##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended September 30, 2005
 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 001-12749
 HARTFORD LIFE, INC.
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    06-1470915
(I.R.S. Employer
Identification No.)
 200 Hopmeadow Street, Simsbury, Connecticut 06089
 (860) 547-5000
 þ o
 o þ
 o þ




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INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Report of Independent Registered Public Accounting Firm
    
    
    3Condensed Consolidated Statements of Income  Three and Nine Months
Ended September 30, 2005 and 2004
    
    
    4Condensed Consolidated Balance Sheets  September 30, 2005
and December 31, 2004
    
    
    5Condensed Consolidated Statements of Changes in
Stockholders Equity  Nine Months Ended September 30, 2005 and 2004
    
    
    6Condensed Consolidated Statements of Cash Flows  Nine Months
Ended September 30, 2005 and 2004
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    42PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    42Item 6. Exhibits
    
    
    43Signature
    
    
    44Exhibits Index
    
    
    45EX-15.01: LETTER OF AWARENESSEX-31.01: CERTIFICATIONEX-31.02: CERTIFICATIONEX-32.01: CERTIFICATIONEX-32.02: CERTIFICATION


2



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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
  
     
 3




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HARTFORD LIFE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Income
 Three Months
    
    Nine MonthsEnded
    
    EndedSeptember 30,
    
    September 30,(In millions)
    
    2005
    
    2004
    
    2005
    
    2004(Unaudited)
    
    (Unaudited)RevenuesFee income
    
    $
    1,026
    
    
    $
    864
    
    
    $
    2,936
    
    
    $
    2,527Earned premiums
    
    
    1,045
    
    
    
    1,058
    
    
    
    3,091
    
    
    
    3,023Net investment income (Note 1)Securities available-for-sale and other
    
    
    771
    
    
    
    726
    
    
    
    2,233
    
    
    
    2,141Equity securities held for trading
    
    
    1,500
    
    
    
    (174
    )
    
    
    2,024
    
    
    
    383Total Net investment income
    
    
    2,271
    
    
    
    552
    
    
    
    4,257
    
    
    
    2,524Net realized capital gains (losses)
    
    
    (35
    )
    
    
    28
    
    
    
    30
    
    
    
    130Total revenues
    
    
    4,307
    
    
    
    2,502
    
    
    
    10,314
    
    
    
    8,204Benefits, claims and expensesBenefits, claims and claim adjustment expenses
    
    
    2,926
    
    
    
    1,325
    
    
    
    6,421
    
    
    
    4,733Insurance expenses and other
    
    
    607
    
    
    
    522
    
    
    
    1,802
    
    
    
    1,542Amortization
of deferred policy acquisition costs and present value of future profits
    
    
    312
    
    
    
    236
    
    
    
    860
    
    
    
    702Dividends to policyholders
    
    
    14
    
    
    
    3
    
    
    
    35
    
    
    
    24Interest expense
    
    
    20
    
    
    
    20
    
    
    
    60
    
    
    
    77Total benefits, claims and expenses
    
    
    3,879
    
    
    
    2,106
    
    
    
    9,178
    
    
    
    7,078Income before income tax expense
and cumulative effect of
accounting change
    
    
    428
    
    
    
    396
    
    
    
    1,136
    
    
    
    1,126Income tax expense (benefit)
    
    
    95
    
    
    
    (103
    )
    
    
    262
    
    
    
    91Income before cumulative effect of accounting change
    
    
    333
    
    
    
    499
    
    
    
    874
    
    
    
    1,035Cumulative effect of accounting change, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )Net income
    
    $
    333
    
    
    $
    499
    
    
    $
    874
    
    
    $
    1,012
 See Notes to Condensed Consolidated Financial Statements.
 4




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HARTFORD LIFE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 September 30,
    
    December 31,2005
    
    2004(In millions, except for share data)
    
    (Unaudited)AssetsInvestmentsFixed maturities, available-for-sale, at fair value (amortized cost of
$49,582 and $47,962)
    
    $
    51,115
    
    
    $
    50,531Equity securities, available-for-sale, at fair value (cost of $779 and $506)
    
    
    797
    
    
    
    525Equity securities, held for trading, at fair value (cost of $18,382 and $12,514)
    
    
    21,247
    
    
    
    13,634Policy loans, at outstanding balance
    
    
    2,009
    
    
    
    2,662Other investments
    
    
    1,728
    
    
    
    1,364Total investments
    
    
    76,896
    
    
    
    68,716Cash
    
    
    1,223
    
    
    
    933Premiums receivable and agents balances
    
    
    417
    
    
    
    391Reinsurance recoverables
    
    
    722
    
    
    
    993Deferred policy acquisition costs and present value of future profits
    
    
    8,250
    
    
    
    7,437Deferred income taxes
    
    
    (706
    )
    
    
    (747
    )Goodwill
    
    
    796
    
    
    
    796Other assets
    
    
    2,002
    
    
    
    1,911Separate account assets
    
    
    150,341
    
    
    
    140,023Total assets
    
    $
    239,941
    
    
    $
    220,453LiabilitiesReserve for future policy benefits
    
    $
    12,591
    
    
    $
    12,250Other policyholder funds
    
    
    61,535
    
    
    
    52,833Long-term debt
    
    
    1,050
    
    
    
    1,050Other liabilities
    
    
    5,121
    
    
    
    5,125Separate account liabilities
    
    
    150,341
    
    
    
    140,023Total liabilities
    
    
    230,638
    
    
    
    211,281Commitments and Contingent Liabilities, Note 6
    
    
    
    
    
    
    Stockholders EquityCommon Stock
 1,000 shares authorized, issued and outstanding;
par value $0.01
    
    
    
    
    
    
    Capital surplus
    
    
    3,094
    
    
    
    3,094Accumulated other comprehensive incomeNet unrealized capital gains on securities, net of tax
    
    
    740
    
    
    
    1,178Foreign currency translation adjustments
    
    
    (31
    )
    
    
    16Total accumulated other comprehensive income
    
    
    709
    
    
    
    1,194Retained earnings
    
    
    5,500
    
    
    
    4,884Total stockholders equity
    
    
    9,303
    
    
    
    9,172Total liabilities and stockholders equity
    
    $
    239,941
    
    
    $
    220,453
 See Notes to Condensed Consolidated Financial Statements.
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HARTFORD LIFE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Changes in Stockholders Equity
 Nine Months Ended September 30, 2005
 Accumulated Other Comprehensive IncomeNet GainNet Unrealized
    
    (Loss) onCapital
    
    Cash Flow
    
    ForeignGains (Losses)
    
    Hedging
    
    CurrencyCommon
    
    Capital
    
    on Securities,
    
    Instruments,
    
    Translation
    
    Retained
    
    Total Stockholders(In millions) (Unaudited)
    
    Stock
    
    Surplus
    
    Net of Tax
    
    Net of Tax
    
    Adjustments
    
    Earnings
    
    EquityBalance, December 31, 2004
    
    $
    
    
    
    $
    3,094
    
    
    $
    1,348
    
    
    $
    (170
    )
    
    $
    16
    
    
    $
    4,884
    
    
    $
    9,172Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    874
    
    
    
    874Other comprehensive income, net of tax (1)Net change in unrealized capital losses
on securities (3)
    
    
    
    
    
    
    
    
    
    
    (504
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (504
    )Net gain on cash flow hedging
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    66Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (485
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (258
    )
    
    
    (258
    )Balance, September 30, 2005
    
    $
    
    
    
    $
    3,094
    
    
    $
    844
    
    
    $
    (104
    )
    
    $
    (31
    )
    
    $
    5,500
    
    
    $
    9,303
 Nine Months Ended September 30, 2004
 Accumulated Other Comprehensive IncomeNet GainNet Unrealized
    
    (Loss) onCapital
    
    Cash Flow
    
    ForeignGains (Losses)
    
    Hedging
    
    CurrencyCommon
    
    Capital
    
    on Securities,
    
    Instruments,
    
    Translation
    
    Retained
    
    Total Stockholders(In millions) (Unaudited)
    
    Stock
    
    Surplus
    
    Net of Tax
    
    Net of Tax
    
    Adjustments
    
    Earnings
    
    EquityBalance, December 31, 2003
    
    $
    
    
    
    $
    2,489
    
    
    $
    928
    
    
    $
    (25
    )
    
    $
    (43
    )
    
    $
    3,710
    
    
    $
    7,059Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,012
    
    
    
    1,012Other comprehensive income, net of tax (1)Cumulative effect of accounting change (2)
    
    
    
    
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292Net change in unrealized capital (losses)
on securities (3)
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Net loss on cash flow hedging
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,272Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121
    )
    
    
    (121
    )Capital contributions from parent
    
    
    
    
    
    
    605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    605Balance, September 30, 2004
    
    $
    
    
    
    $
    3,094
    
    
    $
    1,196
    
    
    $
    (35
    )
    
    $
    (41
    )
    
    $
    4,601
    
    
    $
    8,815
 (1)
    
    Net change in unrealized capital losses on securities is reflected net of tax benefit of
$271 and $13 for the nine months ended September 30, 2005 and 2004, respectively. Net gain
(loss) on cash flow hedging instruments is net of tax provision (benefit) of $36 and $(5) for
the nine months ended September 30, 2005 and 2004, respectively. There is no tax effect on
cumulative translation adjustments.
 (2)
    
    Represents the impact of the adoption of SOP 03-1. The Company adopted SOP 03-1 beginning
January 1, 2004.
 (3)
    
    There were reclassification adjustments for after-tax gains realized in net income of $24
and $71 for the nine months ended September 30, 2005 and 2004, respectively.
 See Notes to Condensed Consolidated Financial Statements.
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HARTFORD LIFE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows
 Nine Months EndedSeptember 30,(In millions) (Unaudited)
    
    2005
    
    2004Operating ActivitiesNet income
    
    $
    874
    
    
    $
    1,012Adjustments to reconcile net income to net cash provided by operating activitiesNet realized capital (gains)
    
    
    (30
    )
    
    
    (130
    )Cumulative
effect of adoption of SOP 03-1
    
    
    
    
    
    
    23Amortization of deferred policy acquisition costs and present value of future profits
    
    
    860
    
    
    
    702Additions to deferred policy acquisition costs and present value of future profits
    
    
    (1,555
    )
    
    
    (1,463
    )Amortization of sales inducements
    
    
    29
    
    
    
    19Additions to deferred sales inducements
    
    
    (68
    )
    
    
    (91
    )Depreciation and amortization
    
    
    180
    
    
    
    (14
    )Increase in premiums receivable and agents balances
    
    
    (26
    )
    
    
    (77
    )Decrease (increase) in receivables
    
    
    28
    
    
    
    (328
    )Decrease in accrued liabilities and payables
    
    
    (32
    )
    
    
    (47
    )Increase (decrease) in other liabilities
    
    
    159
    
    
    
    (191
    )Decrease in accrued taxes
    
    
    (96
    )
    
    
    (80
    )Change in deferred income taxes
    
    
    138
    
    
    
    743Increase in liabilities for future policy benefits
    
    
    345
    
    
    
    394Net increase in equity securities, held for trading
    
    
    (9,297
    )
    
    
    (4,460
    )Net receipts from investment contracts credited to policyholder accounts associated
with equity securities, held for trading
    
    
    9,477
    
    
    
    4,906Decrease in reinsurance recoverables
    
    
    51
    
    
    
    72Other, net
    
    
    27
    
    
    
    296Net cash provided by operating activities
    
    
    1,064
    
    
    
    1,286Investing ActivitiesPurchases of fixed maturity and equity security investments, available-for-sale
    
    
    (19,856
    )
    
    
    (13,034
    )Sales of fixed maturity and equity security investments, available-for-sale
    
    
    16,065
    
    
    
    8,574Maturity of fixed maturity and equity security investments, available-for-sale
    
    
    2,016
    
    
    
    3,282Purchase price adjustment of Business/Affiliate
    
    
    
    
    
    
    (58
    )Increase in other assets
    
    
    (6
    )
    
    
    (24
    )Net cash used for investing activities
    
    
    (1,781
    )
    
    
    (1,260
    )Financing ActivitiesCapital contributions
    
    
    
    
    
    
    605Repayment of short-term debt
    
    
    
    
    
    
    (505
    )Repayment of company obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely parent junior subordinated debentures
    
    
    
    
    
    
    (250
    )Dividends paid
    
    
    (226
    )
    
    
    (115
    )Net receipts (disbursements) from investment and universal life-type contracts
credited to policyholder accounts
    
    
    1,301
    
    
    
    597Net cash provided by (used for) financing activities
    
    
    1,075
    
    
    
    332Net increase in cash
    
    
    358
    
    
    
    358Impact of foreign exchange
    
    
    (68
    )
    
    
    2Cash  beginning of period
    
    
    933
    
    
    
    265Cash  end of period
    
    $
    1,223
    
    
    $
    625Supplemental Disclosure of Cash Flow InformationNet cash paid during the period forIncome taxes
    
    $
    198
    
    
    $
    24Interest
    
    $
    59
    
    
    $
    74
 See Notes to Condensed Consolidated Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Dollar amounts in millions, unless otherwise stated)
 1. Basis of Presentation and Accounting Policies
 Basis of Presentation
    Reclassifications
  Use of Estimates
   Significant Accounting Policies
  Income Taxes
   8




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##### Table of Contents



Net Investment Income
   Future Adoption of Accounting Standards
    2. Segment Information
   9




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Retail Products GroupRealized gains (losses)
    
    $
    9
    
    
    $
    6
    
    
    $
    28
    
    
    $
    15Credit risk fees
    
    
    (7
    )
    
    
    (6
    )
    
    
    (21
    )
    
    
    (18
    )Institutional Solutions GroupRealized gains (losses)
    
    
    5
    
    
    
    5
    
    
    
    15
    
    
    
    11Credit risk fees
    
    
    (6
    )
    
    
    (6
    )
    
    
    (19
    )
    
    
    (18
    )Individual LifeRealized gains (losses)
    
    
    3
    
    
    
    2
    
    
    
    8
    
    
    
    4Credit risk fees
    
    
    (2
    )
    
    
    (1
    )
    
    
    (5
    )
    
    
    (4
    )Group BenefitsRealized gains (losses)
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    7Credit risk fees
    
    
    (2
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    (6
    )OtherRealized gains (losses)
    
    
    (19
    )
    
    
    (15
    )
    
    
    (58
    )
    
    
    (37
    )Credit risk fees
    
    
    17
    
    
    
    15
    
    
    
    52
    
    
    
    46Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Revenues
    
    2005
    
    2004
    
    2005
    
    2004Retail Products Group
    
    $
    858
    
    
    $
    842
    
    
    $
    2,543
    
    
    $
    2,369Institutional Solutions Group
    
    
    480
    
    
    
    448
    
    
    
    1,369
    
    
    
    1,324Individual Life
    
    
    277
    
    
    
    263
    
    
    
    799
    
    
    
    769Group Benefits
    
    
    1,049
    
    
    
    1,009
    
    
    
    3,143
    
    
    
    3,013Other
    
    
    143
    
    
    
    114
    
    
    
    436
    
    
    
    346Total Segment Revenues
    
    
    2,807
    
    
    
    2,676
    
    
    
    8,290
    
    
    
    7,821Net investment income on equity securities held for trading [1]
    
    
    1,500
    
    
    
    (174
    )
    
    
    2,024
    
    
    
    383Total [2]
    
    
    4,307
    
    
    
    2,502
    
    
    
    10,314
    
    
    
    8,204
 [1]
    
    Management does not include the investment income and mark to market
effects of the international operations trading securities in its
segment revenues.[2]
    
    Amounts include net realized capital (losses) gains of $(35) and $28
for three months ended September 30,2005 and 2004, respectively.
Amounts include net realized capital of $30 and $130 for nine months
ended September 30,2005 and 2004, respectively. 10




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Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Net Income
    
    2005
    
    2004
    
    2005
    
    2004Retail Products Group
    
    $
    182
    
    
    $
    140
    
    
    $
    474
    
    
    $
    375Institutional Solutions Group
    
    
    38
    
    
    
    33
    
    
    
    110
    
    
    
    89Individual Life
    
    
    45
    
    
    
    44
    
    
    
    123
    
    
    
    114Group Benefits
    
    
    68
    
    
    
    70
    
    
    
    191
    
    
    
    165Other [2]
    
    
    
    
    
    
    212
    
    
    
    (24
    )
    
    
    269Total [1]
    
    
    333
    
    
    
    499
    
    
    
    874
    
    
    
    1,012
 [1]
    
    The nine months ended September 30, 2005 reflects a charge of $66 to
reserve for investigations related to market timing by the SEC and New
York Attorney Generals Office and directed brokerage by the SEC, as
discussed in Note 6.[2]
    
    For the three and nine months ended September 30, 2004, includes a
$190 tax benefit, which relates to agreement with the IRS on the
resolution of matters pertaining to tax years prior to 2004. 3. Investments and Derivative Instruments
 September 30, 2005
    
    December 31, 2004Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    Value
    
    Cost
    
    Gains
    
    Losses
    
    ValueBonds and NotesAsset-backed securities (ABS)
    
    $
    7,003
    
    
    $
    52
    
    
    $
    (72
    )
    
    $
    6,983
    
    
    $
    6,346
    
    
    $
    76
    
    
    $
    (64
    )
    
    $
    6,358Commercial mortgage-backed
securities (CMBS)Agency backed
    
    
    71
    
    
    
    1
    
    
    
    
    
    
    
    72
    
    
    
    72
    
    
    
    2
    
    
    
    (1
    )
    
    
    73Non-agency backed
    
    
    8,974
    
    
    
    210
    
    
    
    (69
    )
    
    
    9,115
    
    
    
    8,384
    
    
    
    368
    
    
    
    (19
    )
    
    
    8,733Collateralized mortgage
obligations (CMOs)Agency backed
    
    
    828
    
    
    
    4
    
    
    
    (6
    )
    
    
    826
    
    
    
    1,036
    
    
    
    11
    
    
    
    (3
    )
    
    
    1,044Non-agency backed
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    115
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    48Corporate
    
    
    23,895
    
    
    
    1,359
    
    
    
    (212
    )
    
    
    25,042
    
    
    
    23,645
    
    
    
    1,957
    
    
    
    (70
    )
    
    
    25,532Government/Government agenciesForeign
    
    
    699
    
    
    
    56
    
    
    
    (2
    )
    
    
    753
    
    
    
    723
    
    
    
    67
    
    
    
    (2
    )
    
    
    788United States
    
    
    815
    
    
    
    26
    
    
    
    (7
    )
    
    
    834
    
    
    
    884
    
    
    
    19
    
    
    
    (5
    )
    
    
    898Mortgage-backed securities (MBS)Agency backed
    
    
    2,434
    
    
    
    5
    
    
    
    (26
    )
    
    
    2,413
    
    
    
    1,771
    
    
    
    20
    
    
    
    (3
    )
    
    
    1,788States, municipalities and
political subdivisions
    
    
    3,263
    
    
    
    221
    
    
    
    (8
    )
    
    
    3,476
    
    
    
    2,780
    
    
    
    221
    
    
    
    (6
    )
    
    
    2,995Redeemable preferred stock
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13Short-term investments
    
    
    1,473
    
    
    
    
    
    
    
    
    
    
    
    1,473
    
    
    
    2,261
    
    
    
    
    
    
    
    
    
    
    
    2,261Total fixed maturities
    
    $
    49,582
    
    
    $
    1,935
    
    
    $
    (402
    )
    
    $
    51,115
    
    
    $
    47,962
    
    
    $
    2,742
    
    
    $
    (173
    )
    
    $
    50,531
 Derivative Instruments
   11




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##### Table of Contents



.
   September 30, 2005
    
    December 31, 2004Liability
    
    
    
    
    
    LiabilityAsset Values
    
    Values
    
    Asset Values
    
    ValuesOther investments
    
    $
    184
    
    
    $
    
    
    
    $
    185
    
    
    $
    Reinsurance recoverables
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    67Other policyholder funds and benefits payable
    
    
    99
    
    
    
    
    
    
    
    129
    
    
    
    Fixed maturities
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    Other liabilities
    
    
    
    
    
    
    407
    
    
    
    
    
    
    
    518Total
    
    $
    283
    
    
    $
    459
    
    
    $
    318
    
    
    $
    585
  September 30, 2005
    
    December 31, 2004Notional
    
    
    
    
    
    NotionalAmount
    
    Fair Value
    
    Amount
    
    Fair ValueCash flow hedge
    
    $
    7,882
    
    
    $
    (270
    )
    
    $
    7,168
    
    
    $
    (374
    )Fair value hedge
    
    
    1,392
    
    
    
    1
    
    
    
    363
    
    
    
    (4
    )Other investment and risk management activities
    
    
    53,993
    
    
    
    93
    
    
    
    45,931
    
    
    
    134Total
    
    $
    63,267
    
    
    $
    (176
    )
    
    $
    53,462
    
    
    $
    (244
    )
       12




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##### Table of Contents



4. Deferred Policy Acquisition Costs and Present Value of Future Profits
  2005
    
    2004Balance, January 1
    
    $
    7,437
    
    
    $
    6,623Capitalization
    
    
    1,564
    
    
    
    1,463Amortization
 Deferred Policy Acquisitions costs
    
    
    (830
    )
    
    
    (671
    )Amortization
 Present Value of Future Profits
    
    
    (30
    )
    
    
    (31
    )Amortization
 Realized Capital (Gains)/Losses
    
    
    (27
    )
    
    
    (12
    )Adjustments to unrealized gains and losses on securities available-for-sale and other
    
    
    136
    
    
    
    (226
    )Balance, September 30
    
    $
    8,250
    
    
    $
    7,146
 5. Separate Accounts, Death Benefits and Other Insurance Benefit Features
  13




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##### Table of Contents



U.S. GMDB [1]
    
    Japan GMDB/GMIBLiability balance as of January 1, 2005
    
    $
    174
    
    
    $
    28Incurred
    
    
    96
    
    
    
    26Paid
    
    
    (111
    )
    
    
    (3
    )Currency translation adjustment
    
    
    
    
    
    
    (5
    )Liability balance as of September 30, 2005
    
    $
    159
    
    
    $
    46
 [1]
    
    The reinsurance recoverable asset related to the U.S. GMDB was $64 as of January 1, 2005
and $42 as of September 30, 2005. U.S. GMDB [1]
    
    Japan GMDB/GMIBLiability
balance upon adoption  as of
January 1, 2004
    
    $
    217
    
    
    $
    8Incurred
    
    
    93
    
    
    
    15Paid
    
    
    (128
    )
    
    
    (2
    )Liability balance as of September 30, 2004
    
    
    182
    
    
    
    21
 [1]
    
    The reinsurance recoverable asset related to the U.S. GMDB was $108 upon adoption of SOP
03-1 and $71 as of September 30, 2004.   Breakdown of Individual Variable and Group Annuity Account Value by GMDB/GMIB Type
 Retained Net
    
    Weighted AverageAccount
    
    Net Amount
    
    Amount
    
    Attained Age ofMaximum anniversary value (MAV) [1]
    
    Value
    
    at Risk
    
    at Risk
    
    AnnuitantMAV only
    
    $
    58,306
    
    
    $
    5,469
    
    
    $
    560
    
    
    
    64With 5% rollup [2]
    
    
    4,056
    
    
    
    533
    
    
    
    98
    
    
    
    62With Earnings Protection Benefit Rider (EPB) [3]
    
    
    5,297
    
    
    
    277
    
    
    
    52
    
    
    
    60With 5% rollup & EPB
    
    
    1,453
    
    
    
    129
    
    
    
    23
    
    
    
    62Total MAV
    
    
    69,112
    
    
    
    6,408
    
    
    
    733Asset Protection Benefit (APB) [4]
    
    
    24,534
    
    
    
    17
    
    
    
    9
    
    
    
    60Ratchet [5] (5 years)
    
    
    33
    
    
    
    2
    
    
    
    
    
    
    
    67Reset [6] (5-7 years)
    
    
    7,572
    
    
    
    490
    
    
    
    490
    
    
    
    65Return of Premium [7]/Other
    
    
    9,162
    
    
    
    70
    
    
    
    70
    
    
    
    49Subtotal U.S. Guaranteed Minimum Death Benefits
    
    
    110,413
    
    
    
    6,987
    
    
    
    1,302
    
    
    
    62Japan Guaranteed Minimum Death and Income Benefit [8]
    
    
    21,892
    
    
    
    15
    
    
    
    15
    
    
    
    67Total at September 30, 2005
    
    $
    132,305
    
    
    $
    7,002
    
    
    $
    1,317Total at December 31, 2004
    
    $
    120,379
    
    
    $
    8,259
    
    
    $
    1,636
 [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]
    
    Ratchet: the death benefit is the greatest of current account value, net premiums
paid and the highest account value on any specified anniversary before age 85 (adjusted for
withdrawals).[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.[8]
    
    Death benefits include a Return of Premium and MAV (before age 75) as described above
and income benefits include a guarantee to return initial investment, adjusted for
earnings liquidity, through a fixed annuity, after a minimum deferral period of 10, 15, or
20 years. The 14




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##### Table of Contents



guaranteed remaining balance related to the Japan GMIB was $14.0 billion and $7.3 billion as
of September 30, 2005 and December 31, 2004,
respectively.
    6. Commitments and Contingencies
 Litigation
  Broker Compensation Litigation
  15




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Regulatory Developments
    16




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##### Table of Contents



17




---



##### Table of Contents



Other
  7. Transactions with Affiliates
  18




---



##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 (Dollar amounts in millions, unless otherwise stated)
    INDEX
 Overview
    
    
    20Critical Accounting Estimates
    
    
    24Consolidated
Results of Operations  Operating Summary
    
    
    26Retail Products Group
    
    
    28Institutional Solutions Group
    
    
    29Individual Life
    
    
    30Group Benefits
    
    
    31Investments
    
    
    32Investment Credit Risk
    
    
    35Capital Markets Risk Management
    
    
    37Capital Resources and Liquidity
    
    
    39Accounting Standards
    
    
    42
 19




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##### Table of Contents



OVERVIEW
   Performance Measures
 Fee Income
  As of and For the
    
    As of and For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Product/Key Indicator Information
    
    2005
    
    2004
    
    2005
    
    2004U.S. Variable AnnuitiesAccount value, beginning of period
    
    $
    99,747
    
    
    $
    92,504
    
    
    $
    99,617
    
    
    $
    86,501Net flows
    
    
    (348
    )
    
    
    953
    
    
    
    (1
    )
    
    
    4,806Change in market value and other
    
    
    4,193
    
    
    
    (1,378
    )
    
    
    3,976
    
    
    
    772Account value, end of period
    
    $
    103,592
    
    
    $
    92,079
    
    
    $
    103,592
    
    
    $
    92,079Retail Mutual FundsAssets under management, beginning of period
    
    $
    25,958
    
    
    $
    22,734
    
    
    $
    25,240
    
    
    $
    20,301Net sales
    
    
    73
    
    
    
    439
    
    
    
    776
    
    
    
    2,118Change in market value and other
    
    
    1,491
    
    
    
    (479
    )
    
    
    1,506
    
    
    
    275Assets under management, end of period
    
    $
    27,522
    
    
    $
    22,694
    
    
    $
    27,522
    
    
    $
    22,694Individual Life InsuranceVariable universal life account value, end of period
    
    
    
    
    
    
    
    
    
    $
    5,700
    
    
    $
    4,860Total life insurance inforce, end of period
    
    
    
    
    
    
    
    
    
    $
    147,278
    
    
    $
    136,686S&P 500 IndexPeriod end closing value
    
    
    
    
    
    
    
    
    
    
    1,229
    
    
    
    1,115Daily average value
    
    
    1,224
    
    
    
    1,104
    
    
    
    1,200
    
    
    
    1,120Japan AnnuitiesAccount value, end of period
    
    
    
    
    
    
    
    
    
    $
    23,299
    
    
    $
    11,127Net flows
    
    $
    2,704
    
    
    $
    2,182
    
    
    $
    8,815
    
    
    $
    4,919
 
    
    The increase in U.S. variable annuity account values can be attributed to market
growth over the past four quarters.
    
    Net flows and net sales for the U.S. variable annuity and retail mutual fund businesses,
respectively, have decreased from the prior year levels. In particular, variable annuity
net flows and mutual fund net sales were impacted due to lower sales levels and higher
surrenders due to increased competition.
    
    The change in the market value will be based on market conditions.
    
    Japan annuity account values and net flows continue to grow as a result of strong sales and significant market growth.
 Net Investment Income and Interest Credited
  20




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##### Table of Contents




    
    Net investment income and interest credited on general account assets in Other increased
for the three and nine months ended September 30, 2005 due to the mark-to-market effects of
trading account securities supporting the Japanese variable annuity business.
    
    Net investment income and interest credited on general account assets in the Retail
Products Group declined for the three and nine months ended September 30, 2005 due to lower
assets under management from surrenders on market value adjusted (MVA) fixed annuity
products at the end of their guarantee period.
    
    Net investment income and interest credited on general account assets in Institutional
increased as a result of the Companys funding agreement backed Investor Notes program and
was partially offset by surrenders in the private placement life insurance (PPLI)
business.
 Premiums
  For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,Group Benefits
    
    2005
    
    2004
    
    2005
    
    2004Earned premiums and other considerations
    
    $
    950
    
    
    $
    914
    
    
    $
    2,846
    
    
    $
    2,735Fully insured ongoing sales (excluding buyouts)
    
    
    157
    
    
    
    107
    
    
    
    643
    
    
    
    552
 
    
    Earned premiums and other considerations for the nine months ended September 30,
2005 include $26 in buyout premiums compared to $1 in the prior year comparable period.
 Expenses
  For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Retail Products GroupExpense ratio, annualized (individual annuity)
    
    16.8
    bps
    
    19.3
    bps
    
    17.7
    bps
    
    18.9
    bpsDAC amortization ratio (individual annuity)
    
    
    48.5
    %
    
    
    50.5
    %
    
    
    48.9
    %
    
    
    50.6
    %Individual LifeDeath benefits
    
    $
    54
    
    
    $
    60
    
    
    $
    183
    
    
    $
    188Group BenefitsLoss ratio (excluding buyout premiums)
    
    
    72.4
    %
    
    
    73.4
    %
    
    
    73.8
    %
    
    
    74.8
    %Expense ratio (excluding buyout premiums)
    
    
    28.0
    %
    
    
    26.4
    %
    
    
    27.4
    %
    
    
    27.2
    %
 
    
    Individual annuitys expense ratio for the three and nine months ended
September 30, 2005 continued to benefit from the Companys disciplined expense management
and economies of scale in the variable annuity business. Additionally, individual
annuitys expense ratio continues to be one of the lowest ratios of general insurance
expenses as a percent of assets under management in the industry, holding near the range of
18-20 bps of average account value for the nine months ended September 30, 2005.
    
    The ratio of individual annuity DAC amortization over income before taxes and DAC
amortization declined for both the three and nine months ended September 30, 2005 as a
result of higher gross profits and a lower amount of additional deposits received on
existing business.
    
    Individual Life death benefits decreased for both the three and nine months ended
September 30, 2005 due to favorable mortality experience in the third quarter of 2005, the
lowest level of mortality in the last seven quarters.
    
    The Group Benefits loss ratio, excluding buyouts, for the three and nine months ended
September 30, 2005 decreased due to favorable morbidity and mortality experience.
    
    The Group Benefits expense ratio, excluding buyouts, increased for the three and nine
months ended September 30, 2005 primarily due to increased operating expenses to support
business growth. In addition, the expense ratio for the three months ended September 30,
2005 increased due to higher commissions on the experience rated portion of the financial
institution business resulting from improved life mortality.
 21




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##### Table of Contents



Profitability
  For the Three Months
    
    For the Nine Months EndedEnded September 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004RatiosRetail Products GroupIndividual
annuity return on
assets (ROA)
excluding
cumulative
effect of
accounting change
    
    56.7
    bps

    
    49.0
    bps

    
    52.0

    bps
    

    46.6
    bpsGroup BenefitsAfter-tax margin
    
    
    7.2
    %
    
    
    7.7
    %
    
    
    6.8
    %
    
    
    6.0
    %
 
    
    Individual annuitys ROA increased for the three and nine months ended
September 30, 2005, compared to the respective prior year periods. In particular, variable
annuity fees and fixed annuity general account spreads each increased for the three and
nine months ended September 30, 2005 compared to the prior year periods. The increase in
the ROA can be attributed to the increase in account values and resulting increased fees,
including GMWB rider fees, without a corresponding increase in expenses, while the increase
in fixed annuity general account spread resulted from fixed annuity contracts that were
repriced upon the contract reaching maturity.
    
    The decline in the Group Benefits after-tax margin for the three months ended
September 30, 2005 was due to a higher expense ratio partially offset by a lower loss
ratio. The improvement in the after-tax margin for the nine months ended September 30,
2005 was primarily due to favorable loss ratios and higher net investment income as
compared to 2004.
 Regulatory Developments
     22




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23




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##### Table of Contents



Broker Compensation
   CRITICAL ACCOUNTING ESTIMATES
   Deferred Policy Acquisition Costs and Present Value of Future Profits
     24




---



##### Table of Contents



Income Taxes
   Other Critical Accounting Estimates
  25




---



##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Operating Summary
    
    
    2005
    
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    
    2004
    
    
    ChangeFee income
    
    $
    1,026
    
    
    $
    864
    
    
    
    19
    %
    
    $
    2,936
    
    
    $
    2,527
    
    
    
    16
    %Earned premiums
    
    
    1,045
    
    
    
    1,058
    
    
    
    (1
    %)
    
    
    3,091
    
    
    
    3,023
    
    
    
    2
    %Net investment incomeSecurities available-for-sale
    
    
    771
    
    
    
    726
    
    
    
    6
    %
    
    
    2,233
    
    
    
    2,141
    
    
    
    4
    %Equity securities held for trading [1]
    
    
    1,500
    
    
    
    (174
    )
    
    NM
    
    
    2,024
    
    
    
    383
    
    
    NMTotal net investment income
    
    
    2,271
    
    
    
    552
    
    
    NM
    
    
    4,257
    
    
    
    2,524
    
    
    
    69
    %Net realized capital gains (losses)
    
    
    (35
    )
    
    
    28
    
    
    NM
    
    
    30
    
    
    
    130
    
    
    
    (77
    %)Total revenues
    
    
    4,307
    
    
    
    2,502
    
    
    
    72
    %
    
    
    10,314
    
    
    
    8,204
    
    
    
    26
    %Benefits, claims and claim adjustment expenses [1]
    
    
    2,926
    
    
    
    1,325
    
    
    
    121
    %
    
    
    6,421
    
    
    
    4,733
    
    
    
    36
    %Insurance operating costs and other expenses
    
    
    621
    
    
    
    525
    
    
    
    18
    %
    
    
    1,837
    
    
    
    1,566
    
    
    
    17
    %Amortization of deferred policy acquisition costs and
present value of future profits
    
    
    312
    
    
    
    236
    
    
    
    32
    %
    
    
    860
    
    
    
    702
    
    
    
    23
    %Interest expense
    
    
    20
    
    
    
    20
    
    
    
    
    
    
    
    60
    
    
    
    77
    
    
    
    (22
    %)Total benefits, claims and expenses
    
    
    3,879
    
    
    
    2,106
    
    
    
    84
    %
    
    
    9,178
    
    
    
    7,078
    
    
    
    30
    %Income before income taxes and cumulative effect
of accounting change
    
    
    428
    
    
    
    396
    
    
    
    8
    %
    
    
    1,136
    
    
    
    1,126
    
    
    
    1
    %Income tax expense
    
    
    95
    
    
    
    (103
    )
    
    NM
    
    
    262
    
    
    
    91
    
    
    
    188
    %Income before cumulative effect of accounting
change
    
    
    333
    
    
    
    499
    
    
    
    (33
    %)
    
    
    874
    
    
    
    1,035
    
    
    
    (16
    %)Cumulative effect of accounting change, net of tax [2]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )
    
    
    100
    %Net income
    
    $
    333
    
    
    $
    499
    
    
    
    (33
    %)
    
    $
    874
    
    
    $
    1,012
    
    
    
    (14
    %)
 [1]
    
    Includes the investment income and mark-to-market effects of trading securities
supporting the international operations variable annuity businesses, which are classified in
net investment income and corresponding amounts credited to policyholders within benefits,
claims and claim adjustment expenses.[2]
    
    For the nine months ended September 30, 2004, represents the cumulative impact of the
Companys adoption of SOP 03-1.
  Three and nine months ended September 30, 2005 compared to the three and nine months ended
September 30, 2004
  
    
    For the three months ended September 30, 2005, the Company experienced realized capital
losses as compared to realized capital gains for the three months ended September 30, 2004.
For the nine months ended September 30, 2005, realized capital gains decreased as compared
to the respective prior year period. See the Investments section for further discussion of
investment results and related realized capital gains and losses.
    
    The Company recorded a charge of $66 for the nine months ended September 30, 2005, in
the Other category, to establish reserves for regulatory matters for investigations related
to market timing by the SEC and New York Attorney Generals Office and directed brokerage
by the SEC.
    
    The Company recorded an after-tax expense of $24 during the nine months ended September
30, 2005, which is an estimate of the termination value of a provision of an agreement with
a distribution partner of the Companys retail mutual funds. Management is currently in
discussions with the distributor concerning this matter. The ultimate cost of resolution
may vary from managements estimate.
    
    Net income in Group Benefits decreased 3% for the three months ended September 30, 2005
primarily due to a $4 after-tax provision for Hurricane Katrina and higher operating costs.
    
    Net income in the international operations decreased for the three months ended
September 30, 2005 principally due to realized capital losses for the Japan operations in
the current year period.
  26




---



##### Table of Contents




    
    Net income in the Retail Products Group increased 30% and 26% for the three
and nine months ended September 30, 2005, respectively, principally driven by higher fee
income from growth in the variable annuity and mutual fund businesses as a result of higher
assets under management as compared to the prior year periods.
    
    The Institutional Solutions Group contributed higher earnings, increasing 15%
and 24% for the three and nine months ended September 30, 2005, respectively, driven by
higher assets under management and the recognition of deferred gains that resulted from
three leveraged COLI surrenders.
    
    Individual Life earnings increased for both periods primarily driven by favorable
mortality experience and growth in fee income generated from higher life insurance inforce
and account values.
    
    Net income in Group Benefits increased 16% for the nine months ended September 30, 2005,
primarily due to a favorable loss ratio and higher net investment income as compared to the
prior year period.
    
    Net income for the international operations, which is included in the Other category,
increased for the nine months ended September 30, 2005 compared to the prior year period
primarily driven by the increased fees from an increase in assets under management of the
Japan annuity business. Japans assets under management have grown to $23.3 billion at
September 30, 2005 from $11.1 billion at September 30, 2004.
    
    Higher net investment income across businesses for the three and nine months ended
September 30, 2005 driven by a higher asset base and increased partnership income as
compared to the respective prior year periods.
 Outlook
 
    
    Due to gains in the equity markets and positive net flows and net sales, total Company
assets under management grew 16% as of September 30, 2005 as compared to December 31, 2004
resulting in increased fee income earned on those assets. The growth and profitability of
the Company in the future is dependent to a large degree on the performance of the equity
markets as well as its ability to attract new customers and retain assets under
management.
    
    While variable annuity account values have grown during 2005 within the individual
annuity business, U.S. sales have decreased during the first nine months of 2005 compared
to 2004 due to increased sales competition related to guaranteed living benefits, which is
likely to continue in the future. In addition, net flows are flat on a year to date basis
and will likely end the year negative. These factors may negatively affect assets under
management growth of the U.S. individual annuities business.
    
    Also contributing to the Companys performance for the nine months ended September 30,
2005 was increased earnings in the Companys international operations (included in the
Other category), which was primarily the result of the growth in assets under management.
This growth was driven by record sales of $9.4 billion and positive net flows in Japan for
the first nine months of 2005, which coupled with market returns increased Japans assets
under management to $23.3 billion at September 30, 2005 from $11.1 billion at September 30,
2004. Although the Companys international operations have experienced significant growth
during 2005, seasonality and increased competition could lead to lower sales levels in the
fourth quarter of 2005.
 27




---



##### Table of Contents



RETAIL PRODUCTS GROUP
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Operating Summary
    
    2005
    
    2004
    
    Change
    
    2005
    
    2004
    
    ChangeFee income
    
    $
    622
    
    
    $
    521
    
    
    
    19
    %
    
    $
    1,794
    
    
    $
    1,540
    
    
    
    16
    %Earned premiums
    
    
    (15
    )
    
    
    50
    
    
    
    NM
    
    
    
    (31
    )
    
    
    19
    
    
    NMNet investment income
    
    
    250
    
    
    
    272
    
    
    
    (8
    )%
    
    
    771
    
    
    
    810
    
    
    
    (5
    )%Net realized capital gains (losses)
    
    
    1
    
    
    
    (1
    )
    
    NM
    
    
    9
    
    
    
    
    
    
    NMTotal revenues
    
    
    858
    
    
    
    842
    
    
    
    2
    %
    
    
    2,543
    
    
    
    2,369
    
    
    
    7
    %Benefits, claims and claim adjustment expenses
    
    
    229
    
    
    
    336
    
    
    
    (32
    )%
    
    
    726
    
    
    
    852
    
    
    
    (15
    )%Insurance operating costs and other expenses
    
    
    219
    
    
    
    189
    
    
    
    16
    %
    
    
    677
    
    
    
    544
    
    
    
    24
    %Amortization of deferred policy acquisition costs and present
value of future profits
    
    
    191
    
    
    
    159
    
    
    
    20
    %
    
    
    559
    
    
    
    486
    
    
    
    15
    %Total benefits, claims and expenses
    
    
    639
    
    
    
    684
    
    
    
    (7
    )%
    
    
    1,962
    
    
    
    1,882
    
    
    
    4
    %Income before income taxes and cumulative effect of
accounting change
    
    
    219
    
    
    
    158
    
    
    
    39
    %
    
    
    581
    
    
    
    487
    
    
    
    19
    %Income tax expense
    
    
    37
    
    
    
    18
    
    
    
    106
    %
    
    
    107
    
    
    
    93
    
    
    
    15
    %Income before cumulative effect of accounting change
    
    
    182
    
    
    
    140
    
    
    
    30
    %
    
    
    474
    
    
    
    394
    
    
    
    20
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    100
    %Net income
    
    $
    182
    
    
    $
    140
    
    
    
    30
    %
    
    $
    474
    
    
    $
    375
    
    
    
    26
    %Assets Under ManagementIndividual variable annuity account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    103,592
    
    
    $
    92,079
    
    
    
    13
    %Individual fixed annuity and other account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,323
    
    
    
    11,471
    
    
    
    (10
    %)Other retail products account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,589
    
    
    
    5,926
    
    
    
    45
    %Total account values [2]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,504
    
    
    
    109,476
    
    
    
    12
    %Retail mutual fund assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,522
    
    
    
    22,694
    
    
    
    21
    %Other mutual fund assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,773
    
    
    
    1,204
    
    
    
    47
    %Total mutual fund assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,295
    
    
    
    23,898
    
    
    
    23
    %Total assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    151,799
    
    
    $
    133,374
    
    
    
    14
    %
 [1]
    
    For the nine months ended September 30, 2004, represents the cumulative impact of the Companys
adoption of SOP 03-1.[2]
    
    Includes policyholder balances for investment contracts and reserves for future policy benefits
for insurance contracts.
 Three and nine months ended September 30, 2005 compared to the three and nine months ended
September 30, 2004.
  
    
    Fee income in the variable annuity business increased for the three and nine months
ended September 30, 2005 primarily due to growth in average account values. The
year-over-year increase in average account values of 13% can be attributed to market
appreciation of $10.9 billion over the past four quarters and approximately $600 of net
flows over the past four quarters. The amount of net flows has declined significantly for
the three and nine months ended September 30, 2005 compared to the respective prior year
periods due to increased surrender activity, and increased sales competition, particularly
as it relates to guaranteed living benefits.
    
    Mutual fund fee income increased for the three and nine months ended September 30, 2005
compared to the respective prior year periods due to increased assets under management
driven by market appreciation of $3.7 billion and net sales of $1.2 billion during the past
four quarters. Despite the increase in assets under management, the amount of net sales
has declined in the three and nine months ended September 30, 2005 compared to the
respective prior year periods. This decrease is attributed to lower gross sales due to
market competition and higher redemption amounts.
    
    401(k) and other retail products fee income increased for the three and nine months
ended September 30, 2005 compared to the respective prior year periods as a result of
positive net flows from the 401(k) business of $1.8 billion over the past four quarters
driven by strong sales contributing to the increase in 401(k) assets under management of
43% to $8.3 billion. Total deposits and net flows increased substantially by 31% and 33%,
respectively, over the prior year nine month period primarily due to the expansion of
wholesaling capabilities and new product offerings.
    
    The fixed annuity business contributed higher net income, excluding the cumulative
effects of accounting change in 2004, due to improved investment spreads from the MVA
products.
    
    Benefits and claims and claim adjustment expenses have decreased for the three and nine
months ended September 30, 2005 due to an increase in reserves in the third quarter of 2004
related to the acquisition of a block of business from London Pacific. The increase in
reserves was offset by an equivalent increase in earned premium. Also contributing to the
decrease in benefits
expense for both the three and nine month periods is a decrease in interest credited as older
fixed annuity MVA business with
 28




---



##### Table of Contents



higher credited rates matures and receives lower credited
rates at renewal.
  
    
    Throughout Retail, insurance operating costs and other expenses increased for the three
and nine months ended September 30, 2005 compared to the respective prior year periods.
General insurance expenses increased due to an increase in investment technology services
and sales and marketing. In addition, during the second quarter of 2005, the Company
recorded an after-tax expense of $24, which is an estimate of the termination value of a
provision of an agreement with a distribution partner of the Companys retail mutual funds.
Management is currently in discussions with the distributor concerning this matter. The
ultimate cost of resolution may vary from managements estimates.
    
    The effective tax rate increased for the three months ended September 30, 2005 compared
to the prior year period due to changes in estimates in the DRD benefit. The changes in
estimates were $9 and $18 for the three months ended September 30, 2005 and 2004,
respectively.
    
    Higher amortization of DAC, which resulted from higher gross profits due to the positive
earnings drivers as discussed above.
  INSTITUTIONAL SOLUTIONS GROUP
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Operating Summary
    
    2005
    
    2004
    
    Change
    
    2005
    
    2004
    
    ChangeFee income
    
    $
    57
    
    
    $
    77
    
    
    
    (26
    %)
    
    $
    191
    
    
    $
    227
    
    
    
    (16
    %)Earned premiums
    
    
    127
    
    
    
    100
    
    
    
    27
    %
    
    
    327
    
    
    
    304
    
    
    
    8
    %Net investment income
    
    
    296
    
    
    
    269
    
    
    
    10
    %
    
    
    851
    
    
    
    788
    
    
    
    8
    %Net realized capital gains
    
    
    
    
    
    
    2
    
    
    
    (100
    %)
    
    
    
    
    
    
    5
    
    
    
    (100
    %)Total revenues
    
    
    480
    
    
    
    448
    
    
    
    7
    %
    
    
    1,369
    
    
    
    1,324
    
    
    
    3
    %Benefits, claims and claim adjustment expenses
    
    
    375
    
    
    
    363
    
    
    
    3
    %
    
    
    1,067
    
    
    
    1,075
    
    
    
    (1
    %)Insurance operating costs and other expenses
    
    
    31
    
    
    
    27
    
    
    
    15
    %
    
    
    88
    
    
    
    71
    
    
    
    24
    %Dividends to policyholders
    
    
    13
    
    
    
    2
    
    
    NM
    
    
    33
    
    
    
    22
    
    
    
    50
    %Amortization of deferred policy acquisition costs and present
value of future profits
    
    
    11
    
    
    
    9
    
    
    
    22
    %
    
    
    30
    
    
    
    28
    
    
    
    7
    %Total benefits, claims and expenses
    
    
    430
    
    
    
    401
    
    
    
    7
    %
    
    
    1,218
    
    
    
    1,196
    
    
    
    2
    %Income before income taxes and cumulative effect of
accounting change
    
    
    50
    
    
    
    47
    
    
    
    6
    %
    
    
    151
    
    
    
    128
    
    
    
    18
    %Income tax expense
    
    
    12
    
    
    
    14
    
    
    
    (14
    %)
    
    
    41
    
    
    
    38
    
    
    
    8
    %Income before cumulative effect of accounting change
    
    
    38
    
    
    
    33
    
    
    
    15
    %
    
    
    110
    
    
    
    90
    
    
    
    22
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    100
    %Net income
    
    $
    38
    
    
    $
    33
    
    
    
    15
    %
    
    $
    110
    
    
    $
    89
    
    
    
    24
    %Assets Under ManagementInstitutional account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    17,174
    
    
    $
    14,011
    
    
    
    23
    %Governmental account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,162
    
    
    
    9,437
    
    
    
    8
    %PPLI account valuesVariable products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,537
    
    
    
    21,889
    
    
    
    8
    %Leveraged COLI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,814
    
    
    
    2,520
    
    
    
    (28
    %)Total account values [2]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,687
    
    
    
    47,857
    
    
    
    10
    %Mutual fund assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,471
    
    
    
    1,300
    
    
    
    13
    %Total assets under management
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    54,158
    
    
    $
    49,157
    
    
    
    10
    %
 [1]
    
    For the nine months ended September 30, 2004, represents the cumulative impact of the Companys
adoption of SOP 03-1.[2]
    
    Includes policyholder balances for investment contracts and reserves for future policy benefits
for insurance contracts.
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Net Flows and Net Sales
    
    2005
    
    2004
    
    Change
    
    2005
    
    2004
    
    ChangeInstitutional
    
    $
    887
    
    
    $
    427
    
    
    
    108
    %
    
    $
    1,949
    
    
    $
    795
    
    
    
    145
    %Governmental
    
    
    (263
    )
    
    
    70
    
    
    NM
    
    
    (215
    )
    
    
    280
    
    
    NMPPLI
    
    
    68
    
    
    
    117
    
    
    
    (42
    %)
    
    
    (306
    )
    
    
    393
    
    
    NMMutual Funds net sales
    
    
    (513
    )
    
    
    38
    
    
    NM
    
    
    (130
    )
    
    
    105
    
    
    NMTotal Net Flows and Net Sales
    
    $
    179
    
    
    $
    652
    
    
    
    (73
    %)
    
    $
    1,298
    
    
    $
    1,573
    
    
    
    (17
    %)
 Three and nine months ended September 30, 2005 compared to the three and nine months ended
September 30, 2004
  29




---



##### Table of Contents




    
    Total revenues increased in the institutional business driven by positive net flows of
$2.2 billion during the past four quarters, which resulted in higher assets under
management. Net flows for the institutional business increased for the three and nine
months ended September 30, 2005 compared to the prior year period, primarily as a result of
the Companys funding agreement backed Investor Notes program, which was launched in the
third quarter of 2004. (For a discussion of the Investor Notes program, see the MD&A
section of Hartford Lifes 2004 Form 10-K.) Investor Notes sales for the nine months ended
September 30, 2005 were $1.9 billion.
    
    Net income for the institutional business increased for the nine months ended September
30, 2005 due to improved investment spread as a result of higher partnership income For
further discussion of investment spread, see the Overview section. For the three months
ended September 30, 2005 and 2004, gains related to mortality, investments or other
activity were $5 and $2 after-tax, and for the nine months ended September 30, 2005 and
2004, gains related to mortality, investments or other activity were $9 and $1 after-tax,
respectively.
    
    Net income for the PPLI business increased for the nine months ended September 30, 2005
compared to the prior year period primarily due to the recognition of a $6 after-tax
deferred gain that resulted from three leveraged COLI surrenders totaling $716.
  
    
    An increase in insurance operating costs and other expenses of $17 for the
nine months ended September 30, 2005 was principally driven by increased amortization
related to higher information technology expenditures supporting the Institutional
segments business, as well as costs attributed to marketing.
    
    An increase in dividends to policyholders of $11 for the nine months ended
September 30, 2005 was driven by experience-rated refunds occurring within the PPLI
business as a result of favorable mortality experience.
    
    Fee income decreased for the three and nine months ended September 30, 2005 compared to
prior periods due to lower insurance fees on PPLIs leveraged COLI product driven by the
decrease in leveraged COLI assets as a result of the leveraged COLI surrenders previously
discussed.
  INDIVIDUAL LIFE
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Operating Summary
    
    2005
    
    2004
    
    Change
    
    2005
    
    2004
    
    ChangeFee income
    
    $
    207
    
    
    $
    190
    
    
    
    9
    %
    
    $
    593
    
    
    $
    557
    
    
    
    6
    %Earned premiums
    
    
    (8
    )
    
    
    (6
    )
    
    
    (33
    %)
    
    
    (23
    )
    
    
    (16
    )
    
    
    (44
    %)Net investment income
    
    
    78
    
    
    
    78
    
    
    
    
    
    
    
    229
    
    
    
    227
    
    
    
    1
    %Net realized capital gains
    
    
    
    
    
    
    1
    
    
    
    (100
    %)
    
    
    
    
    
    
    1
    
    
    
    (100
    %)Total revenues
    
    
    277
    
    
    
    263
    
    
    
    5
    %
    
    
    799
    
    
    
    769
    
    
    
    4
    %Benefits, claims and claim adjustment expenses
    
    
    112
    
    
    
    115
    
    
    
    (3
    %)
    
    
    352
    
    
    
    360
    
    
    
    (2
    %)Insurance operating costs and other expenses
    
    
    43
    
    
    
    41
    
    
    
    5
    %
    
    
    125
    
    
    
    120
    
    
    
    4
    %Amortization of deferred policy acquisition costs and
present value of future profits
    
    
    58
    
    
    
    43
    
    
    
    35
    %
    
    
    144
    
    
    
    122
    
    
    
    18
    %Total benefits, claims and expenses
    
    
    213
    
    
    
    199
    
    
    
    7
    %
    
    
    621
    
    
    
    602
    
    
    
    3
    %Income before income taxes and cumulative effect of
accounting change
    
    
    64
    
    
    
    64
    
    
    
    
    
    
    
    178
    
    
    
    167
    
    
    
    7
    %Income tax expense
    
    
    19
    
    
    
    20
    
    
    
    (5
    %)
    
    
    55
    
    
    
    52
    
    
    
    6
    %Income before cumulative effect of accounting change
    
    
    45
    
    
    
    44
    
    
    
    2
    %
    
    
    123
    
    
    
    115
    
    
    
    7
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    100
    %Net income
    
    $
    45
    
    
    $
    44
    
    
    
    2
    %
    
    $
    123
    
    
    $
    114
    
    
    
    8
    %Account ValuesVariable universal life insurance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,700
    
    
    $
    4,860
    
    
    
    17
    %Universal life/interest sensitive whole life
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,599
    
    
    
    3,350
    
    
    
    7
    %Modified guaranteed life and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    716
    
    
    
    733
    
    
    
    (2
    %)Total account values
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,015
    
    
    $
    8,943
    
    
    
    12
    %Life Insurance InforceVariable universal life insurance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    70,569
    
    
    $
    68,051
    
    
    
    4
    %Universal life/interest sensitive whole life
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,694
    
    
    
    38,717
    
    
    
    5
    %Modified guaranteed life and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,015
    
    
    
    29,918
    
    
    
    20
    %Total life insurance inforce
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    147,278
    
    
    $
    136,686
    
    
    
    8
    %
 [1]
    
    For the nine months ended September 30, 2004, represents the cumulative impact of the Companys
adoption of SOP 03-1.
 Three and nine months ended September 30, 2005 compared to the three and nine months ended
September 30, 2004
 30




---



##### Table of Contents




    
    Fee income increased $17 and $36 for the three and nine months ended September 30, 2005,
respectively. Other fee income, a component of total fee income, increased $10 and $15 in
the three and nine months ended September 30, 2005, respectively, primarily due to improved
product performance and growth. Cost of insurance charges, another component of fee
income, increased $5 and $15 for the three and nine months ended September 30, 2005,
respectively driven by business growth and aging in the variable universal, universal, and
interest-sensitive whole life insurance inforce. Variable fee income grew $2 and $6 for
the three and nine months ended September 30, 2005, respectively, as favorable equity
markets and increased premiums over withdrawals added to the variable universal life
account value.
    
    Net investment income increased $2 for the nine months ended September 30, 2005 due to
increased general account assets from sales growth, partially offset by a reduction in
non-recurring investment income (prepayments on bonds) as compared to the prior year
period.
    
    Benefits, claims and claim adjustment expenses decreased $3 and $8 for the three and
nine months ended September 30, 2005, respectively, primarily due to favorable mortality
experience in the third quarter of 2005, the lowest level of mortality in the last seven
quarters. This was partially offset by the absence of a reserve refinement benefit in
2004.
  
    
    Amortization of DAC increased primarily as a result of product mix and higher gross margins.
    
    Operating costs increased over the corresponding prior year periods as a result of business growth.
  GROUP BENEFITS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Operating Summary
    
    2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeEarned premiums and other
    
    $
    950
    
    
    $
    914
    
    
    
    4
    %
    
    $
    2,846
    
    
    $
    2,735
    
    
    
    4
    %Net investment income
    
    
    99
    
    
    
    95
    
    
    
    4
    %
    
    
    297
    
    
    
    277
    
    
    
    7
    %Net realized capital gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (100
    %)Total revenues
    
    
    1,049
    
    
    
    1,009
    
    
    
    4
    %
    
    
    3,143
    
    
    
    3,013
    
    
    
    4
    %Benefits, claims and claim adjustment expenses
    
    
    688
    
    
    
    671
    
    
    
    3
    %
    
    
    2,106
    
    
    
    2,045
    
    
    
    3
    %Insurance operating costs and other expenses
    
    
    258
    
    
    
    234
    
    
    
    10
    %
    
    
    752
    
    
    
    726
    
    
    
    4
    %Amortization of deferred policy acquisition
costs and present value of future profits
    
    
    8
    
    
    
    7
    
    
    
    14
    %
    
    
    22
    
    
    
    18
    
    
    
    22
    %Total benefits, claims and expenses
    
    
    954
    
    
    
    912
    
    
    
    5
    %
    
    
    2,880
    
    
    
    2,789
    
    
    
    3
    %Income before income taxes
    
    
    95
    
    
    
    97
    
    
    
    (2
    %)
    
    
    263
    
    
    
    224
    
    
    
    17
    %Income tax expense
    
    
    27
    
    
    
    27
    
    
    
    
    
    
    
    72
    
    
    
    59
    
    
    
    22
    %Net income
    
    $
    68
    
    
    $
    70
    
    
    
    (3
    %)
    
    $
    191
    
    
    $
    165
    
    
    
    16
    %Earned Premiums and OtherFully insured  ongoing premiums
    
    $
    940
    
    
    $
    904
    
    
    
    4
    %
    
    $
    2,792
    
    
    $
    2,706
    
    
    
    3
    %Buyout premiums
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    26
    
    
    
    1
    
    
    NMOther
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    28
    
    
    
    28
    
    
    
    Total earned premiums and other
    
    $
    950
    
    
    $
    914
    
    
    
    4
    %
    
    $
    2,846
    
    
    $
    2,735
    
    
    
    4
    %
  Three months ended September 30, 2005 compared to the three months ended September 30, 2004
  
    
    The segments expense ratio (defined as insurance operating costs and other
expenses and amortization of DAC as a percentage of premiums and other considerations
excluding buyouts) increased for the three months ended September 30, 2005 to 28.0%, from
26.4% in the prior year period. This increase in expense ratio was primarily attributed to
lower losses, which resulted in increased commissions, on the experience rated portion of
the financial institution business and increased operating expenses
 31




---



##### Table of Contents



due principally to
increased staffing to support business growth. Excluding financial institutions, the
expense ratio was 23.8%, up from 22.5% for the three months ended September 30, 2005.
  
    
    Earned premiums increased 4% driven by sales and persistency.
    
    The segments loss ratio (defined as benefits, claims and claim adjustment
expenses as a percentage of premiums and other considerations excluding buyouts) was 72.4%,
down from 73.4% in the third quarter 2004 due to favorable life mortality experience as
well as improved disability experience. Excluding financial institutions, the loss ratio
was 77.1%, down from 77.6% in the third quarter of 2004.
 Nine months ended September 30, 2005 compared to the nine months ended September 30, 2004
  
    
    Earned premiums increased 4% driven by sales (excluding buyouts) growth,
particularly in disability, of 16% for the nine months ended September 30, 2005 and
continued strong persistency during 2005.
    
    Net investment income increased due to higher average asset balances as well
as slightly higher average investment yields.
    
    The segments loss ratio (defined as benefits, claims and claim adjustment
expenses as a percentage of premiums and other considerations excluding buyouts) was 73.8%
for the nine months ended September 30, 2005, down from 74.8% in the prior year period due
to favorable life mortality experience as well as improved disability experience.
Excluding financial institutions, the loss ratio was 77.7%, down from 79.3% in the prior
year period.
   INVESTMENTS
 General
     32




---



##### Table of Contents



Composition of Invested Assets
 September 30, 2005
    
    December 31, 2004Amount
    
    Percent
    
    Amount
    
    PercentFixed maturities, available-for-sale, at fair value
    
    $
    51,115
    
    
    
    66.5
    %
    
    $
    50,531
    
    
    
    73.5
    %Equity securities, available-for-sale, at fair value
    
    
    797
    
    
    
    1.1
    %
    
    
    525
    
    
    
    0.8
    %Equity securities, held for trading, at fair value
    
    
    21,247
    
    
    
    27.6
    %
    
    
    13,634
    
    
    
    19.8
    %Policy loans, at outstanding balance
    
    
    2,009
    
    
    
    2.6
    %
    
    
    2,662
    
    
    
    3.9
    %Mortgage loans, at cost
    
    
    1,178
    
    
    
    1.5
    %
    
    
    923
    
    
    
    1.3
    %Limited partnerships, at fair value
    
    
    369
    
    
    
    0.5
    %
    
    
    256
    
    
    
    0.4
    %Other investments
    
    
    181
    
    
    
    0.2
    %
    
    
    185
    
    
    
    0.3
    %Total investments
    
    $
    76,896
    
    
    
    100.0
    %
    
    $
    68,716
    
    
    
    100.0
    %
  Investment Results
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(before-tax)
    
    2005
    
    2004
    
    2005
    
    2004Net investment incomeexcluding
income on policy loans and trading securities
    
    $
    735
    
    
    $
    680
    
    
    $
    2,125
    
    
    $
    2,003Policy loan income
    
    
    36
    
    
    
    46
    
    
    
    108
    
    
    
    138Trading securities income (loss) [1]
    
    
    1,500
    
    
    
    (174
    )
    
    
    2,024
    
    
    
    383Net investment income  total
    
    $
    2,271
    
    
    $
    552
    
    
    $
    4,257
    
    
    $
    2,524Yield on average invested assets [2]
    
    
    5.8
    %
    
    
    5.8
    %
    
    
    5.7
    %
    
    
    5.8
    %Gross gains on sale
    
    $
    89
    
    
    $
    74
    
    
    $
    310
    
    
    $
    258Gross losses on sale
    
    
    (72
    )
    
    
    (24
    )
    
    
    (204
    )
    
    
    (112
    )Impairments
    
    
    (16
    )
    
    
    (4
    )
    
    
    (22
    )
    
    
    (16
    )GMWB derivatives, net
    
    
    (1
    )
    
    
    
    
    
    
    7
    
    
    
    4Other, net [3]
    
    
    (35
    )
    
    
    (18
    )
    
    
    (61
    )
    
    
    (4
    )Net realized capital gains (losses)
    
    $
    (35
    )
    
    $
    28
    
    
    $
    30
    
    
    $
    130
 [1]
    
    Represents the change in value of securities classified as trading.[2]
    
    Represents annualized net investment income (excluding trading securities income (loss)) divided by the monthly
weighted average invested assets at cost or amortized cost, as applicable, excluding trading securities, the collateral
received associated with the securities lending program and consolidated variable interest entity minority interests.[3]
    
    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, foreign currency
transaction remeasurements, as well as the amortization of deferred acquisition costs related to realized capital
gains.
  33




---



##### Table of Contents



.
    Other-Than-Temporary Impairments
   34




---



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INVESTMENT CREDIT RISK
      35




---



##### Table of Contents



Fixed Maturities by TypeSeptember 30, 2005
    
    
    December 31, 2004Percent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    of TotalAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Fair
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueABS
    
    $
    7,003
    
    
    $
    52
    
    
    $
    (72
    )
    
    $
    6,983
    
    
    
    13.7
    %
    
    $
    6,346
    
    
    $
    76
    
    
    $
    (64
    )
    
    $
    6,358
    
    
    
    12.6
    %CMBS
    
    
    9,045
    
    
    
    211
    
    
    
    (69
    )
    
    
    9,187
    
    
    
    18.0
    %
    
    
    8,456
    
    
    
    370
    
    
    
    (20
    )
    
    
    8,806
    
    
    
    17.5
    %Collateralized
mortgage obligations
(CMOs)
    
    
    943
    
    
    
    4
    
    
    
    (6
    )
    
    
    941
    
    
    
    1.8
    %
    
    
    1,084
    
    
    
    11
    
    
    
    (3
    )
    
    
    1,092
    
    
    
    2.2
    %CorporateBasic industry
    
    
    2,293
    
    
    
    106
    
    
    
    (28
    )
    
    
    2,371
    
    
    
    4.6
    %
    
    
    2,412
    
    
    
    192
    
    
    
    (6
    )
    
    
    2,598
    
    
    
    5.1
    %Capital goods
    
    
    1,725
    
    
    
    108
    
    
    
    (12
    )
    
    
    1,821
    
    
    
    3.6
    %
    
    
    1,554
    
    
    
    126
    
    
    
    (6
    )
    
    
    1,674
    
    
    
    3.3
    %Consumer cyclical
    
    
    2,224
    
    
    
    76
    
    
    
    (34
    )
    
    
    2,266
    
    
    
    4.4
    %
    
    
    2,426
    
    
    
    163
    
    
    
    (8
    )
    
    
    2,581
    
    
    
    5.1
    %Consumer non-cyclical
    
    
    2,362
    
    
    
    146
    
    
    
    (24
    )
    
    
    2,484
    
    
    
    4.9
    %
    
    
    2,506
    
    
    
    207
    
    
    
    (6
    )
    
    
    2,707
    
    
    
    5.4
    %Energy
    
    
    1,187
    
    
    
    108
    
    
    
    (8
    )
    
    
    1,287
    
    
    
    2.5
    %
    
    
    1,251
    
    
    
    122
    
    
    
    (1
    )
    
    
    1,372
    
    
    
    2.7
    %Financial services
    
    
    6,725
    
    
    
    336
    
    
    
    (47
    )
    
    
    7,014
    
    
    
    13.7
    %
    
    
    6,202
    
    
    
    482
    
    
    
    (22
    )
    
    
    6,662
    
    
    
    13.2
    %Technology and
communications
    
    
    3,103
    
    
    
    240
    
    
    
    (21
    )
    
    
    3,322
    
    
    
    6.5
    %
    
    
    3,570
    
    
    
    342
    
    
    
    (11
    )
    
    
    3,901
    
    
    
    7.7
    %Transportation
    
    
    629
    
    
    
    33
    
    
    
    (4
    )
    
    
    658
    
    
    
    1.3
    %
    
    
    622
    
    
    
    44
    
    
    
    (1
    )
    
    
    665
    
    
    
    1.3
    %Utilities
    
    
    2,591
    
    
    
    180
    
    
    
    (23
    )
    
    
    2,748
    
    
    
    5.4
    %
    
    
    2,317
    
    
    
    230
    
    
    
    (7
    )
    
    
    2,540
    
    
    
    5.0
    %Other
    
    
    1,056
    
    
    
    26
    
    
    
    (11
    )
    
    
    1,071
    
    
    
    2.1
    %
    
    
    785
    
    
    
    49
    
    
    
    (2
    )
    
    
    832
    
    
    
    1.6
    %Government/Government
agenciesForeign
    
    
    699
    
    
    
    56
    
    
    
    (2
    )
    
    
    753
    
    
    
    1.5
    %
    
    
    723
    
    
    
    67
    
    
    
    (2
    )
    
    
    788
    
    
    
    1.6
    %United States
    
    
    815
    
    
    
    26
    
    
    
    (7
    )
    
    
    834
    
    
    
    1.6
    %
    
    
    884
    
    
    
    19
    
    
    
    (5
    )
    
    
    898
    
    
    
    1.8
    %MBS  agency
    
    
    2,434
    
    
    
    5
    
    
    
    (26
    )
    
    
    2,413
    
    
    
    4.7
    %
    
    
    1,771
    
    
    
    20
    
    
    
    (3
    )
    
    
    1,788
    
    
    
    3.5
    %MunicipalTaxable
    
    
    946
    
    
    
    47
    
    
    
    (3
    )
    
    
    990
    
    
    
    1.9
    %
    
    
    700
    
    
    
    30
    
    
    
    (5
    )
    
    
    725
    
    
    
    1.4
    %Tax-exempt
    
    
    2,317
    
    
    
    174
    
    
    
    (5
    )
    
    
    2,486
    
    
    
    4.9
    %
    
    
    2,080
    
    
    
    191
    
    
    
    (1
    )
    
    
    2,270
    
    
    
    4.5
    %Redeemable preferred
stock
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    Short-term
    
    
    1,473
    
    
    
    
    
    
    
    
    
    
    
    1,473
    
    
    
    2.9
    %
    
    
    2,261
    
    
    
    
    
    
    
    
    
    
    
    2,261
    
    
    
    4.5
    %Total fixed maturities
    
    $
    49,582
    
    
    $
    1,935
    
    
    $
    (402
    )
    
    $
    51,115
    
    
    
    100.0
    %
    
    $
    47,962
    
    
    $
    2,742
    
    
    $
    (173
    )
    
    $
    50,531
    
    
    
    100.0
    %
   CMBS
 Aircraft lease receivables
 Financial services
 36




---



##### Table of Contents



CAPITAL MARKETS RISK MANAGEMENT
  Market Risk
  Derivative Instruments
  Equity Risk
  37




---



##### Table of Contents



th
   38




---



##### Table of Contents



Interest Rate Risk
   CAPITAL RESOURCES AND LIQUIDITY
 Liquidity Requirements
    39




---



##### Table of Contents



Ratings
   40




---



##### Table of Contents



A.M. Best
    
    
    Fitch
    
    
    Standard & Poors
    
    
    MoodysInsurance RatingsHartford Life Insurance Company
    
    
    A+
    
    
    AA
    
    AA-
    
    Aa3Hartford Life and Accident
    
    
    A+
    
    
    AA
    
    AA-
    
    Aa3Hartford Life Group Insurance Company
    
    
    A+
    
    
    AA
    
    
    
    
    
    
    Hartford Life and Annuity
    
    
    A+
    
    
    AA
    
    AA-
    
    Aa3Hartford Life Insurance K.K. (Japan)
    
    
    
    
    
    
    
    
    
    AA-
    
    
    Hartford Life Limited (Ireland)
    
    
    
    
    
    
    
    
    
    AA-
    
    
    Other RatingsHartford Life, Inc.Senior debt
    
    
    a-
    
    
    
    A
    
    
    
    A-
    
    
    
    A3Commercial paper
    
    AMB-1
    
    
    
    F1
    
    
    
    A-2
    
    
    
    P-2Hartford Life, Inc.Capital II Trust preferred securities
    
    bbb
    
    
    
    A-
    
    
    BBB
    
    Baa1Hartford Life Insurance Company:Short Term Rating
    
    
    
    
    
    
    
    
    
    
    A-1+
    
    
    
        P-1
  Risk-Based Capital
  NAIC Developments
 Proposed Changes to NAIC RBC Requirements for Variable Annuities with Guarantees  C-3 Phase II
Capital
    Contingencies
 Regulatory
Developments
 Other 
  41




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##### Table of Contents



ACCOUNTING STANDARDS
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures
  Changes in internal control over financial reporting
  
 Part II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  Broker
Compensation Litigation
    42




---



##### Table of Contents



Item 6. EXHIBITS
  43




---



##### Table of Contents



SIGNATURE
  HARTFORD LIFE, INC./s/ Ernest M. McNeill Jr.Ernest M. McNeill Jr.Vice President and Chief Accounting Officer
  44




---



##### Table of Contents



HARTFORD LIFE, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2005
 
 EXHIBITS INDEX
 Exhibit #15.01
    
    Deloitte & Touche LLP Letter of Awareness31.01
    
    Section 302 Certification of Thomas M. Marra31.02
    
    Section 302 Certification of Lizabeth H. Zlatkus32.01
    
    Section 906 Certification of Thomas M. Marra32.02
    
    Section 906 Certification of Lizabeth H. Zlatkus
 45