##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 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
(Address of principal executive offices) (860) 547-5000
(Registrants telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
þ   No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act) Yes
o   No þ As of April 25, 2005 there were outstanding 1,000 shares of Common Stock, $0.01 par value per
share, of the registrant, all of which were directly owned by Hartford Holdings, Inc., a
direct wholly owned subsidiary of The Hartford Financial Services Group, Inc. The registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of
Form 10-Q and is therefore filing this form with the reduced disclosure format.




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INDEX PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    3Condensed Consolidated Statements of Income  Three Months
Ended March 31, 2005 and 2004
    
    
    4Condensed Consolidated Balance Sheets  March 31, 2005
and December 31, 2004
    
    
    5Condensed Consolidated Statements of Changes in
Stockholders Equity  Three Months Ended March 31, 2005 and 2004
    
    
    6Condensed Consolidated Statements of Cash Flows  Three Months
Ended March 31, 2005 and 2004
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 6. Exhibits
    
    
    36Signature
    
    
    37Exhibits Index
    
    
    38EX-15.01: DELOITTE & TOUCHE LLP LETTER OF AWARENESSEX-31.01: CERTIFICATIONEX-31.02: CERTIFICATIONEX-32.01: CERTIFICATIONEX-32.02: CERTIFICATION
 2




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PART I. FINANCIAL INFORMATION 
 Item 1. FINANCIAL STATEMENTS 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholder of
Hartford Life, Inc.
Hartford, Connecticut We have reviewed the accompanying condensed consolidated balance sheet of Hartford Life, Inc. and
subsidiaries (the Company) as of March 31, 2005, and the related condensed consolidated
statements of income, changes in stockholders equity, and cash flows for the three-month periods
ended March 31, 2005 and 2004. These interim financial statements are the responsibility of the
Companys management. We conducted our reviews in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States), the objective of
which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such
condensed consolidated interim financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of the Company as of December 31,
2004, and the related consolidated statements of income, changes in stockholders equity, and cash
flows for the year then ended (not presented herein); and in our report dated February 24, 2005
(which report includes an explanatory paragraph relating to the Companys change in its method of
accounting and reporting for certain nontraditional long-duration contracts and for separate
accounts in 2004), we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived. DELOITTE & TOUCHE, LLP
Hartford, Connecticut
April 29, 2005 3




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HARTFORD LIFE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Income
 Three MonthsEndedMarch 31,(In millions) (Unaudited)
    
    2005
    
    
    2004RevenuesFee income
    
    $
    950
    
    
    $
    825Earned premiums
    
    
    999
    
    
    
    995Net investment income
    
    
    950
    
    
    
    1,162Net realized capital gains (losses)
    
    
    81
    
    
    
    76Total revenues
    
    
    2,980
    
    
    
    3,058Benefits, claims and expensesBenefits, claims and claim adjustment expenses
    
    
    1,739
    
    
    
    1,877Insurance expenses and other
    
    
    559
    
    
    
    514Amortization of deferred policy acquisition costs and present value of
future profits
    
    
    280
    
    
    
    233Dividends to policyholders
    
    
    18
    
    
    
    13Interest expense
    
    
    20
    
    
    
    35Total benefits, claims and expenses
    
    
    2,616
    
    
    
    2,672Income before income tax expense
and cumulative effect of
accounting change
    
    
    364
    
    
    
    386Income tax expense
    
    
    86
    
    
    
    105Income before cumulative effect of accounting change
    
    
    278
    
    
    
    281Cumulative effect of accounting change, net of tax
    
    
    
    
    
    
    (23
    )Net income
    
    $
    278
    
    
    $
    258
 See Notes to Condensed Consolidated Financial Statements. 4




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HARTFORD LIFE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Balance Sheets
 March 31,(In millions, except for share data)
    
    2005
    
    
    December 31, 2004(Unaudited)AssetsInvestmentsFixed maturities, available-for-sale,
at fair value (amortized cost of
$49,119 and $47,962)
    
    $
    50,877
    
    
    $
    50,531Equity securities,
available-for-sale, at fair value (cost of $645 and $506)
    
    
    662
    
    
    
    525Equity securities, held for trading, at fair value (cost of $14,605 and $12,514)
    
    
    15,855
    
    
    
    13,634Policy loans, at outstanding balance
    
    
    2,119
    
    
    
    2,662Other investments
    
    
    1,459
    
    
    
    1,364Total investments
    
    
    70,972
    
    
    
    68,716Cash
    
    
    1,198
    
    
    
    933Premiums receivable and agents balances
    
    
    386
    
    
    
    391Reinsurance recoverables
    
    
    767
    
    
    
    993Deferred policy acquisition costs and present value of future profits
    
    
    7,908
    
    
    
    7,437Deferred income taxes
    
    
    (654
    )
    
    
    (747
    )Goodwill
    
    
    796
    
    
    
    796Other assets
    
    
    2,218
    
    
    
    1,911Separate account assets
    
    
    138,502
    
    
    
    140,023Total assets
    
    $
    222,093
    
    
    $
    220,453LiabilitiesReserve for future policy benefits
    
    $
    12,375
    
    
    $
    12,250Other policyholder funds
    
    
    55,459
    
    
    
    52,833Long-term debt
    
    
    1,050
    
    
    
    1,050Other liabilities
    
    
    5,683
    
    
    
    5,125Separate account liabilities
    
    
    138,502
    
    
    
    140,023Total liabilities
    
    
    213,069
    
    
    
    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
    
    
    772
    
    
    
    1,178Foreign currency translation adjustments
    
    
    (4
    )
    
    
    16Total accumulated other comprehensive income
    
    
    768
    
    
    
    1,194Retained earnings
    
    
    5,162
    
    
    
    4,884Total stockholders equity
    
    
    9,024
    
    
    
    9,172Total liabilities and stockholders equity
    
    $
    222,093
    
    
    $
    220,453
 See Notes to Condensed Consolidated Financial Statements. 5




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HARTFORD LIFE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Changes in Stockholders Equity
 Three Months Ended March 31, 2005 Accumulated Other Comprehensive IncomeNet GainNet Unrealized
    
    
    (Loss) onCapital
    
    
    Cash Flow
    
    
    ForeignGains on
    
    
    Hedging
    
    
    CurrencyCommon
    
    
    Capital
    
    
    Securities, Net
    
    
    Instruments,
    
    
    Translation
    
    

    Retained
    
    
    Total Stockholders(In millions) (Unaudited)
    
    Stock
    
    
    Surplus
    
    
    of Tax
    
    
    Net of Tax
    
    
    Adjustments
    
    
    Earnings
    
    
    EquityBalance, December 31, 2004
    
    $
    
    
    
    $
    3,094
    
    
    $
    1,348
    
    
    $
    (170
    )
    
    $
    16
    
    
    $
    4,884
    
    
    $
    9,172Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278
    
    
    
    278Other comprehensive income, net of tax (1)Net change in unrealized capital losses
on securities (3)
    
    
    
    
    
    
    
    
    
    
    (370
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (370
    )Net loss on cash flow hedging
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    (36
    )Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (20
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (426
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (148
    )Balance, March 31, 2005
    
    $
    
    
    
    $
    3,094
    
    
    $
    978
    
    
    $
    (206
    )
    
    $
    (4
    )
    
    $
    5,162
    
    
    $
    9,024
 Three Months Ended March 31, 2004 Accumulated Other Comprehensive IncomeNet Unrealized
    
    
    Net Gain (Loss) onCapital
    
    
    Cash Flow
    
    
    ForeignGains on
    
    
    Hedging
    
    
    CurrencyCommon
    
    
    Capital
    
    
    Securities, Net
    
    
    Instruments,
    
    
    Translation
    
    
    Retained
    
    
    Total Stockholders(In millions) (Unaudited)
    
    Stock
    
    
    Surplus
    
    
    of Tax
    
    
    Net of Tax
    
    
    Adjustments
    
    
    Earnings
    
    
    EquityBalance, December 31, 2003
    
    $
    
    
    
    $
    2,489
    
    
    $
    928
    
    
    $
    (25
    )
    
    $
    (43
    )
    
    $
    3,710
    
    
    $
    7,059Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    258
    
    
    
    258Other comprehensive income, net of tax (1)Cumulative effect of accounting change (2)
    
    
    
    
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292Net change in unrealized capital gains on
securities (3)
    
    
    
    
    
    
    
    
    
    
    422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    422Net loss on cash flow hedging
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    765Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,023Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )
    
    
    (74
    )Capital contributions from parent
    
    
    
    
    
    
    505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    505Balance, March 31, 2004
    
    $
    
    
    
    $
    2,994
    
    
    $
    1,642
    
    
    $
    27
    
    
    $
    (44
    )
    
    $
    3,894
    
    
    $
    8,513
   (1)
    
    Net change in unrealized capital (loss) gain on securities is reflected net of tax provision
of $(199) and $227 for the first quarters ended March 31, 2005 and 2004, respectively. Net
(loss) gain on cash flow hedging instruments is net of tax (benefit) provision of $(19) and
$28 for the first quarters ended March 31, 2005 and 2004, respectively. There is no tax
effect on cumulative translation adjustments.(2)
    
    Represents the impact of the adoption of SOP 03-1. SOP 03-1 was effective for financial
statements for fiscal years beginning after December 15, 2003.(3)
    
    There were reclassification adjustments for after-tax gains (losses) realized in net income
of $42 for each of the first quarters ended March 31, 2005 and 2004, respectively. See Notes to Condensed Consolidated Financial Statements. 6




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HARTFORD LIFE, INC. AND SUBSIDIARIES 
 Condensed Consolidated Statements of Cash Flows
 Three Months EndedMarch 31,(In millions) (Unaudited)
    
    2005
    
    
    2004Operating ActivitiesNet income
    
    $
    278
    
    
    $
    258Adjustments to reconcile net income to net cash provided by operating activitiesNet realized capital (gains)
    
    
    (81
    )
    
    
    (76
    )Cumulative effect of adoption of SOP 03-1
    
    
    
    
    
    
    23Amortization of deferred policy acquisition costs and present value of future
profits
    
    
    280
    
    
    
    233Additions to deferred policy acquisition costs
    
    
    (556
    )
    
    
    (494
    )Amortization of sales inducements
    
    
    9
    
    
    
    6Additions to deferred sales inducements
    
    
    (21
    )
    
    
    (33
    )Depreciation and amortization
    
    
    15
    
    
    
    24Decrease (increase) in premiums receivable and agents balances
    
    
    5
    
    
    
    (3
    )Decrease (increase) in receivables
    
    
    49
    
    
    
    (249
    )Decrease in accrued liabilities and payables
    
    
    (58
    )
    
    
    (197
    )Increase (decrease) in other liabilities
    
    
    42
    
    
    
    (166
    )(Decrease) increase in accrued taxes
    
    
    (89
    )
    
    
    16Change in deferred income taxes
    
    
    71
    
    
    
    533Increase in liabilities for future policy benefits
    
    
    125
    
    
    
    256Net increase in equity securities, held for trading
    
    
    (2,220
    )
    
    
    (1,611
    )Net receipts from investment contracts credited to policyholder accounts
associated with equity securities, held for trading
    
    
    2,367
    
    
    
    1,915(Increase) decrease in reinsurance recoverables
    
    
    (18
    )
    
    
    2Other, net
    
    
    14
    
    
    
    270Net cash provided by operating activities
    
    
    212
    
    
    
    707Investing ActivitiesPurchases of fixed maturity and equity security investments, available-for-sale
    
    
    (7,593
    )
    
    
    (3,460
    )Sales of fixed maturity and equity security investments, available-for-sale
    
    
    6,619
    
    
    
    2,476Maturity of fixed maturity and equity security investments, available-for-sale
    
    
    515
    
    
    
    749(Increase) decrease in other assets
    
    
    (17
    )
    
    
    5Net cash used for investing activities
    
    
    (476
    )
    
    
    (230
    )Financing ActivitiesCapital contributions
    
    
    
    
    
    
    505Repayment of short-term debt
    
    
    
    
    
    
    (305
    )Repayment of company obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely parent junior subordinated debentures
    
    
    
    
    
    
    (250
    )Dividends paid
    
    
    (24
    )
    
    
    (67
    )Net receipts (disbursements) from investment and universal life-type contracts
credited to policyholder accounts
    
    
    548
    
    
    
    (164
    )Net cash provided by (used for) financing activities
    
    
    524
    
    
    
    (281
    )Net increase in cash
    
    
    260
    
    
    
    196Impact of foreign exchange
    
    
    5
    
    
    
    (1
    )Cash - beginning of period
    
    
    933
    
    
    
    265Cash - end of period
    
    $
    1,198
    
    
    $
    460Supplemental Disclosure of Cash Flow InformationNet cash paid during the period forIncome taxes
    
    $
    57
    
    
    $
    10Interest
    
    $
    19
    
    
    $
    28
 See Notes to Condensed Consolidated Financial Statements. 7




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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 Hartford Life, Inc. (a Delaware corporation), together with its consolidated subsidiaries
(Hartford Life or the Company), is a leading financial services and insurance organization
which provides, primarily in the United States, investment, retirement, estate planning and group
benefits products. Hartford Life, Inc. is a direct wholly-owned subsidiary of Hartford Holdings,
Inc., a direct wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (The
Hartford). The condensed consolidated financial statements have been prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from the accounting
prescribed by various insurance regulatory authorities. The financial statements include the
accounts of Hartford Life and its wholly-owned as well as controlled majority owned subsidiaries.
Subsidiaries in which the Company has at least 20% interest, but less than a majority ownership
interest, are reported using the equity method. All intercompany transactions and balances between
Hartford Life, its subsidiaries and affiliates have been eliminated. The accompanying condensed, consolidated financial statements and notes as of March 31, 2005, and
for the first quarters ended March 31, 2005 and 2004 are unaudited. These condensed consolidated
financial statements reflect all adjustments (consisting only of normal accruals) which are, in the
opinion of management, necessary for the fair presentation of the financial position, results of
operations, and cash flows for the interim periods. These condensed financial statements and notes
should be read in conjunction with the consolidated financial statements and notes thereto included
in Hartford Lifes 2004 Form 10-K Annual Report. The results of operations for the interim periods
should not be considered indicative of results to be expected for the full year. Reclassifications Certain reclassifications have been made to prior year financial information to conform to the
current year classifications. Specifically, the Company reclassified amounts assessed against
certain contract holder balances during the first quarter of 2004 from net investment income to fee
income. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally
accepted in the United States of America, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in determining reserves for future policyholder
benefits, deferred policy acquisition costs and present value of future profits, the valuation of
investments and derivative instruments and the evaluation of other-than-temporary impairments, and
contingencies. Significant Accounting Policies For a description of accounting policies, see Note 2 of Notes to Consolidated Financial Statements
included in Hartford Lifes 2004 Form 10-K Annual Report. Future Adoption of Accounting Standards In March 2004, the Emerging Issues Task Force (EITF) reached a final consensus on EITF Issue No.
03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
(EITF Issue No. 03-1). EITF Issue No. 03-1 was effective for periods beginning after June 15,
2004 and adopts a three-step impairment model for securities within its scope. The three-step
model must be applied on a security-by-security basis as follows: Step 1:
    
    Determine whether an investment is impaired. An investment is
impaired if the fair value of the investment is less than its cost
basis.Step 2:
    
    Evaluate whether an impairment is other-than-temporary. For debt
securities that cannot be contractually prepaid or otherwise
settled in such a way that the investor would not recover
substantially all of its cost, an impairment is deemed
other-than-
 8




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##### Table of Contents



temporary if the investor does not have the ability and
intent to hold the investment until a forecasted market price
recovery or it is probable that the investor will be unable to collect all amounts due according to the contractual terms of the debt security.Step 3:
    
    If the impairment is other-than-temporary, recognize an impairment loss equal to the difference between the investments
cost basis and its fair value.
 Subsequent to an other-than-temporary impairment loss, a debt security should be accounted for in
accordance with SOP 03-3, Accounting for Certain Loans and Debt Securities Acquired in a Transfer
(SOP 03-3). SOP 03-3 requires that the amount of a securitys expected cash flows in excess of
the investors initial cost or amortized cost investment be recognized as interest income on a
level-yield basis over the life of the security. EITF Issue No. 03-1 does not replace the
impairment guidance for investments accounted for under EITF Issue No. 99-20, Recognition of
Interest Income and Impairments on Purchased and Retained Beneficial Interests in Securitized
Financial Assets (EITF Issue No. 99-20), however, it requires investors to determine if a
security is other-than-temporarily impaired under EITF Issue No. 03-1 if the security is determined
not to be other-than-temporarily impaired under EITF Issue No. 99-20. In September 2004, the Financial Accounting Standards Board (FASB) staff issued clarifying
guidance for comment in FASB Staff Position (FSP) EITF Issue No. 03-1-a, Implementation Guidance
for the Application of Paragraph 16 of EITF Issue No. 03-1 (FSP Issue No. 03-1-a) and
subsequently voted to delay the implementation of the impairment measurement and recognition
guidance contained in paragraphs 1020 of EITF Issue No. 03-1. In April 2005, the FASB and International Accounting Standards Board (IASB) added a joint project
to their agenda to converge impairment models for financial instruments. The FASB subsequently
decided not to redeliberate EITF 03-1. 2. Segment Information The Company has four reportable operating segments: Retail Products Group (Retail),
Institutional Solutions Group (Institutional), Individual Life and Group Benefits. The Company
evaluates performance based on revenues and net income. For a full discussion of each segment,
please refer to Hartford Lifes 2004 Form 10-K Annual Report. Retail
    
    
    InstitutionalProducts
    
    
    Solutions
    
    
    Individual
    
    
    GroupMarch 31, 2005
    
    Group
    
    
    Group
    
    
    Life
    
    
    Benefits
    
    
    Other[1]
    
    
    TotalThree Months EndedTotal revenues
    
    $
    837
    
    
    $
    424
    
    
    $
    262
    
    
    $
    1,046
    
    
    $
    411
    
    
    $
    2,980Net income
    
    
    156
    
    
    
    40
    
    
    
    39
    
    
    
    59
    
    
    
    (16
    )
    
    
    278
 Retail
    
    
    InstitutionalProducts
    
    
    Solutions
    
    
    Individual
    
    
    GroupMarch 31, 2004
    
    Group
    
    
    Group
    
    
    Life
    
    
    Benefits
    
    
    Other
    
    
    TotalThree Months EndedTotal revenues
    
    $
    763
    
    
    $
    442
    
    
    $
    254
    
    
    $
    1,004
    
    
    $
    595
    
    
    $
    3,058Net income
    
    
    107
    
    
    
    28
    
    
    
    33
    
    
    
    47
    
    
    
    43
    
    
    
    258
   [1]
    
    The 2005 amount reflects the $66 provision for
the regulatory investigations discussed in Note 6. 9




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##### Table of Contents



3. Investments and Derivative Instruments As of March 31, 2005
    
    
    As of December 31, 2004Gross
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Amortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueBonds and NotesAsset-backed securities (ABS)
    
    $
    6,433
    
    
    $
    63
    
    
    $
    (70
    )
    
    $
    6,426
    
    
    $
    6,346
    
    
    $
    76
    
    
    $
    (64
    )
    
    $
    6,358Collateralized mortgage
obligations (CMOs)Agency backed
    
    
    905
    
    
    
    7
    
    
    
    (4
    )
    
    
    908
    
    
    
    1,036
    
    
    
    11
    
    
    
    (3
    )
    
    
    1,044Non-agency backed
    
    
    120
    
    
    
    
    
    
    
    (1
    )
    
    
    119
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    48Commercial mortgage-backed
securities (CMBS)Agency backed
    
    
    72
    
    
    
    2
    
    
    
    (1
    )
    
    
    73
    
    
    
    72
    
    
    
    2
    
    
    
    (1
    )
    
    
    73Non-agency backed
    
    
    8,360
    
    
    
    230
    
    
    
    (75
    )
    
    
    8,515
    
    
    
    8,384
    
    
    
    368
    
    
    
    (19
    )
    
    
    8,733Corporate
    
    
    24,544
    
    
    
    1,584
    
    
    
    (196
    )
    
    
    25,932
    
    
    
    23,645
    
    
    
    1,957
    
    
    
    (70
    )
    
    
    25,532Government/Government agenciesForeign
    
    
    736
    
    
    
    46
    
    
    
    (7
    )
    
    
    775
    
    
    
    723
    
    
    
    67
    
    
    
    (2
    )
    
    
    788United States
    
    
    918
    
    
    
    22
    
    
    
    (13
    )
    
    
    927
    
    
    
    884
    
    
    
    19
    
    
    
    (5
    )
    
    
    898Mortgage-backed securities (MBS)Agency backed
    
    
    2,262
    
    
    
    9
    
    
    
    (21
    )
    
    
    2,250
    
    
    
    1,771
    
    
    
    20
    
    
    
    (3
    )
    
    
    1,788States, municipalities and
political subdivisions
    
    
    2,885
    
    
    
    192
    
    
    
    (9
    )
    
    
    3,068
    
    
    
    2,780
    
    
    
    221
    
    
    
    (6
    )
    
    
    2,995Redeemable preferred stock
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13Short-term investments
    
    
    1,872
    
    
    
    
    
    
    
    
    
    
    
    1,872
    
    
    
    2,261
    
    
    
    
    
    
    
    
    
    
    
    2,261Total fixed maturities
    
    $
    49,119
    
    
    $
    2,155
    
    
    $
    (397
    )
    
    $
    50,877
    
    
    $
    47,962
    
    
    $
    2,742
    
    
    $
    (173
    )
    
    $
    50,531
 Derivative Instruments The Company utilizes a variety of derivative instruments, including swaps, caps, floors, forwards,
futures and options designed to achieve one of four Company-approved objectives: to hedge risk
arising from interest rate, price or currency exchange rate volatility; to manage liquidity; to
control transaction costs; or to enter into replication transactions. On the date the derivative contract is entered into, the Company designates the derivative as (1) a
hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a
forecasted transaction or of the variability of cash flows to be received or paid related to a
recognized asset or liability (cash flow hedge), (3) a foreign-currency fair value or cash flow
hedge (foreign-currency hedge), (4) a hedge of a net investment in a foreign operation (net
investment hedge) or (5) held for other investment and risk management activities, which primarily
involve managing asset or liability related risks that do not qualify for hedge accounting
treatment. The Companys derivative transactions are permitted uses of derivatives under the derivatives use
plan filed and/or approved, as applicable, by the State of Connecticut, the State of Illinois and
the State of New York insurance departments. The Company does not make a market or trade in these
instruments for the express purpose of earning short-term trading profits. For a detailed discussion of the Companys use of derivative instruments, see Notes 2 and 4 of
Notes to Consolidated Financial Statements included in Hartford Lifes 2004 Form 10-K Annual
Report. Derivative instruments are recorded at fair value and presented in the condensed consolidated
balance sheets as follows: March 31, 2005
    
    
    December 31, 2004Liability
    
    
    
    
    
    
    LiabilityAsset Values
    
    
    Values
    
    
    Asset Values
    
    
    ValuesOther investments
    
    $
    207
    
    
    $
    
    
    
    $
    185
    
    
    $
    Reinsurance recoverables
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    67Other policyholder funds and benefits payable
    
    
    136
    
    
    
    
    
    
    
    129
    
    
    
    Fixed maturities
    
    
    
    
    
    
    1
    
    
    
    4
    
    
    
    Other liabilities
    
    
    
    
    
    
    507
    
    
    
    
    
    
    
    518Total
    
    $
    343
    
    
    $
    578
    
    
    $
    318
    
    
    $
    585
 The following table summarizes the notional amount and fair value of derivatives by hedge
designation as of March 31, 2005 and December 31, 2004. The notional amount of derivative
contracts represents the basis upon which pay or receive amounts are calculated and are not
necessarily reflective of credit risk. The fair value amounts of derivative assets and liabilities
are presented on a net basis in the following table. 10




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##### Table of Contents



March 31, 2005
    
    
    December 31, 2004Notional
    
    
    
    
    
    
    NotionalAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueCash flow hedge
    
    $
    7,612
    
    
    $
    (418
    )
    
    $
    7,168
    
    
    $
    (374
    )Fair value hedge
    
    
    481
    
    
    
    (10
    )
    
    
    363
    
    
    
    (4
    )Net investment hedge
    
    
    415
    
    
    
    9
    
    
    
    401
    
    
    
    (23
    )Other investment and risk management activities
    
    
    49,893
    
    
    
    184
    
    
    
    45,931
    
    
    
    134Total
    
    $
    58,401
    
    
    $
    (235
    )
    
    $
    53,863
    
    
    $
    (267
    )
 The increase in notional amount since December 31, 2004 is primarily due to an increase in embedded
derivatives associated with guaranteed minimum withdrawal benefit (GMWB) product sales and new
hedging strategies. The increase in net fair value of derivative instruments since December 31,
2004 was primarily due to the strengthening of the U.S. Dollar in comparison to foreign currencies
and derivatives associated with the GMWB rider due to the decline in value of the equity markets
and the increase in equity market volatility, partially offset by the rise in interest rates. The Company offers certain variable annuity products with a GMWB rider which is accounted for as an
embedded derivative. (For further discussion, refer to Note 5 of Notes to Condensed Consolidated
Financial Statements.) During the first quarter of 2005, the Company entered into interest rate swap agreements with a
combined notional and fair value of $122 and $(2), respectively, to hedge the variability in
certain variable rate investment contracts. These swaps convert the variable liability payment
(e.g. based off of the Consumer Price Index) to a variable rate, London-Interbank Offered Rate
(LIBOR), to better match the cash receipts earned from the supporting investment portfolio.
Certain of these swap agreements are designated as cash flow hedges and have a notional and fair
value of $75 and $(1), respectively, as of March 31, 2005. In addition, swap agreements that do
not receive hedge accounting have a notional and fair value of $47 and $(1), respectively, as of
March 31, 2005. During the first quarter of 2005, the Company entered into forward starting Standard and Poors
(S&P) 500 put options, as well as S&P index futures and interest rate swap contracts to
economically hedge the equity volatility risk exposure associated with anticipated future sales of
the GMWB rider. As of March 31, 2005, the notional and fair value of these contracts was $882 and
$39, respectively, and the net gain, after-tax, from these contracts was $3. The total notional amount of derivative contracts purchased to hedge the in-force GMWB exposure, as
of March 31, 2005 and December 31, 2004, was $4.0 billion and $3.1 billion, respectively, and net
fair value was $114 and $108, respectively. For the three months ended March 31, 2005 and 2004,
net realized capital gains and losses included the change in market value of both the embedded
derivative related to the GMWB liability and the related derivative contracts that were purchased
as economic hedges. For the three months ended March 31, 2005 and 2004, the net effect was a net
gain of $5 and a net loss of $1, after-tax, respectively. For the three months ended March 31, 2005, gross gains and losses representing the total
ineffectiveness of all fair value and net investment hedges were immaterial. For the three months
ended March 31, 2005, the Companys net gain and loss representing hedge ineffectiveness on cash
flow hedges was $(2), after-tax. For the three months ended March 31, 2004, the Companys net
gains and losses representing the total ineffectiveness of all cash flow, fair value and net
investment hedges were immaterial. The total change in value for other derivative-based strategies which do not qualify for hedge
accounting treatment, including periodic net coupon settlements, are reported as net realized
capital gains and losses in the condensed consolidated statements of income. For the three months
ended March 31, 2005 and 2004, the Company recognized an after-tax net gain of $10 and $7,
respectively, for derivative-based strategies, which do not qualify for hedge accounting treatment. As of March 31, 2005, the after-tax deferred net gains on derivative instruments accumulated in
AOCI that are expected to be reclassified to earnings during the next twelve months are $3. This
expectation is based on the anticipated interest payments on hedged investments in fixed maturity
securities that will occur over the next twelve months, at which time the Company will recognize
the deferred net gains (losses) as an adjustment to interest income over the term of the investment
cash flows. The maximum term over which the Company is hedging its exposure to the variability of
future cash flows (for all forecasted transactions, excluding interest payments on variable rate
debt) is twenty-four months. For the three months ended March 31, 2005 and 2004, the net
reclassifications from AOCI to earnings resulting from the discontinuance of cash flow hedges were
immaterial. 11




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##### Table of Contents



4. Deferred Policy Acquisition Costs and Present Value of Future Profits Changes in deferred policy acquisition costs and present value of future profits was as
follows: 2005
    
    
    2004Balance, January 1
    
    $
    7,437
    
    
    $
    6,623Capitalization
    
    
    556
    
    
    
    494Amortization  Deferred Policy Acquisitions costs
    
    
    (272
    )
    
    
    (225
    )Amortization  Present Value of Future Profits
    
    
    (8
    )
    
    
    (8
    )Amortization  Realized Capital Gains/Losses
    
    
    (11
    )
    
    
    (5
    )Adjustments to unrealized gains and losses on
securities available-for-sale and other
    
    
    245
    
    
    
    (251
    )Cumulative effect of accounting change [1]
    
    
    
    
    
    
    (105
    )Effect of Currency Translation Adjustment
    
    
    (39
    )
    
    
    Balance, March 31
    
    $
    7,908
    
    
    $
    6,523
   [1]
    
    For the three months ended March 31, 2004, represents the Companys adoption of American
Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 03-1, Accounting
and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for
Separate Accounts (SOP 03-1). 5. Separate Accounts, Death Benefits and Other Insurance Benefit Features Many of the variable annuity contracts issued by the Company offer various guaranteed minimum
death, withdrawal and income benefits. Guaranteed minimum death and income benefits are offered in
various forms as described in the footnotes to the table below. The Company currently reinsures a
significant portion of the death benefit guarantees associated with its in-force block of business. Changes in the gross U.S. guaranteed minimum death benefit (GMDB) and Japan GMDB/guaranteed
minimum income benefits (GMIB) liability balance sold with annuity products are as follows: U.S. GMDB [1]
    
    
    Japan GMDB/GMIBLiability balance as of January 1, 2005
    
    $
    174
    
    
    $
    28Incurred
    
    
    32
    
    
    
    7Paid
    
    
    38
    
    
    
    Currency translation adjustment
    
    
    
    
    
    
    (2
    )Liability balance as of March 31, 2005
    
    $
    168
    
    
    $
    33
   [1]
    
    The reinsurance recoverable asset, related to the U.S. GMDB was $55 as of March 31, 2005. U.S. GMDB [1]
    
    
    Japan GMDB/GMIBLiability balance upon adoption  as of
January 1, 2004
    
    $
    217
    
    
    $
    8Incurred
    
    
    123
    
    
    
    21Paid
    
    
    166
    
    
    
    1Liability balance as of December 31, 2004
    
    $
    174
    
    
    $
    28
   [1]
    
    The reinsurance recoverable asset, related to the U.S. GMDB was $108 upon adoption of SOP
03-1 and $64 as of December 31, 2004. The net GMDB and GMIB liability is established by estimating the expected value of net reinsurance
costs and death and income benefits in excess of the projected account balance. The excess death
and income benefits and net reinsurance costs are recognized ratably over the accumulation period
based on total expected assessments. The GMDB and GMIB liabilities are recorded in Future Policy
Benefits on the Companys balance sheet. Changes in the GMDB and GMIB liability are recorded in
Benefits, Claims and Claims Adjustment Expenses on the Companys statement of income. The Company
regularly evaluates estimates used and adjusts the additional liability balances, with a related
charge or credit to benefit expense, if actual experience or other evidence suggests that earlier
assumptions should be revised. 12




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##### Table of Contents



The following table provides details concerning GMDB and GMIB exposure as of March 31, 2005: Breakdown of Variable Annuity Account Value by GMDB/GMIB Type Retained Net
    
    
    Weighted AverageAccount
    
    
    Net Amount
    
    
    Amount
    
    
    Attained Age ofValue
    
    
    at Risk
    
    
    at Risk
    
    
    AnnuitantMaximum anniversary value (MAV) [1]MAV only
    
    $
    58,807
    
    
    $
    7,015
    
    
    $
    804
    
    
    63With 5% rollup [2]
    
    
    4,025
    
    
    
    642
    
    
    
    121
    
    
    62With Earnings Protection Benefit Rider (EPB) [3]
    
    
    4,985
    
    
    
    193
    
    
    
    42
    
    
    60With 5% rollup & EPB
    
    
    1,442
    
    
    
    122
    
    
    
    21
    
    
    61Total MAV
    
    
    69,259
    
    
    
    7,972
    
    
    
    988
    
    
    63Asset Protection Benefit (APB) [4]
    
    
    18,885
    
    
    
    71
    
    
    
    41
    
    
    61Ratchet [5] (5 years)
    
    
    38
    
    
    
    3
    
    
    
    
    
    
    66Reset [6] (5-7 years)
    
    
    7,759
    
    
    
    690
    
    
    
    690
    
    
    64Return of Premium [7]/Other
    
    
    8,263
    
    
    
    53
    
    
    
    53
    
    
    49Subtotal U.S. Guaranteed Minimum Death Benefits
    
    
    104,204
    
    
    
    8,789
    
    
    
    1,772
    
    
    62Japan Guaranteed Minimum Death and Income Benefit [8]
    
    
    16,495
    
    
    
    76
    
    
    
    76
    
    
    67Total
    
    $
    120,699
    
    
    $
    8,865
    
    
    $
    1,848
   [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 guaranteed remaining balance related to the Japan GMIB was $9.7 billion and
$7.3 billion as of March 31, 2005 and December 31, 2004, respectively. The Company offers certain variable annuity products with a GMWB rider. The GMWB provides the
policyholder with a guaranteed remaining balance (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. However, annual withdrawals that exceed a specified percentage of the premiums
paid may reduce the GRB by an amount greater than the withdrawals and may also impact the
guaranteed annual withdrawal amount that subsequently applies after the excess annual withdrawals
occur. In certain contracts, the policyholder also has the option, after a specified time period,
to reset the GRB to the then-current account value, if greater. The GMWB represents an embedded
derivative liability in the variable annuity contract that is required to be reported separately
from the host variable annuity contract. It is carried at fair value and reported in other
policyholder funds. The fair value of the GMWB obligations are calculated based on actuarial
assumptions related to the projected cash flows, including benefits and related contract charges,
over the lives of the contracts, incorporating expectations concerning policyholder behavior.
Because of the dynamic and complex nature of these cash flows, stochastic techniques under a
variety of market return scenarios and other best estimate assumptions are used. Estimating cash

flows involves numerous estimates and subjective judgments including those regarding expected
market rates of return, market volatility, correlations of market returns and discount rates. As of March 31, 2005 and December 31, 2004, the embedded derivative asset recorded for GMWB, before
reinsurance or hedging, was $136 and $129, respectively. During the three months ended March 31,
2005 and 2004, the change in value of the GMWB, before reinsurance and hedging, reported in
realized gains (losses) was $19 and $(27), respectively. There were no payments made for the GMWB
during the three months ended March 31, 2005 and 2004. As of March 31, 2005 and
December 31, 2004, $11.4 billion, or 37%, and
$11.7 billion, or 39%,
respectively, of account value representing all of the contracts written before July 2003, with
the GMWB feature was reinsured and $19.7 billion, or 63%, and $18.1 billion, or 61%, respectively,
was unreinsured. In order to minimize the volatility associated with the unreinsured GMWB
liabilities, the Company established a hedging-based risk management strategy. In 2003, the
Company began hedging its unreinsured GMWB exposure using interest rate futures, and Standard and
Poors (S&P) 500 and NASDAQ index options and futures contracts. During 2004, the Company
began using Europe, Australasia and Far East (EAFE) Index swaps to hedge GMWB exposure to
international equity markets. The GRB as of March 31, 2005 and December 31, 2004 was $27.4
billion and $25.4 billion, respectively. 13




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##### Table of Contents



6 . Commitments and Contingencies Litigation The Hartford Financial Services Group, Inc. and its consolidated subsidiaries (The Hartford) is
involved in various legal actions arising in the ordinary course of business, some of which assert
claims for substantial amounts. These actions include, among others, putative state and federal
class actions seeking certification of a state or national class. Such putative class actions have
alleged, for example, improper sales practices in connection with the sale of life insurance and
other investment products; and improper fee arrangements in connection with mutual funds. The
Hartford also is involved in individual actions in which punitive damages are sought, such as
claims alleging bad faith in the handling of insurance claims. Management expects that the
ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made
for estimated losses, will not be material to the consolidated financial condition of the Company.
Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the
inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters
could, from time to time, have a material adverse effect on the Companys consolidated results of
operations or cash flows in particular quarterly or annual periods. Broker Compensation Litigation- On October 14, 2004, the New York Attorney Generals Office filed
a civil complaint (the NYAG Complaint) against Marsh Inc. and Marsh & McLennan Companies, Inc.
(collectively, Marsh) alleging, among other things, that certain insurance companies, including
The Hartford, participated with Marsh in arrangements to submit inflated bids for business
insurance and paid contingent commissions to ensure that Marsh would direct business to them. The
Hartford was not joined as a defendant in the action, which has since settled. Since the filing of
the NYAG Complaint, several private actions have been filed against The Hartford asserting claims
arising from the allegations of the NYAG Complaint. Two securities class actions, now consolidated, have been filed in the United States District Court
for the District of Connecticut alleging claims against The Hartford and certain of its executive
officers under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5. The consolidated
amended complaint alleges on behalf of a putative class of shareholders that The Hartford and the
four named individual defendants, as control persons of The Hartford, failed to disclose to the
investing public that The Hartfords business and growth was predicated on the unlawful activity
alleged in the NYAG Complaint. The class period alleged is August 6, 2003 through October 13,
2004, the day before the NYAG Complaint was filed. The complaint seeks damages and attorneys
fees. The Hartford and the individual defendants dispute the allegations and intend to defend
these actions vigorously. In addition, three putative class actions, now consolidated, have been filed in the same court on
behalf of participants in The Hartfords 401(k) plan against The Hartford, Hartford Fire Insurance
Company, The Hartfords Pension Fund Trust and Investment Committee, The Hartfords Pension
Administration Committee, The Hartfords Chief Financial Officer, and John/Jane Does 1-15. The
suits assert claims under the Employee Retirement Income Security Act of 1974, as amended
(ERISA), alleging that The Hartford and the other named defendants breached their fiduciary
duties to plan participants by, among other things, failing to inform them of the risk associated
with investment in The Hartfords stock as a result of the activity alleged in the NYAG Complaint.
The class period alleged is November 5, 2003 through the present. The complaints seek restitution
of losses to the plan, declaratory and injunctive relief, and attorneys fees. All defendants
dispute the allegations and intend to defend these actions vigorously. Two corporate derivative actions, now consolidated, also have been filed in the same court. The
consolidated amended complaint, brought by a shareholder on behalf of The Hartford against its
directors and an executive officer, alleges that the defendants knew adverse non-public information
about the activities alleged in the NYAG Complaint and concealed and misappropriated that
information to make profitable stock trades, thereby breaching their fiduciary duties, abusing
their control, committing gross mismanagement, wasting corporate assets, and unjustly enriching
themselves. The complaint seeks damages, injunctive relief, disgorgement, and attorneys fees.
All defendants dispute the allegations and intend to defend these actions vigorously. Ten putative class actions also have been filed by alleged policyholders in federal district
courts against several brokers and insurers, including The Hartford. These actions assert, on
behalf of a class of persons who purchased insurance through the broker defendants, claims under
the Sherman Act and state law, and in some cases the Racketeer Influenced and Corrupt Organizations
Act (RICO), arising from the conduct alleged in the NYAG Complaint. The class period alleged is
1994 through the date of class certification, which has not yet occurred. The complaints seek
treble damages, injunctive and declaratory relief, and attorneys fees. Pursuant to an order of
the Judicial Panel on Multidistrict Litigation, it is likely that the venue for all of these
actions will be the United States District Court for the District of New Jersey. Putative class
actions also have been filed in the Circuit Court for Cook County, Illinois, Chancery Division and
in the Circuit Court for Seminole County, Florida, Civil Division, on behalf of a class of all
persons who purchased insurance from defendant insurers, including Hartford entities. These state
court actions assert unjust enrichment claims and violations of state unfair trade practices acts
arising from the conduct alleged in the NYAG Complaint and seek remedies including restitution of
premiums, and, in the Illinois action, imposition of a constructive trust, and declaratory and
injunctive relief. The class period alleged is 1994 through the present. The Hartford has removed
both actions to federal court, but the plaintiffs have moved to remand the actions to the
respective state courts. The plaintiffs' motion to remand the
Illinois action was denied; the remand motion in the Florida action
has not been decided. The Hartford disputes the allegations in all of these actions and intends
to defend the actions vigorously. 14




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##### Table of Contents



Additional complaints may be filed against The Hartford in various courts alleging claims under
federal or state law arising from the conduct alleged in the NYAG Complaint. The Hartfords
ultimate liability, if any, in the pending and possible future suits is highly uncertain and
subject to contingencies that are not yet known, such as how many suits will be filed, in which
courts they will be lodged, what claims they will assert, what the outcome of investigations by the
New York Attorney Generals Office and other regulatory agencies will be, the success of defenses
that The Hartford may assert, and the amount of recoverable damages if liability is established.
In the opinion of management, it is possible that an adverse outcome in one or more of these suits
could have a material adverse effect on the Companys consolidated results of operations or cash
flows in particular quarterly or annual periods. Regulatory Developments In June 2004, The Hartford received a subpoena from the New York Attorney Generals Office in
connection with its inquiry into compensation arrangements between brokers and carriers. In
mid-September 2004 and subsequently, The Hartford has received additional subpoenas from the New
York Attorney Generals Office, which relate more specifically to possible anti-competitive
activity among brokers and insurers. Since the beginning of October 2004, The Hartford has
received subpoenas or other information requests from Attorneys General and regulatory agencies in
more than a dozen jurisdictions regarding broker compensation and possible anti-competitive
activity. The Hartford may receive additional subpoenas and other information requests from
Attorneys General or other regulatory agencies regarding similar issues. The Hartford also has
received a subpoena from the New York Attorney Generals Office requesting information related to
The Hartfords underwriting practices with respect to legal professional liability insurance. In
addition, The Hartford has received a request for information from the New York Attorney Generals
Office concerning The Hartfords compensation arrangements in connection with the administration of
workers compensation plans. The Hartford intends to continue cooperating fully with these
investigations, and is conducting an internal review, with the assistance of outside counsel,
regarding broker compensation issues in its Property & Casualty and Group Benefits operations. On October 14, 2004, the New York Attorney Generals Office filed a civil complaint against Marsh &
McLennan Companies, Inc., and Marsh, Inc. (collectively, Marsh). The complaint alleges, among
other things, that certain insurance companies, including The Hartford, participated with Marsh in
arrangements to submit inflated bids for business insurance and paid contingent commissions to
ensure that Marsh would direct business to them. The Hartford was not joined as a defendant in the
action, which has since settled. Although no regulatory action has been initiated against The
Hartford in connection with the allegations described in the civil complaint, it is possible that
the New York Attorney Generals Office or one or more other regulatory agencies may pursue action
against The Hartford or one or more of its employees in the future. The potential timing of any
such action is difficult to predict. If such an action is brought, it could have a material
adverse effect on The Hartford. On October 29, 2004, the New York Attorney Generals Office informed The Hartford that the Attorney
General is conducting an investigation with respect to the timing of the previously disclosed sale
by Thomas Marra, a director and executive officer of The Hartford, of 217,074 shares of The
Hartfords common stock on September 21, 2004. The sale occurred shortly after the issuance of two
additional subpoenas dated September 17, 2004 by the New York Attorney Generals Office. The
Hartford has engaged outside counsel to review the circumstances related to the transaction and is
fully cooperating with the New York Attorney Generals Office. On the basis of the review, The
Hartford has determined that Mr. Marra complied with The Hartfords applicable internal trading
procedures and has found no indication that Mr. Marra was aware of the additional subpoenas at the
time of the sale. There continues to be significant federal and state regulatory activity relating to financial
services companies, particularly mutual funds companies. These regulatory inquiries have focused
on a number of mutual fund issues, including market timing and late trading, revenue sharing and
directed brokerage, fees, transfer agents and other fund service providers, and other mutual-fund
related issues. The Hartford has received requests for information and subpoenas from the SEC,
subpoenas from the New York Attorney Generals Office, a subpoena from the Connecticut Attorney
Generals Office, requests for information from the Connecticut Securities and Investments Division
of the Department of Banking, and requests for information from the New York Department of
Insurance, in each case requesting documentation and other information regarding various mutual
fund regulatory issues. The SECs Division of Enforcement and the New York Attorney Generals Office are investigating
aspects of The Hartfords variable annuity and mutual fund operations related to market timing.
The Hartfords mutual funds are available for purchase by the separate accounts of different
variable universal life insurance policies, variable annuity products, and funding agreements, and
they are offered directly to certain qualified retirement plans. Although existing products
contain transfer restrictions between subaccounts, some products, particularly older variable
annuity products, do not contain restrictions on the frequency of transfers. In addition, as a
result of the settlement of litigation against The Hartford with respect to certain owners of older
variable annuity products, The Hartfords ability to restrict transfers by these owners is limited.
In February 2005, The Hartford agreed in principle with the Boards of Directors of the mutual
funds to indemnify the mutual funds for any material harm caused to the funds from frequent trading
by these owners. The specific terms of the indemnification have not been determined. The SECs Division of Enforcement also is investigating aspects of The Hartfords variable annuity
and mutual fund operations related to directed brokerage and revenue sharing. The Hartford
discontinued the use of directed brokerage in recognition of mutual fund sales in late 2003. The Hartford also has received subpoenas from the New York Attorney
Generals Office and the Connecticut Attorney 15




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##### Table of Contents



Generals Office requesting information related to The Hartfords group annuity products. The Hartford continues to cooperate fully with the SEC, the
New York Attorney Generals Office and other regulatory agencies. To date, neither the SECs and New York Attorney Generals market timing investigation nor the
SECs directed brokerage investigation has resulted in either regulator initiating any formal
action against The Hartford. However, The Hartford believes that the SEC and the New York Attorney
Generals Office are likely to take some action against The Hartford at the conclusion of the
respective investigations. The potential timing of any such action is difficult to predict. Based
on The Hartfords discussions with the SEC and the New York Attorney Generals Office and its own
analysis, the Company recorded a charge of $66 to establish a reserve for these matters during the
first quarter of 2005. This reserve is an estimate; in view of the uncertainties regarding the
timing and outcome of any payments relating to these types of regulatory investigations, as well as
the tax-deductibility, if any, and any potential deferred acquisition cost effects (though no
deferred acquisition cost effects are included in this estimate) that may be applicable, it is
possible that the ultimate cost to the Company of these matters may exceed or be below the reserve
amount, perhaps by a significant amount. 7. Transactions with Affiliates For a description of transactions with affiliates, see Note 18 of Notes to Consolidated
Financial Statements included in Hartford Lifes 2004 Form 10-K Annual Report. 16




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Dollar amounts in millions, unless otherwise stated) Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
addresses the financial condition of Hartford Life, Inc. and its subsidiaries (Hartford Life or
the Company) as of March 31, 2005, compared with December 31, 2004, and its results of
operations for the three months ended March 31, 2005 compared with the equivalent period in 2004.
This discussion should be read in conjunction with the MD&A in Hartford Lifes 2004 Form 10-K
Annual Report. Certain of the statements contained herein are forward-looking statements. These forward-looking
statements are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic, competitive and
legislative developments. These forward-looking statements are subject to change and uncertainty
which are, in many instances, beyond the Companys control and have been made based upon
managements expectations and beliefs concerning future developments and their potential effect
upon the Company. There can be no assurance that future developments will be in accordance with
managements expectations or that the effect of future developments on the Company will be those
anticipated by management. Actual results could differ materially from those expected by the
Company, depending on the outcome of various factors. These factors include: the possible
occurrence of terrorist attacks; the response of reinsurance companies under reinsurance contracts
and the availability, pricing and adequacy of reinsurance to protect the Company against losses;
changes in the stock markets, interest rates or other financial markets, including the potential
effect on the Companys statutory capital levels; the inability to effectively mitigate the impact
of equity market volatility on the Companys financial position and results of operations arising
from obligations under annuity product guarantees; the difficulty in predicting the Companys
potential exposure arising out of regulatory proceedings or private claims relating to incentive
compensation or payments made to brokers or other producers and alleged anti-competitive conduct;
the uncertain effect on the Company of regulatory and market-driven changes in practices relating
to the payment of incentive compensation to brokers and other producers, including changes that
have been announced and those which may occur in the future; the possibility of more unfavorable
loss experience than anticipated; stronger than anticipated competitive activity; unfavorable
judicial or legislative developments, including the possibility that the Terrorism Risk Insurance
Act of 2002 is not extended beyond 2005; the potential effect of domestic and foreign regulatory
developments, including those which could increase the Companys business costs and required
capital levels; the possibility of general economic and business conditions that are less
favorable than anticipated; the Companys ability to distribute its products through distribution
channels, both current and future; the uncertain effects of emerging claim and coverage issues;
the effect of assessments and other surcharges for guaranty funds; a downgrade in the Companys
claims-paying, financial strength or credit ratings; the ability of the Companys subsidiaries to
pay dividends to the Company; and other factors described in such forward-looking statements.  INDEX
 Overview
    
    
    18Critical Accounting Estimates
    
    
    22Consolidated Results of Operations  Operating Summary
    
    
    24Retail Products Group
    
    
    25Institutional Solutions Group
    
    
    26Individual Life
    
    
    27Group Benefits
    
    
    28Investments
    
    
    28Investment Credit Risk
    
    
    30Capital Markets Risk Management
    
    
    33Capital Resources and Liquidity
    
    
    33Accounting Standards
    
    
    34
 17




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##### Table of Contents



OVERVIEW
 The Company has four reportable operating segments: Retail Products Group, Institutional
Solutions Group, Individual Life and Group Benefits. The Company provides investment and
retirement products such as variable and fixed annuities, mutual funds and retirement plan services
and other institutional investment products; structured settlements; private placement life
insurance; individual life insurance products including variable universal life, universal life,
interest sensitive whole life and term life; and group benefit products, such as group life and
group disability insurance. The Company derives its revenues principally from: (a) fee income, including asset management
fees, on separate account and mutual fund assets and mortality and expense fees, as well as cost of
insurance charges; (b) net investment income on general account assets; (c) fully insured premiums;
and (d) certain other fees. Asset management fees and mortality and expense fees are primarily
generated from separate account assets, which are deposited with the Company through the sale of
variable annuity and variable universal life products and from mutual funds. Cost of insurance
charges are assessed on the net amount at risk for investment-oriented life insurance products.
Premium revenues are derived primarily from the sale of group life, group disability and individual
term insurance products. The Companys expenses essentially consist of interest credited to policyholders on general account
liabilities, insurance benefits provided, amortization of the deferred policy acquisition costs,
expenses related to the selling and servicing the various products offered by the Company,
dividends to policyholders, and other general business expenses. The Companys profitability in its variable annuity, mutual fund and to a lesser extent, variable
universal life businesses depends largely on the amount of the contract holder account value or
assets under management on which it earns fees and the level of fees charged. Changes in account
value or assets under management are driven by two main factors: net flows, which measure the
success of the Companys asset gathering and retention efforts and the market return of the funds,
which is heavily influenced by the return on the equity markets. Net flows are comprised of new
sales and other deposits less surrenders, death benefits, policy charges and annuitizations of
investment type contracts, for instance, variable annuity contracts. In the mutual fund business,
net flows are known as net sales. Net sales are comprised of new sales less redemptions of mutual
fund customers. The Company uses the average daily value of the S&P 500 Index as an indicator for
evaluating market returns of the underlying account portfolios in the United States. Relative
profitability of variable products is highly correlated to the growth in account values or assets
under management since these products generally earn fee income on a daily basis. Thus, a
prolonged downturn in the financial markets could reduce revenues and potentially raise the
possibility of a charge against deferred policy acquisition costs. The profitability of the Companys fixed annuities and other spread based products depends largely
on its ability to earn target spreads between earned investment rates on its general account assets
and interest credited to policyholders. Profitability is also influenced by operating expense
management including the benefits of economies of scale in the administration of its United States
variable annuity businesses in particular. In addition, the size and persistency of gross profits
from these businesses is an important driver of earnings as it affects the rate of amortization of
the deferred policy acquisition costs. The Companys profitability in its individual life insurance and group benefits businesses depends
largely on the size of its in force block, the adequacy of product pricing and underwriting
discipline, actual mortality and morbidity experience, and the efficiency of its claims and expense
management. Performance Measures Fee Income Fee income is largely driven from amounts collected as a result of contractually defined
percentages of assets under management on investment type contracts. These fees are generally
collected on a daily basis from the contract holders account. For individual life insurance
products, fees are contractually defined percentages based on levels of insurance, age, premiums
and deposits collected and contract holder account value. Life insurance fees are generally
collected on a monthly basis. Therefore, the growth in assets under management either through
positive net flows or net sales and favorable equity market performance will have a favorable
impact on fee income. Conversely, negative net flows or net sales and unfavorable equity market
performance will reduce fee income generated from investment type contracts. 18




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##### Table of Contents



As of and For theThree Months EndedMarch 31,Product/Key Indicator Information
    
    2005
    
    
    2004United States Variable AnnuitiesAccount value, beginning of period
    
    $
    99,617
    
    
    $
    86,501Net flows
    
    
    412
    
    
    
    2,201Change in market value
    
    
    (1,958
    )
    
    
    1,684Account value, end of period
    
    $
    98,071
    
    
    $
    90,386Retail Mutual FundsAssets under management, beginning of period
    
    $
    25,240
    
    
    $
    20,301Net sales
    
    
    381
    
    
    
    1,055Change in market value and other
    
    
    (672
    )
    
    
    532Account value, end of period
    
    $
    24,949
    
    
    $
    21,888Individual Life InsuranceVariable universal life account value, end of period
    
    $
    5,249
    
    
    $
    4,797Total life insurance inforce
    
    
    141,739
    
    
    
    132,482S&P 500 IndexPeriod end closing value
    
    
    1,181
    
    
    
    1,126Daily average value
    
    
    1,192
    
    
    
    1,132Japan AnnuitiesAccount value, end of period
    
    $
    17,615
    
    
    $
    8,119
  
    The increase in assets under management and average account values can be
attributed to market appreciation and net flows over the past four quarters, with most of
the growth occurring in the fourth quarter of 2004.
    Net flows and net sales for the U.S. variable annuity and retail mutual fund businesses,
respectively, have slowed due to lower sales levels and higher surrender levels.
    The change in the market value will be volatile based on market conditions.
    Japan annuity account values continue to grow as a result of new sales, which in the
first quarter of 2005 were higher than the U.S. sales levels. Net Investment Income and Interest Credited Certain investment type contracts such as fixed annuities and other spread-based contracts generate
deposits that the Company collects and invests to earn investment income. In addition, insurance
type contracts such as those sold by the Group Benefits segment collect premiums (discussed below)
for protection from losses specified in the particular insurance contract. These deposits and
premiums together comprise the majority of the assets of the general account that are invested to
generate investment income for the Company. The investment type contracts use this investment
income to credit the contract holder an amount of interest specified in the respective contract.
As discussed in the overview, the amount of investment income earned in excess of the interest
credited to the contract holder is the spread income earned by the Company. For insurance type
contracts, net investment income earned during the time that premiums are invested prior to paying
claims and expenses supports the profitability of these products.  
    Net investment income and interested credited on general account assets in Other
decreased due to the mark to market effects of trading account securities supporting the
Japanese variable annuity business. Premiums As discussed above, traditional insurance type products collect premiums from policyholders in
exchange for financial protection of the policyholder from a specified insurable loss, such as
death or disability. These premiums together with net investment income earned from the overall
investment strategy are used to pay the contractual obligations under these insurance contracts.
Sales impact premium growth and can increase or decrease in a given year based on a number of
factors, including but not limited to, customer demand for the Companys product offerings, pricing
competition, distribution channels and the Companys reputation and ratings. A majority of sales
correspond with the open enrollment periods of employers benefit plans, typically January 1 or
July 1. 19




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##### Table of Contents



Three Months EndedMarch 31,2005
    
    
    2004Group Benefits SegmentEarned premiums and other consideration
    
    $
    948
    
    
    $
    915Fully insured ongoing sales (excluding buyouts)
    
    
    376
    
    
    
    341
  
    Earned premiums for the first quarter of 2005 included $25 in buyout premiums compared
to $0 in the prior year comparable quarter Expenses There are three major categories for expenses. The first category of expenses is benefits and
claims. These include the costs of mortality and morbidity in the Group Benefits segment and
mortality in the individual life businesses, as well as other contract holder benefits to
policyholders. In addition, traditional insurance type products generally use a loss ratio which
is expressed as the amount of benefits incurred during a particular period divided by earned
premiums and other considerations, as a key indicator of underwriting performance. The Group
Benefits segment occasionally buys a block of claims for a stated premium amount. The Company
excludes this buyout from the loss ratio used for evaluating the underwriting results of the
ongoing business as buyouts may distort the loss ratio. The second major category is insurance operating costs and expenses, which is commonly expressed as
a percentage of revenue. The third category is the amortization of deferred policy acquisition
costs and the present value of future profits, which is typically expressed as a percentage of
pretax income before the cost of this amortization. The individual annuity business within the
Retail Products Group segment accounts for the majority of the amortization of deferred policy
acquisition costs and present value of future profits for the Company. Three Months EndedMarch 31,2005
    
    
    2004Retail Products GroupInsurance expenses, net of deferrals
    
    $
    206
    
    
    $
    175Expense ratio, annualized (individual annuity)
    
    17.8
    bps
    
    18.5
    bpsDAC amortization ratio (individual annuity)
    
    
    50.0
    %
    
    
    51.4
    %Individual LifeDeath benefits
    
    $
    66
    
    
    $
    67Insurance expenses, net of deferrals
    
    $
    40
    
    
    $
    40Group BenefitsTotal benefits and claims
    
    $
    722
    
    
    $
    684Loss ratio (excluding buyout premiums)
    
    
    75.5
    %
    
    
    74.8
    %Insurance expenses, net of deferrals and amortization
    
    $
    244
    
    
    $
    257Expense ratio, annualized (excluding buyout premiums)
    
    
    26.4
    %
    
    
    28.1
    %
  
    Retail Products Groups expense ratios continue to benefit from the Companys
economies of scale in the variable annuity business.
    Group Benefits total benefits and claims include reserves related to the first quarter
2005 premium buyout.
    The Group Benefits segment has a block of financial institution business that is
experience rated. Under the terms of this business the loss experience will inversely
affect the commission expenses incurred. Profitability Management evaluates the rates of return various businesses can provide as a way of determining
where additional capital is invested to increase net income and shareholder returns. Specifically,
because of the importance of its individual annuity products, the Company uses the return on assets
for the individual annuity business for evaluating profitability. In Group Benefits, after tax
margin is a key indicator of overall profitability. Three Months EndedMarch 31,2005
    
    
    2004RatiosRetail Products GroupIndividual annuity return on assets
    
    50.2
    bps
    36.9
    bpsGroup BenefitsAfter-tax margin
    
    
    6.4
    %
    
    
    5.1
    %
 20




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##### Table of Contents




    Return on assets increased from prior year due to higher income as a result of market
appreciation and growth in the assets under management.
    The improvement in the Group Benefits after-tax margin was primarily due to higher net
investment income and a favorable expense ratio compared to 2004. Regulatory Developments In June 2004, The Hartford received a subpoena from the New York Attorney Generals Office in
connection with its inquiry into compensation arrangements between brokers and carriers. In
mid-September 2004 and subsequently, The Hartford has received additional subpoenas from the New
York Attorney Generals Office, which relate more specifically to possible anti-competitive
activity among brokers and insurers. Since the beginning of October 2004, The Hartford has
received subpoenas or other information requests from Attorneys General and regulatory agencies in
more than a dozen jurisdictions regarding broker compensation and possible anti-competitive
activity. The Hartford may receive additional subpoenas and other information requests from
Attorneys General or other regulatory agencies regarding similar issues. The Hartford also has
received a subpoena from the New York Attorney Generals Office requesting information related to
The Hartfords underwriting practices with respect to legal professional liability insurance. In
addition, The Hartford has received a request for information from the New York Attorney Generals
Office concerning The Hartfords compensation arrangements in connection with the administration of
workers compensation plans. The Hartford intends to continue cooperating fully with these
investigations, and is conducting an internal review, with the assistance of outside counsel,
regarding broker compensation issues in its Property & Casualty and Group Benefits operations. On October 14, 2004, the New York Attorney Generals Office filed a civil complaint against Marsh &
McLennan Companies, Inc., and Marsh, Inc. (collectively, Marsh). The complaint alleges, among
other things, that certain insurance companies, including The Hartford, participated with Marsh in
arrangements to submit inflated bids for business insurance and paid contingent commissions to
ensure that Marsh would direct business to them. The Hartford was not joined as a defendant in the
action, which has since settled. Although no regulatory action has been initiated against The
Hartford in connection with the allegations described in the civil complaint, it is possible that
the New York Attorney Generals Office or one or more other regulatory agencies may pursue action
against The Hartford or one or more of its employees in the future. The potential timing of any
such action is difficult to predict. If such an action is brought, it could have a material
adverse effect on The Hartford. On October 29, 2004, the New York Attorney Generals Office informed The Hartford that the Attorney
General is conducting an investigation with respect to the timing of the previously disclosed sale
by Thomas Marra, a director and executive officer of The Hartford, of 217,074 shares of The
Hartfords common stock on September 21, 2004. The sale occurred shortly after the issuance of two
additional subpoenas dated September 17, 2004 by the New York Attorney Generals Office. The
Hartford has engaged outside counsel to review the circumstances related to the transaction and is
fully cooperating with the New York Attorney Generals Office. On the basis of the review, The
Hartford has determined that Mr. Marra complied with The Hartfords applicable internal trading
procedures and has found no indication that Mr. Marra was aware of the additional subpoenas at the
time of the sale. There continues to be significant federal and state regulatory activity relating to financial
services companies, particularly mutual funds companies. These regulatory inquiries have focused
on a number of mutual fund issues, including market timing and late trading, revenue sharing and
directed brokerage, fees, transfer agents and other fund service providers, and other mutual-fund
related issues. The Hartford has received requests for information and subpoenas from the SEC,
subpoenas from the New York Attorney Generals Office, a subpoena from the Connecticut Attorney
Generals Office, requests for information from the Connecticut Securities and Investments Division
of the Department of Banking, and requests for information from the New York Department of
Insurance, in each case requesting documentation and other information regarding various mutual
fund regulatory issues. The SECs Division of Enforcement and the New York Attorney Generals Office are investigating
aspects of The Hartfords variable annuity and mutual fund operations related to market timing.
The Hartfords mutual funds are available for purchase by the separate accounts of different
variable universal life insurance policies, variable annuity products, and funding agreements, and
they are offered directly to certain qualified retirement plans. Although existing products
contain transfer restrictions between subaccounts, some products, particularly older variable
annuity products, do not contain restrictions on the frequency of transfers. In addition, as a
result of the settlement of litigation against The Hartford with respect to certain owners of older
variable annuity products, The Hartfords ability to restrict transfers by these owners is limited.
In February 2005, The Hartford agreed in principle with the Boards of Directors of the mutual
funds to indemnify the mutual funds for any material harm caused to the funds from frequent trading
by these owners. The specific terms of the indemnification have not been determined. The SECs Division of Enforcement also is investigating aspects of The Hartfords variable annuity
and mutual fund operations related to directed brokerage and revenue sharing. The Hartford
discontinued the use of directed brokerage in recognition of mutual fund sales in late 2003. The
Hartford also has received subpoenas from the New York Attorney Generals Office and the
Connecticut Attorney Generals Office requesting information related to The Hartfords group annuity products.
The Hartford continues to cooperate fully with the SEC, the New York Attorney Generals Office and
other regulatory agencies. To date, neither the SECs and New York Attorney Generals market timing investigation nor the
SECs directed brokerage 21




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##### Table of Contents



investigation has resulted in either regulator initiating any formal
action against The Hartford. However, The Hartford believes that the SEC and the New York Attorney
Generals Office are likely to take some action against The Hartford at the conclusion of the
respective investigations. The potential timing of any such action is difficult to predict. Based
on The Hartfords discussions with the SEC and the New York Attorney Generals Office and its own
analysis, the Company recorded a charge of $66 to establish a reserve for these matters during the
first quarter of 2005. This reserve is an estimate; in view of the uncertainties regarding the
timing and outcome of any payments relating to these types of regulatory investigations, as well as
the tax-deductibility, if any, and any potential deferred acquisition cost effects (though no
deferred acquisition cost effects are included in this estimate) that may be applicable, it is
possible that the ultimate cost to the Company of these matters may exceed or be below the reserve
amount, perhaps by a significant amount. Broker Compensation As The Hartford has disclosed previously, the Company pays brokers and independent agents
commissions and other forms of incentive compensation in connection with the sale of many of the
Companys insurance products. Since the New York Attorney Generals Office filed a civil complaint
against Marsh & McLennan Companies, Inc. and Marsh, Inc. (collectively, Marsh) on October 14,
2004, several of the largest national insurance brokers, including Marsh, Aon Corporation and
Willis Group Holdings Limited, have announced that they have discontinued the use of contingent
compensation arrangements. Other industry participants may make similar, or different,
determinations in the future. In addition, legal, legislative, regulatory, business or other
developments may require changes to industry practices relating to incentive compensation. At this
time, it is not possible to predict the effect of these announced or potential changes on the
Companys business or distribution strategies .  CRITICAL ACOUNTING ESTIMATES
 The preparation of financial statements, in conformity with accounting principles generally
accepted in the United States of America (GAAP), requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. The Company has identified the following estimates as critical in that they involve a higher degree
of judgment and are subject to a significant degree of variability; insurance reserves; deferred
policy acquisition costs and present value of future profits; the valuation of investments and
derivative instruments and the evaluation of other-than-temporary impairments; and contingencies.
In developing these estimates management makes subjective and complex judgments that are inherently
uncertain and subject to material change as facts and circumstances develop. Although variability
is inherent in these estimates, management believes the amounts provided are appropriate based upon
the facts available upon compilation of the financial statements. For a discussion of each of these
critical accounting estimates, see Hartford Lifes 2004 Form 
10-K Annual Report. Deferred Policy Acquisition Costs and Present Value of Future Profits Policy acquisition costs include commissions and certain other expenses that vary with and are
primarily associated with acquiring business. Present value of future profits is an intangible
asset recorded upon applying purchase accounting in an acquisition of a life insurance company.
Deferred policy acquisition costs and the present value of future profits intangible asset are
amortized in the same way. Both are amortized over the estimated life of the contracts acquired,
usually 20 years. Within the following discussion, deferred policy acquisition costs and the
present value of future profits intangible asset will be referred to as DAC. At March 31, 2005
and December 31, 2004, the carrying value of the Companys DAC was $7.9 billion and $7.4 billion,
respectively. For statutory accounting purposes, such costs are expensed as incurred. DAC related to traditional policies are amortized over the premium-paying period in proportion
to the present value of annual expected premium income. DAC related to investment contracts and
universal life-type contracts are deferred and amortized using the retrospective deposit method.
Under the retrospective deposit method, acquisition costs are amortized in proportion to the
present value of estimated gross profits (EGPs), arising principally from projected investment,
mortality and expense margins and surrender charges. The attributable portion of the DAC
amortization is allocated to realized gains and losses on investments. The DAC balance is also
adjusted through other comprehensive income by an amount that represents the amortization of
deferred policy acquisition costs that would have been required as a charge or credit to operations
had unrealized gains and losses on investments been realized. Actual gross profits that vary from
managements estimates result in increases or decreases in the rate of amortization, commonly
referred to as a true-up, which are recorded in the current period. The Company regularly evaluates its estimates of future gross profits combined with actual gross
profits earned to date to determine if actual experience or other evidence suggests that those earlier estimates of future gross profits
should be revised. In the event that the Company were to revise its EGPs, the cumulative DAC
amortization would be adjusted to reflect such revised EGPs in the period the revision was
determined to be necessary. Several assumptions considered to be significant in the development of
EGPs include separate account fund performance, surrender and lapse rates, estimated interest
spread and estimated mortality. The separate account fund performance assumption is critical to
the development of the EGPs related to the Companys variable annuity and to a lesser extent,
variable universal life insurance businesses. The average annual long-term rate of assumed
separate account fund performance (before 22




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##### Table of Contents



mortality and expense charges) used in estimating gross profits for the variable annuity and variable universal life business was 9% for the three months
ended March 31, 2005 and 2004. For other products including fixed annuities and other universal
life-type contracts, the average assumed investment yield ranged from 5.7% to 7.9% for the three
months ended March 31, 2005 and 2004. The Company had developed models to evaluate its DAC asset, which allowed it to run a large number
of stochastically determined scenarios of separate account fund performance. These scenarios were
then utilized to calculate a statistically significant range of reasonable estimates of EGPs. This
range was then compared to the present value of EGPs currently utilized in the DAC amortization
model. As of March 31, 2005, the present value of the EGPs utilized in the DAC amortization model
fall within a reasonable range of statistically calculated present value of EGPs. As a result, the
Company does not believe there is sufficient evidence to suggest that a revision to the EGPs (and
therefore, a revision to the DAC) as of March 31, 2005 is necessary; however, if in the future the
EGPs utilized in the DAC amortization model were to fall outside of the margin of the reasonable
range of statistically calculated EGPs, a revision could be necessary. Furthermore, the Company
has estimated that the present value of the EGPs is likely to remain within a reasonable range if
overall separate account returns decline by 18% or less over the next twelve months, and if certain
other assumptions that are implicit in the computations of the EGPs are achieved. Additionally, the Company continues to perform analyses with respect to the potential impact of a
revision to future EGPs. If such a revision to EGPs were deemed necessary, the Company would
adjust, as appropriate, all of its assumptions for products accounted for in accordance with
Statement of Financial Accounting Standards (SFAS) No. 97, Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments, and reproject its future EGPs based on current account values at the end of the
quarter in which a revision is deemed to be necessary. To illustrate the effects of this process,
assume the Company had concluded that a revision of the Companys EGPs was required at March 31,
2005. If the Company assumed a 9% average long-term rate of growth from March 31, 2005 forward
along with other appropriate assumption changes in determining the revised EGPs, the Company
estimates the cumulative increase to amortization would be approximately $60-$65, after-tax. If,
instead, the Company were to assume a long-term growth rate of 8% in determining the revised EGPs,
the adjustment would be approximately $85-$95, after-tax. Any such adjustment would not affect
statutory income or surplus, due to the prescribed accounting for such amounts that is discussed
above. Aside from absolute levels and timing of market performance assumptions, additional factors that
will influence this determination include the degree of volatility in separate account fund
performance and shifts in asset allocation within the separate account made by policyholders. The
overall return generated by the separate account is dependent on several factors, including the
relative mix of the underlying sub-accounts among bond funds and equity funds as well as equity
sector weightings. The Companys overall separate account fund performance has been reasonably
correlated to the overall performance of the S&P 500 Index (which closed at 1,181 on March 31,
2005), although no assurance can be provided that this correlation will continue in the future. The overall recoverability of the DAC asset is dependent on the future profitability of the
business. The Company tests the aggregate recoverability of the DAC asset by comparing the amounts
deferred to the present value of total EGPs. In addition, the Company routinely stress tests its
DAC asset for recoverability against severe declines in its separate account assets, which could
occur if the equity markets experienced another significant sell-off, as the majority of
policyholders funds in the separate accounts is invested in the equity market. As of March 31,
2005, the Company believed variable annuity separate account assets could fall by at least 35%
before portions of its DAC asset would be unrecoverable. Other Critical Accounting Estimates There have been no material changes to the Companys other critical accounting estimates since the
filing of the Companys 2004 Form 10-K Annual Report. 23




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##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
 Operating Summary Three Months EndedMarch 31,2005
    
    
    2004
    
    
    ChangeFee income
    
    $
    950
    
    
    $
    825
    
    
    
    15
    %Earned premiums
    
    
    999
    
    
    
    995
    
    
    
    Net investment income [1]
    
    
    950
    
    
    
    1,162
    
    
    
    (18
    %)Net realized capital gains
    
    
    81
    
    
    
    76
    
    
    
    7
    %Total revenues
    
    
    2,980
    
    
    
    3,058
    
    
    
    (3
    %)Benefits, claims and claim adjustment expenses [1]
    
    
    1,739
    
    
    
    1,877
    
    
    
    (7
    %)Insurance operating costs and other expenses
    
    
    559
    
    
    
    514
    
    
    
    9
    %Amortization of deferred policy acquisition costs and
present value
of future profits
    
    
    280
    
    
    
    233
    
    
    
    20
    %Interest expense
    
    
    20
    
    
    
    35
    
    
    
    (43
    %)Dividends to policyholders
    
    
    18
    
    
    
    13
    
    
    
    38
    %Total benefits, claims and expenses
    
    
    2,616
    
    
    
    2,672
    
    
    
    (2
    %)Income before income taxes and cumulative effect of
accounting change
    
    
    364
    
    
    
    386
    
    
    
    (6
    %)Income tax expense
    
    
    86
    
    
    
    105
    
    
    
    (18
    %)Income before cumulative effect of accounting change
    
    
    278
    
    
    
    281
    
    
    
    (1
    %)Cumulative effect of accounting change, net of tax [2]
    
    
    
    
    
    
    (23
    )
    
    
    100
    %Net income
    
    $
    278
    
    
    $
    258
    
    
    
    8
    %
   [1]
    
    Included impact of mark to market effects of trading securities supporting the Japanese
variable annuity business, which are classified in net investment income and corresponding
amounts credited to policyholders within benefits, claims and claim adjustment expenses.[2]
    
    For the three months ended March 31, 2004, represents the cumulative impact of the
Companys adoption of SOP 03-1. The Company defines NM as not meaningful for increases or decreases greater than 200%, or changes
from a net gain to a net loss position, or vice versa. The Companys net income increased due primarily to business growth in all of it segments. Net
income in the Retail segment increased 46%, principally driven by higher fee income from growth in
the variable annuity and mutual fund businesses as a result of increasing assets under management.
The Institutional segment contributed higher earnings due to first quarter 2005 surrender activity
in the leveraged block of the private placement life insurance business, as well as favorable
mortality experience and higher investment spreads in the institutional business. Net income in
the Group Benefits segment increased primarily due to higher net investment income and a favorable
expense ratio compared to 2004. Additionally, net income was higher for Individual Life and the
international operations. The increase in Individual Life earnings was primarily driven by growth
in account values and life insurance inforce. Net income for the international operations, which
is included in the other category, increased over the prior year primarily driven by the increase
in assets under management of the Japan annuity business and net after-tax realized gains. Japans assets under management have grown to $17.6
billion at March 31, 2005 from $8.1 billion at March 31, 2004. The Company recorded a charge of
$66, in Other, to establish a reserve for regulatory matters during the first quarter of 2005, which
partially offset the increases in net income. 24




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##### Table of Contents



Retail Products Group
 Operating Summary Three Months EndedMarch 31,2005
    
    
    2004
    
    
    ChangeFee income
    
    $
    580
    
    
    $
    506
    
    
    
    15
    %Earned premiums
    
    
    (14
    )
    
    
    (14
    )
    
    
    Net investment income
    
    
    265
    
    
    
    272
    
    
    
    (3
    %)Net realized capital gains (losses)
    
    
    6
    
    
    
    (1
    )
    
    NMTotal revenues
    
    
    837
    
    
    
    763
    
    
    
    10
    %Benefits, claims and claim adjustment expenses
    
    
    247
    
    
    
    257
    
    
    
    (4
    %)Insurance operating costs and other expenses
    
    
    206
    
    
    
    175
    
    
    
    18
    %Amortization of deferred policy acquisition costs and
present value
of future profits
    
    
    187
    
    
    
    167
    
    
    
    12
    %Total benefits, claims and expenses
    
    
    640
    
    
    
    599
    
    
    
    7
    %Income before income taxes and cumulative effect of
accounting change
    
    
    197
    
    
    
    164
    
    
    
    20
    %Income tax expense
    
    
    41
    
    
    
    38
    
    
    
    8
    %Income before cumulative effect of accounting change
    
    
    156
    
    
    
    126
    
    
    
    24
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    (19
    )
    
    
    100
    %Net income
    
    $
    156
    
    
    $
    107
    
    
    
    46
    %Assets Under ManagementIndividual variable annuity account values
    
    $
    98,071
    
    
    $
    90,386
    
    
    
    9
    %Individual fixed annuity and other account values
    
    
    10,946
    
    
    
    11,312
    
    
    
    (3
    %)Other retail products account values
    
    
    7,280
    
    
    
    5,230
    
    
    
    39
    %Total account values [2]
    
    
    116,297
    
    
    
    106,928
    
    
    
    9
    %Retail mutual fund assets under management
    
    
    24,949
    
    
    
    21,888
    
    
    
    14
    %Other mutual fund assets under management
    
    
    1,461
    
    
    
    1,089
    
    
    
    34
    %Total mutual fund assets under management
    
    
    26,410
    
    
    
    22,977
    
    
    
    15
    %Total assets under management
    
    $
    142,707
    
    
    $
    129,905
    
    
    
    10
    %
   [1]
    
    For the three months ended March 31, 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. Net income in the Retail segment increased, principally driven by higher fee income from
growth in the assets under management in virtually all businesses of the segment and the cumulative
effect of accounting change from the Companys adoption of SOP 03-1 recognized in the first quarter
of 2004. Fee income generated by the variable annuity operation increased as average account
values were higher in the first quarter of 2005 compared to the prior period. The increase in
average account values can be attributed to market appreciation of $4.0 billion over the past four
quarters, with most of the growth occurring in the fourth quarter of 2004, and approximately $3.7
billion of net flows over the past four quarters. Another contributing factor to the increase in
fee income was the mutual fund and 401(k) businesses. Retail mutual fund assets under management
increased 14% principally due to net sales of $1.8 billion and market appreciation of $1.3 billion
during the past four quarters. In addition, 401(k) assets under management grew 37% to $7.1
billion as a result of favorable net flows and market conditions. In addition, the fixed annuity
business contributed higher net income, excluding the cumulative effects of accounting change in
2004, due to improved investment spreads from the market value adjusted (MVA) products. A
consequence of the positive earnings drivers discussed above was higher DAC amortization costs due
to higher gross profits. 25




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##### Table of Contents



Institutional Solutions Group
 Operating Summary Three Months EndedMarch 31,2005
    
    
    2004
    
    
    ChangeFee income
    
    $
    67
    
    
    $
    74
    
    
    
    (9
    %)Earned premiums
    
    
    84
    
    
    
    109
    
    
    
    (23
    %)Net investment income
    
    
    273
    
    
    
    257
    
    
    
    6
    %Net realized capital gains
    
    
    
    
    
    
    2
    
    
    
    (100
    %)Total revenues
    
    
    424
    
    
    
    442
    
    
    
    (4
    %)Benefits, claims and claims adjustment expenses
    
    
    316
    
    
    
    355
    
    
    
    (11
    %)Insurance operating costs and other expenses
    
    
    26
    
    
    
    25
    
    
    
    4
    %Dividends to policyholders
    
    
    17
    
    
    
    12
    
    
    
    42
    %Amortization of deferred policy acquisition costs and
present value
of future profits
    
    
    9
    
    
    
    9
    
    
    
    Total benefits, claims and expenses
    
    
    368
    
    
    
    401
    
    
    
    (8
    %)Income before income taxes and cumulative effect of
accounting change
    
    
    56
    
    
    
    41
    
    
    
    37
    %Income tax expense
    
    
    16
    
    
    
    12
    
    
    
    33
    %Income before cumulative effect of accounting change
    
    
    40
    
    
    
    29
    
    
    
    38
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    (1
    )
    
    
    100
    %Net income
    
    $
    40
    
    
    $
    28
    
    
    
    43
    %Assets Under ManagementInstitutional account values
    
    $
    15,497
    
    
    $
    12,941
    
    
    
    20
    %Governmental account values
    
    
    9,882
    
    
    
    9,243
    
    
    
    7
    %Private Placement Life Insurance account values:Variable Products
    
    
    22,641
    
    
    
    21,305
    
    
    
    6
    %Leveraged COLI
    
    
    1,957
    
    
    
    2,537
    
    
    
    (23
    %)Total Private Placement Life Insurance account values [2]
    
    
    24,598
    
    
    
    23,842
    
    
    
    3
    %Mutual fund assets under management
    
    
    1,553
    
    
    
    1,246
    
    
    
    25
    %Total assets under management
    
    $
    51,530
    
    
    $
    47,272
    
    
    
    9
    %
   [1]
    
    For the three months ended March 31, 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. Net income in the Institutional segment increased, principally driven by higher earnings in the
private placement life insurance business (PPLI) combined with a favorable after-tax mortality
gain of $3 and improved investment spreads in the institutional business. The PPLI business
contributed higher earnings due primarily to surrender activity of $572 in account value associated
with the leveraged COLI product. This increase in surrenders resulted in the recognition of an
after-tax deferred gain of $6 in the first quarter of 2005 that was recognized in benefits, claims
and claim adjustment expenses. In addition, PPLI reported higher earnings due to favorable
mortality experience in the first quarter of 2005. The institutional business earned higher
investment spreads due to the growth in average account values within the institutional businesses
as a result of positive net flows that were largely attributable to increased sales levels for the
funding agreement backed investor notes program. Partially offsetting these increases to net
income was lower fee income due to the leveraged COLI product surrender activity discussed above. 26




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##### Table of Contents



Individual Life
 Operating Summary Three Months EndedMarch 31,2005
    
    
    2004
    
    
    ChangeFee income
    
    $
    195
    
    
    $
    186
    
    
    
    5
    %Earned premiums
    
    
    (8
    )
    
    
    (5
    )
    
    
    (60
    %)Net investment income
    
    
    75
    
    
    
    73
    
    
    
    3
    %Total revenues
    
    
    262
    
    
    
    254
    
    
    
    3
    %Benefits, claims and claim adjustment expenses
    
    
    120
    
    
    
    125
    
    
    
    (4
    %)Insurance operating costs and other expenses
    
    
    40
    
    
    
    40
    
    
    
    Amortization of deferred policy acquisition costs and present
value
of future profits
    
    
    45
    
    
    
    39
    
    
    
    15
    %Total benefits, claims and expenses
    
    
    205
    
    
    
    204
    
    
    
    -Income before income taxes and cumulative effect of
accounting change
    
    
    57
    
    
    
    50
    
    
    
    14
    %Income tax expense
    
    
    18
    
    
    
    16
    
    
    
    13
    %Income before cumulative effect of accounting change
    
    
    39
    
    
    
    34
    
    
    
    15
    %Cumulative effect of accounting change, net of tax [1]
    
    
    
    
    
    
    (1
    )
    
    
    100
    %Net income
    
    $
    39
    
    
    $
    33
    
    
    
    18
    %Account ValuesVariable universal life insurance
    
    $
    5,249
    
    
    $
    4,797
    
    
    
    9
    %Universal life/interest sensitive whole life
    
    
    3,452
    
    
    
    3,297
    
    
    
    5
    %Modified guaranteed life and other
    
    
    728
    
    
    
    742
    
    
    
    (2
    %)Total account values
    
    $
    9,429
    
    
    $
    8,836
    
    
    
    7
    %Life Insurance InforceVariable universal life insurance
    
    $
    69,442
    
    
    $
    67,101
    
    
    
    3
    %Universal life/interest sensitive whole life
    
    
    39,349
    
    
    
    38,532
    
    
    

    2
    %Modified guaranteed life and other
    
    
    32,948
    
    
    
    26,849
    
    
    
    23
    %Total life insurance inforce
    
    $
    141,739
    
    
    $
    132,482
    
    
    

    7
    %
   [1]
    
    For the three months ended March 31, 2004, represents the cumulative impact of the Companys
adoption of SOP 03-1. Net income in the Individual Life segment increased due to revenue growth from 7% increases in both
life insurance inforce and account value, while claims and expenses remained stable. Fee income
included increased cost of insurance charges of $4 and other fee income of $3. These were
primarily driven by business growth and aging in the variable universal, universal, and interest
sensitive whole life insurance inforce. Variable fee income, also a component of fee income, grew
$2 as favorable equity markets and sales added 9% to the variable universal life account value.
Investment income grew with the increase in general account assets from continued sales of general
account products. Partially offsetting these positive earnings drivers was higher amortization of
deferred acquisitions costs as a result of higher gross margins. 27




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##### Table of Contents



Group Benefits
 Operating Summary Three Months EndedMarch 31,2005
    
    
    2004
    
    
    ChangeEarned premiums and other
    
    $
    948
    
    
    $
    915
    
    
    
    4
    %Net investment income
    
    
    98
    
    
    
    89
    
    
    
    10
    %Total revenues
    
    
    1,046
    
    
    
    1,004
    
    
    
    4
    %Benefits, claims and claim adjustment expenses
    
    
    722
    
    
    
    684
    
    
    
    6
    %Insurance operating costs and other expenses
    
    
    237
    
    
    
    252
    
    
    
    (6
    %)Amortization of deferred policy acquisition
costs and present value
of future profits
    
    
    7
    
    
    
    5
    
    
    
    40
    %Total benefits, claims and expenses
    
    
    966
    
    
    
    941
    
    
    
    3
    %Income before income taxes
    
    
    80
    
    
    
    63
    
    
    
    27

    %Income tax expense
    
    
    21
    
    
    
    16
    
    
    
    31
    %Net income
    
    $
    59
    
    
    $
    47
    
    
    
    26
    %Earned Premiums and OtherFully insured  ongoing premiums
    
    $
    912
    
    
    $
    905
    
    
    
    1
    %Buyout premiums
    
    
    25
    
    
    
    
    
    
    
    Other
    
    
    11
    
    
    
    10
    
    
    
    10
    %Total earned premiums and other
    
    $
    948
    
    
    $
    915
    
    
    
    4
    %
 Net income in the Group Benefits segment increased primarily due to higher net investment income
and a favorable expense ratio compared to 2004. The segments ratio of insurance operating costs
and other expenses to premiums and other considerations (excluding buyouts) decreased to 26%, from
28% in 2004, which contributed favorably to net income. The segment has a block of financial
institution business that is experience rated. Under the terms of this business the loss
experience will inversely effect the commission expenses incurred. The decrease in commissions for
the quarter compared to the prior year period was primarily attributed to the experience rated
financial institution business. The segments loss ratio (defined as benefits, claims and claim
adjustment expenses as a percentage of premiums and other considerations excluding buyouts) was
76%, up from 75% in first quarter 2004. This increase was due to an increase in the loss ratio of
the experience rated financial institution business and less favorable disability morbidity.  INVESTMENTS
 General The investment portfolios are managed by Hartford Investment Management Company (HIM), a
wholly-owned subsidiary of The Hartford. HIM manages the portfolios to maximize economic value,
while attempting to generate the income necessary to support the Companys various product
obligations, within internally established objectives, guidelines and risk tolerances. (For a
further discussion of how HIM manages the investment portfolios, see the Investments section of the
MD&A under the General section in Hartford Lifes 2004 Form 10-K Annual Report. Also, for a
further discussion of how the investment portfolios credit and market risks are assessed and
managed, see the Investment Credit Risk section that follows.) Return on general account invested assets is an important element of Hartford Lifes financial
results. Significant fluctuations in the fixed income or equity markets could weaken the Companys
financial condition or its results of operations. Additionally, changes in market interest rates
may impact the period of time over which certain investments, such as mortgage-backed securities,
are repaid and whether certain investments are called by the issuers. Such changes may, in turn,
impact the yield on these investments and also may result in reinvestment of funds received from
calls and prepayments at rates below the average portfolio yield. Net investment income and net
realized capital gains and losses accounted for approximately 35% and 40% of the Companys
consolidated revenues for the three months ended March 31, 2005 and 2004, respectively. Fluctuations in interest rates affect the Companys return on, and the fair value of, general
account fixed maturity investments, which comprised approximately 72% and 74% of the fair value of
its invested assets as of March 31, 2005 and December 31, 2004, respectively. Other events beyond
the Companys control could also adversely impact the fair value of these investments.
Specifically, a downgrade of an issuers credit rating or default of payment by an issuer could
reduce the Companys investment return. A decrease in the fair value of any investment that is deemed other-than-temporary would result in
the Companys recognition of a net realized capital loss in its financial results prior to the
actual sale of the investment. (For a further discussion of the evaluation of other-than-temporary
impairments, see the Critical Accounting Estimates section of the MD&A under Valuation of
Investments and Derivative Instruments and Evaluation of Other-Than-Temporary Impairments section
in Hartford Lifes 2004 Form 10-K Annual Report.) 28




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##### Table of Contents



The primary investment objective of the Companys general account is to maximize economic value
consistent with acceptable risk parameters, including the management of the interest rate
sensitivity of invested assets, while generating sufficient after-tax income to meet policyholder
and corporate obligations. The following table identifies the Companys invested assets by type as of March 31, 2005 and
December 31, 2004. Composition of Invested AssetsMarch 31, 2005
    
    December 31, 2004Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentFixed maturities, available-for-sale, at fair value
    
    $
    50,877
    
    
    
    71.7
    %
    
    $
    50,531
    
    
    
    73.5
    %Equity securities, available-for-sale, at fair value
    
    
    662
    
    
    
    0.9
    %
    
    
    525
    
    
    
    0.8
    %Equity securities, held for trading, at fair value
    
    
    15,855
    
    
    
    22.3
    %
    
    
    13,634
    
    
    
    19.8
    %Policy loans, at outstanding balance
    
    
    2,119
    
    
    
    3.0
    %
    
    
    2,662
    
    
    
    3.9
    %Mortgage loans, at cost
    
    
    979
    
    
    
    1.4
    %
    
    
    923
    
    
    
    1.3
    %Limited partnerships, at fair value
    
    
    273
    
    
    
    0.4
    %
    
    
    256
    
    
    
    0.4
    %Other investments
    
    
    207
    
    
    
    0.3
    %
    
    
    185
    
    
    
    0.3
    %Total investments
    
    $
    70,972
    
    
    
    100.0
    %
    
    $
    68,716
    
    
    
    100.0
    %
 Fixed maturity investments increased $346 since December 31, 2004, primarily the result of positive
operating cash flow, partially offset by a decrease in fair value due to an increase in interest
rates. Equity securities held for trading increased $2,221 since December 31, 2004, due to
positive cash flow primarily generated from sales and deposits related to variable annuity products
sold in Japan and positive performance of the underlying investment funds supporting the Japanese
variable annuity product. Policy loans decreased $543 since December 31, 2004, as a result of
certain policy loan surrenders. Investment Results The following table summarizes the Companys investment results. Three Months EndedMarch 31,(before-tax)
    
    2005
    
    
    2004Net investment income  excluding income on policy loans and trading securities
    
    $
    693
    
    
    $
    661Policy loan income
    
    
    36
    
    
    
    45Trading securities income [1]
    
    
    221
    
    
    
    456Net investment income  total
    
    $
    950
    
    
    $
    1,162Yield on average invested assets [2]
    
    
    5.6
    %
    
    
    5.7
    %Gross gains on sale
    
    $
    98
    
    
    $
    100Gross losses on sale
    
    
    (48
    )
    
    
    (18
    )Impairments
    
    
    (1
    )
    
    
    (8
    )GMWB derivatives, net
    
    
    7
    
    
    
    (2
    )Other, net [3]
    
    
    25
    
    
    
    4Net realized capital gains
    
    $
    81
    
    
    $
    76
   [1]
    
    Represents the change in value of securities classified as trading.[2]
    
    Represents annualized net investment income (excluding the change in fair value of trading securities) divided by the
monthly weighted average invested assets at cost or amortized cost, as applicable, excluding trading securities, 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 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. For the three months ended March 31, 2005, net investment income, excluding income on policy
loans and trading securities, increased $32, or 5%, compared to the prior year period. The
increase in net investment income was primarily due to income earned on a higher average invested
assets base, as compared to the respective prior year period. The increase in the average invested
assets base, as compared to the prior year period, was primarily due to positive operating cash
flows, investment contract sales such as retail and institutional notes, and universal life-type
product sales such as individual fixed annuity products sold in Japan. This increase was partially
offset by a decrease in the yield on average invested assets. Net investment income on trading securities of $221 during the three months ended March 31, 2005,
was primarily generated by positive performance of the underlying investment funds
supporting the Japanese variable annuity product, partially offset by foreign currency
depreciation. Net investment income on trading securities of $456 during the three months ended
March 31, 2004, was primarily generated by the positive performance of the underlying investment
funds supporting the Japanese variable annuity product, as well as, foreign currency appreciation
in comparison to the U.S. Dollar. The decrease in the first quarter 2005 from the first quarter 29




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##### Table of Contents



2004 is due to the performance of the underlying funds and foreign currency movements. For the three months ended March 31, 2005, the yield on average invested assets decreased slightly
from the respective prior year period as a result of new investment purchases at rates below the
average portfolio yield due to the continued low interest rate environment and decreased policy
loan income. Since the Company invests primarily in long-term fixed rate debt securities, current
period changes in long-term interest rates impact the yield on new asset purchases and, therefore,
have a gradual impact on the overall portfolio yield. The weighted average yield on new invested
asset purchases in the three months ended March 31, 2005 of approximately 5.1%, before-tax,
continues to be below the average portfolio yield. Net realized capital gains for the three months ended March 31, 2005 increased by $5 compared to
the respective prior year period, primarily the result of higher net realized gains on
non-qualifying foreign currency derivatives, foreign currency transaction remeasurement and GMWB
derivatives, partially offset by lower net realized gains on fixed maturity and equity securities. Gross gains on sales for the three months ended March 31, 2005 were primarily within fixed
maturities and were concentrated in the commercial mortgage-backed securities (CMBS), foreign
government and corporate sectors. The CMBS sales resulted from a decision to divest securities
that were backed by a single asset due to the currently scheduled expiration of the Terrorism Risk
Insurance Act (TRIA) at the end of 2005. Gains on these sales were realized as a result of an
improved credit environment and interest rate declines from the date of purchase. Foreign
government securities were sold in the first quarter of 2005, primarily to reduce the foreign
currency exposure in the portfolio due to the expected near term volatility of foreign exchange
rates. Gains resulted from the depreciation of the U.S. Dollar against foreign currencies and
credit spread tightening. Certain lower quality corporate securities that had appreciated in value
as a result of an improved corporate credit environment were sold in order to reposition the
corporate holdings into higher quality securities. Gross losses on sales for the three months ended March 31, 2005 were primarily within foreign and
U.S. governments, corporate securities and CMBS, with no single security sold at a loss in excess
of $5 and an average loss as a percentage of the fixed maturitys amortized cost of less than 2%,
which, under the Companys current impairment policy, were deemed to be depressed only to a minor
extent. Gross gains on sales for the three months ended March 31, 2004 were primarily from sales of fixed
maturity investments in the corporate, foreign government and asset-backed securities (ABS)
sectors. The majority of the sales in the corporate and ABS sectors were the result of portfolio
rebalancing that resulted in divesting securities that had appreciated in value due to a decline in
interest rates and an improved corporate credit environment. Foreign government securities were
sold in the first quarter of 2004 primarily to realize gains associated with the decline in value
of the U.S. Dollar against foreign currencies. Gross losses on sales for the three months ended March 31, 2004 were primarily within ABS and
corporate securities, with no single security sold at a loss in excess of $5 and an average loss as
a percentage of the fixed maturitys amortized cost of less than 4%. Other-Than-Temporary Impairments For the three months ended March 31, 2005, total other-than-temporary impairments were less than
$1, as compared with $8 for the comparable period in 2004. The Company believes the favorable other-than-temporary impairments trend will depend on continued
strong economic fundamentals, continued positive issuer performance, political stability and
collateral performance. Adverse issuer specific circumstances may result in future
other-than-temporary impairments. (For further discussion of risk factors associated with
portfolio sectors with significant unrealized loss positions, see the risk factor commentary under
the Fixed Maturity by Type schedule in the Investment Credit Risk section that follows.)  INVESTMENT CREDIT RISK
 Hartford Life has established investment credit policies that focus on the credit quality of
obligors and counterparties, limit credit concentrations, encourage diversification and require
frequent creditworthiness reviews. Investment activity, including setting of policy and defining
acceptable risk levels, is subject to regular review and approval by senior management and by the
Finance Committee of The Hartfords Board of Directors. Refer to the Investment Credit Risk section of the MD&A in Hartford Lifes 2004 Form 10-K Annual
Report for a description of the Companys objectives, policies and strategies, including the use of
derivative instruments. The Company invests primarily in securities that are rated investment grade, and has established
exposure limits, diversification standards and review procedures for all credit risks including
borrower, issuer and counterparty. Creditworthiness of specific obligors is determined by an
internal credit evaluation supplemented by consideration of external determinants of
creditworthiness, typically ratings assigned by nationally recognized ratings agencies. Obligor,
asset sector and industry concentrations are subject to established limits and are monitored on a
regular basis. 30




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##### Table of Contents



Hartford Life is not exposed to any credit concentration risk of a single issuer greater than 10%
of the Companys stockholders equity other than certain U.S. government and government agencies.  Fixed Maturities by TypeMarch 31, 2005Percentof TotalAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    FairCost
    
    Gains
    
    Losses
    
    Value
    
    ValueABS
    
    $
    6,433
    
    
    $
    63
    
    
    $
    (70
    )
    
    $
    6,426
    
    
    
    12.6
    %CMBS
    
    
    8,432
    
    
    
    232
    
    
    
    (76
    )
    
    
    8,588
    
    
    
    16.9
    %Collateralized mortgage obligations (CMOs)
    
    
    1,025
    
    
    
    7
    
    
    
    (5
    )
    
    
    1,027
    
    
    
    2.0
    %Corporate Basic industry
    
    
    2,339
    
    
    
    138
    
    
    
    (17
    )
    
    
    2,460
    
    
    
    4.8
    %Capital goods
    
    
    1,633
    
    
    
    123
    
    
    
    (10
    )
    
    
    1,746
    
    
    
    3.4
    %Consumer cyclical
    
    
    2,590
    
    
    
    97
    
    
    
    (43
    )
    
    
    2,644
    
    
    
    5.2
    %Consumer non-cyclical
    
    
    2,540
    
    
    
    171
    
    
    
    (17
    )
    
    
    2,694
    
    
    
    5.3
    %Energy
    
    
    1,279
    
    
    
    105
    
    
    
    (6
    )
    
    
    1,378
    
    
    
    2.7
    %Financial services
    
    
    6,778
    
    
    
    401
    
    
    
    (44
    )
    
    
    7,135
    
    
    
    14.0
    %Technology and communications
    
    
    3,497
    
    
    
    271
    
    
    
    (31
    )
    
    
    3,737
    
    
    
    7.4
    %Transportation
    
    
    608
    
    
    
    36
    
    
    
    (4
    )
    
    
    640
    
    
    
    1.3
    %Utilities
    
    
    2,401
    
    
    
    212
    
    
    
    (13
    )
    
    
    2,600
    
    
    
    5.1
    %Other
    
    
    879
    
    
    
    30
    
    
    
    (11
    )
    
    
    898
    
    
    
    1.8
    %Government/ Government agencies Foreign
    
    
    736
    
    
    
    46
    
    
    
    (7
    )
    
    
    775
    
    
    
    1.5
    %United States
    
    
    918
    
    
    
    22
    
    
    
    (13
    )
    
    
    927
    
    
    
    1.8
    %Mortgage-backed securities (MBS)  agency
    
    
    2,262
    
    
    
    9
    
    
    
    (21
    )
    
    
    2,250
    
    
    
    4.4
    %Municipal Taxable
    
    
    779
    
    
    
    34
    
    
    
    (5
    )
    
    
    808
    
    
    
    1.6
    %Tax-exempt
    
    
    2,106
    
    
    
    158
    
    
    
    (4
    )
    
    
    2,260
    
    
    
    4.5
    %Redeemable preferred stock
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    Short-term
    
    
    1,872
    
    
    
    
    
    
    
    
    
    
    
    1,872
    
    
    
    3.7
    %Total fixed maturities
    
    $
    49,119
    
    
    $
    2,155
    
    
    $
    (397
    )
    
    $
    50,877
    
    
    
    100.0
    %  Fixed Maturities by TypeDecember 31, 2004Percentof TotalAmortized
    
    Unrealized
    
    Unrealized
    
    Faire
    
    FairCost
    
    Gains
    
    Losses
    
    Value
    
    ValueABS
    
    $
    6,346
    
    
    $
    76
    
    
    $
    (64
    )
    
    $
    6,358
    
    
    
    12.6%CMBS
    
    
    8,456
    
    
    
    370
    
    
    
    (20
    )
    
    
    8,806
    
    
    
    17.5%Collateralized mortgage obligations (CMOs)
    
    
    1,084
    
    
    
    11
    
    
    
    (3
    )
    
    
    1,092
    
    
    
    2.2%Corporate Basic industry
    
    
    2,412
    
    
    
    192
    
    
    
    (6
    )
    
    
    2,598
    
    
    
    5.1%Capital goods
    
    
    1,554
    
    
    
    126
    
    
    
    (6
    )
    
    
    1,674
    
    
    
    3.3%Consumer cyclical
    
    
    2,426
    
    
    
    163
    
    
    
    (8
    )
    
    
    2,581
    
    
    
    5.1%Consumer non-cyclical
    
    
    2,506
    
    
    
    207
    
    
    
    (6
    )
    
    
    2,707
    
    
    
    5.4%Energy
    
    
    1,251
    
    
    
    122
    
    
    
    (1
    )
    
    
    1,372
    
    
    
    2.7%Financial services
    
    
    6,202
    
    
    
    482
    
    
    
    (22
    )
    
    
    6,662
    
    
    
    13.2%Technology and communications
    
    
    3,570
    
    
    
    342
    
    
    
    (11
    )
    
    
    3,901
    
    
    
    7.7%Transportation
    
    
    622
    
    
    
    44
    
    
    
    (1
    )
    
    
    665
    
    
    
    1.3%Utilities
    
    
    2,317
    
    
    
    230
    
    
    
    (7
    )
    
    
    2,540
    
    
    
    5.0%Other
    
    
    785
    
    
    
    49
    
    
    
    (2
    )
    
    
    832
    
    
    
    1.6%Government/ Government agencies Foreign
    
    
    723
    
    
    
    67
    
    
    
    (2
    )
    
    
    788
    
    
    
    1.6%United States
    
    
    884
    
    
    
    19
    
    
    
    (5
    )
    
    
    898
    
    
    
    1.8%Mortgage-backed securities (MBS)  agency
    
    
    1,771
    
    
    
    20
    
    
    
    (3
    )
    
    
    1,788
    
    
    
    3.5%Municipal Taxable
    
    
    700
    
    
    
    30
    
    
    
    (5
    )
    
    
    725
    
    
    
    1.4%Tax-exempt
    
    
    2,080
    
    
    
    191
    
    
    
    (1
    )
    
    
    2,270
    
    
    
    4.5%Redeemable preferred stock
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    Short-term
    
    
    2,261
    
    
    
    
    
    
    
    
    
    
    
    2,261
    
    
    
    4.5%Total fixed maturities
    
    $
    47,962
    
    
    $
    2,742
    
    
    $
    (173
    )
    
    $
    50,531
    
    
    
    100.0%   CMBS 
 Aircraft lease receivables 
 31




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##### Table of Contents



Financial services 


Consumer cyclical 










32



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##### Table of Contents





CAPITAL MARKETS RISK MANAGEMENT


For a complete discussion on our capital markets risk management, please refer to the MD&A
included in Hartford Lifes 2004 Annual Report on Form 10-K.



CAPITAL RESOURCES AND LIQUIDITY


Liquidity Requirements

The liquidity requirements of Hartford Life have been and will continue to be met by funds from
operations as well as the issuance of commercial paper, debt securities and borrowings from its
credit facilities. The principal sources of operating funds for its insurance entities are fees,
premiums and investment income as well as maturities and sales of invested assets. Hartford Life
is a holding company which relies upon operating cash flow in the form of dividends from its
subsidiaries, which enables it to service its debt, pay dividends to its parent, and pay certain
business expenses. As a holding company, Hartford Life has no significant business operations of
its own and, therefore, relies mainly on the dividends from its insurance company subsidiaries,
which are primarily domiciled in Connecticut, as the principal source of cash to meet its
obligations (predominantly debt obligations) and pay stockholder dividends.

The Companys Japanese life insurance operations are conducted through Hartford Insurance Life K.K.
a wholly owned subsidiary of Hartford Life and Accident Insurance Company (HLA), one of the
companys principal statutorily regulated operating subsidiaries. To date, the Company has funded
the capital needs of its Japanese operations through investments in the common stock of Hartford
Life Insurance K.K. by HLA, an investment that stood at $813 as of March 31, 2005. This
arrangement has generally allowed some portion of the Companys investment in its Japanese
operations to be included as part of the aggregate statutory capital (for the purposes of
regulatory and rating agency capital adequacy measures) of HLA.

The Company is currently in the process of evaluating capital structures that it believes in the
long-term could result in improved financial flexibility. Certain of these structures would no
longer allow a portion of the capital invested in our Japanese operations to be included in the
aggregate capital of HLA. This could reduce certain of the capital adequacy measures employed by
regulators and rating agencies to assess the capital strength of The Hartfords domestic life
insurance companies. At the current time, the Company believes it has sufficient financial
resources to maintain capital adequacy levels consistent with all of its rating objectives.

Dividends to Hartford Life, Inc. from its direct subsidiary, HLA, are restricted. The payment of
dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of
Connecticut. Under these laws, the insurance subsidiaries may only make their dividend payments
out of unassigned surplus. These laws require notice to and approval by the state insurance
commissioner for the declaration or payment of any dividend, which, together with other dividends
or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the
insurers policyholder surplus as of December 31 of the preceding year or (ii) net income (or net
gain from operations, if such company is a life insurance company) for the twelve-month period
ending on the thirty-first day of December last preceding, in each case determined under statutory
insurance accounting policies. In addition, if any dividend of a Connecticut-domiciled insurer
exceeds the insurers earned surplus, it requires the prior approval of the Connecticut Insurance
Commissioner. HLA declared to the Company dividends of $122 in the first quarter of 2005. The
statutory net gain was $111 in the first quarter of 2005. Statutory capital and surplus as
of March 31, 2005 was $5.1 billion.

The insurance holding company laws of the jurisdictions in which Hartford Lifes insurance
subsidiaries are incorporated (or deemed commercially domiciled) limit the payment of dividends.

The primary uses of funds are to pay claims, policy benefits, operating expenses and commissions,
and to purchase new investments. In addition, Hartford Life has a policy of carrying a
significant short-term investment positions and accordingly does not anticipate selling
intermediate and long-term fixed maturity investments to meet any liquidity needs. (For a
discussion of the Companys investment objectives and strategies, see the Investments and Capital
Markets Risk Management sections.)

Ratings

Ratings are an important factor in establishing the competitive position in the insurance and
financial services marketplace. There can be no assurance that the Companys ratings will continue
for any given period of time or that they will not be changed. In the event the Companys ratings
are downgraded, the level of revenues or the persistency of the Companys business may be adversely
impacted.

The following table summarizes Hartford Lifes significant United States member companies
financial ratings from the major independent rating organizations as of April 29, 2005:

33



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##### Table of Contents



StandardA.M. Best
    
    Fitch
    
    & 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 KK (Japan)
    
    
    
    
    
    AA-
    
    
    Hartford Life Limited (Ireland)
    
    
    
    
    
    AA-
    
    
    Other RatingsHartford Life, Inc.Senior debt
    
    a-
    
    A
    
    A-
    
    
    A3Commercial paper
    
    
    
    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
 The agencies consider many factors in determining the final rating of an insurance company.
One consideration is the relative level of statutory surplus necessary to support the business
written. Statutory surplus represents the capital of the insurance company reported in accordance
with accounting practices prescribed by the applicable state insurance department. Contingencies Regulatory Developments For a discussion regarding contingencies related to regulatory
developments that affect the Company, please see OverviewRegulatory Developments above. On October 21, 2004, the Financial Services Agency (FSA), the Companys primary regulator in
Japan, issued regulations concerning new reserving methodologies and Solvency Margin Ratio (SMR)
standards for variable annuity contracts. The regulations allow a Standard methodology and an
Alternative methodology to determine required reserve levels and SMR standards. On December 27,
2004, the FSA also issued administrative guidelines that describe the detailed requirements under
the two methodologies. The regulations are scheduled to become effective on April 1, 2005. The new reserve methodologies and SMR standards would only apply to capital requirements for
Japanese regulatory purposes, and are not directly related to results under accounting principles
generally accepted in the United States. At this time, the Company has decided to adopt the
Standard methodology. While management is still evaluating the impact of the regulations on the
Companys Japanese operations, at this time, based on the Companys assessment, the Standard
methodology would require $400  $650 of additional capital during 2005. This estimate assumes that
the Company will successfully employ various capital management strategies within its discretion
and control, which may include, but are not limited to, product re-filing. The Company also is
currently evaluating certain reinsurance strategies which have the potential to reduce the
additional capital required to $100. These reinsurance strategies would be subject to regulatory
approval, which may not be granted. For further information on other contingencies, see Note 6 of Notes to Consolidated Financial
Statements.  ACCOUNTING STANDARDS
 For a discussion of accounting standards, see Note 2 of Notes to Condensed Consolidated
Financial Statements. 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information contained in the Capital Markets Risk Management section of Managements Discussion
and Analysis of Financial Condition and Results of Operations is incorporated herein by reference. 
 Item 4. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures The Companys principal executive officer and its principal financial officer, based on their
evaluation of the Companys disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e)) have concluded that the Companys disclosure controls and procedures are effective for
the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of March 31,
2005. 34




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##### Table of Contents



Changes in internal control over financial reporting There was no change in the Companys internal control over financial reporting that occurred during
the Companys first fiscal quarter of 2005 that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 Part II. OTHER INFORMATION 
 Item 1. LEGAL PROCEEDINGS Litigation The Hartford Financial Services Group, Inc. and its consolidated subsidiaries (The Hartford) is
involved in various legal actions arising in the ordinary course of business, some of which assert
claims for substantial amounts. These actions include, among others, putative state and federal
class actions seeking certification of a state or national class. Such putative class actions have
alleged, for example, improper sales practices in connection with the sale of life insurance and
other investment products; and improper fee arrangements in connection with mutual funds. The
Hartford also is involved in individual actions in which punitive damages are sought, such as
claims alleging bad faith in the handling of insurance claims. Management expects that the
ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made
for estimated losses, will not be material to the consolidated financial condition of the Company.
Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the
inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters
could, from time to time, have a material adverse effect on the Companys consolidated results of
operations or cash flows in particular quarterly or annual periods. Broker Compensation Litigation On October 14, 2004, the New York Attorney Generals Office filed
a civil complaint (the NYAG Complaint) against Marsh Inc. and Marsh & McLennan Companies, Inc.
(collectively, Marsh) alleging, among other things, that certain insurance companies, including
The Hartford, participated with Marsh in arrangements to submit inflated bids for business
insurance and paid contingent commissions to ensure that Marsh would direct business to them. The
Hartford was not joined as a defendant in the action, which has since settled. Since the filing of
the NYAG Complaint, several private actions have been filed against The Hartford asserting claims
arising from the allegations of the NYAG Complaint. Two securities class actions, now consolidated, have been filed in the United States District Court
for the District of Connecticut alleging claims against The Hartford and certain of its executive
officers under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5. The consolidated
amended complaint alleges on behalf of a putative class of shareholders that The Hartford and the
four named individual defendants, as control persons of The Hartford, failed to disclose to the
investing public that The Hartfords business and growth was predicated on the unlawful activity
alleged in the NYAG Complaint. The class period alleged is August 6, 2003 through October 13,
2004, the day before the NYAG Complaint was filed. The complaint seeks damages and attorneys
fees. The Hartford and the individual defendants dispute the allegations and intend to defend
these actions vigorously. In addition, three putative class actions, now consolidated, have been filed in the same court on
behalf of participants in The Hartfords 401(k) plan against The Hartford, Hartford Fire Insurance
Company, The Hartfords Pension Fund Trust and Investment Committee, The Hartfords Pension
Administration Committee, The Hartfords Chief Financial Officer, and John/Jane Does 1-15. The
suits assert claims under the Employee Retirement Income Security Act of 1974, as amended
(ERISA), alleging that The Hartford and the other named defendants breached their fiduciary
duties to plan participants by, among other things, failing to inform them of the risk associated
with investment in The Hartfords stock as a result of the activity alleged in the NYAG Complaint.
The class period alleged is November 5, 2003 through the present. The complaints seek restitution
of losses to the plan, declaratory and injunctive relief, and attorneys fees. All defendants
dispute the allegations and intend to defend these actions vigorously. Two corporate derivative actions, now consolidated, also have been filed in the same court. The
consolidated amended complaint, brought by a shareholder on behalf of The Hartford against its
directors and an executive officer, alleges that the defendants knew adverse non-public information
about the activities alleged in the NYAG Complaint and concealed and misappropriated that
information to make profitable stock trades, thereby breaching their fiduciary duties, abusing
their control, committing gross mismanagement, wasting corporate assets, and unjustly enriching
themselves. The complaint seeks damages, injunctive relief, disgorgement, and attorneys fees.
All defendants dispute the allegations and intend to defend these actions vigorously. Ten putative class actions also have been filed by alleged policyholders in federal district
courts against several brokers and insurers, including The Hartford. These actions assert, on
behalf of a class of persons who purchased insurance through the broker defendants, claims under
the Sherman Act and state law, and in some cases the Racketeer Influenced and Corrupt Organizations
Act (RICO), arising from the conduct alleged in the NYAG Complaint. The class period alleged is
1994 through the date of class certification, which has not yet occurred. The complaints seek
treble damages, injunctive and declaratory relief, and attorneys fees. Pursuant to an order of
the Judicial Panel on Multidistrict Litigation, it is likely that the venue for all of these
actions will be the United States District Court for the District of New Jersey. Putative class
actions also have been filed in the Circuit Court for Cook County, Illinois, Chancery Division and
in the Circuit Court for Seminole County, Florida, Civil Division, on behalf of a class of all
persons who purchased 35




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insurance from defendant insurers, including Hartford entities. These state court actions assert
unjust enrichment claims and violations of state unfair trade practices acts arising from the
conduct alleged in the NYAG Complaint and seek remedies including restitution of premiums, and, in
the Illinois action, imposition of a constructive trust, and declaratory and injunctive relief.
The class period alleged is 1994 through the present. The Hartford has removed both actions to
federal court, but the plaintiffs have moved to remand the actions to the respective state courts.
The plaintiffs motion to remand the Illinois action was denied;
the remand motion in the Florida action has not been decided. The Hartford disputes the allegations in all of these actions and intends to defend the actions
vigorously. Additional complaints may be filed against The Hartford in various courts alleging claims under
federal or state law arising from the conduct alleged in the NYAG Complaint. The Hartfords
ultimate liability, if any, in the pending and possible future suits is highly uncertain and
subject to contingencies that are not yet known, such as how many suits will be filed, in which
courts they will be lodged, what claims they will assert, what the outcome of investigations by the
New York Attorney Generals Office and other regulatory agencies will be, the success of defenses
that The Hartford may assert, and the amount of recoverable damages if liability is established.
In the opinion of management, it is possible that an adverse outcome in one or more of these suits
could have a material adverse effect on the Companys consolidated results of operations or cash
flows in particular quarterly or annual periods. 
 Item 6. EXHIBITS See Exhibits Index on page 38. 36




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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized. HARTFORD LIFE, INC./s/ Ernest M. McNeill Jr.Ernest M. McNeill Jr.
Vice President and Chief Accounting Officer
 May 2, 2005 37




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HARTFORD LIFE, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 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 38