and Regulatory Initiatives~~Reinsurance

~~Reference~~In accordance with normal industry practice, the Company is ~~made~~involved in both the cession and assumption of insurance with other insurance and reinsurance companies. As of December 31, 2004, the largest amount of life insurance retained on any one life by any one of the life operations was approximately $2.9. In addition, the Company has reinsured the majority of the minimum death benefit guarantees as well as the guaranteed minimum withdrawal benefits on contracts issued prior to July 2003 offered in connection with its variable annuity contracts. The Company also assumes reinsurance from other insurers. The Company evaluates the ~~Regulatory~~financial ~~Matters~~condition of its reinsurers and ~~Contingencies~~monitors ~~section~~concentrations of credit risk. For the years ended December 31, 2004, 2003 and 2002, ~~MD&A~~the Company did not make any significant changes in the terms under ~~“Legislative~~which ~~and~~reinsurance ~~Regulatory~~is ~~Initiatives”~~ceded to other insurers except for the Company’s 2003 recapture of a block of business previously reinsured with an unaffiliated reinsurer. For further discussion see Note 6 of Notes to Consolidated Financial Statements.

~~Guaranty Fund~~10

~~Reference is made to the Regulatory Matters and Contingencies section of the~~Investments ~~MD&A under “Guaranty Fund”.~~

~~NAIC~~The ~~Codification~~investment portfolios of the Company are managed by Hartford Investment Management Company (“HIM”), a wholly-owned subsidiary of The Hartford. HIM manages the portfolios to maximize economic value, while attempting to generate the income necessary to support the Company’s various product obligations, within internally established objectives, guidelines and risk tolerances. The portfolio objectives and guidelines are developed based upon the asset/liability profile, including duration, convexity and other characteristics within specified risk tolerances. The risk tolerances considered include, for example, asset and credit issuer allocation limits, maximum portfolio below investment grade (“BIG”) holdings and foreign currency exposure. The Company attempts to minimize adverse impacts to the portfolio and the results of operations due to changes in economic conditions through asset allocation limits, asset/liability duration matching and through the use of derivatives. (For further discussion of HIM’s portfolio management approach, see the Investments General section of the MD&A.)

~~Reference~~Regulation ~~is made to the Regulatory Matters~~ and ~~Contingencies~~Premium ~~section of the~~Rates ~~MD&A under “NAIC Codification”.~~

~~Dependence~~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 that must be met and maintained; the licensing of insurers and their agents; the nature of and limitations on investments; ~~Certain~~establishing ~~Third~~premium ~~Party~~rates; ~~Relationships~~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 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.

~~Reference~~Most states have enacted legislation that regulates insurance holding company systems such as the Company. This legislation provides that each insurance company in the system is ~~made~~required to register with the ~~Regulatory~~insurance ~~Matters~~department of its state of domicile and ~~Contingencies~~furnish ~~section~~information concerning the operations of companies within the holding company system which may materially affect the ~~MD&A~~operations, ~~under~~management ~~“Dependence~~or onfinancial ~~Certain~~condition ~~Third~~of ~~Party~~the ~~Relationships”~~insurers within the system. All transactions within a holding company system affecting insurers must be fair and equitable. Notice to the insurance departments is required prior to the consummation of transactions affecting the ownership or control of an insurer and of certain material transactions between an insurer and any entity in its holding company system. In addition, certain of such transactions cannot be consummated without the applicable insurance department’s prior approval.

~~Employees~~The extent of insurance regulation on business outside the United States varies significantly among the countries in which the Company operates. Some countries have minimal regulatory requirements, while others regulate insurers extensively. Foreign insurers in many countries are faced with greater restrictions than domestic competitors domiciled in that particular jurisdiction. The Company’s international operations are comprised of insurers licensed in their respective countries and, therefore, are subject to the generally less restrictive domestic insurance regulations.

~~Hartford Life had approximately 6,700 employees at February 28, 2002.~~Ratings

~~Item 2.~~Reference ~~PROPERTIES~~is made to the Capital Resources and Liquidity section of the MD&A under “Ratings”.

~~Hartford~~Risk-Based ~~Life’s principal executive offices are located in Simsbury,~~Capital ~~Connecticut. The Company’s home office complex consists of approximately 655~~ ~~thousand square feet, and is leased from a third party by Hartford Fire~~ ~~Insurance Company (Hartford Fire), a direct subsidiary of The Hartford. This lease expires in the year 2009. Expenses associated with these offices are allocated on a direct~~

9Reference is made to the Capital Resources and Liquidity section of the MD&A under “Risk-Based Capital”.

~~Table~~Legislative ofand ~~Contents~~Regulatory Initiatives

~~basis~~Reference tois ~~Hartford~~made ~~Life~~to bythe ~~Hartford~~Regulatory ~~Fire.~~Matters ~~The~~and ~~Company believes~~Contingencies ~~its~~section ~~properties~~of ~~and~~the ~~facilities~~MD&A ~~are~~under “Legislative ~~suitable~~ and ~~adequate~~Regulatory ~~for current operations~~Initiatives”.

~~Item 3.~~Insolvency ~~LEGAL PROCEEDINGS~~Fund

~~Hartford~~Reference ~~Life~~ is ~~involved~~made orto ~~may become involved in various legal actions, in~~ the ~~normal~~Regulatory ~~course~~Matters ~~of its business, in which claims for alleged economic~~ and ~~punitive~~ ~~damages~~Contingencies ~~have~~section ~~been or may be asserted. Some~~ of the ~~pending~~MD&A ~~litigation has~~under ~~been filed as purported class actions and some actions have been filed in~~“Guaranty ~~certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred~~Fund”. ~~Although there can be no~~ ~~assurances, at the present time, the Company does not anticipate that the~~ ~~ultimate~~ liability arising from potential, pending or threatened legal actions, 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~~Dependence IIon Certain Third Party Relationships

~~Item 5.~~Reference ~~MARKET~~is ~~FOR~~made ~~HARTFORD~~to ~~LIFE’S~~the ~~COMMON~~Regulatory ~~STOCK~~Matters ~~AND~~and ~~RELATED~~Contingencies ~~STOCKHOLDER~~section ~~MATTERS~~of the MD&A under “Dependence on Certain Third Party Relationships”.

~~All of the Company’s outstanding shares are ultimately owned by The Hartford.~~Employees ~~As of February 28, 2002 the Company had issued and outstanding 1,000 shares of~~ ~~Common Stock at $0.01 par value per share.~~

10The Company has approximately 7,700 employees as of December 31, 2004.

~~Table of Contents~~11

Item 7 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ PROPERTIES

~~(Dollar~~The ~~amounts~~Company’s principal executive offices are located in ~~millions~~Simsbury, ~~except~~Connecticut. ~~for~~The ~~share~~Company’s home ~~data~~office complex consists of approximately 655 thousand square feet, ~~unless~~and ~~otherwise~~is ~~stated~~leased from a third party by Hartford Fire Insurance Company (“Hartford Fire”), a direct subsidiary of The Hartford. This lease expires January 1, 2010. Expenses associated with these offices are allocated on a direct basis to the Company by Hartford Fire. The Company believes its properties and facilities are suitable and adequate for current operations.

~~Management’s~~Item ~~Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the financial condition of Hartford Life, Inc~~3. ~~and~~ ~~its~~LEGAL subsidiaries (“Hartford Life” or the “Company”) as of December 31, 2001, compared with December 31, 2000, and its results of operations for the years ended December 31, 2001, 2000 and 1999. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes beginning on page F-1. PROCEEDINGS

~~Certain~~The ofHartford ~~the~~Financial ~~statements~~Services ~~contained~~Group, ~~herein~~Inc. orand inits ~~Part~~consolidated Isubsidiaries of(“The ~~the~~Hartford”) is ~~Company’s~~involved ~~Form 10-K,~~in ~~other~~various ~~than~~legal ~~statements~~actions ofarising ~~historical~~in ~~fact,~~the ~~are~~ordinary ~~forward-looking~~course ~~statements.~~of business, ~~These~~some ~~statements~~of ~~are~~which ~~made~~assert ~~pursuant~~claims tofor ~~the~~substantial ~~safe~~amounts. ~~harbor~~These ~~provisions~~actions ofinclude, ~~the Private~~among ~~Securities~~others, ~~Litigation~~putative state ~~Reform~~and ~~Act~~federal ofclass ~~1995~~actions ~~and~~seeking ~~include~~certification ~~estimates~~of ~~and assumptions~~a ~~related~~state toor ~~economic,~~national ~~competitive~~class. ~~and~~Such ~~legislative developments.~~putative ~~These~~class ~~forward-looking~~actions ~~statements~~have ~~are~~alleged, ~~subject~~for toexample, ~~change~~improper ~~and~~sales ~~uncertainty,~~practices ~~which are,~~ in ~~many~~connection ~~instances,~~with ~~beyond~~the ~~Hartford~~sale ~~Life’s~~of life ~~control~~insurance and ~~have~~other ~~been~~investment ~~made~~products; ~~based upon~~and ~~management’s~~improper ~~expectations~~fee ~~and~~arrangements ~~beliefs~~in ~~concerning~~connection ~~future~~with mutual ~~developments~~funds. ~~and their~~The ~~potential~~Hartford ~~effect~~also onis ~~the~~involved ~~Company.~~in ~~There~~individual ~~can~~actions bein nowhich ~~assurance~~punitive ~~that~~damages ~~future~~are ~~developments~~sought, ~~will~~such beas claims alleging bad faith in ~~accordance~~the ~~with~~handling ~~management’s~~of ~~expectations~~insurance orclaims. Management expects that the ~~effect~~ ofultimate ~~future~~liability, ~~developments~~if onany, ~~Hartford~~with ~~Life~~respect ~~will~~to besuch ~~those~~lawsuits, ~~anticipated~~after byconsideration of ~~management.~~provisions ~~Actual~~made ~~results~~for ~~could~~estimated ~~differ~~losses, ~~materially~~will ~~from~~not ~~those~~be ~~expected~~material byto the consolidated financial condition of the Company. Nonetheless, ~~depending~~given on the ~~outcome~~large ofor indeterminate amounts sought in certain ~~factors~~of these actions, ~~including~~and the ~~possibility of~~inherent ~~general~~unpredictability ~~economic~~of ~~and~~litigation, ~~business~~it ~~conditions~~is possible that ~~are~~an ~~less~~adverse ~~favorable~~outcome ~~than~~in ~~anticipated~~certain matters could, ~~legislative~~from ~~developments~~time to time, ~~changes~~have ina ~~interest~~material ~~rates~~adverse oreffect on the ~~stock~~Company’s ~~markets,~~consolidated ~~stronger~~results ~~than~~of ~~anticipated~~operations ~~competitive~~or ~~activity~~cash ~~and~~flows ~~those~~in ~~factors described~~particular inquarterly ~~such~~or ~~forward-looking~~annual ~~statements~~periods.

~~Certain~~Broker ~~reclassifications~~Compensation ~~have~~Litigation ~~been~~– ~~made~~On toOctober 14, ~~prior~~2004, ~~year~~the ~~financial~~New ~~information~~York Attorney General’s Office filed a civil complaint (the “NYAG Complaint”) against Marsh Inc. and Marsh & McLennan Companies, Inc. (collectively, “Marsh”) alleging, among other things, that certain insurance companies, including The Hartford, participated with Marsh in arrangements to submit inflated bids for business ~~conform~~insurance and paid contingent commissions to ensure that Marsh would direct business to them. The Hartford is not joined as a defendant in the ~~current~~action. ~~year~~Since ~~presentation~~the filing of the NYAG Complaint, several private actions have been filed against The Hartford asserting claims arising from the allegations of the NYAG Complaint.

~~INDEX~~Two securities class actions have been filed in the United States District Court for the District of Connecticut alleging claims against The Hartford and five of its executive officers under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5. The complaints allege on behalf of a putative class of shareholders that The Hartford and the five named individual defendants, as control persons of The Hartford, “disseminated false and misleading financial statements” by concealing that “[The Hartford] was paying illegal and concealed ‘contingent commissions’ pursuant to illegal ‘contingent commission agreements.’” The class period alleged is November 5, 2003 through October 13, 2004, the day before the NYAG Complaint was filed. The complaints seek damages and attorneys’ fees. The Hartford and the individual defendants dispute the allegations and intend to defend these actions vigorously.

Consolidated Results of Operations			11
Investment Products			13
Individual Life			15
Group Benefits			16
Corporate Owned Life Insurance (COLI)			17
Deferred Acquisition Costs (DAC) and Reserves			17
Investments			18
Capital Markets Risk Management			20
Capital Resources and Liquidity			28
Regulatory Matters and Contingencies			31
Effect of Inflation			32
Accounting Standards			32

In addition, three putative class actions have been filed in the same court on behalf of participants in The Hartford’s 401(k) plan against The Hartford, Hartford Fire Insurance Company, The Hartford’s Pension Fund Trust and Investment Committee, The Hartford’s Pension Administration Committee, The Hartford’s Chief Financial Officer, and John/Jane Does 1-15. The suits assert claims under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), alleging that The Hartford and the other named defendants breached their fiduciary duties to plan participants by, among other things, failing to inform them of the risk associated with investment in The Hartford’s stock as a result of the activity alleged in the NYAG Complaint. The class period alleged is November 5, 2003 through the present. The complaints seek restitution of losses to the plan, declaratory and injunctive relief, and attorneys’ fees. All defendants dispute the allegations and intend to defend these actions vigorously.

~~CONSOLIDATED~~Two ~~RESULTS~~corporate OFderivative ~~OPERATIONS~~actions also have been filed in the same court. The complaints, brought in each case by a shareholder on behalf of The Hartford against its directors and an executive officer, allege that the defendants knew adverse non-public information about the activities alleged in the NYAG Complaint and concealed and misappropriated that information to make profitable stock trades, thereby breaching their fiduciary duties, abusing their control, committing gross mismanagement, wasting corporate assets, and unjustly enriching themselves. The complaints seek damages, injunctive relief, disgorgement, and attorneys’ fees. All defendants dispute the allegations and intend to defend these actions vigorously.

~~Hartford~~ Seven ~~Life~~putative ~~provides~~class ~~investment~~actions also have been filed by alleged policyholders in federal district courts, one in the Southern District of New York, two in the Eastern District of Pennsylvania, three in the Northern District of Illinois, and ~~retirement~~one ~~products~~in ~~such~~the asNorthern ~~variable~~District of California, against several brokers and insurers, including The Hartford. These actions assert, on behalf of a class ~~fixed~~of ~~annuities~~persons who purchased insurance through the broker defendants, ~~mutual~~claims ~~funds~~under the Sherman Act and state ~~retirement~~law, ~~plan~~and ~~services;~~in ~~individual~~some cases the Racketeer Influenced and Corrupt Organizations Act (“RICO”), ~~corporate~~arising ~~owned~~from ~~life~~the ~~insurance;~~conduct alleged in the NYAG Complaint. The class period alleged is 1994 through the date of class certification, which has not yet occurred. The complaints seek treble damages, injunctive and declaratory relief, ~~group~~and ~~benefit~~attorneys’ ~~products~~fees. ~~such~~Putative class asactions ~~group~~also ~~life~~have been filed in the Circuit Court for Cook County, Illinois, Chancery Division and ~~group~~in ~~disability~~the Circuit Court for Seminole County, Florida, Civil Division, on behalf of a class of all persons who purchased insurance from a class of defendant insurers. These state court

~~The Company derives its revenues principally from: (a) fee income, including~~12 asset management fees, on separate account and mutual fund assets, mortality and expense fees, as well as cost of insurance charges; (b) fully insured premiums; (c) certain other fees; and (d) net investment income on general account assets. 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 and variable life products and mutual funds. Cost of insurance charges are assessed on the net amount at risk for investment-oriented life insurance products. Premium revenues are derived primarily from the sale of group life and group disability insurance products.

~~The~~actions ~~Company’s~~assert ~~expenses~~unjust enrichment ~~essentially~~claims ~~consist~~and violation of ~~interest~~state ~~credited~~unfair totrade practices acts arising from the conduct ~~policyholders~~alleged onin ~~general~~the ~~account~~NYAG ~~liabilities~~Complaint and seek remedies including restitution of premiums, ~~insurance~~and, ~~benefits~~in ~~provided~~the Cook County action, imposition of a constructive trust, and declaratory and injunctive ~~dividends~~relief. The class period alleged is 1994 through the present. The Hartford has removed the Cook County action to ~~policyholders~~the United States District Court for the Northern District of Illinois. Pursuant to an order of the Judicial Panel on Multidistrict Litigation, ~~costs~~it is likely that most or all of these ~~selling~~actions ~~and~~will ~~servicing~~be transferred to the ~~various~~United ~~products~~States District Court for the District of New ~~offered~~Jersey. byThe Hartford disputes the ~~Company,~~allegations in all of these actions and ~~other~~intends ~~general~~to ~~business~~defend ~~expenses~~the actions vigorously.

~~The~~Additional ~~Company’s~~complaints ~~profitability~~may ~~depends~~be ~~largely~~filed onagainst ~~the~~The ~~amount~~Hartford ofin ~~assets~~various courts alleging claims under ~~management,~~federal ~~the~~or ~~level~~state oflaw ~~fully~~arising ~~insured~~from ~~premiums,~~the conduct alleged in the ~~adequacy~~NYAG ofComplaint. ~~product~~The Hartford’s ~~pricing~~ultimate ~~and~~liability, ~~underwriting~~if ~~discipline~~any, ~~claims~~in ~~management~~the pending and ~~operating~~possible future suits is highly uncertain and ~~efficiencies~~subject to contingencies that are not yet known, ~~and~~such ~~its~~as ~~ability~~how tomany ~~earn~~suits ~~target~~will ~~spreads~~be ~~between~~filed, ~~earned~~in ~~investment~~which ~~rates~~courts onthey ~~general~~will ~~account~~be ~~assets~~lodged, ~~and~~what ~~credited~~claims ~~rates~~they towill ~~customers.~~assert, ~~The~~what ~~level~~the outcome of investigations by the ~~assets~~New ~~under~~York ~~management~~Attorney isGeneral’s ~~generally~~Office ~~impacted~~and byother ~~equity~~regulatory ~~market~~agencies ~~performance~~will be, ~~persistency~~ the success of defenses that The Hartford may assert, and the ~~in-force~~amount ~~block~~of recoverable damages if liability is established. In the opinion of ~~business~~management, ~~sales~~it ~~and~~is ~~other~~possible ~~deposits,~~that asan adverse outcome in one or more of these suits ~~well~~could ashave ~~any~~a ~~acquired~~material ~~blocks~~adverse effect on the Company’s consolidated results of ~~business~~operations or cash flows in particular quarterly or annual periods.

11PART II

~~Table~~Item of5. ~~Contents~~MARKET FOR HARTFORD LIFE’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

~~Operating~~All ~~Summary~~of the Company’s outstanding shares are ultimately owned by The Hartford. As of February 18, 2005, the Company had issued and outstanding 1,000 shares of Common Stock at $0.01 par value per share. There is no established public trading market for the Company’s Common Stock.

			2001			2000			1999
Fee income			$	2,633		$	2,484		$	2,105
Earned premiums				2,142			1,886			1,764
Net investment income				1,779			1,592			1,562
Other revenue				128			116			110
Net realized capital losses				(133	)		(88	)		(5	)
		Total revenues		6,549			5,990			5,536
Benefits, claims and claim adjustment expenses				3,611			3,162			3,054
Insurance operating costs and expenses				1,390			1,281			1,132
Amortization of deferred policy acquisition costs and present value of future profits				642			671			568
Other expenses				141			88			96
		Total benefits, claims and expenses		5,784			5,202			4,850
		Income before income tax expense and cumulative effect of accounting changes		765			788			686
		Income tax expense		54			213			219
Cumulative effect of accounting changes, net of tax[1]				(26	)		—			—
	Net income			685			575			467
Less: Cumulative effect of accounting changes, net of tax [1]				(26	)		—			—
	Net realized capital losses, after-tax			(89	)		(57	)		—
	Operating income [2]		$	800		$	632		$	467

For a discussion regarding the Company’s payment of dividends, and the restrictions related thereto, see the Capital Resources and Liquidity section of the MD&A under “Dividends” and “Liquidity Requirements.”

[1] For the year ended December 31, 2001, represents the cumulative impact of the Company’s adoption of EITF Issue 99-20 and SFAS No. 133. [2] For the year ended December 31, 2001, includes $130 tax benefit primarily related to separate account investment activity and $20 of after-tax losses related to the September 11 terrorist attack. For the year ended December 31, 2000, includes $32 tax benefit related to favorable tax items.13

OnItem ~~April 2, 2001, The Hartford acquired the United States individual life insurance, annuity and mutual fund businesses of Fortis~~7. ~~This transaction was accounted for as a purchase and, as such, the revenues and expenses generated by this business from April 2, 2001 forward are included in the Company~~MANAGEMENT’sS ~~consolidated results~~DISCUSSION ofAND ~~operations.~~ANALYSIS ~~(For~~OF ~~further~~FINANCIAL ~~disclosure,~~CONDITION ~~see~~AND ~~Note~~RESULTS ~~5).~~ OF OPERATIONS

~~On June 27, 2000, The Hartford acquired all of the outstanding shares of Class A common stock of Hartford Life which The Hartford did not already own~~ (~~The Hartford~~Dollar ~~Acquisition).~~amounts ~~The~~in Hartford Acquisition was accomplished through an offer to all Hartford Life shareholders to tender their shares to The Hartford for cash consideration of $50.50 per share. Subsequent to the tender offermillions, ~~a newly~~unless ~~formed~~otherwise ~~wholly-owned subsidiary of The Hartford was merged into Hartford~~stated) ~~Life, as a result of which, Hartford Life became an indirect wholly-owned~~ ~~subsidiary of The Hartford. Those shareholders who had not tendered their~~ ~~shares in the tender offer also received $50.50 in cash in exchange for their shares in the subsequent merger.~~

~~2001 Compared to 2000 — Revenues increased $559, or 9%, primarily related to the growth across each of the Company~~Management’s ~~primary~~Discussion ~~operating~~and ~~segments, particularly~~Analysis ~~the~~of ~~Individual~~Financial ~~Life~~Condition and ~~Group~~Results ~~Benefits~~of ~~segments,~~Operations ~~where revenues~~(“MD&A”) ~~increased~~addresses ~~$250,~~the orfinancial ~~39%,~~condition ~~and~~of ~~$300,~~Hartford ~~or 14%~~Life, ~~respectively~~Inc. ~~The~~and ~~revenue~~its ~~growth~~subsidiaries ~~in the~~(“Hartford ~~Individual~~ Life” ~~segment was primarily due to higher earned fee income and~~or ~~net investment income resulting from~~ the ~~business~~“Company”) ~~acquired~~as ~~from~~of ~~Fortis.~~December 31, ~~The Group~~2004, ~~Benefits~~compared ~~segment~~with ~~experienced~~December 31, ~~higher~~2003, ~~earned premiums due to strong sales~~ and ~~persistency.~~its ~~The~~results ~~Investment Products segment also contributed to the~~of ~~revenue~~operations ~~increase~~for aseach ~~a result~~ of ~~higher~~the ~~fee~~three ~~income~~years in the ~~retail~~period ~~mutual~~ended ~~fund business~~December 31, ~~and~~2004. ~~higher~~This ~~net~~discussion should ~~investment~~be ~~income~~read in ~~the~~conjunction ~~institutional~~with ~~business. Revenues related to~~ the ~~Company’s~~Consolidated ~~Individual~~Financial ~~Annuity~~Statements ~~business~~and ~~were~~related ~~down $46 or~~Notes ~~3%,~~beginning ~~primarily~~on ~~due~~page ~~to lower fee income as a result of the lower equity markets in 2001~~F-1. ~~Additionally,~~Certain ~~COLI~~reclassifications ~~revenues~~have ~~were~~been ~~lower~~made ~~than~~to ~~the~~ prior year ~~due~~financial information to aconform ~~decrease in~~to ~~variable COLI sales and~~ the ~~declining~~current ~~block~~year ~~of leveraged COLI business~~presentation.

~~Benefits~~Certain of the statements contained herein are forward-looking statements. These forward-looking 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 upon 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 the Company will be those anticipated by management. Actual results could differ materially from those expected by the Company, depending on the outcome of various factors. These factors include: the possible occurrence of terrorist attacks; the response of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses; changes in the stock markets, interest rates or other financial markets, including the potential effect on the Company’s statutory capital levels; the inability to effectively mitigate the impact of equity market volatility on the Company’s financial position and results of operations arising from obligations under annuity product guarantees; the difficulty in predicting the Company’s potential exposure arising out of regulatory proceedings or private claims relating to incentive compensation or payments made to brokers or other producers and ~~expenses~~alleged anti-competitive ~~increased~~conduct; ~~$582~~the uncertain effect on the Company of regulatory and market-driven changes in practices relating to the payment of incentive compensation to brokers and other producers, including changes that have been announced and those which may occur in the future; the possibility of more unfavorable loss experience than anticipated; stronger than anticipated competitive activity; unfavorable judicial or ~~11%~~legislative developments, ~~primarily~~including ~~associated~~the ~~with~~possibility that the ~~growth~~Terrorism Risk Insurance Act of 2002 is not extended beyond 2005; the potential effect of domestic and foreign regulatory developments, including those which could increase the Company’s business costs and required capital levels; the possibility of general economic and business conditions that are less favorable than anticipated; the Company’s ability to distribute its products through distribution channels, both current and future; the uncertain effects of emerging claim and coverage issues; the effect of assessments and other surcharges for guaranty funds; a downgrade in ~~revenues~~the ~~discussed~~Company’s ~~above~~claims-paying, financial strength or credit ratings; the ability of the Company’s subsidiaries to pay dividends to the Company; and other factors described in such forward-looking statements.

~~Operating income increased $168, or 27%, led by the Individual Life and Group~~INDEX ~~Benefits segments where net income increased $42, or 53% and $16, or 18%,~~ ~~respectively. In addition, the 2001 results include a $130 federal income tax~~ benefit primarily related to separate account investment activity and a $20 charge associated with the impact of the September 11 terrorist attack. Additionally, 2000 results include a benefit of $32 also related to favorable tax items. Excluding these tax items and the impact of the September 11 terrorist attack, operating income increased $90, or 15%, for the year ended December 31, 2001, as each of the Company’s operating segments experienced growth from a year ago.


Overview			14
Critical Accounting Estimates			19
Consolidated Results of Operations: Operating Summary			24
Retail Products Group			27
Institutional Solutions Group			29
Individual Life			31
Group Benefits			33
Investments			34
Investment Credit Risk			40
Capital Markets Risk Management			46
Capital Resources and Liquidity			52
Effect of Inflation			57
Impact of New Accounting Standards			57

~~Table of Contents~~OVERVIEW

~~2000~~The ~~Compared~~Company tohas ~~1999~~four —reportable ~~Revenues increased $454, or 8%, primarily related to the growth across each of the Company’s primary~~ operating segments~~, particularly~~: ~~the~~Retail ~~Investment~~ Products ~~and~~ Group ~~Benefits segments~~, ~~where~~Institutional ~~revenues~~Solutions ~~increased $339~~Group, orIndividual ~~17%,~~Life and ~~$183,~~Group ~~or 9%, respectively~~Benefits. The ~~revenue growth~~Company inprovides ~~the~~investment ~~Investment Products segment was primarily due to higher fee~~and ~~income~~retirement inproducts ~~the~~such ~~individual~~as ~~annuity~~variable and ~~retail~~fixed annuities, mutual ~~fund~~funds ~~operations~~and asretirement ~~related~~plan services ~~average~~and ~~assets~~other ~~under~~institutional ~~management~~investment inproducts; ~~2000~~structured ~~were~~settlements; ~~higher~~private ~~than~~placement ~~1999. The Group~~life ~~Benefits~~insurance; ~~segment~~individual ~~experienced~~life ~~higher~~insurance ~~earned~~products ~~premiums~~including ~~due~~variable touniversal ~~strong~~life, ~~sales~~universal ~~and~~life, ~~persistency.~~interest ~~The~~sensitive ~~Individual~~whole ~~Life~~life ~~segment~~and ~~also~~term ~~contributed~~life; toand ~~the~~group ~~revenue increase~~benefit asproducts, asuch ~~result~~as ofgroup ~~strong~~life ~~sales~~ and ~~favorable persistency. Partially~~ ~~offsetting~~group ~~the~~disability ~~growth in revenues was the decrease in COLI revenues primarily related to the declining block of leveraged COLI business~~insurance.

~~Benefits~~The Company derives its revenues principally from: (a) fee income, ~~claims~~including asset management fees, on separate account and ~~expenses~~mutual ~~increased~~fund ~~$352,~~assets orand 7%mortality and expense fees, as well as cost of insurance charges; (b) net investment income on general account assets; (c) fully insured premiums; and (d) certain other fees. Asset management fees and mortality and expense fees are primarily generated ~~related~~from toseparate account assets, which are deposited with the Company through the sale of ~~growth~~variable inannuity and variable universal life products and from mutual funds. Cost of insurance charges are assessed on the ~~Company’s~~net ~~principal~~amount ~~operating~~at ~~segments~~risk ~~described~~for ~~above~~investment-oriented life insurance products. Premium revenues are derived primarily from the sale of group life, group disability and individual term insurance products.

~~Operating income increased $165, or 35%, led by the Investment Products~~14 segment, where net income increased $94, or 28%. Additionally, net income related to each of the remaining three operating segments increased 10% or more. As discussed above, Hartford Life also recorded benefits of $32 in 2000 related to favorable tax items. Excluding these tax items, operating income increased $133, or 28%.

~~Segment~~The ~~Results~~Company’s expenses essentially consist of interest credited to policyholders on general account liabilities, insurance benefits provided, amortization of the deferred policy acquisition costs, expenses related to the selling and servicing the various products offered by the Company, dividends to policyholders, and other general business expenses.

~~Below~~The isCompany’s profitability in its variable annuity, mutual fund and to a ~~summary~~lesser extent, variable universal life businesses depends largely on the amount of the contract holder account value or assets under management on which it earns fees and the level of fees charged. Changes in account value or assets under management are driven by two main factors: net ~~income~~flows, ~~(loss)~~ which measure the success of the Company’s asset gathering and retention efforts and the market return of the funds, which is heavily influenced by ~~segment~~the return on the equity markets. Net flows are comprised of new sales and other deposits less surrenders, death benefits, policy charges and annuitizations of investment type contracts, for instance, variable annuity contracts. In the mutual fund business, net flows are known as net sales. Net sales are comprised of new sales less redemptions of mutual fund customers. The Company uses the average daily value of the S&P 500 Index as an indicator for evaluating market returns of the underlying account portfolios in the United States. Relative profitability of variable products is highly correlated to the growth in account values or assets under management since these products generally earn fee income on a daily basis. Thus, a prolonged downturn in the financial markets could reduce revenues and potentially raise the possibility of a charge against deferred policy acquisition costs.

		2001			2000			1999
Investment Products		$	463		$	424		$	330
Individual Life			121			79			71
Group Benefits			106			90			79
Corporate Owned Life Insurance			37			34			30
Other			(42	)		(52	)		(43	)
	Net income	$	685		$	575		$	467

The profitability of the Company’s fixed annuities and other spread based products depends largely on its ability to earn target spreads between earned investment rates on its general account assets and interest credited to policyholders. Profitability is also influenced by operating expense management including the benefits of economies of scale in the administration of its United States variable annuity businesses in particular. In addition, the size and persistency of gross profits from these businesses is an important driver of earnings as it affects the rate of amortization of the deferred policy acquisition costs.

AThe ~~description~~Company’s ofprofitability ~~each~~in ~~segment~~its asindividual ~~well~~life asinsurance anand ~~analysis~~group ofbenefits businesses depends largely on the ~~operating~~size ~~results summarized~~of ~~above~~its isin ~~included~~force onblock, the ~~following~~adequacy ~~pages.~~of ~~Deferred~~product ~~Acquisition Costs~~pricing ~~(DAC)~~and underwriting discipline, ~~Reserves~~actual mortality and ~~Investments~~morbidity ~~are~~experience, ~~discussed~~and inthe ~~separate~~efficiency ~~sections~~of its claims and expense management.

~~INVESTMENT~~Performance ~~PRODUCTS~~Measures

~~Operating~~Fee ~~Summary~~Income

			2001		2000		1999
Fee income and other			$	1,620	$	1,639	$	1,333
Net investment income				886		741		708
		Total revenues		2,506		2,380		2,041
Benefits, claims and claim adjustment expenses				819		700		668
Insurance operating costs and other expenses				608		551		440
Amortization of deferred policy acquisition costs and present value of future profits				461		516		430
		Total benefits, claims and expenses		1,888		1,767		1,538
		Income before income tax expense		618		613		503
Income tax expense				155		189		173
		Net income	$	463	$	424	$	330
Individual variable annuity account values			$	74,581	$	78,174	$	80,588
Other individual annuity account values				9,572		9,059		8,383
Other investment products account values				19,322		17,376		16,352
	Total account values			103,475		104,609		105,323
Mutual fund assets under management				16,809		11,432		6,374
	Total Investment Products assets under management		$	120,284	$	116,041	$	111,697

Fee income is largely driven from amounts collected as a result of contractually defined percentages of assets under management on investment type contracts. These fees are generally collected on a daily basis from the contract holder’s account. For individual life insurance products, fees are contractually defined percentages based on levels of insurance, age, premiums and deposits collected and contractholder account value. Life insurance fees are generally collected on a monthly basis. Therefore, the growth in assets under management either through positive net flows or net sales and favorable equity market performance will have a favorable impact on fee income. Conversely, negative net flows or net sales and unfavorable equity market performance will reduce fee income generated from investment type contracts.

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 variable and fixed annuities, mutual funds, retirement plan services and other investment products. The Company is both a leading writer of individual variable annuities and a top seller of individual variable annuities through banks in the United States. In addition, in 2001 The Hartford Mutual Funds, Inc. reached $12 billion in assets faster than any other retail-oriented mutual fund family in history, according to Strategic Insight.



	For the Years Ended
Product/Key Indicator Information		2004		2003		2002
United States Variable Annuities
Account value at December 31,		$	99,617	$	86,501	$	64,343
Net flows			5,471		7,709		2,127
Change in market value			7,645		14,449		(12,365	)
Retail Mutual Funds
Assets under management at December 31,		$	25,240	$	20,301	$	14,079
Net sales			2,505		2,155		1,951
Change in market value			2,522		4,142		(3,232	)
Individual Life Insurance
Variable universal life account value at December 31		$	5,356	$	4,725	$	3,648
Total life insurance inforce			139,889		130,798		126,680
S&P 500 Index
Year end closing value			1,212		1,112		880
Daily average value			1,131		965		995

1315

~~Table~~Net ofInvestment ~~Contents~~Income and Interest Credited

~~2001~~Certain ~~Compared~~investment totype ~~2000~~contracts —such ~~Revenues~~as infixed ~~the~~annuities ~~Investment~~and ~~Products~~other ~~segment~~spread-based ~~increased~~contracts generate ~~$126,~~deposits orthat ~~5%,~~the ~~driven~~Company ~~primarily~~collects byand ~~other~~invests to earn investment ~~products~~income. ~~Fee~~In ~~income~~addition, ~~from~~insurance ~~other~~type ~~investment~~contracts ~~products~~such ~~increased~~as ~~$59,~~those orsold ~~21%,~~by ~~principally~~the ~~due~~Group toBenefits ~~growth~~segment ~~in the~~collect ~~Company’s mutual~~premiums ~~fund~~(discussed ~~assets~~below) for ~~under~~protection ~~management.~~from ~~Mutual~~losses ~~fund~~specified ~~assets~~in ~~increased~~the ~~$5.4 billion, or~~particular ~~47%,~~insurance ~~to $16~~contract.~~8 billion~~ asThese ofdeposits ~~December 31,~~and premiums ~~2001,~~together ~~due~~comprise tothe ~~strong~~majority ~~sales~~of ~~and~~ the ~~inclusion~~ assets of the ~~mutual~~general ~~fund~~account ~~assets~~that ~~acquired~~are ~~from~~invested ~~Fortis.~~to generate ~~Net~~ investment income ~~from~~for ~~other~~the ~~investment~~Company. ~~products~~The ~~increased~~investment ~~$113,~~type orcontracts ~~20%,~~use ~~due~~this ~~mostly~~investment income to ~~growth~~ incredit the ~~institutional~~contract ~~business,~~holder ~~where account values were $9.1 billion at December 31, 2001,~~ an ~~increase~~amount of ~~$1.4 billion,~~interest orspecified ~~18%,~~in ~~from~~the arespective ~~year ago~~contract. ~~The~~ ~~increase~~As discussed in ~~revenues~~the ~~from other investment products was partially offset by individual annuity revenues~~overview, ~~which~~the ~~decreased~~amount ~~$46,~~of orinvestment ~~3%. Fee~~ income ~~and~~earned ~~net investment~~in ~~income~~excess ~~from~~of the ~~individual annuity business acquired from Fortis~~interest ~~helped~~credited to ~~partially~~the ~~offset~~contract ~~lower~~holder ~~revenues~~is in the ~~individual~~spread ~~annuity~~income ~~operation. The~~earned ~~lower~~by ~~revenues~~the ~~were~~Company. ~~primarily~~For ~~associated~~insurance ~~with decreased account values~~type ~~resulting~~contracts, ~~from~~net ~~the~~investment ~~lower~~income ~~equity~~earned ~~markets~~during ~~as compared to~~ the ~~prior~~time ~~year. Individual~~that ~~annuity~~premiums ~~account~~are ~~values~~invested atprior ~~December 31,~~to ~~2001 were $84.2 billion, a~~paying ~~decrease~~claims ofand ~~$3.1 billion,~~expenses orsupports ~~4%,~~the ~~from~~profitability ~~December 31,~~of ~~2000~~these products.

Benefits, claims and expenses increased $121, or 7%, driven by higher interest credited and insurance operating expenses related to other investment products consistent with the revenue growth described above. Interest credited related to other investment products increased $83, or 18%, while insurance operating expenses increased $44, or 17%. Also, individual annuity benefits and claims expenses increased $35, or 14%, principally due to the business acquired from Fortis and higher death benefits resulting from the lower equity markets in 2001. Individual annuity’s insurance operating costs increased $13, or 4% due to the business acquired from Fortis. Excluding Fortis, individual annuity’s operating expenses decreased $39, or 4% from prior year, driven by management’s continued focus on maintaining operating expense levels. Partially offsetting the increase in benefits, claims, and insurance operating costs was a decrease in the amortization of deferred policy acquisition costs resulting from the lower gross profits associated with the individual annuity business. In addition, individual annuity income tax expense for the twelve months ended December 31, 2001 was $118, a $45 or 28% decrease due to lower pre-tax operating income and the ongoing tax impact related to separate account investment activity.



	For the Years Ended
Net Investment Income		2004		2003		2002
Retail Products Group segment		$	1,077	$	494	$	368
Institutional Solutions Group segment			1,061		995		977
Individual Life segment			302		256		262
Group Benefits segment			375		264		258
Other			1,079		32		(16	)
Total net investment income		$	3,894	$	2,041	$	1,849

Interest Credited on General Account Assets
Retail Products Group segment		$	880	$	325	$	256
Institutional Solutions Group segment			587		566		547
Individual Life segment			216		192		196
Other			798		—		—
Total interest credited on general account assets		$	2,481	$	1,083	$	999

~~Net~~The significant increase in net investment income ~~increased~~and ~~$39~~interest credited in the Retail Products Group segment and Other and, orto ~~9%.~~a ~~These~~lesser ~~increases~~extent ~~were~~Individual ~~driven~~Life bysegment, was largely the ~~growth~~result inof ~~revenues~~the adoption of SOP 03-1. The adoption of SOP 03-1 resulted in ~~other~~certain ~~investment~~changes ~~products~~in ~~described~~presentation ~~above~~in the Company’s financial statements, including reporting of the ~~favorable~~spreads ~~impact~~on ofthe Company’s MVA fixed ~~Fortis~~annuities and variable annuity products offered in Japan on a gross basis in net investment income and interest credited. The increase in net investment income for the ~~lower~~Group ~~effective~~Benefits ~~tax~~segment ~~rate~~was primarily ~~related~~due to the ~~individual~~acquisition ~~annuity~~ of the group benefits business of CNA at December 31, 2003.

~~2000 Compared to 1999 — Revenues increased $339, or 17%, primarily due to~~Premiums ~~higher fee income in the individual annuity and retail mutual fund operations.~~ ~~Fee income generated by individual annuities increased $227, or 20%, while~~ related average account values grew $8.2 billion, or 10%, to $88.1 billion. The growth in average account values was due, in part, to strong sales of $10.7 billion in 2000, and the significant equity market performance in 1999, partially offset by surrenders. Although average individual annuity account values in 2000 were higher than 1999, account values at December 31, 2000 declined $1.7 billion, or 2%, as compared to December 31, 1999, as strong sales were not sufficient to offset surrenders and the impact of the retreating equity markets. In addition, fee income from other investment products increased $99, or 54%, primarily driven by the Company’s retail mutual fund operation, where related assets under management increased $4.0 billion, or 63%. This substantial increase in the retail mutual fund operation was due to sales of $5.2 billion in 2000, which was partially offset by redemptions.

~~Due~~As todiscussed ~~the~~above, ~~continued~~traditional ~~growth~~insurance intype ~~this~~products ~~segment,~~collect ~~particularly~~premiums ~~the~~from ~~individual~~policyholders in ~~annuity~~exchange ~~and~~for ~~retail~~financial ~~mutual~~protection ~~fund~~of ~~operations,~~the ~~total~~policy ~~benefits,~~holder ~~claims~~from ~~and~~a ~~expenses increased~~specified ~~$229~~insurable loss, such as death or ~~15%~~disability. ~~This~~These ~~increase~~premiums ~~was~~together ~~driven~~with bynet ~~the~~investment ~~amortization~~income ofearned from the overall ~~deferred~~investment ~~policy~~strategy ~~acquisition~~are ~~costs~~used ~~and~~to ~~operating~~pay ~~expenses,~~the ~~which~~contractual ~~grew~~obligations ~~$86,~~under orthese insurance contracts. ~~20%~~Two major factors, new sales and ~~$43~~persistency, impact premium growth. Sales can increase or decrease ~~15%,~~in ~~respectively~~a given year based on a number of factors, ~~primarily~~including ~~related~~but not limited to, ~~growth~~customer demand infor the Company’s product offerings, pricing competition, distribution channels and the ~~individual~~Company’s ~~annuity~~reputation ~~operation~~and ratings. ~~Additionally,~~A ~~non-deferred~~majority ~~commissions~~of ~~increased~~sales correspond with the open enrollment periods ~~$83~~of employers’ benefit plans, typically January 1 or ~~59%,~~July ~~principally~~1. ~~related~~Persistency tois ~~growth~~a inmeasure ~~the~~of ~~retail~~business retention ~~mutual~~during ~~fund~~a ~~operation~~renewal period.

Net income increased $94, or 28%, primarily due to the growth in revenues discussed above. Additionally, the Investment Products segment continued to maintain its profit margins related to its primary businesses, thus contributing to the segment’s earnings growth. In particular, its individual annuity operation’s operating expenses as a percentage of average individual annuity account values remained consistent with the prior year at 21 basis points.



	For the Years Ended
Group Benefits Segment		2004			2003			2002
Total premiums and other consideration		$	3,652		$	2,362		$	2,327
Fully insured ongoing sales			632			507			597
Persistency [1]			88	%		81	%		83	%

~~Outlook~~ [1] The persistency rate represents the employer group life and disability business, which accounts for 65-70% of inforce premiums, excluding the CNA acquisition. For comparability purposes, the 2004 persistency rate excludes the CNA acquisition.

The ~~market~~significant ~~for~~increase ~~retirement~~in ~~products~~premiums ~~continues~~for tothe ~~expand~~Group asBenefits ~~individuals increasingly~~segment ~~save~~in ~~and~~2004 ~~plan~~compared ~~for~~to ~~retirement.~~2003 ~~Demographic~~is ~~trends suggest that as~~ the result ~~“baby boom” generation matures, a significant portion~~ of the ~~United~~earned ~~States population~~premium ~~will~~growth ~~allocate~~as athe ~~greater~~result ~~percentage~~ of ~~their disposable income to saving for their retirement years due to uncertainty surrounding~~ the ~~Social Security~~CNA ~~system~~Acquisition ~~and~~as ~~increases~~well as in ~~average life expectancy. As this market grows, particularly for variable annuities and mutual funds, new companies are continually entering~~ the ~~market, aggressively seeking distribution channels~~ ~~and~~pre-acquisition ~~pursuing~~Group ~~market~~Benefits ~~share~~business. ~~This~~The ~~trend~~increase ~~is not expected to subside, particularly~~ in ~~light~~earned ofpremiums ~~the Gramm-Leach-Bliley Act~~ of ~~1999 (“~~the ~~Financial~~pre-acquisition ~~Services~~Group ~~Modernization~~Benefits ~~Act”),~~business ~~which~~was ~~permits~~driven ~~affiliations~~by ~~among~~sales ~~banks, insurance companies~~ and ~~securities~~favorable ~~firms~~persistency.

~~Management believes that it has developed and implemented strategies to~~16 maintain and enhance its position as a market leader in the financial services industry. For example, Hartford Life is introducing a tax advantaged college savings product (529 Plan) in early 2002 called SMART 529. SMART 529 is a state-sponsored education savings program established by the State of West Virginia

14Expenses

~~Table~~There are three major categories for expenses. The first category of ~~Contents~~expenses is benefits and claims. These include the costs of mortality and morbidity, particularly in the group benefits and mortality in the individual life businesses, as well as other contract holder benefits to policyholders. In addition, traditional insurance type products generally use a loss ratio which is expressed as the amount of benefits incurred during a particular period divided by total premiums and other considerations, as a key indicator of underwriting performance. Since the Group Benefits segment occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the underwriting results of the business as buyout may distort the loss ratio.

~~which~~The ~~offers~~second anmajor ~~easy~~category ~~way~~is ~~for~~insurance ~~both~~operating ~~the~~costs ~~residents~~and ~~of West Virginia~~expenses, ~~and out-of-state~~which ~~participants~~is tocommonly ~~invest~~expressed ~~for~~ in a ~~college~~ratio ~~education.~~of ~~SMART~~a ~~529~~revenue ~~will allow~~measure ~~investors~~depending toon ~~choose~~the ~~from~~type aof ~~wide~~business. ~~variety~~The ofthird ~~investment~~category ~~portfolios~~is ~~to match~~the ~~their~~amortization ~~risk~~of ~~preference~~deferred topolicy ~~help~~acquisition ~~accumulate~~costs ~~savings~~and ~~for~~the ~~college.~~present ~~The~~value ~~SMART 529 product complements Hartford Life’s existing offering~~ of ~~investment~~future ~~products (mutual funds~~profits, ~~variable~~which ~~annuities,~~is typically ~~401~~expressed ~~(k),~~as ~~457~~a ~~and~~percentage ~~403~~of ~~(b) plans).~~pretax Itincome ~~also leverages~~before the ~~Company’s~~cost ~~capabilities~~of inthis ~~distribution,~~amortization. ~~service~~The ~~and~~individual ~~fund~~annuity ~~performance.~~business ~~The~~within ~~Hartford~~the ~~believes~~Retail ~~this~~Products isGroup asegment ~~significant~~accounts ~~market opportunity~~for ~~and~~ the ~~benefits~~majority of the ~~investing~~amortization inof ~~529~~deferred ~~plans~~policy ~~will~~acquisition becosts ~~well~~and ~~received~~present ~~by many~~value ~~Americans~~of ~~saving~~future profits for ~~college~~the Company.

INDIVIDUAL LIFE



	For the Years Ended
		2004			2003			2002
Retail Products Group
Insurance expenses, net of deferrrals		$	742		$	602		$	568
Expense ratio (individual annuity)		18.3 bps			22.0 bps			24.5 bps
DAC amortization ratio (individual annuity)			50.8	%		49.6	%		47.0	%

Individual Life
Death benefits		$	245		$	224		$	232
Insurance expenses, net of deferrals		$	164		$	161		$	159

Group Benefits
Total benefits and claims		$	2,703		$	1,862		$	1,878
Loss ratio (excluding buyout premiums)			74.0	%		78.5	%		80.6	%
Insurance expenses, net of deferrals		$	989		$	553		$	524
Expense ratio			27.7	%		24.6	%		23.4	%

~~Operating~~The ~~Summary~~increase in the expense ratio for the Group Benefits segment in 2004 compared to 2003 is the result of the CNA Acquisition. As part of the CNA Acquisition, a larger block of affinity business is now included in the Group Benefits segment and this business typically has lower expected loss ratios and higher expected commission ratios than other products within the business.

		2001		2000		1999
Fee income and other		$	647	$	459	$	412
Net investment income			243		181		172
	Total revenues		890		640		584
Benefits, claims and claim adjustment expenses			385		274		258
Amortization of deferred policy acquisition costs			168		145		129
Insurance operating costs and other expenses			159		103		88
	Total benefits, claims and expenses		712		522		475
	Income before income tax expense		178		118		109
Income tax expense			57		39		38
	Net income	$	121	$	79	$	71
Variable life account values		$	3,993	$	2,947		2,595
Total account values		$	7,868	$	5,849		5,419
Variable life insurance in force		$	61,617	$	33,460		23,854
Total life insurance in force		$	120,269	$	75,113		66,690

Profitability

~~The~~Management ~~Individual~~evaluates ~~Life~~the ~~segment~~rates ~~sells~~of areturn ~~variety~~various ofbusinesses ~~life~~can ~~insurance~~provide ~~products,~~as a way of determining ~~including~~where ~~variable~~additional ~~life,~~capital ~~universal~~is ~~life,~~invested ~~interest~~to ~~sensitive~~increase ~~whole~~net ~~life~~income and ~~term life~~shareholder ~~insurance~~returns. ~~primarily~~Specifically, because toof the ~~high~~importance ~~end~~of ~~estate~~its ~~and~~individual ~~business~~annuity ~~planning markets. Additionally~~products, the ~~Fortis~~Company ~~transaction,~~uses ~~through~~ the ~~addition~~return ofon aassets for ~~retail~~the ~~broker dealer,~~individual ~~which~~annuity ~~has~~business ~~been~~for ~~renamed~~evaluating ~~Woodbury~~profitability. ~~Financial~~In ~~Services,~~Group ~~Inc.~~Benefits, ~~has~~after ~~allowed~~tax ~~the~~margin ~~Individual~~is ~~Life~~a ~~segment~~key toindicator ~~increase~~of ~~its~~overall ~~reach in the emerging affluent market~~profitability.

2001 Compared to 2000 — Revenues in the Individual Life segment increased $250, or 39%, primarily due to the business acquired from Fortis. Fee income, including cost of insurance charges, increased $180, or 40%, driven principally by growth in the variable life business where account values increased $1.0 billion, or 35%, and life insurance in force increased $28.2 billion, or 84% from a year ago. In addition, net investment income on general account business (universal life, interest sensitive whole life and term life) increased $66, or 34%, consistent with the growth in related account values.

Ratios

2004

2003

2002

Retail Products Group

Individual annuity return on assets

44.8 bps

45.9 bps

41.8 bps

Group Benefits

After tax margin

6.3

6.4

5.5

~~Benefits,~~Regulatory ~~claims and expenses increased $190, or 36%, due principally to the~~Developments ~~growth in revenues described above. Although death benefits were higher in~~ ~~2001 than the prior year as a result of the increase in life insurance in~~ ~~force, year-to-date mortality experience (expressed as death claims as a percentage of net amount at risk) for 2001 was within pricing assumptions.~~

~~Net~~In ~~income increased $42~~June 2004, orThe ~~53%~~Hartford ~~primarily~~received ~~due~~a tosubpoena from the ~~revenue~~New ~~growth~~York ~~described~~Attorney General’s Office in ~~above.~~connection ~~Individual~~with ~~Life~~its ~~incurred~~inquiry aninto ~~after-tax~~compensation ~~loss~~arrangements ofbetween $3brokers ~~related~~and tocarriers. ~~the~~In mid-September 112004 ~~terrorist~~and ~~attack.~~subsequently, ~~Excluding~~The ~~this~~Hartford ~~loss~~has received additional subpoenas from the New York Attorney General’s Office, ~~operating~~which ~~income~~relate ~~increased~~more specifically to possible anti-competitive ~~$45~~activity among brokers and insurers. Since the beginning of October 2004, The Hartford has received subpoenas or ~~57%,~~other ~~primarily~~information ~~due~~requests tofrom Attorneys General and regulatory agencies in more than a dozen jurisdictions regarding broker compensation and possible anti-competitive activity. The Hartford may receive additional subpoenas and other information requests from Attorneys General or other regulatory agencies regarding similar issues. The Hartford also has received a subpoena from the ~~growth~~New ~~factors~~York ~~described~~Attorney ~~above~~General’s Office requesting information related to The Hartford’s underwriting practices with respect to legal professional liability insurance. In addition, The Hartford has received a request for information from the New York Attorney General’s Office concerning

~~2000 Compared to 1999 — Revenues increased $56, or 10%, resulting primarily~~17 from fee income associated with the growing block of variable life insurance. Fee income increased $59, or 15%, as variable life account values increased $352, or 14%, and variable life insurance in force increased $9.6 billion, or 40%.

~~Benefits,~~The ~~claims and expenses increased $47, or 10%, primarily due to a $16, or~~Hartford’s ~~6%,~~compensation ~~increase~~arrangements in ~~benefits,~~connection ~~claims~~with ~~and~~the ~~claim~~administration ~~adjustment~~of ~~expenses~~workers ~~and~~compensation aplans. ~~$16, or~~The ~~12%,~~Hartford ~~increase~~intends into ~~amortization~~continue ofcooperating ~~deferred~~fully ~~policy acquisition costs mostly associated~~ with ~~the~~these ~~growth in this segment’s variable business. Additionally~~investigations, ~~insurance~~ ~~operating costs~~ and ~~other~~is ~~expenses~~conducting ~~increased~~an internal ~~$15~~review, ~~or 17%, directly associated~~ with the ~~growth~~assistance inof ~~this~~outside ~~segment~~counsel, asregarding ~~previously~~the ~~described~~issues under investigation.

~~Net~~On ~~income~~October 14, ~~increased~~2004, $8the New York Attorney General’s Office filed a civil complaint against Marsh & McLennan Companies, orInc., ~~11%~~and Marsh, ~~primarily~~Inc. ~~due~~(collectively, “Marsh”). The complaint alleges, among other things, that certain insurance companies, including The Hartford, participated with Marsh in arrangements to ~~higher~~submit ~~fee~~inflated ~~income~~bids asfor business insurance and paid contingent commissions to ~~mortality~~ensure ~~experience~~that ~~(death~~Marsh ~~claims~~would direct business to them. The Hartford is not joined as a ~~percentage~~defendant in the action. Although no regulatory action has been initiated against The Hartford in connection with the allegations described in the civil complaint, it is possible that the New York Attorney General’s Office or one or more other regulatory agencies may pursue action against The Hartford or one or more of ~~net~~its ~~amount~~employees atin ~~risk)~~the ~~was~~future. The potential timing of any such action is difficult ~~consistent~~to ~~with~~predict. ~~prior~~If ~~year~~such an action is brought, it could have a material adverse effect on the Company.

15On October 29, 2004, the New York Attorney General’s Office informed The Hartford that the Attorney General is conducting an investigation with respect to the timing of the previously disclosed sale by Thomas Marra, a director and executive officer of The Hartford, of 217,074 shares of The Hartford’s common stock on September 21, 2004. The sale occurred shortly after the issuance of two additional subpoenas dated September 17, 2004 by the New York Attorney General’s Office. The Hartford has engaged outside counsel to review the circumstances related to the transaction and is fully cooperating with the New York Attorney General’s Office. On the basis of the review, The Hartford has determined that Mr. Marra complied with The Hartford’s applicable internal trading procedures and has found no indication that Mr. Marra was aware of the additional subpoenas at the time of the sale.

~~Table~~There continues to be significant federal and state regulatory activity relating to financial services companies, particularly mutual funds companies. These regulatory inquiries have focused on a number of ~~Contents~~mutual fund issues, including market timing and late trading, revenue sharing and directed brokerage, fees, transfer agents and other fund service providers, and other mutual-fund related issues. The Hartford has received requests for information and subpoenas from the Securities and Exchange Commission (“SEC”), subpoenas from the New York Attorney General’s Office, requests for information from the Connecticut Securities and Investments Division of the Department of Banking, and requests for information from the New York Department of Insurance, in each case requesting documentation and other information regarding various mutual fund regulatory issues.

~~Outlook~~The SEC’s Division of Enforcement and the New York Attorney General’s Office are investigating aspects of The Hartford’s variable annuity and mutual fund operations related to market timing. The Hartford’s mutual funds are available for purchase by the separate accounts of different variable universal life insurance policies, variable annuity products, and funding agreements, and they are offered directly to certain qualified retirement plans. Although existing products contain transfer restrictions between subaccounts, some products, particularly older variable annuity products, do not contain restrictions on the frequency of transfers. In addition, as a result of the settlement of litigation against The Hartford with respect to certain owners of older variable annuity products, The Hartford’s ability to restrict transfers by these owners is limited. In February 2005, the Company agreed in principle with the Boards of Directors of the mutual funds to idemnify the mutual funds for any material harm caused to the funds from frequent trading by these owners. The specific terms of the indemnification have not been determined. The SEC’s Division of Enforcement also is investigating aspects of The Hartford’s variable annuity and mutual fund operations related to directed brokerage and revenue sharing. The Hartford discontinued the use of directed brokerage in recognition of mutual fund sales in late 2003. The Hartford also has received a subpoena from the New York Attorney General’s Office requesting information related to The Hartford’s group annuity products. The Hartford continues to cooperate fully with the SEC, the New York Attorney General’s Office and other regulatory agencies.

~~Management~~A ~~believes~~number ~~that~~of companies have announced settlements of enforcement actions with various regulatory agencies, primarily the ~~Company~~SEC and the New York Attorney General’s ~~strong~~Office, ~~market~~which ~~position~~have ~~will~~included ~~provide~~a range ~~opportunities~~of ~~for~~monetary ~~growth~~penalties inand ~~this~~restitution. ~~segment~~While asno ~~individuals~~such ~~increasingly~~action ~~focus~~has onbeen initiated against The ~~estate~~Hartford, ~~planning~~the SEC, and the New York Attorney General’s Office are likely to take some action at the conclusion of the on-going investigations related to market timing and directed brokerage. The potential timing of any such action is difficult to predict, and The Hartford’s ~~acquisition~~ultimate ofliability, if ~~the~~any, ~~United~~from ~~States~~any ~~individual~~such action is not reasonably estimable at this time. If such an action is brought, it could ~~life~~have ~~insurance~~a ~~business~~material ofadverse ~~Fortis~~effect ~~has~~on ~~increased~~the ~~its~~Company’s ~~scale~~consolidated ~~while~~results ~~broadening~~of ~~its~~operations or cash flows in ~~distribution~~particular ~~capabilities~~quarterly asor ~~described~~annual ~~above~~periods.

~~GROUP~~Broker ~~BENEFITS~~Compensation

~~Operating~~As ~~Summary~~The Hartford has disclosed previously, the Company pays brokers and independent agents commissions and other forms of incentive compensation in connection with the sale of many of the Company’s insurance products. Since the New York Attorney General’s Office filed a civil complaint against Marsh & McLennan Companies, Inc. and Marsh, Inc. (collectively, “Marsh”) on October 14, 2004, several of the largest national insurance brokers, including Marsh, have announced that they have discontinued the use of contingent compensation arrangements. Other industry participants may make similar, or different, determinations in the future. In addition, legal, legislative, regulatory, business or other developments may require changes to industry practices relating to incentive compensation. At this time, it is not possible to predict the effect of these announced or potential changes on the Company’s business or distribution strategies.

			2001		2000		1999
Earned premiums and other			$	2,259	$	1,981	$	1,829
Net investment income				248		226		195
		Total revenues		2,507		2,207		2,024
Benefits, claims and claim adjustment expenses				1,874		1,643		1,507
Insurance operating costs and other expenses				498		450		415
		Total benefits, claims and expenses		2,372		2,093		1,922
		Income before income tax expense		135		114		102
Income tax expense				29		24		23
	Net income		$	106	$	90	$	79

~~Hartford~~CRITICAL ~~Life~~ACCOUNTING ~~is a leading provider of group benefits, and through this~~ESTIMATES ~~segment sells group life and group disability insurance as well as other~~ ~~products, including stop loss and supplementary medical coverage to employers~~ and employer sponsored plans, accidental death and dismemberment, travel accident and other special risk coverages to employers and associations. The Company also offers disability underwriting, administration, claims processing services and reinsurance to other insurers and self-funded employer plans.

~~2001~~The ~~Compared~~preparation toof ~~2000~~financial —statements, ~~Revenues~~ in ~~the~~conformity ~~Group~~with ~~Benefits~~accounting ~~segment~~principles ~~increased $300,~~generally oraccepted ~~14%, driven primarily by growth~~ in ~~earned~~the ~~premiums,~~United ~~which~~States ~~increased~~of ~~$278,~~America ~~or 14%~~(“GAAP”), ~~due~~requires management to ~~solid~~make ~~persistency~~estimates and assumptions ~~increased~~that ~~premium~~affect ~~rates related to~~ the ~~in force~~reported ~~block~~amounts of ~~business,~~assets and ~~strong~~liabilities ~~sales~~and todisclosure ~~new~~of ~~customers. Fully insured~~contingent ~~ongoing~~assets ~~sales~~and ~~for~~liabilities at the ~~year~~date ~~ended~~of ~~December 31,~~the ~~2001~~financial ~~were~~statements ~~$531,~~and ~~$85 or 19% higher than~~ the ~~prior~~reported ~~year.~~amounts ~~Additionally,~~of ~~net~~revenues and ~~investment~~expenses ~~income~~during ~~increased~~the ~~$22,~~reporting orperiod. ~~10% due~~Actual toresults ~~the~~could ~~overall~~differ ~~growth~~from inthose ~~the in-force business~~estimates.

~~Total~~The ~~benefits,~~Company ~~claims~~has ~~and~~identified ~~expenses~~the ~~increased~~following ~~$279,~~estimates oras ~~13%,~~critical ~~driven~~in ~~primarily~~that ~~by higher~~they ~~benefits,~~involve ~~claims~~a ~~and~~higher ~~claims~~degree of ~~adjustment~~judgment ~~expenses~~and ~~which~~are ~~increased~~subject ~~$231,~~to ~~or 14%.~~a ~~These~~significant ~~increases~~degree ~~are~~of ~~consistent~~variability; ~~with~~insurance ~~the~~reserves; ~~growth~~deferred policy inacquisition ~~the~~costs ~~business~~and ~~described above~~present asvalue ~~the~~of ~~loss~~future ~~ratios~~profits; ~~(defined~~valuation asof ~~benefits~~investments and derivative ~~claims~~instruments and ~~claim~~the ~~adjustment~~evaluation of other-than-temporary impairments; and contingencies. ~~expenses~~In asdeveloping athese ~~percentage~~estimates ofmanagement ~~premiums~~makes subjective and ~~other~~complex ~~considerations)~~judgments ~~have~~that ~~remained~~are inherently ~~relatively~~uncertain ~~consistent~~and ~~with~~subject ~~the~~to ~~comparable~~material ~~prior~~change ~~year~~as ~~periods.~~facts Inand ~~addition, expenses~~circumstances ~~other~~develop. ~~than~~Although ~~benefits~~variability is ~~and~~inherent ~~claims~~in ~~increased~~these ~~$48~~estimates, ormanagement ~~11%,~~believes ~~for~~ the ~~year ended~~amounts ~~December 31,~~provided ~~2001,~~are ~~also~~appropriate ~~consistent~~based ~~with~~ upon the ~~overall~~facts ~~growth~~available inupon compilation of the ~~segment~~ financial statements.

~~Net~~Reserves ~~income~~for ~~increased~~Future ~~$16~~Policy Benefits, orUnpaid ~~18%~~Claims, ~~driven~~Claim byAdjustment ~~overall~~Expenses, ~~revenue~~Other ~~growth and~~Policyholder ~~consistent~~Funds ~~loss~~ and ~~expense ratios as compared to the prior year. Group~~ Benefits ~~incurred an after-tax loss of $2 related to the September 11 terrorist~~Payable ~~attack; excluding this loss, net income increased $18, or 20%.~~

~~2000~~The ~~Compared~~Company’s tolife ~~1999~~insurance —subsidiaries ~~Revenues~~establish ~~increased~~and ~~$183,~~carry oras 9%liabilities, ~~driven~~predominantly, ~~primarily by~~three ~~growth~~types inof ~~fully~~reserves: ~~insured~~(1) a ~~premiums,~~liability ~~excluding~~for ~~buyouts,~~amounts ~~which~~that ~~increased~~accrue ~~$182,~~to ~~or 10%,~~the ~~principally~~benefit ~~due~~of tothe ~~favorable~~policyholder ~~persistency~~as of the infinancial ~~force~~statement ~~block~~date, of(2) a liability for unpaid claims, including those that have been ~~business~~incurred but not yet reported, asand ~~well~~(3) a asliability ~~new~~for ~~sales~~future policy benefits. ~~Also~~Reserves ~~contributing~~also include toamounts ~~the~~for ~~revenue~~unearned ~~growth~~premiums. ~~was~~Reserves ~~an increase~~for assumed reinsurance are computed in ~~net~~a ~~investment~~manner that ~~income~~is ofcomparable ~~$31,~~to ordirect ~~16%~~insurance reserves.

~~Total~~The ~~benefits,~~Company ~~claims~~has classified its fixed and ~~expenses~~variable ~~increased~~annuities, ~~$171~~401(k), orcertain 9%governmental annuities, ~~primarily~~private ~~due~~placement ~~to higher~~life ~~benefits~~insurance, ~~claims~~variable life insurance, universal life insurance and interest ~~claim~~sensitive ~~adjustment~~whole ~~expenses~~life ~~which~~insurance as universal life-type contracts. The liability for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the financial statement date (commonly referred to as the account value), including ~~excluding~~credited ~~buyouts~~interest, amounts that have been assessed to compensate the Company for services ~~increased~~to ~~$168~~be performed over future periods, and any amounts previously assessed against policyholders that are refundable on termination of the contract. Certain contracts classified as universal life-type may also include additional death or ~~12%~~other insurance benefit features, ~~directly~~such ~~related~~as toguaranteed ~~revenue~~minimum death ~~growth~~or inincome ~~this~~benefits ~~segment~~offered with variable annuity contracts or no lapse guarantees offered with universal life insurance contracts. An additional liability is established for these benefits ~~The~~by ~~segment’s~~estimating ~~combined~~the ~~ratio~~expected ~~(ratio~~present value of ~~total~~the benefits, ~~claims~~in ~~and~~excess ~~expenses~~of the projected account value in proportion to the present value of total expected assessments. Excess benefits are accrued as a ~~percentage~~liability as actual assessments are recorded. Determination of ~~earned~~the ~~premiums~~expected value of excess benefits and ~~other)~~assessments ~~was~~are ~~consistent~~based ~~with~~on ~~the~~a ~~prior~~range ~~year~~of scenarios and assumptions including those related to market rates of return and volatility, contract surrender rates and mortality experience.

~~Net~~The ~~income~~Company ~~increased~~has ~~$11~~classified its institutional and governmental products, orwithout ~~14%~~life contingencies, including ~~primarily~~funding ~~driven~~agreements, bystructured settlements and guaranteed investment contracts, as investment contracts. The liability for investment contracts is equal to the ~~increased~~balance ~~revenues~~that accrues ~~described~~to ~~above~~the benefit of the contract holder as of the financial statement date, which includes the accumulation of deposits plus credited interest, less withdrawals and amounts assessed through the financial statement date.

~~Outlook~~Liabilities for the Company’s group life and disability contracts as well its individual term life insurance policies include amounts for unpaid claims and future policy benefits. Liabilities for unpaid claims include estimates of amounts to fully settle known reported claims as well as claims related to insured events that the Company estimates have been incurred but have not yet been reported. Liabilities for future policy benefits are calculated by estimating the present value of future policy benefits to be paid to or on behalf of policyholders less the estimated present value of future net premiums. The methods used in determining the liability for unpaid claims and future policy benefits are standard actuarial methods recognized by the American Academy of Actuaries. For the tabular reserves, discount rates are based on the Company’s earned investment yield and the morbidity/mortality tables used are standard industry tables modified to reflect the Company’s actual experience when appropriate. In particular, for the Company’s group disability known claim reserves, the morbidity table for the early durations of claim is based exclusively on the Company’s experience, incorporating factors such as sex, elimination period and diagnosis. These reserves are computed such that they are expected to meet the Company’s future policy obligations. Future policy benefits 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. Changes in or deviations from the assumptions used for mortality, morbidity, expected future premiums and interest can significantly affect the Company’s reserve levels and related future operations and, as such, provisions for adverse deviation are built into the long-tailed liability assumptions.

AsValuation ~~employers~~of ~~continue~~Investments ~~to offer benefit plans in order to attract~~ and ~~retain valued~~Derivative ~~employees,~~Instruments ~~management expects that the need for group life~~ and ~~group disability~~Evaluation ~~insurance will continue to expand and believes that the Company is well positioned to take advantage~~ of ~~this growth potential.~~Other-Than-Temporary Impairments

The ~~Group~~Company’s ~~Benefits~~investments ~~segment~~in ~~offered~~fixed ~~Medicare~~maturities, ~~supplement~~which ~~insurance~~include tobonds, ~~members~~redeemable ~~of several~~preferred ~~retired~~stock ~~military officer associations. Federal legislation effective~~and incommercial ~~the~~paper; ~~fourth~~and ~~quarter~~certain ofequity ~~2001~~securities, ~~now~~which ~~provides~~include ~~retired~~common ~~military~~and ~~officers~~non-redeemable ~~age 65~~preferred ~~and~~ stocks, ~~older~~are ~~with~~classified ~~full~~as ~~medical~~“available-for-sale” ~~insurance~~as ~~paid~~defined ~~for~~in byStatement ~~the~~of ~~government,~~Financial ~~eliminating~~Accounting ~~the~~Standards ~~need~~(“SFAS”) ~~for Medicare supplement insurance~~No. 115, ~~This~~“Accounting ~~legislation~~for ~~will~~Certain ~~reduce~~Investments ~~Group Benefits~~in ~~premium~~Debt ~~revenues~~and byEquity ~~approximately $131 in 2002.~~Securities”

1619

~~Table~~(“SFAS No. 115”). Accordingly, these securities are carried at fair value with the after-tax difference from amortized cost, as adjusted for the effect of ~~Contents~~deducting the life and pension policyholders’ share of the immediate participation guaranteed contracts and certain life and annuity deferred policy acquisition costs, reflected in stockholders’ equity as a component of accumulated other comprehensive income (“AOCI”). The equity investments associated with the variable annuity products offered in Japan are recorded at fair value and are classified as “trading” as defined in SFAS No. 115, with changes in fair value recorded in net investment income. Policy loans are carried at outstanding balance, which approximates fair value. Other investments primarily consist of limited partnership interests, derivatives and mortgage loans. The limited partnerships are accounted for under the equity method and accordingly the Company’s share of partnership earnings are included in net investment income. Derivatives are carried at fair value and mortgage loans on real estate are recorded at the outstanding principal balance adjusted for amortization of premiums or discounts and net of valuation allowances, if any.

~~CORPORATE~~Valuation ~~OWNED~~of ~~LIFE~~Fixed ~~INSURANCE (COLI)~~Maturities

~~Operating~~The ~~Summary~~fair value for fixed maturity securities is largely determined by one of three primary pricing methods: independent third party pricing service market quotations, independent broker quotations or pricing matrices, which use data provided by external sources. With the exception of short-term securities for which amortized cost is predominantly used to approximate fair value, security pricing is applied using a hierarchy or “waterfall” approach whereby prices are first sought from independent pricing services with the remaining unpriced securities submitted to brokers for prices or lastly priced via a pricing matrix.

			2001		2000		1999
Fee income and other			$	367	$	401	$	400
Net investment income				352		366		431
		Total revenues		719		767		831
Benefits, claims and claim adjustment expenses				514		545		621
Insurance operating costs and expenses				84		102		59
Dividends to policyholders				66		67		104
		Total benefits, claims and expenses		664		714		784
		Income before income tax expense		55		53		47
Income tax expense				18		19		17
		Net income	$	37	$	34	$	30
Variable COLI account values			$	18,019	$	15,937	$	12,386
Leveraged COLI account values				4,315		4,978		5,729
	Total account values		$	22,334	$	20,915	$	18,115

Prices from independent pricing services are often unavailable for securities that are rarely traded or are traded only in privately negotiated transactions. As a result, certain of the Company’s asset-backed and commercial mortgage-backed securities are priced via broker quotations. A pricing matrix is used to price securities for which the Company is unable to obtain either a price from an independent third party service or an independent broker quotation. The pricing matrix begins with current treasury rates and uses credit spreads and issuer-specific yield adjustments received from an independent third party source to determine the market price for the security. The credit spreads incorporate the issuer’s credit rating as assigned by a nationally recognized rating agency and a risk premium, if warranted, due to the issuer’s industry and the security’s time to maturity. The issuer-specific yield adjustments, which can be positive or negative, are updated twice annually, as of June 30 and December 31, by an independent third party source and are intended to adjust security prices for issuer-specific factors. The matrix-priced securities at December 31, 2004 and 2003, primarily consisted of non-144A private placements and have an average duration of 4.8 and 4.4, respectively.

~~2001~~The ~~Compared~~following totable ~~2000~~identifies —the ~~COLI~~fair ~~revenues~~value ~~decreased~~of ~~$48,~~fixed ormaturity ~~6%,~~securities ~~mostly~~by ~~due~~pricing tosource ~~lower fee income and net investment income. Fee income and other decreased $34, or 8%, due to a decline in variable COLI sales and deposits which were approximately $1.5 billion in 2001~~ as ~~compared to $2.9 billion in 2000. In~~of ~~addition~~December 31, ~~net~~2004 ~~investment income decreased $14, or 4% due primarily to lower interest rates,~~ and ~~the decline in leveraged COLI account values.~~2003:

Benefits, claims and expenses decreased $50, or 7%, directly related to the decrease in revenue discussed above.


	2004					2003
			Percentage					Percentage
			of Total					of Total
	Fair Value		Fair Value			Fair Value		Fair Value

Priced via independent market quotations	$	40,902		80.9	%	$	39,857		81.0	%
Priced via broker quotations		3,319		6.6	%		3,273		6.7	%
Priced via matrices		4,018		7.9	%		3,445		7.0	%
Priced via other methods		31		0.1	%		301		0.6	%
Short-term investments [1]		2,261		4.5	%		2,321		4.7	%

Total	$	50,531		100.0	%	$	49,197		100.0	%

Total general accounts						$	37,462		76.1	%
Total guaranteed separate accounts [2]						$	11,735		23.9	%

Net income increased $3 or 9% primarily due to the overall growth in variable COLI business and earnings associated with the leveraged COLI business recaptured in 1998. COLI incurred an after-tax charge of $2 related to the September 11 terrorist attack; excluding this charge, operating income increased $5, or 15%.

[1]		Short-term investments are primarily valued at amortized cost, which approximates fair value.

[2]		Effective January 1, 2004, guaranteed separate account assets were included with general account assets as a result of adopting SOP 03-1.

~~2000~~The ~~Compared~~fair tovalue ~~1999~~of —a ~~Revenues~~financial ininstrument is the ~~COLI~~amount ~~segment~~at ~~decreased~~which ~~$64,~~the orinstrument ~~8%,~~could be ~~primarily~~exchanged ~~due~~in to a ~~decline~~current intransaction ~~net~~between ~~investment income of $65~~knowledgeable, orunrelated ~~15%~~willing parties. ~~This decline~~As ~~was~~such, ~~principally due to~~ the estimated ~~leveraged~~fair ~~COLI~~value ~~block~~ of ~~business,~~a asfinancial ~~related account~~instrument ~~values~~may ~~decreased~~differ ~~$751,~~significantly orfrom ~~13%, as a result of~~ the ~~continued~~amount ~~downsizing~~that could ~~caused~~be byrealized if the ~~HIPA~~security ~~Act~~was ofsold ~~1996~~immediately.

~~Total~~Valuation ~~benefits,~~of ~~claims~~Derivative ~~and expenses decreased $70, or 9%, consistent with the~~Instruments ~~decline in revenues described above.~~

~~Net~~Derivative ~~income~~instruments ~~increased~~are ~~$4,~~reported orat ~~13%,~~fair ~~principally~~value ~~due~~based toupon ~~the~~either ~~variable~~independent ~~COLI~~market ~~business~~quotations ~~where~~or ~~related~~pricing ~~account~~valuation ~~values~~models ~~increased~~which $3utilize independent third party data as inputs.~~6 billion~~ Other than the guaranteed minimum withdrawal benefit (“GMWB”) and the associated reinsurance contracts, orwhich 29are discussed below, approximately 72% of derivatives, asbased ~~well~~upon asnotional values, were priced via ~~earnings~~valuation ~~associated~~models ~~with~~and athe ~~block~~remaining 28% of ~~leveraged~~derivatives ~~COLI~~were ~~business~~priced ~~recaptured~~via inindependent ~~1998~~market quotations.

~~Outlook~~Other-Than-Temporary Impairments

~~The~~One ~~focus~~ of ~~this~~the ~~segment~~significant isestimations ~~variable~~inherent ~~COLI,~~in ~~which~~the ~~continues~~valuation toof beinvestments ais ~~product generally~~the ~~used~~evaluation ~~by employers to fund non~~of other-~~qualified~~than-temporary ~~benefits or other postemployment benefit liabilities~~impairments. The ~~leveraged~~evaluation ~~COLI~~of ~~product~~impairments ~~has~~is ~~been~~a ~~an important~~quantitative ~~contributor~~and toqualitative process, ~~the~~which ~~Company~~is ~~profitability~~subject into ~~recent~~risks ~~years~~ and ~~will continue~~uncertainties toand ~~contribute~~is intended to ~~the~~determine ~~profitability~~whether ~~of the Company~~ declines in the ~~future, although~~fair ~~the~~value ~~level~~ of ~~profit~~investments isshould ~~expected~~be torecognized ~~decline~~in ~~over~~current ~~the~~period ~~long run~~earnings. ~~COLI~~The ~~is subject~~risks ~~to a changing legislative~~ and ~~regulatory environment that could have a~~ ~~material adverse effect on its business.~~

~~DEFERRED ACQUISITION COSTS (DAC) AND RESERVES~~20

~~Management~~uncertainties isinclude ~~required~~changes toin ~~make~~general ~~estimates~~economic conditions, the issuer’s financial condition or near term recovery prospects and ~~assumptions~~the effects of changes in interest rates. The Company’s accounting policy requires that ~~affect~~a decline in the ~~reported~~ ~~amounts~~value of ~~assets~~a ~~and~~security ~~liabilities~~below atits amortized cost basis be assessed to determine if the ~~date~~decline ofis other-than-temporary. If the ~~financial~~security is deemed to be ~~statements~~other-than-temporarily impaired, a charge is recorded in net realized capital losses equal to the difference between the fair value and amortized cost basis of the ~~reported~~security. ~~amounts~~In addition, for securities expected to be sold, an other-than-temporary impairment charge is recognized if the Company does not expect the fair value of ~~revenues~~a ~~and~~security ~~expenses~~to ~~during~~recover to amortized cost prior to the ~~reporting~~expected ~~period~~date of sale. ~~Actual~~The ~~results~~fair ~~could~~value ~~differ~~of ~~from~~the ~~those~~other-than-temporarily ~~estimates~~impaired investment becomes its new cost basis. The ~~most significant~~Company ~~estimates~~has ~~include~~a ~~those~~security ~~used~~monitoring inprocess ~~determining~~overseen ~~deferred~~by ~~policy acquisition~~a ~~costs~~committee of investment and accounting professionals (“the ~~liability~~committee”) that identifies securities that, due to certain characteristics, as described below, are subjected to an enhanced analysis on a quarterly basis.

17Securities not subject to Emerging Issues Task Force (“EITF”) Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets” (“non-EITF Issue No. 99-20 securities”), that are in an unrealized loss position, are reviewed at least quarterly to determine if an other-than-temporary impairment is present based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether a decline in value for non-EITF Issue No. 99-20 securities is other-than-temporary include: (a) the length of time and the extent to which the fair value has been less than cost, (b) the financial condition, credit rating and near-term prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. Non-EITF Issue No. 99-20 securities depressed by twenty percent or more for six months are presumed to be other-than-temporarily impaired unless significant objective verifiable evidence supports that the security price is temporarily depressed and is expected to recover within a reasonable period of time. The evaluation of non-EITF Issue No. 99-20 securities depressed more than ten percent is documented and discussed quarterly by the committee.

~~Table~~For certain securitized financial assets with contractual cash flows (including asset-backed securities), EITF Issue No. 99-20 requires the Company to periodically update its best estimate of cash ~~Contents~~flows over the life of the security. If the fair value of a securitized financial asset is less than its carrying amount and there has been a decrease in the present value of the estimated cash flows since the last revised estimate, considering both timing and amount, then an other-than-temporary impairment charge is recognized. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. As a result, actual results may differ from current estimates. In addition, projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral.

~~for~~Once ~~future~~an ~~policyholder~~impairment ~~benefits~~charge ~~and~~has ~~other~~been recorded, the Company continues to review the ~~policyholder~~other-than-temporarily ~~funds~~impaired securities for additional other-than-temporary impairments. ~~Although~~As discussed ~~some~~in ~~variability~~Note is2 ~~inherent~~of the Notes to Consolidated Financial Statements, the Financial Accounting Standards Board (“FASB”) voted to delay the implementation of the impairment measurement and recognition guidance contained in ~~these~~paragraphs ~~estimates~~10-20 of EITF Issue No. 03-1, “The Meaning of ~~management~~Other-Than-Temporary ~~believes~~Impairments and Its Application to Certain Investments”, (“EITF Issue No. 03-1”), in order to redeliberate certain aspects of the ~~amounts~~consensus. ~~provided~~The ~~are~~ultimate ~~adequate~~completion of EITF Issue No. 03-1 may impact the Company’s current other-than-temporary impairment evaluation process.

~~Deferred~~Valuation ~~Acquisition~~of ~~Costs~~Guaranteed Minimum Withdrawal Benefit Derivatives

~~Policy~~An ~~acquisition~~embedded ~~costs,~~derivative ~~which~~instrument ~~include~~is ~~commissions~~reported ~~and~~at ~~certain~~fair ~~other~~value ~~expenses~~based upon internally established valuations that ~~vary~~are consistent with external valuation models, ~~and~~quotations ~~are~~furnished ~~primarily~~by ~~associated~~dealers ~~with~~in such ~~acquiring~~instrument ~~business,~~or ~~are~~market quotations. The Company has calculated the fair value of the GMWB ~~deferred~~embedded derivative liability based on actuarial assumptions related to the projected cash flows, including benefits and ~~amortized~~related contract charges, over the ~~estimated~~ lives of the contracts, ~~usually~~incorporating expectations concerning policyholder behavior. Because of the dynamic and complex nature of these cash flows, stochastic techniques under a variety of market return scenarios and other best estimate assumptions are used. Estimating these cash flows involves numerous estimates and subjective judgments including those regarding expected market rates of return, market volatility, correlations of market returns and discount rates. At each valuation date, the Company assumes expected returns based on risk-free rates as represented by the current LIBOR forward curve rates; market volatility assumptions for each underlying index is based on a blend of observed market “implied volatility” data and annualized standard deviations of monthly returns using the most recent 20 years of observed market performance; correlations of market returns across underlying indices is based on actual observed market returns and relationships over the ten years preceding the valuation date; and current risk-free spot rates as represented by the current LIBOR spot curve is used to determine the present value of expected future cash flows produced in the stochastic projection process.

~~Deferred policy acquisition costs related to investment contracts and universal~~21 life type contracts are deferred and amortized using the retrospective deposit method. Under the retrospective deposit method, acquisition costs are amortized in proportion to the present value of expected gross profits from investment, mortality and expense margins and surrender charges. Actual gross profits can vary from management’s estimates, resulting in increases or decreases in the rate of amortization. Management periodically reviews these estimates and evaluates the recoverability of the deferred acquisition cost asset. When appropriate, management revises its assumptions on the estimated gross profits of these contracts and the cumulative amortization for the books of business are re-estimated and adjusted by a cumulative charge or credit to income. The average rate of assumed future investment yield used in estimating expected gross profits related to variable annuity and variable life business was 9.0% at December 31, 2001 and for all other products including fixed annuities and other universal life type contracts, the average assumed investment yield ranged from 5.0-8.5%.

Deferred ~~policy~~Policy ~~acquisition~~Acquisition ~~costs~~Costs ~~related~~and toPresent ~~traditional~~Value ~~policies are amortized over the premium paying period~~ of ~~the~~Future ~~related policies in proportion to the~~Profits ~~ratio of the present value of annual expected premium income to the present~~ ~~value of total expected premium income. Adjustments are made each year to~~ ~~recognize actual experience as compared to assumed experience for the current period.~~

ToPolicy ~~date,~~acquisition ~~the~~costs ~~Company’s~~include ~~experience~~commissions ~~has~~and ~~generally~~certain ~~been~~other ~~consistent~~expenses orthat ~~favorable~~vary towith and are ~~the~~primarily ~~assumptions~~associated ~~used~~with acquiring business. Present value of future profits is an intangible asset recorded upon applying purchase accounting in ~~determining~~an ~~DAC~~acquisition ~~amortization~~of a life insurance company. Deferred ~~However,~~policy ifacquisition costs and the ~~Company were~~present tovalue ~~experience~~of afuture ~~material~~profits ~~adverse~~intangible ~~deviation~~asset are amortized in ~~certain~~the ~~critical assumptions,~~same ~~including~~way. ~~surrender~~Both ~~rates~~are amortized over the estimated life of the contracts acquired, usually ~~mortality~~20 years. ~~experience~~Within the following discussion, ordeferred ~~investment~~policy acquisition costs and the ~~performance,~~present ~~there~~value ~~could~~of befuture aprofits ~~negative~~intangible ~~affect~~asset will be referred to as “DAC”. At December 31, 2004 and 2003, the carrying value of the Company’s ~~reported earnings~~DAC was $7.4 billion and ~~shareholder’s~~$6.6 billion, respectively. ~~equity~~For statutory accounting purposes, such costs are expensed as incurred.

~~Reserves~~DAC related to traditional policies are amortized over the premium-paying period in proportion to the present value of annual expected premium income. DAC related to investment contracts and universal life-type contracts are deferred and amortized using the retrospective deposit method. Under the retrospective deposit method, acquisition costs are amortized in proportion to the present value of estimated gross profits (“EGPs”), arising principally from projected investment, mortality and expense margins and surrender charges. The attributable portion of the DAC amortization is allocated to realized gains and losses on investments. The DAC balance is also adjusted through other comprehensive income by an amount that represents the amortization of deferred policy acquisition costs that would have been required as a charge or credit to operations had unrealized gains and losses on investments been realized. Actual gross profits can vary from management’s estimates, resulting in increases or decreases in the rate of amortization.

InThe ~~accordance~~Company ~~with~~regularly ~~applicable~~evaluates ~~insurance~~its ~~regulations~~EGPs ~~under~~to ~~which~~determine ~~Hartford~~if ~~Life operates,~~actual ~~life~~experience ~~insurance~~or ~~subsidiaries~~other ofevidence suggests ~~the~~that ~~Company~~earlier ~~establish~~estimates ~~and~~should ~~carry~~be ~~as liabilities~~revised. ~~actuarially~~In ~~determined~~the ~~reserves~~event ~~which~~that ~~are~~the ~~calculated~~Company were to ~~meet their~~revise ~~future~~its ~~obligations.~~EGPs, ~~Reserves~~the ~~for~~cumulative ~~life~~DAC ~~insurance~~amortization ~~and~~would ~~disability~~be ~~contracts~~adjusted ~~are~~to reflect such revised EGPs in the ~~based~~period onthe ~~actuarially~~revision ~~recognized~~was ~~methods~~determined ~~using~~to ~~prescribed~~be ~~morbidity~~necessary. ~~and mortality~~Several ~~tables~~assumptions inconsidered ~~general~~to ~~use~~be significant in the ~~United~~development ~~States,~~of ~~which~~EGPs ~~are~~include ~~modified~~separate toaccount fund performance, surrender and ~~reflect~~lapse ~~Hartford~~rates, ~~Life’s~~estimated ~~actual~~interest ~~experience~~spread ~~when~~and ~~appropriate~~estimated mortality. ~~These~~The ~~reserves~~separate ~~are~~account fund ~~computed~~performance atassumption ~~amounts~~is ~~that,~~critical ~~with~~to ~~additions~~the ~~from~~development ~~estimated~~of ~~premiums~~the EGPs related to bethe ~~received~~Company’s variable annuity and ~~with~~to ~~interest~~a onlesser ~~such~~extent, ~~reserves~~variable ~~compounded~~universal ~~annually~~life atinsurance ~~certain~~businesses. ~~assumed~~The average annual ~~rates,~~long-term ~~are~~rate ~~expected~~of toassumed beseparate ~~sufficient~~account tofund ~~meet~~performance ~~Hartford~~(before ~~Life’s~~mortality ~~policy~~and ~~obligations~~expense charges) atused ~~their~~in ~~maturities~~estimating orgross inprofits for the ~~event~~variable ofannuity anand ~~insured’s~~variable ~~death.~~universal ~~Reserves~~life ~~also~~business was ~~include~~9% ~~unearned~~for ~~premiums,~~the ~~premium~~years ~~deposits~~ended December 31, ~~claims~~2004 ~~incurred~~and ~~but~~2003. ~~not~~For ~~reported~~other products including fixed annuities and ~~claims~~other ~~reported~~universal ~~but~~life-type ~~not~~contracts, ~~yet~~the ~~paid.~~average ~~Reserves~~assumed ~~for~~investment ~~assumed~~yield ~~reinsurance~~ranged ~~are computed~~from in5.7% ato 7.9% ~~manner~~for ~~that~~both isyears ~~comparable~~ended toDecember 31, ~~direct~~2004 ~~insurance~~and ~~reserves~~2003.

The ~~liability~~Company ~~for~~had ~~policy~~developed ~~benefits~~models ~~for~~to ~~universal~~evaluate ~~life-type~~its ~~contracts~~DAC ~~and~~asset, which allowed it to run a large number ~~interest-sensitive~~of ~~whole~~stochastically ~~life~~determined ~~policies~~scenarios isof ~~equal~~separate toaccount ~~the~~fund ~~balance~~performance. ~~that~~These ~~accrues~~scenarios towere ~~the~~then ~~benefit~~utilized ofto ~~policyholders,~~calculate ~~including~~a ~~credited~~statistically ~~interest,~~significant ~~amounts~~range ~~that~~of ~~have~~reasonable estimates of EGPs. This ~~been~~range ~~assessed~~was tothen ~~compensate~~compared to the ~~Company~~present ~~for~~value ~~services~~of toEGPs becurrently ~~performed~~utilized ~~over~~in the DAC amortization ~~future~~model. ~~periods~~As of December 31, ~~and~~2004, ~~any~~the ~~amounts~~present ~~previously~~value ~~assessed~~of ~~against~~the ~~policyholders~~EGPs ~~that~~utilized in the DAC amortization ~~are~~model ~~refundable~~fall onwithin ~~termination~~a reasonable range of ~~the~~statistically ~~contract.~~calculated ~~For~~present ~~investment~~value ~~contracts,~~of EGPs. As a ~~policyholder~~result, ~~liabilities~~the ~~are~~Company ~~equal~~does not believe there is sufficient evidence to ~~the~~suggest ~~accumulated~~that ~~policy~~a ~~account~~revision ~~values,~~to the ~~which~~EGPs ~~consist~~(and oftherefore, ana ~~accumulation~~revision to the DAC) as of ~~deposit~~December 31, ~~payments~~2004 ~~plus~~is ~~credited~~necessary; ~~interest~~however, if in ~~less~~the ~~withdrawals~~future ~~and~~the ~~amounts~~EGPs ~~assessed~~utilized ~~through~~in the ~~end~~DAC amortization model were to fall outside of the ~~period.~~margin ~~For~~ of the reasonable range of statistically calculated EGPs, a revision could be necessary. Furthermore, the Company’s ~~group~~has ~~disability~~estimated ~~policies,~~that the ~~level~~present value of ~~reserves~~the EGPs is ~~based~~likely onto remain within a ~~variety~~reasonable ofrange ~~factors~~if ~~including~~overall ~~particular~~separate ~~diagnoses,~~account ~~termination~~returns ~~rates~~decline ~~and~~by 25% or less over the next twelve ~~benefit~~months, ~~levels~~and if certain other assumptions that are implicit in the computations of the EGPs are achieved.

~~The~~Additionally, ~~persistency~~the ofCompany ~~Hartford~~continues ~~Life’s~~to ~~annuity~~perform ~~and~~analyses ~~other~~with ~~interest-sensitive~~respect ~~life~~to the potential impact of a ~~insurance~~revision ~~reserves~~to isfuture ~~enhanced~~EGPs. byIf ~~policy~~such ~~restrictions~~a onrevision to EGPs were deemed necessary, the ~~withdrawal~~Company ofwould ~~funds.~~adjust, ~~Withdrawals~~as appropriate, all of its assumptions for products accounted for in ~~excess~~accordance with Statement of ~~allowable~~Financial ~~penalty-free~~Accounting ~~amounts~~Standards ~~are~~(“SFAS”) ~~assessed~~No. 97, a“Accounting and Reporting by Insurance ~~surrender~~Enterprises ~~charge~~for ~~during~~Certain aLong-Duration ~~penalty~~Contracts ~~period~~and for Realized Gains and Losses from the Sale of Investments”, ~~which~~and isreproject ~~usually~~its future EGPs based on current account values at ~~least~~the ~~seven~~end of the ~~years.~~quarter ~~Such~~in ~~surrender~~which ~~charge~~a revision is ~~initially~~deemed ato ~~percentage~~be ofnecessary. ~~either~~To illustrate the ~~accumulation~~ ~~value~~effects orof ~~considerations~~this ~~received~~process, assume ~~which~~the ~~varies~~Company byhad ~~product,~~concluded ~~and generally~~that ~~decreases~~a ~~gradually~~revision ~~during~~of the ~~penalty~~Company’s ~~period.~~EGPs ~~Surrender~~was ~~charges~~required ~~are~~at December 31, ~~set~~2004. atIf ~~levels~~the toCompany ~~protect~~assumed ~~Hartford~~a ~~Life~~9% average long-term rate of growth from ~~loss~~December 31, on2004 ~~early~~forward along ~~terminations~~with ~~and~~other appropriate assumption changes in determining the revised EGPs, the Company estimates the cumulative decrease to amortization would be approximately $80-$90, after-tax. If ~~reduce~~instead the ~~likelihood~~Company were to assume a long-term growth rate of ~~policyholders~~8% ~~terminating~~in ~~their~~determining ~~policies~~the ~~during~~revised EGPs, ~~periods~~the ofadjustment ~~increasing~~would ~~interest~~be ~~rates~~approximately $45-$50, ~~thereby~~after-tax. ~~lengthening~~Any ~~the~~such ~~effective~~adjustment would not affect ~~duration~~statutory ofincome ~~policy~~or ~~liabilities~~surplus, ~~and~~due ~~improving~~to the ~~Company’s~~prescribed ~~ability~~accounting tofor ~~maintain profitability~~such onamounts ~~such~~that ~~policies~~is discussed above.

~~INVESTMENTS~~Aside from absolute levels and timing of market performance assumptions, additional factors that will influence this determination include the degree of volatility in separate account fund performance and shifts in asset allocation within the separate account made by policyholders. The overall return generated by the separate account is dependent on several factors, including the relative mix of the underlying sub-accounts among bond funds and equity funds as well as equity sector weightings. The Company’s overall separate account fund performance has been reasonably correlated to the overall performance of the S&P 500 Index (which closed at 1,212 on December 31, 2004), although no assurance can be provided that this correlation will continue in the future.

~~Hartford~~The ~~Life’s~~overall ~~investments~~recoverability ~~are~~of ~~managed~~the byDAC ~~Hartford~~asset ~~Investment~~is ~~Management Company,~~dependent aon ~~wholly-owned~~the ~~subsidiary~~future profitability of ~~The Hartford~~the business. ~~Hartford~~The ~~Investment Management~~ Company istests ~~responsible~~the ~~for~~aggregate ~~monitoring~~recoverability ~~and~~of ~~managing~~ the ~~asset/liability~~ ~~profile,~~DAC ~~establishing~~asset ~~investment~~by ~~objectives~~comparing ~~and~~the ~~guidelines,~~amounts ~~and~~deferred ~~determining,~~to ~~within~~the ~~specified~~present ~~risk~~value ~~tolerances~~of ~~and~~total ~~investment~~EGPs. ~~guidelines~~In addition, the Company

1822

~~Table~~routinely stress tests its DAC asset for recoverability against severe declines in its separate account assets, which could occur if the equity markets experienced another significant sell-off, as the majority of ~~Contents~~policyholders’ funds in the separate accounts is invested in the equity market. As of December 31, 2004, the Company believed variable annuity separate account assets could fall by at least 45% before portions of its DAC asset would be unrecoverable.

Contingencies ~~appropriate asset allocation, duration, convexity and other~~ ~~characteristics of the portfolios. Security selection and monitoring~~ ~~functions are performed by asset class specialists working within dedicated portfolio management teams.~~

~~The~~Management ~~primary~~follows ~~investment~~the ~~objective~~requirements of ~~the~~SFAS ~~Company’s~~No. 5 ~~general~~“Accounting ~~account~~for isContingencies”. toThis statement ~~maximize~~requires ~~after-tax~~management ~~returns~~to ~~consistent~~evaluate ~~with~~each ~~acceptable~~contingent ~~risk~~matter ~~parameters~~separately. A loss is recorded if estimable ~~(including~~and ~~the~~probable. ~~management~~Management ofestablishes ~~the~~reserves ~~interest~~for ~~rate~~these ~~sensitivity~~contingencies ofat ~~invested~~its ~~assets~~“best estimate”, or, ~~relative~~if tono ~~that~~one number within the range of ~~policyholder~~possible ~~obligations)~~losses asis more likely than any other, the Company ~~discussed~~records inan estimated reserve at the ~~Capital~~low ~~Markets~~end ~~Risk~~of ~~Management~~the ~~section~~range ~~under~~of ~~“Market~~losses. ~~Risk~~The -majority of contingencies ~~Interest~~currently ~~Rate~~being ~~Risk”.~~evaluated Anby ~~additional~~the ~~objective~~Company isrelate to ~~generate~~litigation ~~sufficient~~matters, which are inherently ~~liquidity~~difficult to ~~meet~~evaluate ~~corporate~~ and ~~policyholder~~subject ~~obligations~~to significant changes.

~~The Company’s general account consists of a diversified portfolio of~~23 investments. Although all the assets of the general account support the Company’s general account liabilities, the Hartford Investment Management Company has developed separate investment portfolios for specific classes of product liabilities within the general account. The Hartford Investment Management Company 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~~CONSOLIDATED ~~assets~~RESULTS inOF ~~the Company’s general account totaled $28.4 billion as of~~OPERATIONS ~~December 31, 2001 and were comprised of $23.3 billion of fixed maturities, $3.3~~ ~~billion of policy loans, equity securities of $428 and other investments of~~ $1.3 billion. As of December 31, 2000, general account invested assets totaled $22.9 billion and were comprised of $18.2 billion of fixed maturities, $3.6 billion of policy loans, equity securities of $171 and other investments of $910. The decrease in policy loans was primarily due to the decline in leveraged COLI business (as discussed in the COLI section). Policy loans are secured by the cash value of the underlying life policy and do not mature in a conventional sense, but expire in conjunction with the related policy liabilities. The increase in other investments primarily reflects an increase in limited partnership investments.

~~The~~Operating ~~following table sets forth by type, the fixed maturity securities held in~~Summary ~~the Company’s general account as of December 31, 2001 and 2000.~~

			2001							2000
												2004 vs.				2003 vs.
Fixed Maturities by Type			Fair Value			Percent				Fair Value			Percent
		2004			2003				2002			2003				2002
Corporate			$	11,419			49.0	%		$	7,663			42.0	%
												Change				Change
Asset backed securities				3,427			14.7	%			3,070			16.8	%
Fee income and other		$	3,245		$	2,891			$	2,697			12	%			7	%
Commercial mortgage backed securities				3,029			13.0	%			2,776			15.2	%
Earned premiums			4,072			3,086				2,697			32	%			14	%
Municipal – tax-exempt				1,565			6.7	%			1,390			7.6	%
Net investment income [1]			3,894			2,041				1,849			91	%			10	%
Collateralized mortgage obligations				767			3.3	%			928			5.1	%
Net realized capital gains (losses)			149			40				(308	)	NM				NM
Mortgage backed securities – agency				981			4.2	%			602			3.3	%
Total revenues			11,360			8,058				6,935			41	%			16	%
Government/Government agencies – Foreign				390			1.7	%			321			1.8	%
Benefits, claims and claim adjustment expenses [1]			6,630			4,616				4,158			44	%			11	%
Government/Government agencies – U.S				374			1.6	%			244			1.3	%
Insurance expenses and other			2,116			1,544				1,405			37	%			10	%
Municipal – taxable				47			0.2	%			83			0.5	%
Amortization of deferred policy acquisition costs and present value of future profits			978			769				628			27	%			22	%
Short-term				1,245			5.3	%			975			5.3	%
Interest expense			97			117				112			(17	%)			4	%
Redeemable preferred stock				57			0.3	%			196			1.1	%
Dividends to policyholders			29			63				65			(54	%)			(3	%)
	Total fixed maturities		$	23,301			100.0	%		$	18,248			100.0	%
Total benefits, claims and expenses			9,850			7,109				6,368			39	%			12	%
Income before income tax expense and cumulative effect of account change			1,510			949				567			59	%			67	%
Income tax expense			168			180				10			(7	%)		NM
Income before cumulative effect of accounting change			1,342			769				557			75	%			38	%
Cumulative effect of accounting changes, net of tax[2]			(23	)		—				—			—				—
Net income		$	1,319		$	769			$	557			72	%			38	%

During 2001, fixed maturity investments increased by $5.1 billion as a result of the Fortis acquisition, increased cash flow and an increase in fair value due to a lower interest rate environment. The securities acquired as part of the Fortis transaction were principally corporate and asset backed securities.

[1]		With the adoption of SOP 03-1, certain annuity and individual life products were required to be accounted for in the general account. This change in accounting resulted in an increase of $1,637 in net investment income, an increase of $1,387 in benefits, claims and claim adjustment expenses and a decrease of $131 in other revenues for the year ended December 31, 2004, respectively.

[2]		For the years ended December 31, 2004, represents the cumulative impact of the Company’s adoption of SOP 03-1.

AsThe ofCompany ~~December 31,~~defines ~~2001 and 2000, approximately 21% and 22%, respectively, of~~ the ~~Company’s~~following ~~fixed maturities were invested in private placement securities (including 12% and 13% of Rule 144A offerings~~ as of“NM” ~~December 31,~~or ~~2001~~not ~~and December 31,~~meaningful: ~~2000,~~increases ~~respectively).~~or ~~Private~~decreases ~~placement securities are generally~~greater ~~less liquid~~ than ~~public securities. However~~200%, ~~private~~or ~~placements~~changes ~~generally~~from ~~have covenants~~a ~~designed~~net gain to ~~compensate~~a ~~for~~net ~~liquidity~~loss ~~risk. Most of the private placement securities in the Company’s portfolio are rated by nationally recognized rating agencies. For further discussion of the Company’s investment credit policies~~position, ~~see~~or ~~the~~vice ~~Capital Markets Risk Management section under “Credit Risk”~~versa.

The Company changed its reportable operating segments in 2004 from Investment ~~Results~~Products, Individual Life, Group Benefits and Corporate Owned Life Insurance (“COLI”) to Retail Products Group (“Retail”), Institutional Solutions Group (“Institutional”), Individual Life and Group Benefits. Retail offers individual variable and fixed annuities, mutual funds, retirement plan products and services to corporations under Section 401(k) plans and other investment products. Institutional primarily offers retirement plan products and services to municipalities under Section 457 plans, other institutional investment products, structured settlements, and private placement life insurance. Individual Life sells a variety of life insurance products, including variable universal life, universal life, interest sensitive whole life and term life insurance. Group Benefits sells group insurance products, including group life and group disability insurance as well as other products, including medical stop loss and supplementary medical coverages to employers and employer sponsored plans, accidental death and dismemberment, travel accident and other special risk coverages to employers and associations. The Company also includes, in an Other category, its international operations, which are primarily located in Japan and Brazil; net realized capital gains and losses other than periodic net coupon settlements on non-qualifying derivatives and net realized capital gains and losses related to guaranteed minimum withdrawal benefits; corporate items not directly allocated to any of its reportable operating segments; and intersegment eliminations. Periodic net coupon settlements on non-qualifying derivatives and net realized capital gains and losses related to guaranteed minimum withdrawal benefits are reflected in each applicable segment in net realized capital gains and losses.

~~The~~2004 ~~table~~Compared to 2003 — Net income increased due primarily to business growth in virtually all lines of business as discussed below, ~~summarizes~~a ~~Hartford~~lower ~~Life’s~~effective income tax rate, and higher net realized capital gains. (See the Investments section for further discussion of investment results ~~for~~and related realized capital gains.) During the ~~years~~third quarter of 2004, the Internal Revenue Service ~~ended~~completed its examination of the 1998-2001 tax years. (For further discussion see Note 12 of Notes to Condensed Consolidated Financial Standards under Tax Matters). The Company recorded in the third quarter of 2004 a tax benefit of $190, consisting primarily of a change in estimate of the dividends-received deduction (“DRD”) tax benefit reported during 2003 and ~~2000~~prior years and interest, and changed the estimate of the after-tax benefit for the DRD benefit related to the 2004 tax year.

(Before-tax)	2001			2000			1999
Net investment income – excluding policy loan income	$	1,472		$	1,284		$	1,171
Policy loan income		307			308			391
Net investment income – total	$	1,779		$	1,592		$	1,562
Yield on average invested assets (1)		7.0	%		7.0	%		6.7	%
Net realized capital losses	$	(133	)	$	(88	)	$	(5	)

19Net income in the Retail segment increased, principally driven by growth in the variable annuity and mutual fund businesses as a result of increasing assets under management. Partially offsetting the increase in the Retail segment was lower spread income on market value adjusted (“MVA”) fixed annuities due to the adoption of SOP 03-1. Net income in the Group Benefits segment increased due primarily to increased earned premiums and net investment income growth, primarily resulting from the Company’s acquisition of the group life and accident, and short-term and long-term disability businesses of CNA Financial Corporation (“CNA Acquisition”). In addition, the Group Benefits segment was impacted by favorable persistency in most businesses and lower benefit costs in the group life line. Net income in the Institutional segment was higher as a result of a decrease in other expenses related to private placement life insurance business compared to the respective prior year period. The decrease in other expenses for the current year is attributed to a $40 after-tax charge, recorded in the third quarter ended September 30, 2003, associated with the settlement of the Bancorp Services, LLC (“Bancorp”) litigation. Additionally, net income was higher for Individual Life and the international operations. The increase in Individual Life earnings was primarily driven by improved net investment spread including the effects of prepayments and growth in account values and life insurance inforce. Net income for the international operations, which is included in the other category, increased over the prior year primarily driven by the increase in assets under management of the Japan annuity business. Japan’s assets under management have grown to $14.7 billion at December 31, 2004 from $6.2 billion at December 31, 2003. During 2004, the Company introduced market value adjusted fixed annuity products to provide a diversified product portfolio to customers in Japan.

~~Table~~The effective tax rate was 11% for the current year as compared to an effective tax rate of ~~Contents~~19% for the respective prior year period. The lower effective tax rate was attributed to tax related items, as discussed above, of $190 and a 2004 tax year DRD benefit of $132, as compared to tax related items of $30 and a 2003 tax year DRD benefit of $87 reported for the years ended December 31, 2004 and 2003, respectively. Slightly offsetting the positive earnings drivers for the year ended December 31, 2004 was the cumulative effect of accounting change from the Company’s adoption of SOP 03-1. The adoption of SOP 03-1 also resulted in certain changes in presentation in the Company’s financial statements, including reporting of the spreads on the Company’s MVA fixed annuities and variable annuity products offered in Japan on a gross basis in net investment income and benefits expense. Exclusive of the cumulative effect, overall application of SOP 03-1 resulted in an immaterial reduction in net income. (For further discussion of the impact of the Company’s adoption of SOP 03-1, see Note 2 of Notes to Condensed Consolidated Financial Statements).

~~(1)~~2003 ~~Represents~~Compared ~~net~~to ~~investment~~2002 - Net income ~~(excluding~~increased for the year ended December 31, 2003 due primarily to the growth in the Retail segment and a decrease in net realized capital losses) ~~divided~~compared byto 2002. The earnings growth in the Retail segment is due to an increase in fee income and net investment income. Fee income in the Retail segment was higher in 2003 compared to 2002, as a result of higher average ~~invested~~account values, specifically in individual annuities and mutual fund businesses, due primarily to stronger variable annuity sales as well as market appreciation. Net investment income in Retail increased due to higher general account assets atin ~~cost~~the ~~(fixed~~individual ~~maturities~~annuity atbusiness. ~~amortized~~Also contributing to the net income growth was higher earnings in Group Benefits, primarily due to increases in earned premiums and favorable claims. Additionally, Individual Life experienced earnings growth due to increases in fees and cost) of insurance as life insurance in-force grew and aged, and variable universal life account values increased 30% due primarily to the growth in the equity markets and favorable mortality. Partially offsetting these increases was a decrease in Institutional net income for the year ended December 31, 2003, as compared to the prior year period. This decrease is attributed to a $40 after-tax charge, recorded in the third quarter of 2003 associated with the settlement of the Bancorp litigation. In addition, there was an $8 after-tax benefit recorded in the first quarter of 2002 related to favorable development on the Company’s estimated September 11 exposure.

~~2001~~The ~~Compared~~effective totax ~~2000~~rate —increased ~~Net~~in ~~investment~~2003 ~~income,~~when ~~excluding~~compared ~~policy~~with ~~loan~~2002 ~~income,~~as ~~increased~~a ~~$188,~~result orof ~~15%.~~higher earnings and lower DRD related tax items. The ~~increase~~tax ~~was~~provision recorded during 2003 reflects a benefit of $30, consisting primarily ~~due~~of toa ~~income~~change ~~earned~~in onestimate of the ~~previously~~DRD ~~discussed~~tax benefit reported during 2002. The ~~increase~~change in ~~fixed~~estimate ~~maturity~~was ~~investments,~~the ~~partially~~result ~~offset~~of byactual ~~lower~~2002 ~~yields~~investment performance on the related separate ~~fixed~~accounts ~~maturities~~being inunexpectedly out of pattern with past performance, which had been the ~~third~~basis ~~and~~for ~~fourth~~the estimate. ~~quarters~~This compares with a tax benefit of ~~2001~~$76 recorded in 2002. ~~Yields~~The ontotal ~~overall~~DRD benefit related ~~average~~to ~~invested~~the ~~assets~~2003 ~~were~~tax ~~flat~~year for the year ended December 31, 2003 was $87 as compared to $63 for the year ended December 31, 2002.

~~Included in 2001 net realized losses were write-downs for other than temporary~~Outlook ~~impairments on fixed maturities of $95 which includes $37 capital loss related~~ ~~to securities issued by the Enron Corporation. Also included is a $45~~ capital loss recognized on the sale of the Company’s interest in an Argentine insurance joint venture, as well as losses associated with the credit deterioration of certain investments in which the Company has an indirect economic interest. These losses were partially offset by capital gains from the sale of fixed maturities.

~~2000~~In ~~Compared~~2004, tothe ~~1999~~Company —experienced ~~Net~~record ~~investment~~earnings ~~income,~~driven by strong growth in assets under ~~excluding~~management, ~~policy~~favorable ~~loan~~premium ~~income~~growth and loss ratios in Group Benefits, ~~increased~~strong expense management, and a one-time DRD tax benefit related to prior years of $~~113~~190. Due to gains in the equity markets and positive net flows, orassets 10under management grew 18% resulting in increased fee income earned on those assets. The ~~increase was~~growth ~~primarily~~and ~~due~~profitability toof ~~higher~~the ~~yields~~Company ~~earned~~in the future is dependent to a large degree on the ~~investment~~performance ~~cash~~of ~~flow~~the equity markets as well as each segment’s ability to attract ~~from~~new ~~operations~~customers and ~~reinvestment~~attract ofand ~~proceeds~~retain ~~from~~assets ~~sales~~under management. Please refer to each segment’s results for outlooks on specific segments and products. Also, contributing to the Company’s ~~maturities~~performance in 2004 was increased earnings in the Other category, which was primarily the result of ~~fixed~~the ~~maturity~~growth ~~securities~~in assets under management in athe ~~higher~~international ~~interest~~operations. ~~rate~~This growth was driven ~~environment~~by record sales of $7.8 billion ~~Policy~~and ~~loan~~positive ~~income~~net ~~decreased~~flows in Japan, which combined with gains in the equity market increased assets under management to $8314.7 billion at December 31, or2004 ~~21%~~from $6.2 billion at December 31, ~~due~~2003. toAlthough the Company’s international operations experienced ~~decrease~~significant ingrowth ~~leveraged~~during ~~COLI~~2004, ~~business~~Japanese regulations combined with competition could adversely affect the Company’s ability to exceed or sustain the level of new sales and net flows attained in 2004.

~~Net realized capital losses increased $83 primarily~~25 ~~as a result of portfolio rebalancing in a higher interest rate environment.~~

~~Separate~~Segment ~~Account Products~~Results

~~Separate~~Below ~~account products are those for which a separate investment and liability account~~ is maintained on behalf of the policyholder. Separate accounts reflect two categories of risk assumption: non-guaranteed separate accounts totaling $104.6 billion and $104.2 billion as of December 31, 2001 and 2000, respectively, wherein the policyholder assumes substantially all the investment risk and reward, and guaranteed separate accounts totaling $10.1 billion and $9.8 billion as of December 31, 2001 and 2000, respectively, wherein Hartford Life contractually guarantees either a ~~minimum~~summary ~~return or account value to the policyholder. The primary investment objective~~ of ~~the Company’s~~net ~~guaranteed~~income ~~separate account 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~~loss) by ~~as discussed in the Capital Markets Risk Management section under “Market Risk — Interest Rate Risk~~segment.”

Investment objectives for non-guaranteed separate accounts vary by fund type, as outlined in the applicable fund prospectus or separate account plan of operations. Non-guaranteed separate account products include variable annuities, variable life insurance contracts and variable COLI. Guaranteed separate account products primarily consist of modified guaranteed individual annuities and modified guaranteed life insurance and generally include market value adjustment features and surrender charges to mitigate the risk of disintermediation.


	2004		2003			2002

Retail	$	526	$	430		$	356
Institutional		124		83			108
Individual Life		153		145			133
Group Benefits		229		148			128
Other [1]		287		(37	)		(168	)

Net income	$	1,319	$	769		$	557

~~CAPITAL~~[1] ~~MARKETS~~Includes ~~RISK~~tax ~~MANAGEMENT~~ benefits reflecting the impact of audit settlements of $190, $0 and $76 for the years ended December 31, 2004, 2003 and 2002.

~~Hartford~~A ~~Life~~description ~~is exposed to two primary sources~~ of ~~investment~~each ~~risk~~segment ~~and asset/liability~~as ~~management~~well ~~risk:~~as ~~credit risk, relating to the uncertainty associated with~~ an ~~obligor’s~~analysis ~~continued ability to make timely payment~~ of ~~principal~~ ~~and/or interest, and market risk, relating to~~ the ~~market~~operating ~~price~~results ~~and/or~~summarized ~~cash~~above ~~flow~~is ~~variability~~included ~~associated~~on ~~with~~the ~~changes in interest rates, security prices, market indices, yield curves or currency exchange rates. The Company does not hold any financial instruments purchased for trading purposes. The~~ following ~~discussion identifies the Company’s policies and procedures for managing these risks and monitoring the results of the Company’s risk management activities~~pages.

~~Credit Risk~~26

~~Hartford~~RETAIL ~~Life~~PRODUCTS ~~has established investment credit policies that focus on the~~GROUP ~~credit quality of obligors and counterparties, limit credit concentrations,~~ ~~encourage diversification and require frequent creditworthiness reviews.~~ ~~Investment activity, including setting of policy and defining acceptable risk~~ ~~levels, is subject to regular review and approval by senior management and reported to The Hartford’s Finance Committee.~~

~~The~~ Operating ~~Company invests primarily in securities which are rated investment grade~~Summary ~~and has established exposure limits, diversification standards and review~~ procedures for all credit risks including borrower, issuer and counterparty. Creditworthiness of specific obligors is determined by an internal credit evaluation supplemented by consideration of external determinants of creditworthiness, typically ratings assigned by nationally recognized ratings agencies. Obligor, asset sector and industry concentrations are subject to established limits and monitored on a regular interval.

The Company’s derivatives counterparty exposure policy establishes market-based credit limits, favors long-term financial stability and creditworthiness, and typically requires credit enhancement/credit risk reducing agreements. Credit risk is measured as the amount owed to the Company based on current market conditions and potential payment obligations between the Company and its counterparties. Credit exposures are generally quantified weekly and netted, and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of derivatives exceeds exposure policy thresholds.


										2004 vs.			2003 vs.
										2003			2002
	2004			2003			2002			Change			Change

Fee income and other	$	2,098		$	1,703		$	1,591			23	%		7	%
Earned premiums		7			(31	)		(24	)	NM				(29	%)
Net investment income		1,077			494			368			118	%		34	%
Net realized capital gains		—			21			7		NM				200	%

Total revenues		3,182			2,187			1,942			45	%		13	%

Benefits, claims and claim adjustment expenses		1,120			568			486			97	%		17	%
Insurance operating costs and other expenses		742			602			568			23	%		6	%
Amortization of deferred policy acquisition costs and present value of future profits		661			509			436			30	%		17	%

Total benefits, claims and expenses		2,523			1,679			1,490			50	%		13	%


Income before income tax expense and cumulative effect of account change		659			508			452			30	%		12	%
Income tax expense		114			78			96			46	%		(19	%)

Income before cumulative effect of accounting change		545			430			356			27	%		21	%
Cumulative effect of accounting change, net of tax [1]		(19	)		—			—			—			—

Net Income	$	526		$	430		$	356			22	%		21	%

										2004 vs.			2003 vs.
										2003			2002
Assets Under Management	2004			2003			2002			Change			Change

Individual variable annuity account values	$	99,617		$	86,501		$	64,343			15	%		34	%
Individual fixed annuity and other account values		11,384			11,215			10,565			2	%		6	%
Other retail products account values		6,713			4,654			2,972			44	%		57	%

Total account values [2]		117,714			102,370			77,880			15	%		31	%
Retail mutual fund assets under management		25,240			20,301			14,079			24	%		44	%
Other mutual fund assets under management		1,396			953			480			46	%		99	%

Total mutual fund assets under management		26,636			21,254			14,559			25	%		46	%
Total assets under management	$	144,350		$	123,624		$	92,439			17	%		34	%

Hartford Life is not exposed to any significant credit concentration risk of a single issuer greater than 10% of the Company’s stockholders’ equity.

[1]		Represents the cumulative impact of the Company’s adoption of SOP 03-1.

[2]		Includes policyholders balances for investments contracts and reserve for future policy benefits for insurance contracts.

20The Retail Products Group 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 variable and fixed annuities, mutual funds, retirement plan services and other investment products. The Company is both a leading writer of individual variable annuities and a top seller of individual variable annuities through banks in the United States.

~~Table~~2004 Compared to 2003 — Net income increased for the year ended December 31, 2004, principally driven by higher fee income from double digit growth in the assets under management in virtually all businesses of ~~Contents~~the segment and strong expense management. Fee income generated by the variable annuity operation increased, as average account values were higher in the current year compared to the respective prior year periods. The increase in average account values can be attributed to market appreciation of $7.6 billion and net flows of $5.5 billion during 2004. Another contributing factor to the increase in fee income was the increase in assets under management in the mutual fund and 401(k) businesses. Retail mutual fund assets under management increased 24% principally due to net sales and market appreciation of $2.5 billion each during 2004. In addition, 401(k) assets under management grew 40% to $7.3 billion as a result of favorable net flows and market conditions.

~~The~~Partially ~~following~~offsetting ~~table~~the ~~identifies~~positive ~~fixed~~earnings ~~maturity~~drivers ~~securities,~~discussed ~~including~~above ~~guaranteed separate~~were ~~accounts~~higher DAC amortization costs, ~~for~~lower income from the fixed annuity business and the cumulative effect of accounting change from the Company’s ~~operations~~adoption byof ~~credit~~SOP ~~quality~~03-1. ~~The~~DAC ~~ratings referenced~~amortization was higher in the ~~tables~~current ~~are~~year ~~based~~as compared onto the ~~ratings~~prior ofyear ~~nationally~~due ~~recognized rating~~to ~~organizations~~higher orsubsequent deposit activity, ifprimarily ~~not~~in ~~rated,~~individual annuity. ~~assigned~~The ~~based~~decrease onin net income in the ~~Company’s~~fixed ~~internal~~annuity business in 2004 compared to 2003 was principally due ~~analysis~~to oflower ~~such~~investment ~~securities.~~spread from

~~As of December 31, 2001 and 2000, over 96% and 97%, respectively, of the fixed~~27 maturity portfolio, including guaranteed separate accounts, was invested in investment grade securities. During 2001, the percentage of BBB related fixed maturity investments increased primarily due to the continued active management of the general account portfolios.

		2001					2000
Fixed Maturities by Credit Quality		Fair Value		Percent			Fair Value		Percent
U.S. Government/Government agencies		$	2,639		8.0	%	$	2,329		8.4	%
AAA			5,070		15.3	%		4,896		17.6	%
AA			3,644		11.0	%		3,546		12.7	%
A			11,528		34.8	%		9,675		34.7	%
BBB			7,644		23.1	%		5,633		20.2	%
BB & below			1,148		3.4	%		708		2.5	%
Short-term			1,470		4.4	%		1,085		3.9	%
	Total fixed maturities	$	33,143		100.0	%	$	27,872		100.0	%

the market value adjusted (“MVA”) product. With the adoption of SOP 03-1, the Company includes the investment return from the fixed annuity product in net investment income and includes interest credited to contract holders in the benefits, claims and expenses line on the income statement rather than reporting the net spread in fee income and other. Additionally, income tax expense was higher for the current year due primarily to higher income earned by the segment. This increase was largely offset by a higher DRD tax benefit of $115 related to the 2004 tax year reported for the year ended December 31, 2004, as discussed above, as compared to the DRD tax benefit of $79 related to the 2003 tax year reported in the comparable prior year period.

~~Market~~2003 ~~Risk~~Compared to 2002 - Net income was higher driven by an increase in revenues in the individual annuity and other retail product operations as a result of the strong net flows and growth in the equity markets during 2003 and strong expense management. Net income increased due to an increase in fee income in Retail. Fee income in Retail was higher in 2003 compared to 2002, as a result of higher average account values, specifically in individual annuities and mutual fund businesses, due primarily to stronger variable annuity sales and the higher equity market values compared to the prior year. Net investment income increased due to higher general account assets. General account assets for the individual annuity business were $9.4 billion as of December 31, 2003, an increase of approximately $800 or 9% from 2002, due primarily to an increase in individual annuity sales, with the majority of those new sales electing to use the dollar cost averaging (“DCA”) feature. The DCA feature allows policyholders to earn a credited interest rate in the general account for a defined period of time as their invested assets are systematically invested into the separate account funds. Additionally, there was increased interest credited in the individual annuity operation as a result of higher general account asset levels and an increase in amortization of deferred policy acquisition costs related to the individual annuity business due to higher gross profits.

~~Hartford~~In ~~Life~~addition, ~~has~~net ~~several~~income ~~objectives~~increased in ~~managing~~2003 ~~market~~compared ~~risk.~~to ~~The~~2002 ~~Company~~due ~~is responsible~~to ~~for~~the ~~maximizing~~favorable ~~after-tax~~impact ~~returns~~of ~~within acceptable risk parameters~~$19, ~~including~~resulting from the ~~management~~Company’s ofpreviously ~~the~~discussed ~~interest~~change ~~rate~~in ~~sensitivity~~estimate of ~~invested~~the DRD tax benefit ~~assets~~reported ~~and~~during 2002. The change in estimate was the ~~generation~~result of ~~sufficient~~2002 ~~liquidity~~actual toinvestment performance ~~that~~on ofthe ~~corporate~~related ~~and~~separate ~~policyholder~~accounts ~~obligations.~~being ~~The~~unexpectedly ~~Company’s~~out ~~fixed~~of ~~maturity~~pattern ~~portfolios~~with ~~have~~past performance, which had ~~material~~been ~~market~~the ~~exposure~~basis for the estimate. The total DRD benefit related to ~~interest~~the ~~rate~~2003 ~~risk.~~tax ~~Hartford~~year ~~Life~~for ~~continually~~the year ~~monitors~~ended ~~these~~December 31, ~~exposures~~2003 ~~and~~was ~~makes~~$79 ~~portfolio~~as ~~adjustments~~compared to ~~manage~~$59 ~~these~~for ~~risks within~~the ~~established~~year ~~limits~~ended December 31, 2002.

~~Downward movement in market interest rates during 2001 resulted in a~~Outlook ~~significant increase in the unrealized appreciation of the fixed maturity~~ ~~security portfolio from 2000. However, Hartford Life’s asset allocation and~~ ~~its exposure to market risk as of December 31, 2001 have not changed materially from its position at December 31, 2000.~~

~~The~~Management ~~Company~~believes ~~analyzes~~the ~~interest~~market ~~rate~~for ~~risk~~retirement ~~using~~products ~~various~~continues ~~models,~~to ~~including~~expand as individuals ~~multi-scenario~~increasingly ~~cash~~save ~~flow~~and ~~projection~~plan ~~models~~for retirement. Demographic trends suggest that ~~forecast~~as ~~cash~~the ~~flows~~“baby boom” generation matures, a significant portion of the United States population will allocate a greater ~~liabilities~~percentage ~~and~~of their ~~supporting~~disposable ~~investments~~incomes to saving for their retirement years due to uncertainty surrounding the Social Security system and increases in average life expectancy. Individual annuity sales in 2004 were $15.7 billion (a 5% decrease) compared to $16.5 billion in 2003, ~~including~~and 401(k) ~~derivative~~products ~~instruments~~experienced an increase of 37% in sales in 2004 compared to 2003.

~~Derivative~~Significantly ~~Instruments~~contributing to the Company’s variable annuity sales during 2004 and 2003 was Principal First, a guaranteed minimum withdrawal benefit (GMWB) rider, which was developed in response to our customers’ needs. However, competition has increased substantially in this market with most major variable annuity writers now offering GMWB riders and as a result, the Company may not be able to sustain the level of sales attained in 2004. In an effort to meet diverse customer needs, in the fourth quarter of 2004 the Company introduced Principal First Preferred, a lower cost GMWB alternative to Principal First. The success of this new product will ultimately be based on customer acceptance. According to VARDS, the Company had 11.87% market share as of December 31, 2004 as compared to 12.6% at December 31, 2003. With the increased competition in the variable annuity market causing lower sales levels from the record level in 2003, combined with an aging block of business, net flows may decline from levels experienced in 2004. This will be largely dependent on the Company’s ability to retain contractholder’s account values as they reach the end of the surrender charge period of their contract. In addition, net flows in the Company’s fixed annuity block may be impacted by approximately $2 billion of contracts reaching renewal dates in 2005 at crediting rates significantly above those offered currently.

~~Hartford~~The ~~Life~~growth ~~utilizes~~and profitability of the individual annuity and mutual fund businesses is dependent to a ~~variety~~large degree on the performance of ~~derivative~~the ~~instruments~~equity markets. In periods of favorable equity market performance, ~~including~~the ~~swaps~~Company may experience stronger sales and higher net flows, which will increase ~~caps~~assets under management and thus increase fee income earned on those assets. In addition, ~~floors~~higher equity market levels will generally reduce certain costs to the Company of individual annuities, such ~~forwards~~as ~~and~~guaranteed ~~exchange~~minimum ~~traded~~death ~~futures~~benefit (“GMDB”) and ~~options~~GMWB benefits. Conversely, weak equity markets may dampen sales activity and increase surrender activity causing declines in ~~compliance~~assets under ~~with~~management and lower fee income. Such declines in the equity markets will also increase the cost to the Company ~~policy~~of GMDB and ~~regulatory~~GMWB ~~requirements~~benefits inassociated ~~order~~with individual annuities. The Company attempts to ~~achieve~~mitigate ~~one~~some of the volatility associated with the GMDB and GMWB benefits using ~~three~~reinsurance or other risk management strategies, such as hedging. Future net income for the Company ~~approved~~will ~~objectives:~~be toaffected ~~hedge~~by the effectiveness of the risk ~~arising~~management ~~from~~strategies ~~interest~~the ~~rate,~~Company has ~~price~~implemented orto ~~currency~~mitigate ~~exchange~~the ~~rate~~net income volatility; toassociated ~~manage~~with ~~liquidity;~~the orGMDB toand ~~control~~GMWB benefits of ~~transaction~~variable ~~costs~~annuity contracts. ~~The~~For ~~Company~~spread ~~does~~based ~~not~~products ~~make~~sold ain ~~market~~the orRetail ~~trade~~segment, ~~derivatives~~the ~~for~~future growth will depend on the ~~express~~ability ~~purpose~~to earn targeted returns on new business given competition, retention of ~~earning~~account ~~trading~~values ~~profits~~in the fixed annuity business where the contract holder’s rate guarantee expires in the upcoming year, and the future interest rate environment.

~~Interest rate swaps involve the periodic exchange of payments with other~~28 parties, at specified intervals, calculated using the agreed upon rates and notional principal amounts. Generally, no cash is exchanged at the inception of the contract and no principal payments are exchanged. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value.

~~Foreign~~INSTITUTIONAL ~~currency~~SOLUTIONS ~~swaps exchange an initial principal amount in two currencies,~~GROUP ~~agreeing to re-exchange the currencies at a future date, at an agreed upon~~ ~~exchange rate. There is also periodic exchange of payments at specified~~ ~~intervals calculated using the agreed upon rates and exchanged principal amounts.~~

~~Interest~~Operating ~~rate cap and floor contracts entitle the purchaser to receive from the~~Summary ~~issuer at specified dates, the amount, if any, by which a specified market rate~~ ~~exceeds the cap strike rate or falls below the floor strike rate, applied to a~~ ~~notional principal amount. A premium payment is made by the purchaser of the contract at its inception, and no principal payments are exchanged.~~

Forward contracts are customized commitments to either purchase or sell designated financial instruments, at a future date, for a specified price and may be settled in cash or through delivery of the underlying instrument.


								2004 vs.			2003 vs.
	2004			2003		2002		2003			2002
								Change			Change

Fee income and other	$	307		$	308	$	356		—			(13	%)
Earned premiums		471			795		421		(41	%)		89	%
Net investment income		1,061			995		977		7	%		2	%
Net realized capital losses		7			12		3		(42	%)	NM

Total revenues		1,846			2,110		1,757		(13	%)		20	%

Benefits, claims and claim adjustment expenses		1,513			1,749		1,369		(13	%)		28	%
Insurance operating costs and other expenses		100			152		162		(34	%)		(6	%)
Dividends to policyholders		27			60		62		(55	%)		(3	%)
Amortization of deferred policy acquisition costs		37			34		8		9	%	NM

Total benefits, claims and expenses		1,677			1,995		1,601		(16	%)		25	%


Income before income tax expense and cumulative effect of account change		169			115		156		47	%		(26	%)
Income tax expense		44			32		48		38	%		(33	%)

Income before cumulative effect of Accounting change		125			83		108		51	%		(23	%)
Cumulative effect of accounting change, net of tax [1]		(1	)		—		—		—			—

Net Income	$	124		$	83	$	108		49	%		(23	%)

Financial futures are standardized commitments to either purchase or sell designated financial instruments, at a future date, for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities, and changes in the futures’ contract values are settled daily in cash.


							2004 vs.			2003 vs.
							2003			2002
Assets Under Management	2004		2003		2002		Change			Change

Institutional account values	$	14,599	$	12,660	$	9,738		15	%		30	%
Governmental account values		9,962		8,965		7,211		11	%		24	%

Private Placement Life Insurance account values:

Variable products		22,498		20,993		19,674		7	%		7	%
Leveraged COLI		2,529		2,524		3,321		—			(24	%)

Total Private Placement Life Insurance account values [2]		25,027		23,517		22,995		6	%		2	%
Mutual fund assets under management		1,432		1,208		762		19	%		59	%

Total assets under management	$	51,020	$	46,350	$	40,706		10	%		14	%

Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date.

[1]		Represents the cumulative impact of the Company’s adoption of SOP 03-1.

[2]		Includes policyholder balances for investment contracts and reserves for future policy benefits for insurance contracts

21The Institutional Solutions Group primarily offers customized wealth creation and financial protection for institutions, corporate and government employers and high net worth individuals through its three business units: Government, Institutional Investment Products (“IIP”) and private placement life insurance (“PPLI”) (formerly Corporate Owned Life Insurance or “COLI”).

~~Table~~2004 Compared to 2003 - Net income for the year ended December 31, 2004 increased primarily due to decreases in other expenses related to PPLI business compared to the prior year. The decrease in other expenses was primarily attributed to a $40 after-tax charge, recorded in the third quarter ended September 30, 2003, associated with the settlement of ~~Contents~~the Bancorp litigation. In addition, the governmental business contributed higher income for the current year. This increase was primarily attributable to higher revenues earned from the growth in the average account values as a result of positive net flows and market appreciation since the prior year coupled with improved spreads and expense management.

~~The~~Partially ~~Company~~offsetting ~~uses~~increases ~~derivative~~in ~~instruments~~segment innet ~~its~~income ~~management~~for the current year was lower income from the IIP and PPLI businesses, excluding the settlement of ~~market~~the ~~risk~~Bancorp litigation. For a discussion of ~~consistent~~the ~~with~~Bancorp ~~four~~litigation, ~~risk~~see ~~management~~Note ~~strategies:~~12 ~~hedging~~of ~~anticipated~~Notes to Consolidated Financial Statements. The decrease in ~~transactions;~~net ~~hedging~~income ~~liability~~in ~~instruments;~~the ~~hedging~~IIP ~~invested~~was ~~assets~~due primarily to lower spread income and slightly higher insurance ~~hedging~~operating ~~portfolios~~costs offor ~~assets~~the ~~and/or~~year ~~liabilities~~ended December 31, 2004 as compared to 2003. ~~(For~~In ~~additional~~addition, ~~information~~the IIP onreported ~~these~~lower ~~strategies~~earnings ~~along~~for ~~with~~the ~~tables~~current ~~reflecting~~year ~~outstanding~~compared ~~derivative~~to the prior year due to favorable mortality ~~instruments,~~experience ~~see~~in 2003. PPLI also experienced lower earnings for the ~~discussions~~year ~~below~~ended December 31, 2004 as compared to 2003 due to lower average leveraged COLI account values.)

~~Derivative activities are monitored by an internal compliance unit, reviewed~~29 frequently by senior management and reported to The Hartford’s Finance Committee of the Board of Directors. The notional amounts of derivative contracts represent the basis upon which pay or receive amounts are calculated and are not reflective of credit risk. Notional amounts pertaining to derivative instruments for both general and guaranteed separate accounts at December 31, 2001 and 2000 totaled $9.9 billion and $8.5 billion, respectively.

~~The~~Additionally, ~~following~~income ~~discussions~~tax ~~focus~~expense onwas higher for the ~~key~~current ~~market~~year ~~risk~~due ~~exposures~~primarily ~~within~~to decreases in ~~Hartford~~other ~~Life~~expenses related to the PPLI business, as discussed above. This increase in income tax expense was partially offset by a higher DRD tax benefit of $11 related to the 2004 tax year, as compared to the DRD tax benefit of $4 related to the 2003 tax year reported in the prior year period.

~~Interest~~2003 ~~Rate~~Compared ~~Risk~~to 2002 - Net income decreased in 2003 compared to 2002 principally as a result of lower income from the PPLI business due to an increase in other expenses. Other expenses increased due primarily to a $40 after-tax expense, related to the Bancorp litigation expense recorded in 2003 compared with the $11 after-tax expense recorded in 2002.

~~Changes~~Excluding inthe ~~interest~~expenses ~~rates~~associated ~~can~~with ~~potentially~~the ~~impact~~Bancorp ~~Hartford~~litigation, ~~Life’s~~net ~~profitability.~~income increased $4 or 9%, ~~Under~~primarily ~~certain~~due ~~circumstances~~to higher income in the institutional investment products business as a result of favorable ~~interest~~mortality ~~rate~~experience ~~volatility,~~and growth in average assets over the ~~Company~~last ~~could~~twelve bemonths. General ~~exposed~~account assets under management related to ~~disintermediation~~the ~~risk~~IIP ~~and~~increased ~~reduction~~32% since December 31, 2002, to $9.9 billion as of December 31, 2003. The increase in general account assets was primarily due to higher net ~~interest~~flows ~~rate~~and ~~spread~~market orappreciation related to institutional annuities and structured ~~profit~~settlement ~~margins~~products. ~~The~~Partially ~~Company~~offsetting ~~analyzes~~the ~~interest~~increase ~~rate~~in ~~risk~~earnings ~~using~~in ~~various~~the ~~models,~~IIP was lower PPLI ~~including~~income ~~multi-scenario~~due ~~cash~~to ~~flow~~the ~~projection~~decline ~~models~~in ~~that~~leveraged ~~forecast~~COLI ~~cash~~account ~~flows~~ values as a result of ~~the~~surrender ~~liabilities~~activity and lower ~~their~~sales ~~supporting~~volume ~~investments,~~of ~~including~~PPLI ~~derivative instruments.~~products ~~For~~in ~~non-guaranteed~~2003 ~~separate~~as ~~accounts,~~compared to the ~~Company’s~~prior ~~exposure~~year. ~~is not~~In ~~significant~~addition, amortization of deferred policy acquisition costs increased as ~~the~~a ~~policyholder~~result ~~assumes~~of ~~substantially~~higher ~~all~~sales in the institutional investment ~~risk~~ products business.

~~The Company’s general account and guaranteed separate account investment~~Outlook ~~portfolios primarily consist of investment grade, fixed maturity securities,~~ ~~including corporate bonds, asset backed securities, commercial mortgage backed~~ securities, tax-exempt municipal securities and collateralized mortgage obligations. The fair value of these and the Company’s other invested assets fluctuates depending on the interest rate environment and other general economic conditions. During periods of declining interest rates, paydowns on mortgage backed securities and collateralized mortgage obligations increase as the underlying mortgages are prepaid. During such periods, the Company generally will not be able to reinvest the proceeds of any such prepayments at comparable yields. Conversely, during periods of rising interest rates, the rate of prepayments generally declines, exposing the Company to the possibility of asset/liability cash flow and yield mismatch. For a discussion of the Company’s risk management techniques to manage this market risk, see “Asset/Liability Management Strategies Used to Manage Market Risk” below.

AsThe ~~described~~future ~~above,~~net ~~the~~income ~~Company~~of ~~holds~~this asegment ~~significant~~will ~~fixed~~depend ~~maturity~~on ~~portfolio, which~~the ~~includes~~Company’s ~~both~~ability ~~fixed~~to increase assets under management and ~~variable~~maintain ~~rate~~its ~~features.~~investment ~~The~~spread ~~following~~earnings ~~table reflects~~on the ~~principal~~majority ~~amounts~~ of the ~~general~~products ~~and~~sold ~~guaranteed~~in largely ~~separate~~the ~~account fixed~~IIP and ~~variable~~Government ~~rate~~businesses. ~~fixed~~These ~~maturity~~markets ~~portfolios,~~are ~~along~~highly ~~with~~competitive ~~the~~from ~~respective~~a pricing ~~weighted~~perspective, ~~average~~and ~~coupons~~a ~~(WAC) by~~small ~~estimated~~number ~~maturity year as~~ of ~~December 31, 2001.~~cases ~~Comparative~~often ~~totals~~account ~~are~~for ~~included~~a ~~for~~significant ~~December 31,~~portion ~~2000.~~of ~~Expected~~sales, ~~maturities~~therefore ~~differ~~the ~~from~~Company ~~contractual~~may ~~maturities~~not ~~due~~be able to ~~call~~sustain orthe ~~prepayment provisions.~~level ~~The~~of ~~weighted~~assets ~~average~~under ~~coupon~~management ongrowth attained ~~variable~~in ~~rate~~2004. ~~securities~~In is2004, ~~based on~~IIP ~~spot~~introduced ~~rates~~the asHartford ofIncome ~~December 31~~Notes, ~~2001~~a ~~and~~new ~~2000,~~funding ~~and~~agreement backed isproduct ~~primarily~~that ~~based~~provides on the ~~London~~ ~~Interbank~~Company ~~Offered~~with ~~Rate~~opportunity ~~(LIBOR).~~for ~~Callable~~future ~~bonds~~growth. ~~and~~This ~~notes~~product ~~are~~provides ~~distributed~~access to ~~either~~both ~~call~~a ~~dates~~multi-billion-dollar orretail ~~maturity~~market, ~~depending~~and ona ~~which~~nearly ~~date~~trillion ~~produces the~~dollar ~~most conservative yield~~institutional market. ~~Asset~~These ~~backed~~markets ~~securities,~~are ~~collateralized~~very ~~mortgage obligations~~competitive and ~~mortgage~~the ~~backed~~Company’s ~~securities~~success ~~are~~depends ~~distributed~~in ~~based~~part on ~~estimates~~the level of ~~the~~credited ~~rate~~interest ofrates ~~future~~and ~~prepayments~~the ofCompany’s ~~principal~~credit ~~over~~rating. ~~the~~The ~~remaining~~focus ~~life~~ of the ~~securities.~~ ~~These~~PPLI ~~estimates~~business ~~are~~is variable ~~developed~~PPLI ~~using~~products ~~prepayment~~to ~~speeds~~fund ~~provided~~non-qualified ~~in broker~~benefits ~~consensus~~or ~~data.~~other ~~Such~~post ~~estimates~~employment ~~are~~benefit ~~derived~~liabilities. The ~~from~~leveraged ~~prepayment~~COLI ~~speeds previously~~business, ~~experienced~~while atin ~~the~~run-off, ~~interest~~has ~~rate~~been ~~levels~~an ~~projected~~important ~~for~~contributor ~~the~~to ~~underlying~~PPLI’s ~~collateral.~~profitability ~~Actual~~in ~~prepayment~~recent ~~experience~~years ~~may~~and ~~vary~~will ~~from~~continue ~~these~~to ~~estimates. Financial~~contribute ~~instruments~~to ~~with~~the ~~certain~~profitability ~~leverage~~of ~~features~~the ~~have~~Company albeit ~~been~~at ~~included~~lower inlevels. ~~each of~~The ~~the~~market ~~fixed~~served ~~maturity~~by ~~categories.~~PPLI ~~These~~is ~~instruments~~subject ~~have~~to ~~not~~extensive ~~been~~legal ~~separately~~and regulatory ~~displayed~~review ~~because~~that ~~they~~could ~~are~~have ~~immaterial~~an toadverse ~~the~~effect ~~Company’s~~on ~~investment~~its ~~portfolio~~business.

2230

~~Table~~INDIVIDUAL ~~of Contents~~LIFE

																					2001			2000
			2002			2003			2004			2005			2006			Thereafter			Total			Total
Bonds-Callable Fixed Rate
		Par value	$	17		$	34		$	9		$	52		$	17		$	2,795		$	2,924		$	1,458
		WAC		6.5	%		5.2	%		6.7	%		8.2	%		8.3	%		3.8	%		4.0	%		5.5	%
		Fair value																			$	2,445		$	1,439
Variable Rate
		Par value	$	12		$	24		$	3		$	37		$	9		$	980		$	1,065		$	1,158
		WAC		4.0	%		3.2	%		3.8	%		4.1	%		5.7	%		3.4	%		3.4	%		7.1	%
		Fair value																			$	972		$	1,075
Bonds — Other Fixed Rate
		Par value	$	2,531		$	1,521		$	1,304		$	1,680		$	1,934		$	9,275		$	18,245		$	14,699
		WAC		5.8	%		6.7	%		6.1	%		7.4	%		6.1	%		6.1	%		6.2	%		6.1	%
		Fair value																			$	17,424		$	13,409
Variable Rate
		Par value	$	211		$	224		$	70		$	248		$	73		$	221		$	1,047		$	1,235
		WAC		4.6	%		3.9	%		5.2	%		4.2	%		7.7	%		5.8	%		4.9	%		7.4	%
		Fair value																			$	947		$	1,108
Asset-backed Securities Fixed Rate
		Par value	$	462		$	365		$	484		$	264		$	168		$	509		$	2,252		$	2,343
		WAC		6.9	%		6.6	%		6.3	%		6.9	%		6.5	%		7.7	%		6.9	%		6.9	%
		Fair value																			$	2,234		$	2,342
Variable Rate
		Par value	$	276		$	305		$	380		$	343		$	212		$	880		$	2,396		$	2,124
		WAC		2.4	%		2.8	%		2.8	%		2.7	%		2.7	%		2.9	%		2.8	%		7.3	%
		Fair value																			$	2,333		$	2,099
Collateralized Mortgage Obligations Fixed Rate
		Par value	$	104		$	116		$	110		$	102		$	95		$	441		$	968		$	1,098
		WAC		6.7	%		6.1	%		6.1	%		6.1	%		6.1	%		6.5	%		6.3	%		6.4	%
		Fair value																			$	960		$	1,087
Variable Rate
		Par value	$	4		$	3		$	3		$	2		$	1		$	2		$	15		$	112
		WAC		7.9	%		6.7	%		6.6	%		6.7	%		6.7	%		6.4	%		6.9	%		5.3	%
		Fair value																			$	16		$	101
Commercial Mortgage-backed Securities Fixed Rate
		Par value	$	85		$	69		$	106		$	77		$	198		$	2,483		$	3,018		$	2,606
		WAC		7.0	%		6.8	%		7.1	%		6.9	%		7.3	%		7.1	%		7.1	%		7.3	%
		Fair value																			$	3,123		$	2,674
Variable Rate
		Par value	$	274		$	289		$	242		$	137		$	118		$	441		$	1,501		$	1,730
		WAC		4.2	%		4.1	%		4.0	%		5.7	%		7.1	%		7.9	%		5.8	%		7.9	%
		Fair value																			$	1,498		$	1,738
Mortgage-backed Securities Fixed Rate
		Par value	$	159		$	175		$	158		$	128		$	104		$	444		$	1,168		$	792
		WAC		7.0	%		6.9	%		6.8	%		6.8	%		6.8	%		6.7	%		6.8	%		7.2	%
		Fair value																			$	1,189		$	800
	Variable Rate
		Par value	$	—		$	—		$	—		$	—		$	—		$	2		$	2		$	3
		WAC		—			—			—			—			—			5.4	%		5.4	%		7.0	%
		Fair value																			$	2		$	3

Operating Summary


										2004 vs.			2003 vs.
	2004			2003			2002			2003			2002
										Change			Change

Fee income and other	$	767		$	747		$	705			3	%		6	%
Earned premiums		(21	)		(20	)		(8	)		(5	%)		(150	%)
Net investment income		302			256			262			18	%		(2	%)
Net realized capital losses		—			(1	)		(1	)		—			—

Total revenues		1,048			982			958			7	%		3	%

Benefits, claims and claim adjustment expenses		480			436			443			10	%		(2	%)
Amortization of deferred policy acquisition costs		180			176			160			2	%		10	%
Insurance operating costs and other expenses		164			161			159			2	%		1	%

Total benefits, claims and expenses		824			773			762			7	%		1	%


Income before income tax expense and cumulative effect of account change		224			209			196			7	%		7	%
Income tax expense		70			64			63			9	%		2	%

Income before cumulative effect of accounting change		154			145			133			6	%		9	%
Cumulative effect of accounting change, net of tax[1]		(1	)		—			—			—			—

Net Income	$	153		$	145		$	133			6	%		9	%


Account Values

Variable universal life	$	5,356		$	4,725		$	3,648			13	%		30	%
Universal life/interest sensitive whole life		3,402			3,259			3,139			4	%		4	%
Modified guaranteed life and other		729			742			770			(2	%)		(4	%)

Total account values	$	9,487		$	8,726		$	7,557			9	%		15	%

Life Insurance Inforce

Variable universal life insurance	$	69,089		$	67,031		$	66,715			3	%		—
Universal life/interest sensitive whole life		39,109			38,320			38,457			2	%		—
Modified guaranteed life and other		31,691			25,447			21,508			25	%		18	%

Total life insurance inforce	$	139,889		$	130,798		$	126,680			7	%		3	%

~~Table~~[1] Represents the cumulative impact of ~~Contents~~the Company’s adoption of SOP 03-1.

The ~~table~~Individual ~~below~~Life segment provides ~~information~~life asinsurance ofsolutions ~~December 31,~~to ~~2001~~a ~~and~~wide ~~2000~~array onof ~~debt~~partners to ~~obligations~~solve ~~and~~the ~~reflects~~wealth ~~principal~~protection, ~~cash~~accumulation ~~flows~~ and ~~related~~transfer ~~weighted~~needs ~~average effective~~of ~~interest~~their ~~rates~~affluent, byemerging ~~maturity~~affluent and ~~year~~business insurance clients.

															2001			2000
		2002		2003		2004		2005		2006		Thereafter			Total			Total
Long -Term Debt
Fixed Rate
	Amount	$	—	$	—	$	200	$		$	—	$	850		$	1,050		$	650
	Weighted average effective interest rate		—		—		6.9		%		—		7.4	%		7.3	%		7.4	%
	Fair value														$	1,118		$	658
TruPS (1)
Fixed Rate
	Amount	$	—	$	—	$	—	$	—	$	—	$	450		$	450		$	250
	Weighted average effective interest rate		—		—		—		—		—		7.4	%		7.4	%		7.4	%
	Fair value														$	461		$	245

2004 Compared to 2003 - Net income in the Individual Life segment increased for the year ended December 31, 2004 as compared to the prior year, primarily driven by business growth and improved investment spreads. Account values and inforce grew 9% and 7% from 2003 to 2004. Net investment income increased for the current year as compared to the prior year primarily due to the adoption of SOP 03-1, growth in general account values and prepayments on bonds. The adoption of SOP 03-1 also resulted in increases in benefits, claims and claim adjustment expenses and a decrease to fee income and other for the year ended December 31, 2004 as compared to the prior year period for the segment’s Modified Guarantee Life Insurance product, which was formerly classified as a separate account product. Fee income increased primarily due to increased cost of insurance charges as life insurance inforce grew and aged and variable universal life account values increased driven by favorable equity markets and new sales. The increase in benefits, claims and claim adjustment expenses was primarily due to the absence in 2004 of the unusually favorable mortality experienced in 2003, along with continued growth and aging of the inforce. Business growth resulted in increased insurance operating costs and expenses for the year compared to prior year. Additionally, income tax expense was higher for the year ended December 31, 2004 due primarily to earnings growth, as discussed above. Income tax expense includes a DRD tax benefit of $5 related to the 2004 tax year, whereas, income tax expense for 2003 includes a total DRD tax benefit of $6.

~~(1)~~2003 ~~Represents~~Compared ~~company~~to ~~obligated~~2002 ~~mandatorily~~- ~~redeemable~~Net ~~preferred~~income ~~securities~~increased due to increases in fee income. Fees increased primarily due to increased cost of ~~subsidiary~~insurance ~~trust~~charges ~~holding~~as ~~solely~~life ~~parent~~insurance ~~junior~~inforce ~~subordinated~~grew ~~debentures~~and aged, and variable universal life account values increased 30%, driven by the growth in the equity markets in 2003. Also contributing to the increase in net income was a decrease in benefit costs in 2003 as compared to 2002 due to favorable mortality rates compared to the prior year. Additionally, net income for the year ended December 31, 2003 includes the favorable impact of $2 DRD benefit resulting from the Company’s previously discussed change in estimate of

~~Asset/Liability Management Strategies Used to Manage Market Risk~~31

~~Hartford~~the ~~Life~~DRD ~~employs~~tax ~~several~~benefit ~~risk~~reported ~~management~~during ~~tools~~2002. toThe ~~quantify~~total ~~and~~DRD ~~manage market~~benefit ~~risk~~related ~~arising~~to ~~from~~the ~~their~~2003 ~~investments~~tax ~~and~~year ~~interest sensitive liabilities.~~for ~~For certain portfolios, management monitors~~ the ~~changes~~year inended ~~present~~December 31, ~~value between~~2003 ~~assets~~was ~~and~~$4 ~~liabilities~~as ~~resulting~~compared ~~from~~to ~~various~~$3 ~~interest~~for ~~rate scenarios using integrated asset/liability measurement systems and a proprietary system that simulates~~ the ~~impacts~~year ofended ~~parallel and non-parallel yield curve shifts. Based on this current and prospective information~~December 31, ~~management implements risk reduction techniques to improve the match between assets and liabilities~~2002.

~~Derivatives~~Earned ~~play an important role in facilitating the management of interest rate risk~~premiums, ~~creating~~which ~~opportunities~~include topremiums ~~efficiently~~for ~~fund~~ceded ~~obligations~~reinsurance, ~~hedge against~~decreased ~~risks~~primarily ~~that~~due ~~affect~~to ~~the value of certain liabilities and adjust broad~~increased ~~investment~~use ~~risk characteristics as a result~~ of ~~any significant changes in market risks~~reinsurance. AsThe andecrease ~~end-user of derivatives, Hartford Life uses a variety of derivatives, including swaps, caps, floors, forwards and exchange-traded financial futures and options,~~ in ~~order~~net toinvestment ~~hedge~~income ~~exposure~~was due primarily to ~~interest rate~~lower ~~risk on anticipated~~ investment ~~purchases or existing assets and~~ ~~liabilities~~yields. ~~At December 31, 2001, notional amounts pertaining to derivatives~~ ~~totaled $9.9 billion ($8.2 billion related to insurance investments and $1.7~~ ~~billion related to life insurance liabilities). Notional amounts pertaining to~~ ~~derivatives totaled $8.5 billion at December 31, 2000 ($6.5 billion related to insurance investments and $2.0 billion related to life insurance liabilities).~~

~~The economic objectives and strategies for which the Company utilized~~Outlook ~~derivatives are categorized as follows:~~

~~Anticipatory~~Individual ~~Hedging~~Life —sales ~~For~~grew ~~certain~~to ~~liabilities,~~$233 ~~the~~in ~~Company~~2004 ~~commits~~from to$196 ~~the price~~in of2003 ~~the~~with ~~product~~renewed ~~prior~~customer tointerest ~~receipt~~in variable ofuniversal life products and the ~~associated~~successful ~~premium~~introduction orof ~~deposit.~~new universal life and ~~Anticipatory~~variable ~~hedges~~universal ~~are~~life ~~executed~~products. toVariable ~~offset~~universal ~~the~~life ~~impact~~sales ofand ~~changes~~account invalues ~~asset~~remain ~~prices~~sensitive ~~arising~~to ~~from~~equity ~~interest~~market ~~rate~~levels ~~changes~~and ~~pending~~returns. ~~the~~The ~~receipt~~Company ofalso ~~premium~~continues ~~or deposit~~to introduce new and enhanced ~~the~~products, ~~subsequent~~which ~~purchase~~are ofexpected anto ~~asset~~increase new sales. ~~These~~The ~~hedges~~Company ~~involve~~continues ~~taking~~to apursue ~~long~~broader ~~position~~and ~~(purchase) in~~deeper ~~interest~~distribution ~~rate~~opportunities ~~futures~~to orincrease ~~entering~~sales. ~~into~~However, anthe ~~interest~~Company continues to ~~rate~~face ~~swap~~uncertainty ~~with~~surrounding ~~duration~~estate ~~characteristics~~tax ~~equivalent~~legislation, toaggressive ~~the~~competition ~~associated liabilities~~from orlife ~~anticipated~~insurance providers, ~~investments.~~reduced ~~The~~availability ~~notional~~and ~~amounts~~higher price of ~~anticipatory~~reinsurance, and the current regulatory ~~hedges~~environment asregarding ofreserving ~~December 31,~~practices ~~2001~~for ~~and~~universal ~~2000~~life ~~were~~products ~~$320~~with ~~and~~no-lapse ~~$144 million, respectively~~guarantees.

~~Liability Hedging — Several products obligate the Company to credit a return to~~32 the contract holder 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 the operation’s asset/liability matching policy. In addition, interest rate swaps are used to convert certain variable contract rates to different variable rates, thereby allowing them to be appropriately matched against variable rate assets. Finally, interest rate caps and option contracts are used to hedge against the risk of contract holder disintermediation in a rising interest rate environment. The notional amounts of derivatives used for liability hedging as of December 31, 2001 and 2000 were $1.7 billion and $2.0 billion, respectively.

~~Asset~~GROUP ~~Hedging —To meet the various policyholder obligations and to provide~~BENEFITS ~~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 amounts of asset hedges as of December 31, 2001 and 2000, were $6.8 billion and $5.4 billion, respectively.

24Operating Summary


									2004 vs.			2003 vs.
									2003			2002
	2004		2003			2002			Change			Change

Earned premiums and other	$	3,652	$	2,362		$	2,327			55	%		2	%
Net investment income		375		264			258			42	%		2	%
Net realized capital gains (losses)		1		(2	)		(3	)	NM				33	%

Total revenues		4,028		2,624			2,582			54	%		2	%

Benefits, claims and claim adjustment expenses		2,703		1,862			1,878			45	%		(1	%)
Insurance operating costs and other expenses		989		553			524			79	%		6	%
Amortization of deferred policy acquisition costs		23		18			17			28	%		6	%

Total benefits, claims and expenses		3,715		2,433			2,419			53	%		1	%


Income before income tax expense		313		191			163			64	%		17	%
Income tax expense		84		43			35			95	%		23	%

Net income	$	229	$	148		$	128			55	%		16	%

Portfolio Hedging —The Company periodically compares the duration and convexity of its portfolios of assets to its corresponding liabilities and enters into portfolio hedges to reduce any difference to desired levels. Portfolio hedges reduce the duration and convexity mismatch between assets and liabilities and offset the potential impact to cash flows caused by changes in interest rates. The notional amounts of portfolio hedges as of December 31, 2001 and 2000, were $1.1 and $1.0 billion, respectively.


							2004 vs.			2003 vs.
							2003			2002
Earned Premiums and Other	2004		2003		2002		Change			Change

Fully insured – ongoing premiums	$	3,611	$	2,302	$	2,295		57	%		—
Buyout premiums		4		40		13		(90	%)	NM
Other		37		20		19		85	%		5	%

Earned premiums and other total	$	3,652	$	2,362	$	2,327		55	%		2	%

The ~~following~~Group ~~tables~~Benefits ~~provide~~segment ~~information~~provides ~~as of December 31~~employers, ~~2001 with comparative totals for December 31~~associations, ~~2000~~affinity ongroups ~~derivative~~and ~~instruments used in~~financial ~~accordance~~institutions with ~~the~~group ~~aforementioned hedging strategies. For interest rate swaps~~life, ~~caps~~accident and ~~floors~~disability coverage, ~~the~~along ~~tables present notional amounts~~ with ~~weighted average~~other ~~pay~~products and services, ~~receive~~including ~~rates~~voluntary ~~for~~benefits, ~~swaps~~employee ~~and~~assistance ~~weighted~~programs, ~~average~~travel ~~strike~~assistance, ~~rates for~~group ~~caps~~retiree health, and ~~floors~~medical bystop ~~maturity year~~loss. ~~For~~The ~~interest~~Company ~~rate~~also ~~futures,~~offers ~~the~~disability ~~table~~underwriting, ~~presents~~administration, ~~contract~~claims ~~amount~~processing services and ~~weighted~~reinsurance ~~average~~to ~~settlement~~other ~~price~~insurers byand ~~expected~~self-funded ~~maturity~~employer ~~year~~plans. ~~For option contracts, the table presents contract amount by~~ ~~expected maturity year.~~

																				2001			2000
Interest Rate Swaps		2002			2003			2004			2005			2006			Thereafter			Total			Total
Pay Fixed/Receive Variable
	National value	$	90		$	198		$	35		$	140		$	50		$	794		$	1,307		$	1,031
	Weighted average pay rate		5.9	%		5.1	%		6.1	%		7.5	%		6.7	%		7.0	%		6.5	%		6.6	%
	Weighted average receive rate		2.1	%		2.3	%		2.2	%		2.2	%		2.4	%		2.2	%		2.2	%		6.8	%
	Fair value																			$	(65	)	$	(43	)
Pay Variable/Receive Fixed
	Notional value	$	204		$	518		$	1,299		$	935		$	797		$	1,327		$	5,080		$	4,886
	Weighted average pay rate		2.1	%		2.0	%		2.2	%		2.1	%		2.0	%		2.1	%		2.1	%		7.0	%
	Weighted average receive rate		5.9	%		5.4	%		5.6	%		6.0	%		5.7	%		6.3	%		5.8	%		6.6	%
	Fair value																			$	194		$	78
Pay Variable/Receive Different Variable
	Notional value	$	5		$	2		$	150		$	11		$	—		$	251		$	419		$	278
	Weighted average pay rate		5.4	%		2.2	%		3.3	%		4.0	%		—			3.1	%		3.2	%		6.6	%
	Weighted average receive rate		3.0	%		1.9	%		3.0	%		1.2	%		—			5.5	%		4.4	%		4.9	%
	Fair value																			$	(48	)	$	(1	)

2004 Compared to 2003 - Net income increased for the year ended December 31, 2004 as compared to the prior year due to earned premium growth and net investment income growth as the result of the CNA Acquisition. The increase in earned premiums was driven by sales (excluding buyouts) of $632 for the current year, representing an increase of 25% over sales reported in the prior year, and favorable persistency. Although benefits, claims and claim adjustment expenses increased, the segment’s loss ratio was 74% for the current year as compared to 79% for the prior year, which contributed favorably to net income. The loss ratio for the year was the result of improved mortality and morbidity experience as well as a change in the mix of business (discussed below) that results in a lower loss ratio and higher expense ratio. Partially offsetting these favorable items for current year as compared to the prior year were higher commissions due to higher sales and premiums previously discussed. Additionally, operating costs increased due to the growth in the segment and the CNA Acquisition. Consistent with the increase in operating costs, the segment’s ratio of insurance operating costs and other expenses to premiums and other considerations (excluding buyouts) increased to 28% for the year ended December 31, 2004, respectively, from 25% for prior year. As part of the CNA Acquisition, a larger block of affinity business is now included in the Group Benefits segment. This business typically has lower expected loss ratios and higher expected commission ratios than other products within the business.

																		2001			2000
Interest Rate Caps - LIBOR Based		2002			2003			2004		2005			2006		Thereafter			Total			Total
Purchased
	Notional value	$	10		$	54		$	—	$	77		$	—	$	30		$	171		$	171
	Weighted average strike rate (8.0 - 9.9%)		8.9	%		8.5	%		—		8.4	%		—		8.3	%		8.5	%		8.5	%
	Fair value																	$	1		$	1
	Notional value	$	19		$	—		$	—	$	—		$	—	$	—		$	19		$	19
	Weighted average strike rate (10.0 - 11.9%)		10.1	%		—			—		—			—		—			10.1	%		10.1	%
	Fair value																	$	—		$	—

2003 Compared to 2002 - Net income increased primarily due to increases in earned premiums and favorable claims experience. Premium growth was not as high as anticipated, however, due to lower sales to new customers in 2003 and lower persistency on renewals reflecting a competitive marketplace. However, the segment reported an increase in total buyout premiums. Buyouts involve the acquisition of claim liabilities from another carrier for a purchase price calculated to cover the run off of those liabilities plus administration expenses and profit. Due to the nature of the buyout marketplace, the predictability of buyout premiums is uncertain. Although, total benefits, claims and expenses increased for the year ended December 31, 2003, total benefits, claims and expenses excluding buyouts decreased $43, or 2%, over the same period. The segment’s loss ratio was 79%, down from 81% in 2002. Partially offsetting these factors that contributed to the increased net income was an increase in insurance operating costs and other expenses due to the premium growth previously described and continued investments in technology, service and distribution. The segment’s ratio of insurance operating costs and other expenses to premiums and other considerations, excluding buyouts, was 25%, increasing slightly from 23% in 2002.

																	2001			2000
Interest Rate Caps - CMT Based[1]			2002		2003			2004		2005			2006		Thereafter		Total			Total
Purchased
	Notional value	$	—	$	250		$	—	$	250		$	—	$	—	$	500		$	500
	Weighted average strike rate (8.0 - 9.9%)		—		8.7	%		—		8.7	%		—		—		8.7	%		8.7	%
	Fair value															$	3		$	—

~~[1] CMT represents the Constant Maturity Treasury Rate.~~Outlook

25Following the majority of the integration effort of the acquired group life and accident, and short-term and long-term disability businesses of CNA Financial Corporation, the Company anticipates the increased scale of the group life and disability operations and the expanded distribution network for its products and services will generate low double digit sales growth in 2005. Sales, however, may be negatively affected by the competitive pricing environment in the marketplace. Management is committed to selling competitively priced products that meet the Company’s internal rate of return guidelines. The two significant factors in evaluating this business are the loss ratio and the expense ratio. Based on historical experience trends and variability in the Group Benefits business, management expects the loss ratio in future periods to be in the range of 73% to 76% and the expense ratio to be in the range of 27% to 29%.

~~Table~~Despite the current market conditions, including low interest rates, rising medical costs, the changing regulatory environment and cost containment pressure on employers, the Group Benefits segment continues to leverage off of ~~Contents~~its strength in claim practices, risk management, service and distribution, enabling the Company to capitalize on market opportunities. Additionally, employees continue to look to the workplace for a broader and ever expanding array of insurance products. As employers design benefit strategies to attract and retain employees, while attempting to control their benefit costs, management believes that the need for the Group Benefits segment’s products will continue to expand. This, combined with the significant number of employees who currently do not have coverage or adequate levels of coverage, creates unique opportunities for our products and services.

																		2001			2000
Interest Rate Floors - LIBOR Based		2002			2003			2004			2005			2006		Thereafter		Total			Total
Purchased
	Notional value	$	—		$	—		$	27		$	—		$	—	$	—	$	27		$	27
	Weighted average strike rate (6.0 - 7.9%)		—			—			7.9	%		—			—		—		7.9	%		7.9	%
	Fair value																	$	3		$	2
Issued
	Notional value	$	28		$	54		$	34		$	77		$	—	$	—	$	193		$	193
	Weighted average strike rate (4.0 - 5.9%)		5.3	%		5.4	%		5.3	%		5.3	%		—		—		5.3	%		5.3	%
	Fair value																	$	(8	)	$	(2	)
	Notional value	$	—		$	—		$	27		$	—		$	—	$	—	$	27		$	27
	Weighted average strike rate (6.0 - 7.9%)		—			—			7.8	%		—			—		—		7.8	%		7.8	%
	Fair value																	$	(3	)	$	(2	)

INVESTMENTS

															2001			2000
Interest Rate Floors - CMT Based		2002		2003			2004		2005		2006		Thereafter		Total			Total
Purchased
	Notional value	$	—	$	150		$	—	$	—	$	—	$	—	$	150		$	150
	Weighted average strike rate (4.0 - 5.9%)		—		5.5	%		—		—		—		—		5.5	%		5.5	%
	Fair value														$	5		$	3

General

~~[1]~~The ~~CMT~~investment ~~represents~~portfolios of the ~~Constant~~Company ~~Maturity~~are ~~Treasury~~managed ~~Rate~~by Hartford Investment Management Company (“HIM”), a wholly-owned subsidiary of The Hartford. HIM manages the portfolios to maximize economic value, while attempting to generate the income necessary to support the Company’s various product obligations, within internally established objectives, guidelines and risk tolerances. The portfolio objectives and guidelines are developed based upon the asset/liability profile, including duration, convexity and other characteristics within specified risk tolerances. The risk tolerances considered include, for example, asset and credit issuer allocation limits, maximum portfolio below investment grade (“BIG”) holdings and foreign currency exposure. The Company attempts to minimize adverse impacts to the portfolio and the results of operations due to changes in economic conditions through asset allocation limits, asset/liability duration matching and through the use of derivatives. (For a further discussion of how the investment portfolio’s credit and market risks are assessed and managed, see the Investment Credit Risk and Capital Markets Risk Management sections of the MD&A.)

														2001		2000
Interest Rate Futures		2002		2003		2004		2005		2006		Thereafter		Total		Total
Long
	Contract amount/notional	$	266	$	—	$	—	$	—	$	—	$	—	$	266	$	198
	Weighted average settlement price	$	105	$	—	$	—	$	—	$	—	$	—	$	105	$	105
Short
	Contract amount/notional	$	25	$	—	$	—	$	—	$	—	$	—	$	25	$	59
	Weighted average settlement price	$	105	$	—	$	—	$	—	$	—	$	—	$	105	$	105

HIM’s security selection process is a multi-dimensional approach that combines independent internal credit research along with a macro economic outlook of technical trends (e.g. interest rates, slope of the yield curve and credit spreads) and market pricing to identify valuation inefficiencies and relative value buying and selling opportunities. Security selection and monitoring is performed by asset class specialists working within dedicated portfolio management teams.

															2001			2000
Option Contracts			2002		2003		2004		2005		2006		Thereafter		Total			Total
Long
		Contract amount/notional	$	—	$	119	$	107	$	45	$	324	$	128	$	723		$	589
	Fair value															28			6
Short
		Contract amount/notional	$	39	$	178	$	427	$	137	$	245	$	30	$	1,056		$	362
		Fair value														(61	)		(40	)

HIM portfolio managers may sell securities, except those securities in an unrealized loss position for which the Company has indicated its intent and ability to hold until the price recovers, due to portfolio guidelines or market technicals or trends. For example, the Company may sell securities to capture market valuation inefficiencies or relative value opportunities through security or sector rotation, to remain compliant with internal asset/liability duration matching guidelines often times a result of changes in interest rates, or to modify a portfolio’s duration to capitalize on interest rate levels or yield curve slope.

~~Currency~~HIM ~~Exchange~~believes ~~Risk~~that advantageously buying and selling securities within a structured purchasing, monitoring and selling framework, provides the greatest economic value for the Company over the long-term.

AsThe primary investment objective of ~~December 31~~Hartford Life’s general account is to maximize after-tax returns consistent with acceptable risk parameters, ~~2001~~including the management of the interest rate sensitivity of invested assets and the generation of sufficient liquidity relative to that of policyholder and corporate obligations, ~~Life~~as ~~had~~discussed ~~immaterial~~in ~~currency~~the ~~exposures~~Capital ~~resulting~~Markets ~~from~~Risk Management section ~~its~~of ~~international~~the ~~operations~~MD&A under “Market Risk – Key Market Risk Exposures”.

~~Life~~Pursuant ~~Insurance~~to ~~Liability~~the ~~Characteristics~~adoption of SOP 03-1, as discussed in Note 2 of Notes to Consolidated Financial Statements, on January 1, 2004, the Company reclassified $18.1 billion of separate account assets to the general account. Of this amount, $11.7 billion was associated with guaranteed separate accounts and was primarily comprised of fixed maturities. These assets are classified as available-for-sale securities with changes in fair value reported in other comprehensive income. In addition, $6.2 billion is primarily comprised of equity securities related to variable annuity products offered in Japan. These assets are classified as trading securities with changes in fair value reported in net investment income. The remaining amount of $200 related to policy loans on private placement life insurance products.

~~Hartford Life’s insurance liabilities, other than non-guaranteed separate~~34 accounts, include accumulation vehicles such as fixed and variable annuities, other investment and universal life-type contracts, and other insurance products such as long-term disability and term life insurance.

~~Asset~~Return ~~Accumulation~~on ~~Vehicles~~general account invested assets is an important element of Hartford Life’s financial results. Significant fluctuations in the fixed income or equity markets could weaken the Company’s financial condition or its results of operations. Additionally, changes in market interest rates may impact the period of time over which certain investments, such as mortgage-backed securities, are repaid and whether certain investments are called by the issuers. Such changes may, in turn, impact the yield on these investments and also may result in reinvestment of funds received from calls and prepayments at rates below the average portfolio yield. Net investment income and net realized capital gains and losses accounted for approximately 36%, 26% and 22% of the Company’s consolidated revenues for the years ended December 31, 2004, 2003 and 2002, respectively. The increase in the percentage of consolidated revenues for 2004, as compared to the prior years, is primarily due to income earned on separate account assets reclassified to the general account as a result of the adoption of SOP 03-1.

26Fluctuations in interest rates affect the Company’s return on, and the fair value of, general account fixed maturity investments, which comprised approximately 74% and 91% of the fair value of its invested assets as of December 31, 2004 and 2003, respectively. Other events beyond the Company’s control could also adversely impact the fair value of these investments. Specifically, a downgrade of an issuer’s credit rating or default of payment by an issuer could reduce the Company’s investment return.

~~Table~~The Company invests in private placement securities, mortgage loans and limited partnership arrangements in order to further diversify its investment portfolio. These investment types comprised approximately 17% and 19% of ~~Contents~~the fair value of its invested assets as of December 31, 2004 and 2003, respectively. These security types are typically less liquid than direct investments in publicly traded fixed income or equity investments. However, generally these securities have higher yields to compensate for the liquidity risk.

~~While~~A ~~interest~~decrease ~~rate~~in ~~risk~~the ~~associated~~fair ~~with~~value ~~these~~of ~~insurance~~any ~~products~~investment ~~has~~that ~~been reduced~~is ~~through~~deemed other-than-temporary would result in the ~~use~~Company’s recognition of ~~market~~a ~~value~~net ~~adjustment~~realized ~~features~~capital ~~and~~loss ~~surrender~~in its financial results prior to the ~~charges,~~actual sale of the ~~primary~~investment. ~~risk~~(For ~~associated~~a ~~with~~further ~~asset~~discussion ~~accumulation~~of ~~products~~the isevaluation ~~that~~of other-than-temporary ~~the~~impairments, ~~spread~~see ~~between~~the ~~investment~~Critical ~~return~~Accounting ~~and~~Estimates ~~credited~~section ~~rate~~of ~~may~~the ~~not~~MD&A beunder ~~sufficient~~“Valuation toof ~~earn~~Investments ~~targeted~~and ~~returns~~Derivative Instruments and Evaluation of Other-Than-Temporary Impairments”.)

~~Fixed Rate — Products in this category require the Company to pay a fixed rate for a certain period of time.~~ The ~~cash~~following ~~flows~~table ~~are~~identifies ~~not interest sensitive because~~ the ~~products~~invested ~~are~~assets ~~written~~by ~~with~~type aheld ~~market~~in ~~value adjustment feature and~~ the ~~liabilities~~ ~~have~~general ~~protection~~account ~~against~~as ~~the early withdrawal~~ of ~~funds through~~ ~~surrender~~December 31, ~~charges.~~2004 ~~Product examples include fixed rate annuities with a market value adjustment~~ and ~~fixed rate guaranteed investment contracts~~2003. ~~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 the 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.


Composition of Invested Assets
	2004					2003
	Amount		Percent			Amount		Percent
Fixed maturities, available-for-sale, at fair value	$	50,531		73.5	%	$	37,462		91.0	%
Equity securities, available-for-sale, at fair value		525		0.8	%		357		0.9	%
Equity securities, held for trading, at fair value		13,634		19.8	%		—		—
Policy loans, at outstanding balance		2,662		3.9	%		2,512		6.1	%
Mortgage loans, at cost		923		1.3	%		466		1.1	%
Limited partnerships, at fair value		256		0.4	%		177		0.4	%
Other investments		185		0.3	%		180		0.5	%

Total investments	$	68,716		100.0	%	$	41,154		100.0	%

~~Interest~~Fixed ~~Credited~~maturity —investments ~~Products~~and inequity ~~this~~securities ~~category~~held ~~credit~~for ~~interest~~trading toincreased ~~policyholders, subject~~35% ~~to market conditions~~ and ~~minimum guarantees. Policyholders may~~100%, ~~surrender~~respectively, atsince ~~book~~December 31, ~~value~~2003, ~~but~~primarily ~~are~~the ~~subject~~result toof ~~surrender~~fixed ~~charges~~maturities ~~for~~and ~~an initial~~equity ~~period.~~securities ~~Product~~that ~~examples~~were ~~include~~reclassified ~~universal~~from ~~life~~separate ~~contracts~~accounts ~~and~~to the general account ~~portion~~as a result of the adoption ~~Company’s~~of ~~variable~~SOP ~~annuity~~03-1 ~~products.~~coupled ~~Liability~~with ~~duration is~~positive ~~short~~operating tocash ~~intermediate term~~flow.

~~Other~~Mortgage ~~Insurance~~loans ~~Products~~increased $457, or 98%, since December 31, 2003, as a result of a decision to increase the Company’s investment in this asset class primarily due to its attractive yields and diversification opportunities.

~~Long-Term Pay Out Liabilities — Products in this category are long term in~~35 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~~Investment ~~Pay Out Liabilities — These liabilities are short term in nature~~Results ~~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~~ The offollowing ~~the~~table ~~duration~~summarizes ~~of investments with respective policyholder obligations is an explicit objective of~~ the Company’s ~~management~~investment ~~strategy~~results. ~~The~~ ~~estimated cash flows of insurance policy liabilities based upon internal~~ ~~actuarial assumptions as of December 31, 2001 are reflected in the table below by expected maturity year. Comparative totals are included for December 31, 2000.~~

(Dollars in billions)
(before-tax)		2004				2003				2002
																							2001			2000
Net investment income – excluding income on policy loan and trading securities		$	2,690			$	1,831			$	1,595
Description (1)			2002				2003				2004			2005			2006			Thereafter			Total			Total
Policy loan income			186				210				254
Fixed rate asset accumulation vehicles			$	1.0			$	1.3			$	2.9		$	3.0		$	2.3		$	5.3		$	15.8		$	10.4
Trading securities income [1]			1,018				—				—
	Weighted average credited rate			5.3	%			5.5	%			6.5	%		6.1	%		5.7	%		5.8	%		5.9	%		6.7	%
Net investment income – total		$	3,894			$	2,041			$	1,849
Indexed asset accumulation vehicles			$	0.6			$	0.1			$	—		$	—		$	—		$	0.1		$	0.8		$	0.7
Yield on average invested assets [2]			5.8	%			6.0	%			6.1	%
	Weighted average credited rate			6.5	%			6.5	%			—			—			—			6.5	%		6.5	%		6.3	%
Gross gains on sale			359				267				175
Interest credited asset accumulation vehicles			$	4.7			$	0.5			$	0.5		$	0.2		$	0.2		$	2.0		$	8.1		$	10.1
Gross losses on sale			(147	)			(95	)			(112	)
	Weighted average credited rate			6.2	%			4.6	%			4.5	%		5.5	%		5.5	%		5.4	%		5.7	%		5.9	%
Impairments			(25	)			(162	)			(380	)
Long-term pay out liabilities			$	1.0			$	0.5			$	0.7		$	0.6		$	0.5		$	5.3		$	8.6		$	6.5
Periodic net coupon settlements on non-qualifying derivatives			6				26				9
Short-term pay out liabilities			$	0.9			$	0.1			$	—		$	—		$	—		$	—		$	1.0		$	0.9
GMWB derivatives, net gains before DAC			8				6				—
Other, net [3]			(52	)			(2	)			—
Net realized capital gains (losses), before-tax		$	149			$	40			$	(308	)

(1) As of December 31, 2001 and 2000, the fair value of the Company’s investment contracts, including guaranteed separate accounts, were $26.0 billion and $21.4 billion, respectively.

[1]		Represents the change in value of securities classified as trading.

[2]		Represents annualized net investment income (excluding the change in fair value of trading securities) divided by the monthly weighted average invested assets at cost or amortized cost, as applicable, excluding trading securities and the collateral received associated with the securities lending program. Also, for 2003, the fixed maturities associated with the acquisition of CNA’s group life and accident, long-term and short-term disability and certain specialty businesses are excluded from the weighted average invested assets.

[3]		Primarily consists of changes in fair value on non-qualifying derivatives and hedge ineffectiveness on qualifying derivative instruments, as well as, the amortization of deferred acquisition costs.

272004 Compared to 2003 — Net investment income, excluding income on policy loans and trading securities, increased $859, or 47%, compared to the prior year. The increase in net investment income was primarily due to income earned on a higher average invested assets base, as compared to the prior year, and an increase in income from prepayment penalties primarily associated with commercial mortgage-backed securities (“CMBS”) and yield adjustments related to changes in prepayment speeds associated with mortgage-backed securities (“MBS”) held at a premium or discount. These increases were partially offset by a decrease in the average new invested asset yield and the repositioning of the portfolio into higher quality assets as described below.

~~Table~~The increase in the average invested assets base, as compared to the prior year, was primarily the result of ~~Contents~~separate account assets reclassified to the general account pursuant to the adoption of SOP 03-1 and, to a lesser extent, assets acquired in the CNA acquisition and operating cash flows. Income earned on separate account assets reclassified to the general account, excluding trading securities, was $619 for 2004. Income earned on assets acquired in the CNA transaction was $116 for 2004.

~~Sensitivity~~During 2004, the yield on average invested assets decreased from the prior year as a result of new investment purchases at rates below the average portfolio yield due to ~~Changes~~the continued low interest rate environment and decreased policy loan income. Since the Company invests primarily in long-term ~~Interest~~fixed ~~Rates~~rate debt securities, current period changes in long-term interest rates impact the yield on new asset purchases and, therefore, have a gradual impact on the overall portfolio yield. The weighted average yield on new invested asset purchases in 2004 of approximately 4.9%, before-tax, continues to be below the average portfolio yield. The Company expects the average before-tax new investment yields in 2005 to range from 4.8% to 5.0%. If future interest rates differ from the forward rates as of December 31, 2004, the actual average new investment yields may be significantly different than yields currently expected.

~~For~~Net ~~liabilities~~realized ~~whose~~capital ~~cash~~gains ~~flows~~during ~~are~~2004 ~~not~~increased ~~substantially affected~~ by ~~changes~~$109 ~~in interest~~compared ~~rates~~to ~~(fixed liabilities) and where investment experience is substantially absorbed by~~ the ~~Company~~prior year, ~~the~~primarily ~~sensitivity of~~ the ~~net economic~~ ~~value~~result ~~(discounted present value~~ of ~~asset~~lower ~~cash~~other-than-temporary ~~flows less the discounted present value of liability cash flows) of those portfolios to 100 basis point shifts in interest rates is shown in the table below~~impairments. ~~These~~(For ~~fixed~~further ~~liabilities represented~~discussion ~~approximately 61% and 60%~~ of ~~the Company’s general and guaranteed~~other-than-temporary ~~separate account liabilities at December 31~~impairments, ~~2001~~see ~~and 2000, respectively. The remaining liabilities generally allow~~ the ~~Company~~Other-Than-Temporary ~~significant~~Impairments ~~flexibility~~commentary ~~to adjust~~in ~~credited~~this ~~rates~~section ~~to reflect actual investment experience and thereby pass through a substantial portion~~ of ~~actual investment experience to~~ the ~~policyholder.~~ ~~The fixed liability portfolios are managed and monitored~~MD&A.) ~~relative to defined objectives and are analyzed regularly by management for~~ ~~internal risk management purposes using scenario simulation techniques, and are~~ ~~evaluated annually in compliance with regulatory requirements.~~

	Change in Net Economic Value
	2001						2000
Basis point shift	- 100			+ 100			- 100			+ 100
Amount	$	6		$	(31	)	$	(15	)	$	(27	)
Percent of liability value		0.03	%		(0.16	)%		(0.09	)%		(0.16	)%

In 2004, gross gains were realized as fixed maturity credit spreads tightened and portions of the Company’s portfolios were repositioned into higher quality assets where HIM believed greater relative value existed. Credit spreads tightened primarily due to improved credit quality, market liquidity and demand for higher yielding assets, as well as the relatively low interest rate environment. It is expected that the higher quality assets will provide greater liquidity if the credit environment and issuer default rates return to historical norms. In addition, foreign government securities were sold, primarily in the first and fourth quarters of 2004, to reduce the portfolios’ exposure to foreign holdings and realize gains associated with the decline in value of the U.S. dollar against foreign currencies.

~~CAPITAL~~In ~~RESOURCES~~2004, ~~AND~~securities ~~LIQUIDITY~~sold at a loss were predominantly corporate securities, U.S. government securities, certain asset-backed securities (“ABS”) and CMBS with no single security sold at a loss in excess of $5 and an average loss as a percentage of the fixed maturity’s amortized cost of less than 5%, which under the Company’s current impairment policy, were deemed to be depressed only to a minor extent. In 2003, no single security was sold at a loss in excess of $8.

~~Capital resources and liquidity represent the overall financial strength of~~36 Hartford Life and its ability to generate strong cash flows from each of the business segments and borrow funds at competitive rates to meet operating and growth needs. The Company maintained cash and short-term investments totaling $1.4 billion and $1.1 billion as of December 31, 2001 and 2000, respectively.

2003 Compared to 2002 — Net investment income, excluding policy loan income, increased $236, or 15%, compared to the prior year. The ~~capital~~increase ~~structure~~was ofprimarily ~~Hartford~~due ~~Life~~to ~~consists~~income ofearned ~~debt~~on ~~and~~a ~~equity~~higher invested asset base partially offset by lower investment yields. Policy loan income decreased primarily due to the decline in leveraged COLI policies, ~~and~~as isa result of surrender activity and ~~summarized~~lower sales. Yield on average invested assets decreased as ~~follows:~~a result of lower rates on new investment purchases and decreased policy loan income.

			2001			2000
Long-term debt				1,050			650
Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely parent junior subordinated debentures (TruPS)				450			250
	Total debt		$	1,500		$	900
Equity excluding net unrealized capital gains (losses) on securities, net of tax			$	4,385		$	3,167
Net unrealized capital gains (losses) on securities, net of tax				225			40
		Total stockholder’s equity	$	4,610		$	3,207
		Total capitalization (1)	$	5,885		$	4,067
Debt to equity (1) (2)				34	%		28	%
Debt to capitalization (1) (2)				25	%		22	%

Net realized capital gains (losses) for 2003 increased by $348 compared to the prior year, primarily as a result of net gains on sales of fixed maturities and a decrease in other-than-temporary impairments on fixed maturities. Sales were the result of normal trading activity and were primarily attributable to the improvement in the corporate credit environment, general economic conditions and operating fundamentals, the decrease in interest rates and improved pricing levels for ABS. (For a further discussion of other-than-temporary impairments, see the Other-Than-Temporary Impairments commentary in this section of the MD&A.)

(1)		Excludes net unrealized capital gains (losses) on securities, net of tax.
(2)		Excluding TruPS from debt, the debt to equity ratios were 24% and 21%, and the debt to capitalization ratios were 18% and 16% as of December 31, 2001 and 2000, respectively.

Separate Account Products

~~Capitalization~~Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Prior to January 1, 2004, the Company’s separate accounts reflected two categories of risk assumption: non-guaranteed separate accounts wherein the policyholder assumes substantially all the risk and reward; and guaranteed separate accounts wherein the Company contractually guarantees either a minimum return or the account value to the policyholder. Effective January 1, 2004, the guaranteed separate accounts are included with general account assets pursuant to SOP 03-1. As of December 31, 2004, the Company’s separate accounts totaled $140.0 billion. As of December 31, 2003, the Company’s total separate accounts totaled $136.6 billion, of which $12.1 billion was guaranteed separate accounts.

~~The~~Investment ~~Company’s~~objectives ~~total~~for ~~capitalization~~non-guaranteed separate accounts, ~~excluding~~which ~~net~~consist ~~unrealized~~of ~~capital~~the ~~gains~~participants’ ~~(losses) on~~account ~~securities~~balances, ~~net~~vary ofby ~~tax,~~fund ~~increased~~account $1type,~~818,~~ oras ~~45%,~~outlined in ~~2001.~~the ~~The increase~~applicable ~~was~~fund ~~primarily~~prospectus ~~the~~or separate ~~result~~account plan of ~~net~~operations. ~~income~~Separate ofaccount ~~$685,~~products ainclude ~~capital~~variable ~~contribution~~annuities, ~~from~~variable ~~The~~universal ~~Hartford~~life ininsurance ~~the~~contracts ~~amount~~and ofvariable ~~$615,~~COLI. ~~additional~~The ~~debt~~assets ~~of $400~~ and ~~TRUPS of~~liabilities ~~$200~~associated ~~in connection~~ with ~~the~~variable ~~acquisition~~annuity ofproducts ~~Fortis~~sold ~~Financial~~in ~~Group,~~Japan ~~partially offset~~do bynot ~~dividends~~meet ~~declared of $66. As a result, both~~ the ~~debt~~criteria to ~~equity~~be ~~and~~recognized ~~debt~~as toa ~~capitalization~~separate ~~ratios~~account ~~(both~~because ~~exclude~~the ~~net~~assets ~~unrealized~~are ~~capital~~not ~~gains (losses) on~~legally ~~securities,~~insulated ~~net of tax) increased to 34% and 25% as of December 31, 2001, respectively,~~ from ~~28%~~the ~~and~~Company. ~~22% as of December 31~~Therefore, ~~2000, respectively.~~ ~~Net~~these ~~unrealized~~assets ~~capital~~are ~~gains~~also ~~(losses) on~~included ~~securities,~~with ~~net~~general ofaccount ~~tax,~~assets ~~increased~~effective ~~$185 as December~~January 311, ~~2001, as compared to December 31, 2000, primarily due to the impact of decreased interest rates on the Company’s fixed maturity portfolio~~2004.

28Products, previously recorded as guaranteed separate accounts but now recorded in the general account upon adoption of SOP 03-1, primarily consist of modified guaranteed individual annuities and modified guaranteed life insurance and generally include market value adjustment features and surrender charges to mitigate the risk of disintermediation. The primary investment objective of these assets 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, as discussed in the Capital Markets Risk Management section of the MD&A under “Market Risk — Key Market Risk Exposures”.

~~Table~~Investment ofManagement ~~Contents~~Activities

~~Common~~During ~~Stock~~2004, ~~Acquired~~HIM byissued one and began serving as the collateral asset manager for an additional synthetic collateralized loan obligation (“CLO”), both of which the Company has an investment in. The ~~Hartford~~synthetic CLOs invest in senior secured bank loans through total return swaps (“referenced bank loan portfolios”). The notional value of the referenced bank loan portfolios from the two synthetic CLOs as of December 31, 2004 was approximately $700. The synthetic CLOs issued approximately $135 of notes and preferred shares (“CLO issuances”), approximately $120 of which was to third party investors. The proceeds from the CLO issuances were invested in collateral accounts consisting of high credit quality securities that were pledged to the referenced bank loan portfolios’ swap counterparties. Investors in the CLO issuances receive the net proceeds from the referenced bank loan portfolios. Any principal losses incurred by the swap counterparties associated with the referenced bank loan portfolios are borne by the CLO issuances investors through the total return swaps.

OnPursuant ~~June 27,~~to ~~2000~~the requirements of FIN 46R, ~~The~~the ~~Hartford~~Company ~~acquired~~has ~~all~~concluded ofthat the ~~outstanding~~two ~~shares~~synthetic ofCLOs ~~Class~~are Avariable ~~common~~interest ~~stock~~entities of(“VIEs”) ~~Hartford~~and ~~Life,~~for ~~which~~the ~~The~~CLO ~~Hartford~~issued ~~did~~in ~~not~~2004, ~~already~~the ~~own~~Company ~~(The~~is the primary ~~Hartford~~beneficiary ~~Acquisition)~~and must consolidate this CLO. ~~The~~Accordingly, ~~Hartford~~the ~~Acquisition~~Company ~~was~~has ~~accomplished~~recorded ~~through~~in anthe ~~offer~~consolidated tobalance ~~all~~sheets ~~Hartford~~$65 ~~Life~~of ~~shareholders~~cash toand ~~tender~~invested ~~their~~assets, ~~shares~~total toreturn ~~The~~swaps ~~Hartford for~~with ~~cash~~a ~~consideration~~fair value of $~~50.50~~3 ~~per~~in ~~share.~~other ~~Subsequent~~assets, towhich ~~the~~reference ~~tender~~a ~~offer,~~bank loan portfolio with a maximum notional of $400, and ~~newly~~$52 ~~formed~~in ~~wholly-owned~~other ~~subsidiary~~liabilities ofrelated to the CLO issuances. The ~~Hartford~~total return from the referenced bank loan portfolio of $3 was ~~merged~~received ~~into~~via ~~Hartford~~the total return swap and recorded in realized capital gains ~~Life,~~and aslosses. aIncome ~~result~~from ofthe ~~which,~~fixed ~~Hartford~~maturity ~~Life~~collateral ~~became~~account anand ~~indirect~~CLO ~~wholly-owned~~issuance investor payments ~~subsidiary~~were ofrecorded ~~The~~in ~~Hartford.~~net ~~Those~~investment ~~shareholders~~income ~~who~~in ~~had~~the ~~not~~consolidated ~~tendered~~statements ~~their~~of income. The Company’s ~~shares~~investment in the ~~tender~~consolidated ~~offer~~synthetic ~~also~~CLO ~~received~~issuance is $5014, which is its maximum exposure to loss.50 In addition, the Company has a $2 preferred share investment in ~~cash~~the non-consolidated synthetic CLO issuance, which is its maximum exposure to loss. The investors in ~~exchange~~the ~~for~~two ~~their~~synthetic ~~shares~~CLO inissuances have recourse only to the ~~subsequent~~VIE ~~merger~~assets and not to the general credit of the Company.

~~Debt~~Other-Than-Temporary Impairments

~~For~~The Company has a ~~discussion~~security monitoring process overseen by a committee of ~~Debt~~investment and accounting professionals that, ~~see~~on ~~Note~~a 10quarterly ofbasis, ~~Notes~~identifies securities that could potentially be other-than-temporarily impaired. When a security is deemed to ~~Consolidated~~be ~~Financial~~other-than-temporarily impaired ~~Statements~~its carrying amount is written-down to current market value and a realized loss is recorded in the Company’s consolidated statements of income. (For further discussion regarding the Company’s other-than-temporary impairment policy, see

~~Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary~~37 ~~Trust Holding Solely Parent Junior Subordinated Debentures~~

~~For~~“Valuation aof ~~discussion~~Investments ofand ~~Company~~Derivative ~~Obligated~~Instruments ~~Mandatorily~~and ~~Redeemable~~Evaluation ~~Preferred~~of Other-Than-Temporary ~~Securities~~Impairments” ofincluded ~~Subsidiary~~in ~~Trust~~the ~~Holding~~Critical ~~Solely~~Accounting ~~Parent~~Estimates ~~Junior~~section ~~Subordinated Debentures,~~of ~~see~~the MD&A and Note 112 of Notes to Consolidated Financial Statements.)

~~Dividends~~The following table identifies the Company’s other-than-temporary impairments by type.

Hartford Life declared $66 in dividends for 2001 to Hartford Fire Insurance Company. Future dividend decisions will be based on, and affected by, a number of factors, including the operating results and financial requirements of Hartford Life on a stand-alone basis and the impact of regulatory restrictions discussed in Liquidity Requirements below.


Other-Than-Temporary Impairments by Type
(before-tax)	2004		2003		2002

ABS
Aircraft lease receivables	$	2	$	29	$	73
Collaterized debt obligations (“CDO”)		4		21		35
Credit card receivables		¾		12		9
Manufactured housing (“MH”) receivables		¾		9		14
Mutual fund fee receivables		¾		3		16
Other ABS		¾		8		16

Total ABS		6		82		163
Commercial mortgages		3		—		—
CMBS		3		5		4
Corporate
Food and beverage		3		25		—
Technology and communications		1		3		142
Transportation		¾		7		1
Utilities		¾		¾		23
Other Corporate		¾		12		19

Total Corporate		4		47		185
Equity		7		21		17
Foreign government		¾		¾		11
MBS – interest only securities		2		7		¾

Total other-than-temporary impairments	$	25	$	162	$	380

AsThe adecrease ~~holding~~in ~~company,~~other-than-temporary ~~Hartford~~impairments ~~Life,~~during ~~Inc.~~2003 ~~has~~and no2004 ~~significant~~in ~~business operations~~comparison ofto ~~its~~2002 ~~own~~levels is ~~and,~~due ~~therefore,~~to ~~relies~~an ~~mainly~~improvement onin the ~~dividends~~corporate ~~from~~credit ~~its insurance~~environment, ~~company~~general ~~subsidiaries~~economic conditions and operating fundamentals, ~~which~~and ~~are~~improved ~~primarily~~pricing ~~domiciled~~levels infor ~~Connecticut~~ABS. In general, as ~~the~~security ~~principal~~issuers’ operating ~~source~~fundamentals ofhave ~~cash~~improved due to ~~meet~~reduced ~~its~~company ~~obligations~~leverage, ~~(predominantly~~improved ~~debt obligations)~~liquidity and ~~pay~~the successful ~~stockholder~~implementation ~~dividends.~~of ~~The~~various ~~Company’s~~cost ~~direct~~cutting ~~regulated life~~measures. ~~insurance~~Improvement ~~subsidiary,~~in ~~Hartford~~pricing ~~Life~~levels ~~and~~for ~~Accident~~ABS has ~~Insurance~~been ~~Company, declared~~driven ~~and~~by ~~paid~~a togeneral ~~the~~stabilization ~~Company~~in ~~dividends~~the performance of ~~$128~~the inunderlying ~~2001.~~collateral ~~Statutory~~and ~~net loss~~an increase in ~~2001~~demand ~~was~~for ~~$364~~these asasset ~~compared~~types due to ~~net~~improved ~~income~~economic and operating fundamentals of ~~$399~~the underlying insecurity ~~2000.~~issuers, ~~The~~better ~~loss~~market inliquidity ~~the current~~and ~~year~~attractive ~~was~~yields. ~~primarily~~The ~~the~~following discussion ~~result~~provides an analysis of ~~the~~significant ~~ceding~~other-than-temporary ~~commission~~impairments ~~paid~~recognized onduring 2004, 2003 and 2002, the ~~Fortis~~ ~~Financial~~related ~~Group~~circumstances ~~acquisition.~~giving ~~Statutory~~rise ~~capital~~to the other-than-temporary impairments and ~~surplus~~the aspotential ~~of December 31,~~impact ~~2001~~such ~~was~~circumstances ~~$3.0 billion,~~may ahave ~~25%~~on ~~increase~~other ~~over~~material ~~December 31,~~investments ~~2000~~held.

~~Treasury Stock~~2004

During ~~the~~2004 ~~first~~there ~~six~~were ~~months~~no ~~ended~~significant ~~June 30,~~other-than-temporary ~~2000,~~impairments to(e.g. ~~make~~$15 ~~shares~~or ~~available to~~greater) ~~employees~~recorded ~~pursuant~~on toany ~~stock~~single ~~based~~security ~~benefit~~or ~~plans,~~issuer. ~~the~~In ~~Company~~aggregate, ~~repurchased~~other-than-temporary ~~40,000~~impairments recorded ~~shares~~on ofABS ~~its~~and ~~Class A~~corporate ~~Common~~fixed ~~Stock~~maturity inprimarily relate to the ~~open~~decline in market atvalues aof ~~total~~certain previously ~~cost~~impaired ofsecurities. $2Other-than-temporary impairments recorded on equity securities primarily related to variable rate perpetual preferred securities issued by two highly rated financial services companies. These securities are variable rate securities with unique structural ~~Shares~~interest ~~repurchased~~rate inreset ~~the~~characteristics ~~open~~that have sustained a decline in market ~~were~~value ~~carried~~for atan ~~cost~~extended period ~~and~~of ~~reflected~~time primarily as a ~~reduction~~ toresult ~~stockholder~~of the increase in short-term interest rates after the security’s ~~equity~~interest rate reset period. ~~Treasury~~As ~~shares~~of ~~reissued~~December 31, ~~were~~2004, ~~reduced~~the ~~from~~Company did not hold other ~~treasury~~perpetual ~~stock~~preferred onsecurities ain ~~weighted~~an ~~average~~unrealized ~~cost~~loss ~~basis~~position with similar interest rate reset characteristics.

~~As a result of The Hartford Acquisition, during the second quarter of 2000, the~~2003 ~~Company canceled the remaining 80,152 treasury shares with a cost basis of $4.~~

29During 2003, other-than-temporary impairments were primarily recorded on ABS, corporate fixed maturities and equity securities. The ABS other-than-temporary impairments were primarily due to the continued deterioration of the underlying collateral supporting the various transactions. A significant portion of corporate fixed maturity other-than-temporary impairments during 2003 resulted from various issuers who experienced fraud or accounting irregularities. In addition, during the first half of the year, corporate debt issuers in the transportation sector, specifically issuers in the airline sector, deteriorated as a result of the continued decline in airline travel. During 2003, there was one security for which a significant (e.g. $15 or greater) other-than-temporary impairment was recorded, the circumstances of which are discussed in more detail below.

~~Table~~• The $25 of ~~Contents~~impairments on corporate fixed maturities within the food and beverage sector related to securities issued by the Italian dairy concern, Parmalat SpA. Parmalat filed for bankruptcy in December 2003 due to liquidity problems when it was discovered that 4 billion euros of liquid investments previously reported on its balance sheet were non-existent.

~~Ratings~~38

The following ~~table~~list ~~summarizes~~identifies ~~Hartford~~ABS ~~Life’s~~and ~~significant~~equity ~~U.S.~~impairment ~~member~~losses recognized in 2003 that by issuer ~~companies’~~did ~~financial~~not ~~ratings~~exceed ~~from~~$15 ~~the~~but ~~major~~did ~~independent~~when ~~rating~~combined ~~organizations~~with securities supported with similar collateral or asequity ofsecurity ~~February 28,~~types. ~~2002~~The circumstances giving rise to those losses are as follows:

A.M. Best

Fitch

Moody's

Standard & Poor's

Insurance Ratings

Hartford Life Insurance Company

A+

AA+

Aa3

Hartford Life and Accident

A+

AA+

Aa3

Hartford Life and Annuity

A+

AA+

Aa3

Other Ratings

Hartford Life, Inc. Senior debt

A+

Commercial paper

—

P-1

A-1

Hartford Life Capital I and II (1) Trust preferred securities

a–

BBB+

•	The $29 of other-than-temporary impairments recognized on ABS supported by aircraft lease receivables primarily consisted of investments in lower tranches of four transactions. These securities are supported by aircraft leases and enhanced equipment trust certificates (together, “aircraft lease receivables”) issued by multiple airlines that had sustained a steep decline in market value and adverse change in expected cash flows due to continued lower aircraft lease rates, airline bankruptcies and the prolonged decline in airline travel.

•	The $21 of CDO other-than-temporary impairments consisted of approximately eight securities, the majority of which were interests in the lower tranches of securities backed by high yield corporate debt. These impairments were primarily the result of continued high default rates in 2003 and lower expected recovery rates on the CDO’s underlying collateral.

•	The $21 of the other-than-temporary impairments recorded on equity securities primarily related to various diversified mutual funds. The market values of these funds had fallen since the date of purchase due to declines in primarily the equity markets and were not expected to recover within a reasonable period of time. Due to the severity of the price depression and length of time the holdings were in an unrealized loss position, these securities were deemed to be other-than-temporarily impaired.

~~(1)~~In ~~A.M.~~addition ~~Best~~to ~~ratings~~the impairments described above, fixed maturity and equity securities were ~~adjusted~~sold toat losses ~~reflect~~during ~~the~~2003, ~~integration~~with ofno ~~A.M.~~single ~~Best’s~~security ~~debt~~sold ~~and~~at ~~preferred~~a ~~stock~~loss ~~scales~~in excess of $8.

~~Ratings are an important factor in establishing the competitive position of an~~2002 ~~insurance company such as Hartford Life. 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.~~

AsDuring a2002, ~~result~~other-than-temporary ofimpairments on ABS were primarily driven by collateral deterioration associated with securities backed by aircraft lease receivables and high yield debt. Impairments recognized on corporate fixed maturities were concentrated in the ~~September 11~~technology ~~terrorist~~and communications ~~attack~~sector and ~~subsequent~~were ~~reviews~~primarily driven by weakening economic conditions and operating ~~major~~fundamentals ~~independent~~in ~~rating~~this ~~agencies~~sector. Other-than-temporary impairments were also recorded on equity securities, ~~all~~the ~~insurance~~majority ~~financial~~of ~~strength~~which ~~and~~related ~~debt~~to various diversified mutual funds. The market values ~~ratings~~of these funds had fallen since the date of purchase due to declines in the ~~Company~~bond and equity markets and were ~~reaffirmed~~not expected to recover within a reasonable period of time. ~~However,~~Due ~~negative~~to ~~outlooks~~the ~~were placed~~severity ~~upon~~of the price ~~debt~~depression ~~ratings~~and length of time the ~~Company~~holdings bywere ~~Moody’s~~in an unrealized loss position, these securities were deemed to be other-than-temporarily impaired. ~~All~~During 2002, there were 4 securities for which a significant (e.g. $15 or greater) other-than-temporary ~~ratings~~impairment was recorded which ~~were~~are ~~reaffirmed~~discussed ~~with~~in ~~stable~~more ~~outlooks~~detail below.

~~Liquidity~~• ~~Requirements~~ Of the technology and communications sector impairments, $81 related to securities issued by WorldCom and its subsidiary MCI, which filed for Chapter 11 bankruptcy protection in July 2002 as a result of liquidity problems driven by economic and operating weakness in this sector, and specific issues related to accounting fraud. • Of the $73 of impairments relating to ABS backed by aircraft lease receivables, $33 related to investments in the lower tranches of one transaction that experienced a steep decline in fair value as a result of a significant decrease in aircraft lease payments and lower appraised values on the underlying collateral. This transaction was primarily supported by lower quality aircraft and was significantly impacted by the decline in airline travel and numerous airline bankruptcies resulting from the catastrophic events of September 11, 2001. The remaining $40 of impairments on aircraft lease receivables were primarily related to two other transactions that were also adversely impacted by similar circumstances surrounding the airline industry in 2002. • In the technology and telecommunications sector, $22 of impairments were recognized on fixed maturity securities issued by a major U.S. telecom equipment manufacturer. This issuer had amassed high levels of debt to acquire assets and subsequently experienced liquidity difficulties due to the downturn in demand and economic conditions within the technology and telecommunications sector. As a result, this issuer initiated a debt restructuring in 2002.

The ~~liquidity~~following ~~requirements~~identifies ofABS ~~Hartford~~impairment ~~Life~~losses ~~have~~recognized ~~been~~in ~~and~~2002 ~~will~~that ~~continue to be met~~ by ~~funds~~issuer ~~from~~did ~~operations~~not asexceed ~~well~~$15 but asdid ~~the~~when ~~issuance~~combined ofwith ~~commercial paper, debt~~ securities ~~and~~supported ~~borrowings~~with ~~from~~similar ~~its credit facility~~collateral. The ~~principal~~circumstances ~~sources of funds are premiums~~giving ~~and~~rise ~~investment~~to ~~income~~those aslosses ~~well~~are as ~~maturities and sales of invested assets.~~follows: ~~Hartford Life, Inc. is a holding company which receives operating cash flow in the~~ ~~form of dividends from its subsidiaries, enabling it to service its debt, pay~~ ~~dividends on its common stock and support its other obligations.~~

~~Dividends~~• toThe ~~Hartford~~$35 ~~Life,~~of ~~Inc.~~CDO ~~from~~impairments ~~its~~consisted ~~direct~~of ~~subsidiary,~~approximately ~~Hartford~~eight ~~Life and Accident Insurance Company (HLA)~~securities, ~~as an insurance company domiciled in Connecticut, are subject to restriction as prescribed in~~ the ~~insurance~~majority ~~holding company laws~~ of ~~Connecticut. HLA adheres to these laws,~~ which ~~require~~were ~~notice to~~interests ~~and~~in ~~approval by~~ the ~~state~~lower ~~insurance~~tranches ~~commissioner for the declaration or payment~~ of ~~any~~transactions ~~dividend~~backed ~~that,~~by ~~together~~high ~~with~~yield ~~other~~corporate ~~dividends~~debt. orThese ~~distributions made~~impairments ~~within~~were ~~the~~primarily ~~preceding~~driven ~~twelve~~by ~~months,~~deterioration ~~exceeds~~in the ~~greater~~underlying ofcollateral ~~(i) 10%~~resulting ~~of the insurer’s policyholder surplus as of December 31 of the preceding year or (ii) net gain~~ from ~~operations~~corporate ~~for~~bankruptcies ~~the~~and ~~twelve~~above ~~month~~average ~~period~~defaults ~~ending~~ on ~~the thirty-first~~high ~~day~~yield ~~of December last preceding, in each case determined under statutory insurance accounting policies~~bonds. In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer’s earned surplus, it requires the prior approval of the Connecticut Insurance Commissioner. The total amount of statutory dividends which may be paid by the insurance subsidiaries of the Company without prior approval in 2002 is estimated to be $299.

~~The~~In ~~insurance~~addition ~~holding~~to ~~company~~the ~~laws~~impairments ofdescribed ~~the~~above, ~~other~~fixed ~~jurisdictions~~maturity inand ~~which Hartford~~equity ~~Life’s~~securities ~~insurance~~were ~~subsidiaries~~sold ~~are~~at losses ~~incorporated~~during or2002, ~~deemed~~with ~~commercially domiciled~~no ~~generally~~single ~~contain~~security ~~similar~~sold ~~limitations~~at ona ~~the~~loss ~~payment~~in excess of ~~dividends~~$13.

The ~~primary~~favorable ~~uses~~other-than-temporary ofimpairments ~~funds~~trend ~~are~~will todepend ~~pay~~on ~~claims,~~continued ~~policy~~strong ~~benefits~~economic fundamentals, ~~operating expenses~~political stability and ~~commissions~~collateral ~~and~~performance. toIn ~~purchase~~addition, ~~new~~as ~~investments.~~discussed ~~Hartford~~in ~~Life~~Note 2 ~~carries~~of aNotes ~~significant~~to ~~short-term~~Consolidated ~~investment~~Financial ~~position~~Statements, ~~and~~the ~~accordingly~~future ~~does~~adoption ~~not anticipate~~of ~~selling~~EITF ~~intermediate~~Issue No. 03-1 ~~and~~could result ~~long~~in the recognition of additional other-~~term~~than-temporary ~~fixed~~impairments. ~~maturity~~While ~~investments~~the toultimate ~~meet~~impact ~~any~~of ~~liquidity~~the ~~needs.~~adoption ~~For~~of athis ~~discussion~~standard ofis still unknown, depending on the ~~Company’s~~nature ~~investment objectives~~of ~~and~~the ~~strategies~~ultimate guidance, ~~see~~adoption of this standard could potentially result in the ~~Investments~~recognition ~~and~~of ~~Capital~~unrealized losses, ~~Markets~~including ~~Risk~~those declines in value that are attributable to interest rate movements, as ~~Management~~other-than-temporary ~~sections~~impairments, except those deemed to be minor in nature. As of December 31, 2004, the Company had $184 of total

3039

~~Table~~gross unrealized losses. The amount of ~~Contents~~impairments to be recognized, if any, will depend on the final standard, market conditions and management’s intent and ability to hold securities with unrealized losses at the time of the impairment evaluation. (For further discussion of risk factors associated with sectors with significant unrealized loss positions, see the sector risk factor commentary under the Total Available-for-Sale Securities with Unrealized Loss Greater than Six Months by Type schedule in the Investment Credit Risk section of the MD&A.)

~~Risk-Based~~INVESTMENT ~~Capital~~CREDIT RISK

The ~~National~~Company ~~Association~~has ofestablished ~~Insurance~~investment ~~Commissioners~~credit ~~(“NAIC”)~~policies ~~has~~that ~~regulations establishing~~focus ~~minimum~~on ~~capitalization~~the ~~requirements~~credit ~~based~~quality ~~on risk-based capital~~of ~~(“RBC”)~~obligors ~~formulas for both life~~ and ~~property~~counterparties, ~~and~~limit ~~casualty~~credit ~~companies. The requirements consist of formulas~~concentrations, ~~which~~encourage ~~identify~~diversification ~~companies~~and ~~that are~~require ~~undercapitalized~~frequent ~~and~~creditworthiness ~~require~~reviews. ~~specific~~Investment ~~regulatory~~activity, ~~actions.~~including ~~The~~setting ~~RBC~~of ~~formula~~policy ~~for~~and defining ~~life~~acceptable ~~companies~~risk ~~establishes~~levels, ~~capital~~is ~~requirements~~subject ~~relating~~ to ~~insurance, business,~~regular ~~asset~~review and ~~interest~~approval ~~rate~~by ~~risks.~~senior Asmanagement ofand ~~December 31,~~by ~~2001, Hartford Life~~the ~~had~~Finance ~~more~~Committee ~~than~~of ~~sufficient~~The ~~capital to meet the NAIC~~Hartford’s ~~RBC~~Board ~~requirements~~of Directors.

Cash Flow
	2001			2000			1999
Cash provided by operating activities	$	1,673		$	1,701		$	724
Cash (used for) provided by investing activities		(4,624	)		(564	)		1,907
Cash provided by (used for) financing activities		3,018			(1,118	)		(2,578	)
Cash – end of year		167			106			89

The Company invests primarily in securities which are rated investment grade and has established exposure limits, diversification standards and review procedures for all credit risks including borrower, issuer and counterparty. Creditworthiness of specific obligors is determined by an internal credit evaluation supplemented by consideration of external determinants of creditworthiness, typically ratings assigned by nationally recognized ratings agencies. Obligor, asset sector and industry concentrations are subject to established Company limits and monitored on a regular basis.

~~2001 Compared to 2000 -~~ The ~~decrease~~Company inis ~~cash~~not ~~provided~~exposed byto ~~operating~~any ~~activities~~credit ~~was~~concentration ~~primarily~~risk ~~the result~~ of ~~the~~a ~~timing~~single ofissuer ~~the~~greater ~~settlement~~than of10% ~~receivables, payables and other related~~of ~~liabilities. The increase in cash (used for) provided by investing activities and~~ the ~~decrease~~Company’s instockholders’ ~~cash~~equity ~~used~~other ~~for~~than ~~financing~~certain ~~activities primarily relates to the purchase of Fortis Financial Group~~U.S. ~~Operating~~government ~~cash~~and ~~flows~~government ~~in the periods presented have been more than adequate to meet liquidity requirements~~agencies.

~~2000~~Derivative ~~Compared to 1999 - The increase in cash~~Instruments ~~provided by operating activities was primarily the result of the~~ ~~timing of the settlement of receivables, payables and other related~~ ~~liabilities, as well as increased future policy benefits and net~~ income associated with growth in the business. The decrease in cash (used for) provided by investing activities and the decrease in cash used for financing activities primarily relates to the significant downsizing of the leveraged COLI block of business during 1999 as compared to 2000. Operating cash flow in the periods presented have been more than adequate to meet liquidity requirements.

~~REGULATORY~~The ~~MATTERS~~Company’s ~~AND~~derivative ~~CONTINGENCIES~~counterparty exposure policy establishes market-based credit limits, favors long-term financial stability and creditworthiness and typically requires credit enhancement/credit risk reducing agreements. Credit risk is measured as the amount owed to the Company based on current market conditions and potential payment obligations between the Company and its counterparties. Credit exposures are generally quantified daily, netted by counterparty for each legal entity of the Company, and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of derivatives exceeds the exposure policy thresholds which do not exceed $10. The Company also minimizes the credit risk in derivative instruments by entering into transactions with high quality counterparties rated Aa/A or better, which are monitored by the Company’s internal compliance unit and reviewed frequently by senior management. In addition, the compliance unit monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company also maintains a policy of requiring that all derivative contracts be governed by an International Swaps and Dealers Association Master Agreement which is structured by legal entity and by counterparty and permits right of offset. To date, the Company has not incurred any losses on derivative instruments due to counterparty nonperformance.

~~Legislative~~In addition to counterparty credit risk, the Company periodically enters into swap agreements in which the Company assumes credit exposure from a single entity, referenced index or asset pool. Total return swaps involve the periodic exchange of payments with other parties, at specified intervals, calculated using the agreed upon index and ~~Regulatory~~notional ~~Initiatives~~principal amounts. Generally, no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value.

~~The~~Credit ~~business~~default ofswaps ~~insurance~~involve isa ~~primarily~~transfer ~~regulated~~of bycredit ~~the~~risk ~~states~~from ~~and~~one isparty ~~also affected~~to byanother ain ~~range~~exchange ~~of legislative developments at the state and federal~~for ~~levels~~periodic payments. ~~The~~One ~~1999~~party ~~Gramm-Leach-Bliley~~to ~~Act (~~the ~~Financial~~contract ~~Services~~will ~~Modernization Act),~~make ~~which~~a ~~allows~~payment ~~affiliations~~based ~~among~~on ~~banks,~~an ~~insurance~~agreed ~~companies~~upon ~~and~~rate ~~securities~~and ~~firms,~~a ~~did~~notional ~~not~~amount. ~~precipitate~~The ~~any~~second ~~significant~~party, ~~changes~~who inassumes ~~ownership~~credit inexposure ~~2000.~~will ~~The provisions~~only ofmake ~~the~~a ~~Act~~payment ~~requiring~~when there ~~the~~is ~~development~~a ofcredit aevent, ~~formal~~and ~~privacy~~such ~~policy~~payment ~~by each~~will ~~financial~~be ~~institution~~equal ~~had~~to ~~created~~the anotional ~~number~~value of ~~administrative~~the ~~issues,~~swap ~~but~~contract less the ~~enforcement~~value ~~date~~of ~~was~~the ~~delayed~~referenced ~~until~~security ~~July 1,~~issuer ~~2001~~debt obligation. ~~Insurance~~A ~~companies~~credit ~~are~~event is generally ~~subject~~defined toas ~~privacy~~default ~~regulation~~on ~~issued~~contractually byobligated ~~the~~interest ~~federal~~or ~~regulators~~principal ~~and~~payments byor ~~state~~bankruptcy. The ~~regulators~~average ~~who~~S&P ~~adopted~~rating ~~and~~for ~~implemented~~these ~~privacy~~referenced ~~regulations~~security ~~during~~issuer ~~2001~~debt obligations is A-.

The ~~enactment~~Company ofalso ~~the~~uses ~~Financial~~credit ~~Services~~defaults ~~Modernization~~swaps ~~Act~~to ~~has~~reduce ~~focused~~its ~~renewed attention~~credit onexposure ~~state~~by ~~regulation~~entering ofinto agreements ~~insurance.~~in ~~Life~~which ~~insurers~~the ~~are~~Company ~~working~~pays ~~with state~~a ~~insurance~~derivative ~~regulators~~counterparty toa ~~improve~~periodic ~~and~~fee ~~centralize~~in ~~the~~exchange ~~process~~ for ~~agent~~ ~~licensing~~compensation ~~and~~from ~~form~~the ~~filing.~~counterparty ~~Both~~should ofa ~~these~~credit ~~areas~~event ofoccur ~~regulation~~on ~~are critical to~~ the ~~development~~part of ~~new~~the ~~business~~referenced security issuer. InThe ~~addition,~~Company ~~Congress~~entered ~~may~~into ~~consider legislation~~these ~~providing~~agreements ~~for~~as ~~optional~~an ~~federal~~efficient ~~regulation~~means ofto ~~insurance~~reduce incredit exposure to the ~~future.~~ ~~These~~specified ~~measures,~~issuers. ~~state~~The ~~and~~average ~~federal,~~S&P ~~may~~rating ~~lead~~for toall ~~improved~~of ~~regulation~~these ~~and~~referenced securities ~~reduced~~issuers ~~transaction~~is ~~costs~~A.

~~Federal~~As ~~measures~~of ~~which~~December 31, ~~have~~2004 ~~been previously considered by Congress~~ and ~~which~~2003, if ~~adopted, could affect~~ the ~~insurance~~notional ~~business~~value ~~include tax law changes pertaining to the tax treatment~~ of ~~insurance~~total ~~companies~~return and ~~life~~credit ~~insurance~~default swaps ~~products,~~totaled as$1.6 billion ~~well as changes in individual income tax rates~~ and ~~the estate tax~~$534, a ~~number of which could impact the relative desirability of various personal investment vehicles. Other proposals pertain to medical testing for insurability~~respectively, and the ~~use~~swap offair ~~gender~~value intotaled ~~determining~~$6 ~~insurance~~ and ~~pension rates~~$(16), ~~and benefits~~respectively. ~~It is too early to determine whether any of these 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.~~

~~Guaranty Fund~~40

~~Under~~Fixed ~~insurance guaranty fund laws in each state, the District of Columbia and~~Maturities ~~Puerto Rico, insurers licensed to do business can be assessed by state~~ ~~insurance guaranty associations for certain obligations of insolvent insurance~~ ~~companies to policyholders and claimants. Part of the assessments paid by the~~ Company’s insurance subsidiaries pursuant to these laws may be used as credits for a portion of the Company’s insurance subsidiaries’ premium taxes. There were no guaranty fund assessment payments (net of refunds) in 2001 and 2000. The Company paid guaranty fund assessments (net of refunds) of approximately $2 in 1999, of which $1 was estimated to be creditable against future premium taxes.

The following table identifies fixed maturity securities by type as of December 31, 2004 and 2003.


Fixed Maturities by Type
	2004												2003
										Percent												Percent
										of Total												of Total
	Amortized		Unrealized		Unrealized			Fair		Fair			Amortized		Unrealized		Unrealized			Fair		Fair
	Cost		Gains		Losses			Value		Value			Cost		Gains		Losses			Value		Value

ABS	$	6,346	$	76	$	(64	)	$	6,358		12.6	%	$	5,397	$	113	$	(101	)	$	5,409		11.0	%
CMBS		8,456		370		(20	)		8,806		17.5	%		7,757		432		(21	)		8,168		16.6	%
Collateralized mortgage obligations (“CMOs”)		1,084		11		(3	)		1,092		2.2	%		1,023		15		(3	)		1,035		2.1	%
Corporate
Basic industry		2,412		192		(6	)		2,598		5.1	%		2,509		176		(10	)		2,675		5.4	%
Capital goods		1,554		126		(6	)		1,674		3.3	%		1,555		113		(6	)		1,662		3.4	%
Consumer cyclical		2,426		163		(8	)		2,581		5.1	%		2,513		164		(6	)		2,671		5.4	%
Consumer non-cyclical		2,506		207		(6	)		2,707		5.4	%		2,735		198		(9	)		2,924		5.9	%
Energy		1,251		122		(1	)		1,372		2.7	%		1,485		118		(5	)		1,598		3.2	%
Financial services		6,202		482		(22	)		6,662		13.2	%		5,842		442		(28	)		6,256		12.7	%
Technology and communications		3,570		342		(11	)		3,901		7.7	%		3,771		382		(11	)		4,142		8.5	%
Transportation		622		44		(1	)		665		1.3	%		633		43		(3	)		673		1.4	%
Utilities		2,317		230		(7	)		2,540		5.0	%		2,118		172		(11	)		2,279		4.6	%
Other		785		49		(2	)		832		1.6	%		638		36		(1	)		673		1.4	%
Government/Government agencies
Foreign		723		67		(2	)		788		1.6	%		866		87		(1	)		952		1.9	%
United States		884		19		(5	)		898		1.8	%		1,100		30		(4	)		1,126		2.3	%
MBS – agency		1,771		20		(3	)		1,788		3.5	%		2,145		32		(2	)		2,175		4.4	%
Municipal
Taxable		700		30		(5	)		725		1.4	%		401		14		(7	)		408		0.9	%
Tax-exempt		2,080		191		(1	)		2,270		4.5	%		1,850		168		(1	)		2,017		4.1	%
Redeemable preferred stock		12		1		—			13		—			32		1		—			33		0.1	%
Short-term		2,261		—		—			2,261		4.5	%		2,319		2		—			2,321		4.7	%

Total fixed maturities	$	47,962	$	2,742	$	(173	)	$	50,531		100.0	%	$	46,689	$	2,738	$	(230	)	$	49,197		100.0	%

Total general account fixed maturities													$	35,569	$	2,051	$	(158	)	$	37,462		76.1	%
Total guaranteed separate account fixed maturities [1]													$	11,120	$	687	$	(72	)	$	11,735		23.9	%

~~NAIC~~[1] ~~Codification~~ Effective January 1, 2004, guaranteed separate account assets were included with general account assets as a result of adopting SOP 03-1.

The ~~NAIC~~Company’s ~~adopted~~fixed ~~the~~maturity ~~Codification~~portfolio ofgross ~~Statutory~~unrealized ~~Accounting~~gains ~~Principles~~and losses as of December 31, ~~(“Codification”)~~2004 in ~~March~~comparison ~~1998.~~to ~~The~~December 31, ~~effective~~2003 ~~date~~were ~~for~~primarily ~~the~~impacted ~~statutory~~by changes in interest rates, ~~accounting~~foreign ~~guidance~~currency ~~was~~exchange ~~January 1~~rates, ~~2001.~~credit ~~Each~~spreads ofand ~~Hartford~~security ~~Life~~sales. The Company’s ~~domiciliary~~fixed maturity ~~states~~gross ~~has~~unrealized ~~adopted~~gains ~~Codification~~increased slightly from December 31, ~~and~~2003 ~~the~~to ~~Company~~December 31, ~~has~~2004 ~~made~~primarily ~~the~~due to ~~necessary~~credit spread tightening and changes in foreign currency exchange rates offset by sales of securities in ~~its~~a ~~statutory~~gain ~~accounting~~position and ~~reporting~~the ~~required~~increase ~~for~~in ~~implementation~~interest rates (e.g. ~~The~~short-term through five-year ~~overall~~rates). ~~impact~~The ofgross ~~applying~~unrealized ~~the~~loss ~~new~~amount ~~guidance~~decreased ~~resulted~~from inDecember 31, a2003 ~~one-time~~to ~~statutory~~December 31, 2004 ~~cumulative~~primarily ~~transition~~due ~~benefit~~to ofcredit ~~$74~~spread intightening, ~~statutory~~improved ~~surplus~~pricing levels for ~~the~~certain ~~Company~~CDOs and ABS, security sales and, to a lesser extent, other-than-temporary impairments, offset by interest rate increases.

~~Dependence~~(For onfurther ~~Certain~~discussion ~~Third~~of ~~Party~~risk ~~Relationships~~factors associated with sectors with significant unrealized loss positions, see the sector risk factor commentary under the Total Available-for-Sale Securities with Unrealized Loss Greater than Six Months by Type schedule in this section of the MD&A.)

~~Hartford~~Investment ~~Life~~sector ~~distributes~~allocations ~~its~~as ~~annuity~~a ~~and~~percentage ~~life~~of ~~insurance~~total ~~products~~fixed ~~through~~maturities ~~a variety~~have ofremained ~~distribution~~materially consistent ~~channels,~~since ~~including broker-dealers~~December 31, ~~banks~~2003, ~~wholesalers, its~~except ~~own~~for ~~internal~~ABS ~~sales force~~ and ~~other third party marketing organizations~~CMBS. ~~The~~ ~~Company~~In ~~periodically~~2004, ~~negotiates~~HIM ~~provisions~~continued ~~and~~to ~~renewals of these~~overweight, ~~relationships~~in ~~and~~comparison ~~there can be no assurance that such terms will remain acceptable~~ to the ~~Company~~Lehman orAggregate ~~such~~Index, ~~service~~ABS ~~providers.~~supported Anby ~~interruption~~diversified inpools ~~the Company’s continuing relationship with certain~~ of ~~these~~consumer ~~third parties could~~loans ~~materially affect the Company’s ability to market its products~~(e.g. ~~During~~home ~~the first~~equity ~~quarter~~and ofauto ~~1999,~~loans ~~the~~and ~~Company~~credit ~~modified~~card ~~its~~receivables) ~~contract~~and ~~with~~CMBS ~~Putnam~~due ~~Mutual Funds Corp. (Putnam)~~ to ~~eliminate~~ the ~~exclusivity provision, which will allow~~securities ~~both~~attractive ~~parties~~spread tolevels ~~pursue new market opportunities. Putnam is contractually obligated to support~~ and ~~service~~underlying ~~the~~asset ~~related~~diversification ~~annuity in force block of business~~ and ~~to market, support and service new business~~quality. ~~However~~In general, ~~there can be no~~CMBS ~~assurance~~securities ~~that~~have ~~this~~lower ~~contract~~prepayment ~~modification~~risk ~~will~~than ~~not~~MBS ~~adversely~~due ~~impact the Company’s ability~~ to ~~distribute~~contractual ~~Putnam-related products~~penalties.

~~EFFECT~~As OFof ~~INFLATION~~December 31, 2004 and 2003, 21% and 20% respectively, of the fixed maturities were invested in private placement securities, including 13% and 13%, respectively, of Rule 144A offerings to qualified institutional buyers. Private placement securities are generally less liquid than public securities. Most of the private placement securities are rated by nationally recognized rating agencies.

~~The rate of inflation as measured by the change in the average consumer price~~41 ~~index has not had a material effect on the revenues or operating results of Hartford Life during the fiscal years presented.~~

~~ACCOUNTING~~At ~~STANDARDS~~the December 14th, 2004 Federal Open Market Committee policy meeting, the overnight funds rate was raised a quarter-point for the fifth time in 2004 to 2.25%. The Fed members indicated that the economy is growing at a moderate pace and the job market continues to show gradual improvement despite higher energy and commodity prices. The Company continues to expect the Fed to raise short-term interest rates at a measured pace for the foreseeable future unless inflationary pressures accelerate. The risk of inflation could increase if energy and commodity prices continue to rise, productivity growth slows or the U.S. dollar continues to devalue in comparison to foreign currencies. Increases in future interest rates may result in lower fixed maturity valuations.

~~For~~The afollowing ~~discussion~~table ofidentifies ~~accounting~~fixed ~~standards~~maturities by credit quality as of December 31, ~~see~~2004 ~~Note~~and 22003. The ratings referenced below are based on the ratings of ~~Notes~~a tonationally ~~Consolidated~~recognized rating ~~Financial~~organization ~~Statements~~or, if not rated, assigned based on the Company’s internal analysis of such securities.


Fixed Maturities by Credit Quality
	2004							2003
					Percent of							Percent of
	Amortized				Total Fair			Amortized				Total Fair
	Cost		Fair Value		Value			Cost		Fair Value		Value

United States Government/Government agencies	$	3,762	$	3,803		7.5	%	$	4,291	$	4,361		9.0	%
AAA		9,920		10,282		20.4	%		8,285		8,681		17.6	%
AA		5,024		5,275		10.4	%		4,243		4,486		9.1	%
A		12,543		13,531		26.8	%		13,015		13,901		28.3	%
BBB		12,598		13,447		26.6	%		12,277		13,061		26.5	%
BB & below		1,854		1,932		3.8	%		2,259		2,386		4.8	%
Short-term		2,261		2,261		4.5	%		2,319		2,321		4.7	%

Total fixed maturities	$	47,962	$	50,531		100.0	%	$	46,689	$	49,197		100.0	%

Total general account fixed maturities								$	35,569	$	37,462		76.1	%
Total guaranteed separate account fixed maturities [1]								$	11,120	$	11,735		23.9	%

~~Table~~[1] Effective January 1, 2004, guaranteed separate account assets were included with general account assets as a result of ~~Contents~~adopting SOP 03-1.

~~Item~~As of December ~~7A.~~31, ~~QUANTITATIVE~~2004 ~~AND~~and ~~QUALITATIVE~~2003, ~~DISCLOSURES~~95% ~~ABOUT~~or ~~MARKET~~greater ~~RISK~~of the fixed maturity portfolio was invested in short-term securities or securities rated investment grade (BBB and above).

The ~~information~~following ~~called~~table ~~for~~presents ~~by Item 7A is set forth in~~ the ~~Capital~~BIG ~~Markets~~fixed ~~Risk Management~~maturities ~~section~~by oftype ~~the~~as ~~Management’s Discussion and Analysis~~ of ~~Financial Condition~~December 31, ~~and~~2004 ~~Results of Operations~~ and ~~is incorporated herein by reference~~2003.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


BIG Fixed Maturities by Type
	2004							2003
					Percent of							Percent of
	Amortized				Total Fair			Amortized				Total Fair
	Cost		Fair Value		Value			Cost		Fair Value		Value

ABS	$	224	$	198		10.2	%	$	259	$	234		9.9	%
CMBS		92		101		5.2	%		117		120		5.0	%
Corporate
Basic industry		191		204		10.6	%		243		255		10.7	%
Capital goods		122		122		6.3	%		102		106		4.4	%
Consumer cyclical		124		132		6.8	%		273		295		12.3	%
Consumer non-cyclical		160		169		8.7	%		305		317		13.3	%
Energy		55		59		3.1	%		62		69		2.9	%
Financial services		22		23		1.2	%		20		21		0.9	%
Technology and communications		315		337		17.5	%		291		346		14.5	%
Transportation		8		8		0.4	%		38		40		1.7	%
Utilities		293		311		16.1	%		357		368		15.4	%
Foreign government		219		240		12.4	%		173		195		8.2	%
Other		29		28		1.5	%		19		20		0.8	%

Total fixed maturities	$	1,854	$	1,932		100.0	%	$	2,259	$	2,386		100.0	%

Total general account fixed maturities								$	1,513	$	1,604		67.2	%
Total guaranteed separate account fixed maturities [1]								$	746	$	782		32.8	%

~~See~~[1] ~~Index~~Effective toJanuary ~~Consolidated~~1, ~~Financial~~2004, ~~Statements~~guaranteed ~~and~~separate ~~Schedules~~account ~~elsewhere~~assets ~~herein~~were included with general account assets as a result of adopting SOP 03-1.

~~Item~~As of December 931, 2004 and 2003, the Company held no issuer of a BIG security with a fair value in excess of 5% and 4%, respectively, of the total fair value for BIG securities. ~~CHANGES~~Total INBIG securities ~~AND~~decreased ~~DISAGREEMENTS~~since ~~WITH~~December 31, ~~ACCOUNTANTS~~2003 ONas ~~ACCOUNTING~~a ~~AND~~result of decisions to reduce exposure to lower ~~FINANCIAL~~credit ~~DISCLOSURE~~quality assets resulting from the securities’ significant credit spread tightening and re-invest in higher quality securities.

~~None.~~42

~~PART~~The IVfollowing table presents the Company’s unrealized loss aging for total fixed maturity and equity securities classified as available-for-sale as of December 31, 2004 and 2003, by length of time the security was in an unrealized loss position.

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


Unrealized Loss Aging of Total Available-for-Sale Securities
	2004							2003
	Amortized		Fair		Unrealized			Amortized		Fair		Unrealized
	Cost		Value		Loss			Cost		Value		Loss

Three months or less	$	5,560	$	5,528	$	(32	)	$	2,903	$	2,878	$	(25	)
Greater than three months to six months		474		470		(4	)		1,943		1,882		(61	)
Greater than six months to nine months		2,277		2,237		(40	)		265		250		(15	)
Greater than nine months to twelve months		399		383		(16	)		138		130		(8	)
Greater than twelve months		1,415		1,323		(92	)		1,661		1,528		(133	)

Total	$	10,125	$	9,941	$	(184	)	$	6,910	$	6,668	$	(242	)

Total general account								$	4,887	$	4,717	$	(170	)
Total guaranteed separate accounts [1]								$	2,023	$	1,951	$	(72	)

~~(a) Documents~~[1] ~~filed~~Effective January 1, 2004, guaranteed separate account assets were included with general account assets as a ~~part~~result of ~~this~~adopting ~~report:~~ SOP 03-1.

~~1. Consolidated~~The ~~Financial~~decrease ~~Statements.~~in ~~See~~the ~~Index~~unrealized toloss ~~Consolidated~~amount ~~Financial~~since December 31, 2003 is primarily the result of ~~Statements~~credit spread tightening, improved pricing levels for certain CDOs and ~~Schedules~~ABS, ~~elsewhere~~asset ~~herein~~sales, and, to a lesser extent, other-than-temporary impairments, offset in part by an increase in the short-term through five-year interest rates. (For further discussion, see the economic commentary under the Fixed Maturities by Type table in this section of the MD&A.)

As a percentage of amortized cost, the average security or fixed maturity unrealized loss at December 31, 2004 and 2003 was less than 2% and 4%, respectively. ~~Consolidated~~ ~~Financial~~As ~~Statement~~of ~~Schedules~~December 31, 2004 and 2003, fixed maturities represented $173, or 94%, and $230, or 95%, respectively, of the Company’s total unrealized loss associated with securities classified as available-for-sale. ~~See~~There ~~Index~~were no fixed maturities as of December 31, 2004 and 2003 with a fair value less than 80% of the security’s amortized cost basis for six continuous months other than certain ABS and CMBS subject to ~~Consolidated~~EITF ~~Financial~~Issue ~~Statement~~No. 99-20. Other-than-temporary impairments for certain ABS and ~~Schedules~~CMBS ~~elsewhere~~are ~~herein~~recognized if the fair value of the security, as determined by external pricing sources, is less than its carrying amount and there has been a decrease in the present value of the expected cash flows since the last reporting period. There were no ABS or CMBS included in the table above, as of December 31, 2004 and 2003, for which management’s best estimate of future cash flows adversely changed during the reporting period. (For further discussion of the other-than-temporary impairments criteria, see “Valuation of Investments and Derivative Instruments and Evaluation of Other-Than-Temporary Impairments” included in the Critical Accounting Estimates section of the MD&A and Note 2 of Notes to Consolidated Financial Statements.)

~~3. Exhibits.~~The ~~See~~Company ~~Exhibit~~held no securities of a single issuer that were at an unrealized loss position in excess of 8% and 7% of the total unrealized loss amount as of December ~~Index~~31, ~~elsewhere~~2004 ~~herein~~and 2003, respectively.

~~(b) Reports on Form 8-K – None.~~43

~~(c) Exhibits~~The –total ~~See~~securities ~~Item~~classified as available-for-sale in an unrealized loss position for longer than six months by type as of December ~~14(a)(3)~~31, 2004 and 2003 are presented in the following table.

(d) Schedules – See Item 14(a)(2).


Total Available-for-Sale Securities with Unrealized Loss Greater Than Six Months by Type
	2004										2003
								Percent of										Percent of
								Total										Total
	Amortized		Fair		Unrealized			Unrealized			Amortized		Fair		Unrealized			Unrealized
	Cost		Value		Loss			Loss			Cost		Value		Loss			Loss

ABS
Aircraft lease receivables	$	194	$	144	$	(50	)		33.8	%	$	163	$	108	$	(55	)		35.3	%
CDOs		63		60		(3	)		2.0	%		140		120		(20	)		12.8	%
Credit card receivables		65		64		(1	)		0.7	%		123		111		(12	)		7.7	%
Other ABS		397		392		(5	)		3.3	%		448		441		(7	)		4.5	%
CMBS		614		603		(11	)		7.4	%		168		161		(7	)		4.5	%
Corporate
Financial services		850		824		(26	)		17.5	%		678		646		(32	)		20.5	%
Technology and communications		262		250		(12	)		8.1	%		39		37		(2	)		1.3	%
Transportation		17		17		—			—			25		22		(3	)		1.9	%
Utilities		155		149		(6	)		4.1	%		85		79		(6	)		3.8	%
Other		829		808		(21	)		14.3	%		181		169		(12	)		7.7	%
Other securities		645		632		(13	)		8.8	%		14		14		—			—

Total	$	4,091	$	3,943	$	(148	)		100.0	%	$	2,064	$	1,908	$	(156	)		100.0	%

Total general accounts											$	1,425	$	1,315	$	(110	)		70.5	%
Total guaranteed separate accounts [1]											$	639	$	593	$	(46	)		29.5	%

33 [1] Effective January 1, 2004, guaranteed separate account assets were included with general account assets as a result of adopting SOP 03-1.

~~Table~~The slight decrease in the unrealized loss greater than six months amount during 2004 was primarily driven by improved pricing levels for certain CDOs and ABS, credit spread tightening, asset sales and, to a lesser extent, other-than-temporary impairments. This increase was partially offset by the aging of ~~Contents~~securities depressed due to interest rate changes from the date of purchase.

~~INDEX~~With TOthe ~~CONSOLIDATED~~exception ~~FINANCIAL~~of ~~STATEMENTS~~ABS, ~~AND~~the ~~SCHEDULES~~majority of the securities in an unrealized loss position for six months or more as of December 31, 2004 were depressed primarily due to interest rate changes from the date of purchase. The sectors with the most significant concentration of unrealized losses were ABS supported by aircraft lease receivables and corporate fixed maturities primarily within the financial services sector. The Company’s current view of risk factors relative to these fixed maturity types is as follows:

	Page(s)
Report of Management		F-1
Report of Independent Public Accountants		F-2
Consolidated Statements of Income for the years ended December 31, 2001, 2000 and 1999		F-3
Consolidated Balance Sheets as of December 31, 2001 and 2000		F-4
Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2001, 2000 and 1999		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999		F-6
Notes to Consolidated Financial Statements		F-7–27
Schedule I — Summary of Investments — Other Than Investments in Affiliates		S-1
Schedule II — Condensed Financial Information of Hartford Life, Inc.		S-2–3
Schedule III- Supplementary Insurance Information		S-4
Schedule IV — Reinsurance		S-5
Schedule V — Valuation and Qualifying Accounts		S-6

Aircraft lease receivables — The decrease in the unrealized loss position during 2004 was primarily the result of improving pricing levels for certain issuers in this sector, as well as by other-than-temporary impairments taken during the year. In prior years, these securities had suffered a decrease in value as a result of a prolonged decline in airline travel, the uncertainty of a potential industry recovery and lack of market liquidity in this sector. Although uncertainty surrounding the stability of domestic airlines continues to weigh heavily on this sector, worldwide travel and aircraft demand appears to be improving. While the Company has seen modest price increases and greater liquidity in this sector during 2004, any additional price recovery will depend on continued improvement in economic fundamentals, political stability and airline operating performance.

~~REPORT~~Financial OFservices ~~MANAGEMENT~~— As of December 31, 2004, the Company held approximately 80 different securities in the financial services sector that had been in an unrealized loss position for greater than six months. Substantially all of these securities are investment grade securities priced at or greater than 90% of amortized cost as of December 31, 2004. These positions are a mixture of fixed and variable rate securities with extended maturity dates, which have been adversely impacted by changes in interest rates after the purchase date. Additional changes in fair value of these securities are primarily dependent on future changes in interest rates.

~~The~~As ~~management~~part of ~~Hartford~~the ~~Life,~~Company’s ~~Inc.~~ongoing ~~(Hartford~~security ~~Life)~~monitoring isprocess ~~responsible~~by ~~for~~a ~~the preparation~~committee of investment and accounting ~~integrity~~professionals, ofthe ~~information~~Company ~~contained~~has inreviewed ~~the~~its ~~accompanying~~investment portfolio and concluded that ~~Consolidated~~there ~~Financial~~were ~~Statements.~~no ~~The~~additional ~~Consolidated~~other-than-temporary ~~Financial~~impairments ~~Statements~~as ~~are~~of December 31, 2004 and 2003. Due to ~~prepared~~the inissuers’ ~~accordance~~continued ~~with~~satisfaction ~~accounting~~of ~~principles~~the ~~generally~~securities’ ~~accepted~~obligations in ~~the~~accordance with their ~~United~~contractual ~~States~~terms and, ~~where~~the ~~necessary,~~expectation ~~include~~that ~~amounts~~they ~~that~~will ~~are~~continue ~~based~~to on do so, management’s ~~informed~~intent ~~judgments~~ and ability ~~estimates.~~to ~~Management~~hold ~~believes~~ these ~~consolidated~~ ~~statements~~securities, ~~present~~as ~~fairly,~~well ~~Hartford~~as ~~Life’s~~the evaluation of the fundamentals of the issuers’ financial ~~position~~condition and ~~results~~ other objective evidence, the Company believes that the prices of ~~operations~~the securities in the sectors identified above were temporarily depressed.

~~Management~~The ~~has~~evaluation ~~made~~for ~~available~~other-than-temporary ~~Hartford~~impairments ~~Life’s~~is ~~financial~~a ~~records~~quantitative and ~~related~~qualitative process, ~~data~~which is subject to ~~Arthur~~risks ~~Andersen~~and ~~LLP,~~uncertainties ~~independent~~in ~~public~~the ~~accountants~~determination of whether declines in the fair value of investments are other-than-temporary. The risks and uncertainties include changes in general economic conditions, the issuer’s financial condition or near term recovery prospects and the effects of changes in ~~order~~interest rates. In addition, for ~~them~~securitized financial assets with tocontractual ~~perform~~cash anflows ~~audit~~(e.g. ABS and CMBS), projections of ~~Hartford~~expected ~~Life’s~~future ~~Consolidated~~cash ~~Financial~~flows ~~Statements.~~may change ~~Their~~based ~~report~~upon ~~appears~~new oninformation ~~page~~regarding ~~F-2.~~the performance of the underlying

~~An essential element in meeting management’s financial responsibilities is~~44 Hartford Life’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’s internal auditors independently assess the effectiveness of the controls and make recommendations for improvement. Also, Arthur Andersen LLP took into consideration Hartford Life’s system of internal controls in determining the nature, timing and extent of their audit tests.

~~Another~~collateral. ~~important~~As ~~element~~of isDecember 31, 2004 and 2003, management’s ~~recognition~~expectation of ~~its~~the ~~responsibility~~discounted ~~for~~future ~~fostering~~cash aflows ~~strong,~~on ~~ethical~~these ~~climate,~~securities ~~thereby~~was ~~ensuring~~in ~~that~~excess ~~Hartford~~of ~~Life~~the associated securities’~~s affairs~~ ~~are~~amortized ~~transacted~~cost. ~~according~~(For toa further ~~the~~discussion, ~~highest~~see ~~standards~~“Valuation of ~~personal~~Investments and ~~professional~~ ~~conduct.~~Derivative ~~Hartford~~Instruments ~~Life~~and ~~has~~Evaluation ~~a long~~of Other-~~standing~~Than-Temporary ~~reputation~~Impairments” ~~of integrity~~included in ~~business~~the ~~conduct~~Critical ~~and~~Accounting ~~utilizes~~Estimates ~~communication~~section ~~and~~of ~~education~~the toMD&A ~~create~~ and ~~fortify~~Note a2 ~~strong~~of ~~compliance~~Notes ~~culture~~to Consolidated Financial Statements.)

The ~~Audit~~following ~~Committee~~table ofpresents the ~~Board of Directors of The Hartford Financial Services Group, Inc. (the “Committee”), the~~ Company’s ~~ultimate~~unrealized ~~parent,~~loss ~~composed of~~aging ~~independent~~for ~~directors,~~BIG ~~meets periodically with the external~~ and ~~internal auditors~~equity tosecurities ~~evaluate the effectiveness~~ as of ~~work~~December 31, ~~performed~~2004 ~~by them in discharging their respective responsibilities~~ and ~~to ensure their independence and free access to the Committee~~2003.

F-1


Unrealized Loss Aging of Available-for-Sale BIG and Equity Securities
	2004							2003
	Amortized		Fair		Unrealized			Amortized		Fair		Unrealized
	Cost		Value		Loss			Cost		Value		Loss

Three months or less	$	206	$	203	$	(3	)	$	57	$	55	$	(2	)
Greater than three months to six months		14		13		(1	)		91		87		(4	)
Greater than six months to nine months		128		120		(8	)		60		54		(6	)
Greater than nine months to twelve months		79		73		(6	)		18		17		(1	)
Greater than twelve months		225		184		(41	)		361		302		(59	)

Total	$	652	$	593	$	(59	)	$	587	$	515	$	(72	)

Total general accounts								$	467	$	411	$	(56	)
Total guaranteed separate accounts [1]								$	120	$	104	$	(16	)

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