##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-32293
 HARTFORD LIFE INSURANCE COMPANY
  Connecticut
    
    06-0974148(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 200 Hopmeadow Street, Simsbury, Connecticut 06089
 (860) 547-5000
    þ o
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



CONTENTS
 ITEM
    
    DESCRIPTION
    
    PAGEPART I
    
    1.
    
    Business *
    
    
    31A.
    
    Risk Factors
    
    
    111B.
    
    Unresolved Staff Comments
    
    
    162.
    
    Properties *
    
    
    163.
    
    Legal Proceedings
    
    
    164.
    
    **PART II
    
    5.
    
    Market for Hartford Life Insurance Companys Common Equity,
Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    176.
    
    **7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations *
    
    
    187A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    698.
    
    Financial Statements and Supplementary Data
    
    
    699.
    
    Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
    
    
    699A.
    
    Controls and Procedures
    
    
    699B.
    
    Other Information
    
    
    70PART III
    
    
    10.
    
    **11.
    
    **12.
    
    **13.
    
    **14.
    
    Principal Accounting Fees and Services
    
    
    70PART IV
    
    15.
    
    Exhibits, Financial Statement Schedules
    
    
    70Signatures
    
    II-1Exhibits Index
    
    II-2EX-12.01: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGESEX-23.01: CONSENT OF DELOITTE & TOUCHE LLPEX-31.01: CERTIFICATIONEX-31.02: CERTIFICATIONEX-31.03: CERTIFICATIONEX-32.01: CERTIFICATIONEX-32.02: CERTIFICATION
  
 *
    
    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 2




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PART I
 
 Item 1. BUSINESS  (Dollar Amounts In Millions, Unless Otherwise Stated)
 General
   Reporting Segments
       Customer Service, Technology and Economies of Scale 
  3




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Risk Management
  Retail
    Principal Products
 Individual Variable Annuities
  4




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Fixed MVA Annuities
 Marketing and Distribution
   5




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Competition
   Retirement Plans
   Principal Products
 4 03(b) /457
 4 01(k)
 Marketing and Distribution
   6




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Competition
     Institutional
   Principal Products
 IIP
 Structured Settlements
 Stable Value Products
 Institutional Annuities
 Longevity assurance 
 Single Premium Immediate Annuities
 7




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Variable PPLI Products
 Marketing and Distribution
      Competition
     Individual Life
  8




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Principal Products
  Variable Universal Life
 Universal Life and Interest Sensitive Whole Life
 Marketing and Distribution
  Competition
     9




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Reserves
  Ceded Reinsurance
   Investment Operations
  Regulation and Premium Rates
  10




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Intellectual Property
   Employees 
  
 Item 1A. RISK FACTORS
  The occurrence of one or more terrorist attacks in the geographic areas we serve or the threat of
terrorism in general may have a material adverse effect on our business, consolidated operating
results, financial condition or liquidity.
  We may incur losses due to our reinsurers unwillingness or inability to meet their obligations
under reinsurance contracts and the availability, pricing and adequacy of reinsurance may not be
sufficient to protect us against losses.
  11




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We are exposed to significant financial and capital markets risk, including changes in interest
rates, credit spreads, equity prices, and foreign exchange rates which may adversely affect our
results of operations, financial condition or liquidity.
   We may be unable to effectively mitigate the impact of equity market volatility on our financial
position and results of operations arising from obligations under annuity product guarantees, which
may affect our consolidated results of operations, financial condition or liquidity.
  12




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We are particularly vulnerable to losses from the incidence and severity of catastrophes, both
natural and man-made, the occurrence of which may have a material adverse effect on our financial
condition, consolidated results of operations or liquidity.
  Competitive activity may adversely affect our market share and profitability, which could have an
adverse effect on our business, results of operations or financial condition.
  We may experience unfavorable judicial or legislative developments that could adversely affect our
results of operations, financial condition or liquidity.
  Potential changes in domestic and foreign regulation may increase our business costs and required
capital levels, which could adversely affect our business, consolidated operating results,
financial condition or liquidity.
   
    
    licensing companies and agents to transact business;
 
    
    calculating the value of assets to determine compliance with statutory requirements;
 
    
    mandating certain insurance benefits;
 
    
    regulating certain premium rates;
 13




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
    
    reviewing and approving policy forms;
 
    
    regulating unfair trade and claims practices, including through the imposition of
restrictions on marketing and sales practices, distribution arrangements and payment of
inducements;
 
    
    establishing statutory capital and reserve requirements and solvency standards;
 
    
    fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed
crediting rates on life insurance policies and annuity contracts;
 
    
    approving changes in control of insurance companies;
 
    
    restricting the payment of dividends and other transactions between affiliates;
 
    
    establishing assessments and surcharges for guaranty funds, second-injury funds and other
mandatory pooling arrangements;
 
    
    requiring insurers to dividend to policy holders any excess profits; and
 
    
    regulating the types, amounts and valuation of investments.
  Our business, results of operations and financial condition may be adversely affected by general
domestic and international economic and business conditions that are less favorable than
anticipated.
  We may experience difficulty in marketing and distributing products through our current and future
distribution channels.
  14




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We may experience a downgrade in our financial strength or credit ratings, which may make our
products less attractive, increase our cost of capital, and inhibit our ability to refinance our
debt, which would have an adverse effect on our business, consolidated operating results, financial
condition and liquidity.
  If we are unable to maintain the availability of our systems and safeguard the security of our data
due to the occurrence of disasters or other unanticipated events, our ability to conduct business
may be compromised, which may have a material adverse effect on our business, consolidated results
of operations, financial condition or cash flows.
  If we experience difficulties arising from outsourcing relationships, our ability to conduct
business may be compromised.
  Potential changes in federal or state tax laws, including changes impacting the availability of the
separate account dividend received deduction, could adversely affect our business, consolidated
operating results or financial condition
  15




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Losses due to defaults by others, including issuers of investment securities or reinsurance and
derivative instrument counterparties, could adversely affect the value of our investments, results
of operations, financial condition or cash flows.
  We may not be able to protect our intellectual property and may be subject to infringement claims.
   
 Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
  
 Item 3. LEGAL PROCEEDINGS
   16




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Broker Compensation Litigation
 
 PART II
 
 Item 5.
    
    MARKET FOR HARTFORD LIFE INSURANCE COMPANYS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
   17




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Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (Dollar amounts in millions, unless otherwise stated)
   INDEX
 Overview
    
    
    19Critical Accounting Estimates
    
    
    19Consolidated Results of Operations
    
    
    26Retail
    
    
    33Retirement Plans
    
    
    35Institutional
    
    
    37Individual Life
    
    
    39Other
    
    
    41Investments
    
    
    42Investment Credit Risk
    
    
    48Capital Markets Risk Management
    
    
    58Capital Resources and Liquidity
    
    
    66Impact of New Accounting Standards
    
    
    69
 18




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OVERVIEW
 .
       
 CRITICAL ACCOUNTING ESTIMATES
   19




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Estimated Gross Profits Used in the Valuation and Amortization of Assets and Liabilities Associated
with Variable Annuity and Other Universal Life-Type Contracts
 Accounting Policy and Assumptions
       20




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Unlock and Sensitivity Analysis
  Segment
    
    
    
    
    
    Unearned Revenue
    
    
    Death Benefit
    
    
    Sales InducementAfter-tax (charge) benefit
    
    DAC and PVFP
    
    
    Reserves
    
    
    Reserves [1]
    
    
    Assets
    
    
    Total [2]Retail
    
    $
    181
    
    
    $
    (5
    )
    
    $
    (4
    )
    
    $
    9
    
    
    $
    181Retirement Plans
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Institutional
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Individual Life
    
    
    24
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    16Total
    
    $
    197
    
    
    $
    (13
    )
    
    $
    (4
    )
    
    $
    9
    
    
    $
    189
 
 [1]
    
    As a result of the unlock, death benefit reserves, in Retail, decreased $4,
pre-tax, offset by a decrease of $10,pre-tax, in reinsurance recoverables.[2]
    
    The following were the most significant contributors to the unlock amounts recorded
during the third quarter of 2007: 
    
    Actual separate account returns were above our aggregated estimated return.
    
    During the third quarter of 2007, the Company estimated gross profits using the mean
of EGPs derived from a set of stochastic scenarios that have been calibrated to our
estimated separate account return as compared to prior year where we used a single
deterministic estimation. The impact of this change in estimation was a benefit of
$20, after-tax, for variable annuities.
    
    As part of its continual enhancement to its assumption setting processes and in
connection with its assumption study, the Company included dynamic lapse behavior
assumptions. Dynamic lapses reflect that lapse behavior will be different depending
upon market movements. The impact of this assumption change along with other base
lapse rate changes was an approximate benefit of $40, after-tax, for variable
annuities.   Segment
    
    
    
    
    
    Unearned Revenue
    
    
    Death Benefit
    
    
    Sales InducementAfter-tax (charge) benefit
    
    DAC and PVFP
    
    
    Reserves
    
    
    Reserves [1]
    
    
    Assets
    
    
    TotalRetail
    
    $
    (116
    )
    
    $
    5
    
    
    $
    (10
    )
    
    $
    3
    
    
    $
    (118
    )Retirement Plans
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Individual Life
    
    
    (46
    )
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    (16
    )Total
    
    $
    (142
    )
    
    $
    35
    
    
    $
    (10
    )
    
    $
    3
    
    
    $
    (114
    )
 
 [1]
    
    As a result of the unlock, death benefit reserves, in Retail, increased
$294,pre-tax, offset by an increase of $279, pre-tax, in reinsurance recoverables. 21




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Effect onEGP-related(Increasing separate account returns and decreasing lapse rates generally result in
    
    balances ifbenefits. Decreasing separate account returns and increasing lapse rates generally
    
    unlockedresult in charges.)
    
    (after-tax) [1]If actual separate account returns were 1% above or below our aggregated estimated
return
    
    $15   $30 [3]If actual lapse rates were 1% above or below our estimated aggregate lapse rate
    
    $10  $25 [2]If we changed our future separate account return rate by 1% from our aggregated
estimated future return
    
    $80  $100If we changed our future lapse rate by 1% from our estimated aggregate future lapse rate
    
    $70  $90 [2]
 
 [1]
    
    These sensitivities are reflective of the results of our 2007 assumption studies. The Companys EGP models assume that
separate account returns are earned linearly and that lapses occur linearly (except for certain dynamic lapse features)
throughout the year. Similarly, the sensitivities assume that differential separate account and lapse rates are linear and
parallel and persist for one year from the date of our third quarter unlock, which reflects all in-force and account value
data as of July 31, 2007, including the corresponding market levels, allocation of funds, policyholder behavior and
actuarial assumptions at that same date. These sensitivities are not perfectly linear nor perfectly symmetrical for
increases and decreases and are most accurate for small changes in assumptions. As such, extrapolating results over a wide
range will decrease the accuracy of the sensitivities predictive ability. Sensitivity results are, in part, based on
the current in-the-moneyness of various guarantees offered with the products. Future market conditions could
significantly change the sensitivity results.[2]
    
    Sensitivity around lapses assumes lapses increase or decrease consistently across all cohort years and products.[3]
    
    The overall actual return generated by the variable annuity separate accounts 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 and as a result of the large proportion
of separate account assets invested in equity markets, the Companys overall separate account
fund performance has been reasonably correlated to the overall performance of the S&P 500,
although no assurance can be provided that this correlation will continue in the future.  Living Benefits Required to be Fair Valued
   22




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Valuation of Investments and Derivative Instruments
  Valuation of Fixed Maturities
   23




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2007
    
    2006Percentage of Total
    
    
    
    
    
    Percentage of TotalFair Value
    
    Fair Value
    
    Fair Value
    
    Fair ValuePriced via third party pricing services
    
    $
    35,892
    
    
    
    78.7
    %
    
    $
    37,190
    
    
    
    83.3
    %Priced via independent broker quotations
    
    
    5,931
    
    
    
    13.0
    %
    
    
    3,567
    
    
    
    8.0
    %Priced via matrices
    
    
    3,526
    
    
    
    7.7
    %
    
    
    3,810
    
    
    
    8.5
    %Priced via other methods
    
    
    262
    
    
    
    0.6
    %
    
    
    79
    
    
    
    0.2
    %Total
    
    $
    45,611
    
    
    
    100.0
    %
    
    $
    44,646
    
    
    
    100.0
    %
  Valuation of Derivative Instruments
  Evaluation of Other-Than-Temporary Impairments on Available-for-Sale Securities
   24




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Contingencies Relating to Corporate Litigation and Regulatory Matters
   25




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CONSOLIDATED RESULTS OF OPERATIONS
 Operating Summary
 2007
    
    
    2006
    
    
    2005Fee income and other
    
    $
    3,509
    
    
    $
    3,113
    
    
    $
    2,811Earned premiums
    
    
    983
    
    
    
    547
    
    
    
    449Net investment income
    
    
    3,048
    
    
    
    2,728
    
    
    
    2,569Net realized capital gains (losses)
    
    
    (934
    )
    
    
    (299
    )
    
    
    75Total revenues
    
    
    6,606
    
    
    
    6,089
    
    
    
    5,904Benefits, losses and loss adjustment expenses
    
    
    3,980
    
    
    
    3,205
    
    
    
    3,008Insurance operating costs and other expenses
    
    
    1,203
    
    
    
    875
    
    
    
    835Amortization of deferred policy acquisition costs
    
    
    515
    
    
    
    1,175
    
    
    
    945Total benefits, claims and expenses
    
    
    5,698
    
    
    
    5,255
    
    
    
    4,788Income before income taxes
    
    
    908
    
    
    
    834
    
    
    
    1,116Income Tax expense
    
    
    168
    
    
    
    103
    
    
    
    207Net income
    
    $
    740
    
    
    $
    731
    
    
    $
    909
 Year ended December 31, 2007 compared to the year ended December 31, 2006
  
    
    The DAC unlock benefit recorded in the third quarter of 2007.
 
    
    Increased income on asset growth in the variable annuity, retirement and institutional
businesses.
 
    
    Increased net investment income primarily due to strong partnership income.
  
    
    Increased non-deferrable individual annuity asset based commissions.
 
    
    Unfavorable mortality in Individual Life.
 
    
    Benefits, losses and loss adjustment expenses increased for the year ended December 31,
2007, as a result of the Company recording a reserve of $55, after tax, during the second
quarter of 2007 for regulatory matters.
 
    
    During the first quarter of 2006, the Company achieved favorable settlements in several
cases brought against the Company by policyholders regarding their purchase of broad-based
leveraged corporate owned life insurance (leveraged COLI) policies in the early to mid-1990s
and therefore, released a reserve for these matters of $34, after-tax.
 
    
    Realized capital losses increased for the year ended December 31, 2007 as compared to the
comparable prior year periods primarily due to net losses on GMWB derivatives and impairments.
 Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    Fee income and other increases were due to growth in assets under management resulting from
market growth and strong sales along with higher premiums. The increase in net investment
income was primarily due to income earned on higher average invested assets base, an increase
in interest rates and a change in asset mix (e.g. greater investment in mortgage loans and
limited partnerships).
 
    
    During 2006, the Company achieved favorable settlements in several cases brought against
the Company by policyholders regarding their purchase of broad-based leveraged corporate owned
life insurance (leveraged COLI) policies in the early to mid-1990s. The Company ceased
offering this product in 1996. Based on the favorable outcome of these cases, together with
the Companys current assessment of the few remaining leveraged COLI cases, the Company
reduced its estimate of the ultimate cost of these cases during 2006. This reserve reduction,
recorded in insurance operating costs and other expenses, resulted in an after-tax benefit of
$34.
 
    
    Partially offsetting the increase in net income was an unlock expense in the fourth quarter
of 2006. See Unlock and Sensitivity Analysis within the Critical Accounting Estimates of the
MD&A for Further information on the unlock.
 26




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Net Realized Capital Gains and Losses
  Income Taxes
     Outlook 
     27




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Performance Measures
 Fee Income
  As of and for theyears ended December 31,Product/Key Indicator Information
    
    2007
    
    2006
    
    2005Retail Individual Variable AnnuitiesAccount value, beginning of period
    
    $
    114,365
    
    
    $
    105,314
    
    
    $
    99,617Net flows
    
    
    (2,733
    )
    
    
    (3,150
    )
    
    
    (881
    )Change in market value and other
    
    
    7,439
    
    
    
    12,201
    
    
    
    6,578Account value, end of period
    
    $
    119,071
    
    
    $
    114,365
    
    
    $
    105,314Retirement PlansAccount value, beginning of period
    
    $
    23,575
    
    
    $
    19,317
    
    
    $
    16,493Net flows
    
    
    1,669
    
    
    
    2,545
    
    
    
    1,618Change in market value and other
    
    
    1,850
    
    
    
    1,713
    
    
    
    1,206Account value, end of period
    
    $
    27,094
    
    
    $
    23,575
    
    
    $
    19,317Individual LifeVariable universal life account value, end of period
    
    $
    7,284
    
    
    $
    6,637
    
    
    $
    5,902Total life insurance in-force
    
    
    175,547
    
    
    
    159,984
    
    
    
    146,165S&P 500 IndexYear end closing value
    
    
    1,468
    
    
    
    1,418
    
    
    
    1,248Daily average value
    
    
    1,477
    
    
    
    1,310
    
    
    
    1,208
 Year ended December 31, 2007 compared to year ended December 31, 2006
 
    
    Increases in Retail individual variable annuity account values as of December 31, 2007
can be primarily attributed to market growth during the year and improved net flows due to
an increase in sales.
    
    Retirement Plans account values increased for the year ended December 31, 2007 due to
positive net flows driven by ongoing contributions and market appreciation during the year.
    
    Individual Life variable universal life account values increased primarily due to market
appreciation and positive net flows. Life insurance in-force increased from the prior
periods due to business growth.
 28




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Year ended December 31, 2006 compared to year ended December 31, 2005
 
    
    The increase in Retail individual variable annuity account values can be attributed
primarily to market growth during 2006. Net flows for the Retail individual variable
annuity business were negative and have worsened from prior year levels resulting from
higher surrenders outpacing increased deposits due primarily to increased competition in
the living benefit market.
    
    The increase in Retirement Plans account values is due to positive net flows driven by
ongoing contributions over the past year due to higher deposits and market appreciation.
    
    Individual Life variable universal life account value increased due primarily to
premiums, deposits and market appreciation. Life insurance in-force increased from
December 31, 2005 due to business growth.
 Net Investment Spread
   For the years ended December 31,2007
    
    
    2006
    
    
    2005Retail  Individual Annuity
    
    180.5 bps
    
    159.0 bps
    
    160.0 bpsRetirement Plans
    
    161.0 bps
    
    146.1 bps
    
    149.2 bpsInstitutional (GICs, Funding Agreements, Funding Agreement Backed Notes and Consumer Notes)
    
    124.0 bps
    
    82.0 bps
    
    60.0 bpsIndividual Life
    
    131.8 bps
    
    118.4 bps
    
    122.1 bps
 Year ended December 31, 2007 compared to year ended December 31, 2006
 
    
    Retail individual annuity, Retirement Plans, Institutional and Individual Life net
investment spreads increased or remained stable, primarily due to a higher allocation of
investments in higher yield / higher risk investment classes, including limited partnerships
and alternative investments and relative strong performance of this asset class in 2007.
 Year ended December 31, 2006 compared to year ended December 31, 2005
 
    
    Net investment spreads were virtually unchanged in 2006 as
compared to 2005 with the exception of Institutional where increased
partnership income increased spread from 2005 to
2006.
 Expenses
  29




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##### Table of Contents



For the years ended December 31,Retail
    
    2007
    
    2006
    
    2005General
insurance expense ratio (individual annuity)
    
    17.9 bps
    
    17.2 bps
    
    17.9 bpsDAC amortization ratio (individual annuity)
    
    
    28.2
    %
    
    
    71.5
    %
    
    
    58.2
    %DAC amortization ratio (individual
annuity) excluding DAC unlock [1]
    
    
    53.1
    %
    
    
    57.4
    %
    
    
    58.2
    %Insurance expenses, net of deferrals
    
    $
    602
    
    
    $
    497
    
    
    $
    433Individual LifeDeath benefits
    
    $
    266
    
    
    $
    223
    
    
    $
    214Insurance expenses, net of deferrals
    
    $
    188
    
    
    $
    172
    
    
    $
    156
 [1]
    
    See Unlock and Sensitivity Analysis within the Critical Accounting Estimates section of the
MD&A Year ended December 31, 2007 compared to year ended December 31, 2006
 
    
    The increase in the Retail individual annuity general insurance ratio was primarily due to
higher service and technology costs.
 
    
    The ratio of Retail individual annuity DAC amortization over income before taxes and DAC
amortization declined in 2007 primarily due to unlock charge in 2006. DAC unlock charges generally have the effect of reducing future DAC amortization rates. After an unlock
charge, the DAC amortization rate will generally decline as amortization expected to occur in
 future years was recorded as part of the unlock charge.
 
    
    Retail insurance expenses, net of deferrals, increased due to increasing trail commissions
on growing variable annuity assets.
 
    
    Individual Life death benefits increased in 2007 primarily due to a larger life insurance
in-force and unfavorable mortality.
 Year ended December 31, 2006 compared to year ended December 31, 2005
 
    
    Retail individual annuity asset growth in 2006 decreased its expense ratio to a level lower
than prior years.
 
    
    Individual Life death benefits increased 4% in 2006 primarily due to a larger insurance
in-force. Individual Life insurance expenses, net of deferrals increased 9% for 2006
consistent with the growth of life insurance in-force.
 Profitability
  Ratios
    
    2007
    
    2006
    
    2005RetailIndividual annuity return on assets (ROA)
    
    52.6 bps
    
    33.4 bps
    
    42.5 bpsEffect of net realized gains (losses), net of tax and DAC on ROA [1]
    
    (13.3) bps
    
    (7.8) bps
    
    (3.4) bpsEffect of DAC unlock on ROA [2]
    
    15.6 bps
    
    (6.0) bps
    
    
    ROA excluding realized gains (losses) and DAC unlock
    
    50.3 bps
    
    47.2 bps
    
    45.9 bpsRetirement PlansRetirement Plans return on assets (ROA)
    
    20.9 bps
    
    43.8 bps
    
    40.8 bpsEffect of net realized gains (losses), net of tax and DAC on ROA [1]
    
    (11.1) bps
    
    (3.3) bps
    
    3.9 bpsEffect of DAC unlock on ROA [2]
    
    (3.6) bps
    
    9.3 bps
    
    
    ROA excluding realized gains (losses) and DAC unlock
    
    35.6 bps
    
    37.8 bps
    
    36.9 bpsInstitutionalInstitutional return on assets (ROA)
    
    1.3 bps
    
    15.4 bps
    
    27.3 bpsEffect of net realized gains (losses), net of tax and DAC on ROA [1]
    
    (23.3) bps
    
    (5.6) bps
    
    5.6 bpsEffect of DAC unlock on ROA [2]
    
    0.2 bps
    
    
    
    
    
    
    ROA excluding realized gains (losses) and DAC unlock
    
    24.4 bps
    
    21.0 bps
    
    21.7 bpsIndividual LifeAfter-tax margin
    
    
    15.9
    %
    
    
    13.0
    %
    
    
    15.6
    %Effect of net realized gains (losses), net of tax and DAC on after-tax margin [1]
    
    
    (1.3
    %)
    
    
    (1.7
    %)
    
    
    1.0
    %Effect of DAC unlock on after-tax margin [2]
    
    
    1.5
    %
    
    
    (1.5
    %)
    
    
    After-tax margin excluding realized gains (losses) and DAC unlock
    
    
    15.7
    %
    
    
    16.2
    %
    
    
    14.6
    %
 [1]
    
    See Realized Capital Gains and Losses by Segment table within the this Section of the MD&A[2]
    
    See Unlock and Sensitivity Analysis within the Critical Accounting Estimates section of the MD&A Year ended December 31, 2007 compared to year ended December 31, 2006
 
    
    The increase in Retail individual annuitys ROA, excluding realized gain (losses) and DAC
unlock, was primarily due to increased net investment income on allocated capital and an
increase in partnership income. This was partially offset by an increase in the effective tax
rate as a result of revisions in the estimates of the separate account DRD and FTC.
 30




---



##### Table of Contents




    
    The decrease in Retirement Plans ROA, excluding realized gains (losses) and DAC unlock, was
primarily due to higher service and technology costs.
    
    The increase in Institutionals ROA, excluding realized gains (losses) and DAC unlock, is
primarily due to an increase in partnership income and increased net investment income on
allocated capital.
    
    Individual Lifes decrease in after-tax margin, excluding realized gains (losses) and DAC
unlock, is primarily due to unfavorable mortality experience in 2007 compared to 2006.
 Year ended December 31, 2006 compared to year ended December 31, 2005
 
    
    The increase in Retail individual annuitys ROA, excluding realized gain (losses) and DAC
unlock, was primarily due to a decline in the effective tax rate as a result of prior period
true-up benefits in 2006 related to separate account DRD and FTC.
    
    The decrease in Institutionals ROA, excluding realized gains (losses) and DAC unlock, is
primarily due to higher maintenance expense in 2006.
    
    Individual Lifes after-tax margin, excluding realized gains (losses) and DAC unlock,
increased primarily due to favorable mortality experience in 2006 compared to 2005 as well as
favorable revisions to DAC estimates reflected in the first half of 2006.
 Realized Capital Gains and Losses by Segment
  Net realized gains (losses) for the year ended December 31, 2007Periodicnet couponJapanese
    
    settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totalfixed annuity
    
    on credit
    
    GMWB
    
    GMIB/
    
    
    
    
    
    
    
    
    
    
    gains/losses,Gains/losses on
    
    
    
    
    
    contract
    
    derivatives
    
    derivatives,
    
    GMAB
    
    Other,
    
    
    
    
    
    
    net of tax andsales, net
    
    Impairments
    
    hedges, net
    
    Japan
    
    net
    
    Reinsurance
    
    net
    
    Total
    
    
    DACRetail
    
    
    17
    
    
    
    (87
    )
    
    
    
    
    
    
    1
    
    
    
    (277
    )
    
    
    
    
    
    
    (35
    )
    
    
    (381
    )
    
    
    
    (169
    )Retirement Plans
    
    
    (11
    )
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (41
    )
    
    
    
    (28
    )Institutional
    
    
    13
    
    
    
    (146
    )
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    (188
    )
    
    
    
    (123
    )Individual Life
    
    
    7
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (26
    )
    
    
    
    (14
    )Other
    
    
    19
    
    
    
    (65
    )
    
    
    18
    
    
    
    (44
    )
    
    
    
    
    
    
    (155
    )
    
    
    (71
    )
    
    
    (298
    )
    
    
    
    (197
    )Total
    
    
    45
    
    
    
    (339
    )
    
    
    18
    
    
    
    (40
    )
    
    
    (277
    )
    
    
    (155
    )
    
    
    (186
    )
    
    
    (934
    )
    
    
    
    (531
    )
 Net realized gains (losses) for the year ended December 31, 2006
 Net realized gains (losses) for the year ended December 31, 2006Periodicnet couponJapanese
    
    settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totalfixed annuity
    
    on credit
    
    GMWB
    
    GMIB/
    
    
    
    
    
    
    
    
    
    
    gains/losses,Gains/losses on
    
    
    
    
    
    contract
    
    derivatives
    
    derivatives,
    
    GMAB
    
    Other,
    
    
    
    
    
    
    net of tax andsales, net
    
    Impairments
    
    hedges, net
    
    Japan
    
    net
    
    Reinsurance
    
    net
    
    Total
    
    
    DACRetail
    
    
    (44
    )
    
    
    (6
    )
    
    
    
    
    
    
    3
    
    
    
    (26
    )
    
    
    
    
    

    
    (14
    )
    
    
    (87
    )
    
    
    
    (96
    )Retirement Plans
    

    
    (9
    )
    

    
    (6
    )
    
    

    
    
    
    

    
    
    
    

    
    
    
    

    
    
    
    
    (1
    )
    

    
    (16
    )
    

    
    
    (7
    )Institutional
    
    
    15
    
    
    
    (32
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    (40
    )
    
    
    
    (25
    )Individual Life
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (22
    )
    
    
    
    (18
    )Other
    
    
    2
    
    
    
    (10
    )
    
    
    (17
    )
    
    
    (52
    )
    
    
    
    
    
    
    (53
    )
    
    
    (4
    )
    
    
    (134
    )
    
    
    
    (87
    )Total
    
    
    (36
    )
    
    
    (71
    )
    
    
    (17
    )
    
    
    (48
    )
    
    
    (26
    )
    
    
    (53
    )
    
    
    (48
    )
    
    
    (299
    )
    
    
    
    (233
    )
 31




---



##### Table of Contents



Net realized gains (losses) for the year ended December 31, 2005Periodicnet couponJapanese
    
    settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totalfixed annuity
    
    on credit
    
    GMWB
    
    GMIB/
    
    
    
    
    
    
    
    
    
    
    gains/losses,Gains/losses on
    
    
    
    
    
    contract
    
    derivatives
    
    derivatives,
    
    GMAB
    
    Other,
    
    
    
    
    
    
    net of tax andsales, net
    
    Impairments
    
    hedges, net
    
    Japan
    
    net
    
    Reinsurance
    
    net
    
    Total
    
    
    DACRetail
    
    
    50
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    (55
    )
    
    
    
    
    
    
    (37
    )
    
    
    (57
    )
    
    
    
    (39
    )Retirement Plans
    
    
    19
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    14
    
    
    
    
    7Institutional
    
    
    22
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    35
    
    
    
    
    22Individual Life
    
    
    12
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    16
    
    
    
    
    10Other
    
    
    (11
    )
    
    
    (1
    )
    
    
    (36
    )
    
    
    (32
    )
    
    
    
    
    
    
    113
    
    
    
    34
    
    
    
    67
    
    
    
    
    45Total
    
    
    92
    
    
    
    (27
    )
    
    
    (36
    )
    
    
    (32
    )
    
    
    (55
    )
    
    
    113
    
    
    
    20
    
    
    
    75
    
    
    
    
    45
  
    
    Across all lines of business, impairments increased $268 in 2007, primarily due to an
increase in credit related other-than-temporary impairments which were taken on ABS securities
backed by sub-prime residential mortgage loans and securities in the financial services and
home builders sectors. For further discussion, see the Other-Than-Temporary Impairments
discussion within Investment section of the MD&A.
 
    
    Retail losses on GMWB rider embedded derivatives increased $251 primarily due to liability
model assumption updates and modeling refinements made in 2007, including those for dynamic
lapse behavior, mortality and claims adjustments, correlations of market returns across
underlying indices as well as those to reflect newly reliable market inputs for volatility.
 
    
    Across all lines of business, Other net losses increased $138 primarily from the change in
value of non-qualifying derivatives due to fluctuations in credit spreads, interest rates, and
equity markets. The increase in net losses in 2007 compared to the prior year was primarily
due to changes in value associated with credit derivatives due to credit spreads widening.
Credit spreads widened primarily due to the deterioration in the U.S. housing market,
tightened lending conditions, reduction of risk appetite as well as increased likelihood of a
U.S. recession. For further discussion, see the Capital Market Risk Management section of
the MD&A.
 
    
    Within the Other segment, GMIB/GMAB reinsurance losses increased by $102 due to liability
model refinements, a decline in interest rates and markets as well as changes in equity
volatility levels.
 
    
    The net gains on sales resulted from primarily from changes in credit spreads, foreign currency exchange
rates, and interest rates from the date of purchase. For further discussion of gross gains and
losses, see Investment Results in the Investments section of the MD&A.
  
    
    Across all lines of business, impairments were primarily recorded on corporate fixed
maturities. For further discussion, see the Other-Than-Temporary Impairments section within
the Investments section of the MD&A.
 
    
    Other net losses, as compared to gains in the prior year period were primarily driven from
the change in value of non-qualifying derivatives due to fluctuations in interest rates and
foreign currency exchange rates. These losses were partially offset by a before-tax benefit
of $25 received from the WorldCom security settlement.
 
    
    Within the Other segment, GMIB/GMAB reinsurance losses as compared to gains in the prior
year period were primarily driven by liability model refinements and assumption updates
reflecting in-force demographics, actual experience, and revised future expectations. The net
gains in 2005 were primarily driven by positive movements in the global bond market and the
Japanese equity market.
 
    
    The net losses on sales were driven by fixed maturities for the year ended December 31, 2006 and primarily the
result of rising interest rates from the date of security purchase and, to a lesser extent, credit spread
widening on certain issuers that were sold. For further discussion of gross gains and losses, see
Investment Results in the Investments section of the MD&A.
 32




---



##### Table of Contents



RETAIL
 Operating Summary
    
    2007
    
    2006
    
    2005Fee income and other
    
    $
    2,166
    
    
    $
    1,924
    
    
    $
    1,737Earned premiums
    
    
    (62
    )
    
    
    (86
    )
    
    
    (110
    )Net investment income
    
    
    815
    
    
    
    835
    
    
    
    934Net realized capital (losses)
    
    
    (381
    )
    
    
    (87
    )
    
    
    (57
    )Total revenues
    
    
    2,538
    
    
    
    2,586
    
    
    
    2,504Benefits, losses and loss adjustment expenses
    
    
    820
    
    
    
    819
    
    
    
    895Insurance operating costs and other expenses
    
    
    602
    
    
    
    497
    
    
    
    433Amortization of deferred policy acquisition costs
and present value of future profits
    
    
    316
    
    
    
    913
    
    
    
    685Total benefits, losses and expenses
    
    
    1,738
    
    
    
    2,229
    
    
    
    2,013Income before income taxes
    
    
    800
    
    
    
    357
    
    
    
    491Income tax expense (benefit)
    
    
    137
    
    
    
    (40
    )
    
    
    11Net income
    
    $
    663
    
    
    $
    397
    
    
    $
    480
 Account Values
    
    2007
    
    2006
    
    2005Individual variable annuity account values
    
    $
    119,071
    
    
    $
    114,365
    
    
    $
    105,314Individual fixed annuity and other account values [1]
    
    
    10,243
    
    
    
    9,937
    
    
    
    10,222Total Account Values
    
    $
    129,314
    
    
    $
    124,302
    
    
    $
    115,536
 
 [1]
    
    Includes policyholders balances for investment contracts and reserve for future policy
benefits for insurance contracts.  Year ended December 31, 2007 compared to the year ended December 31, 2006
  
    
    Fee income increased for the year ended December 31, 2007 primarily as a result of growth
in variable annuity average account values. The year-over-year increase in average variable
annuity account values can be attributed to market appreciation of $7.4 billion during the
year. Variable annuities had net outflows of $2.7 billion in 2007. Net outflows were driven
by surrender activity due to the aging of the variable annuity inforce block of business and
increased sales competition, particularly competition related to guaranteed living benefits.
 
    
    Net investment income has declined for the year ended December 31, 2007 due to a decrease
in variable annuity fixed option account values of 11% or $635. The decrease in these account
values can be attributed to a combination of transfers into separate accounts and surrender
activity. Offsetting this decrease in net investment income was an increase in the returns on
partnership income of $14, after-tax, for the year ended December 31, 2007.
 
    
    Insurance operating costs and other expenses increased for the year ended December 31,
2007. These increases were principally driven by non-deferrable variable annuity asset based
commissions which increased $67 for the year ended December 31, 2007 due to a 4% growth in
assets under management, as well as an increase in the number of contracts reaching
anniversaries when trail commission payments begin.
 
    
    Lower amortization of DAC resulted from the unlock benefit during the third quarter of 2007
as compared to an unlock expense during the fourth quarter of 2006. For further discussion,
see Unlock and Sensitivity Analysis in the Critical Accounting Estimates section of the MD&A.
 33




---



##### Table of Contents




    
    The effective tax rate increased from (11)% to 17% for the year ended December 31, 2007
from the prior year period, due to an increase in income before income taxes and revisions in
the estimates of the separate account DRD which resulted from an incremental tax of $17, and
foreign tax credits.
 Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    The increase in fee income in the variable annuity business for the year ended December 31,
2006 was mainly a result of growth in average account values. The year-over-year increase in
average variable annuity account values can be attributed to market appreciation of $12.2
billion during 2006. Variable annuities had net outflows of $3.2 billion for the year ended
December 31, 2006 compared to net outflows of $881 for the year ended December 31, 2005. Net
outflows from additional surrender activity were due to increased sales competition,
particularly from competitors offering variable annuity products with guaranteed living
benefits.
    
    Despite stable general account investment spread during the year, net investment income has
steadily declined for the year ended December 31, 2006 due to variable annuity transfers from
the fixed account to the separate account combined with surrenders in the fixed MVA contracts.
Despite these outflows, a more favorable interest rate environment during 2006 has resulted
in increased deposits and a lower surrender rate due to fewer contracts up for renewal for the
year ended December 31, 2006 resulting in a decrease in net outflows of $1.3 billion compared
to the prior year.
    
    Benefits, losses and loss adjustment expenses have decreased for the year ended December
31, 2006 due to a decline in interest credited as a result of fixed annuity outflows which
decreased fixed annuity account values. In addition, variable annuity asset based commissions
increased due to 9% growth in assets under management, as well as an increase in the number of
contracts reaching anniversaries when trail commission payments begin.
    
    Higher amortization of DAC resulted from the unlock expense during the fourth quarter of
2006. For further discussion, see Unlock and Sensitivity Analysis in the Critical Accounting
Estimates section of the MD&A.
    
    The effective tax rate declined due to separate account DRD and foreign tax credit true-up
benefits recorded in 2006.
 Outlook
  34




---



##### Table of Contents



RETIREMENT PLANS
 Operating Summary
    
    2007
    
    2006
    
    2005Fee income and other
    
    $
    225
    
    
    $
    180
    
    
    $
    139Earned premiums
    
    
    4
    
    
    
    19
    
    
    
    10Net investment income
    
    
    355
    
    
    
    326
    
    
    
    311Net realized capital gains (losses)
    
    
    (41
    )
    
    
    (16
    )
    
    
    14Total revenues
    
    
    543
    
    
    
    509
    
    
    
    474Benefits, losses and loss adjustment expenses
    
    
    249
    
    
    
    250
    
    
    
    231Insurance operating costs and other expenses
    
    
    169
    
    
    
    134
    
    
    
    117Amortization of deferred policy acquisition costs and present
value of future profits
    
    
    58
    
    
    
    (4
    )
    
    
    31Total benefits, losses and expenses
    
    
    476
    
    
    
    380
    
    
    
    379Income before income taxes
    
    
    67
    
    
    
    129
    
    
    
    95Income tax expense
    
    
    14
    
    
    
    35
    
    
    
    22Net income
    
    $
    53
    
    
    
    94
    
    
    $
    73
 Account Values
    
    2007
    
    2006
    
    2005403(b)/457 account values
    
    $
    12,363
    
    
    $
    11,540
    
    
    $
    10,475401(k) account values
    
    
    14,731
    
    
    
    12,035
    
    
    
    8,842Total account values
    
    $
    27,094
    
    
    $
    23,575
    
    
    $
    19,317
  Year ended December 31, 2007 compared to the year ended December 31, 2006
  
    
    Fee income increased for the year ended December 31, 2007 primarily due to an increase in
401(k) average account values. This growth in 401(k) business is primarily driven by positive
net flows of $1.8 billion over the past four quarters resulting from strong sales and
increased ongoing deposits. Market appreciation contributed an additional $888 to assets
under management over the past year.
 
    
    Net investment income increased for the year ended December 31, 2007 for 403(b)/457
business due to growth in general account assets along with an increase in return on
partnership investments.
 
    
    Insurance operating costs and other expenses increased for the year ended December 31,
2007, primarily attributable to greater assets under management aging beyond their first year
resulting in higher trail commissions. Also contributing to higher insurance operating costs
for the year ended December 31, 2007 were higher service and technology costs.
 
    
    Benefits, losses and loss adjustment expenses and earned premiums decreased for the year
ended December 31, 2007 primarily due to a large case annuitization in the 401(k) business of
$12 which occurred in the first quarter of 2006. This decrease was partially offset by an
increase in interest credited resulting from the growth in general account assets.
 
    
    Higher amortization of DAC resulted from the unlock expense in the third quarter of 2007 as
compared to an unlock benefit in the fourth quarter of 2006. For further discussion, see
Unlock and Sensitivity Analysis in the Critical Accounting Estimates section of the MD&A.
 35




---



##### Table of Contents



Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    Fee income for 401(k) increased 38%, or $38 for the year ended December 31, 2006 compared
to the prior year due to the growth in average account values. This growth is primarily
driven by positive net flows of $2.0 billion during the year resulting from strong deposits.
Total 401(k) annuity deposits and net flows increased by 22% and 16%, respectively, over the
prior year. The increase in average account values can also be attributed to market
appreciation of $1.1 billion during the year.
 
    
    General account net investment spread remained stable for the year ended December 31, 2006
compared to the prior year. Overall, net investment income and the associated interest
credited within benefits, losses and loss adjustment expenses each increased as a result of
the growth in general account assets under management. Additionally, benefits, losses and
loss adjustment expenses increased for the year ended December 31, 2006 compared to the prior
year due to a large case annuitization in the 401(k) business which also resulted in a
corresponding increase in earned premiums of $12.
 
    
    Insurance operating costs and other expenses increased for the year ended December 31, 2006
primarily driven by the 401(k) business. The additional costs can be attributed to greater
assets under management resulting in higher trail commissions and maintenance expenses.
 
    
    Lower amortization of DAC resulted from an unlock benefit in the fourth quarter of 2006.
For further discussion see Unlock and Sensitivity Analysis in the Critical Accounting
Estimates section of the MD&A
 Outlook
  36




---



##### Table of Contents



INSTITUTIONAL
 Operating Summary
    
    2007
    
    
    2006
    
    
    2005Fee income and other
    
    $
    246
    
    
    $
    119
    
    
    $
    117Earned premiums
    
    
    990
    
    
    
    607
    
    
    
    504Net investment income
    
    
    1,226
    
    
    
    987
    
    
    
    784Net realized capital gains (losses)
    
    
    (188
    )
    
    
    (40
    )
    
    
    35Total revenues
    
    
    2,274
    
    
    
    1,673
    
    
    
    1,440Benefits, losses and loss adjustment expenses
    
    
    2,066
    
    
    
    1,471
    
    
    
    1,199Insurance operating costs and other expenses
    
    
    183
    
    
    
    75
    
    
    
    53Amortization of deferred policy acquisition costs and present value of future profits
    
    
    23
    
    
    
    32
    
    
    
    32Total benefits, losses and expenses
    
    
    2,272
    
    
    
    1,578
    
    
    
    1,284Income before income taxes
    
    
    2
    
    
    
    95
    
    
    
    156Income tax (benefit) expense
    
    
    (5
    )
    
    
    26
    
    
    
    49Net income
    
    $
    7
    
    
    $
    69
    
    
    $
    107
 Account Value
    
    2007
    
    
    2006
    
    
    2005Institutional account values [1]
    
    $
    24,828
    
    
    $
    21,933
    
    
    $
    17,632Private Placement Life Insurance account values [2]
    
    
    32,792
    
    
    
    26,131
    
    
    
    23,836Total Account Values
    
    $
    57,620
    
    
    $
    48,064
    
    
    $
    41,468
 
 [1]
    
    Institutional investment product account values include transfers from Retirement Plans of
$413 during 2006 and from the Retail segment of $350 during 2006[2]
    
    Includes policyholder balances for investment contracts and reserves for future policy benefits
for insurance contracts.  Year ended December 31, 2007 compared to the year ended December 31, 2006
  
    
    Fee income increased for the year ended December 31, 2007 primarily driven by higher PPLI
assets under management due to net flows and change in market appreciation of $5.1 billion and
$1.7 billion, respectively. In addition, PPLI collects front-end loads, recorded in fee
income, to subsidize premium tax payments. Premium taxes are recorded as an expense in
insurance operating costs and other expenses. During the year ended December 31, 2007, PPLI
had deposits of $5.2 billion, which resulted in an increase in fee income due to front-end
loads of $107 offset by a corresponding increase in insurance operating costs and other
expenses.
 
    
    Earned premiums increased for the year ended December 31, 2007 primarily as a result of
increased structured settlement life contingent sales, and one large terminal funding life
contingent case sold in the third quarter. This increase in earned premiums was offset by a
corresponding increase in benefits, losses and loss adjustment expenses.
 
    
    General account net investment spread is the main driver of net income for IIP. An
increase in spread income for the year ended December 31, 2007, was driven principally by
higher assets under management in IIP resulting from positive net flows of $1.5 billion during
the year. Net flows for IIP were favorable primarily as a result of the Companys funding
agreement backed Investor Notes program. Investor Notes deposits for the year ended December
31, 2007 were $1.5 billion. General account net investment spread also increased for the year
ended December 31, 2007 due to improved returns on partnership investments. For the year ended
December 31, 2007 and 2006, partnership income was $32 and $15, after-tax, respectively.
 
    
    PPLIs income increased for the year ended December 31, 2007 primarily due to a one-time
adjustment of $4, after-tax, consisting mainly of a true-up of premium tax accruals in the
first quarter of 2007.
 
    
    The change in income taxes for the year ended December 31, 2007 over the prior year was due
to a decrease in income before income taxes primarily driven by the increase in realized
capital losses.
 37




---



##### Table of Contents



Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    Net investment income increased in Institutional driven by positive net flows of $2.2
billion during the year, which resulted in higher assets under management. Net flows for IIP
were strong primarily as a result of the Companys funding agreement backed Investor Notes
program. Investor Note deposits for the years ended December 31, 2006 and 2005 were $2.3
billion and $2.0 billion, respectively.
 
    
    General account spread is one of the main drivers of net income for the Institutional line
of business. The increase in spread income in 2006 was driven by higher assets under
management as noted above, combined with improved partnership income. For the year ended
December 31, 2006 and 2005, income from partnership investments was $15 and $6 after-tax,
respectively.
 
    
    Earned premiums increased as a result of two large terminal funding cases that were sold
during 2006. This increase in earned premiums was offset by a corresponding increase in
benefits, losses and loss adjustment expenses.
 
    
    PPLIs income increased compared to prior year primarily due to asset growth in the
variable business combined with increased tax benefits.
 
    
    IIP operating expenses increased in the year ended December 31, 2006 due to higher costs
related to the launch of new retirement products targeting the baby boom generation in 2006.
 Outlook
    38




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##### Table of Contents



INDIVIDUAL LIFE
 Operating Summary
    
    2007
    
    2006
    
    2005Fee income and other
    
    $
    816
    
    
    $
    825
    
    
    $
    742Earned premiums
    
    
    (56
    )
    
    
    (45
    )
    
    
    (26
    )Net investment income
    
    
    331
    
    
    
    293
    
    
    
    272Net realized capital gains (losses)
    
    
    (26
    )
    
    
    (22
    )
    
    
    16Total revenues
    
    
    1,065
    
    
    
    1,051
    
    
    
    1,004Benefits, losses and loss adjustment expenses
    
    
    510
    
    
    
    447
    
    
    
    420Insurance operating costs and other expenses
    
    
    188
    
    
    
    172
    
    
    
    156Amortization of deferred policy acquisition costs and present value of future profits
    
    
    117
    
    
    
    235
    
    
    
    198Total benefits, losses and expenses
    
    
    815
    
    
    
    854
    
    
    
    774Income before income taxes
    
    
    250
    
    
    
    197
    
    
    
    230Income tax expense
    
    
    81
    
    
    
    60
    
    
    
    73Net income
    
    $
    169
    
    
    $
    137
    
    
    $
    157
 Account Values
    
    2007
    
    2006
    
    2005Variable universal life insurance
    
    $
    7,284
    
    
    $
    6,637
    
    
    $
    5,902Total account values
    
    $
    11,876
    
    
    $
    10,884
    
    
    $
    9,819
  Year ended December 31, 2007 compared to the year ended December 31, 2006
  
    
    Fee income and other decreased for the year ended December 31, 2007 primarily due to the
impacts of the 2007 and 2006 unlocks. For further discussion, see Unlock and Sensitivity
Analysis in the Critical Accounting Estimates section of the MD&A. Offsetting the impacts of
the 2007 and 2006 unlocks, fee income increased for the year ended December 31, 2007. Cost of
insurance charges, the largest component of fee income, increased $35 primarily driven by
growth in variable universal and universal life insurance account value. Variable fee income
increased consistent with the growth in variable universal life insurance account value.
    
    Earned premiums, which include premiums for ceded reinsurance, decreased primarily due to
increased ceded reinsurance premiums for the year ended December 31, 2007.
    
    Net investment income increased for the year ended December 31, 2007 consistent with growth
in general account account values. Individual Life earned additional investment income
throughout 2007 associated with higher returns from partnership investments.
    
    Benefits, losses and loss adjustment expenses increased due to life insurance in-force
growth and unfavorable mortality for the year ended December 31, 2007 compared to the
corresponding 2006 period.
    
    Insurance operating costs and other expenses increased for the year ended December 31, 2007
substantially consistent with life insurance in-force growth.
    
    Lower amortization of DAC resulted from the unlock benefit in the third quarter of 2007 as
compared to an unlock expense in the fourth quarter of 2006. For further discussion, see
Unlock and Sensitivity Analysis in the Critical Accounting Estimates section of the MD&A.
 39




---



##### Table of Contents



Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    Cost of insurance charges, the largest component of fee income, increased $31 for the year
ended December 31, 2006, driven by growth in the variable universal and universal life
insurance in-force. Variable fee income increased, consistent with the growth in the variable
universal life insurance account value. Other fee income, another component of total fee
income, increased primarily due to additional amortization of deferred revenues associated
with the unlock.
    
    Earned premiums, which include premiums for ceded reinsurance, decreased primarily due to
increased ceded reinsurance premiums for the year ended December 31, 2006.
    
    Net investment income increased primarily due to increased general account assets from
sales growth.
    
    Benefits, losses and loss adjustment expenses increased for 2006 consistent with the growth
in account values and life insurance in-force and also reflect favorable mortality experience
in 2006 compared to 2005.
    
    Insurance operating costs and other expenses increased for the year ended December 31, 2006
consistent with the growth of life insurance in-force.
    
    Amortization of DAC for the year ended December 31, 2006 increased related to the unlock
expense, partially offset by revisions to prior year estimates. Excluding the impacts of the
unlock expense and revisions, the amortization of DAC decreased for the year ended December
31, 2006, consistently with the mix of products and the level and mix of product
profitability. For further discussion, see Unlock and Sensitivity Analysis in the Critical
Accounting Estimates section of the MD&A.
 Outlook
      40




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##### Table of Contents



OTHER
 Operating Summary
    
    2007
    
    2006
    
    2005Fee income and other
    
    $
    56
    
    
    $
    65
    
    
    $
    76Earned premiums
    
    
    107
    
    
    
    52
    
    
    
    71Net investment income
    
    
    321
    
    
    
    287
    
    
    
    268Net realized capital gains (losses)
    
    
    (298
    )
    
    
    (134
    )
    
    
    67Total revenues
    
    
    186
    
    
    
    270
    
    
    
    482Benefits, losses and loss adjustment expenses
    
    
    335
    
    
    
    218
    
    
    
    263Insurance operating costs and other expenses
    
    
    61
    
    
    
    (3
    )
    
    
    76Amortization of deferred policy acquisition costs and present
value of future profits
    
    
    1
    
    
    
    (1
    )
    
    
    (1
    )Total benefits, losses and expenses
    
    
    397
    
    
    
    214
    
    
    
    338Income (loss) before income taxes
    
    
    (211
    )
    
    
    56
    
    
    
    144Income tax expense (benefit)
    
    
    (59
    )
    
    
    22
    
    
    
    52Net income (loss)
    
    $
    (152
    )
    
    $
    34
    
    
    $
    92
  Year ended December 31, 2007 compared to the year ended December 31, 2006
 
    
    During the first quarter of 2006, the Company achieved favorable settlements in several
cases brought against the Company by policyholders regarding their purchase of broad-based
leveraged corporate owned life insurance (leveraged COLI) policies in the early to
mid-1990s. The Company ceased offering this product in 1996. Based on the favorable outcome
of these cases, together with the Companys current assessment of the few remaining leveraged
COLI cases, the Company reduced its estimate of the ultimate cost of these cases as of June
30, 2006. This reserve reduction, recorded in insurance operating costs and other expenses,
resulted in an after-tax benefit of $34.
    
    Also contributing to the change in insurance operating costs and other expenses was an
increase of $20 for the year ended December 31, 2007, as a result of recording penalties
related to regulatory matters during the second quarter of 2007. During the year, the Company
recorded an insurance recovery of $9 against the litigation costs associated with regulatory
matters.
    
    Benefits, losses and loss adjustment expenses increased $55, after tax for the year ended
December 31, 2007, as a result of the Company recording a reserve during the second quarter of
2007 for regulatory matters.
    
    Refer to Realized Capital Gains and Losses by Segment table under the Consolidated
Operating summary section of the MD&A.
 Year ended December 31, 2006 compared to the year ended December 31, 2005
  
    
    During 2006, the Company achieved favorable settlements in several cases brought against
the Company by policyholders regarding their purchase of broad-based leveraged corporate owned
life insurance (leveraged COLI) policies in the early to mid-1990s. The Company ceased
offering this product in 1996. Based on the favorable outcome of these cases, together with
the Companys current assessment of the few remaining leveraged COLI cases, the Company
reduced its estimate of the ultimate cost of these cases during 2006. This reserve reduction,
recorded in insurance operating costs and other expenses, resulted in an after-tax benefit of
$34.
    
    Also contributing to the insurance operating costs and other expenses decreases for the
year ended December 31, 2006 was a lower level of dividends to leveraged COLI policyholders.
    
    Refer to Realized Capital Gains and Losses by Segment table under the Consolidated
Operating summary section of the MD&A.
 41




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##### Table of Contents



INVESTMENTS
 General
          42




---



##### Table of Contents



Composition of Invested Assets
 2007
    
    2006Amount
    
    Percent
    
    Amount
    
    PercentFixed maturities, available-for-sale, at fair value
    
    $
    45,611
    
    
    
    82.9
    %
    
    $
    44,646
    
    
    
    87.1
    %Equity securities, available-for-sale, at fair value
    
    
    722
    
    
    
    1.3
    %
    
    
    275
    
    
    
    0.5
    %Policy loans, at outstanding balance
    
    
    2,016
    
    
    
    3.7
    %
    
    
    2,009
    
    
    
    3.9
    %Mortgage loans, at amortized cost [1]
    
    
    4,166
    
    
    
    7.5
    %
    
    
    2,631
    
    
    
    5.2
    %Limited partnerships and other alternative investments [2]
    
    
    1,246
    
    
    
    2.3
    %
    
    
    750
    
    
    
    1.5
    %Short-term investments
    
    
    752
    
    
    
    1.4
    %
    
    
    694
    
    
    
    1.3
    %Other investments [3]
    
    
    480
    
    
    
    0.9
    %
    
    
    274
    
    
    
    0.5
    %Total investments
    
    $
    54,993
    
    
    
    100.0
    %
    
    $
    51,279
    
    
    
    100.0
    %
 [1]
    
    Consist of commercial and agricultural loans.[2]
    
    Includes real estate joint ventures.[3]
    
    Primarily relates to derivative instruments.
    Composition of Limited Partnerships and Other Alternative Investments
 2007
    
    2006Amount
    
    Percent
    
    Amount
    
    PercentHedge funds [1]
    
    $
    514
    
    
    
    41.3
    %
    
    $
    370
    
    
    
    49.3
    %Private equity [2]
    
    
    399
    
    
    
    32.0
    %
    
    
    239
    
    
    
    31.9
    %Mortgage and real estate [3]
    
    
    272
    
    
    
    21.8
    %
    
    
    83
    
    
    
    11.1
    %Mezzanine debt [4]
    
    
    61
    
    
    
    4.9
    %
    
    
    58
    
    
    
    7.7
    %Total
    
    $
    1,246
    
    
    
    100.0
    %
    
    $
    750
    
    
    
    100.0
    %
 [1]
    
    Hedge funds include investments in funds of funds as well as direct
funds. The hedge funds of funds invest in approximately 30 to 60
different hedge funds within a variety of investment styles. Examples
of hedge fund strategies include long/short equity or credit, event
driven strategies and structured credit.[2]
    
    Private equity funds consist of investments in funds whose assets
typically consist of a diversified pool of investments in small
non-public businesses with high growth potential.[3]
    
    Mortgage and real estate funds consist of investments in funds whose
assets consist of mortgage loans, participations in mortgage loans,
mezzanine loans or other notes which may be below investment grade
credit quality as well as equity real estate. Also included is the
investment in real estate joint ventures.[4]
    
    Mezzanine debt funds consist of investments in funds whose assets
consist of subordinated debt that often times incorporates
equity-based options such as warrants and a limited amount of direct
equity investments.
 43




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##### Table of Contents



Investment Results
  2007
    
    2006
    
    2005(Before-tax)
    
    Amount
    
    Yield [1]
    
    Amount
    
    Yield [1]
    
    Amount
    Yield [1]Fixed maturities [2]
    
    $
    2,710
    
    
    
    6.0
    %
    
    $
    2,459
    
    
    
    5.8
    %
    
    $
    2,275
    
    
    
    5.8
    %Equity securities, available-for-sale
    
    
    48
    
    
    
    7.2
    %
    
    
    12
    
    
    
    4.3
    %
    
    
    9
    
    
    
    3.3
    %Mortgage loans
    
    
    227
    
    
    
    6.4
    %
    
    
    126
    
    
    
    6.4
    %
    
    
    64
    
    
    
    6.3
    %Limited partnerships and other
alternative investments
    
    
    112
    
    
    
    13.0
    %
    
    
    67
    
    
    
    12.5
    %
    
    
    56
    
    
    
    18.9
    %Policy loans
    
    
    132
    
    
    
    6.5
    %
    
    
    140
    
    
    
    7.0
    %
    
    
    142
    
    
    
    6.6
    %Other [3]
    
    
    (125
    )
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    60
    
    
    
    Investment expense
    
    
    (56
    )
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (37
    )
    
    
    Total net investment income
    
    $
    3,048
    
    
    
    6.1
    %
    
    $
    2,728
    
    
    
    5.8
    %
    
    $
    2,569
    
    
    
    5.7
    %
 [1]
    
    Yields calculated using investment income before investment expenses
divided by the monthly weighted average invested assets at cost,
amortized cost, or adjusted carrying value, as applicable, excluding
collateral received associated with the securities lending program and
consolidated variable interest entity minority interests. Included in
the fixed maturity yield is Other income (loss) as it primarily
relates to fixed maturities, see footnote [3] below. Included in the
total net investment income yield is investment expense.[2]
    
    Includes net investment income on short-term bonds.[3]
    
    Primarily represents fees associated with securities lending
activities. The income from securities lending activities is included
within fixed maturities. Also included are derivatives that qualify
for hedge accounting under SFAS 133. These derivatives hedge fixed
maturities.
  (Before-tax)
    
    2007
    
    2006
    
    2005Gross gains on sale
    
    $
    187
    
    
    $
    199
    
    
    $
    310Gross losses on sale
    
    
    (142
    )
    
    
    (235
    )
    
    
    (218
    )ImpairmentsCredit related [1]
    
    
    (231
    )
    
    
    (10
    )
    
    
    (23
    )Other [2]
    
    
    (108
    )
    
    
    (61
    )
    
    
    (4
    )Total impairments
    
    
    (339
    )
    
    
    (71
    )
    
    
    (27
    )Japanese fixed annuity contract hedges, net [3]
    
    
    18
    
    
    
    (17
    )
    
    
    (36
    )Periodic net coupon settlements on credit derivatives/Japan
    
    
    (40
    )
    
    
    (48
    )
    
    
    (32
    )GMWB derivatives, net
    
    
    (277
    )
    
    
    (26
    )
    
    
    (55
    )GMIB/GMAB reinsurance
    
    
    (155
    )
    
    
    (53
    )
    
    
    113Other, net [4]
    
    
    (186
    )
    
    
    (48
    )
    
    
    20Net realized capital gain (losses), before-tax
    
    $
    (934
    )
    
    $
    (299
    )
    
    $
    75
 [1]
    
    Relates to impairments for which the Company has current concerns
regarding the issuers ability to pay future interest and principal
amounts based upon the securities contractual terms or the depression
in security value is primarily related to significant issuer specific
or sector credit spread widening.[2]
    
    Primarily relates to impairments of securities that had declined in
value primarily due to changes in interest rate or general or modest
spread widening and for which the Company was uncertain of its intent
to retain the investment for a period of time sufficient to allow
recovery to cost or amortized cost.[3]
    
    Relates to the Japanese fixed annuity product assumed from HLIKK
(product and related derivative hedging instruments excluding periodic
net coupon settlements).[4]
    
    Primarily consists of changes in fair value on non-qualifying
derivatives and hedge ineffectiveness on qualifying derivative
instruments and other investment gains.
 Year ended December 31, 2007 compared to the year ended December 31, 2006
  44




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##### Table of Contents




    
    See the Other-Than-Temporary Impairments section that follows for information on impairment
losses.
    
    An increase in losses in 2007 compared to 2006 on GMWB rider embedded derivatives was
primarily due to liability model assumption updates and modeling refinements made in 2007,
including those for dynamic lapse behavior and correlations of
market returns across underlying indices as well as those to reflect newly reliable market
inputs for volatility. For a further discussion of the GMWB rider valuation assumption, see
the Capital Markets Risk management section of the MD&A under Key Market Risk Exposures.
    
    Other, net losses in both 2007 and 2006 primarily resulted from the change in value of
non-qualifying derivatives due to fluctuations in credit spreads, interest rates, and equity
markets. The increase in net losses in 2007 compared to the prior year was primarily due to
changes in value associated with credit derivatives due to credit spreads widening. Credit
spreads widened primarily due to the deterioration in the U.S. housing market, tightened
lending conditions, the markets flight to quality securities as well as increased likelihood
of a U.S. recession. For further discussion, see the Capital Market Risk Management section
of the MD&A.
    
    The increase in net losses associated with the internal
reinsurance of GMIB is due to
liability model refinements, a decline in interest rates and markets as well as changes in
equity volatility levels.
  Year ended December 31, 2006 compared to the year ended December 31, 2005
    
    
    The net losses on fixed maturity sales for the year ended December 31, 2006 were primarily
the result of rising interest rates from the date of security purchase and, to a lesser
extent, credit spread widening on certain issuers that were sold. For further discussion of
gross gains and losses, see the following discussion below.
    
    The net losses in 2006 related to GMIB were primarily driven by liability model refinements
and assumption updates reflecting in-force demographics, actual experience, and revised future
expectations. The net gains in 2005 were primarily driven by positive movements in the global
bond market and the Japanese equity market.
    
    Other, net losses were primarily driven from the change in value of non-qualifying
derivatives due to fluctuations in interest rates and foreign currency exchange rates. These
losses were partially offset by a before-tax benefit of $25 received from the WorldCom
security settlement.
 45




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##### Table of Contents



Separate Account Products
  Variable Interest Entities (VIE)
   December 31, 2007
    
    December 31, 2006Maximum
    
    
    
    
    
    
    
    
    
    MaximumCarrying
    
    
    
    
    
    Exposure to
    
    Carrying
    
    
    
    
    
    Exposure toValue [1]
    
    Liability [2]
    
    Loss [3]
    

    Value [1]

    
    Liability[2]
    
    Loss[3]Collateralized loan
obligations (CLOs)
and other funds [4]
    
    $
    359
    
    
    $
    199
    
    
    $
    171
    
    
    $
    296
    
    
    $
    167
    
    
    $
    136Limited partnerships
    
    
    309
    
    
    
    121
    
    
    
    150
    
    
    
    103
    
    
    
    15
    
    
    
    75Other investments [5]
    
    
    65
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    Total [6]
    
    $
    733
    
    
    $
    320
    
    
    $
    402
    
    
    $
    399
    
    
    $
    182
    
    
    $
    211
 [1]
    
    The carrying value of CLOs and other funds and Other investments is equal to fair value. Limited partnerships are
accounted for under the equity method.[2]
    
    Creditors have no recourse against the Company in the event of default by the VIE.[3]
    
    The maximum exposure to loss does not include changes in fair value or the Companys proportionate shares of earnings associated with
limited partnerships accounted for under the equity method. The Companys maximum exposure to loss as of December 31, 2007
and 2006 based on the carrying value was $413 and $217, respectively. The Companys maximum  exposure to
loss as of  December 31, 2007 and 2006 based on the Companys initial co-investment or amortized
cost basis was $402 and $211, respectively.[4]
    
    The Company provides collateral management services and earns a fee associated with these structures.[5]
    
    Other investments include investment structures that are backed by preferred securities.[6]
    
    As of December 31, 2007 and 2006, the Company had relationships with six and four VIEs, respectively, where the Company was
the primary beneficiary.
  46




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##### Table of Contents



Other-Than-Temporary Impairments
    2007
    
    2006
    
    2005ABSSub-prime residential mortgages
    
    $
    188
    
    
    $
    7
    
    
    $
    1Other
    
    
    18
    
    
    
    1
    
    
    
    1CMBS/CMOs
    
    
    6
    
    
    
    1
    
    
    
    1Corporate
    
    
    104
    
    
    
    59
    
    
    
    24Foreign government/Government agency
    
    
    5
    
    
    
    
    
    
    
    Equity
    
    
    18
    
    
    
    3
    
    
    
    Total other-than-temporary impairments
    
    $
    339
    
    
    $
    71
    
    
    $
    27Credit related
    
    $
    231
    
    
    $
    10
    
    
    $
    23Other
    
    
    108
    
    
    
    61
    
    
    
    4Total other-than-temporary impairments
    
    $
    339
    
    
    $
    71
    
    
    $
    27
  2007
   47




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##### Table of Contents



2006
   2005
  
 INVESTMENT CREDIT RISK
    Derivative Instruments
  48




---



##### Table of Contents



December 31, 2007Underlying Referenced Asset(s)Notional
    
    
    
    
    
    Average Credit
    
    
    
    
    
    AverageAmount
    
    Fair Value
    
    Risk Exposure
    
    Type
    
    Credit RatingCredit default swaps [1]Investment grade risk exposure
    
    $
    1,549
    
    
    $
    (93
    )
    
    AA
    
    Corporate Credit
    
    BBB+Below investment grade risk
exposure [2]
    
    
    300
    
    
    
    (142
    )
    
    CCC+
    
    Corporate Credit
    
    BBB-Credit index swaps
    
    
    881
    
    
    
    (21
    )
    
    AAA
    
    Lehman CMBS Index
    
    AAATotal return swaps
    
    
    850
    
    
    
    (41
    )
    
    NR to A
    
    Bank Loans
    
    
    BTotal
    
    $
    3,580
    
    
    $
    (297
    )
 [1]
    
    Includes $1.3 billion, as of December 31, 2007, of a standard market index of diversified
portfolios of corporate issuers referenced through credit default swaps. These swaps are
subsequently valued based upon the observable standard market index.
 [2]
    
    The fair value includes cash payments received at
inception of certain contracts of $100. The net loss for the year
ended December 31, 2007, was $48 before tax.
     49




---



##### Table of Contents



Fixed Maturities
  Fixed Maturities by TypeDecember 31, 2007
    
    December 31, 2006Percent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PercentAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    of Total
    
    Amortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    of TotalCost
    
    Gains
    
    Losses
    
    Value
    
    Fair Value
    
    Cost
    
    Gains
    
    Losses
    
    Value
    
    Fair ValueABSAuto
    
    $
    536
    
    
    $
    1
    
    
    $
    (12
    )
    
    $
    525
    
    
    
    1.2
    %
    
    $
    507
    
    
    $
    1
    
    
    $
    (3
    )
    
    $
    505
    
    
    
    1.1
    %Collateralized
debt obligations
(CDOs) [1]
    
    
    1,877
    
    
    
    
    
    
    
    (82
    )
    
    
    1,795
    
    
    
    3.9
    %
    
    
    818
    
    
    
    2
    
    
    
    
    
    
    
    820
    
    
    
    1.9
    %Credit cards
    
    
    826
    
    
    
    2
    
    
    
    (18
    )
    
    
    810
    
    
    
    1.8
    %
    
    
    994
    
    
    
    5
    
    
    
    (2
    )
    
    
    997
    
    
    
    2.2
    %Residential
mortgage backed
(RMBS) [2]
    
    
    2,558
    
    
    
    6
    
    
    
    (294
    )
    
    
    2,270
    
    
    
    5.0
    %
    
    
    2,320
    
    
    
    10
    
    
    
    (6
    )
    
    
    2,324
    
    
    
    5.2
    %Student loans
    
    
    719
    
    
    
    
    
    
    
    (37
    )
    
    
    682
    
    
    
    1.5
    %
    
    
    736
    
    
    
    5
    
    
    
    
    
    
    
    741
    
    
    
    1.7
    %Other
    
    
    1,086
    
    
    
    15
    
    
    
    (76
    )
    
    
    1,025
    
    
    
    2.2
    %
    
    
    795
    
    
    
    15
    
    
    
    (30
    )
    
    
    780
    
    
    
    1.8
    %CMBSBonds
    
    
    8,600
    
    
    
    81
    
    
    
    (239
    )
    
    
    8,442
    
    
    
    18.5
    %
    
    
    8,366
    
    
    
    94
    
    
    
    (51
    )
    
    
    8,409
    
    
    
    18.8
    %CDOs
    
    
    1,872
    
    
    
    
    
    
    
    (319
    )
    
    
    1,553
    
    
    
    3.4
    %
    
    
    1,301
    
    
    
    1
    
    
    
    (8
    )
    
    
    1,294
    
    
    
    2.9
    %IOs
    
    
    1,043
    
    
    
    78
    
    
    
    (14
    )
    
    
    1,107
    
    
    
    2.4
    %
    
    
    1,139
    
    
    
    51
    
    
    
    (12
    )
    
    
    1,178
    
    
    
    2.6
    %CMOsAgency backed
    
    
    793
    
    
    
    18
    
    
    
    (3
    )
    
    
    808
    
    
    
    1.8
    %
    
    
    778
    
    
    
    8
    
    
    
    (5
    )
    
    
    781
    
    
    
    1.8
    %Non-agency backed
[3]
    
    
    411
    
    
    
    4
    
    
    
    (2
    )
    
    
    413
    
    
    
    0.9
    %
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    0.2
    %CorporateBasic industry
    
    
    1,552
    
    
    
    45
    
    
    
    (19
    )
    
    
    1,578
    
    
    
    3.5
    %
    
    
    1,794
    
    
    
    60
    
    
    
    (17
    )
    
    
    1,837
    
    
    
    4.1
    %Capital goods
    
    
    1,460
    
    
    
    72
    
    
    
    (14
    )
    
    
    1,518
    
    
    
    3.3
    %
    
    
    1,648
    
    
    
    90
    
    
    
    (10
    )
    
    
    1,728
    
    
    
    3.9
    %Consumer cyclical
    
    
    1,886
    
    
    
    72
    
    
    
    (34
    )
    
    
    1,924
    
    
    
    4.2
    %
    
    
    2,031
    
    
    
    73
    
    
    
    (19
    )
    
    
    2,085
    
    
    
    4.7
    %Consumer
non-cyclical
    
    
    2,023
    
    
    
    72
    
    
    
    (19
    )
    
    
    2,076
    
    
    
    4.6
    %
    
    
    2,111
    
    
    
    64
    
    
    
    (24
    )
    
    
    2,151
    
    
    
    4.8
    %Energy
    
    
    1,117
    
    
    
    53
    
    
    
    (8
    )
    
    
    1,162
    
    
    
    2.5
    %
    
    
    1,164
    
    
    
    56
    
    
    
    (9
    )
    
    
    1,211
    
    
    
    2.7
    %Financial services
    
    
    7,467
    
    
    
    188
    
    
    
    (349
    )
    
    
    7,306
    
    
    
    16.0
    %
    
    
    6,380
    
    
    
    242
    
    
    
    (45
    )
    
    
    6,577
    
    
    
    14.7
    %Technology and
communications
    
    
    2,455
    
    
    
    141
    
    
    
    (22
    )
    
    
    2,574
    
    
    
    5.6
    %
    
    
    2,584
    
    
    
    140
    
    
    
    (24
    )
    
    
    2,700
    
    
    
    6.0
    %Transportation
    
    
    312
    
    
    
    10
    
    
    
    (7
    )
    
    
    315
    
    
    
    0.7
    %
    
    
    546
    
    
    
    14
    
    
    
    (6
    )
    
    
    554
    
    
    
    1.2
    %Utilities
    
    
    2,797
    
    
    
    138
    
    
    
    (70
    )
    
    
    2,865
    
    
    
    6.3
    %
    
    
    2,663
    
    
    
    151
    
    
    
    (40
    )
    
    
    2,774
    
    
    
    6.2
    %Other
    
    
    859
    
    
    
    16
    
    
    
    (29
    )
    
    
    846
    
    
    
    1.9
    %
    
    
    1,061
    
    
    
    21
    
    
    
    (12
    )
    
    
    1,070
    
    
    
    2.4
    %Government/Government
agenciesForeign
    
    
    465
    
    
    
    35
    
    
    
    (2
    )
    
    
    498
    
    
    
    1.1
    %
    
    
    568
    
    
    
    44
    
    
    
    (4
    )
    
    
    608
    
    
    
    1.4
    %United States
    
    
    516
    
    
    
    14
    
    
    
    (1
    )
    
    
    529
    
    
    
    1.2
    %
    
    
    542
    
    
    
    2
    
    
    
    (5
    )
    
    
    539
    
    
    
    1.2
    %MBS
    
    
    1,750
    
    
    
    15
    
    
    
    (15
    )
    
    
    1,750
    
    
    
    3.8
    %
    
    
    1,808
    
    
    
    6
    
    
    
    (31
    )
    
    
    1,783
    
    
    
    4.0
    %Municipal
    
    
    1,226
    
    
    
    32
    
    
    
    (20
    )
    
    
    1,238
    
    
    
    2.7
    %
    
    
    1,114
    
    
    
    23
    
    
    
    (15
    )
    
    
    1,122
    
    
    
    2.5
    %Redeemable preferred
stock
    
    
    2
    
    
    
    2
    
    
    
    (2
    )
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    Total fixed maturities
    
    $
    46,208
    
    
    $
    1,110
    
    
    $
    (1,707
    )
    
    $
    45,611
    
    
    
    100.0
    %
    
    $
    43,846
    
    
    $
    1,178
    
    
    $
    (378
    )
    
    $
    44,646
    
    
    
    100.0
    %
 [1]
    
    Includes securities with an amortized cost and fair value of $16 and
$15 as of December 31, 2007 and $48 as of December 31, 2006 that
contain a below-prime loan residential mortgage component. Typically
these CDOs are also backed by assets other than below-prime loans.[2]
    
    Includes securities with an amortized cost and fair value of $30 and
$28, respectively, as of December 31, 2007 and $8 as of December 31,
2006, which were backed by pools of loans issued to prime borrowers.
Includes securities with an amortized cost and fair value of $91 and
$82, respectively, as of December 31, 2007, and $26 and $25,
respectively, as of December 31, 2006, which were backed by pools of
loans issued to Alt-A borrowers.[3]
    
    Includes securities with an amortized cost and fair value of $212 as
of December 31, 2007 and $72 and $73, respectively, as of December 31,
2006, which were backed by pools of loans issued to Alt-A borrowers.
   50




---



##### Table of Contents



Sub-prime Residential Mortgage Loans
   Sub-Prime Residential Mortgage Loans [1] [2] [3] [4] [5]
 December 31, 2007AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    50
    
    
    $
    49
    
    
    $
    180
    
    
    $
    168
    
    
    $
    79
    
    
    $
    66
    
    
    $
    6
    
    
    $
    5
    
    
    $
    7
    
    
    $
    6
    
    
    $
    322
    
    
    $
    2942004
    
    
    129
    
    
    
    127
    
    
    
    304
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    433
    
    
    
    4032005
    
    
    83
    
    
    
    77
    
    
    
    762
    
    
    
    683
    
    
    
    8
    
    
    
    5
    
    
    
    10
    
    
    
    3
    
    
    
    29
    
    
    
    19
    
    
    
    892
    
    
    
    7872006
    
    
    336
    
    
    
    304
    
    
    
    48
    
    
    
    39
    
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    390
    
    
    
    3462007
    
    
    262
    
    
    
    227
    
    
    
    66
    
    
    
    37
    
    
    
    52
    
    
    
    44
    
    
    
    17
    
    
    
    17
    
    
    
    19
    
    
    
    20
    
    
    
    416
    
    
    
    345Total
    
    $
    860
    
    
    $
    784
    
    
    $
    1,360
    
    
    $
    1,203
    
    
    $
    140
    
    
    $
    116
    
    
    $
    35
    
    
    $
    26
    
    
    $
    58
    
    
    $
    46
    
    
    $
    2,453
    
    
    $
    2,175Credit protection
[6]
    
    32.3%
    
    47.9%
    
    22.7%
    
    23.1%
    
    19.2%
    
    40.7%
 51




---



##### Table of Contents



December 31, 2006AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    88
    
    
    $
    90
    
    
    $
    255
    
    
    $
    256
    
    
    $
    150
    
    
    $
    151
    
    
    $
    9
    
    
    $
    9
    
    
    $
    1
    
    
    $
    1
    
    
    $
    503
    
    
    $
    5072004
    
    
    266
    
    
    
    266
    
    
    
    347
    
    
    
    349
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    621
    
    
    
    6232005
    
    
    128
    
    
    
    128
    
    
    
    774
    
    
    
    776
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    32
    
    
    
    937
    
    
    
    9362006
    
    
    239
    
    
    
    239
    
    
    
    29
    
    
    
    29
    
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    1
    
    
    
    273
    
    
    
    273Total
    
    $
    721
    
    
    $
    723
    
    
    $
    1,405
    
    
    $
    1,410
    
    
    $
    151
    
    
    $
    152
    
    
    $
    20
    
    
    $
    20
    
    
    $
    37
    
    
    $
    34
    
    
    $
    2,334
    
    
    $
    2,339
 [1]
    
    The vintage year represents the year the underlying loans in the pool were originated.[2]
    
    Securities backed by Alt-A residential mortgages, including CMOs, have an amortized cost and fair value of $303 and $294,
respectively, as of December 31, 2007 and $98 as of December 31, 2006. These amounts are not included in the table.[3]
    
    The Companys exposure to second lien residential mortgages is composed primarily of loans to prime and Alt-A
borrowers, of which approximately half were wrapped by monoline insurers. These securities are included in the table above
and have an amortized cost and fair value of $206 and $170, respectively, as of December 31, 2007 and $118 as of December
31, 2006.[4]
    
    As of December 31, 2007, the weighted average life of the sub-prime residential mortgage portfolio was 4.6 years.[5]
    
    Approximately 90% of the portfolio is backed by adjustable rate mortgages.[6]
    
    Represents the current weighted average percentage of the capital structure subordinated to the Companys investment
holding that is available to absorb losses before the security suffers the first dollar loss of principal.
  Sub-Prime Residential Mortgage Loans [1] [2] [3] [4] [5]
 December 31, 2007AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    23
    
    
    $
    23
    
    
    $
    95
    
    
    $
    87
    
    
    $
    49
    
    
    $
    41
    
    
    $
    4
    
    
    $
    3
    
    
    $
    3
    
    
    $
    3
    
    
    $
    174
    
    
    $
    1572004
    
    
    112
    
    
    
    111
    
    
    
    199
    
    
    
    181
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311
    
    
    
    2922005
    
    
    63
    
    
    
    58
    
    
    
    624
    
    
    
    559
    
    
    
    8
    
    
    
    5
    
    
    
    10
    
    
    
    4
    
    
    
    27
    
    
    
    16
    
    
    
    732
    
    
    
    6422006
    
    
    241
    
    
    
    217
    
    
    
    29
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    271
    
    
    
    2422007
    
    
    165
    
    
    
    143
    
    
    
    55
    
    
    
    30
    
    
    
    37
    
    
    
    36
    
    
    
    8
    
    
    
    8
    
    
    
    11
    
    
    
    13
    
    
    
    276
    
    
    
    230Total
    
    $
    604
    
    
    $
    552
    
    
    $
    1,002
    
    
    $
    881
    
    
    $
    94
    
    
    $
    82
    
    
    $
    23
    
    
    $
    16
    
    
    $
    41
    
    
    $
    32
    
    
    $
    1,764
    
    
    $
    1,563Credit protection
[6]
    
    32.7%
    
    48.4%
    
    24.1%
    
    27.9%
    
    23.3%
    
    41.4%
 December 31, 2006AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    48
    
    
    $
    49
    
    
    $
    120
    
    
    $
    121
    
    
    $
    83
    
    
    $
    83
    
    
    $
    3
    
    
    $
    3
    
    
    $
    1
    
    
    $
    1
    
    
    $
    255
    
    
    $
    2572004
    
    
    192
    
    
    
    191
    
    
    
    237
    
    
    
    238
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    436
    
    
    
    4362005
    
    
    97
    
    
    
    98
    
    
    
    633
    
    
    
    635
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    24
    
    
    
    756
    
    
    
    7572006
    
    
    168
    
    
    
    168
    
    
    
    14
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    185Total
    
    $
    505
    
    
    $
    506
    
    
    $
    1,004
    
    
    $
    1,008
    
    
    $
    83
    
    
    $
    83
    
    
    $
    13
    
    
    $
    13
    
    
    $
    27
    
    
    $
    25
    
    
    $
    1,632
    
    
    $
    1,635
 [1]
    
    The vintage year represents the year the underlying loans in the pool were originated.[2]
    
    Securities backed by Alt-A residential mortgages, including CMOs, have an amortized cost and fair value of $176 and $168,
respectively, as of December 31, 2007 and $68 as of December 31, 2006. These amounts are not included in the table.[3]
    
    The Companys exposure to second lien residential mortgages is composed primarily of loans to prime and Alt-A
borrowers, of which approximately half were wrapped by monoline insurers. These securities are included in the table above
and have an amortized cost and fair value of $145 and $118, respectively, as of December 31, 2007 and $97 and $98,
respectively, as of December 31, 2006.[4]
    
    As of December 31, 2007, the weighted average life of the sub-prime residential mortgage portfolio was 4.6 years.[5]
    
    Approximately 90% of the portfolio is backed by adjustable rate mortgages.[6]
    
    Represents the current weighted average percentage of the capital structure subordinated to the Companys investment
holding that is available to absorb losses before the security suffers the first dollar loss of principal.
 52




---



##### Table of Contents



Commercial Mortgage Loans
  CMBS  Bonds [1]
 December 31, 2007AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    1,953
    
    
    $
    1,983
    
    
    $
    296
    
    
    $
    303
    
    
    $
    133
    
    
    $
    133
    
    
    $
    7
    
    
    $
    7
    
    
    $
    26
    
    
    $
    29
    
    
    $
    2,415
    
    
    $
    2,4552004
    
    
    368
    
    
    
    370
    
    
    
    56
    
    
    
    55
    
    
    
    71
    
    
    
    68
    
    
    
    21
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    5122005
    
    
    623
    
    
    
    615
    
    
    
    247
    
    
    
    236
    
    
    
    272
    
    
    
    265
    
    
    
    67
    
    
    
    65
    
    
    
    22
    
    
    
    19
    
    
    
    1,231
    
    
    
    1,2002006
    
    
    1,940
    
    
    
    1,890
    
    
    
    263
    
    
    
    254
    
    
    
    569
    
    
    
    559
    
    
    
    392
    
    
    
    352
    
    
    
    18
    
    
    
    17
    
    
    
    3,182
    
    
    
    3,0722007
    
    
    673
    
    
    
    662
    
    
    
    263
    
    
    
    249
    
    
    
    142
    
    
    
    131
    
    
    
    175
    
    
    
    158
    
    
    
    3
    
    
    
    3
    
    
    
    1,256
    
    
    
    1,203Total
    
    $
    5,557
    
    
    $
    5,520
    
    
    $
    1,125
    
    
    $
    1,097
    
    
    $
    1,187
    
    
    $
    1,156
    
    
    $
    662
    
    
    $
    601
    
    
    $
    69
    
    
    $
    68
    
    
    $
    8,600
    
    
    $
    8,442Credit protection
    
    23.8%
    
    16.4%
    
    13.6%
    
    6.8%
    
    3.7%
    
    19.2%
 December 31, 2006AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    2,439
    
    
    $
    2,469
    
    
    $
    394
    
    
    $
    401
    
    
    $
    262
    
    
    $
    262
    
    
    $
    54
    
    
    $
    55
    
    
    $
    30
    
    
    $
    39
    
    
    $
    3,179
    
    
    $
    3,2262004
    
    
    372
    
    
    
    368
    
    
    
    56
    
    
    
    55
    
    
    
    85
    
    
    
    84
    
    
    
    25
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    538
    
    
    
    5312005
    
    
    674
    
    
    
    668
    
    
    
    428
    
    
    
    425
    
    
    
    441
    
    
    
    439
    
    
    
    215
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    1,758
    
    
    
    1,7462006
    
    
    1,435
    
    
    
    1,443
    
    
    
    326
    
    
    
    327
    
    
    
    709
    
    
    
    714
    
    
    
    397
    
    
    
    398
    
    
    
    24
    
    
    
    24
    
    
    
    2,891
    
    
    
    2,906Total
    
    $
    4,920
    
    
    $
    4,948
    
    
    $
    1,204
    
    
    $
    1,208
    
    
    $
    1,497
    
    
    $
    1,499
    
    
    $
    691
    
    
    $
    691
    
    
    $
    54
    
    
    $
    63
    
    
    $
    8,366
    
    
    $
    8,409
 [1]
    
    The vintage year represents the year the pool of loans was originated. CMBS  CRE CDOs [1] [2]
 December 31, 2007AAA
    
    AA
    
    A
    
    BBB
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    270
    
    
    $
    228
    
    
    $
    70
    
    
    $
    58
    
    
    $
    31
    
    
    $
    22
    
    
    $
    7
    
    
    $
    7
    
    
    $
    378
    
    
    $
    3152004
    
    
    86
    
    
    
    69
    
    
    
    16
    
    
    
    13
    
    
    
    11
    
    
    
    8
    
    
    
    4
    
    
    
    3
    
    
    
    117
    
    
    
    932005
    
    
    79
    
    
    
    65
    
    
    
    34
    
    
    
    26
    
    
    
    10
    
    
    
    7
    
    
    
    2
    
    
    
    1
    
    
    
    125
    
    
    
    992006
    
    
    436
    
    
    
    386
    
    
    
    142
    
    
    
    113
    
    
    
    187
    
    
    
    145
    
    
    
    50
    
    
    
    38
    
    
    
    815
    
    
    
    6822007
    
    
    206
    
    
    
    177
    
    
    
    129
    
    
    
    107
    
    
    
    79
    
    
    
    63
    
    
    
    23
    
    
    
    17
    
    
    
    437
    
    
    
    364Total
    
    $
    1,077
    
    
    $
    925
    
    
    $
    391
    
    
    $
    317
    
    
    $
    318
    
    
    $
    245
    
    
    $
    86
    
    
    $
    66
    
    
    $
    1,872
    
    
    $
    1,553Credit protection
    
    31.5%
    
    27.1%
    
    16.7%
    
    10.4%
    
    27.5%
 December 31, 2006AAA
    
    AA
    
    A
    
    BBB
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value2003 & Prior
    
    $
    230
    
    
    $
    227
    
    
    $
    75
    
    
    $
    75
    
    
    $
    28
    
    
    $
    28
    
    
    $
    5
    
    
    $
    5
    
    
    $
    338
    
    
    $
    3352004
    
    
    61
    
    
    
    61
    
    
    
    20
    
    
    
    20
    
    
    
    8
    
    
    
    8
    
    
    
    1
    
    
    
    1
    
    
    
    90
    
    
    
    902005
    
    
    90
    
    
    
    90
    
    
    
    21
    
    
    
    21
    
    
    
    6
    
    
    
    6
    
    
    
    1
    
    
    
    1
    
    
    
    118
    
    
    
    1182006
    
    
    442
    
    
    
    440
    
    
    
    107
    
    
    
    105
    
    
    
    150
    
    
    
    150
    
    
    
    56
    
    
    
    56
    
    
    
    755
    
    
    
    751Total
    
    $
    823
    
    
    $
    818
    
    
    $
    223
    
    
    $
    221
    
    
    $
    192
    
    
    $
    192
    
    
    $
    63
    
    
    $
    63
    
    
    $
    1,301
    
    
    $
    1,294
 [1]
    
    The vintage year represents the year the underlying loans in the pool were originated.[2]
    
    Approximately 50% of the underlying CMBS CRE CDO collateral are seasoned, below investment grade securities. However, the
Company primarily invests in the AAA tranche of the CDO capital structure. 53




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##### Table of Contents



Commercial Mortgage Loans on Real Estate by RegionDecember 31, 2007
    
    December 31, 2006Carrying Value
    
    Percent of Total
    
    Carrying Value
    
    Percent of TotalEast North Central
    
    $
    101
    
    
    
    2.4
    %
    
    $
    94
    
    
    
    3.6
    %East South Central
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Middle Atlantic
    
    
    503
    
    
    
    12.1
    %
    
    
    470
    
    
    
    17.9
    %Mountain
    
    
    101
    
    
    
    2.4
    %
    
    
    24
    
    
    
    0.9
    %New England
    
    
    348
    
    
    
    8.4
    %
    
    
    166
    
    
    
    6.3
    %Pacific
    
    
    959
    
    
    
    23.0
    %
    
    
    523
    
    
    
    19.9
    %South Atlantic
    
    
    749
    
    
    
    18.0
    %
    
    
    551
    
    
    
    20.9
    %West North Central
    
    
    25
    
    
    
    0.6
    %
    
    
    6
    
    
    
    0.2
    %West South Central
    
    
    179
    
    
    
    4.3
    %
    
    
    100
    
    
    
    3.8
    %Other [1]
    
    
    1,201
    
    
    
    28.8
    %
    
    
    697
    
    
    
    26.5
    %Total
    
    $
    4,166
    
    
    
    100.0
    %
    
    $
    2,631
    
    
    
    100.0
    %
 [1]
    
    Includes multi-regional properties. Commercial Mortgage Loans on Real Estate by Property TypeDecember 31, 2007
    
    December 31, 2006Carrying Value
    
    Percent of Total
    
    Carrying Value
    
    Percent of TotalIndustrial
    
    $
    424
    
    
    
    10.2
    %
    
    $
    298
    
    
    
    11.3
    %Lodging
    
    
    424
    
    
    
    10.2
    %
    
    
    413
    
    
    
    15.7
    %Agricultural
    
    
    236
    
    
    
    5.7
    %
    
    
    58
    
    
    
    2.2
    %Multifamily
    
    
    708
    
    
    
    17.0
    %
    
    
    250
    
    
    
    9.5
    %Office
    
    
    1,550
    
    
    
    37.2
    %
    
    
    1,130
    
    
    
    43.0
    %Retail
    
    
    702
    
    
    
    16.8
    %
    
    
    352
    
    
    
    13.4
    %Other
    
    
    122
    
    
    
    2.9
    %
    
    
    130
    
    
    
    4.9
    %Total
    
    $
    4,166
    
    
    
    100.0
    %
    
    $
    2,631
    
    
    
    100.0
    %
 Consumer Loans
  54




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##### Table of Contents



ABS Consumer Loans
 December 31, 2007AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    ValueCredit card [1]
    
    $
    156
    
    
    $
    157
    
    
    $
    19
    
    
    $
    19
    
    
    $
    130
    
    
    $
    130
    
    
    $
    521
    
    
    $
    504
    
    
    $
    
    
    
    $
    
    
    
    $
    826
    
    
    $
    810Auto [2]
    
    
    204
    
    
    
    201
    
    
    
    7
    
    
    
    7
    
    
    
    151
    
    
    
    148
    
    
    
    154
    
    
    
    150
    
    
    
    20
    
    
    
    19
    
    
    
    536
    
    
    
    525Student loan [3]
    
    
    290
    
    
    
    274
    
    
    
    308
    
    
    
    293
    
    
    
    121
    
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    719
    
    
    
    682Total
    
    $
    650
    
    
    $
    632
    
    
    $
    334
    
    
    $
    319
    
    
    $
    402
    
    
    $
    393
    
    
    $
    675
    
    
    $
    654
    
    
    $
    20
    
    
    $
    19
    
    
    $
    2,081
    
    
    $
    2,017
 December 31, 2006AAA
    
    AA
    
    A
    
    BBB
    
    BB and Below
    
    TotalAmortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    ValueCredit card [1]
    
    $
    184
    
    
    $
    183
    
    
    $
    30
    
    
    $
    30
    
    
    $
    198
    
    
    $
    200
    
    
    $
    582
    
    
    $
    584
    
    
    $
    
    
    
    $
    
    
    
    $
    994
    
    
    $
    997Auto [2]
    
    
    163
    
    
    
    163
    
    
    
    57
    
    
    
    56
    
    
    
    90
    
    
    
    90
    
    
    
    187
    
    
    
    186
    
    
    
    10
    
    
    
    10
    
    
    
    507
    
    
    
    505Student loan [3]
    
    
    341
    
    
    
    342
    
    
    
    237
    
    
    
    240
    
    
    
    151
    
    
    
    152
    
    
    
    7
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    736
    
    
    
    741Total
    
    $
    688
    
    
    $
    688
    
    
    $
    324
    
    
    $
    326
    
    
    $
    439
    
    
    $
    442
    
    
    $
    776
    
    
    $
    777
    
    
    $
    10
    
    
    $
    10
    
    
    $
    2,237
    
    
    $
    2,243
 [1]
    
    Approximately 15% of the exposure was issued by lenders that lend primarily to sub-prime borrowers.[2]
    
    The AAA rated securities include monoline insured securities with an amortized cost and fair value of $42 at December 31,
2007 and $29 at December 31, 2006. Additionally, approximately 7% of the auto consumer loan-backed securities was issued
by lenders whose primary business is to sub-prime borrowers.[3]
    
    The AAA rated securities include monoline insured securities with an amortized cost and fair value of $102 and $93,
respectively, at December 31, 2007 and $102 at December 31, 2006. Additionally, approximately half of the student
loan-backed exposure is guaranteed by the Federal Family Education Loan Program, with the remainder comprised of loans to
prime-borrowers. Monoline Insured Securities
  Mortgage Lenders
   55




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##### Table of Contents



Fixed Maturities by Credit Quality2007
    
    2006Percent of Total
    
    
    
    
    
    
    
    
    
    Percent of TotalAmortized Cost
    
    Fair Value
    
    Fair Value
    
    Amortized Cost
    
    Fair Value
    
    Fair ValueAAA
    
    $
    14,217
    
    
    $
    13,879
    
    
    
    30.5
    %
    
    $
    10,851
    
    
    $
    10,923
    
    
    
    24.5
    %AA
    
    
    6,015
    
    
    
    5,700
    
    
    
    12.5
    %
    
    
    5,334
    
    
    
    5,402
    
    
    
    12.1
    %A
    
    
    10,887
    
    
    
    10,999
    
    
    
    24.1
    %
    
    
    11,206
    
    
    
    11,657
    
    
    
    26.1
    %BBB
    
    
    9,980
    
    
    
    9,937
    
    
    
    21.8
    %
    
    
    11,104
    
    
    
    11,308
    
    
    
    25.3
    %United States Government/Government agencies
    
    
    3,262
    
    
    
    3,295
    
    
    
    7.2
    %
    
    
    3,532
    
    
    
    3,513
    
    
    
    7.9
    %BB & below
    
    
    1,847
    
    
    
    1,801
    
    
    
    3.9
    %
    
    
    1,819
    
    
    
    1,843
    
    
    
    4.1
    %Total fixed maturities
    
    $
    46,208
    
    
    $
    45,611
    
    
    
    100.0
    %
    
    $
    43,846
    
    
    $
    44,646
    
    
    
    100.0
    %
  Unrealized Loss Aging of Total Available-for-Sale Securities2007
    
    2006Fair
    
    
    
    
    
    
    
    
    
    FairAmortized Cost
    
    Value
    
    Unrealized Loss
    
    Amortized Cost
    
    Value
    
    Unrealized LossThree months or less
    
    $
    6,580
    
    
    $
    6,321
    
    
    $
    (259
    )
    
    $
    7,193
    
    
    $
    7,132
    
    
    $
    (61
    )Greater than three months to six months
    
    
    8,023
    
    
    
    7,411
    
    
    
    (612
    )
    
    
    959
    
    
    
    948
    
    
    
    (11
    )Greater than six months to nine months
    
    
    5,238
    
    
    
    4,795
    
    
    
    (443
    )
    
    
    775
    
    
    
    757
    
    
    
    (18
    )Greater than nine months to twelve months
    
    
    1,917
    
    
    
    1,763
    
    
    
    (154
    )
    
    
    1,104
    
    
    
    1,087
    
    
    
    (17
    )Greater than twelve months
    
    
    5,971
    
    
    
    5,681
    
    
    
    (290
    )
    
    
    8,537
    
    
    
    8,260
    
    
    
    (277
    )Total
    
    $
    27,729
    
    
    $
    25,971
    
    
    $
    (1,758
    )
    
    $
    18,568
    
    
    $
    18,184
    
    
    $
    (384
    )
  56




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##### Table of Contents



Total Available-for-Sale Securities with Unrealized Loss Greater Than Six Months by Type2007
    
    2006Percent of Total
    
    
    
    
    
    
    
    
    
    
    
    Percent of TotalAmortized Cost
    
    Fair Value
    
    Unrealized Loss
    
    Unrealized Loss
    
    Amortized Cost
    
    FairValue
    
    Unrealized Loss
    
    Unrealized LossABSAircraft lease receivables
    
    $
    91
    
    
    $
    75
    
    
    $
    (16
    )
    
    
    1.8
    %
    
    $
    99
    
    
    $
    73
    
    
    $
    (26
    )
    
    
    8.3
    %CDOs
    
    
    351
    
    
    
    335
    
    
    
    (16
    )
    
    
    1.8
    %
    
    
    130
    
    
    
    126
    
    
    
    (4
    )
    
    
    1.3
    %RMBS
    
    
    600
    
    
    
    522
    
    
    
    (78
    )
    
    
    8.8
    %
    
    
    148
    
    
    
    143
    
    
    
    (5
    )
    
    
    1.6
    %Other ABS
    
    
    642
    
    
    
    599
    
    
    
    (43
    )
    
    
    4.8
    %
    
    
    458
    
    
    
    449
    
    
    
    (9
    )
    
    
    2.9
    %CMBS
    
    
    4,342
    
    
    
    3,991
    
    
    
    (351
    )
    
    
    39.6
    %
    
    
    2,399
    
    
    
    2,345
    
    
    
    (54
    )
    
    
    17.3
    %CorporateBasic industry
    
    
    310
    
    
    
    300
    
    
    
    (10
    )
    
    
    1.1
    %
    
    
    476
    
    
    
    463
    
    
    
    (13
    )
    
    
    4.2
    %Consumer cyclical
    
    
    369
    
    
    
    354
    
    
    
    (15
    )
    
    
    1.7
    %
    
    
    372
    
    
    
    357
    
    
    
    (15
    )
    
    
    4.8
    %Consumer non-cyclical
    
    
    450
    
    
    
    437
    
    
    
    (13
    )
    
    
    1.5
    %
    
    
    572
    
    
    
    553
    
    
    
    (19
    )
    
    
    6.1
    %Financial services
    
    
    2,209
    
    
    
    2,020
    
    
    
    (189
    )
    
    
    21.3
    %
    
    
    1,581
    
    
    
    1,547
    
    
    
    (34
    )
    
    
    10.9
    %Technology and communications
    
    
    335
    
    
    
    323
    
    
    
    (12
    )
    
    
    1.4
    %
    
    
    500
    
    
    
    481
    
    
    
    (19
    )
    
    
    6.1
    %Transportation
    
    
    94
    
    
    
    91
    
    
    
    (3
    )
    
    
    0.3
    %
    
    
    151
    
    
    
    146
    
    
    
    (5
    )
    
    
    1.6
    %Utilities
    
    
    994
    
    
    
    940
    
    
    
    (54
    )
    
    
    6.1
    %
    
    
    748
    
    
    
    717
    
    
    
    (31
    )
    
    
    9.9
    %Other
    
    
    770
    
    
    
    739
    
    
    
    (31
    )
    
    
    3.5
    %
    
    
    791
    
    
    
    765
    
    
    
    (26
    )
    
    
    8.3
    %MBS
    
    
    778
    
    
    
    763
    
    
    
    (15
    )
    
    
    1.7
    %
    
    
    1,163
    
    
    
    1,134
    
    
    
    (29
    )
    
    
    9.3
    %Municipals
    
    
    331
    
    
    
    315
    
    
    
    (16
    )
    
    
    1.8
    %
    
    
    205
    
    
    
    195
    
    
    
    (10
    )
    
    
    3.2
    %Other securities
    
    
    460
    
    
    
    435
    
    
    
    (25
    )
    
    
    2.8
    %
    
    
    623
    
    
    
    610
    
    
    
    (13
    )
    
    
    4.2
    %Total
    
    $
    13,126
    
    
    $
    12,239
    
    
    $
    (887
    )
    
    
    100.0
    %
    
    $
    10,416
    
    
    $
    10,104
    
    
    $
    (312
    )
    
    
    100.0
    %
  CMBS
 Financial services
 RMBS
  57




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##### Table of Contents



CAPITAL MARKETS RISK MANAGEMENT
  Market Risk
  Interest Rate Risk
     58




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##### Table of Contents



Credit Risk
     Equity Risk
   Foreign Currency Exchange Risk
  59




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##### Table of Contents



Derivative Instruments
         Key Market Risk Exposures
   Interest Rate Risk
  60




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##### Table of Contents



Fixed Maturity Investments
  Liabilities
     Derivatives
    Calculated Interest Rate Sensitivity
  61




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##### Table of Contents



Change in Net Economic Value As of December 31,2007
    
    2006Basis point shift
    
    
    - 100
    
    
    
    + 100
    
    
    
    - 100
    
    
    
    + 100Amount
    
    $
    (145
    )
    
    $
    59
    
    
    $
    (29
    )
    
    $
    
   Change in Fair Value As of December 31,2007
    
    2006Basis point shift
    
    
    - 100
    
    
    
    + 100
    
    
    
    - 100
    
    
    
    + 100Amount
    
    $
    354
    
    
    $
    (342
    )
    
    $
    398
    
    
    $
    (390
    )
  Equity Risk
    62




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63




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64




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##### Table of Contents



Variable Annuity Equity Risk Impact on Statutory Distributable Earnings
 th
  
    
    Capital market levels at the date of the projections;
    
    A decision to buy hedging instruments would mitigate the exposure in the tail scenario.
Such decisions are made based on a variety of factors including the price of the
instrument versus the protection afforded.
    
    The Companys ability to organically generate surplus in excess of that required to
maintain financial strength ratings would reduce the exposure in a tail scenario.
    
    Increases or decreases in surplus due to the impact capital market movements can have
on the valuation of GMWB hedging instruments. Under statutory accounting, there is no fair
value recognition of an embedded derivative; however, changes in value of the GMWB hedging
instruments are recorded in capital and surplus. The tail scenario estimates described
above incorporate the dynamic hedging of GMWB. Generally, increases in the value of GMWB
hedging instruments will reduce the exposure in the tail scenario.
    
    Each year, the Company writes new variable annuity business with existing or new living
benefit guarantees, while older business, often without living benefit guarantees, is
naturally lapsing. As a result the exposure in the tail scenario is likely to increase
over time.
    
    Changes in statutory reserving requirements, which can ultimately impact the level of
capital and surplus at a point in time, can impact the estimate of exposure in the tail
scenario.
    
    Changes in estimates of policyholder behavior can impact the estimates of statutory
distributable earnings.
    
    Changes in rating agency, regulatory risk based capital (RBC) ratios and other
similar solvency margin ratios can impact the estimate of exposure in the tail scenario.
    
    Management regularly evaluates the model used to produce projections of distributable
earnings and incorporates changes deemed necessary to improve the relevance and
reliability of this estimate.
 Foreign Currency Exchange Risk
  Fixed Maturity Investments
  Liabilities
  65




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##### Table of Contents



CAPITAL RESOURCES AND LIQUIDITY
  Debt
 Consumer Notes
    66




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##### Table of Contents



Contractual Obligations
 Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 yearsOperating leases
    
    $
    45
    
    
    $
    17
    
    
    $
    19
    
    
    $
    7
    
    
    $
    2Policyholder obligations [1]
    
    
    403
    
    
    
    25
    
    
    
    52
    
    
    
    54
    
    
    
    272Consumer Notes
    
    
    874
    
    
    
    257
    
    
    
    555
    
    
    
    49
    
    
    
    15Other long-term liabilities
    
    
    2,791
    
    
    
    2,766
    
    
    
    
    
    
    
    
    
    
    
    25Life and Annuity obligations (1)
    
    
    405,106
    
    
    
    25,189
    
    
    
    51,957
    
    
    
    53,854
    
    
    
    274,106Total
    
    $
    495,844
    
    
    $
    43,525
    
    
    $
    68,113
    
    
    $
    557
    
    
    $
    314,419
 [1]
    
    Estimated Life and Annuity obligations include death and disability claims, other charges
associated with policyholder reserves, policy surrenders and policyholder dividends, offset by
expected future deposits on in-force contracts. Estimated contractual policyholder obligations are
based on mortality, morbidity and lapse assumptions comparable with the Companys historical
experience, modified for recent observed trends. The Company has also assumed market growth
consistent with assumptions used in amortizing deferred acquisition costs. As the majority of the
Companys estimated obligations are recorded on the balance sheet at the current account value, as
described in the Critical Accounting Policies, the Companys recorded liability does not
incorporate an expectation of future market growth. Therefore, the estimated contractual policy
holder obligations presented in this table exceed the liabilities recorded on the balance sheet
within reserves for future policy benefits and unpaid claims and claim adjustment expenses, other
policyholder funds and benefits payable and separate account liabilities. Due to the significance
of the assumptions used, the amounts presented could significantly differ from actual results.
 Dividends
  Cash Flow
    
    2007
    
    2006
    
    2005Net cash provided by operating activities
    
    $
    2,433
    
    
    $
    2,766
    
    
    $
    1,341Net cash used for investing activities
    
    
    (4,329
    )
    
    
    (4,349
    )
    
    
    (2,410
    )Net cash provided by financing activities
    
    
    1,999
    
    
    
    1,644
    
    
    
    978Cash  End of Year
    
    
    281
    
    
    
    186
    
    
    
    124
 2007 Compared to 2006
 2006 Compared to 2005
 Equity Markets
  67




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##### Table of Contents



Ratings
   Standard &A.M. Best
    
    Fitch
    

Poors
    

MoodysInsurance RatingsHartford Life Insurance Company
    
    
    A+
    
    
    AA
    
    AA-
    
    Aa3Hartford Life and Annuity Insurance Company
    
    
    A+
    
    
    AA
    
    AA-
    
    Aa3Other RatingsHartford Life Insurance Company:Short term rating
    
    
    
    
    
    
    
    
    
    
    A-1+
    
    
    
    P-1Consumer notes
    
    
    A+
    
    
    AA-
    
    AA-
    
    
    A-1
  Risk-based Capital
  Contingencies
 Legal Proceedings
 Regulatory Developments
  Legislative Initiatives
  Guaranty Fund and Other Insurance-Related Assessments
  68




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##### Table of Contents



IMPACT OF NEW ACCOUNTING STANDARDS
  
 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
  
 Item 9A. CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures
  Managements annual report on internal control over financial reporting
     69




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##### Table of Contents



Changes in internal control over financial reporting
  
 Item 9B. OTHER INFORMATION
  
 PART III
 
 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  Year Ended
    
    
    Year EndedDecember 31, 2007
    
    
    December 31, 2006(1) Audit fees
    
    
    6,492,776
    
    
    
    6,621,494(2) Audit-related fees(a)
    
    
    
    
    
    
    (3) Tax fees(b)
    
    
    
    
    
    
    (4) All other fees ( c)
    
    
    
    
    
    
    85,251
 
 (a)
    
    Fees for the year ended December 31, 2007 principally consisted of internal control
reviews. Fees for the year ended December 31, 2006 principally consisted of due diligence
assistance and services relating to acquisitions and divestitures and internal control reviews.(b)
    
    Principally consisted of domestic tax compliance services and tax examination assistance.(c)
    
    Fees for the year ended December 31, 2006 consisted of a project related to the analysis of
risk-based capital.









PART IV





Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


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


1.
    
    Consolidated Financial Statements. See Index to Consolidated Financial Statements and
Schedules elsewhere herein.2.
    
    Consolidated Financial Statement Schedules. See Index to Consolidated Financial Statement
Schedules elsewhere herein.3.
    
    Exhibits. See Exhibit Index elsewhere herein. 70




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
 Page(s)Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Statements of Income for the three years ended December 31, 2007
    
    F-3Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the three
years ended December 31, 2007
    
    F-5Consolidated Statements of Cash Flows for the three years ended December 31, 2007
    
    F-6Notes to Consolidated Financial Statements
    
    F-7Schedule I  Summary of Investments  Other Than Investments in Affiliates
    
    S-1Schedule III  Supplementary Insurance Information
    
    S-2Schedule IV  Reinsurance
    
    S-3
 F-1




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F-2




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES  Consolidated Statements of Income
 For the years ended December 31,(In millions)
    
    2007
    
    2006
    
    2005RevenuesFee income and other
    
    $
    3,509
    
    
    $
    3,113
    
    
    $
    2,811Earned premiums
    
    
    983
    
    
    
    547
    
    
    
    449Net investment income
    
    
    3,048
    
    
    
    2,728
    
    
    
    2,569Net realized capital gains (losses)
    
    
    (934
    )
    
    
    (299
    )
    
    
    75Total revenues
    
    
    6,606
    
    
    
    6,089
    
    
    
    5,904Benefits, claims and expensesBenefits, loss and loss adjustment expenses
    
    
    3,980
    
    
    
    3,205
    
    
    
    3,008Insurance expenses and other
    
    
    1,192
    
    
    
    853
    
    
    
    798Amortization of deferred policy
acquisition costs and present value
of future profits
    
    
    515
    
    
    
    1,175
    
    
    
    945Dividends to policyholders
    
    
    11
    
    
    
    22
    
    
    
    37Total benefits, losses and expenses
    
    
    5,698
    
    
    
    5,255
    
    
    
    4,788Income before income tax expense
    
    
    908
    
    
    
    834
    
    
    
    1,116Income tax expense
    
    
    168
    
    
    
    103
    
    
    
    207Net income
    
    $
    740
    
    
    $
    731
    
    
    $
    909
 See Notes to Consolidated Financial Statements.
 F-3




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES  Consolidated Balance Sheets
 As of December 31,(In millions, except for share data)
    
    2007
    
    2006Assets
    
    $
    
    
    
    $InvestmentsFixed maturities, available for sale, at fair value (amortized cost of $46,208
and $43,846)
    
    
    45,611
    
    
    
    44,646Equity securities, available for sale, at fair value (cost of $763 and $267)
    
    
    722
    
    
    
    275Equity securities, held for trading, at fair value
    
    
    
    
    
    
    1Policy loans, at outstanding balance
    
    
    2,016
    
    
    
    2,009Mortgage loans on real estate
    
    
    4,166
    
    
    
    2,631Short-term investments
    
    
    752
    
    
    
    694Other investments
    
    
    1,726
    
    
    
    1,023Total investments
    
    
    54,993
    
    
    
    51,279Cash
    
    
    281
    
    
    
    186Premiums receivable and agents balances
    
    
    28
    
    
    
    29Reinsurance recoverables
    
    
    1,730
    
    
    
    1,393Deferred policy acquisition costs and present value of future profits
    
    
    8,393
    
    
    
    7,334Goodwill
    
    
    186
    
    
    
    186Other assets
    
    
    1,348
    
    
    
    1,120Separate account assets
    
    
    199,253
    
    
    
    179,943Total assets
    
    $
    266,212
    
    
    $
    241,470LiabilitiesReserve for future policy benefits
    
    $
    9,396
    
    
    $
    8,209Other policyholder funds
    
    
    42,377
    
    
    
    40,191Consumer Notes
    
    
    809
    
    
    
    258Deferred income taxes
    
    
    124
    
    
    
    491Other liabilities
    
    
    6,621
    
    
    
    4,718Separate account liabilities
    
    
    199,253
    
    
    
    179,943Total liabilities
    
    
    258,580
    
    
    
    233,810Commitments and contingent liabilities, Note 10
    
    
    
    
    
    
    Stockholders EquityCommon stock  1,000 shares authorized, issued and outstanding,
par value $5,690
    
    
    6
    
    
    
    6Capital surplus
    
    
    2,888
    
    
    
    2,586Accumulated other comprehensive incomeNet unrealized capital gains on securities, net of tax
    
    
    (469
    )
    
    
    290Foreign currency translation adjustments
    
    
    
    
    
    
    1Total accumulated other comprehensive income
    
    
    (469
    )
    
    
    291Retained earnings
    
    
    5,207
    
    
    
    4,777Total stockholders equity
    
    
    7,632
    
    
    
    7,660Total liabilities and stockholders equity
    
    $
    266,212
    
    
    $
    241,470
 See Notes To Consolidated Financial Statements.
 F-4




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES  Consolidated Statements Of Changes In Stockholders Equity
 Accumulated OtherComprehensive Income (Loss)Net Unrealized
    
    
    Net (Loss)Capital
    
    
    Gain On Cash
    
    
    ForeignGains (Losses)
    
    
    Flow Hedging
    
    
    Currency
    
    
    
    
    
    
    TotalCommon
    
    
    Capital
    
    
    On Securities,
    
    
    Instruments,
    
    
    Translation
    
    
    Retained
    
    
    Stockholders(In millions)
    
    Stock
    
    
    Surplus
    
    
    Net of Tax
    
    
    Net of Tax
    
    
    Adjustments
    
    
    Earnings
    
    
    Equity2007Balance, December 31, 2006
    
    $
    6
    
    
    $
    2,586
    
    
    $
    500
    
    
    $
    (210
    )
    
    $
    1
    
    
    $
    4,777
    
    
    $
    7,660Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740
    
    
    
    740Other comprehensive income, net of tax (1)Net change in unrealized capital gains
(losses) on securities (2)
    
    
    
    
    
    
    
    
    
    
    (832
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (832
    )Net gains on cash flow hedging instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    73Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (760
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )Capital contribution from parent
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (307
    )
    
    
    (307
    )Cumulative effect of Accounting Changes,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Balance, December 31, 2007
    
    $
    6
    
    
    $
    2,888
    
    
    $
    (332
    )
    
    $
    (137
    )
    
    $
    
    
    
    $
    5,207
    
    
    $
    7,6322006Balance, December 31, 2005
    
    $
    6
    
    
    $
    2,405
    
    
    $
    577
    
    
    $
    (113
    )
    
    $
    (1
    )
    
    $
    4,463
    
    
    $
    7,337Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731
    
    
    
    731Other comprehensive income, net of tax (1)Net change in unrealized capital gains
(losses) on securities (2)
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77
    )Net loss on cash flow hedging instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    (97
    )Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (172
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559Capital contribution from parent
    
    
    
    
    
    
    181
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    (417
    )Balance, December 31, 2006
    
    $
    6
    
    
    $
    2,586
    
    
    $
    500
    
    
    $
    (210
    )
    
    $
    1
    
    
    $
    4,777
    
    
    $
    7,6602005Balance, December 31, 2004
    
    $
    6
    
    
    $
    2,240
    
    
    $
    1,124
    
    
    $
    (184
    )
    
    $
    (1
    )
    
    $
    4,064
    
    
    $
    7,249Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    909
    
    
    
    909Other comprehensive income, net of tax (1)Net change in unrealized capital gains
(losses) on securities (2)
    
    
    
    
    
    
    
    
    
    
    (547
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (547
    )Net gains on cash flow hedging instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    71Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (476
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    433Capital contribution from parent
    
    
    
    
    
    
    165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (510
    )
    
    
    (510
    )Balance, December 31, 2005
    
    $
    6
    
    
    $
    2,405
    
    
    $
    577
    
    
    $
    (113
    )
    
    $
    (1
    )
    
    $
    4,463
    
    
    $
    7,337
 (1)
    
    Net change in unrealized capital gain on securities is reflected net of tax provision
(benefit) and other items of $448, $(42) and $(295) for the years ended December 31, 2007,
2006 and 2005, respectively. Net (loss) gain on cash flow hedging instruments is net of tax
provision (benefit) of $(39), $(52) and $38 for the years ended December 31, 2007, 2006 and
2005, respectively. There is no tax effect on cumulative translation adjustments.(2)
    
    There were reclassification adjustments for after-tax gains (losses) realized in net income
of $(140), $(75), and $26 for the years ended December 31, 2007, 2006 and 2005, respectively.
 See Notes to Consolidated Financial Statements
 F-5




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES  Consolidated Statements of Cash Flows
 For the years ended December 31,(In millions)
    
    2007
    
    2006
    
    2005Operating ActivitiesNet income
    
    $
    740
    
    
    $
    731
    
    
    $
    909Adjustments to reconcile net income to net cash provided by operating activitiesAmortization of deferred policy acquisition costs and present value of future profits
    
    
    515
    
    
    
    1,175
    
    
    
    945Additions to deferred policy acquisition costs and present value of future profits
    
    
    (1,400
    )
    
    
    (1,351
    )
    
    
    (1,226
    )Change in:Reserve for future policy benefits, unpaid losses and loss adjustment expenses
    
    
    1,187
    
    
    
    836
    
    
    
    129Reinsurance recoverables
    
    
    (236
    )
    
    
    (47
    )
    
    
    177Receivables
    
    
    190
    
    
    
    11
    
    
    
    (3
    )Payables and accruals
    
    
    560
    
    
    
    210
    
    
    
    385Accrued and deferred income taxes
    
    
    (102
    )
    
    
    340
    
    
    
    36Net realized capital losses (gains)
    
    
    934
    
    
    
    299
    
    
    
    (75
    )Depreciation and amortization
    
    
    438
    
    
    
    404
    
    
    
    239Other, net
    
    
    (267
    )
    
    
    157
    
    
    
    (228
    )Net cash provided by operating activities
    
    $
    2,559
    
    
    $
    2,765
    
    
    $
    1,288Investing ActivitiesProceeds from the sale/maturity/prepayment of:Fixed Maturities and Short-term Investments, available for sale
    
    $
    15,892
    
    
    $
    19,517
    
    
    $
    19,727Equity securities, available-for-sale
    
    
    296
    
    
    
    249
    
    
    
    38Mortgage loans
    
    
    958
    
    
    
    301
    
    
    
    354Partnerships
    
    
    175
    
    
    
    91
    
    
    
    169Payments for the purchase of:Fixed Maturities and Short-term Investments, available for sale
    
    
    (18,780
    )
    
    
    (22,017
    )
    
    
    (21,511
    )Equity securities, available-for-sale
    
    
    (484
    )
    
    
    (455
    )
    
    
    (60
    )Mortgage loans
    
    
    (2,492
    )
    
    
    (1,574
    )
    
    
    (915
    )Partnerships
    
    
    (607
    )
    
    
    (496
    )
    
    
    (337
    )Change in policy loans, net
    
    
    (6
    )
    
    
    (39
    )
    
    
    647Change in payables for collateral under securities lending, net
    
    
    1,306
    
    
    
    788
    
    
    
    (276
    )Change in all other, net
    
    
    (587
    )
    
    
    (713
    )
    
    
    (193
    )Net cash used for investing activities
    
    $
    (4,329
    )
    
    $
    (4,348
    )
    
    $
    (2,357
    )Financing ActivitiesDeposits and other additions to investment and universal life-type contracts
    
    
    32,396
    
    
    
    26,991
    
    
    
    25,383Withdrawals and other deductions from investment and universal life-type contracts
    
    
    (30,433
    )
    
    
    (26,687
    )
    
    
    (24,888
    )Net transfers (to)/from separate accounts related to investment and universal
life-type contracts
    
    
    (606
    )
    
    
    1,382
    
    
    
    852Capital contributions
    
    
    270
    
    
    
    
    
    
    
    129Dividends paid
    
    $
    (305
    )
    
    $
    (300
    )
    
    $
    (498
    )Proceeds from issuance of consumer notes
    
    
    551
    
    
    
    258
    
    
    
    Net cash provided by financing activities
    
    $
    1,873
    
    
    $
    1,644
    
    
    $
    978Impact of foreign exchange
    
    
    (8
    )
    
    
    1
    
    
    
    (1
    )Net (decrease) increase in cash
    
    
    95
    
    
    
    62
    
    
    
    (92
    )Cash  beginning of year
    
    
    186
    
    
    
    124
    
    
    
    216Cash  end of year
    
    $
    281
    
    
    $
    186
    
    
    $
    124Supplemental Disclosure of Cash Flow Information:Net Cash Paid During the Year for:Income taxes
    
    $
    125
    
    
    $
    (163
    )
    
    $
    149
 Supplemental schedule of noncash operating and financing activities:
 The Company recaptured an indemnity reinsurance arrangement with Hartford Life and Accident
Insurance Company in 2005. In conjunction with this transaction, the Company recorded a noncash
capital contribution of $36 and a related extinguishment of the reinsurance recoverable liability.
 The
Company made noncash dividends of $2 and received a noncash capital
contributions of $20 from
its parent company during 2007 related to the guaranteed minimum income and accumulation benefit
reinsurance agreements with Hartford Life Insurance K.K. The Company made noncash dividends of
$117 and received a noncash capital contributions of $154 from its parent company during 2006
related to the guaranteed minimum income benefit reinsurance agreement with Hartford Life Insurance
K.K.
 See Notes to Consolidated Financial Statements.
 F-6




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollar amounts in millions, unless otherwise stated)
 1. Basis of Presentation and Accounting Policies
 Basis of Presentation 
    Consolidation
  Use of Estimates 
   Reclassifications 
  Adoption of New Accounting Standards 
 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
  F-7




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##### Table of Contents



Amendment of FASB Interpretation No. 39
  Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements No. 133 and 140
  Accounting by Insurance Enterprises for Deferred Acquisition Costs (DAC) in Connection with Modifications or Exchanges of Insurance Contracts
  The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
  F-8




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##### Table of Contents



Future Adoption of New Accounting Standards
 Business Combinations
  
    
    Most of the identifiable assets acquired, liabilities assumed and any noncontrolling
interest in the acquiree shall be measured at their acquisition-date fair values rather
than SFAS 141s requirement to allocate the cost of an acquisition to individual assets
acquired and liabilities assumed based on their estimated fair values;
    
    Acquisition-related costs incurred by the acquirer shall be expensed in the periods in
which the costs are incurred rather than included in the cost of the acquired entity;
    
    Goodwill shall be measured as the excess of the consideration transferred, including the
fair value of any contingent consideration, plus the fair value of any noncontrolling
interest in the acquiree, over the fair values of the acquired identifiable net assets,
rather than measured as the excess of the cost of the acquired entity over the estimated
fair values of the acquired identifiable net assets;
    
    Contractual pre-acquisition contingencies are to be recognized at their acquisition date
fair values and noncontractual pre-acquisition contingencies are to be recognized at their
acquisition date fair values only if it is more likely than not that the contingency gives
rise to an asset or liability, whereas SFAS 141 generally permits the deferred recognition
of pre-acquisition contingencies until the recognition criteria of SFAS No. 5, Accounting
for Contingencies are met; and
    
    Contingent consideration shall be recognized at the acquisition date rather than when
the contingency is resolved and consideration is issued or becomes issuable.
  Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
  Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies
  F-9




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##### Table of Contents



Fair Value Option for Financial Assets and Financial Liabilities
  Fair Value Measurements
 Fair Value Under SFAS No. 157
  Level 1
    
    Observable inputs that reflect quoted prices for identical assets
or liabilities in active markets that the Company has the ability
to access at the measurement date.Level 2
    
    Observable inputs, other than quoted prices included in Level 1,
for the asset or liability or prices for similar assets and
liabilities.Level 3
    
    Unobservable inputs reflecting the reporting entitys estimates of
the assumptions that market participants would use in pricing the
asset or liability (including assumptions about risk).
 Accounting for Guaranteed Benefits Offered With Variable Annuities
  F-10




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##### Table of Contents



Guaranteed Benefits Accounted For Under SOP 03-1
     Account
    
    Net Amount
    
    SOP 03-1Value [1]
    
    at Risk
    
    Reserve [2]U.S. Guaranteed Minimum Death Benefits
    
    $
    126,834
    
    
    $
    5,106
    
    
    $
    527Guaranteed Minimum Death Benefits Assumed
    
    
    30,724
    
    
    
    380
    
    
    
    4Life Contingent Portion of for Life GMWBs
    
    
    10,272
    
    
    
    [*]
    
    
    
    [*]Total
    
    $
    167,830
    
    
    $
    5,486
    
    
    $
    531
 [1]
    
    Policies with for Life GMWB riders include both benefits accounted
for under SFAS 133 and SOP 03-1 and thus are included this table and
the SFAS 133 table below. However, benefits payable are generally
mutually exclusive (e.g., for a given contract, only the death or
living benefits, but not both are payable at one time) (See Note 8).[2]
    
    Before reinsurance. The Company uses reinsurance to manage its
exposure to the mortality and equity risk associated with GMDB.
Reinsurance of GMDB is accounted for under SOP 03-1. After
reinsurance, the net amount at risk for U.S. GMDB is $976. After
reinsurance, the net SOP 03-1 reserve for U.S. GMDB is $202.[*]
    
    Amounts are insignificant at December 31, 2007.
 Guaranteed Benefits Accounted at Fair Value Under SFAS 133
  F-11




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##### Table of Contents




    
    Reinsured GMIB:Effective August 31, 2005, HLAI entered into a reinsurance agreement
with HLIKK where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks
associated with the in-force and prospective GMIB product issued by HLIKK on its variable
annuity business. Effective July 31, 2006, the agreement was modified to include a tiered
reinsurance premium structure. The modified reinsurance agreement applies to all
contracts, GMIBs in-force and issued as of July 31, 2006 and prospectively, except for
policies and GMIB product issued prior to April 1, 2005, which were recaptured.
    
    Reinsured GMAB:Effective September 30, 2007, HLAI entered into another reinsurance
agreement where HLIKK agreed to cede and HLAI agreed to reinsure 100% of the risks
associated with the in-force and prospective GMAB riders issued by HLIKK on certain of its
variable annuity business.
   (Asset)Liability
    
    GuaranteedAccount
    
    Fair
    
    RemainingValue [1]
    
    Value
    
    BalanceU.S. Guaranteed Minimum Withdrawal Benefits
    
    
    46,088
    
    
    
    553
    
    
    
    34,622Non-Life Contingent Portion of for Life
Guaranteed Minimum Withdrawal Benefits
    
    
    10,272
    
    
    
    154
    
    
    
    10,230Reinsured Guaranteed Living BenefitsGuaranteed Minimum Income Benefits
    
    
    16,289
    
    
    
    72
    
    
    
    15,297Guaranteed Minimum Accumulation Benefits
    
    
    2,734
    
    
    
    (2
    )
    
    
    2,768Subtotal
    
    
    19,023
    
    
    
    70
    
    
    
    18,065Total
    
    $
    75,383
    
    
    $
    777
    
    
    $
    62,917
 [1]
    
    For life GMWB policies, and their related account values, include both benefits accounted
for under SFAS 133 and SOP 03-1 and thus are included in this SFAS 133 table and the SOP 03-1
table above. However, benefits payable are generally mutually exclusive (e.g., for a given
contract, only the death or living benefits, but not both are payable at one time).[2]
    
    The magnitude of the SFAS 133 fair value, at December 31, 2007, was highly dependent upon the
size of the block of business for guaranteed living benefits that are required to be fair
valued, and the market conditions at the date of valuation, in particular high implied
volatilities and low risk-free interest rates. If implied volatilities were lower and
risk-free interest rates were higher at December 31, 2007, the SFAS 133 fair value would have
been lower and vice versa. Derivatives That Hedge Capital Markets Risk for Guaranteed Minimum Benefits Accounted for as
Derivatives
  GMWB Reinsurance
  F-12




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##### Table of Contents



Customized Derivatives
  Other Derivative Instruments
  Notional
    
    Fair(in millions)
    
    Amount
    
    ValueReinsurance
    
    $
    6,579
    
    
    $
    128Customized Derivatives
    
    
    12,784
    
    
    
    50Other Derivative Instruments
    
    
    8,573
    
    
    
    592Total
    
    $
    27,936
    
    
    $
    770
 Adoption of Statement of Financial Accounting Standard No. 157, Fair Value Measurements (SFAS
157)
  Pre-SFAS 157 Fair Value
   F-13




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##### Table of Contents




    
    Actively-Managed Volatility Adjustment.This component incorporates the basis
differential between the observable index implied index volatilities used to calculate the
Pre-SFAS 157 component and the actively-managed funds underlying the variable annuity product.
The Actively-Managed Volatility Adjustment is calculated using historical fund and weighted
index volatilities.
 
    
    Credit Standing Adjustment.This component makes an adjustment that market participants
would make to reflect the risk that GMWB obligations or the GMWB reinsurance recoverables will
not be fulfilled (nonperformance risk). SFAS 157 explicitly requires nonperformance risk to
be reflected in fair value. The Company calculates the Credit Standing Adjustment by using
default rates provided by rating agencies, adjusted for market recoverability.
 
    
    Market Illiquidity Premium.This component makes an adjustment that market participants
would require to reflect that GMWB obligations are illiquid and have no market observable exit
prices in the capital markets. The Market Illiquidity Premium was determined using inputs that
are identified in customized derivative transactions that the Company has entered into to
hedge GMWB related risks.
 
    
    Behavior Risk Margin.This component adds a margin that market participants would require
for the risk that the Companys assumptions about policyholder behavior used in the Pre-SFAS
157 model could differ from actual experience. The Behavior Risk Margin is calculated by
taking the difference between adverse policyholder behavior assumptions and the best estimate
assumptions used in the Pre-SFAS 157 model using the Companys long-term view on interest
rates and volatility. The adverse assumptions incorporate adverse dynamic lapse behavior,
greater utilization of the withdrawal features, and the potential for contract holders to
shift their investment funds into more aggressive investments when allowed.
 SFAS 157 Transition
  Investments
  F-14




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##### Table of Contents



Valuation of Fixed Maturities
     2007
    
    2006Percentage of
    
    
    
    
    
    Percentage ofFair Value
    
    Total Fair Value
    
    Fair Value
    
    Total Fair ValuePriced via third party pricing services
    
    $
    35,892
    
    
    
    78.7
    %
    
    $
    37,190
    
    
    
    83.3
    %Priced via independent broker quotations
    
    
    5,931
    
    
    
    13.0
    %
    
    
    3,567
    
    
    
    8.0
    %Priced via matrices
    
    
    3,526
    
    
    
    7.7
    %
    
    
    3,810
    
    
    
    8.5
    %Priced via other methods
    
    
    262
    
    
    
    0.6
    %
    
    
    79
    
    
    
    0.2
    %Total
    
    $
    45,611
    
    
    
    100.0
    %
    
    $
    44,646
    
    
    
    100.0
    %
  Other-Than-Temporary Impairments on Available-for-Sale Securities
  F-15




---



##### Table of Contents



Mortgage Loan Impairments
  Net Realized Capital Gains and Losses
  Net Investment Income
  F-16




---



##### Table of Contents



Derivative Instruments
 Overview
   Accounting and Financial Statement Presentation of Derivative Instruments and Hedging
Activities
   Fair-Value Hedges
  Cash-Flow Hedges
  Foreign-Currency Hedges
  Net Investment in a Foreign Operation Hedges
  F-17




---



##### Table of Contents



Other Investment and/or Risk Management Activities
  Hedge Documentation and Effectiveness Testing
  Discontinuance of Hedge Accounting
     Embedded Derivatives
  Credit Risk
  F-18




---



##### Table of Contents



Product Derivatives and Risk Management
    Separate Accounts
  Deferred Policy Acquisition Costs and Present Value of Future Profits
  F-19




---



##### Table of Contents



Unlock Results
  F-20




---



##### Table of Contents



Unearned
    
    
    
    
    
    SalesSegment
    
    
    
    
    
    Revenue
    
    Death Benefit
    
    InducementAfter-tax (charge) benefit
    
    DAC and PVFP
    
    Reserves
    
    Reserves [1]
    
    Assets
    Total [2]Retail
    
    $
    181
    
    
    $
    (5
    )
    
    $
    (4
    )
    
    $
    9
    
    
    $
    181Retirement Plans
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Institutional
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Individual Life
    
    
    24
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    16Total
    
    $
    197
    
    
    $
    (13
    )
    
    $
    (4
    )
    
    $
    9
    
    
    $
    189
 [1]
    
    As a result of the unlock, death benefit reserves, in Retail, decreased $4,
pre-tax, offset by a decrease of $10,pre-tax, in reinsurance recoverables.[2]
    
    The following were the most significant contributors to the unlock amounts recorded
during the third quarter of 2007: 
    
    Actual separate account returns were above our aggregated estimated return.
    
    During the third quarter of 2007, the Company estimated gross profits using the mean
of EGPs derived from a set of stochastic scenarios that have been calibrated to our
estimated separate account return as compared to prior year where we used a single
deterministic estimation. The impact of this change in estimation was a benefit of
$20, after-tax, for variable annuities.
    
    As part of its continual enhancement to its assumption setting processes and in
connection with its assumption study, the Company included dynamic lapse behavior
assumptions. Dynamic lapses reflect that lapse behavior will be different depending
upon market movements. The impact of this assumption change along with other base
lapse rate changes was an approximate benefit of $40, after-tax, for variable
annuities.
   Unearned
    
    Death
    
    SalesSegment
    
    
    
    
    
    Revenue
    
    Benefit
    
    InducementAfter-tax (charge) benefit
    
    DAC and PVFP
    
    Reserves
    
    Reserves [1]
    
    Assets
    
    TotalRetail
    
    $
    (116
    )
    
    $
    5
    
    
    $
    (10
    )
    
    $
    3
    
    
    $
    (118
    )Retirement Plans
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Individual Life
    
    
    (46
    )
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    (16
    )Total
    
    $
    (142
    )
    
    $
    35
    
    
    $
    (10
    )
    
    $
    3
    
    
    $
    (114
    )
 \1]
    
    As a result of the unlock, death benefit reserves, in the Retail, increased $294, offset
by an increase of $279 in reinsurance recoverables.  Reserve for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses
  F-21




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##### Table of Contents



Other Policyholder Funds and Benefits Payable
   Revenue Recognition
  Foreign Currency Translation
  Dividends to Policyholders
 
  Reinsurance
   F-22




---



##### Table of Contents



Income Taxes
  2. Segment Information
        F-23




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##### Table of Contents



Revenues by Product Line
    
    For the years ended December 31,Revenues
    
    2007
    
    2006
    
    2005LifeEarned premiums, fees, and other considerationsRetailIndividual annuity:Individual variable annuity
    
    $
    2,103
    
    
    $
    1,835
    
    
    $
    1,629Fixed / MVA Annuity
    
    
    1
    
    
    
    3
    
    
    
    (2
    )Other
    
    
    
    
    
    
    
    
    
    
    Total Retail
    
    
    2,104
    
    
    
    1,838
    
    
    
    1,627Retirement Plans401(k)
    
    
    179
    
    
    
    154
    
    
    
    106403(b)/457
    
    
    50
    
    
    
    45
    
    
    
    43Total Retirement Plans
    
    
    229
    
    
    
    199
    
    
    
    149InstitutionalIIP
    
    
    1,012
    
    
    
    623
    
    
    
    516PPLI
    
    
    224
    
    
    
    103
    
    
    
    105Total Institutional
    
    
    1,236
    
    
    
    726
    
    
    
    621Individual LifeTotal Individual Life
    
    
    760
    
    
    
    780
    
    
    
    716Other
    
    
    163
    
    
    
    117
    
    
    
    147Total Life premiums, fees, and other considerations
    
    
    4,492
    
    
    
    3,660
    
    
    
    3,260Net investment income
    
    
    3,048
    
    
    
    2,728
    
    
    
    2,569Net realized capital losses
    
    
    (934
    )
    
    
    (299
    )
    
    
    75Total Life
    
    
    6,606
    
    
    
    6,089
    
    
    
    5,904
 F-24




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##### Table of Contents



Net Income (Loss)
    
    2007
    
    2006
    
    2005Retail
    
    $
    663
    
    
    $
    397
    
    
    $
    480Retirement Plans
    
    
    53
    
    
    
    94
    
    
    
    73Institutional
    
    
    7
    
    
    
    69
    
    
    
    107Individual Life
    
    
    169
    
    
    
    137
    
    
    
    157Other
    
    
    (152
    )
    
    
    34
    
    
    
    92Total net income
    
    $
    740
    
    
    $
    731
    
    
    $
    909Net investment incomeRetail
    
    $
    815
    
    
    $
    835
    
    
    $
    934Retirement Plans
    
    
    355
    
    
    
    326
    
    
    
    311Institutional
    
    
    1,226
    
    
    
    987
    
    
    
    784Individual Life
    
    
    331
    
    
    
    293
    
    
    
    272Other
    
    
    321
    
    
    
    287
    
    
    
    268Total net investment income
    
    $
    3,048
    
    
    $
    2,728
    
    
    $
    2,569Amortization of deferred policy acquisition and present value of future profitsRetail
    
    $
    316
    
    
    $
    913
    
    
    $
    685Retirement Plans
    
    
    58
    
    
    
    (4
    )
    
    
    31Institutional
    
    
    23
    
    
    
    32
    
    
    
    32Individual Life
    
    
    117
    
    
    
    235
    
    
    
    198Other
    
    
    1
    
    
    
    (1
    )
    
    
    (1
    )Total amortization of DAC
    
    $
    515
    
    
    $
    1,175
    
    
    $
    945Income tax expense (benefit)Retail
    
    $
    137
    
    
    $
    (40
    )
    
    $
    11Retirement Plans
    
    
    14
    
    
    
    35
    
    
    
    22Institutional
    
    
    (5
    )
    
    
    26
    
    
    
    49Individual Life
    
    
    81
    
    
    
    60
    
    
    
    73Other [1]
    
    
    (59
    )
    
    
    22
    
    
    
    52Total income tax expense
    
    $
    168
    
    
    $
    103
    
    
    $
    207
 December 31,2007
    
    2006AssetsRetail
    
    $
    135,244
    
    
    $
    129,158Retirement Plans
    
    
    28,157
    
    
    
    24,596Institutional
    
    
    77,990
    
    
    
    65,897Individual Life
    
    
    15,151
    
    
    
    13,810Other
    
    
    9,670
    
    
    
    8,009Total assets
    
    $
    266,212
    
    
    $
    241,470DACRetail
    
    $
    5,182
    
    
    $
    4,561Retirement Plans
    
    
    658
    
    
    
    543Institutional
    
    
    143
    
    
    
    111Individual Life
    
    
    2,411
    
    
    
    2,119Other
    
    
    (1
    )
    
    
    Total DAC
    
    $
    8,393
    
    
    $
    7,334Reserve for Future Policy BenefitsRetail
    
    $
    944
    
    
    $
    845Retirement Plans
    
    
    333
    
    
    
    357Institutional
    
    
    6,657
    
    
    
    5,711Individual Life
    
    
    685
    
    
    
    575Other
    
    
    777
    
    
    
    721Total Reserve for Future Policy Benefits
    
    $
    9,396
    
    
    $
    8,209
 F-25




---



##### Table of Contents



December 31,2007
    
    2006Other Policyholder FundsRetail
    
    $
    15,391
    
    
    $
    15,008Retirement Plans
    
    
    5,591
    
    
    
    5,544Institutional
    
    
    12,455
    
    
    
    11,401Individual Life
    
    
    5,210
    
    
    
    4,845Other
    
    
    3,730
    
    
    
    3,393Total Other Policyholder Funds
    
    $
    42,377
    
    
    $
    40,191
 3. Investments and Derivative Instruments
 For the years ended December 31,Components of Net Investment Income
    
    2007
    
    2006
    
    2005Fixed maturities [1]
    
    $
    2,710
    
    
    $
    2,459
    
    
    $
    2,275Policy loans
    
    
    132
    
    
    
    140
    
    
    
    142Mortgage loans on real estate
    
    
    227
    
    
    
    126
    
    
    
    64Other investments
    
    
    35
    
    
    
    53
    
    
    
    125Gross investment income
    
    
    3,104
    
    
    
    2,778
    
    
    
    2,606Less: Investment expenses
    
    
    56
    
    
    
    50
    
    
    
    37Net investment income
    
    $
    3,048
    
    
    $
    2,728
    
    
    $
    2,569Components of Net Realized Capital Gains (Losses)Fixed maturities
    
    $
    (248
    )
    
    $
    (105
    )
    
    $
    57Equity securities
    
    
    (46
    )
    
    
    (3
    )
    
    
    8Foreign currency transaction remeasurements
    
    
    102
    
    
    
    18
    
    
    
    157Derivatives and other [2]
    
    
    (742
    )
    
    
    (209
    )
    
    
    (147
    )Net realized capital gains (losses)
    
    $
    (934
    )
    
    $
    (299
    )
    
    $
    75
 [1]
    
    Includes income on short-term bonds.[2]
    
    Primarily consists of changes in fair value on non-qualifying
derivatives, changes in fair value of certain derivatives in fair
value hedge relationships and hedge ineffectiveness on qualifying
derivative instruments. Components of Net Unrealized Gains (Losses) on
    
    For the years ended December 31,Available-for-Sale Securities
    
    2007
    
    2006
    
    2005Fixed maturities
    
    $
    (597
    )
    
    $
    800
    
    
    $
    986Equity securities
    
    
    (42
    )
    
    
    8
    
    
    
    7Net unrealized gains credited to policyholders
    
    
    3
    
    
    
    (4
    )
    
    
    (9
    )Net unrealized gains
    
    
    (636
    )
    
    
    804
    
    
    
    984Deferred income taxes and other items
    
    
    (304
    )
    
    
    304
    
    
    
    407Net unrealized gains (losses), net of tax  end of year
    
    
    (332
    )
    
    
    500
    
    
    
    577Net unrealized gains, net of tax  beginning of year
    
    
    500
    
    
    
    577
    
    
    
    1,124Change in unrealized losses on available-for-sale securities
    
    $
    (832
    )
    
    $
    (77
    )
    
    $
    (547
    )
 F-26




---



##### Table of Contents



Components of Fixed Maturity Investments
 As of December 31, 2007
    
    As of December 31, 2006Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    Value
    
    Cost
    
    Gains
    
    Losses
    
    ValueBonds and NotesABS
    
    $
    7,602
    
    
    $
    24
    
    
    $
    (519
    )
    
    $
    7,107
    
    
    $
    6,170
    
    
    $
    38
    
    
    $
    (41
    )
    
    $
    6,167CMOsAgency backed
    
    
    793
    
    
    
    18
    
    
    
    (3
    )
    
    
    808
    
    
    
    778
    
    
    
    8
    
    
    
    (5
    )
    
    
    781Non-agency backed
    
    
    411
    
    
    
    4
    
    
    
    (2
    )
    
    
    413
    
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    76Commercial mortgage-backed
securities (CMBS)
    
    
    11,515
    
    
    
    159
    
    
    
    (572
    )
    
    
    11,102
    
    
    
    10,806
    
    
    
    146
    
    
    
    (71
    )
    
    
    10,881Corporate
    
    
    21,928
    
    
    
    807
    
    
    
    (571
    )
    
    
    22,164
    
    
    
    21,982
    
    
    
    911
    
    
    
    (206
    )
    
    
    22,687Government/Government agenciesForeign
    
    
    465
    
    
    
    35
    
    
    
    (2
    )
    
    
    498
    
    
    
    568
    
    
    
    44
    
    
    
    (4
    )
    
    
    608United States
    
    
    516
    
    
    
    14
    
    
    
    (1
    )
    
    
    529
    
    
    
    542
    
    
    
    2
    
    
    
    (5
    )
    
    
    539MBS
    
    
    1,750
    
    
    
    15
    
    
    
    (15
    )
    
    
    1,750
    
    
    
    1,808
    
    
    
    6
    
    
    
    (31
    )
    
    
    1,783States, municipalities and
political subdivisions
    
    
    1,226
    
    
    
    32
    
    
    
    (20
    )
    
    
    1,238
    
    
    
    1,114
    
    
    
    23
    
    
    
    (15
    )
    
    
    1,122Redeemable preferred stock
    
    
    2
    
    
    
    2
    
    
    
    (2
    )
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Total fixed maturities
    
    $
    46,208
    
    
    $
    1,110
    
    
    $
    (1,707
    )
    
    $
    45,611
    
    
    $
    43,846
    
    
    $
    1,178
    
    
    $
    (378
    )
    
    $
    44,646
  Maturity
    
    Amortized Cost
    
    Fair ValueOne year or less
    
    $
    767
    
    
    $
    805Over one year through five years
    
    
    7,389
    
    
    
    7,675Over five years through ten years
    
    
    6,041
    
    
    
    5,994Over ten years
    
    
    21,455
    
    
    
    21,059Subtotal
    
    
    35,652
    
    
    
    35,533ABS, MBS, and CMOs
    
    
    10,556
    
    
    
    10,078Total
    
    $
    46,208
    
    
    $
    45,611
  Sales of Fixed Maturity and Available-for-Sale Equity Security Investments
 For the years ended December 31,2007
    
    2006
    
    2005Sale of Fixed MaturitiesSale proceeds
    
    $
    12,415
    
    
    $
    16,159
    
    
    $
    15,784Gross gains
    
    
    246
    
    
    
    210
    
    
    
    302Gross losses
    
    
    (135
    )
    
    
    (230
    )
    
    
    (218
    )Sale of Available-for-Sale Equity SecuritiesSale proceeds
    
    $
    296
    
    
    $
    249
    
    
    $
    38Gross gains
    
    
    12
    
    
    
    5
    
    
    
    8Gross losses
    
    
    (7
    )
    
    
    (5
    )
    
    
    
 F-27




---



##### Table of Contents



Concentration of Credit Risk
     Security Unrealized Loss Aging
   2007Less Than 12 Months
    
    12 Months or More
    
    TotalAmortized
    
    Fair
    
    Unrealized
    
    Amortized
    
    Fair
    
    Unrealized
    
    Amortized
    
    Fair
    
    UnrealizedCost
    
    Value
    
    Losses
    
    Cost
    
    Value
    
    Losses
    
    Cost
    
    Value
    
    LossesABS
    
    $
    6,271
    
    
    $
    5,789
    
    
    $
    (482
    )
    
    $
    497
    
    
    
    460
    
    
    $
    (37
    )
    
    $
    6,768
    
    
    $
    6,249
    
    
    $
    (519
    )CMOsAgency backed
    
    
    270
    
    
    
    268
    
    
    
    (2
    )
    
    
    60
    
    
    
    59
    
    
    
    (1
    )
    
    
    330
    
    
    
    327
    
    
    
    (3
    )Non-agency backed
    
    
    97
    
    
    
    96
    
    
    
    (1
    )
    
    
    33
    
    
    
    32
    
    
    
    (1
    )
    
    
    130
    
    
    
    128
    
    
    
    (2
    )CMBS
    
    
    5,493
    
    
    
    5,010
    
    
    
    (483
    )
    
    
    1,808
    
    
    
    1,719
    
    
    
    (89
    )
    
    
    7,301
    
    
    
    6,729
    
    
    
    (572
    )Corporate
    
    
    8,354
    
    
    
    7,920
    
    
    
    (434
    )
    
    
    2,554
    
    
    
    2,417
    
    
    
    (137
    )
    
    
    10,908
    
    
    
    10,337
    
    
    
    (571
    )Government/Government agenciesForeign
    
    
    86
    
    
    
    84
    
    
    
    (2
    )
    
    
    43
    
    
    
    43
    
    
    
    
    
    
    
    129
    
    
    
    127
    
    
    
    (2
    )United States
    
    
    136
    
    
    
    135
    
    
    
    (1
    )
    
    
    7
    
    
    
    7
    
    
    
    
    
    
    
    143
    
    
    
    142
    
    
    
    (1
    )MBS
    
    
    49
    
    
    
    48
    
    
    
    (1
    )
    
    
    760
    
    
    
    746
    
    
    
    (14
    )
    
    
    809
    
    
    
    794
    
    
    
    (15
    )States, municipalities and
political subdivisions
    
    
    383
    
    
    
    373
    
    
    
    (10
    )
    
    
    189
    
    
    
    179
    
    
    
    (10
    )
    
    
    572
    
    
    
    552
    
    
    
    (20
    )Redeemable preferred stock
    
    
    4
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    2
    
    
    
    (2
    )Total fixed maturities
    
    
    21,143
    
    
    
    19,725
    
    
    
    (1,418
    )
    
    
    5,951
    
    
    
    5,662
    
    
    
    (289
    )
    
    
    27,094
    
    
    
    25,387
    
    
    
    (1,707
    )Common stock
    
    
    106
    
    
    
    102
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    102
    
    
    
    (4
    )Non-redeemable preferred stock
    
    
    509
    
    
    
    463
    
    
    
    (46
    )
    
    
    20
    
    
    
    19
    
    
    
    (1
    )
    
    
    529
    
    
    
    482
    
    
    
    (47
    )Total equity
    
    
    615
    
    
    
    565
    
    
    
    (50
    )
    
    
    20
    
    
    
    19
    
    
    
    (1
    )
    
    
    635
    
    
    
    584
    
    
    
    (51
    )Total temporarily impaired securities
    
    $
    21,758
    
    
    $
    20,290
    
    
    $
    (1,468
    )
    
    $
    5,971
    
    
    $
    5,681
    
    
    $
    (290
    )
    
    $
    27,729
    
    
    $
    25,971
    
    
    $
    (1,758
    )z
 F-28




---



##### Table of Contents



CMBS
 Corporate
 Mortgage Loans
   Commercial Mortgage Loans on Real Estate by RegionDecember 31, 2007
    
    December 31, 2006Carrying Value
    
    Percent of Total
    
    Carrying Value
    
    Percent of TotalEast North Central
    
    $
    101
    
    
    
    2.4
    %
    
    $
    94
    
    
    
    3.6
    %East South Central
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Middle Atlantic
    
    
    503
    
    
    
    12.1
    %
    
    
    470
    
    
    
    17.9
    %Mountain
    
    
    101
    
    
    
    2.4
    %
    
    
    24
    
    
    
    0.9
    %New England
    
    
    348
    
    
    
    8.4
    %
    
    
    166
    
    
    
    6.3
    %Pacific
    
    
    959
    
    
    
    23.0
    %
    
    
    523
    
    
    
    19.9
    %South Atlantic
    
    
    749
    
    
    
    18.0
    %
    
    
    551
    
    
    
    20.9
    %West North Central
    
    
    25
    
    
    
    0.6
    %
    
    
    6
    
    
    
    0.2
    %West South Central
    
    
    179
    
    
    
    4.3
    %
    
    
    100
    
    
    
    3.8
    %Other [1]
    
    
    1,201
    
    
    
    28.8
    %
    
    
    697
    
    
    
    26.5
    %Total
    
    $
    4,166
    
    
    
    100.0
    %
    
    $
    2,631
    
    
    
    100.0
    %
 [1]
    
    Includes multi-regional properties. F-29




---



##### Table of Contents



Commercial Mortgage Loans on Real Estate by Property TypeDecember 31, 2007
    
    December 31, 2006Carrying Value
    
    Percent of Total
    
    Carrying Value
    
    Percent of TotalIndustrial
    
    $
    424
    
    
    
    10.2
    %
    
    $
    298
    
    
    
    11.3
    %Lodging
    
    
    424
    
    
    
    10.2
    %
    
    
    413
    
    
    
    15.7
    %Agricultural
    
    
    236
    
    
    
    5.7
    %
    
    
    58
    
    
    
    2.2
    %Multifamily
    
    
    708
    
    
    
    17.0
    %
    
    
    250
    
    
    
    9.5
    %Office
    
    
    1,550
    
    
    
    37.2
    %
    
    
    1,130
    
    
    
    43.0
    %Retail
    
    
    702
    
    
    
    16.8
    %
    
    
    352
    
    
    
    13.4
    %Other
    
    
    122
    
    
    
    2.9
    %
    
    
    130
    
    
    
    4.9
    %Total
    
    $
    4,166
    
    
    
    100.0
    %
    
    $
    2,631
    
    
    
    100.0
    %
 Variable Interest Entities (VIE)
   December 31, 2007
    
    December 31, 2006Carrying
    
    
    
    
    
    Maximum Exposure to
    
    Carrying
    
    
    
    
    
    Maximum Exposure toValue [1]
    
    Liability [2]
    
    Loss [3]
    
    Value [1]
    
    Liability [2]
    
    Loss [3]Collateralized loan
obligations (CLOs) and other funds [4]
    
    $
    359
    
    
    $
    199
    
    
    $
    171
    
    
    $
    296
    
    
    $
    167
    
    
    $
    136Limited partnerships
    
    
    309
    
    
    
    121
    
    
    
    150
    
    
    
    103
    
    
    
    15
    
    
    
    75Other investments [5]
    
    
    65
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    Total [6]
    
    $
    733
    
    
    $
    320
    
    
    $
    402
    
    
    $
    399
    
    
    $
    182
    
    
    $
    211
 [1]
    
    The carrying value of CLOs and other funds and Other investments is equal to fair value. Limited partnerships are
accounted for under the equity method.[2]
    
    Creditors have no recourse against the Company in the event of default by the VIE.[3]
    
    The maximum exposure to loss does not include changes in fair value or the Companys proportionate shares of earnings associated with
limited partnerships accounted for under the equity method. The Companys maximum exposure to loss as of December 31, 2007
and 2006 based on the carrying value was $413 and $217, respectively. The Companys maximum exposure to loss as of December 31, 2007 and 2006 based on the Comanys initial co-investment or amortized cost basis was $402 and $211, respectively.[4]
    
    The Company provides collateral management services and earns a fee associated with these structures.[5]
    
    Other investments include investment structures that are backed by preferred securities.[6]
    
    As of December 31, 2007 and 2006, the Company had relationships with six and four VIEs, respectively, where the Company was
the primary beneficiary.   F-30




---



##### Table of Contents



Derivative Instruments
     Asset Values
    
    Liability Values2007
    
    2006
    
    2007
    
    2006Other investments
    
    $
    446
    
    
    $
    271
    
    
    $
    
    
    
    $
    Reinsurance recoverables
    
    
    128
    
    
    
    
    
    
    
    
    
    
    
    22Other policyholder funds and benefits payable
    
    
    2
    
    
    
    172
    
    
    
    801
    
    
    
    Consumer notes
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    1Other liabilities
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    589Total
    
    $
    576
    
    
    $
    443
    
    
    $
    1,160
    
    
    $
    612
  F-31




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##### Table of Contents



HedgeIneffectiveness,Notional Amount
    
    Fair Value
    
    After-taxHedging Strategy
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Cash-Flow HedgesInterest rate swapsInterest rate swaps are primarily
used to convert interest receipts
on floating-rate fixed maturity
securities to fixed rates. These
derivatives are predominantly used
to better match cash receipts from
assets with cash disbursements
required to fund liabilities.Interest rate swaps are also used
to hedge a portion of the Companys
floating-rate guaranteed investment
contracts. These derivatives
convert the floating-rate
guaranteed investment contract
payments to a fixed rate to better
match the cash receipts earned from
the supporting investment
portfolio.
    
    $
    4,019
    
    
    $
    4,560
    
    
    $
    73
    
    
    $
    (19
    )
    
    
    $
    1
    
    $
    (8
    )Foreign currency swapsForeign currency swaps are used to
convert foreign denominated cash
flows associated with certain
foreign denominated fixed maturity
investments to U.S. dollars. The
foreign fixed maturities are
primarily denominated in euros and
are swapped to minimize cash flow
fluctuations due to changes in
currency rates. In addition,
foreign currency swaps are also
used to convert foreign denominated
cash flows associated with certain
liability payments to U.S. dollars
in order to minimize cash flow
fluctuations due to changes in
currency rates.
    
    
    1,226
    
    
    
    1,420
    
    
    
    (269
    )
    
    
    (318
    )
    
    
    (1
    )
    
    
    (4
    )Fair-Value HedgesInterest rate swapsInterest rate swaps are used to
hedge the changes in fair value of
certain fixed rate liabilities and
fixed maturity securities due to
changes in the benchmark interest
rate, LIBOR.
    
    
    3,594
    
    
    
    3,303
    
    
    
    (38
    )
    
    
    7
    
    
    
    
    
    
    
    Foreign currency swapsForeign currency swaps are used to
hedge the changes in fair value of
certain foreign denominated fixed
rate liabilities due to changes in
foreign currency rates.
    
    
    696
    
    
    
    492
    
    
    
    25
    
    
    
    (9
    )
    
    
    
    
    
    
    Total cash-flow and fair-value hedges
    
    $
    9,535
    
    
    $
    9,775
    
    
    $
    (209
    )
    
    $
    (339
    )
    
    $
    
    
    
    $
    (12
    )
 F-32




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##### Table of Contents



DerivativeChange in Value,Notional Amount
    
    Fair Value
    
    After-taxHedging Strategy
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Other Investment and/or Risk Management ActivitiesInterest rate swaps, caps and floorsThe Company uses interest rate swaps, caps and
floors to manage duration risk between assets
and liabilities in certain portfolios. In
addition, the Company enters into interest rate
swaps to terminate existing swaps in hedging
relationships, thereby offsetting the changes in
value of the original swap.
    
    $
    6,666
    
    
    $
    4,911
    
    
    $
    
    
    
    $
    (15
    )
    
    $
    15
    
    
    $
    (27
    )Interest rate forwardsThe Company uses interest rate forwards to
replicate the purchase of mortgage-backed
securities to manage duration risk and
liquidity.
    
    
    
    
    
    
    644
    
    
    
    
    
    
    
    (4
    )
    
    
    (1
    )
    
    
    5Foreign currency swaps and forwardsThe Company enters into foreign currency swaps
and forwards to hedge the foreign currency
exposures in certain of its foreign fixed
maturity investments.
    
    
    199
    
    
    
    162
    
    
    
    (8
    )
    
    
    (11
    )
    
    
    (5
    )
    
    
    (7
    )Credit default and total return swapsThe Company enters into credit default swap
agreements in which the Company assumes credit
risk of an individual entity, referenced index
or asset pool. These contracts entitle the
Company to receive a periodic fee in exchange
for an obligation to compensate the derivative
counterparty should a credit event occur on the
part of the referenced security issuers. The
maximum potential future exposure to the Company
is the notional value of the swap contracts,
which is $1,202 and $786, after-tax, as of
December 31, 2007 and 2006, respectively.
    
    
    1,849
    
    
    
    1,209
    
    
    
    (235
    )
    
    
    (92
    )
    
    
    (83
    )
    
    
    20The Company also assumes credit risk through
total return and credit index swaps which
reference a specific index or collateral
portfolio. The maximum potential future
exposure to the Company for the credit index
swaps is the notional value and for the total
return swaps is the cash collateral associated
with the transaction, which has termination
triggers that limit investment losses. As of
December 31, 2007 and 2006, the maximum
potential future exposure to the Company from
such contracts is $639 and $707, after-tax,
respectively.
    
    
    1,731
    
    
    
    1,629
    
    
    
    (62
    )
    
    
    1
    
    
    
    (48
    )
    
    
    1The Company enters into credit default swap
agreements, in which the Company reduces credit
risk to an individual entity. These contracts
require the Company to pay a derivative
counterparty a periodic fee in exchange for
compensation from the counterparty should a
credit event occur on the part of the referenced
security issuer. The Company entered into these
agreements as an efficient means to reduce
credit exposure to specified issuers or sectors.
    
    
    3,494
    
    
    
    1,882
    
    
    
    56
    
    
    
    (8
    )
    
    
    38
    
    
    
    (6
    )Yen fixed annuity hedging instrumentsThe Company enters into currency rate swaps and
forwards to mitigate the foreign currency
exchange rate and yen interest rate exposures
associated with the yen denominated individual
fixed annuity product. The associated liability
is adjusted for changes in spot rates which was
$(66) and $12, after-tax, as of December 31,
2007 and 2006, respectively, and offsets the
derivative.
    
    
    1,849
    
    
    
    1,869
    
    
    
    (115
    )
    
    
    (225
    )
    
    
    34
    
    
    
    (64
    )GMWB product derivativesThe Company offers certain variable annuity
products with a GMWB rider. The GMWB is a
bifurcated embedded derivative that provides the
policyholder with a GRB if the account value is
reduced to zero through a combination of market
declines and withdrawals. The GRB is generally
equal to premiums less withdrawals. The
policyholder also has the option, after a
specified time period, to reset the GRB to the
then-current account value, if greater. The
notional value of the embedded derivative is the
GRB balance. For a further discussion, see the
Derivative Instruments section of Note 2.
    
    
    44,852
    
    
    
    37,769
    
    
    
    (707
    )
    
    
    53
    
    
    
    (430
    )
    
    
    79
 DerivativeChange in Value,Notional Amount
    
    Fair Value
    
    After-taxHedging Strategy
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006GMWB reinsurance contractsReinsurance arrangements are used to offset the
Companys exposure to the GMWB embedded
derivative for the lives of the host variable
annuity contracts. The notional amount of the
reinsurance contracts is the GRB amount.
    
    
    6,579
    
    
    
    7,172
    
    
    
    128
    
    
    
    (22
    )
    
    
    83
    
    
    
    (19
    )
 F-33




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##### Table of Contents



DerivativeChange in Value,Notional Amount
    
    Fair Value
  
    After-taxHedging Strategy
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006GMWB hedging instrumentsThe Company enters into derivative contracts to
economically hedge exposure to the volatility
associated with the portion of the GMWB liabilities
which are not reinsured. These derivative contracts
include customized swaps, interest rate swaps and
futures, and equity swaps, put and call options, and
futures, on certain indices including the S&P 500
index, EAFE index, and NASDAQ index.
    
    $
    21,357
    
    
    $
    8,379
    
    
    $
    642
    
    
    $
    346
    
    
    $
    167
    
    
    $
    (77
    )Guaranteed minimum benefit product reinsurance contractsReinsurance arrangements are used to offset the
Companys exposure to the GMIB and GMAB embedded
derivatives for the lives of the host variable annuity
contracts. The reinsurance contracts are accounted for
as free-standing derivative contracts. The notional
amount of the reinsurance contracts is the yen
denominated GRB balance value converted at the year-end
yen to U.S. dollar foreign spot exchange rate.
    
    
    18,065
    
    
    
    11,304
    
    
    
    (70
    )
    
    
    119
    
    
    
    (101
    )
    
    
    (35
    )Equity index swaps and optionsThe Company offers certain equity indexed products,
which may contain an embedded derivative that requires
bifurcation. The Company enters into S&P index swaps
and options to economically hedge the equity volatility
risk associated with these embedded derivatives. In
addition, the Company is exposed to bifurcated options
embedded in certain fixed maturity investments.
    
    
    149
    
    
    
    25
    
    
    
    (22
    )
    
    
    (1
    )
    
    
    1
    
    
    
    Statutory reserve hedging instrumentsThe Company purchases one and two year S&P 500 put
option contracts to economically hedge the statutory
reserve impact of equity risk arising primarily from
GMDB and GMWB obligations against a decline in the
equity markets.
    
    
    661
    
    
    
    2,220
    
    
    
    18
    
    
    
    29
    
    
    
    (14
    )
    
    
    (9
    )Coinsurance and modified coinsurance reinsurance contractDuring 2007, a subsidiary insurance company entered
into a coinsurance with funds withheld and modified coinsurance reinsurance agreement
(Agreement) with an affiliate reinsurance company to
provide statutory surplus relief for certain life
insurance policies. The Agreement is accounted for as
a financing transaction for GAAP and includes a
compound embedded derivative.
    
    
    655
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total other investment and/or risk management activities
    
    $
    108,106
    
    
    $
    79,175
    
    
    $
    (375
    )
    
    $
    170
    
    
    $
    (344
    )
    
    $
    (139
    )Total derivatives [1]
    
    $
    117,641
    
    
    $
    88,950
    
    
    $
    (584
    )
    
    $
    (169
    )
    
    $
    (344
    )
    
    $
    (151
    )
 [1]
    
    Derivative change in value includes hedge ineffectiveness for cash-flow and fair-value
hedges and total change in value, including periodic derivative net coupon settlements, of
derivatives held for other investment and/or risk management activities.   F-34




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##### Table of Contents



Securities Lending and Collateral Arrangements
  F-35




---



##### Table of Contents



Loaned Securities and Collateral Pledged
    
    2007
    
    2006ABS
    
    $
    4
    
    
    $
    3CMO
    
    
    21
    
    
    
    CMBS
    
    
    244
    
    
    
    169Corporate
    
    
    1,554
    
    
    
    1,339MBS
    
    
    221
    
    
    
    152Government/Government AgenciesForeign
    
    
    14
    
    
    
    4United States
    
    
    303
    
    
    
    327Short-term
    
    
    1
    
    
    
    Preferred stock
    
    
    53
    
    
    
    Total
    
    $
    2,415
    
    
    $
    1,994
  Securities on Deposit with States
  4. Fair Value of Financial Instruments
       F-36




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##### Table of Contents



2007
    
    2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueAssetsFixed maturities
    
    $
    45,611
    
    
    $
    45,611
    
    
    $
    44,646
    
    
    $
    44,646Equity securities
    
    
    722
    
    
    
    722
    
    
    
    276
    
    
    
    276Policy loans
    
    
    2,016
    
    
    
    2,016
    
    
    
    2,009
    
    
    
    2,009Mortgage loans on real estate
    
    
    4,166
    
    
    
    4,169
    
    
    
    2,631
    
    
    
    2,619Short-term investments
    
    
    752
    
    
    
    752
    
    
    
    694
    
    
    
    694Other investments [1]
    
    
    480
    
    
    
    480
    
    
    
    273
    
    
    
    273LiabilitiesOther policyholder funds and benefits payable [2]
    
    $
    15,148
    
    
    
    15,097
    
    
    $
    13,931
    
    
    $
    13,186Consumer notes
    
    
    809
    
    
    
    814
    
    
    
    258
    
    
    
    260
 [1]
    
    2007 and 2006 includes $446 and $271 of derivative related assets, respectively.[2]
    
    Excludes universal life insurance contracts, including corporate owned life insurance. 5. Reinsurance
    For the years ended December 31,2007
    
    2006
    
    2005Gross fee income, earned premiums and other
    
    $
    5,173
    
    
    $
    4,360
    
    
    $
    4,019Reinsurance assumed
    
    
    13
    
    
    
    19
    
    
    
    39Reinsurance ceded
    
    
    (694
    )
    
    
    (719
    )
    
    
    (798
    )Net fee income, earned premiums and other
    
    $
    4,492
    
    
    $
    3,660
    
    
    $
    3,260
   F-37




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##### Table of Contents



6. Deferred Policy Acquisition Costs and Present Value of Future Profits
  2007
    
    2006
    
    2005Balance, January 1, before cumulative
effect of accounting change, pre-tax
    
    $
    7,334
    
    
    $
    7,101
    
    
    $
    6,453Cumulative effect of accounting change,
pre-tax (SOP05-1)
    
    
    (20
    )
    
    
    
    
    
    
    Balance, January 1, as adjusted
    
    
    7,314
    
    
    
    7,101
    
    
    
    6,453Capitalization
    
    
    1,400
    
    
    
    1,351
    
    
    
    1,226Amortization  Deferred policy
acquisitions costs and present value of
future profits
    
    
    (817
    )
    
    
    (1,033
    )
    
    
    (945
    )Amortization  Unlock, pre-tax [1]
    
    
    302
    
    
    
    (142
    )
    
    
    Adjustments to unrealized gains and
losses on securities available-for-sale
and other
    
    
    194
    
    
    
    57
    
    
    
    367Balance, December 31
    
    $
    8,393
    
    
    $
    7,334
    
    
    $
    7,101
 [1]
    
    For a discussion of unlock effects, see Unlock Results in Note 1.  For the years ended December 31,2008
    
    $
    272009
    
    $
    272010
    
    $
    252011
    
    $
    232012
    
    $
    22
 7. Goodwill and Other Intangible Assets
    8. Separate Accounts, Death Benefits and Other Insurance Benefit Features
  F-38




---



##### Table of Contents



UL SecondaryGMDB [1]
    
    Guarantees [1]Liability balance as of January 1, 2007
    
    $
    476
    
    
    
    7Incurred
    
    
    144
    
    
    
    12Unlock
    
    
    (4
    )
    
    
    Paid
    
    
    (85
    )
    
    
    Liability balance as of December 31, 2007
    
    $
    531
    
    
    
    19
 [1]
    
    The reinsurance recoverable asset related to the GMDB was $325 as of December 31, 2007. The
reinsurance recoverable asset related to the UL Secondary Guarantees was $10 as of December 31,
2007. UL SecondaryGMDB [1]
    
    Guarantees [1]Liability balance as of January 1, 2006
    
    $
    158
    
    
    
    5Incurred
    
    
    130
    
    
    
    2Unlock
    
    
    294
    
    
    
    Paid
    
    
    (106
    )
    
    
    Liability balance as of December 31, 2006
    
    $
    476
    
    
    
    7
 [1]
    
    The reinsurance recoverable asset related to the GMDB was $316 as of December 31, 2006. The
reinsurance recoverable asset related to the UL Secondary Guarantees was $6 as of December 31,
2006.   GMDB:
 
    
    1000 stochastically generated investment performance scenarios for all issue years
    
    For all issue years, the weighted average return is 8% after fund fees, but before
mortality and expense charges; it varies by asset class with a low of
3% for cash and a high of 11% for aggressive equities.
    
    Discount rate of 7.5% for issue year 2002 & prior; discount rate of 7% for issue year 2003
& 2004 and discount rate of 5.6% for issue year 2005  2007.
    
    Volatilities also vary by asset class with a low of 1% for cash, a high of 15% for
aggressive equities, and a weighted average of 12%.
    
    100% of the Hartford experience mortality table was used for the mortality assumptions
    
    Lapse rates by calendar year vary from a low of 8% to a high of 13%, with an average of 11%
 F-39




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##### Table of Contents



UL Secondary Guarantees:
 
    
    Discount rate of 4.75% for issue year 2004, discount rate of 4.50% for issue year 2005 &
2006, and discount rate of 4.25% for issue year 2007.
    
    100% of the Hartford pricing mortality table for mortality assumptions.
    
    Lapse rates for single life policies average 3% in policy years 1-10, declining to 0% by
age 95. Lapse rate for last survivor policies is 0.4%.
  Breakdown of Variable Annuity Account Value by GMDB Type at December 31, 2007
 Weighted AverageAccount
    
    Net Amount
    
    Retained Net Amount
    
    Attained Age ofMaximum anniversary value (MAV) [1]
    
    Value
    
    at Risk
    
    at Risk
    
    AnnuitantMAV only
    
    $
    47,463
    
    
    $
    3,557
    
    
    $
    419
    
    
    
    65With 5% rollup [2]
    
    
    3,360
    
    
    
    285
    
    
    
    67
    
    
    
    64With Earnings Protection Benefit Rider (EPB) [3]
    
    
    5,463
    
    
    
    530
    
    
    
    85
    
    
    
    62With 5% rollup & EPB
    
    
    1,333
    
    
    
    155
    
    
    
    30
    
    
    
    64Total MAV
    
    
    57,619
    
    
    
    4,527
    
    
    
    601Asset Protection Benefit (APB) [4]
    
    
    42,489
    
    
    
    446
    
    
    
    242
    
    
    
    62Lifetime Income Benefit (LIB) [5]
    
    
    10,273
    
    
    
    25
    
    
    
    25
    
    
    
    62Reset [6] (5-7 years)
    
    
    6,132
    
    
    
    80
    
    
    
    80
    
    
    
    66Return of Premium [7] /Other
    
    
    10,321
    
    
    
    28
    
    
    
    28
    
    
    
    54Total
    
    $
    126,834
    
    
    $
    5,106
    
    
    $
    976
    
    
    
    63
 [1]
    
    MAV: the death benefit is the greatest of current account value, net premiums paid and the
highest account value on any anniversary before age 80 (adjusted for withdrawals).[2]
    
    Rollup: the death benefit is the greatest of the MAV, current account value, net premium
paid and premiums (adjusted for withdrawals) accumulated at generally 5% simple interest up
to the earlier of age 80 or 100% of adjusted premiums.[3]
    
    EPB: the death benefit is the greatest of the MAV, current account value, or contract
value plus a percentage of the contracts growth. The contracts growth is account value
less premiums net of withdrawals, subject to a cap of 200% of premiums net of withdrawals.[4]
    
    APB: the death benefit is the greater of current account value or MAV, not to exceed
current account value plus 25% times the greater of net premiums and MAV (each adjusted for
premiums in the past 12 months).[5]
    
    LIB: the death benefit is the greatest of current account value or MAV, net premiums paid,
or a benefit amount that ratchets over time, generally based on market performance.[6]
    
    Reset: the death benefit is the greatest of current account value, net premiums paid and
the most recent five to seven year anniversary account value before age 80 (adjusted for
withdrawals).[7]
    
    Return of premium: the death benefit is the greater of current account value and net
premiums paid.   F-40




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##### Table of Contents



As of December 31,
    
    As of December 31,Asset type
    
    2007
    
    2006Equity securities
    
    $
    109,354
    
    
    $
    104,687Cash and cash equivalents
    
    
    9,975
    
    
    
    8,931Total
    
    $
    119,329
    
    
    $
    113,618
  9. Sales Inducements
  F-41




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##### Table of Contents



2007
    
    2006Balance, beginning of period
    
    $
    397
    
    
    $
    359Cumulative effect of accounting change, pre-tax (SOP
05-1)
    
    
    (1
    )
    
    
    Balance, January 1, as adjusted
    
    
    396
    
    
    
    359Sales inducements deferred
    
    
    97
    
    
    
    84Unlock
    
    
    (15
    )
    
    
    4Amortization charged to income
    
    
    (33
    )
    
    
    (50
    )Balance, end of period
    
    $
    445
    
    
    $
    397
 10. Commitments and Contingencies
 Litigation
   Broker Compensation Litigation
 Regulatory Developments -
  F-42




---



##### Table of Contents



Leases
   2008
    
    $
    172009
    
    
    112010
    
    
    82011
    
    
    52012
    
    
    2Thereafter
    
    
    2Total
    
    $
    45
 Tax Matters
     F-43




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##### Table of Contents



Unfunded Commitments
  Guaranty Fund and Other Insurance-related Assessments
   11. Income Tax
   For the years ended December 31,2007
    
    2006
    
    2005Current
    
    $
    106
    
    
    $
    115
    
    
    $
    71Deferred
    
    
    62
    
    
    
    (12
    )
    
    
    136Income tax expense
    
    $
    168
    
    
    $
    103
    
    
    $
    207
  For the years ended December 31,2007
    
    2006
    
    2005Tax provision at the U.S. federal statutory rate
    
    $
    318
    
    
    $
    292
    
    
    $
    391Dividends received deduction
    
    
    (155
    )
    
    
    (174
    )
    
    
    (184
    )Penalties
    
    
    7
    
    
    
    
    
    
    
    1Foreign related investments
    
    
    (11
    )
    
    
    (10
    )
    
    
    (2
    )Other
    
    
    9
    
    
    
    (5
    )
    
    
    1Total
    
    $
    168
    
    
    $
    103
    
    
    $
    207
 F-44




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##### Table of Contents



2007
    
    2006Deferred Tax AssetsTax basis deferred policy acquisition costs
    
    $
    682
    
    
    $
    568Unrealized Loss on Investments
    
    
    294
    
    
    
    Other Investment-related items
    
    
    455
    
    
    
    179Minimum tax credit
    
    
    239
    
    
    
    217Foreign tax credit carryovers
    
    
    
    
    
    
    7Other
    
    
    17
    
    
    
    Total Deferred Tax Assets
    
    
    1,687
    
    
    
    971Deferred Tax LiabilitiesFinancial statement deferred policy acquisition costs and reserves
    
    
    (1,775
    )
    
    
    (1,252
    )Net unrealized gains on equity securities
    
    
    
    
    
    
    (169
    )Employee benefits
    
    
    (36
    )
    
    
    (39
    )Other
    
    
    
    
    
    
    (2
    )Total Deferred Tax Liabilities
    
    
    (1,811
    )
    
    
    (1,462
    )Total Deferred Tax Liability
    
    $
    (124
    )
    
    $
    (491
    )
     12. Debt
 Consumer Notes
   F-45




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##### Table of Contents



13. Statutory Results
 For the years ended December 31,2007
    
    2006
    
    2005Statutory net income
    
    $
    255
    
    
    $
    777
    
    
    $
    393Statutory capital and surplus
    
    $
    4,448
    
    
    $
    3,276
    
    
    $
    3,022
   14. Pension Plans, Postretirement, Health Care and Life Insurance Benefit and Savings Plans
 Pension Plans
  Investment and Savings Plan
  15. Stock Compensation Plans 
   F-46




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Stock Plan
    Stock Option Awards
   Share Awards
  Employee Stock Purchase Plan
  16. Transactions with Affiliates
  F-47




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F-48




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17. Quarterly Results for 2007 and 2006 (unaudited)
 March 31,
    
    June 30,
    
    September 30,
    
    December 31,2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Revenues
    
    $
    1,692
    
    
    $
    1,623
    
    
    $
    1,660
    
    
    $
    1,272
    
    
    $
    1,751
    
    
    $
    1,523
    
    
    $
    1,503
    
    
    $
    1,671Benefits, claims and expenses
    
    
    1,360
    
    
    
    1,286
    
    
    
    1,551
    
    
    
    1,198
    
    
    
    1,337
    
    
    
    1,259
    
    
    
    1,450
    
    
    
    1,512Net income
    
    
    262
    
    
    
    259
    
    
    
    110
    
    
    
    93
    
    
    
    290
    
    
    
    231
    
    
    
    78
    
    
    
    148
 F-49




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
 SCHEDULE I
 SUMMARY OF INVESTMENTS  OTHER THAN INVESTMENTS IN AFFILIATES
 (In millions)
    
    As of December 31, 2007Amount atwhich shown onType of Investment
    
    Cost
    
    Fair Value
    
    Balance SheetFixed MaturitiesBonds and NotesU.S. Government and Government agencies and
authorities (guaranteed and sponsored)
    
    $
    517
    
    
    $
    528
    
    
    $
    528U.S. Government and Government agencies and
authorities (guaranteed and sponsored) 
asset-backed
    
    
    2,792
    
    
    
    2,814
    
    
    
    2,814States, municipalities and political subdivisions
    
    
    1,226
    
    
    
    1,239
    
    
    
    1,239International governments
    
    
    465
    
    
    
    498
    
    
    
    498Public utilities
    
    
    2,797
    
    
    
    2,865
    
    
    
    2,865All other corporate including international
    
    
    19,132
    
    
    
    19,298
    
    
    
    19,298All other corporate  asset-backed
    
    
    19,278
    
    
    
    18,366
    
    
    
    18,366Redeemable preferred stock
    
    
    1
    
    
    
    3
    
    
    
    3Total fixed maturities
    
    
    46,208
    
    
    
    45,611
    
    
    
    45,611Equity SecuritiesCommon stocks
Industrial, miscellaneous and all other
    
    
    184
    
    
    
    184
    
    
    
    184Nonredeemable preferred stocks
    
    
    579
    
    
    
    538
    
    
    
    538Total equity securities
    
    
    763
    
    
    
    722
    
    
    
    722Total fixed maturities and equity securities
    
    
    46,971
    
    
    
    46,333
    
    
    
    46,333Real estate
    
    
    33
    
    
    
    33
    
    
    
    33Other InvestmentsMortgage loans on real estate
    
    
    4,166
    
    
    
    4,169
    
    
    
    4,166Short-term investments
    
    
    752
    
    
    
    752
    
    
    
    752Policy loans
    
    
    2,016
    
    
    
    2,016
    
    
    
    2,016Investments in partnerships and trusts
    
    
    1,246
    
    
    
    1,246
    
    
    
    1,246Other invested assets
    
    
    407
    
    
    
    447
    
    
    
    447Total other investments
    
    
    8,587
    
    
    
    8,630
    
    
    
    8,627Total investments
    
    $
    55,591
    
    
    $
    54,996
    
    
    $
    54,993
 S-1




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
 SCHEDULE III
 SUPPLEMENTARY INSURANCE INFORMATION
For the years ended December 31, 2007, 2006 and 2005
 (In millions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    Benefits,
    
    
    
    
    
    AmortizationFee
    
    
    
    
    
    
    
    
    
    Realized
    
    Claims and
    
    
    
    
    
    of Deferredincome
    
    
    
    
    
    Net
    
    Capital
    
    Claim
    
    Insurance
    
    Policy
    
    Dividendsand
    
    Earned
    
    Investment
    
    Gains
    
    Adjustment
    
    expenses and
    
    Acquisition
    
    To Policy-Segment
    
    other
    
    Premiums
    
    Income
    
    (Losses)
    
    Expenses
    
    other
    
    Costs
    
    holders2007Retail Products Group
    
    $
    2,166
    
    
    $
    (62
    )
    
    $
    815
    
    
    $
    (381
    )
    
    $
    820
    
    
    $
    602
    
    
    $
    316
    
    
    $
    Retirement Plans
    
    
    225
    
    
    
    4
    
    
    
    355
    
    
    
    (41
    )
    
    
    249
    
    
    
    169
    
    
    
    58
    
    
    
    Institutional Solutions Group
    
    
    246
    
    
    
    990
    
    
    
    1,226
    
    
    
    (188
    )
    
    
    2,066
    
    
    
    183
    
    
    
    23
    
    
    
    Individual Life
    
    
    816
    
    
    
    (56
    )
    
    
    331
    
    
    
    (26
    )
    
    
    510
    
    
    
    185
    
    
    
    117
    
    
    
    3Other
    
    
    56
    
    
    
    107
    
    
    
    321
    
    
    
    (298
    )
    
    
    335
    
    
    
    53
    
    
    
    1
    
    
    
    8Consolidated operations
    
    $
    3,509
    
    
    $
    983
    
    
    $
    3,048
    
    
    $
    (934
    )
    
    $
    3,980
    
    
    $
    1,192
    
    
    $
    515
    
    
    $
    112006Retail Products Group
    
    $
    1,924
    
    
    $
    (86
    )
    
    $
    835
    
    
    $
    (87
    )
    
    $
    819
    
    
    $
    497
    
    
    $
    913
    
    
    $
    Retirement Plans
    
    
    180
    
    
    
    19
    
    
    
    326
    
    
    
    (16
    )
    
    
    250
    
    
    
    134
    
    
    
    (4
    )
    
    
    Institutional Solutions Group
    
    
    119
    
    
    
    607
    
    
    
    987
    
    
    
    (40
    )
    
    
    1,471
    
    
    
    75
    
    
    
    32
    
    
    
    Individual Life
    
    
    825
    
    
    
    (45
    )
    
    
    293
    
    
    
    (22
    )
    
    
    447
    
    
    
    170
    
    
    
    235
    
    
    
    2Other
    
    
    65
    
    
    
    52
    
    
    
    287
    
    
    
    (134
    )
    
    
    218
    
    
    
    (23
    )
    
    
    (1
    )
    
    
    20Consolidated operations
    
    $
    3,113
    
    
    
    547
    
    
    
    2,728
    
    
    $
    (299
    )
    
    $
    3,205
    
    
    $
    853
    
    
    $
    1,175
    
    
    $
    222005Retail Products Group
    
    $
    1,737
    
    
    $
    (110
    )
    
    $
    934
    
    
    $
    (57
    )
    
    $
    895
    
    
    $
    433
    
    
    $
    685
    
    
    $
    Retirement Plans
    
    
    139
    
    
    
    10
    
    
    
    311
    
    
    
    14
    
    
    
    231
    
    
    
    117
    
    
    
    31
    
    
    
    Institutional Solutions Group
    
    
    117
    
    
    
    504
    
    
    
    784
    
    
    
    35
    
    
    
    1,199
    
    
    
    53
    
    
    
    32
    
    
    
    Individual Life
    
    
    742
    
    
    
    (26
    )
    
    
    272
    
    
    
    16
    
    
    
    420
    
    
    
    153
    
    
    
    198
    
    
    
    3Other
    
    
    76
    
    
    
    71
    
    
    
    268
    
    
    
    67
    
    
    
    263
    
    
    
    42
    
    
    
    (1
    )
    
    
    34Consolidated operations
    
    $
    2,811
    
    
    
    449
    
    
    $
    2,569
    
    
    $
    75
    
    
    $
    3,008
    
    
    $
    798
    
    
    $
    945
    
    
    $
    37
 S-2




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
 SCHEDULE IV
 REINSURANCE
 AssumedCeded to
    
    From
    
    
    
    
    
    Percentage ofGross
    
    Other
    
    Other
    
    Net
    
    Amount Assumed(In millions)
    
    Amount
    
    Companies
    
    Companies
    
    Amount
    
    to NetFor the year ended December 31, 2007Life insurance in force
    
    $
    346,205
    
    
    $
    147,021
    
    
    $
    2,349
    
    
    $
    201,533
    
    
    
    1.2
    %Fee income, earned premiums and otherLife insurance and annuities
    
    $
    4,867
    
    
    $
    451
    
    
    $
    9
    
    
    $
    4,425
    
    
    
    0.1
    %Accident and health insurance
    
    
    306
    
    
    
    243
    
    
    
    4
    
    
    
    67
    
    
    
    6.0
    %Total fee income, earned premiums and other
    
    $
    5,173
    
    
    $
    694
    
    
    $
    13
    
    
    $
    4,492
    
    
    
    0.2
    %For the year ended December 31, 2006Life insurance in force
    
    $
    340,345
    
    
    $
    164,125
    
    
    $
    6,822
    
    
    $
    183,042
    
    
    
    1.3
    %Fee income, earned premiums and otherLife insurance and annuities
    
    $
    4,072
    
    
    $
    457
    
    
    $
    12
    
    
    $
    3,627
    
    
    
    0.3
    %Accident and health insurance
    
    
    288
    
    
    
    262
    
    
    
    7
    
    
    
    33
    
    
    
    21.2
    %Total fee income, earned premiums and other
    
    $
    4,360
    
    
    $
    719
    
    
    $
    19
    
    
    $
    3,660
    
    
    
    0.5
    %For the year ended December 31, 2005Life insurance in force
    
    $
    341,821
    
    
    $
    194,257
    
    
    $
    3,137
    
    
    $
    150,701
    
    
    
    2.1
    %Fee income, earned premiums and otherLife insurance and annuities
    
    $
    3,735
    
    
    $
    554
    
    
    $
    31
    
    
    $
    3,212
    
    
    
    1.0
    %Accident and health insurance
    
    
    284
    
    
    
    244
    
    
    
    8
    
    
    
    48
    
    
    
    16.7
    %Total fee income, earned premiums and other
    
    $
    4,019
    
    
    $
    798
    
    
    $
    39
    
    
    $
    3,260
    
    
    
    1.2
    %
 S-3




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##### Table of Contents



SIGNATURES
  HARTFORD LIFE INSURANCE COMPANY/s/ Ernest M. McNeill Jr.Ernest M. McNeill JrSenior Vice President and Chief Accounting Officer   Signature
    
    Title
    
    Date/s/ Lizabeth H. Zlatkus

Lizabeth H. Zlatkus
    
    Chairman, Co-President and Co-Chief
Executive Officer
Director
    
    February 22, 2008/s/ John C. Walters

John C. Walters
    
    Co-President, Co-Chief Executive Officer
Director
    
    February 22, 2008/s/ Glenn D. Lammey

Glenn D. Lammey
    
    Executive Vice President,
Chief Financial Officer and Director
    
    February 22, 2008/s/ Ernest M. McNeill Jr.

Ernest M. McNeill Jr
    
    Senior Vice President
and Chief Accounting Officer
    
    February 22, 2008/s/ Stephen T. Joyce

Stephen T. Joyce
    
    Director
    
    February 22, 2008/s/ David M. Znamierowski

David M. Znamierowski
    
    Director
    
    February 22, 2008
 II-1




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##### Table of Contents



HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
EXHIBITS INDEX
 Exhibit #3.01
    
    Restated Certificate of Incorporation of Hartford Life Insurance Company was filed as
Exhibit 3.01 to Hartford Life Insurance Companys Form 10-K filed for the year ended
December 31, 2006 and is incorporated herein by reference.3.02
    
    By-Laws of Hartford Life Insurance Company was filed as Exhibit 3.02 to Hartford Life
Insurance Companys Form 10-K filed for the year ended December 31, 2006 and is
incorporated herein by reference.4.01
    
    Restated Certificate of Incorporation and By-Laws of Hartford Life Insurance Company
(included as Exhibits 3.01 and 3.02, respectively).10.01
    
    Management Agreement among Hartford Life Insurance Company, certain of its affiliates and
Hartford Investment Services, Inc. was filed as Exhibit 10.4 to Hartford Life, Inc.s Form
10-Q filed for the quarter ended June 30, 1997 (File No. 1-12749) and is incorporated
herein by reference.10.02
    
    Management Agreement between Hartford Life Insurance Company and The Hartford Investment
Management Company was filed as Exhibit 10.3 to Hartford Life, Inc.s Form 10-Q filed for
the quarter ended June 30, 1997 (File No. 1-12749) and is incorporated herein by
reference.12.01
    
    Computation of Ratio of Earnings to Fixed Charges is filed herewith.23.01
    
    Consent of Deloitte & Touche, LLP, filed herewith.31.01
    
    Certification of Lizabeth H. Zlatkus, pursuant to Section 302 of the Sarbanes-Oxley Act of
200231.02
    
    Certification of John C. Walters, pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.03
    
    Certification of Glen D. Lammey, pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.01
    
    Certification of Lizabeth H. Zlatkus, pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.02
    
    Certification of John C. Walters, pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.02
    
    Certification of Glen D. Lammey, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 II-2