<PAGE>
As filed with the Securities and Exchange Commission on September 20, 1996
Registration No. 33-65355
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 [X]
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------------------
NEW YORK 6311
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
36-2608394
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
------------------------------
P.O. BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
-----------------------------
MICHAEL J. VELOTTA, ESQUIRE
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847/402-2400
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
STEPHEN E. ROTH, ESQUIRE JOHN R. HEDRICK, ESQUIRE
SUTHERLAND, ASBILL AND BRENNAN ALLSTATE LIFE FINANCIAL SERVICES, INC.
1275 PENNSYLVANIA AVENUE 3100 SANDERS ROAD
WASHINGTON, D.C. 20004-2404 NORTHBROOK, ILLINOIS 60062
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The Annuity
Contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT
CLASS OF AMOUNT OFFERING AGGREGATE OF
SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT PRICE FEE
Deferred Annuity Contracts
and Participating Interests
therein $5,000,000 * * $1,724.14
</TABLE>
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K, ITEM 501(B)
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
- -------------------------------- ---------------------
<S> <C>
1. Forepart of the Registration Statement and Out-
side Front Cover Page of Prospectus.............................................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................................................. Inside Front Cover
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges...................................... Inside Front Cover; Accumulation Units;
Accumulation Unit Value
4. Use of Proceeds............................................................................... Investments
5. Determination of Offering Price............................................................ Not Applicable
6. Dilution................................................................................... Not Applicable
7. Selling Security Holders................................................................... Not Applicable
8. Plan of Distribution....................................... Purchase of the Contracts; Distribution of the
Contracts
9. Description of Securities to be Registered..................................... Purchase of the Contracts;
Benefits under the Contract;
Charges and other Deductions; Federal Tax Matters;
Taxation of Annuities in General
10. Interests of Named Experts and Counsel..................................................... Not Applicable
11. Information with Respect to the Registrant.................... Allstate Life Insurance Company of New York
and the Variable Account; Selected Financial Data;
Competition; Employees;
Properties; State and Federal Regulation;
Executive Officers and Directors of the Company;
Executive Compensation; Legal Proceedings
12. Disclosure of Commission Position on Indemni-
fication for Securities Act Liabilities.................................................... Not Applicable
</TABLE>
<PAGE>
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
OFFERED BY
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
POST OFFICE BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
1-(800) 692-4682
FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACTS
---------------
This prospectus describes the AIM Lifetime Plus Variable Annuity, a group
Flexible Premium Deferred Variable Annuity Certificate (hereinafter referred
to as "Contract") designed to aid you in long-term financial planning and
which can be used for retirement planning. The Contracts are issued by
Allstate Life Insurance Company of New York ("Company"), a wholly owned
indirect subsidiary of Allstate Insurance Company. The Contracts are issued as
group Contracts. A certificate is issued that summarizes the provisions of the
group Contract. For convenience, this prospectus refers to both Contracts and
certificates as "Contracts." Purchase payments for the Contracts will be
allocated to a series of Variable Sub-accounts of the Allstate Life of New
York Separate Account A ("Variable Account") and/or to a Fixed Account
option(s) funded through the Company's general account.
The Variable Sub-accounts invest in shares of AIM Variable Insurance Funds,
Inc. (the "Fund Series"). Nine Funds are currently available for investment
within the Variable Account: (1) AIM V.I. Capital Appreciation Fund; (2) AIM
V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I.
Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and
Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I. Money Market
Fund; and (9) AIM V.I. Value Fund.
This prospectus presents information you should know before making a
decision to invest in the Contract and the available Investment Alternatives.
THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS WHICH HAVE
RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS OR BY EMPLOYEES OF
SUCH BANKS; HOWEVER, THE CONTRACTS AND THE INVESTMENTS IN THE FUNDS ARE NOT
DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK, AND THE
FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL. THESE CONTRACTS ARE NOT FDIC INSURED.
The Company has prepared and filed a Statement of Additional Information
dated October , 1996 with the U.S. Securities and Exchange Commission. If
you wish to receive the Statement of Additional Information, you may obtain a
free copy by calling or writing the Company at the address above. For your
convenience, an order form for the Statement of Additional Information may be
found on page B-2 of this prospectus. Before ordering, you may wish to review
the Table of Contents of the Statement of Additional Information on page B-1
of this prospectus. The Statement of Additional Information has been
incorporated by reference into this prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR AIM VARIABLE INSURANCE FUNDS, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE
The Contract is only available in the State of New York.
At least once each Contract year, the Company will send the Owner an annual
statement that contains certain information pertinent to the individual
Owner's Contract. The annual statement details values and specific Contract
data that applies to each particular Contract. The annual statement does not
contain financial statements of the Company, although the Company's financial
statements are on page F-1 of this prospectus. The Company, however, is
subject to the informational requirements of the Securities Exchange Act of
1934 and in accordance therewith files reports and other information with the
Securities and Exchange Commission. Reports and other information filed by the
Company can be inspected at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and are also
available by personal computer from the SEC's EDGAR database on the World Wide
Web at http://www.sec./gov/edgarhp.htm or through the SEC's web site at
http://www.sec.gov. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed
rates.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY................................................................... 3
HIGHLIGHTS................................................................. 4
SUMMARY OF VARIABLE ACCOUNT EXPENSES....................................... 5
CONDENSED FINANCIAL INFORMATION............................................ 6
YIELD AND TOTAL RETURN DISCLOSURE.......................................... 6
FINANCIAL STATEMENTS....................................................... 7
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT....... 7
Allstate Life Insurance Company of New York............................... 7
The Variable Account...................................................... 7
THE FUND SERIES............................................................ 8
AIM Variable Insurance Funds, Inc......................................... 8
Investment Advisor for the Funds.......................................... 8
FIXED ACCOUNT.............................................................. 9
Example of Interest Crediting During the Guarantee Period................. 9
Withdrawals or Transfers.................................................. 10
Market Value Adjustment................................................... 10
PURCHASE OF THE CONTRACTS.................................................. 10
Purchase Payment Limits................................................... 10
Free-Look Period.......................................................... 11
Crediting of Initial Purchase Payment..................................... 11
Allocation of Purchase Payments........................................... 11
Accumulation Units........................................................ 11
Accumulation Unit Value................................................... 11
Transfers Among Investment Alternatives................................... 11
Dollar Cost Averaging..................................................... 12
Automatic Fund Rebalancing................................................ 12
BENEFITS UNDER THE CONTRACT................................................ 12
Withdrawals............................................................... 12
Income Payments........................................................... 13
Payout Start Date for Income Payments.................................... 13
Variable Account Income Payments......................................... 13
Fixed Amount Income Payments............................................. 13
Income Plans............................................................. 13
DEATH BENEFITS............................................................. 14
Distribution Upon Death Payment Provisions................................ 14
Death Benefit Amount...................................................... 14
CHARGES AND OTHER DEDUCTIONS............................................... 15
Deductions from Purchase Payments......................................... 15
Withdrawal Charge (Contingent Deferred Sales Charge)...................... 15
Contract Maintenance Charge............................................... 15
Administrative Expense Charge............................................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Mortality and Expense Risk Charge......................................... 16
Taxes..................................................................... 16
Transfer Charges.......................................................... 16
Fund Expenses............................................................. 16
GENERAL MATTERS............................................................ 16
Owner..................................................................... 16
Beneficiary............................................................... 16
Assignments............................................................... 17
Delay of Payments......................................................... 17
Modification.............................................................. 17
Customer Inquiries........................................................ 17
FEDERAL TAX MATTERS........................................................ 17
Introduction.............................................................. 17
Taxation of Annuities in General.......................................... 17
Tax Deferral............................................................. 17
Non-natural Owners....................................................... 17
Diversification Requirements............................................. 18
Ownership Treatment...................................................... 18
Taxation of Partial and Full Withdrawals................................. 18
Taxation of Annuity Payments............................................. 18
Taxation of Annuity Death Benefits....................................... 19
Penalty Tax on Premature Distributions................................... 19
Aggregation of Annuity Contracts......................................... 19
Tax Qualified Contracts.................................................. 19
Restrictions Under Section 403(b) Plans.................................. 19
Income Tax Withholding................................................... 19
DISTRIBUTION OF THE CONTRACTS.............................................. 19
VOTING RIGHTS.............................................................. 20
SELECTED FINANCIAL DATA.................................................... 20
COMPETITION................................................................ 27
EMPLOYEES.................................................................. 27
PROPERTIES................................................................. 27
STATE AND FEDERAL REGULATION............................................... 27
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY............................ 27
EXECUTIVE COMPENSATION..................................................... 29
LEGAL PROCEEDINGS.......................................................... 30
EXPERTS.................................................................... 30
LEGAL MATTERS.............................................................. 30
FINANCIAL STATEMENTS....................................................... F-1
APPENDIX A--Market Value Adjustment........................................ A-1
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS..................... B-1
ORDER FORM................................................................. B-2
</TABLE>
TABLE OF CONTENTS
2
<PAGE>
GLOSSARY
ACCUMULATION UNIT: A measure of your ownership interest in a Sub-account of
the Variable Account prior to the Payout Start Date. Analogous, though not
identical, to a share owned in a mutual fund.
ACCUMULATION UNIT VALUE: The value of each Accumulation Unit which is
calculated each Valuation Date. Each Sub-account of the Variable Account has
its own distinct Accumulation Unit Value. Analogous, though not identical, to
the share price (net asset value) of a mutual fund.
ANNUITANT(S): The person or persons whose life determines the latest Payout
Start Date and the amount and duration of any income payments for Income Plan
options other than Guaranteed Payments for a Specified Period. Joint
annuitants are only permitted in the payout phase.
BENEFICIARY(IES): The person(s) to whom any benefits are due when a death
benefit is payable and there is no surviving Owner.
COMPANY("WE," "US"): Allstate Life Insurance Company of New York.
CONTRACT: The Allstate Life Insurance Company of New York Flexible Premium
Deferred Variable Annuity Contract, known as the "AIM Lifetime PlusSM Variable
Annuity," that is described in this prospectus.
CONTRACT ANNIVERSARY: An anniversary of the date that the Contract was issued.
CONTRACT VALUE: The value of all amounts accumulated under the Contract prior
to the Payout Start Date, equivalent to the Accumulation Units in each Sub-
account of the Variable Account multiplied by the respective Accumulation Unit
Value, plus the value in the Fixed Account.
CONTRACT YEAR: A period of 12 months starting with the issue date or any
Contract Anniversary.
DEATH BENEFIT ANNIVERSARY: Every seventh Contract Anniversary beginning on the
date that the Contract was issued. For example, the issue date, 7th and 14th
Contract Anniversaries are the first three Death Benefit Anniversaries.
FIXED ACCOUNT: All of the assets of the Company that are not in separate
accounts.
FIXED SUB-ACCOUNTS: These Sub-accounts are distinguished by Guarantee
Period(s) and the dates the period(s) begin. The Fixed Sub-accounts are
established when purchase payments are allocated to the Fixed Account; when
previous Sub-accounts expire and a new Guarantee Period is selected; and when
You transfer an amount to the Fixed Account.
GUARANTEE PERIOD: A period of years for which a specified effective annual
interest rate is guaranteed by the Company.
INCOME PLAN: One of several ways in which a series of payments are made after
the Payout Start Date. Income payments are based on the Contract Value
adjusted by any applicable Market Value Adjustment and applicable taxes on the
Payout Start Date. Income payment amounts may vary based on any Sub-account of
the Variable Account and/or may be fixed for the duration of the Income Plan.
INVESTMENT ALTERNATIVES: The Sub-accounts of the Variable Account and the
Fixed Account.
MARKET VALUE ADJUSTMENT: The Market Value Adjustment is the adjustment made to
the money distributed from a Sub-account of the Fixed Account, prior to the
end of the Guarantee Period, to reflect the impact of changes in interest
rates between the time the Sub-account of the Fixed Account was established
and the time of distribution.
NON-QUALIFIED CONTRACTS: Contracts other than Qualified Contracts.
OWNER(S)("YOU"): The person or persons designated as the Owner in the
Contract.
PAYOUT START DATE: The date on which income payments begin.
QUALIFIED CONTRACTS: Contracts issued under plans that qualify for special
federal income tax treatment under Sections 401(a), 403(a), 403(b) and 408 of
the Internal Revenue Code.
VALUATION DATE: Each day that the New York Stock Exchange is open for
business. The Valuation Date does not include such Federal and non-Federal
holidays as are observed by the New York Stock Exchange.
VALUATION PERIOD: The period between successive Valuation Dates, commencing at
the close of regular trading on the New York Stock Exchange (which is normally
4:00 pm Eastern Time) and ending as of the close of regular trading on the New
York Stock Exchange on the next succeeding Valuation Date.
VARIABLE ACCOUNT: Allstate Life of New York Separate Account A, a separate
investment account established by the Company to receive and invest purchase
payments paid under the Contracts.
VARIABLE SUB-ACCOUNT: A portion of the Variable Account invested in shares of
a corresponding Fund. The investment performance of each Variable Sub-account
is linked directly to the investment performance of its corresponding Fund.
3
<PAGE>
HIGHLIGHTS
THE CONTRACT
This Contract is designed for long-term financial planning and retirement
planning. Money can be allocated to any combination of Funds or the Fixed
Account. You have access to your funds either through withdrawals of Contract
Value or through periodic income payments. You bear the entire investment risk
for Contract Values and income payments based upon the Variable Account,
because values will vary depending on the investment performance of the
Fund(s) you select. See "Accumulation Unit Value," page and "Income Plans,"
page . You will also bear the investment risk of adverse changes in interest
rates in the event amounts are prematurely withdrawn or transferred from Sub-
accounts of the Fixed Account. See "Fixed Account," page .
FREE-LOOK
You may cancel the Contract any time within 10 days after receipt of the
Contract and receive a full refund of purchase payments allocated to the Fixed
Account. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation, unless a refund of
purchase payments is required by state or federal law. See "Free-Look Period,"
page .
HOW TO INVEST
Your first purchase payment must be at least $5,000 (for Qualified
Contracts, $2,000). Subsequent purchase payments must be at least $500.
Purchase payments may also be made pursuant to an Automatic Addition Program.
See "Purchase Payment Limits," page . At the time of your application, you
will allocate your purchase payment among the Investment Alternatives. The
allocation you specify on the application will be effective immediately. All
allocations must be in whole percents from 0% to 100% (total allocation equals
100%) or in whole dollars. Allocations may be changed by notifying the Company
in writing. See "Allocation of Purchase Payments," page .
INVESTMENT ALTERNATIVES
The Variable Account invests in shares of AIM Variable Insurance Funds, Inc.
(the "Fund Series"). The Fund Series has a total of nine Funds available under
the Contract. The Funds include: (1) AIM V.I. Capital Appreciation Fund; (2)
AIM V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM
V.I. Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth
and Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I. Money
Market Fund; and (9) AIM V.I. Value Fund. The assets of each Fund are held
separately from the other Funds and each has distinct investment objectives
and policies which are described in the accompanying prospectus for the Fund
Series. In addition to the Variable Account, Owners can also allocate all or
part of their purchase payments to the Fixed Account. See "Fixed Account," on
page .
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Payout Start Date, you may transfer amounts among the
Investment Alternatives. The Company reserves the right to assess a $10 charge
on each transfer in excess of twelve per Contract Year. The Company is
presently waiving this charge. Transfers to the Fixed Account must be at least
$500. Certain Fixed Account transfers may be restricted. See "Transfers Among
Investment Alternatives," page . You may want to enroll in a Dollar Cost
Averaging Program or an Automatic Fund Rebalancing Program. See "Dollar Cost
Averaging," page , and "Automatic Fund Rebalancing," page .
CHARGES AND DEDUCTIONS
The costs of the Contract include: a contract maintenance charge ($35
annually), a mortality and expense risk charge (deducted daily, equal on an
annual basis to 1.35% of the Contract's daily net assets of the Variable
Account), and an administrative expense charge (deducted daily, equal on an
annual basis to .10% of the Contract's daily net assets of the Variable
Account). The Company reserves the right to assess a transfer charge ($10 on
each transfer in excess of twelve per Contract Year). Additional deductions
may be made for certain taxes. See "Contract Maintenance Charge," page ,
"Mortality and Expense Risk Charge," page , "Administrative Expense Charge,"
page , "Transfer Charges," page , and "Taxes," page .
WITHDRAWALS
You may withdraw all or part of the Contract Value before the earliest of
the Payout Start Date, the death of any Owner or, if the Owner is not a
natural person, the death of the Annuitant. No withdrawal charges or Market
Value Adjustments will be applied to amounts withdrawn up to 10% of the amount
of purchase payments. Amounts withdrawn in excess of the 10% may be subject to
a withdrawal charge of 0% to 7% depending on how long purchase payments have
been invested in the Contract. Amounts withdrawn from a Sub-account of the
Fixed Account, in excess of the 10%, except during the 30 day period after the
Guarantee Period expires, will be subject to a Market Value Adjustment. See
"Withdrawals," page , "Withdrawals or Transfers," page , and "Taxation of
Annuities in General," page .
4
<PAGE>
DEATH BENEFIT
The Company will pay a death benefit prior to the Payout Start Date on the
death of any Owner or, if the Owner is not a natural person, the death of the
Annuitant. See "Death Benefit Amount," page .
INCOME PAYMENTS
You will receive periodic income payments beginning on the Payout Start Date.
You may choose among several Income Plans to fit your needs. Income payments
may be received for a specified period or for life (either single or joint
life), with or without a guaranteed number of payments. You can select income
payments that are fixed, variable or a combination of fixed and variable. See
"Income Payments," page .
SUMMARY OF VARIABLE ACCOUNT EXPENSES
The following table illustrates all expenses and fees that you will incur.
The expenses and fees set forth in the table are based on charges under the
Contracts and on the expenses of the Variable Account and the underlying Fund
Series.
OWNER TRANSACTION EXPENSES (ALL SUB-ACCOUNTS)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of purchase payments)..... None
Contingent Deferred Sales Charge (as a percentage of purchase payments).... *
</TABLE>
<TABLE>
<CAPTION>
APPLICABLE
YEAR APPLICABLE SINCE WITHDRAWAL
PREMIUM PAYMENT ACCEPTED CHARGE PERCENTAGE
------------------------ -----------------
<S> <C>
1st Year............................................ 7%
2nd Year............................................ 6%
3rd Year............................................ 5%
4th Year............................................ 4%
5th Year............................................ 3%
6th Year............................................ 2%
7th Year............................................ 1%
Thereafter.......................................... 0%
Transfer Fee **
Annual Contract Fee................................... $35***
Variable Account Annual Expenses (as a percentage of
the Contract's average net assets in the Variable
Account):
Mortality and Expense Risk Charge..................... 1.35%
Administrative Expense Charge......................... .10%
Total Variable Account Annual Expenses................ 1.45%
</TABLE>
- --------
*Each Contract Year up to 10% of the amount of purchase payments may be
withdrawn without a contingent deferred sales charge or a Market Value
Adjustment.
**No charges will be imposed on the first twelve transfers in any Contract
Year. The Company reserves the right to assess a $10 charge for each
transfer in excess of twelve in any Contract Year, excluding transfers due
to dollar cost averaging and automatic fund rebalancing.
***The annual Contract Fee will be waived if total purchase payments as of a
Contract Anniversary, or upon a full withdrawal, are $50,000 or if the
entire Contract Value is allocated to the Fixed Account.
5
<PAGE>
FUND EXPENSES
(AS A PERCENTAGE OF FUND ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER ANNUAL
FUND FEES EXPENSES EXPENSES
---- ---------- -------- ----------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund.............. 0.65% 0.10% 0.75%
AIM V.I. Growth and Income Fund................. 0.65% 0.52% 1.17%
AIM V.I. Global Utilities Fund (after expense
reimbursements)................................ 0.65% 1.03% 1.68%
AIM V.I. Diversified Income Fund................ 0.60% 0.28% 0.88%
AIM V.I. Government Securities Fund............. 0.50% 0.69% 1.19%
AIM V.I. Growth Fund............................ 0.65% 0.19% 0.84%
AIM V.I. International Equity Fund.............. 0.75% 0.40% 1.15%
AIM V.I. Value Fund............................. 0.65% 0.10% 0.75%
AIM V.I. Money Market Fund...................... 0.40% 0.13% 0.53%
</TABLE>
EXAMPLE
You (the Owner) would pay the following cumulative expenses on a $1,000
investment, assuming a 5% annual return under the following circumstances:
If you terminate your Contract or annuitize for a specified period of less
than 120 months at the end of the applicable time period:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS
---- ------ -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund.............................. $78 $109
AIM V.I. Growth and Income Fund................................. $82 $122
AIM V.I. Global Utilities Fund.................................. $87 $137
AIM V.I. Diversified Income Fund................................ $79 $113
AIM V.I. Government Securities Fund............................. $82 $122
AIM V.I. Growth Fund............................................ $79 $112
AIM V.I. International Equity Fund.............................. $82 $121
AIM V.I. Value Fund............................................. $78 $109
AIM V.I. Money Market Fund...................................... $75 $102
</TABLE>
If you do not terminate your Contract or if you annuitize for a specified
period of 120 months or more at the end of the applicable time period:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS
---- ------ -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund.............................. $24 $ 73
AIM V.I. Growth and Income Fund................................. $28 $ 86
AIM V.I. Global Utilities Fund.................................. $33 $101
AIM V.I. Diversified Income Fund................................ $25 $ 77
AIM V.I. Government Securities Fund............................. $28 $ 86
AIM V.I. Growth Fund............................................ $25 $ 76
AIM V.I. International Equity Fund.............................. $28 $ 85
AIM V.I. Value Fund............................................. $24 $ 73
AIM V.I. Money Market Fund...................................... $21 $ 66
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of the example is to assist you in understanding the various costs and
expenses that you will bear directly or indirectly. No deductions were made
for premium taxes because New York does not charge premium taxes on annuities.
CONDENSED FINANCIAL INFORMATION
Condensed financial information for the Allstate Life of New York Separate
Account A is not included because, as of the date of this prospectus, the
Variable Account had not yet commenced operations and had no assets,
liabilities, or income.
YIELD AND TOTAL RETURN DISCLOSURE
From time to time the Variable Account may advertise the yield and total
return investment performance of one or more Sub-accounts. Standardized yield
and total return advertisements include charges and expenses attributable to
the Contracts. Including these fees has the effect of decreasing the
advertised performance of a Sub-account, so that a Sub-account's investment
performance will not be directly comparable to that of an ordinary mutual
fund.
6
<PAGE>
When a Sub-account advertises its standardized total return it will usually
be calculated for one year, five years, and ten years or since inception if the
Sub-account has not been in existence for such periods. Total return is
measured by comparing the value of an investment in the Sub-account at the end
of the relevant period to the value of the investment at the beginning of the
period.
In addition to the standardized total return, the Sub-account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described
above, except that the withdrawal charges under the Contract are not deducted.
Therefore, a non-standardized total return for a Sub-account can be higher than
a standardized total return for a Sub-account.
Certain Sub-accounts may advertise yield in addition to total return. Except
in the case of the AIM V.I. Money Market Sub-account, the yield will be
computed in the following manner: the net investment income per unit earned
during a recent one month period is divided by the unit value on the last day
of the period, and then annualized. This figure reflects the recurring charges
at the separate account level.
The AIM V.I. Money Market Sub-account may advertise, in addition to the total
return, either yield or the effective yield. The yield in this case refers to
the income generated by an investment in that Sub-account over a seven-day
period net of recurring charges at the separate account level. The income is
then annualized (i.e., the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment). The effective yield is calculated
similarly but when annualized, the income earned by an investment in the AIM
V.I. Money Market Sub-account is assumed to be reinvested at the end of each
seven-day period. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment during a 52-week
period.
The Variable Account may also disclose yield, standard total return, and non-
standard total return for periods prior to the date that the Variable Account
commenced operations. For periods prior to the date the Variable Account
commenced operations, performance information for the Sub-accounts will be
calculated based on the performance of the underlying Funds and the assumption
that the Sub-accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-accounts.
Please refer to the Statement of Additional Information for a further
description of the method used to calculate a Sub-account's yield and total
return.
FINANCIAL STATEMENTS
The financial statements of Allstate Life Insurance Company of New York begin
on page F-1 of the prospectus. The financial statements of Allstate Life of New
York Separate Account A are not included because, as of the date of this
Prospectus, the Variable Account had not yet commenced operations and had no
assets, liabilities, or income.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
The Company was incorporated in 1967 as a stock life insurance company under
the laws of New York and was known as "Financial Life Insurance Company" from
1967 to 1978. From 1978 to 1984, the Company was known as "PM Life Insurance
Company." Since 1984 the Company has been known as "Allstate Life Insurance
Company of New York." The Company's operations consist of one business segment
which is the sale of annuities and life insurance. The Company is currently
licensed to operate in New York. The Company's home office is located in
Farmingville, New York.
The Company is an indirect, wholly-owned subsidiary of Allstate Insurance
Company ("Allstate") which is a stock property-liability insurance company
incorporated under the laws of Illinois. With the exception of directors'
qualifying shares, all of the outstanding capital stock of Allstate is owned by
The Allstate Corporation ("Corporation").
THE VARIABLE ACCOUNT
Established on December 22, 1995, the Allstate Life of New York Separate
Account A is a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. However, such
registration does not signify that the Commission supervises the management or
investment practices or policies of the Variable Account. The investment
performance of the Variable Account is entirely independent of both the
investment performance of the Company's general account and the performance of
any other separate account.
The Variable Account has been divided into nine Sub-accounts, each of which
invests solely in its corresponding Fund of AIM Variable Insurance Funds, Inc.
Additional Variable Sub-accounts may be added at the discretion of the Company.
The assets of the Variable Account are held separately from the other assets
of the Company. They are not chargeable with liabilities incurred in the
Company's other business operations. Accordingly, the income, capital gains and
capital losses, realized or unrealized,
7
<PAGE>
incurred on the assets of the Variable Account are credited to or charged
against the assets of the Variable Account, without regard to the income,
capital gains or capital losses arising out of any other business the Company
may conduct. The Company's obligations arising under the Contracts are general
corporate obligations of the Company.
THE FUND SERIES
The Variable Account will invest in shares of the AIM Variable Insurance
Funds, Inc. (the "Fund Series"). The Fund Series is registered with the
Securities and Exchange Commission as an open-end, series, management
investment company. Registration of the Fund Series does not involve
supervision of its management, investment practices or policies by the
Securities and Exchange Commission. The Funds are designed to provide
investment vehicles for variable insurance contracts of various insurance
companies, in addition to the Variable Account.
Shares of the Funds are not deposits, or obligations of, or guaranteed or
endorsed by any bank and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Variable Insurance Funds, Inc. offers nine Funds for use with this
Contract: (1) AIM V.I. Capital Appreciation Fund; (2) AIM V.I. Diversified
Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I. Government
Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and Income Fund;
(7) AIM V.I. International Equity Fund; (8) AIM V.I. Money Market Fund; and (9)
AIM V.I. Value Fund. Each Fund has different investment objectives and policies
and operates as a separate investment fund. The following is a brief
description of the investment objectives and programs of the Funds:
AIM V.I. CAPITAL APPRECIATION FUND ("CAPITAL APPRECIATION FUND") is a
diversified Fund which seeks to provide capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller
emerging growth companies.
AIM V.I. DIVERSIFIED INCOME FUND ("DIVERSIFIED INCOME FUND") is a diversified
Fund which seeks to achieve a high level of current income primarily by
investing in a diversified portfolio of foreign and U.S. government and
corporate debt securities, including lower rated high yield debt securities
(commonly known as "junk bonds").
AIM V.I. GLOBAL UTILITIES FUND ("GLOBAL UTILITIES FUND") is a non-diversified
Fund which seeks to achieve a high level of current income and, as a secondary
objective, to achieve capital appreciation, by investing primarily in common
and preferred stocks of public utility companies (either domestic or foreign).
AIM V.I. GOVERNMENT SECURITIES FUND ("GOVERNMENT FUND") is a diversified Fund
which seeks to achieve a high level of current income consistent with
reasonable concern for safety of principal by investing in debt securities
issued, guaranteed or otherwise backed by the U.S. Government.
AIM V.I. GROWTH FUND ("GROWTH FUND") is a diversified Fund which seeks to
provide growth of capital through investments primarily in common stocks of
leading U.S. companies considered by AIM to have strong earnings momentum.
AIM V.I. GROWTH AND INCOME FUND ("GROWTH & INCOME FUND") is a diversified
Fund which seeks to provide growth of capital, with current income as a
secondary objective by investing primarily in dividend paying common stocks
which have prospects for both growth of capital and dividend income.
AIM V.I. INTERNATIONAL EQUITY FUND ("INTERNATIONAL FUND") is a diversified
Fund which seeks to provide long-term growth of capital by investing in
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.
AIM V.I. MONEY MARKET FUND ("MONEY MARKET FUND") is a diversified Fund which
seeks to provide as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in a diversified portfolio
of money market instruments.
AIM V.I. VALUE FUND ("VALUE FUND") is a diversified Fund which seeks to
achieve long-term growth of capital by investing primarily in equity securities
judged by AIM to be undervalued relative to the current or projected earnings
of the companies issuing the securities, or relative to current market values
of assets owned by the companies issuing the securities or relative to the
equity markets generally. Income is a secondary objective.
INVESTMENT ADVISOR FOR THE FUNDS
A I M Advisors, Inc., ("AIM") serves as the investment advisor to each Fund.
AIM was organized in 1976 and, together with its affiliates, manages or advises
43 investment company portfolios (including the Funds). AIM is a wholly-owned
subsidiary of A I M Management Group Inc., a holding company. AIM manages
pursuant to a master investment advisory agreement dated October 18, 1993, as
amended April 28, 1994. As of August 30, 1996, total assets advised or managed
by AIM and its affiliates were approximately $55 billion.
There is no assurance that the Funds will attain their respective stated
objectives. Additional information concerning the investment objectives and
policies of the Funds can be found in the current prospectus for the Fund
Series accompanying this prospectus.
8
<PAGE>
You will find more complete information about the Funds, including the risks
associated with each Fund, in the accompanying prospectus. You should read the
prospectus for the Fund Series in conjunction with this prospectus.
THE FUND SERIES PROSPECTUS SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO A PARTICULAR VARIABLE
SUB-ACCOUNT.
FIXED ACCOUNT
Purchase payments and transfers allocated to one or more of the Sub-accounts
of the Fixed Account become part of the general account of the Company. Each
Sub-account offers a separate interest rate Guarantee Period. Guarantee Periods
will be offered at the Company's discretion and may range from one to ten
years. Presently, the Company offers Guarantee Periods of one, three, five,
seven and ten years. The Owner must select the Sub-account(s) in which to
allocate each purchase payment and transfer. No less than $500 may be allocated
to any one Sub-account. The Company reserves the right to limit the number of
additional purchase payments. Please consult with your sales representative for
current information.
Interest is credited daily to each Sub-account at a rate which compounds to
the effective annual interest rate declared for each Sub-account's Guarantee
Period that has been selected.
The following example illustrates how the Sub-account value for a Sub-account
of the Fixed Account would grow given an assumed purchase payment, Guarantee
Period, and effective annual interest rate:
EXAMPLE OF INTEREST CREDITING DURING THE GUARANTEE PERIOD:
<TABLE>
<S> <C>
Purchase Payment..................................................... $10,000.00
Guarantee Period..................................................... 5 years
Effective Annual Rate:............................................... 4.35%
</TABLE>
END OF CONTRACT YEAR:
<TABLE>
<CAPTION>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beginning Sub-Account
Value $10,000.00
X (1 + Effective Annual
Rate) 1.0435
----------
$10,435.00
Sub-Account Value at end
of Contract $10,435.00
year 1 X (1 + Effective
Annual Rate) 1.0435
----------
$10,888.92
Sub-Account Value at end
of Contract $10,888.92
year 2 X (1 + Effective
Annual Rate) 1.0435
----------
$11,362.59
Sub-Account Value at end
of Contract $11,362.59
year 3 X (1 + Effective
Annual Rate) 1.0435
----------
$11,856.86
Sub-Account Value at end
of Contract $11,856.86
year 4 X (1 + Effective
Annual Rate) 1.0435
----------
Sub-Account Value at end
of Guarantee Period: $12,372.64
==========
</TABLE>
TOTAL INTEREST CREDITED IN GUARANTEE PERIOD: $2,372.64 ($12,372.64 -$10,000.00)
NOTE: The above illustration assumes no withdrawals of any amount during the
entire five year period. A withdrawal charge and a Market Value Adjustment
may apply to any amount withdrawn in excess of 10% of the amount of
purchase payments. The hypothetical interest rate is for illustrative
purposes only and is not intended to predict future interest rates to be
declared under the Contract.
The Company has no specific formula for determining the rate of interest that
it will declare initially or in the future. Such interest rates will be
reflective of investment returns available at the time of the determination. In
addition, the management of the Company may also consider various other factors
in determining interest rates, including regulatory and tax requirements, sales
commissions and administrative expenses borne by the Company, general economic
trends, and competitive factors. The Company guarantees that the interest rates
will never be less that the minimum guaranteed rate shown in the Contract. For
current interest rate information, please contact your sales representative or
the Company's customer support unit at 1(800) 692-4682.
THE MANAGEMENT OF THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO THE
INTEREST RATES TO BE DECLARED. THE COMPANY CAN NEITHER PREDICT NOR GUARANTEE
FUTURE INTEREST RATES TO BE DECLARED.
Prior to the end of a Guarantee Period, a notice will be mailed to the Owner
outlining the options available at the end of a Guarantee Period. During the 30
day period after a Guarantee Period expires the Owner may:
9
<PAGE>
. take no action and the Company will automatically renew the Sub-account
value to a Guarantee Period of the shortest duration available to be
established on the day the previous Guaranteed Period expired; or
. notify the Company to apply the Sub-account value to a new Guarantee
Period or periods to be established on the day the previous Guarantee
Period expired; or
. notify the Company to apply the Sub-account value to any Sub-account of
the Variable Account on the day we receive the notification; or
. receive a portion of the Sub-account value or the entire Sub-account
value through a partial or full withdrawal that is not subject to a
Market Value Adjustment. In this case, the amount withdrawn will be
deemed to have been withdrawn on the day the guarantee period expired.
The Automatic Laddering Program allows the Owner to choose, in advance, one
renewal Guarantee Period for all renewing Sub-accounts. The Owner can select
the Automatic Laddering Program at any time during the accumulation phase,
including on the issue date. The Automatic Laddering Program will continue
until the Owner gives written notice to the Company. The Company reserves the
right to discontinue this Program. For additional information on the Automatic
Laddering Program, please call the Company's Customer Support Unit at
1(800)692-4682.
WITHDRAWALS OR TRANSFERS
With the exception of transfers made automatically through dollar cost
averaging, all withdrawals and transfers, paid from a Sub-account of the Fixed
Account other than during the 30 day period after a Guarantee Period expires
are subject to a Market Value Adjustment.
The amount received by the Owner under a withdrawal request equals the amount
requested, adjusted by any Market Value Adjustment, less any applicable
withdrawal charge, less premium taxes and withholding (if applicable).
MARKET VALUE ADJUSTMENT
The Market Value Adjustment reflects the relationship between (1) the
Treasury Rate for the time remaining in the Guarantee Period at the time of the
request for withdrawal or transfer, and (2) the Treasury Rate at the time the
Sub-account was established. As such, the Owner bears some investment risk
under the Contract. Treasury Rate means the U.S. Treasury Note Constant
Maturity yield for the preceding week as reported in Federal Reserve Bulletin
Release H.15.
Generally, if the Treasury Rate for the Guarantee Period is higher than the
applicable current Treasury Rate, then the Market Value Adjustment will result
in a higher amount payable to the Owner or transferred. Similarly, if the
Treasury Rate at the time the Sub-account was established is lower than the
applicable Treasury Rate (interest rate for a period equal to the time
remaining in the Sub-account), then the Market Value Adjustment will result in
a lower amount payable to the Owner or transferred.
For example, assume the Owner purchases a Contract and selects an initial
Guarantee Period of five years and the five year Treasury Rate for that
duration is 4.75%. Assume that at the end of 3 years, the Owner makes a partial
withdrawal. If, at that later time, the current two year Treasury Rate is
4.00%, then the Market Value Adjustment will be positive, which will result in
an increase in the amount payable to the Owner. Similarly, if the current two
year Treasury Rate is 7.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to the Owner.
The formula for calculating the Market Value Adjustment is set forth in
Appendix A to this prospectus which also contains additional illustrations of
the application of the Market Value Adjustment.
The Market Value Adjustment will be waived on withdrawals taken to satisfy
IRS required minimum distribution rules for this Contract.
PURCHASE OF THE CONTRACTS
PURCHASE PAYMENT LIMITS
Your first purchase payment must be at least $5,000 unless the Contract is a
Qualified Contract, in which case the first purchase payment must be at least
$2,000. All subsequent purchase payments must be $500 or more and may be made
at any time prior to the Payout Start Date. Subsequent purchase payments may
also be made from your bank account through Automatic Additions. Under an
Automatic Additions Program, the minimum purchase payment for allocation to the
Variable Account is $100 and for allocation to the Fixed Account the minimum
purchase payment is $500. Please consult with your sales representative for
detailed information about Automatic Additions.
We reserve the right to limit the amount of purchase payments we will accept.
10
<PAGE>
FREE-LOOK PERIOD
You may cancel the Contract any time within 10 days after receipt of the
Contract and receive a full refund of purchase payments allocated to the Fixed
Account. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation unless a refund of purchase
payments is required by state or federal law.
CREDITING OF INITIAL PURCHASE PAYMENT
The initial purchase payment accompanied by a duly completed application will
be credited to the Contract within two business days of receipt by us at our
home office. If an application is not duly completed, we will credit the
purchase payments to the Contract within five business days or return it at
that time unless you specifically consent to us holding the purchase payment
until the application is complete. We reserve the right to reject any
application. Subsequent purchase payments will be credited to the Contract at
the close of the Valuation Period in which the purchase payment is received by
the Company at its home office.
ALLOCATION OF PURCHASE PAYMENTS
On the application, you instruct us how to allocate the purchase payment
among the Investment Alternatives. Purchase payments may be allocated in whole
percents, from 0% to 100% (total allocation equals 100%) to any Investment
Alternative. Unless you notify us in writing otherwise, subsequent purchase
payments are allocated according to the allocation for the previous purchase
payment.
ACCUMULATION UNITS
Each purchase payment allocated to the Variable Account will be credited to
the Contract as Accumulation Units. For example, if a $10,000 purchase payment
is credited to the Contract when the Accumulation Unit value equals $10, then
1,000 Accumulation Units would be credited to the Contract. The Variable
Account, in turn, purchases shares of the corresponding Fund.
ACCUMULATION UNIT VALUE
The Accumulation Units in each Sub-account of the Variable Account are valued
separately. The value of Accumulation Units will change each Valuation Period
according to the investment performance of the shares purchased by each
Variable Sub-account and the deduction of certain expenses and charges.
The value of an Accumulation Unit in a Variable Sub-account for any Valuation
Period equals the value of the Accumulation Unit as of the immediately
preceding Valuation Period, multiplied by the Net Investment Factor for that
Sub-account for the current Valuation Period. The Net Investment Factor for a
Valuation Period is a number representing the change, since the last Valuation
Date in the value of Sub-account assets per Accumulation Unit due to investment
income, realized or unrealized capital gain or loss, deductions for taxes, if
any, and deductions for the mortality and expense risk charge and
administrative expense charge.
TRANSFERS AMONG INVESTMENT ALTERNATIVES
Prior to the Payout Start Date, you may transfer amounts among Investment
Alternatives. The Company reserves the right to assess a $10 charge on each
transfer in excess of twelve per Contract Year. The Company is presently
waiving this charge. Transfers to or from more than one Investment Alternative
on the same day are treated as one transfer. Transfers among Investment
Alternatives before the Payout Start Date may be made at any time. See
"Withdrawals or Transfers," page for the requirements on transfers from the
Fixed Account.
After the Payout Start Date, transfers among Sub-accounts of the Variable
Account or from a variable amount income payment to a fixed amount income
payment may be made only once every six months and may not be made during the
first six months following the Payout Start Date. After the Payout Start Date,
transfers from a fixed amount income payment are not allowed.
Telephone transfer requests will be accepted by the Company if received at
1(800) 692-4682 by 4:00 p.m., Eastern Time. Telephone transfer requests
received at any other telephone number or after 4:00 p.m., Eastern Time will
not be accepted by the Company. Telephone transfer requests received before
4:00 p.m., Eastern Time are effected at the next computed value. The Company
utilizes procedures which the Company believes will provide reasonable
assurance that telephone authorized transfers are genuine. Such procedures
include taping of telephone conversations with persons purporting to authorize
such transfers and requesting identifying information from such persons.
Accordingly, the Company disclaims any liability for losses resulting from such
transfers by reason of their allegedly not having been properly authorized.
However, if the Company does not take reasonable steps to help ensure that such
authorizations are valid, the Company may be liable for such losses.
The minimum amount that may be transferred into a Sub-account of the Fixed
Account is $500. Any transfer from a Sub-account of the Fixed Account at a time
other than during the 30 day period after a Guarantee Period expires will be
subject to a Market Value Adjustment. If any transfer reduces the value of a
Sub-account of the Fixed Account to less than $500, the Company will treat the
request as a transfer of the entire Sub-account value.
The Company reserves the right to waive transfer restrictions.
11
<PAGE>
DOLLAR COST AVERAGING
Transfers may be made automatically through Dollar Cost Averaging prior to
the Payout Start Date. Dollar Cost Averaging permits the Owner to transfer a
specified amount every month from the one year Guarantee Period Sub-account of
the Fixed Account or any Sub-account of the Variable Account, to any Sub-
account of the Variable Account. Transfers made through Dollar Cost Averaging
must be $50 or more. Dollar Cost Averaging cannot be used to transfer amounts
to the Fixed Account. Transfers made through Dollar Cost Averaging are not
subject to a Market Value Adjustment. In addition, such transfers are not
assessed a $10 charge and are not included in the twelve free transfers per
Contract Year.
The theory of Dollar Cost Averaging is that, if purchases of equal dollar
amounts are made at fluctuating prices, the aggregate average cost per unit
will be less than the average of the unit prices on the same purchase dates.
However, participation in the Dollar Cost Averaging program does not assure you
of a greater profit from your purchases under the program; nor will it prevent
or alleviate losses in a declining market.
AUTOMATIC FUND REBALANCING
Transfers may be made automatically through Automatic Fund Rebalancing prior
to the Payout Start Date. By electing Automatic Fund Rebalancing, all of the
money allocated to Sub-accounts of the Variable Account will be rebalanced to
the desired allocation on a quarterly basis, determined from the first date
that you decide to rebalance. Each quarter, money will be transferred among
Sub-accounts of the Variable Account to achieve the desired allocation.
The desired allocation will be the allocation initially selected, unless
subsequently changed. You may change the allocation at any time by giving us
written notice. The new allocation will be effective with the first rebalancing
that occurs after we receive the written request. We are not responsible for
rebalancing that occurs prior to receipt of the written request.
Transfers made through Automatic Fund Rebalancing are not assessed a $10
charge and are not included in the twelve free transfers per Contract Year.
Any money allocated to the Fixed Account will not be included in the
rebalancing.
BENEFITS UNDER THE CONTRACT
WITHDRAWALS
You may withdraw all or part of the Contract Value at any time prior to the
earlier of the death of the Owner (or the Annuitant if the Owner is not a
natural person) or the Payout Start Date. The amount available for withdrawal
is the Contract Value next computed after the Company receives the request for
a withdrawal at its home office, adjusted by any applicable Market Value
Adjustment, less any withdrawal charges, contract maintenance charges and any
premium taxes. Withdrawals from the Variable Account will be paid within seven
days of receipt of the request, subject to postponement in certain
circumstances. See "Delay of Payments," page .
Money can be withdrawn from the Variable Account or the Fixed Account. To
complete the partial withdrawal from the Variable Account, the Company will
redeem Accumulation Units in an amount equal to the withdrawal and any
applicable withdrawal charge and premium taxes. The Owner must name the
Investment Alternative from which the withdrawal is to be made. If none is
named, then the withdrawal request is incomplete and cannot be honored.
The minimum partial withdrawal is $50. If any withdrawal reduces the value of
any Sub-account of the Fixed Account to less than $500, we will treat the
request as a withdrawal of the entire Sub-account value. If the Contract Value
after a partial withdrawal would be less than $1,000, then the Company will
treat the request as one for termination of the Contract and the entire
Contract Value, adjusted by any Market Value Adjustment, less any charges and
premium taxes, will be paid out.
Partial withdrawals may also be taken automatically through Systematic
Withdrawals on a monthly, quarterly, semi-annual or annual basis. Systematic
Withdrawals of $50 or more may be requested at any time prior to the Payout
Start Date. At the Company's discretion, Systematic Withdrawals may not be
offered in conjunction with Dollar Cost Averaging or Automatic Fund
Rebalancing.
Partial and full withdrawals may be subject to income tax and a 10% tax
penalty. This tax and penalty are explained in "Federal Tax Matters," on page
.
After the Payout Start Date, withdrawals are only permitted when payments
from the Variable Account are being made that do not involve life
contingencies. In that case, you may terminate the Variable Account portion of
the income payments at any time and receive a lump sum equal to the commuted
balance of the remaining variable payments due, less any applicable withdrawal
charge.
12
<PAGE>
INCOME PAYMENTS
PAYOUT START DATE FOR INCOME PAYMENTS
The Payout Start Date is the day that income payments will start under the
Contract. You may change the Payout Start Date at any time by notifying the
Company in writing of the change at least 30 days before the scheduled Payout
Start Date. The Payout Start Date must be (a) at least one month after the
issue date; and (b) no later than the day the Annuitant reaches age 90.
VARIABLE ACCOUNT INCOME PAYMENTS
The amount of Variable Account income payments depends upon the investment
experience of the Sub-accounts selected by the Owner and any premium taxes, the
age and sex of the Annuitant, and the Income Plan chosen. The Company
guarantees that the amount of the income payment will not be affected by (1)
actual mortality experience and (2) the amount of the Company's administration
expenses.
The Contracts offered by this prospectus contain income payment tables that
provide for different benefit payments to men and women of the same age.
Nevertheless, in accordance with the U.S. Supreme Court's decision in ARIZONA
GOVERNING COMMITTEE V. NORRIS, in certain employment-related situations,
annuity tables that do not vary on the basis of sex will be used.
The total income payments received may be more or less than the total
purchase payments made because (a) Variable Account income payments vary with
the investment results of the underlying Funds, and (b) Annuitants may not live
as long as, or may live longer than, expected.
The Income Plan option selected will affect the dollar amount of each income
payment. For example, if an Income Plan for a Life Income is chosen, the income
payments will be greater than income payments under an Income Plan for a Life
Income with Guaranteed Payments.
If the actual net investment experience of the Variable Account is less than
the assumed investment rate, then the dollar amount of the income payments will
decrease. The dollar amount of the income payments will stay level if the net
investment experience equals the assumed investment rate and the dollar amount
of the income payments will increase if the net investment experience exceeds
the assumed investment rate. For purposes of the Variable Account income
payments, the assumed investment rate is 3 percent. For more detailed
information as to how Variable Account income payments are determined see the
Statement of Additional Information.
FIXED AMOUNT INCOME PAYMENTS
Income payment amounts derived from any monies allocated to Sub-accounts of
the Fixed Account during the accumulation phase are fixed for the duration of
the Income Plan. The fixed amount income payment amount is calculated by
applying the portion of the Contract Value in the Fixed Account on the Payout
Start Date, adjusted by any Market Value Adjustment and less any applicable
premium tax, to the greater of the appropriate value from the income payment
table selected or such other value as we are offering at that time.
INCOME PLANS
The Income Plans include:
INCOME PLAN 1--LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as the Annuitant lives. If the
Annuitant dies before the selected number of guaranteed payments have been
made, the Company will continue to pay the remainder of the guaranteed
payments.
INCOME PLAN 2--JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS
The Company will make payments for as long as either the Annuitant or Joint
Annuitant, named at the time of Income Plan selection, is living. If both the
Annuitant and the Joint Annuitant die before the selected number of guaranteed
payments have been made, the Company will continue to pay the remainder of the
guaranteed payments.
INCOME PLAN 3--GUARANTEED NUMBER OF PAYMENTS
The Company will make payments for a specified number of months beginning on
the Payout Start Date. These payments do not depend on the Annuitant's life.
The number of months guaranteed may be from 60 to 360. The mortality and
expense risk charge will be deducted from Variable Account assets supporting
these payments even though the Company does not bear any mortality risk.
The Owner may change the Income Plan until 30 days before the Payout Start
Date. If an Income Plan is chosen which depends on the Annuitant or Joint
Annuitant's life, proof of age will be required before income payments begin.
Applicable premium taxes will be assessed.
In the event that an Income Plan is not selected, the Company will make
income payments in accordance with Income Plan 1 with Guaranteed Payments for
120 Months. At the Company's discretion, other Income Plans may be available
upon request. The Company
13
<PAGE>
currently uses sex-distinct annuity tables. However, if legislation is passed
by Congress or the State of New York, the Company reserves the right to use
income payment tables which do not distinguish on the basis of sex. Special
rules and limitations may apply to certain qualified contracts.
If the Contract Value to be applied to an Income Plan is less than $2,000, or
if the monthly payments determined under the Income Plan are less than $20, the
Company may pay the Contract Value adjusted by any Market Value Adjustment and
less any applicable taxes, in a lump sum or change the payment frequency to an
interval which results in income payments of at least $20.
DEATH BENEFITS
DISTRIBUTION UPON DEATH PAYMENT PROVISIONS
A distribution upon death may be paid to the Owner determined immediately
after the death if, prior to the Payout Start Date:
. any Owner dies; or
. the Annuitant dies and the Owner is not a natural person.
If the Owner eligible to receive a distribution upon death is not a natural
person, then the Owner may elect to receive the distribution upon death in one
or more distributions. Otherwise, if the Owner is a natural person, the Owner
may elect to receive a distribution upon death in one or more distributions or
periodic payments through an Income Plan.
A death benefit will be paid: 1) if the Owner elects to receive the death
benefit in a single payment distributed within 180 days of the date of death;
and 2) if the death benefit is paid as of the day the value of the death
benefit is determined. Otherwise, the settlement value will be paid. The
settlement value is the same amount that would be paid in the event of
withdrawal of the Contract Value. The Company will calculate the settlement
value at the end of the Valuation Period coinciding with the requested
distribution date for payment or on the mandatory distribution date of 5 years
after the date of death. In any event, the entire distribution upon death must
be distributed within five years after the date of death unless an Income Plan
is selected or a surviving spouse continues the Contract in accordance with the
following sections:
Payments from the Income Plan must begin within one year of the date of death
and must be payable throughout:
. the life of the Owner; or
. a period not to exceed the life expectancy of the Owner; or
. the life of the Owner with payments guaranteed for a period not to exceed
the life expectancy of the Owner.
If the surviving spouse of the deceased Owner is the new Owner, then the
spouse may elect one of the options listed above or may continue the Contract
in the accumulation phase as if the death had not occurred. The Company will
only permit the Contract to be continued once. If the Contract is continued in
the accumulation phase, the surviving spouse may make a single withdrawal of
any amount within one year of the date of death without incurring a withdrawal
charge. However, any applicable Market Value Adjustment, determined as of the
date of the withdrawal, will apply.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greatest
of:
(a) the Contract Value on the date the Company determines the death
benefit; or
(b) the amount that would have been payable in the event of a full
withdrawal of the Contract Value on the date the Company determines the
death benefit; or
(c) the Contract Value on the Death Benefit Anniversary immediately
preceding the date we determine the death benefit adjusted by any
purchase payments, withdrawals and charges made between such Death
Benefit Anniversary and the date we determine the death benefit; or
(d) the greatest of the anniversary values as of the date we determine the
death benefit. The anniversary value is equal to the Contract Value on
a Contract Anniversary, increased by purchase payments made since that
anniversary and reduced by the amount of any partial withdrawals since
that anniversary. Anniversary values will be calculated for each
Contract Anniversary prior to the earlier of: (i) the date we determine
the death benefit, or (ii) the deceased's attained age 75 or 5 years
after the date the Contract was established, if later.
The value of the death benefit will be determined at the end of the Valuation
Period during which the Company receives a complete request for payment of the
death benefit, which includes due proof of death.
The Company will not settle any death claim until it receives due proof of
death.
14
<PAGE>
CHARGES AND OTHER DEDUCTIONS
DEDUCTIONS FROM PURCHASE PAYMENTS
No deductions are made from purchase payments. Therefore, the full amount of
every purchase payment is invested in the Investment Alternative(s).
WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)
You may withdraw the Contract Value at any time before the earliest of the
Payout Start Date, the death of any Owner or, if the Owner is not a natural
person, the death of the Annuitant.
There are no withdrawal charges on amounts withdrawn up to 10% of the amount
of purchase payments. Amounts withdrawn in excess of this may be subject to a
withdrawal charge. Amounts not subject to a withdrawal charge and not withdrawn
in a Contract Year are not carried over to later Contract Years. Withdrawal
charges, if applicable, will be deducted from the amount paid.
For purposes of calculating the amount of the withdrawal charge, withdrawals
are assumed to come from purchase payments first, beginning with the oldest
payment. Withdrawals made after all purchase payments have been withdrawn, will
not be subject to a withdrawal charge. For partial withdrawals, the Contract
Value will be adjusted to reflect the amount of payment received by the Owner,
any withdrawal charge, any applicable taxes and any Market Value Adjustment.
Withdrawals in excess of the preferred withdrawal amount will be subject to a
withdrawal charge as set forth below:
<TABLE>
<CAPTION>
APPLICABLE
YEAR APPLICABLE SINCE WITHDRAWAL
PREMIUM PAYMENT ACCEPTED CHARGE PERCENTAGE
------------------------ -----------------
<S> <C>
1st Year.............................................. 7%
2nd Year.............................................. 6%
3rd Year.............................................. 5%
4th Year.............................................. 4%
5th Year.............................................. 3%
6th Year.............................................. 2%
7th Year.............................................. 1%
Thereafter............................................ 0%
</TABLE>
Withdrawal charges will be used to pay sales commissions and other
promotional or distribution expenses associated with the marketing of the
Contracts. The Company does not anticipate that the withdrawal charges will
cover all distribution expenses in connection with the Contract.
In addition, federal and state income tax may be withheld from withdrawal
amounts. Certain terminations may also be subject to a federal tax penalty. See
"Federal Tax Matters," page .
The Company reserves the right to waive the withdrawal charge with respect to
Contracts issued to employees and registered representatives of any broker-
dealer that has entered into a sales agreement with Allstate Life Financial
Services, Inc. ("ALFS") to sell the Contracts and all wholesalers and their
employees that are under agreement with ALFS to wholesale the Contract. The
withdrawal charge will also be waived on withdrawals taken to satisfy IRS
required minimum distribution rules for this Contract.
CONTRACT MAINTENANCE CHARGE
A contract maintenance charge is deducted annually from the Contract Value to
reimburse the Company for its actual costs in maintaining each Contract and the
Variable Account. The Company guarantees that the amount of this charge will
not exceed $35 per Contract Year over the life of the Contract. This charge
will be waived if the total purchase payments are $50,000 or more on a Contract
Anniversary or if all money is allocated to the Fixed Account on the Contract
Anniversary.
Maintenance costs include but are not limited to expenses incurred in billing
and collecting purchase payments; keeping records; processing death claims,
cash withdrawals, and policy changes; proxy statements; calculating
Accumulation Unit and Annuity Unit values; and issuing reports to Owners and
regulatory agencies. The Company does not expect to realize a profit from this
charge.
On each Contract Anniversary prior to the payout start date, the contract
maintenance charge will be deducted from Sub-accounts of the Variable Account
in the same proportion that the Owner's value in each bears to the total value
in all Sub-accounts of the Variable Account. After the Payout Start Date, a pro
rata share of the annual contract maintenance charge will be deducted from each
income payment. For example, 1/12 of the $35, or $2.92, will be deducted if
there are twelve income payments during the Contract Year. A full contract
maintenance charge will be deducted if the Contract is terminated on any date
other than a Contract Anniversary.
15
<PAGE>
ADMINISTRATIVE EXPENSE CHARGE
The Company will deduct an administrative expense charge which is equal, on
an annual basis, to .10% of the daily net assets you have allocated to the Sub-
accounts of the Variable Account. This charge is designed to cover actual
administrative expenses which exceed the revenues from the contract maintenance
charge. The Company does not intend to profit from this charge. The Company
believes that the administrative expense charge and contract maintenance charge
have been set at a level that will recover no more than the actual costs
associated with administering the Contracts. There is no necessary relationship
between the amount of administrative charge imposed on a given Contract and the
amount of expenses that may be attributable to that Contract.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct a mortality and expense risk charge which is equal,
on an annual basis, to 1.35% of the daily net assets you have allocated to the
Sub-accounts of the Variable Account. The Company estimates that .95% is
attributable to the assumption of mortality risks and .40% is attributable to
the assumption of expense risks. The Company guarantees that the amount of this
charge will not increase over the life of the Contract.
The mortality risk arises from the Company's guarantee to cover all death
benefits and to make income payments in accordance with the Income Plan
selected and the Income Payment Tables.
The expense risk arises from the possibility that the contract maintenance
and administrative expense charge, both of which are guaranteed not to
increase, will be insufficient to cover actual administrative expenses.
If the mortality and expense risk charge is insufficient to cover the
Company's mortality costs and excess expenses, the Company will bear the loss.
If the charge is more than sufficient, the Company will retain the balance as
profit. The Company currently expects a profit from this charge. Any such
profit, as well as any other profit realized by the Company and held in its
general account (which supports insurance and annuity obligations), would be
available for any proper corporate purpose, including, but not limited to,
payment of distribution expenses.
TAXES
The Company will deduct applicable state premium taxes or other similar
policyholder taxes relative to the Contract (collectively referred to as
"premium taxes") either at the Payout Start Date, or when a total withdrawal
occurs. The Company reserves the right to deduct premium taxes from the
purchase payments. Currently, no deductions are made because New York does not
charge premium taxes on annuities.
At the Payout Start Date, the charge for applicable premium taxes will be
deducted from each Investment Alternative in the proportion that the Owner's
value in the Investment Alternative bears to the total Contract Value.
TRANSFER CHARGES
The Company reserves the right to assess a $10 charge on each transfer in
excess of twelve per Contract Year, excluding transfers through Dollar Cost
Averaging and Automatic Fund Rebalancing. The Company is presently waiving this
charge.
FUND EXPENSES
A complete description of the expenses and deductions from the Funds is found
in the prospectus for the Fund Series. This prospectus is accompanied by the
prospectus for the Fund Series.
GENERAL MATTERS
OWNER
The Owner has the sole right to exercise all rights and privileges under the
Contract, except as otherwise provided in the Contract. The Contract cannot be
jointly owned by both a non-natural person and a natural person.
BENEFICIARY
Subject to the terms of any irrevocable Beneficiary designation, the Owner
may change the Beneficiary at any time by notifying the Company in writing. Any
change will be effective at the time it is signed by the Owner, whether or not
the Annuitant is living when the change is received by the Company. The Company
will not, however, be liable as to any payment or settlement made prior to
receiving the written notice.
Unless otherwise provided in the Beneficiary designation, if a Beneficiary
predeceases the Owner and there are no other surviving beneficiaries, the new
Beneficiary will be: the Owner's spouse if living; otherwise, the Owner's
children, equally, if living; otherwise, the Owner's estate. Multiple
Beneficiaries may be named. Unless otherwise provided in the Beneficiary
designation, if more than one Beneficiary survives the Owner, the surviving
Beneficiaries will share equally in any amounts due.
16
<PAGE>
ASSIGNMENTS
The Company will not honor an assignment of an interest in a Contract as
collateral or security for a loan. Otherwise, the Owner may assign benefits
under the Contract prior to the Payout Start Date. No Beneficiary may assign
benefits under the Contract until they are due.
No assignment will bind the Company unless it is signed by the Owner and
filed with the Company. The Company is not responsible for the validity of an
assignment. Federal law prohibits or restricts the assignment of benefits under
many types of retirement plans and the terms of such plans may themselves
contain restrictions on assignments.
DELAY OF PAYMENTS
Payment of any amounts due from the Variable Account under the Contract will
occur within seven days, unless:
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the Securities and Exchange
Commission; or
3. The Securities and Exchange Commission permits delay for the protection
of the Owners.
Payments or transfers from the Fixed Account may be delayed for up to 6
months.
MODIFICATION
The Company may not modify the Contract without the consent of the Owner
except to make the Contract meet the requirements of the Investment Company Act
of 1940, or to make the Contract comply with any changes in the Internal
Revenue Code or to make any changes required by the Code or by any other
applicable law.
CUSTOMER INQUIRIES
The Owner or any persons interested in the Contract may make inquiries
regarding the Contract by calling or writing your representative or the Company
at:
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
POST OFFICE BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
1-(800)692-4682
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. THE
COMPANY MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax
consequences of ownership or receipt of distributions under an annuity contract
depend on the individual circumstances of each person. If you are concerned
about any tax consequences with regard to your individual circumstances, you
should consult a competent tax adviser.
TAXATION OF ANNUITIES IN GENERAL
TAX DEFERRAL
Generally, an annuity contract owner is not taxed on increases in the
Contract Value until a distribution occurs. This rule applies only where (1)
the owner is a natural person, (2) the investments of the Variable Account are
"adequately diversified" in accordance with Treasury Department Regulations,
and (3) the issuing insurance company, instead of the annuity owner, is
considered the owner for federal income tax purposes of any separate account
assets funding the contract.
NON-NATURAL OWNERS
As a general rule, annuity contracts owned by non-natural persons such as
corporations, trusts, or other entities are not treated as annuity contracts
for federal income tax purposes and the income on such contracts is taxed as
ordinary income received or accrued by the owner during the taxable year. There
are several exceptions to the general rule for contracts owned by non-natural
persons which are discussed in the Statement of Additional Information.
17
<PAGE>
DIVERSIFICATION REQUIREMENTS
For a Contract to be treated as an annuity for federal income tax purposes,
the investments in the Variable Account must be "adequately diversified" in
accordance with the standards provided in the Treasury regulations. If the
investments in the Variable Account are not adequately diversified, then the
Contract will not be treated as an annuity contract for federal income tax
purposes and the Owner will be taxed on the excess of the Contract Value over
the investment in the Contract. Although the Company does not have control over
the Funds or their investments, the Company expects the Funds to meet the
diversification requirements.
OWNERSHIP TREATMENT
In connection with the issuance of the regulations on the adequate
diversification standards, the Department of the Treasury announced that the
regulations do not provide guidance concerning the extent to which contract
owners may direct their investments among Sub-accounts of a variable account.
The Internal Revenue Service has previously stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the owner possesses incidents of ownership in those assets such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, Treasury announced that guidance would
be issued in the future regarding the extent that owners could direct their
investments among Sub-accounts without being treated as owners of the
underlying assets of the Variable Account. As of the date of this prospectus,
no such guidance has been issued.
The ownership rights under this contract are similar to, but different in
certain respects from, those described by the Service in rulings in which it
was determined that contract owners were not owners of separate account assets.
For example, the owner of this contract has the choice of more investment
options to which to allocate premiums and contract values, and may be able to
transfer among investment options more frequently than in such rulings. These
differences could result in the contract owner being treated as the owner of
the assets of the Variable Account. In those circumstances, income and gains
from the Variable Account assets would be includible in the Contract Owners'
gross income. In addition, the Company does not know what standards will be set
forth in the regulations or rulings which the Treasury Department has stated it
expects to issue. It is possible that Treasury's position, when announced, may
adversely affect the tax treatment of existing contracts. The Company,
therefore, reserves the right to modify the Contract as necessary to attempt to
prevent the Owner from being considered the federal tax owner of the assets of
the Variable Account. However, the Company makes no guarantee that such
modification to the contract will be successful.
DELAYED MATURITY DATES
If the contract's scheduled maturity date is at a time when the annuitant has
reached an advanced age, e.g., past age 85, it is possible that the contract
would not be treated as an annuity. In that event, the income and gains under
the contract could be currently includible in the owner's income.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal under a non-qualified contract, amounts
received are taxable to the extent the contract value before the withdrawal
exceeds the investment in the contract. The investment in the contract is the
gross premium or other consideration paid for the contract reduced by any
amounts previously received from the contract to the extent such amounts were
properly excluded from the owner's gross income. In the case of a partial
withdrawal under a qualified contract, the portion of the payment that bears
the same ratio to the total payment that the investment in the contract (i.e.,
nondeductible IRA contributions, after tax contributions to qualified plans)
bears to the contract value, can be excluded from income. In the case of a full
withdrawal under a non-qualified contract or a qualified contract, the amount
received will be taxable only to the extent it exceeds the investment in the
contract. If an individual transfers an annuity contract without full and
adequate consideration to a person other than the individual's spouse (or to a
former spouse incident to a divorce), the owner will be taxed on the difference
between the contract value and the investment in the contract at the time of
transfer. Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) of the contract value is treated as a withdrawal of such
amount or portion. The contract provides a death benefit that in certain
circumstances may exceed the greater of the payments and the contract value. As
described elsewhere in the prospectus, the Company imposes certain charges with
respect to the death benefit. It is possible that some portion of those charges
could be treated for federal tax purposes as a partial withdrawal from the
contract.
TAXATION OF ANNUITY PAYMENTS
Generally, the rule for income taxation of payments received from an annuity
contract provides for the return of the owner's investment in the contract in
equal tax-free amounts over the payment period. The balance of each payment
received is taxable. In the case of variable annuity payments, the amount
excluded from taxable income is determined by dividing the investment in the
contract by the total number of expected payments. In the case of fixed annuity
payments, the amount excluded from income is determined by multiplying the
payment by the ratio of the investment in the contract (adjusted for any refund
feature or period certain) to the total expected value of annuity payments for
the term of the contract. Once the total amount of the investment in the
contract is excluded using these ratios, the annuity payments will be fully
taxable. If annuity payments cease because of the death of the annuitant before
the total
18
<PAGE>
amount of the investment in the contract is recovered, the unrecovered amount
generally will be allowed as a deduction to the Owner for the last taxable
year.
TAXATION OF ANNUITY DEATH BENEFITS
Amounts may be distributed from an annuity contract because of the death of
an owner or annuitant. Generally, such amounts are includible in income as
follows: (1) if distributed in a lump sum, the amounts are taxed in the same
manner as a full withdrawal or (2) if distributed under an annuity option, the
amounts are taxed in the same manner as an annuity payment.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any premature
distribution from a non-qualified annuity contract. The penalty tax generally
applies to any distribution made prior to the owner attaining age 59 1/2.
However, there should be no penalty tax on distributions to owners (1) made on
or after the owner attains age 59 1/2; (2) made as a result of the owner's
death or disability; (3) made in substantially equal periodic payments over
life or life expectancy; (4) made under an immediate annuity; or (5)
attributable to an investment in the contract before August 14, 1982. Similar
rules apply for distributions under certain qualified contracts. A competent
tax advisor should be consulted to determine if any other exceptions to the
penalty apply to your specific circumstances.
AGGREGATION OF ANNUITY CONTRACTS
All non-qualified deferred annuity contracts issued by the Company (or its
affiliates) to the same owner during any calendar year will be aggregated and
treated as one annuity contract for purposes of determining the taxable amount
of a distribution.
TAX QUALIFIED CONTRACTS
Annuity contracts may be used as investments with certain tax qualified plans
such as: (1) Individual Retirement Annuities under Section 408(b) of the Code;
(2) Simplified Employee Pension Plans under Section 408(k) of the Code; (3) Tax
Sheltered Annuities under Section 403(b) of the Code; (4) Corporate and Self
Employed Pension and Profit Sharing Plans; and (5) State and Local Government
and Tax-Exempt Organization Deferred Compensation Plans. In the case of certain
tax qualified plans, the terms of the plans may govern the right to benefits,
regardless of the terms of the contract.
RESTRICTIONS UNDER SECTION 403(B) PLANS
Section 403(b) of the Code provides for tax-deferred retirement savings plans
for employees of certain non-profit and educational organizations. In
accordance with the requirements of Section 403(b), any annuity contract used
for a 403(b) plan must provide that distributions attributable to salary
reduction contributions made after 12/31/88, and all earnings on salary
reduction contributions, may be made only after the employee attains age 59
1/2, separates from service, dies, becomes disabled or on account of hardship
(earnings on salary reduction contributions may not be distributed on the
account of hardship). These limitations do not apply to withdrawals where the
Company is directed to transfer some or all of the contract value to another
Section 403(b) plans.
INCOME TAX WITHHOLDING
The Company is required to withhold federal income tax at a rate of 20% on
all "eligible rollover distributions" unless an individual elects to make a
"direct rollover" of such amounts to another qualified plan or Individual
Retirement Account or Annuity (IRA). Eligible rollover distributions generally
include all distributions from qualified contracts, excluding IRAs, with the
exception of (1) required minimum distributions, or (2) a series of
substantially equal periodic payments made over a period of at least 10 years,
or the life (joint lives) of the participant (and beneficiary). For any
distributions from non-qualified annuity contracts, or distributions from
qualified contracts which are not considered eligible rollover distributions,
the Company may be required to withhold federal and state income taxes unless
the recipient elects not to have taxes withheld and properly notifies the
Company of such election.
DISTRIBUTION OF THE CONTRACTS
Allstate Life Financial Services, Inc. ("ALFS"), 3100 Sanders Road,
Northbrook Illinois, an indirect wholly owned subsidiary of Allstate Insurance
Company, acts as the principal underwriter of the Contracts. ALFS is registered
as a broker-dealer under the Securities Exchange Act of 1934 and became a
member of the National Association of Securities Dealers, Inc. on June 30,
1993. Contracts are sold by registered representatives of broker-dealers or
bank employees who are licensed insurance agents appointed by the Company,
either individually or through an incorporated insurance agency. Contracts may
be sold by representatives or employees of banks which may be acting as broker-
dealers without separate registration under the Securities Exchange Act of
1934, pursuant to legal and regulatory exceptions.
Commissions paid may vary, but in aggregate are not anticipated to exceed
6.75% of any purchase payment. In addition, under certain circumstances,
certain sellers of the Contracts may be paid persistency bonuses which will
take into account, among other things, the length of time purchase payments
have been held under a Contract, and the amount of purchase payments. A
persistency bonus is not expected to exceed .25%, on an annual basis, of the
purchase payments considered in connection with the bonus. These commissions
are
19
<PAGE>
intended to cover distribution expenses. In addition, sale of the Contract may
count toward incentive program awards for the registered representative. All
Commissions are paid by the Company and not by the separate account.
The underwriting agreement with ALFS provides for indemnification of ALFS by
the Company for liability to Owners arising out of services rendered or
Contracts issued.
VOTING RIGHTS
The Owner or anyone with a voting interest in the Sub-account of the
Variable Account may instruct the Company on how to vote at shareholder
meetings of the Fund Series. The Company will solicit and cast each vote
according to the procedures set up by the Fund Series and to the extent
required by law. The Company reserves the right to vote the eligible shares in
its own right, if subsequently permitted by the Investment Company Act of
1940, its regulations or interpretations thereof.
Fund shares as to which no timely instructions are received will be voted in
proportion to the voting instructions which are received with respect to all
Contracts participating in that Sub-account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro-rata basis to reduce the
votes eligible to be cast.
Before the Payout Start Date, the Owner holds the voting interest in the
Sub-account of the Variable Account (The number of votes for the Owner will be
determined by dividing the Contract Value attributable to a Sub-account by the
net asset value per share of the applicable eligible Fund.)
After the Payout Start Date, the person receiving income payments has the
voting interest. After the Payout Start Date, the votes decrease as income
payments are made and as the reserves for the Contract decrease. That person's
number of votes will be determined by dividing the reserve for such Contract
allocated to the applicable Sub-account by the net asset value per share of
the corresponding eligible Fund.
SELECTED FINANCIAL DATA
The following selected financial data for the Company should be read in
conjunction with the financial statements and notes thereto included in this
prospectus beginning on page F-1.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SELECTED FINANCIAL DATA
($ IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR-END FINANCIAL DATA 1995 1994 1993 1992 1991
- ----------------------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
For The Years Ended
December 31:
Revenues................. $ 250,854 $ 186,249 $ 227,445 $ 203,890 $186,955
Income from Continuing
Operations.............. 19,522 18,221 13,163 12,225 15,996
Net Income............... 19,522 18,221 13,163 12,225 15,996
As of December 31:
Total Assets............ 1,842,969 1,449,993 1,410,895 1,162,763 943,871
</TABLE>
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions," which resulted in a charge
against 1992 earnings of $623 thousand on an after tax basis. Effective
December 31, 1993, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", which requires that investments
classified as available for sale be carried at fair value. The net effect of
adoption of this statement increased shareholder's equity at December 31, 1993
by $25,391 and did not have a material impact on net income. (See note 3 to
the Financial Statements.)
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA 1996 1995
- ------------------------ --------- ---------
<S> <C> <C>
For The Quarters Ended June 30:
Revenues.................................................. $ 56,667 $ 59,766
Net Income................................................ 5,313 4,434
As of June 30:
Total Assets............................................. 1,793,492 1,577,384
</TABLE>
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following highlights significant factors influencing results of
operations and financial position.
Allstate Life Insurance Company of New York ("the Company"), which is wholly
owned by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company
("Allstate"), markets life insurance and group and individual annuities in the
state of New York, with products consisting predominately of structured
settlement annuities sold through independent brokers. The Company also
utilizes Allstate agencies and direct marketing to distribute its traditional
and universal life and accident and disability insurance products.
Additionally, flexible premium deferred variable annuity contracts and certain
single and flexible premium annuities are marketed to individuals through the
account executives of Dean Witter Reynolds Inc.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Statutory premiums and deposits.............. $ 216,361 $ 153,000 $ 226,993
========== ========== ==========
Invested assets (1).......................... 1,335,854 1,184,024 1,148,709
Separate Account assets (2).................. 220,141 175,918 145,866
---------- ---------- ----------
Invested assets, including Separate Account
assets...................................... 1,555,995 1,359,942 1,294,575
========== ========== ==========
Premium income and contract charges.......... 148,316 88,560 126,913
Net investment income........................ 104,384 96,911 95,956
Policy benefits.............................. 198,055 137,434 175,676
Operating expenses........................... 23,366 20,205 31,894
Early retirement program..................... 1,210
---------- ---------- ----------
Income from operations....................... 31,279 26,622 15,299
Income tax on operations..................... 10,557 8,907 5,110
---------- ---------- ----------
Net operating income......................... 20,722 17,715 10,189
Realized capital gains and losses, after tax. (1,200) 506 2,974
---------- ---------- ----------
Net income................................... $ 19,522 $ 18,221 $ 13,163
========== ========== ==========
</TABLE>
- --------
(1) Fixed income securities included in invested assets are carried at
amortized cost in the table above and at fair value in the statements of
financial position.
(2) Separate Accounts are included at fair value.
STATUTORY PREMIUMS AND DEPOSITS
Statutory premiums, which include premiums and deposits for all products,
increased $63.4 million or 41.4% in 1995 from 1994. The increase is primarily
due to growth in sales of individual annuities, which comprised 77.3% of
statutory premiums and deposits in 1995. Increased sales of structured
settlement annuities in 1995 were partially offset by a decrease in the sales
of variable annuities. In 1994, statutory premiums decreased 32.6% from 1993
levels. The decrease was due primarily to lower sales of structured settlement
annuities.
PREMIUM INCOME, CONTRACT CHARGES AND PROVISION FOR POLICY BENEFITS
Premium income and contract charges under generally accepted accounting
principles ("GAAP") increased 67.5% in 1995 and decreased 30.2% in 1994. Under
GAAP, revenues exclude deposits on most annuities and premiums on universal
life insurance policies. The changes in premium and contract charges in 1995
and 1994 reflect fluctuations primarily in the level of sales of structured
settlement annuities sold with life contingencies. Policy benefits increased
$60.6 million, or 44.1% during 1995, and decreased $38.2 million or 21.8% in
1994. These changes also reflect fluctuations primarily in the level of sales
of structured settlement annuities with life contingencies.
NET INVESTMENT INCOME
Pre-tax net investment income increased 7.7% in 1995 and was essentially
unchanged in 1994. The increase in 1995 was related to the 12.8% or $151.8
million increase in invested assets resulting primarily from growth in new
business, partially offset by surrenders and other benefits paid.
21
<PAGE>
OPERATING EXPENSES
Operating expenses increased by $2.0 million, or 9.1%, resulting from an
increase in amortization of deferred acquisition costs, partially offset by the
costs of an early retirement program recorded in 1994. The decrease of $10.5
million, or 32.9%, in 1994 operating expense is attributable to a decrease in
amortization of deferred acquisition costs, which were higher in 1993 as a
result of annuity contract surrenders.
In 1994, an after tax charge of $0.8 million related to the cost of an early
retirement program offered to certain home office employees was recorded. The
program provides one year of salary continuation and related benefits during
the salary continuation period, and an enhanced retirement benefit.
NET OPERATING INCOME
Net operating income increased 17.0% in 1995 from 1994, which in turn
increased 73.9% from 1993. The increase in net operating income in 1995 was
primarily due to higher margins and growth in revenues. The increase in 1994
over 1993 was primarily due to a decrease in operating expenses.
REALIZED CAPITAL GAINS AND LOSSES
Net realized capital losses were reported in 1995 as compared to net realized
capital gains in 1994. Capital losses in 1995 were realized primarily from
writedowns of mortgage loans, partially offset by gains on sales of fixed
income securities. Realized capital gains in 1994 decreased from gains realized
in 1993. While the Company experienced lower asset writedowns in 1994, realized
capital gains from sales of securities and bond calls were also significantly
lower than the prior year. Realized capital gains in 1993 included the effect
of sales related to repositioning a portion of the investment portfolio to
improve the matching of assets with related liabilities.
FINANCIAL POSITION
INVESTMENTS
The Company follows an investment strategy that combines the goals of safety,
stability, liquidity, growth and total return. It seeks to balance preservation
of principal with after-tax yield while maintaining portfolio diversification.
The composition of the portfolio is the result of various interrelated
investment considerations including protection of principal, appreciation
potential, tax consequences, and yield, as well as asset/liability management
issues such as cash flow and duration matching. To achieve an economic balance
between assets and liabilities, the investment portfolios are segmented by type
of insurance product.
The composition of the investment portfolio at December 31, 1995 is presented
in the table below (see Notes 2 and 6 to the financial statements for
investment accounting policies and additional information).
<TABLE>
<CAPTION>
PERCENT
($ IN THOUSANDS) TO TOTAL
---------------- --------
<S> <C> <C>
Fixed income securities
Privately placed corporate bonds..................... $ 466,208 30.2%
U.S. government and agencies......................... 435,555 28.3
Publicly traded corporate bonds...................... 258,829 16.8
Mortgage-backed securities........................... 225,560 14.6
State and municipal.................................. 38,741 2.5
---------- -----
Total fixed income securities....................... $1,424,893 92.4
Mortgage loans........................................ 86,394 5.6
Policy loans.......................................... 22,785 1.5
Short-term and other.................................. 7,257 .5
---------- -----
Total............................................... $1,541,329 100.0%
========== =====
</TABLE>
FIXED INCOME SECURITIES
The Company generally holds its fixed income securities for the long term,
but has classified all of these securities at December 31, 1995, as "available
for sale" which are carried in the statement of financial position at fair
value, to allow maximum flexibility in portfolio management. At December 31,
1995, net unrealized capital gains on the fixed income securities portfolio
totaled $205.5 million compared to an unrealized capital loss of $11.5 million
as of December 31, 1994. The significant change in the unrealized gain/loss
position is primarily attributable to declining interest rates.
As of December 31, 1995, the fixed income securities portfolio included
$466.2 million or 30.2% of the portfolio invested in privately placed corporate
obligations, stated at fair value. Compared to public securities, private
placements generally afford the advantages of higher yields, improved cash flow
predictability through pro-rata sinking funds on many bonds, and a combination
of
22
<PAGE>
covenant and call protection features designed to better protect the holder
against losses resulting from credit deterioration, reinvestment risk, and
losses resulting from fluctuations in interest rates. The relative
disadvantages of private placements include the fact that the securities are
generally less liquid than public securities and that access to information
regarding privately placed securities is generally more restricted than for
public securities. The Company determines the fair value of privately placed
fixed income securities based on discounted cash flows using current interest
rates for similar securities.
At December 31, 1995 the Company had $225.6 million or 14.6% of the portfolio
invested in mortgage-backed securities ("MBS"). These securities provide
higher-than-average credit quality and liquidity. The Company mitigates credit
risk primarily by purchasing securities with underlying collateral that is
guaranteed by U.S. government entities.
MBS are subject to risks associated with repayment of principal, which may
result in the securities having a different actual maturity and yield than
anticipated at the time of purchase. Securities that have an amortized cost
greater than par value, will incur a decrease in yield if mortgages repay
faster than expected. Those securities that have an amortized cost lower than
par value generate an increase in yield if mortgages repay faster than
expected. The degree to which a security is susceptible to changes in yield is
influenced by the difference between its amortized cost and par value, the
relative sensitivity to repayment of the underlying mortgages backing the
securities in a changing interest rate environment, and the repayment priority
of the securities in the overall securitization structure. The Company attempts
to limit repayment risk by purchasing MBS whose cost does not significantly
exceed par value, and with repayment protection to provide a more certain cash
flow to the Company. At December 31, 1995, the amortized cost of the MBS
portfolio was below par value by $8.1 million.
The Company closely monitors its fixed income portfolio for declines in value
that are other than temporary. Securities are placed on non-accrual status when
they are in default or when the receipt of interest payments is in doubt. The
total pretax provisions for losses attributable to fixed income securities for
1995, 1994 and 1993 were $2.4, $0.6 and $1.2 million, respectively.
The Company monitors the quality of its fixed income portfolio, in part, by
categorizing certain investments as problem, restructured or potential problem.
Problem fixed income securities as securities in default with respect to
principal and/or interest and/or securities issued by companies that went into
bankruptcy subsequent to acquisition of the security. Restructured fixed income
securities have modified terms and conditions that were not at current market
rates or terms at the time of the restructuring. Potential problem fixed income
securities are current with respect to contractual principal and/or interest,
but because of other facts and circumstances, management has serious doubts
regarding the borrower's ability to pay future interest and principal, which
causes management to believe these securities may be classified as problem or
restructured in the future.
There were no problem and potential problem fixed income investments as of
December 31, 1995, compared to $7.0 million of potential problem fixed income
securities at December 31, 1994. The $7.0 million of potential problem fixed
income securities at December 31, 1994 related to a single security and has
been removed from the potential problem category due to its improved status.
FINANCIAL FUTURES CONTRACTS
As part of its asset/liability management, the Company generally utilizes
futures contracts to hedge its interest rate risk related to anticipatory
investment purchases as well as to enhance asset/liability management. The
Company does not hold or issue these instruments for trading purposes. At
December 31, 1995, the Company had $22.9 million in notional amount of futures
contracts outstanding, all of which mature within one year.
MORTGAGE LOANS
The Company's $86.4 million investment in mortgage loans at December 31, 1995
is comprised primarily of loans secured by first mortgages on developed,
commercial real estate. Geographical and property type diversification are key
considerations used to manage the Company's mortgage loan risk.
The Company closely monitors its commercial mortgage loan portfolio on a
loan-by-loan basis. Loans with an estimated collateral value less than the
loan's balance, as well as loans with other characteristics indicative of a
higher than normal credit risk, are reviewed by financial and investment
management for purposes of establishing valuation allowances and placing loans
on non-accrual status. The underlying collateral values are based upon
discounted property cash flow projections, which are updated at least annually
or as conditions change. The total pretax provisions for loan losses were $2.2,
$0.7 and $1.2 million, during 1995, 1994 and 1993, respectively.
The Company defines problem commercial mortgage loans as loans that are in
foreclosure, loans for which a principal or interest payment is over 60 days
past due, or are current with respect to interest payments, but considered in
substance foreclosed. Restructured commercial loans have modified terms and
conditions that were not at prevailing market rates or terms at the time of the
restructuring. Potential problem commercial mortgage loans are current with
respect to interest payments, or less than 60 days delinquent as to contractual
principal and interest payments, but because of other facts and circumstances,
management has serious doubts regarding the borrower's ability to pay future
interest and principal which causes management to believe these loans may be
classified as problem or restructured in the future.
23
<PAGE>
At December 31, 1995 and December 31, 1994 total problem, restructured and
potential problem loans, net of valuation allowances, were $9.6 million and
$8.4 million, respectively. The net carrying value of impaired loans (see Note
6 of the financial statements) at December 31, 1995 was $9.6 million. All
problem, restructured and potential problem loans were considered to be
impaired at December 31, 1995.
SEPARATE ACCOUNTS
Separate Account balances increased 25.1% from $175.9 million at December 31,
1994 to $220.1 million at December 31, 1995 due to sales of flexible premium
deferred variable annuity contracts, transfers from fixed annuities to variable
annuities and favorable investment performance of the Separate Accounts,
partially offset by surrenders.
RESERVE FOR LIFE INSURANCE POLICY BENEFITS
The reserve for life insurance policy benefits increased 33.4% to $838.7
million at December 31, 1995, resulting primarily from the sales of structured
settlement annuities with life contingencies.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of funds consists primarily of premiums and
annuity deposits and collections of principal and income from the investment
portfolio. The Company generates substantial positive cash flows from operating
activities. The major use of these funds are policyholder claims and benefits,
contract maturities, surrenders and other operating costs.
FINANCIAL RATINGS AND STRENGTH
Liquidity for life insurance companies is measured by their ability to pay
contractual benefits, pay operating expenses and fund investment commitments.
Independent insurance industry rating organizations rate life insurance
companies based on their overall performance and ability to meet their
policyholder obligations over a long period of time. Such ratings are directed
toward the protection of policyholders, not investors. Claims-paying ability
ratings at December 31, 1995 assigned to the Company include AA+ and A+(g) from
Standard & Poor's and A.M. Best, respectively. In addition, Moody's assigned
the Company an Aa3 financial stability rating at December 31, 1995.
The National Association of Insurance Commissioners ("NAIC") has a standard
for assessing the solvency of insurance companies, which is referred to as
"risk-based capital" ("RBC"). The requirement consists of a formula for
determining each insurer's RBC and a model law specifying regulatory actions if
an insurer's RBC falls below specified levels. The RBC formula for life
insurance companies establishes capital requirements relating to insurance
risk, business risk, asset risk and interest rate risk. At December 31, 1995,
RBC for the Company was significantly above levels which would require
regulatory action.
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996
GENERAL
The following highlights significant factors influencing results of
operations and changes in financial position of Allstate Life Insurance Company
of New York (the "Company"). It should be read in conjunction with the
discussion and analysis and financial statements thereto found under Items 7
and 8 of Part II of the Allstate Life Insurance Company of New York Annual
Report on Form 10-K.
The Company, which is wholly owned by a wholly-owned subsidiary ("Parent") of
Allstate Insurance Company ("Allstate"), markets life insurance and group and
individual annuities in the state of New York, with products consisting
predominately of structured settlement annuities sold through independent
brokers. The Company also utilizes Allstate agencies and direct marketing to
distribute its traditional and universal life and accident and disability
insurance products. Certain single and flexible premium annuities are marketed
to individuals through the account executives of Dean Witter Reynolds Inc. The
Company issues flexible premium deferred variable annuity contracts, also sold
through the account executives of Dean Witter Reynolds Inc., the assets and
liabilities of which are legally segregated and reflected in the accompanying
statements of financial position as the assets and liabilities of the Separate
Accounts.
Separate Account assets and liabilities are carried at fair value in the
statements of financial position. Investment income and realized gains and
losses of the Separate Account investments accrue directly to the
contractholders (net of fees) and, therefore are not included in the Company's
statements of operations.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- -----------
($ IN THOUSANDS) ($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Statutory premiums and deposits. $ 44,541 $ 47,465 $ 89,359 $ 118,751
========== ========== ========== ===========
Invested assets (1)............. $1,396,589 $1,259,751 $1,396,589 $ 1,259,751
Separate Account assets......... 238,347 195,438 238,347 195,438
---------- ---------- ---------- -----------
Invested assets, including
Separate Account assets........ $1,634,936 $1,455,189 $1,634,936 $ 1,455,189
========== ========== ========== ===========
Premium income and contract
charges........................ $ 28,417 $ 34,829 $ 57,221 $ 86,445
Net investment income........... 27,830 25,455 55,424 50,682
Policy benefits................. 42,372 46,864 85,389 109,771
Operating expenses.............. 5,759 6,276 11,379 12,177
Income from operations.......... 8,116 7,144 15,877 15,179
Income tax on operations........ 3,076 2,374 5,867 5,098
---------- ---------- ---------- -----------
Net operating income............ 5,040 4,770 10,010 10,081
---------- ---------- ---------- -----------
Realized capital gains and
losses, after tax.............. 273 (336) 228 (1,386)
---------- ---------- ---------- -----------
Net income...................... $ 5,313 $ 4,434 $ 10,238 $ 8,695
========== ========== ========== ===========
</TABLE>
- --------
(1) Fixed income securities are included in invested assets at amortized cost
in the table above and are carried at fair value in the statements of
financial position. Separate Accounts are included at fair value in both
the table above and the statements of financial position.
STATUTORY PREMIUMS AND DEPOSITS
Statutory premiums, which include premiums and deposits for all products,
decreased $2.9 million, or 6.2% for the second quarter of 1996 from $47.5
million for the same period in 1995. For the first six months of 1996,
statutory premiums decreased $29.4 million or 24.8% from $118.8 million for the
same period in 1995. The decreases for both periods are due primarily to lower
sales of structured settlement annuities, partially offset by increases in
sales of variable annuity and life products.
PREMIUM INCOME, CONTRACT CHARGES AND PROVISION FOR POLICY BENEFITS
Premium income and contract charges under generally accepted accounting
principles ("GAAP") decreased 18.4% for the three-month period ended June 30,
1996 and decreased 33.8% for the first six months of 1996 from the same periods
in 1995. Under GAAP, revenues exclude deposits on most annuities and premiums
on universal life insurance policies. The decrease in premium and contract
charges in 1996 is primarily the result of lower sales of structured settlement
annuities with life contingencies. Policy benefits decreased $4.5 million, or
9.6% during the second quarter of 1996, and decreased $24.4 million, or 22.2%
for the six months ended June 30,
25
<PAGE>
1996, also reflecting the decreased sales of structured settlement annuities
with life contingencies, partially offset by higher mortality costs resulting
from growth in the life insurance block of business.
NET INVESTMENT INCOME
Pre-tax net investment income increased 9.3% in the second quarter of 1996
and 9.4% for the six months ended June 30, 1996, compared to the same periods
in 1995. The increases were primarily related to the 10.9% or $136.8 million
increase in invested assets. The overall portfolio yield declined slightly, as
proceeds from calls and maturities as well as new premiums and deposits were
invested in securities yielding less than the average portfolio rate.
OPERATING EXPENSES
Operating expenses decreased by $517 thousand, or 8.2%, in the second quarter
of 1996 and $798 thousand, or 6.6%, for the six months ended June 30, 1996,
compared to the same periods in 1995. The decrease is primarily attributable to
reduced acquisition costs due to lower sales of structured settlement
annuities. First quarter 1995 operating expenses reflected a one-time $303
thousand benefit related to a reduced rate of amortization of deferred policy
acquisition costs, due to favorable universal life insurance persistency.
NET OPERATING INCOME
Net operating income increased by 5.7% in the second quarter of 1996,
compared to the same period in 1995. The increase for the quarter is primarily
attributable to higher mortality margins and reduced operating expenses. Net
operating income for the first six months of 1996 remained essentially
unchanged as compared to the same period in 1995, since 1995 included the
nonrecurring benefit attributable to the amortization of deferred acquisition
costs as described above.
REALIZED CAPITAL GAINS AND LOSSES
Net realized after-tax capital gains were $273 thousand and $228 thousand for
the three- and six-month periods ending June 30, 1996, compared to net realized
after-tax losses of $336 thousand and $1.4 million for the comparable periods
in 1995. The increases in capital gains are primarily attributable to lower
commercial mortgage loan losses in 1996.
INVESTMENTS
FIXED INCOME SECURITIES
The Company monitors the quality of its fixed income portfolio, in part, by
categorizing certain investments as problem, restructured or potential problem
investments. Problem fixed income securities are securities in default with
respect to principal and/or interest and/or securities issued by companies that
went into bankruptcy subsequent to acquisition of the security. Restructured
fixed income securities have modified terms and conditions that were not at
current market rates or terms at the time of the restructuring. Potential
problem fixed income securities are current with respect to contractual
principal and/or interest, but because of other facts and circumstances,
management has serious doubts regarding the borrower's ability to pay future
interest and principal, which causes management to believe these securities may
be classified as problem or restructured in the future. At June 30, 1996,
problem, restructured and potential problem fixed income securities were $3.8
million. There were no problem, restructured, and potential problem fixed
income securities at December 31, 1995.
MORTGAGE LOANS
The Company monitors the quality of its mortgage loans by categorizing
certain loans as problem, restructured or potential problem. Problem commercial
mortgage loans are loans that are in foreclosure, loans for which a principal
or interest payment is over 60 days past due, or are current with respect to
interest payments, but considered in-substance foreclosed. Restructured
commercial mortgage loans have modified terms and conditions that were not at
current market rates or terms at the time of the restructuring. Potential
problem commercial mortgage loans are current with respect to interest
payments, or less than 60 days delinquent as to contractual principal and/or
interest payments, but because of other facts and circumstances, management has
serious doubts regarding the borrower's ability to pay future interest and
principal which causes management to believe these loans may be classified as
problem or restructured in the future. Total problem, restructured and
potential problem loans, net of valuation allowances, were $6.5 million and
$9.6 million at June 30, 1996 and December 31, 1995, respectively.
The total pre-tax provision for loan losses was $104 thousand and $2.2
million for the six months ended June 30, 1996 and 1995, respectively. The
carrying value of impaired loans was $4.4 million and $9.6 million as of June
30, 1996 and December 31, 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of funds consists primarily of premiums and
annuity deposits and collections of principal and income from the investment
portfolio. The Company generates substantial positive cash flows from operating
activities. The major uses of these funds are policyholder claims and benefits,
acquisition of investments, contract maturities, surrenders and other operating
costs.
26
<PAGE>
COMPETITION
The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other
entities competing in the sale of insurance and annuities. There are
approximately 2,000 stock, mutual and other types of insurers in business in
the United States. Several independent rating agencies regularly evaluate life
insurer's claims-paying ability, quality of investments and overall stability.
A.M. Best Company assigns A+g (Superior) to the Company. A.M. Under Best's
rating policy and procedure, the Company is assigned the Best's rating of its
parent Company, and is based on the consolidated performance of the parent and
its subsidiary. Standard & Poor's Insurance Rating Services assigns AA+
(Excellent) to the Company and Moody's assigns an Aa3 (Excellent) financial
stability rating to the Company. These ratings do not relate to the investment
performance of the Variable Account.
EMPLOYEES
As of December 31, 1995, the Company had approximately 80 employees at its
home office in Farmingville, New York who work primarily on the Company's
matters.
PROPERTIES
The Company occupies office space in Farmingville, New York which is owned by
its parent company.
STATE AND FEDERAL REGULATION
The insurance business of the Company is subject to comprehensive and
detailed regulation and supervision in the State of New York. The laws of New
York establish a supervisory agency with broad administrative powers with
respect to licensing to transact business, overseeing trade practices,
licensing agents, approving policy forms, establishing reserve requirements,
fixing maximum interest rates on life insurance policy loans and minimum rates
for accumulation of surrender values, prescribing the form and content of
required financial statements and regulating the type and amounts of
investments permitted. Each insurance company is required to file detailed
annual reports with the supervisory agency and its operations and accounts are
subject to examination by such agency at regular intervals.
Under insurance guaranty fund law, for the State of New York, insurers doing
business therein can be assessed up to prescribed limits for contract owner
losses incurred as a result of company insolvencies. The amount of any future
assessments on the Company under these laws cannot be reasonably estimated.
These laws do provide, however, that an assessment may be excused or deferred
if it would threaten an insurer's own financial strength.
In addition, the State of New York regulates affiliated groups of insurers,
such as the Company and its affiliates, under insurance holding company
legislation. Under such laws, intercompany transfers of assets and dividend
payments from insurance subsidiaries may be subject to prior notice or
approval, depending on the size of such transfers and payments in relation to
the financial positions of the companies.
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit
regulation, controls on medical care costs, removal of barriers preventing
banks from engaging in the securities and insurance business, tax law changes
affecting the taxation of insurance companies, the tax treatment of insurance
products and its impact on the relative desirability of various personal
investment vehicles, and proposed legislation to prohibit the use of gender in
determining insurance and pension rates and benefits.
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The directors and executive officers are listed below, together with
information as to their ages, dates of election and principal business
occupations during the last five years (if other than their present business
occupations).
LOUIS G. LOWER, II, 50, Chairman of the Board and President (1992)*
He is also President and Chairman of the Board of Directors of Allstate Life
Insurance Company, Northbrook Life Insurance Company, Glenbrook Life and
Annuity Company, Glenbrook Life Insurance Company, and The Northbrook
Corporation; Chairman of the Board of Directors and Chief Executive Officer of
Surety Life Insurance Company and Lincoln Benefit Life Company; Chairman of the
Board of Directors of Allstate Settlement Corporation; Director and Senior Vice
President of Allstate Insurance Company; Vice President of the Allstate
Foundation; and Director of Allstate Life Financial Services, Inc., Allstate
Indemnity Company, Allstate Property and Casualty Insurance Company, Deerbrook
Insurance Company, Northbrook Indemnity Company, Northbrook National Insurance
Company, Northbrook Property and Casualty Insurance Company, Allstate
International, Inc. and Saison Life Insurance Company, Ltd. Prior to 1990, he
was Executive Vice President of Allstate Life Insurance Company. From 1992 to
1995, in addition to his position as Chairman of the Board, he was also
President of the Company.
27
<PAGE>
MICHAEL J. VELOTTA, 50, Vice President, Secretary, General Counsel, and
Director (1993)*
He is also Vice President, Secretary, General Counsel and Director of
Allstate Life Insurance Company, Northbrook Life Insurance Company, Glenbrook
Life Insurance Company and Glenbrook Life and Annuity Company; Secretary and
Director of Allstate Settlement Corporation, Allstate Life Financial Services,
Inc. and The Northbrook Corporation; and Director of Surety Life Insurance
Company and Lincoln Benefit Life Company. Prior to 1993, he was Vice President
and Assistant General Counsel of Allstate Insurance Company.
SHARMAINE M. MILLER, 42, Director and Chief Administrative Officer (1996)*
Prior to 1996, she was a Department manager for Allstate Insurance Company.
PETER H. HECKMAN, 50, Vice President (1992)*
He is also Vice President and Director of Allstate Life Insurance Company,
Northbrook Life Insurance Company, Glenbrook Life Insurance Company, Allstate
Settlement Corporation and Glenbrook Life and Annuity Company; Vice President
and Controller of The Northbrook Corporation; and Director of Surety Life
Insurance Company and Lincoln Benefit Life Company. Prior to 1992, he was Vice
President and Director of Allstate Life Insurance Company, Northbrook Life
Insurance Company, Glenbrook Life Insurance Company and Glenbrook Life and
Annuity Company.
TIMOTHY H. PLOHG, 49, Vice President and Director (1995)*
Timothy H. Plohg is also Vice President and Director of Allstate Life
Insurance Company. Prior to 1995, he was Vice President of the ALSC; Assistant
Vice President Sales, Regional Vice President.
KEVIN R. SLAWIN, 39, Vice President and Director, (1996).*
He is also currently a Director of Allstate Life Financial Services, Inc.,
Vice President and Director of Allstate Life Insurance Company, Glenbrook Life
and Annuity Company, Allstate Settlement Corporation; Director of Laughlin
Group Holdings, Inc. and Northbrook Life Insurance Company, Vice President of
the Northbrook Corporation and Assistant Treasurer of the Allstate Corporation
and Forestview Mortgage Insurance Company. From 1995 to 1996 he served in
various capacities within the Allstate Corporation. Prior to 1995, he was
Assistant Treasurer and Director for Sears Roebuck and Company.
MARCIA D. ALAZRAKI, 54, Director (1993)*
Marcia D. Alazraki is an attorney practicing with the firm of Simpson,
Thacher & Bartlett, New York, New York. Prior to 1991, she practiced with the
firm of Shea & Gould, New York, New York.
JOSEPH F. CARLINO, 78, Director (1983)*
Joseph F. Carlino is a self-employed practicing attorney in Mineola, New
York.
CLEVELAND JOHNSON, JR., 60, Director (1983)*
Cleveland Johnson, Jr. is currently a Business Development Advocate for the
Town of Islip, Division of Economic Development. Previously he was a Vice
President with State University of New York in Farmingdale, New York.
PHILLIP E. LAWSON, 42, Director (1994)*
Phillip E. Lawson is also a Regional Vice President of Allstate Insurance
Company. Prior to 1990, he was a Director of Allstate Insurance Company.
GERARD F. MCDERMOTT, 49, Director (1995)*
Gerard F. McDermott is also a Regional Vice president of Allstate Insurance
Company. Prior to 1992, he held various management positions.
JOSEPH P. MCFADDEN, 56, Director (1992)*
Joseph P. McFadden is also a Territorial Vice President of Allstate
Insurance Company. Prior to 1992, he was a Claim Vice President of Allstate
Insurance Company.
JOHN R. RABEN, JR., 50, Director (1988)*
John R. Raben, Jr. is a Vice President & Municipal Bond/Public Finance
Liaison with J.P. Morgan Securities, Inc.
THEODORE A. SCHNELL, 47, Assistant Vice President and Director (1995)*
Theodore A. Schnell is also Assistant Treasurer of Glenbrook Life & Annuity
Company, Glenbrook Life Insurance Company and Allstate Life Insurance Company.
SALLY A. SLACKE, 62, Director (1983)*
Sally A. Slacke is also President of Slacke Test Boring, Inc.
28
<PAGE>
CASEY J. SYLLA, 52, Chief Investment Officer (1995)*
Casey J. Sylla is also Director of Allstate Insurance Company, Allstate
Indemnity Company, Allstate Property and Casualty Insurance Company, Deerbrook
Insurance Company, First Assurance Company, Northbrook Indemnity Company,
Northbrook National Insurance Company, Northbrook Property and Casualty
Insurance Company. He is also Chief Investment Officer of Glenbrook Life and
Annuity Company, Allstate Settlement Corporation, The Northbrook Corporation,
Allstate Insurance Company, Allstate Indemnity Company, Allstate Property and
Casualty, Deerbrook Insurance Company, First Assurance Company, Northbrook
Indemnity Company, Northbrook National Insurance Company, Northbrook Property
and Casualty Insurance Company. Prior to 1995, he was Senior Vice President and
Executive Officer Investments for Northwestern Mutual Life Insurance Company.
BARRY S. PAUL, 40, Assistant Vice President and Controller (1992)*
He is also Assistant Vice President and Controller of Allstate Life Insurance
Company, Northbrook Life Insurance Company, Glenbrook Life and Annuity Company
and Glenbrook Life Insurance Company. Prior to 1992, he was Assistant Vice
President of Allstate Life Insurance Company and Northbrook Life Insurance
Company.
JAMES P. ZILS, 44, Treasurer (1995)*
James P. Zils is also Treasurer of Allstate Life Financial Services, Inc.,
Allstate Settlement Corporation, Allstate Life Insurance Company, Glenbrook
Life and Annuity Company, Glenbrook Life Insurance Company, Northbrook Life
Insurance Company, The Northbrook Corporation. He is Treasurer and Vice
President of AEI Group, Inc., Allstate International Inc., Allstate Motor Club,
Inc., Direct Marketing Center, Inc., Enterprises Services Corporation, The
Allstate Foundation, Forestview Mortgage Insurance Company, Allstate Indemnity
Company, Allstate Property and Casualty, Deerbrook Insurance Company, First
Assurance Company, Northbrook Indemnity Company, Northbrook National Insurance
Company, Northbrook Property and Casualty Insurance Company. Prior to 1995 he
was Vice President of Allstate Life Insurance Company. Prior to 1993 he held
various management positions.
- --------
*Date elected/appointed to current office.
EXECUTIVE COMPENSATION
Executive officers of the Company also serve as officers of its parent
company and receive no compensation directly from the Company. Some of the
officers also serve as officers of other companies affiliated with the Company.
Allocations have been made as to each individual's time devoted to his or her
duties as an executive officer of the Company. However, no officer's
compensation allocated to the Company exceeded $100,000 in 1994. The allocated
cash compensation of all officers of the Company as a group for services
rendered in all capacities to the Company during 1994 totaled $9,216.31.
Directors of the Company receive no compensation in addition to their
compensation as employees of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------- ------------ ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) AWARD(S) (#) ($) ($)
- ------------------ ---- -------- -------- ------------ ---------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louis G. Lower, II...... 1995 $416,000 $266,175 $17,044 $199,890 N/A $411,122 $5,250(1)
President and Chairman
of the Board of
Directors
1994 $389,050 $ 26,950 $25,889 $170,660 N/A 0 $1,890(1)
1993 $374,200 $294,683 $52,443 $318,625 N/A $ 13,451 $6,296(1)
James J. Brazda(2)...... 1995 $115,870 $ 27,808 $ 175 0 N/A 0 $5,761(3)
Chief Administrative
Officer and Director
1994 $108,195 $ 21,707 0 $ 16,935 N/A 0 $1,608(3)
</TABLE>
- --------
(1) Amount received by Mr. Lower which represents the value allocated to his
account from employer contributions under The Profit Sharing Fund and to
its predecessor, The Savings and Profit Sharing Fund of Sears employees.
(2) Mr. Brazda no longer serves in this capacity for Allstate Life Insurance
Company of New York.
(3) Amount received by Mr. Brazda which represents the value allocated to his
account from employer contributions under The Profit Sharing Fund and to
its predecessor, The Savings and Profit Sharing Fund of Sears employees.
Shares of the Company are not directly owned by any director or officer of
the Company. The percentage of shares of The Allstate Corporation beneficially
owned by any director, and by all directors and officers of the Company as a
group, does not exceed one percent of the class outstanding.
29
<PAGE>
LEGAL PROCEEDINGS
From time to time the Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary
damages are asserted. Management, after consultation with legal counsel, does
not anticipate the ultimate liability arising from such pending or threatened
litigation to have a material effect on the financial condition of the Company.
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995 and the
related financial statement schedules included in this prospectus have been
audited by Deloitte & Touche LLP, Two Prudential Plaza, 180 North Stetson
Avenue, Chicago, Illinois, 60601-6779, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Sutherland, Asbill and Brennan, of Washington, D.C., has provided advice on
certain legal matters relating to the federal securities laws applicable to the
issue and sale of the Contracts. All matters of New York law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue such Contracts under New York insurance law, have been passed upon by
Michael J. Velotta, General Counsel of the Company.
30
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK:
We have audited the accompanying Statements of Financial Position of
Allstate Life Insurance Company of New York as of December 31, 1995 and 1994,
and the related Statements of Operations, Shareholder's Equity and Cash Flows
for each of the three years in the period ended December 31, 1995. Our audits
also included Schedule IV--Reinsurance and Schedule V--Valuation and
Qualifying Accounts. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Allstate Life Insurance Company of New
York as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, Schedule IV--Reinsurance and Schedule V--Valuation and Qualifying
Accounts, when considered in relation to the basic financial statements taken
as a whole, present fairly, in all material respects, the information set
forth therein.
As discussed in Note 3 to the financial statements, in 1993 the Company
changed its method of accounting for investments in fixed income securities.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 1, 1996
F-1
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
---------- ----------
($ IN THOUSANDS)
<S> <C> <C>
Assets
Investments
Fixed income securities
Available for sale, at fair value (amortized cost
$1,219,418 and $468,518)............................ $1,424,893 $ 457,018
Held to maturity, at amortized cost (fair value
$583,000)........................................... 601,359
Mortgage loans........................................ 86,394 86,435
Policy loans.......................................... 22,785 20,500
Short-term............................................ 7,257 7,212
---------- ----------
Total investments................................... 1,541,329 1,172,524
Deferred acquisition costs............................. 53,944 50,699
Accrued investment income.............................. 18,828 16,518
Reinsurance recoverable................................ 3,331 10,365
Deferred income taxes.................................. 17,443
Cash................................................... 1,472 1,763
Other assets........................................... 3,924 4,763
Separate Accounts...................................... 220,141 175,918
---------- ----------
Total assets........................................ $1,842,969 $1,449,993
========== ==========
Liabilities
Reserve for life insurance policy benefits............. $ 838,739 $ 626,316
Contractholder funds................................... 499,548 483,812
Deferred income taxes.................................. 23,659
Other liabilities and accrued expenses................. 8,950 13,304
Net payable to affiliates.............................. 1,865 1,402
Separate Accounts...................................... 220,141 175,918
---------- ----------
Total liabilities................................... 1,592,902 1,300,752
---------- ----------
Shareholder's Equity
Common stock, $25 par value, 80,000 shares authorized,
issued and outstanding................................ 2,000 2,000
Additional capital paid-in............................. 45,787 45,787
Unrealized net capital gains (losses).................. 74,413 (6,891)
Retained income........................................ 127,867 108,345
---------- ----------
Total shareholder's equity.......................... 250,067 149,241
---------- ----------
Total liabilities and shareholder's equity.......... $1,842,969 $1,449,993
========== ==========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1994 1993
-------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Premium income (net of reinsurance ceded of
$2,147, $2,198 and $4,929)....................... $126,713 $ 70,070 $110,051
Contract charges.................................. 21,603 18,490 16,862
Net investment income............................. 104,384 96,911 95,956
Realized capital (losses) gains................... (1,846) 778 4,576
-------- -------- --------
250,854 186,249 227,445
-------- -------- --------
Costs and expenses
Provision for policy benefits (net of reinsurance
recoveries of $1,581, $1,860 and $1,773)......... 198,055 137,434 175,676
Amortization of deferred acquisition costs ....... 5,502 3,875 10,319
Operating costs and expenses...................... 17,864 16,330 21,575
Early retirement program.......................... 1,210
-------- -------- --------
221,421 158,849 207,570
-------- -------- --------
Income before income taxes......................... 29,433 27,400 19,875
Income tax expense................................. 9,911 9,179 6,712
-------- -------- --------
Net income......................................... $ 19,522 $ 18,221 $ 13,163
======== ======== ========
</TABLE>
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
UNREALIZED
NET
ADDITIONAL CAPITAL
COMMON CAPITAL GAINS RETAINED
STOCK PAID-IN (LOSSES) INCOME TOTAL
------- ---------- ---------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992.... $ 2,000 $45,787 -- $ 76,961 $124,748
Net income................... 13,163 13,163
Change in unrealized net
capital gains and losses.... $25,391 25,391
------- ------- ------- -------- --------
Balance, December 31, 1993.... 2,000 45,787 25,391 90,124 163,302
Net income................... 18,221 18,221
Change in unrealized net
capital gains and losses.... (32,282) (32,282)
------- ------- ------- -------- --------
Balance, December 31, 1994.... 2,000 45,787 (6,891) 108,345 149,241
Net income................... 19,522 19,522
Change in unrealized net
capital gains and losses.... 81,304 81,304
------- ------- ------- -------- --------
Balance, December 31, 1995.... $ 2,000 $45,787 $74,413 $127,867 $250,067
======= ======= ======= ======== ========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1994 1993
-------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 19,522 $ 18,221 $ 13,163
Adjustments to reconcile net income to net
cash from operating activities:
Realized capital losses (gains).............. 1,846 (778) (4,576)
Depreciation, amortization and other non-cash
items....................................... (22,348) (18,969) (14,618)
Interest credited to contractholder funds.... 26,924 27,233 26,476
Increase in reserve for policy benefits and
contractholder funds........................ 103,513 55,233 101,348
Increase in deferred acquisition costs....... (5,537) (6,850) (2,396)
Increase in accrued investment income........ (2,497) (102) (114)
Change in deferred income taxes.............. (2,674) (5,993) 7,564
Changes in other operating assets and
liabilities................................. 3,894 (18,082) (3,609)
-------- --------- ---------
Net cash from operating activities.......... 122,643 49,913 123,238
-------- --------- ---------
Cash flows from investing activities:
Proceeds from sales
Fixed income securities available for sale... 13,526 49,903
Fixed income securities...................... 46,496
Investment collections
Fixed income securities available for sale... 30,871 54,796
Fixed income securities held to maturity..... 3,067 17,186
Fixed income securities...................... 153,518
Mortgage loans............................... 6,499 9,744 2,382
Investment purchases
Fixed income securities available for sale... (142,205) (137,684)
Fixed income securities held to maturity..... (32,046) (38,709)
Fixed income securities...................... (282,979)
Mortgage loans............................... (9,864) (10,132) (15,642)
Change in short-term investments, net......... (45) 41,528 4,254
Change in policy loans, net................... (859) (2,133) 84
-------- --------- ---------
Net cash from investing activities.......... (131,056) (15,501) (91,887)
-------- --------- ---------
Cash flows from financing activities:
Contractholder fund deposits.................. 76,534 57,468 84,024
Contractholder fund withdrawals............... (68,412) (92,574) (115,698)
-------- --------- ---------
Net cash from financing activities.......... 8,122 (35,106) (31,674)
-------- --------- ---------
Net decrease in cash........................... (291) (694) (323)
Cash at beginning of year...................... 1,763 2,457 2,780
-------- --------- ---------
Cash at end of year............................ $ 1,472 $ 1,763 $ 2,457
======== ========= =========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
1.ORGANIZATION AND NATURE OF OPERATIONS
Allstate Life Insurance Company of New York (the "Company") is wholly owned
by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company
("Allstate"), a wholly-owned subsidiary of The Allstate Corporation (the
"Corporation"). On June 30, 1995, Sears, Roebuck and Co. ("Sears") distributed
its 80.3% ownership in the Corporation to Sears common shareholders through a
tax-free dividend (the "Distribution").
The Company markets life insurance and group and individual annuities in the
state of New York, with products consisting predominately of structured
settlement annuities sold through independent brokers. The Company also
utilizes Allstate agencies and direct marketing to distribute its traditional
and universal life and accident and disability insurance products.
Additionally, flexible premium deferred variable annuity contracts and certain
single and flexible premium annuities are marketed to individuals through the
account executives of Dean Witter Reynolds, Inc. ("Dean Witter") (Note 4).
Structured settlement annuity contracts issued by the Company are long-term
in nature and involve fixed guarantees relating to the amount and timing of
benefit payments. The fixed income securities supporting these obligations have
been selected to meet the anticipated cash flow requirements of the related
liabilities: however, in a low interest rate environment, funds from maturing
investments may be reinvested at substantially lower interest rates than those
which prevailed when the funds were previously invested. In addition, single
and flexible premium annuity contracts issued by the Company are subject to
discretionary withdrawal or surrender by the contractholder, subject to
applicable surrender charges. The Company utilizes various modeling techniques
in managing the relationship between assets and liabilities and employs
strategies to minimize the Company's exposure to interest rate risk and to
maintain investments which are sufficiently liquid to meet obligations to
contractholders in various interest rate scenarios.
The Company monitors economic and regulatory developments which have the
potential to impact its business. Currently, there is proposed legislation
which would permit banks greater participation in securities businesses, which
could eventually present an increased level of competition for sales of the
Company's annuity contracts. Furthermore, the federal government may enact
changes which could possibly eliminate the tax-advantaged nature of annuities
or eliminate consumers' need for tax deferral, thereby reducing the incentive
for customers to purchase the Company's products. While it is not possible to
predict the outcome of such issues with certainty, management evaluates the
likelihood of various outcomes and develops strategies, as appropriate, to
respond to such challenges.
To conform with the 1995 presentation, certain items in the prior year's
financial statements and notes have been reclassified.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LIFE INSURANCE ACCOUNTING
The Company writes traditional life, accident and disability insurance. The
Company also writes long-duration insurance contracts with terms that are not
fixed and guaranteed, including single premium life insurance contracts, which
are considered universal life-type contracts. The Company also sells long-
duration contracts that do not involve significant risk of policyholder
mortality or morbidity (principally single and flexible premium fixed and
variable annuities and structured settlement annuities when sold without life
contingencies), which are considered investment contracts. Limited payment
contracts (policies with premiums paid over a period shorter than the contract
period) primarily consist of group annuities and structured settlement
annuities, when sold with life contingencies.
Premiums for traditional life insurance are recognized as revenue when due.
Accident and disability premiums are earned on a pro rata basis over the policy
period. Revenues on universal life-type contracts are comprised of contract
charges and fees and are recognized when assessed against the policyholder
account balance. Revenues on investment contracts include contract charges and
fees for contract administration and surrenders. These revenues are recognized
when levied against the contract balances. Gross premiums in excess of the net
premium on limited payment contracts are deferred and recognized over the
contract period.
The reserve for life insurance policy benefits, which relates to traditional
life, group annuities and structured settlement annuities with life
contingencies, and accident and disability insurance, is computed on the basis
of assumptions as to future investment yields, mortality, morbidity,
terminations and expenses. These assumptions, which for traditional life are
applied using the net level premium method, include provisions for adverse
deviation and generally vary by such characteristics as plan, year of issue and
policy duration. Reserve interest rates ranged from 6.2% to 9.5% during 1995.
To the extent that unrealized gains on available for sale securities would
result in a premium deficiency had those gains actually been realized, the
related increase in reserves is recorded as a reduction of the unrealized gains
included in shareholder's equity.
F-5
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contractholder funds arise from the issuance of individual contracts that
include an investment component, including most annuities and universal life-
type contracts. Payments received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received and interest
accrued to the benefit of the contractholder less withdrawals, mortality
charges, and administrative expenses. Credited interest rates on
contractholder funds ranged from 3.0% to 6.8% for those contracts with fixed
interest rates and from 3.6% to 8.5% for those with flexible rates during
1995.
Certain costs of acquiring insurance business, principally agents'
compensation, premium taxes, certain underwriting costs and direct mail
solicitation expenses, are deferred and amortized to income. For traditional
life, limited payment contracts and accident and disability, these costs are
amortized in proportion to the estimated revenues on such business. For
universal life-type and investment contracts, the costs are amortized in
relation to the present value of estimated gross profits on such business.
Changes in the amount or timing of estimated gross profits will result in
adjustments in the cumulative amortization of these costs. To the extent that
unrealized gains or losses on fixed income securities carried at fair value
would result in an adjustment of deferred acquisition costs had those gains or
losses actually been realized, the related unamortized deferred acquisition
costs are recorded as a reduction of the unrealized gains or losses included
in shareholder's equity.
SEPARATE ACCOUNTS
The Company issues flexible premium deferred variable annuity contracts, the
assets and liabilities of which are legally segregated and reflected in the
accompanying statements of financial position as assets and liabilities of the
Separate Accounts. Assets and liabilities of the Separate Accounts represent
funds of Allstate Life of New York Variable Annuity Account and Allstate Life
of New York Variable Annuity Account II ("Separate Accounts"), unit investment
trusts registered with the Securities and Exchange Commission. The assets and
liabilities of the Separate Accounts are carried at fair value. Investment
income and realized capital gains and losses of the Separate Accounts accrue
directly to the contractholders and, therefore, are not included in the
accompanying statements of operations. Revenues to the Company from the
Separate Accounts consist of contract maintenance fees, administration fees
and mortality and expense risk charges.
INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. Fixed
income securities which may be sold prior to their contractual maturity
("available for sale") are carried at fair value. The difference between
amortized cost and fair value, net of deferred income taxes, certain deferred
acquisition costs and reserves for life insurance policy benefits, is
reflected as a component of shareholder's equity. Fixed income securities
which the Company has both the ability and positive intent to hold to maturity
("held to maturity") are carried at amortized cost. Provisions are made to
write down the value of fixed income securities for declines in value that are
other than temporary. Such writedowns are included in realized capital gains
and losses.
Mortgage loans are carried at outstanding principal balance, net of
unamortized premium or discount and valuation allowances. Valuation allowances
are established for impaired loans when it is probable that contractual
principal and interest will not be collected. Valuation allowances for
impaired loans reduce the carrying value to the fair value of the collateral
or the present value of the loan's expected future repayment cash flows,
discounted at the loan's original effective interest rate. Valuation
allowances on loans not considered to be impaired are established based on
consideration of the underlying collateral, borrower financial strength,
current and future market conditions and other factors. While the Company
believes its mortgage loans were carried at appropriate levels at December 31,
1995, further allowances may be required if market conditions or other
circumstances surrounding the loans change.
Short-term investments are carried at cost which approximates fair value.
Policy loans are carried at the unpaid principal balances.
Investment income consists primarily of interest, which is recognized on an
accrual basis. Interest income on mortgage-backed securities is determined on
the effective yield method, based on estimated principal repayments. Accrual
of income is suspended for fixed income securities and mortgage loans that are
in default or when the receipt of interest payments is in doubt. Realized
capital gains and losses are determined on a specific identification basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company designates financial futures contracts as hedges of fixed income
securities and anticipated transactions when certain criteria are met. These
criteria require financial futures contracts to reduce the interest rate risk
associated with designated assets or
F-6
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
anticipated transactions. In addition, at the inception of the hedge and
throughout the hedge period, high correlation between changes in the market
value of the financial future contract and the fair value of, or interest
income or expense associated with, the hedged item must exist. The Company only
hedges those anticipated transactions that are probable of occurrence and whose
significant terms and expected characteristics can be identified.
When the hedged item is an existing asset, gains and losses on financial
futures contracts are deferred as an adjustment to the amortized cost basis of
the hedged item and are reported net of tax in shareholder's equity.
When the hedged item is an anticipated transaction, gains and losses on
financial futures contracts are deferred as other liabilities and accrued
expenses. Once the anticipated transaction occurs, the deferred gains or losses
are considered part of the amortized cost basis of the hedged asset.
Accordingly, they are recognized in net investment income over the life of the
hedged asset or are included in the recognition of gain or loss from
disposition of that asset.
Initial margin deposits are reported in short-term investments. Fees and
commissions on financial futures contracts are deferred as an adjustment to the
amortized cost basis of the hedged item.
If, subsequent to entering into a hedge transaction, the financial futures
contract becomes ineffective (including if the hedged item is sold or otherwise
extinguished), the Company terminates the contract position. Gains and losses
on these terminations are reported in realized capital gains (losses) in the
period they occur. The Company may also terminate financial futures contracts
as a result of other events or circumstances. Gains and losses on these
terminations are reported in shareholder's equity, consistent with the
accounting for the hedged item.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments to extend mortgage loans have only off-balance-sheet risk because
their contractual amounts are not recorded in the Company's statements of
financial position.
REINSURANCE
Certain premiums and policy benefits are ceded and reflected net of such
cessions in the statements of operations. Reinsurance recoverable and the
related reserves for policy benefits are reported separately in the statements
of financial position. Reinsurance ceded arrangements do not discharge the
Company as the primary insurer.
INCOME TAXES
The income tax provision is calculated under the liability method. Deferred
tax assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities and the enacted tax
rates. The principal assets and liabilities giving rise to such differences are
insurance reserves and deferred policy acquisition costs. Deferred income taxes
also arise from unrealized capital gains or losses on fixed income securities
carried at fair value.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3.ACCOUNTING CHANGES
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures." SFAS No. 114
defines impaired loans as loans in which it is probable that a creditor will be
unable to collect all amounts contractually due under the terms of a loan
agreement and requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, at the loan's observable market price, or at the fair value of the
collateral. SFAS No. 118 amends SFAS No. 114 to allow a creditor to use
existing methods for recognizing interest income on impaired loans. The
adoption of these statements did not have a material impact on net income or
financial position.
F-7
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
3.ACCOUNTING CHANGES (CONTINUED)
Effective December 31, 1993, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," which requires that
investments classified as available for sale be carried at fair value.
Previously, fixed income securities classified as available for sale were
carried at the lower of amortized cost or fair value, determined in the
aggregate. Unrealized holding gains and losses are reflected as a separate
component of shareholder's equity, net of deferred income taxes, certain life
deferred acquisition costs and reserves for life insurance policy benefits. The
net effect of adoption of this statement increased shareholder's equity at
December 31, 1993 by $25,391 and did not have a material impact on net income.
4.RELATED PARTY TRANSACTIONS
REINSURANCE
The Company cedes business to the Parent under reinsurance treaties. Premiums
and policy benefits ceded totaled $1,259 and $278 in 1995, $1,181 and $1,877 in
1994, and $4,109 and $1,288 in 1993. Included in the reinsurance recoverable at
December 31, 1995 and 1994 are amounts due from the Parent of $1,212 and
$1,120, respectively.
STRUCTURED SETTLEMENT ANNUITIES
Allstate, through an affiliate, purchased $11,243, $7,568 and $24,778 of
structured settlement annuities from the Company in 1995, 1994 and 1993,
respectively. Included in premium income are $4,164, $1,221 and $7,170, for
1995, 1994 and 1993, respectively, for the amounts related to structured
settlement annuities with life contingencies. Additionally, the provision for
policy benefits was increased by approximately 94% of such premium received in
each of these years.
BUSINESS OPERATIONS
The Company utilizes services and business facilities owned or leased, and
operated by Allstate in conducting its business activities. The Company
reimburses Allstate for the operating expenses incurred by Allstate on its
behalf. The cost to the Company is determined by various allocation methods and
is primarily related to the level of the services provided. Expenses allocated
to the Company were $21,288, $17,320 and $16,313 in 1995, 1994 and 1993,
respectively. A portion of these expenses related to the acquisition of
insurance business is deferred and amortized over the policy period.
DEAN WITTER
Dean Witter is the primary distributor of the Company's single and flexible
premium annuities. Dean Witter is also the distributor of flexible premium
deferred variable annuity contracts and the investment manager for the Dean
Witter Variable Investment Series, the fund in which the assets of the Separate
Accounts are invested. Additionally, Dean Witter loans funds to an affiliate of
the Parent under the terms of a strategic alliance.
5.INCOME TAXES
A consolidated federal income tax return will be filed by the Parent and its
life insurance subsidiaries, including the Company. Tax liabilities and
benefits realized by the consolidated group are allocated as generated by the
respective subsidiaries, whether or not such benefits generated by the
subsidiaries would be available on a separate return basis. The Corporation and
its domestic subsidiaries, including the Company, (the "Allstate Group"), will
be eligible to file a consolidated tax return beginning in the year 2000.
Prior to the Distribution, the Allstate Group joined with Sears and its
domestic business units (the "Sears Group") in the filing of a consolidated
federal income tax return (the "Sears Tax Group") and were parties to a federal
income tax allocation agreement (the "Tax Sharing Agreement"). As a member of
the Sears Tax Group, the Corporation was jointly and severally liable for the
consolidated income tax liability of the Sears Tax Group. Under the Tax Sharing
Agreement, the Company, through the Corporation, paid to or received from the
Sears Group the amount, if any, by which the Sears Tax Group's federal income
tax liability was affected by virtue of inclusion of the Allstate Group in the
consolidated federal income tax return. Effectively, this resulted in the
Company's annual income tax provision being computed as if the Company filed a
separate return, except that items such as net operating losses, capital
losses, or similar items, which might not be immediately recognizable in a
separate return, were allocated according to the Tax Sharing Agreement and
reflected in the Company's provision to the extent that such items reduced the
Sears Tax Group's federal tax liability.
F-8
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
5.INCOME TAXES (CONTINUED)
The Allstate Group and Sears Group have entered into an agreement which
governs their respective rights and obligations with respect to federal income
taxes for all periods prior to the Distribution ("Consolidated Tax Years"). The
agreement provides that all Consolidated Tax Years will continue to be governed
by the Tax Sharing Agreement with respect to the Company's federal income tax
liability and taxes payable to or recoverable from the Sears Group.
The components of the deferred income tax assets and liabilities at December
31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred assets
Reserve for policy benefits................................ $ 25,562 $ 21,447
Difference in tax bases of investments..................... 1,536 1,708
Loss on disposal of discontinued operations................ 376 378
Reserve for postretirement benefits........................ 496 446
Unrealized loss on fixed income securities................. 3,711
Other assets............................................... 1,701 2,402
-------- --------
Total deferred assets..................................... 29,671 30,092
-------- --------
Deferred liabilities
Unrealized gain on fixed income securities................. (40,069)
Policy acquisition costs................................... (12,655) (12,116)
Prepaid commission expense................................. (578) (520)
Other liabilities.......................................... (28) (13)
-------- --------
Total deferred liabilities................................ (53,330) (12,649)
-------- --------
Net deferred (liability) asset............................ $(23,659) $ 17,443
======== ========
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current.............................................. $12,589 $15,172 $12,821
Deferred............................................. (2,678) (5,993) (6,109)
------- ------- -------
Income tax expense.................................. $ 9,911 $ 9,179 $ 6,712
======= ======= =======
</TABLE>
The Company paid income taxes of $11,000, $27,682 and $13,079 in 1995, 1994
and 1993, respectively to the Parent under the Tax Sharing Agreement.
Additionally, the Company had income taxes payable to the Parent of $1,729 and
$141 at December 31, 1995 and 1994, respectively.
Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 1995 of approximately $389
will result in taxes payable of $136 if distributed to the Company's
shareholder. The Company has no plan to distribute amounts from the
policyholder surplus account, and no further additions to the account are
allowed by the Tax Reform Act of 1984.
6.INVESTMENTS
In 1995, the Company transferred its held to maturity fixed income securities
portfolio, with an amortized cost of $644,005 to the available for sale fixed
income portfolio. The fair value of these fixed income securities was $726,820,
resulting in an increase to shareholder's equity of $82,815 after adjustment
for deferred income taxes, certain deferred acquisition costs and reserves for
life insurance policy benefits. While the Company's investment philosophy has
not changed, management chose to transfer these fixed income securities to
available for sale to maximize the Company's flexibility in responding to
changes in market conditions.
F-9
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
6.INVESTMENTS (CONTINUED)
FAIR VALUES
The amortized cost, fair value and gross unrealized gains and losses for
fixed income securities are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------
DECEMBER 31, 1995 COST GAINS LOSSES FAIR VALUE
- ----------------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Available for sale
U.S. government and agencies............ $ 336,331 $ 99,750 $ 526 $ 435,555
State and municipal..................... 36,002 2,831 92 38,741
Corporate............................... 633,731 92,073 767 725,037
Mortgage-backed securities.............. $ 213,354 12,370 164 225,560
---------- -------- ------- ----------
Total available for sale............... $1,219,418 $207,024 $ 1,549 $1,424,893
========== ======== ======= ==========
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------
DECEMBER 31, 1994 COST GAINS LOSSES FAIR VALUE
- ----------------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Available for sale
U.S. government and agencies............ $ 28,621 $ 299 $ 825 $ 28,095
State and municipal..................... 33,939 303 1,024 33,218
Corporate............................... 221,740 3,871 6,748 218,863
Mortgage-backed securities.............. 184,218 1,188 8,564 176,842
---------- -------- ------- ----------
Total available for sale............... $ 468,518 $ 5,661 $17,161 $ 457,018
========== ======== ======= ==========
Held to maturity
U.S. government and agencies............ $ 267,521 $ 5,203 $24,723 $ 248,001
Corporate............................... 328,194 8,462 7,377 329,279
Mortgage-backed securities.............. 5,644 92 16 5,720
---------- -------- ------- ----------
Total held to maturity................. $ 601,359 $ 13,757 $32,116 $ 583,000
========== ======== ======= ==========
</TABLE>
SCHEDULED MATURITIES
The scheduled maturities for fixed income securities at December 31, 1995
are as follows:
<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
-------------- ----------
<S> <C> <C>
Due in one year or less.............................. $ 21,352 $ 21,841
Due after one year through five years................ 78,391 83,922
Due after five years through ten years............... 165,998 182,739
Due after ten years.................................. 740,323 910,831
---------- ----------
1,006,064 1,199,333
Mortgage-backed securities........................... 213,354 225,560
---------- ----------
Total............................................... $1,219,418 $1,424,893
========== ==========
</TABLE>
Actual maturities may differ from those scheduled as a result of prepayments
by the issuers.
UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains and losses on fixed income securities available
for sale included in shareholder's equity at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED NET
COST FAIR VALUE GAINS/(LOSSES)
---------- ---------- --------------
<S> <C> <C> <C>
Fixed income securities available for
sale..................................... $1,219,418 $1,424,893 $205,475
========== ==========
Reserves for life insurance policy
benefits................................. (89,600)
Deferred income taxes..................... (40,068)
Deferred acquisition costs................ (1,394)
--------
Total.................................... $ 74,413
========
</TABLE>
F-10
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
6.INVESTMENTS (CONTINUED)
The change in unrealized net capital gains and losses for fixed income
securities is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Fixed income securities available for sale.................. $216,975 $(52,740)
Reserves for life insurance policy benefits................. (89,600)
Deferred income taxes....................................... (43,779) 17,382
Deferred acquisition costs.................................. (2,292) 3,076
-------- --------
Change in unrealized net capital gains and losses.......... $ 81,304 $(32,282)
======== ========
</TABLE>
INVESTMENT INCOME
Investment income by type of investment is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Fixed income securities............................... $ 95,212 $88,149 $87,524
Mortgage loans........................................ 7,999 8,092 7,435
Policy loans.......................................... 1,309 1,153 1,017
Short-term............................................ 1,435 1,093 1,385
-------- ------- -------
Investment income, before expense..................... 105,955 98,487 97,361
Investment expense.................................... 1,571 1,576 1,405
-------- ------- -------
Net investment income................................. $104,384 $96,911 $95,956
======== ======= =======
</TABLE>
REALIZED CAPITAL GAINS AND LOSSES
Realized capital gains and losses on investments are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
------------------------
1995 1994 1993
------- ------ -------
<S> <C> <C> <C>
Fixed income securities............................... $ 422 $1,570 $ 5,657
Mortgage loans........................................ (2,268) (792) (1,081)
------- ------ -------
Realized capital (losses) gains...................... (1,846) 778 4,576
Income tax (benefit) expense......................... (646) 272 1,602
------- ------ -------
Realized capital (losses) gains...................... $(1,200) $ 506 $ 2,974
======= ====== =======
</TABLE>
PROCEEDS FROM SALES OF FIXED INCOME SECURITIES
The proceeds from sales of investments in fixed income securities, excluding
calls, and related gross realized gains and losses are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Proceeds............................................. $13,526 $49,903 $46,496
------- ------- -------
Gross realized gains................................. $ 172 $ 1,743 $ 1,780
Gross realized losses................................ (105) (973) (30)
------- ------- -------
Net realized gains.................................. $ 67 $ 770 $ 1,750
======= ======= =======
</TABLE>
INVESTMENT LOSS PROVISIONS AND VALUATION RESERVES
Pretax provisions for investment losses, principally relating to other than
temporary declines in value on fixed income securities, and valuation
allowances on mortgage loans were $2,448, $627 and $1,200 in 1995, 1994 and
1993, respectively.
F-11
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
6.INVESTMENTS (CONTINUED)
MORTGAGE LOAN IMPAIRMENT
A mortgage loan is impaired when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
loan agreement. The components of impaired loans at December 31, 1995 are as
follows:
<TABLE>
<S> <C>
Net carrying value of impaired loans with valuation allowances......... $ 9,353
Less: valuation allowances............................................. (1,934)
Without valuation allowances........................................... 2,228
-------
Total................................................................. $ 9,647
=======
</TABLE>
All impaired loans were measured at the fair value of the collateral at
December 31, 1995.
Activity in the valuation allowance for all mortgage loans for the year ended
December 31, 1995 is summarized as follows:
<TABLE>
<S> <C>
Balance at January 1.................................................... $1,179
Additions.............................................................. 1,930
Direct write-downs..................................................... (1,157)
------
Balance at December 31.................................................. $1,952
======
</TABLE>
Interest income is recognized on a cash basis for impaired loans carried at
the fair value of collateral, beginning at the time of impairment. For other
impaired loans, interest is accrued based on the net carrying value. The
Company recognized interest income of $1,398 on impaired loans during the
period, of which $1,193 was received in cash. The average recorded investment
in impaired loans during the period was $8,900.
INVESTMENT CONCENTRATION AND OTHER INVESTMENT INFORMATION
The Company maintains a diversified portfolio of municipal bonds. The largest
concentrations in the portfolio are presented below. Except for the following,
holdings in no other state exceed 5.0% of the carrying value of the portfolio
at December 31, 1995.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Ohio................................................................ 26.8% 26.9%
California.......................................................... 23.1 23.0
Illinois............................................................ 19.7 22.0
Maryland............................................................ 7.6 9.0
Maine............................................................... 5.7 5.9
New York............................................................ 5.3 6.1
Minnesota........................................................... 5.2 --
</TABLE>
The Company's mortgage loans are collateralized primarily by a variety of
commercial real estate property types, located throughout the United States.
Substantially all of the commercial mortgage loans are non-recourse to the
borrower. The three states with the largest portion of the commercial mortgage
loan portfolio are as listed below. Holdings in no other state exceed 5.0% of
the portfolio at December 31:
(% of commercial mortgage portfolio carrying value)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
California.......................................................... 56.7% 58.5%
Illinois............................................................ 22.9 16.3
New York............................................................ 11.1 10.9
</TABLE>
F-12
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
6.INVESTMENTS (CONTINUED)
The types of properties collateralizing the mortgage loans are as follows:
(% of commercial mortgage portfolio carrying value)
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Retail............................................................ 39.5% 31.4%
Warehouse......................................................... 32.1 36.8
Office............................................................ 16.0 19.3
Industrial........................................................ 6.9 7.1
Apartment......................................................... 4.5 4.4
Other............................................................. 1.0 1.0
----- -----
100.0% 100.0%
===== =====
</TABLE>
At December 31, 1995, fixed income securities with a carrying value of $1,988
were on deposit with regulatory authorities as required by law.
During 1995, the Company held one fixed income security which exceeded 10% of
shareholder's equity, the State of Israel Government Loan Trust, with a fair
value of $83,980. This security, issued through the United States Agency for
International Development, is secured by the credit of the United States
government and is backed by government guaranteed loans to Israel.
7.FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets, incurs various financial liabilities and enters into agreements
involving derivative financial instruments. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. As a number of the Company's significant assets,
including deferred acquisition costs and deferred income taxes, and
liabilities, including traditional and universal life-type life insurance
reserves, are not considered financial instruments, the disclosures that follow
do not reflect the fair value of the Company as a whole.
FINANCIAL ASSETS
<TABLE>
<CAPTION>
CARRYING
AT DECEMBER 31, 1995 VALUE FAIR VALUE
- -------------------- ---------- ----------
<S> <C> <C>
Fixed income securities.................................. $1,424,893 $1,424,893
Mortgage loans........................................... 86,394 89,517
Short-term investments................................... 7,257 7,257
Policy loans............................................. 22,785 22,785
Accrued investment income................................ 18,828 18,828
Cash..................................................... 1,472 1,472
Other financial assets................................... 7,169 7,169
Separate Accounts........................................ 220,141 220,141
<CAPTION>
CARRYING
AT DECEMBER 31, 1994 VALUE FAIR VALUE
- -------------------- ---------- ----------
<S> <C> <C>
Fixed income securities.................................. $1,058,377 $1,040,018
Mortgage loans........................................... 86,435 80,785
Short-term investments................................... 7,212 7,212
Policy loans............................................. 20,500 20,500
Accrued investment income................................ 16,518 16,518
Cash..................................................... 1,763 1,763
Other financial assets................................... 4,763 4,763
Separate Accounts........................................ 175,918 175,918
</TABLE>
Carrying value and fair value include the effects of derivative financial
instruments where applicable.
F-13
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
7.FINANCIAL INSTRUMENTS (CONTINUED)
Fair value for fixed income securities are based on quoted market prices
where available. Non-quoted securities are valued based on discounted cash
flows using current interest rates for similar securities. Mortgage loans are
valued based on discounted contractual cash flows. Discount rates are selected
using current rates at which loans would be made to borrowers with similar
characteristics, using similar properties as collateral. Loans that exceed
100% loan-to-value are valued at the estimated fair value of the underlying
collateral. Short-term investments are highly liquid investments with
maturities of less than one year whose carrying value approximates fair value.
The fair value of policy loans is estimated at book value since the loan may
be repaid at any time. Accrued investment income and other financial assets
are valued at their carrying value as they are short-term in nature. Assets of
the Separate Accounts are carried in the statements of financial position at
fair value.
FINANCIAL LIABILITIES
The Company had the following financial liabilities:
<TABLE>
<CAPTION>
CARRYING FAIR
AT DECEMBER 31, 1995 VALUE VALUE
- -------------------- -------- --------
<S> <C> <C>
Contractholder funds on investment contracts.................. $366,481 $392,111
Other financial liabilities................................... 5,383 5,383
Separate Accounts............................................. 220,141 220,141
<CAPTION>
CARRYING FAIR
AT DECEMBER 31, 1994 VALUE VALUE
- -------------------- -------- --------
<S> <C> <C>
Contractholder funds on investment contracts.................. $368,780 $362,221
Other financial liabilities................................... 7,725 7,725
Separate Accounts............................................. 175,918 175,918
</TABLE>
The fair value of contractholder funds on investment contracts is based on
the terms of the underlying contracts. Reserves on investment contracts with
no stated maturities (single premium and flexible premium deferred annuities)
are valued at the account balance less surrender charge. The fair value of
immediate annuities and annuities without life contingencies with fixed terms
are estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Other
financial liabilities are generally valued at their carrying value due to
their short-term nature. Separate Accounts liabilities are carried at the fair
value of the underlying assets.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses financial futures contracts to reduce its exposure to
interest rate risk on its invested assets, as well as to improve
asset/liability management. The Company does not hold or issue these
instruments for trading purposes. The following table summarizes the contract
or notional amount and carrying value of the Company's financial futures
contracts:
<TABLE>
<CAPTION>
CONTRACT/NOTIONAL CARRYING VALUE
AT DECEMBER 31, 1995 AMOUNT ASSET/(LIABILITY)
- -------------------- ----------------- ----------------
<S> <C> <C>
Financial futures........................... $22,900 $576
<CAPTION>
CONTRACT/NOTIONAL CARRYING VALUE
AT DECEMBER 31, 1994 AMOUNT ASSET/(LIABILITY)
- -------------------- ----------------- ----------------
<S> <C> <C>
Financial futures........................... $20,700 $(65)
</TABLE>
The contract or notional amounts are used to calculate the exchange of
contractual payments under the agreements and are not representative of the
potential gain or loss on these agreements.
Financial futures contracts are commitments to either purchase or sell
designated financial instruments at a future date for a specified price or
yield. They may be settled in cash or through delivery. As part of its
asset/liability management, the Company generally utilizes futures contracts
to hedge its interest rate risk related to anticipatory investment purchases.
Hedges of anticipatory transactions pertain to identified transactions which
are probable to occur and are generally completed within ninety days. Futures
contracts have limited off-balance-sheet credit exposure as they are executed
on organized exchanges and require security deposits, as well as the daily
cash settlement of margins.
F-14
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
7.FINANCIAL INSTRUMENTS (CONTINUED)
Market risk is the risk that future changes in market conditions may cause
an instrument to become less valuable or more costly to settle. Market risk
exists for the financial futures contracts that the Company currently holds.
The Company mitigates this risk through established risk limits set by senior
management. In addition, the change in the value of the Company's financial
futures contracts are generally offset by the change in the value of certain
on-balance-sheet items or anticipated transactions.
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments to extend new mortgage loans are agreements to lend to a
customer provided there is no violation of any condition established in the
contract. The Company enters these agreements to commit to future loan
fundings at a predetermined interest rate. Commitments generally have fixed
expiration dates or other termination clauses. Commitments to extend mortgage
loans, which are secured by the underlying properties, are valued based on
estimates of fees charged by other institutions to make similar commitments to
similar borrowers. At December 31, 1994, the Company had $3,075 in mortgage
loan commitments which had a fair value of $31. No such commitments existed at
December 31, 1995.
8.BENEFIT PLANS
PENSION PLANS
Defined benefit pension plans, sponsored by Allstate, cover all domestic
full-time employees and certain part-time employees. Benefits under the
pension plans are based upon the employee's length of service, average annual
compensation and estimated social security retirement benefits. Allstate's
funding policy for the pension plans is to make annual contributions in
accordance with accepted actuarial cost methods. The costs to the Company
included in income were $446, $344 and $340 for the pension plans in 1995,
1994 and 1993, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Allstate provides certain health care and life insurance benefits for
retired employees. Generally, qualified employees may become eligible for
these benefits if they retire in accordance with Allstate's established
retirement policy and are continuously insured under Allstate's group plans or
other approved plans for 10 or more years prior to retirement. Allstate shares
the cost of the retiree medical benefits with retirees based on years of
service, with the Company's share being subject to a 5% limit on annual
medical cost inflation after retirement. Allstate's postretirement benefit
plans currently are not funded. Allstate has the right to modify or terminate
these plans.
PROFIT SHARING FUND
Employees of Allstate and its domestic subsidiaries are also eligible to
become members of the Savings and Profit Sharing Fund of Allstate Employees
("Allstate Plan"). Allstate contributions are based on 6% of consolidated
income, as defined, with Allstate contributions limited to 70% of eligible
deposits. The Allstate Plan includes an Employee Stock Ownership Plan
("Allstate ESOP") to pre-fund a portion of the Company's anticipated
contribution through 2004. The Allstate Plan and the Allstate ESOP split from
The Savings and Profit Sharing Fund of Sears Employees, which included a
leveraged employee stock ownership plan ("Sears ESOP") feature, on June 30,
1995, the date of the Distribution. Fifty percent of the unallocated shares of
the Sears ESOP and 50% of the amount of the Sears ESOP debt (payable to Sears)
were transferred to the Allstate Plan. In connection with this transfer,
Allstate paid Sears $327 million, an amount equal to 50% of the Sears ESOP
debt. Concurrently, Allstate received a note from the Allstate ESOP for a like
principal amount with interest rate and maturity identical to the debt
obligation transferred from the Sears ESOP. Allstate will make contributions
to the Allstate ESOP annually in the amount necessary to allow the Allstate
ESOP to fund interest and principal payments.
The Company's contribution to The Savings and Profit Sharing Fund of
Allstate Employees was $141 in 1995. The costs to the Company prior to the
Distribution and the split from the Savings and Profit Sharing Fund of Sears
Employees were $123 and $176 in 1994 and 1993, respectively.
EARLY RETIREMENT PROGRAM
During 1994, Allstate offered a voluntary early retirement incentive program
to eligible home office employees. The Company's portion of the total cost of
the program of $1,210 was charged to 1994 income.
F-15
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
9.STATUTORY FINANCIAL INFORMATION
The following tables reconcile net income and shareholder's equity as
reported herein in conformity with generally accepted accounting principles
with statutory net income and capital and surplus, determined in accordance
with statutory accounting practices prescribed or permitted by insurance
regulatory authorities:
<TABLE>
<CAPTION>
NET INCOME
-------------------------
YEAR ENDED DECEMBER 31, 1995 1994 1993
- ----------------------- ------- ------- -------
<S> <C> <C> <C>
Balance per generally accepted accounting
principles......................................... $19,522 $18,221 $13,163
Deferred acquisition costs......................... (5,537) (6,849) (2,397)
Income taxes....................................... (3,109) (8,337) (6,074)
Non-admitted assets and statutory reserves......... 12,786 6,900 20,157
Other postretirement and postemployment benefits... 71 105 (54)
Other.............................................. (533) 901 1,236
------- ------- -------
Balance per statutory accounting practices.......... $23,200 $10,941 $26,031
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER'S
EQUITY DECEMBER
31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Balance per generally accepted accounting principles........ $250,067 $149,241
Deferred acquisition costs................................. (53,944) (50,699)
Income taxes............................................... 20,839 (17,443)
Unrealized net capital gains (losses)...................... (114,500) 11,500
Non-admitted assets and statutory reserves................. 43,624 31,074
Other postretirement and postemployment benefits........... 1,058 1,036
Other...................................................... 1,153 106
-------- --------
Balance per statutory accounting practices.................. $148,297 $124,815
======== ========
</TABLE>
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the New York
state insurance department. Prescribed statutory accounting principles include
a variety of publications of the National Association of Insurance
Commissioners, as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The Company does not follow any permitted
statutory accounting practices that have a material effect on statutory
surplus or risk-based capital.
DIVIDENDS
The ability of the Company to pay dividends is dependent, in part, on
business conditions, income, cash requirements of the Company and other
relevant factors and is subject to New York Insurance Regulations. Under New
York Insurance Law, a notice of intention to distribute any dividend must be
filed with the New York Superintendent of Insurance not less than 30 days
prior to the distribution. Such proposed declaration is subject to the
Superintendent's disapproval.
F-16
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1995 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $8,513,295 $ 398,025 $8,115,270
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 146,732 $ 1,246 $ 145,486
Accident and health.......................... 3,731 901 2,830
---------- ---------- ----------
$ 150,463 $ 2,147 $ 148,316
========== ========== ==========
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1994 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $7,598,374 $ 321,623 $7,276,751
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 87,562 $ 1,193 $ 86,369
Accident and health.......................... 3,276 1,005 2,271
---------- ---------- ----------
$ 90,838 $ 2,198 $ 88,640
========== ========== ==========
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1993 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $6,853,083 $1,746,724 $5,106,359
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 128,816 $ 4,122 $ 124,694
Accident and health.......................... 3,026 807 2,219
---------- ---------- ----------
$ 131,842 $ 4,929 $ 126,913
========== ========== ==========
</TABLE>
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTION OF PERIOD
- ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
Allowance for estimated losses on
mortgage loans..................... $1,179 $2,170 $1,397 $1,952
Year Ended December 31, 1994
Allowance for estimated losses on
mortgage loans..................... $2,297 $ 667 $1,785 $1,179
Year Ended December 31, 1993
Allowance for estimated losses on
mortgage loans..................... $2,531 $1,225 $1,459 $2,297
</TABLE>
F-17
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 1996
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION
($ IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Assets
Investments
Fixed income securities available for sale, at fair
value (amortized cost $1,257,814 and $1,219,418)... $1,323,712 $1,424,893
Mortgage loans...................................... 83,403 86,394
Policy loans........................................ 23,920 22,785
Short-term.......................................... 31,452 7,257
---------- ----------
Total investments.................................. 1,462,487 1,541,329
---------- ----------
Deferred acquisition costs........................... 58,127 53,944
Accrued investment income............................ 19,047 18,828
Reinsurance recoverable.............................. 3,009 3,331
Deferred income taxes................................ 6,306
Cash................................................. 1,957 1,472
Other assets......................................... 4,212 3,924
Separate Accounts.................................... 238,347 220,141
---------- ----------
Total assets....................................... $1,793,492 $1,842,969
========== ==========
Liabilities
Reserve for life insurance policy benefits........... $ 824,929 $ 838,739
Contractholder funds................................. 509,737 499,548
Deferred income taxes................................ 23,659
Other liabilities and accrued expenses............... 8,957 8,950
Net payable to affiliates............................ 1,057 1,865
Separate Accounts.................................... 238,347 220,141
---------- ----------
Total liabilities.................................. 1,583,027 1,592,902
---------- ----------
Shareholder's equity
Common stock, $25 par value, 80,000 shares
authorized, issued and outstanding.................. 2,000 2,000
Additional capital paid-in........................... 45,787 45,787
Unrealized net capital gains......................... 24,573 74,413
Retained income...................................... 138,105 127,867
---------- ----------
Total shareholder's equity......................... 210,465 250,067
---------- ----------
Total liabilities and shareholder's equity......... $1,793,492 $1,842,969
========== ==========
</TABLE>
See notes to financial statements.
F-18
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------- -----------------
1996 1995 1996 1995
------- ------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premium income (net of reinsurance ceded
of $610 and $560; $1,194 and $1,066)..... $21,813 $29,285 $ 44,916 $ 76,607
Contract charges.......................... 6,604 5,544 12,305 9,838
Net investment income..................... 27,830 25,455 55,424 50,682
Realized capital gains and (losses)....... 420 (518) 351 (2,133)
------- ------- -------- --------
56,667 59,766 112,996 134,994
------- ------- -------- --------
Costs and expenses
Provision for policy benefits (net of
reinsurance recoveries of $1,305 and
$(135); $2,170 and $178)................. 42,372 46,865 85,389 109,771
Amortization of deferred acquisition
costs.................................... 1,818 813 2,965 1,760
Operating costs and expenses.............. 3,941 5,462 8,414 10,417
------- ------- -------- --------
48,131 53,140 96,768 121,948
------- ------- -------- --------
Income before income taxes................. 8,536 6,626 16,228 13,046
Income tax expense......................... 3,223 2,192 5,990 4,351
------- ------- -------- --------
Net income................................. $ 5,313 $ 4,434 $ 10,238 $ 8,695
======= ======= ======== ========
</TABLE>
See notes to financial statements.
F-19
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------
1996 1995
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income.................................................. $10,238 $ 8,695
Adjustments to reconcile net income to net cash provided by
operating activities
Realized capital (gains) and losses........................ (351) 2,133
Depreciation, amortization and other noncash items......... (12,571) (10,647)
Interest credited to contractholder funds.................. 11,326 12,999
Increase in reserve for policy benefits and contractholder
funds..................................................... 38,824 67,050
Increase in deferred policy acquisition costs.............. (3,083) (3,265)
Increase in accrued investment income...................... (219) (343)
Change in deferred income taxes............................ (3,128) (3,298)
Changes in other operating assets and liabilities.......... 75 1,004
------- -------
Net cash provided by operating activities................. 41,111 74,328
------- -------
Cash flows from investing activities
Proceeds from sales
Fixed income securities available for sale................. 6,097
Investment collections
Fixed income securities available for sale................. 38,404 14,931
Fixed income securities held to maturity................... 2,864
Mortgage loans............................................. 3,360 2,475
Investment purchases
Fixed income securities available for sale................. (65,089) (57,638)
Fixed income securities held to maturity................... (21,273)
Mortgage loans............................................. (2,895)
Change in short-term investments, net........................ (24,195) (10,639)
Change in other investments, net............................. (1,135) (937)
------- -------
Net cash used in investing activities..................... (48,655) (67,015)
------- -------
Cash flows from financing activities
Contractholder fund deposits................................ 31,615 39,709
Contractholder fund withdrawals............................. (23,586) (47,081)
------- -------
Net cash provided by (used in) financing activities....... 8,029 (7,372)
------- -------
Net increase (decrease) in cash.............................. 485 (59)
Cash at beginning of period.................................. 1,472 1,763
------- -------
Cash at end of period........................................ $ 1,957 $ 1,704
======= =======
</TABLE>
See notes to financial statements.
F-20
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
($ IN THOUSANDS)
1.BASIS OF PRESENTATION
Allstate Life Insurance Company of New York (the "Company") is wholly owned
by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company
("Allstate"), a wholly-owned subsidiary of The Allstate Corporation (the
"Corporation").
The statements of financial position as of June 30, 1996, the statements of
operations for the three-month and six-month periods ended June 30, 1996 and
1995, and the statements of cash flows for the six-month periods then ended are
unaudited. The interim financial statements reflect all adjustments (consisting
only of normal recurring 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. The financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Allstate Life Insurance Company of New York Annual Report on
Form 10K for 1995. The results of operations for the interim periods should not
be considered indicative of results to be expected for the full year.
To conform with the 1996 presentation, certain items in the prior year's
financial statements have been reclassified.
F-21
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Sub-account's Guarantee
Period for the week preceding the establishment of the Sub-account.
N = the number of whole and partial years from the date we receive the
withdrawal, or death benefit request, or from the Payout Start Date to
the end of the Sub-account's Guarantee Period.
J = the Treasury Rate for a maturity of length N for the week preceding the
receipt of the withdrawal request, death benefit request, or income
payment request. If a Note with a maturity of length N is not
available, a weighted average will be used. If N is one year or less, J
will be the 1-year Treasury Rate.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as
reported in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I-J) X N
Any transfer, withdrawal in excess of the preferred withdrawal amount, or
death benefit paid from a Sub-account of the Fixed Account will be multiplied
by the Market Value Adjustment factor to determine the Market Value Adjustment.
ILLUSTRATION
EXAMPLE OF MARKET VALUE ADJUSTMENT
<TABLE>
<S> <C>
Purchase Payment: $10,000
Guarantee Period: 5 Years
Guaranteed
Interest Rate: 4.35%
5 Year Treasury
Rate at the time
the Sub-account
is established: 5.55%
Full Withdrawal: End of Contract Year 3
</TABLE>
NOTE: THIS ILLUSTRATION ASSUMES THAT PREMIUM TAXES WERE NOT APPLICABLE.
EXAMPLE 1: (ASSUMES DECLINING INTEREST RATES)
Step 1:
Calculate Account Value at End of Contract Year 3:
=10,000.00 X (1.0435)/3/ = $11,362.59
Step 2:
Calculate the Preferred Withdrawal Amount:
=10% X (10,000.00) = $1,000.00
Step 3:
Calculate the Market Value Adjustment:
I = 5.55%
J = 5.05%
N = 730 days = 2
-----
365 days
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.0555-.0505) X 2 = .009
Market Value Adjustment = Factor X Amount Subject to Market Value Adjustment:
= .009 X (11,362.59 - 1,000) = $93.26
Step 4:
Calculate the Withdrawal Charge:
= .05 X (10,000.00 - 1,000.00 + $93.26) = $454.66
Step 5:
Calculate The Amount Received by Customers as a Result of a Full
Withdrawal at the end of Contract Year 3:
= 11,362.59 - 454.66 + 93.26 = $11,001.19
A-1
<PAGE>
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1:
Calculate Account Value at End of Contract Year 3:
= 10,000.00 X (1.0435)/3/ = $11,362.59
Step 2:
Calculate the Preferred Withdrawal Amount
= 10% X (10,000.00) = $1,000.00
Step 3:
Calculate the Market Value Adjustment:
I = 5.55%
J = 6.05%
N = 730 days = 2
-----
365 days
Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.0555-.0605) X (2) = -.009
Market Value Adjustment = Factor X Amount Subject to Market Value Adjustment:
= -.009 X ($11,362.59 - 1,000) = -93.26
Step 4:
Calculate the Withdrawal Charge:
= .05 X (10,000.00 - 1,000.00-93.26) = $445.34
Step 5:
Calculate The Net Withdrawal Value at End of Contract Year 3:
= 11,362.59 - 445.34 - 93.26 = $10,823.99
A-2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS....................... 3
REINVESTMENT............................................................... 3
THE CONTRACT............................................................... 4
Purchase of Contracts..................................................... 4
Performance Data.......................................................... 4
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers).............. 5
Premium Taxes............................................................. 6
Tax Reserves.............................................................. 6
INCOME PAYMENTS............................................................ 6
Calculation of Variable Annuity Unit Values............................... 6
GENERAL MATTERS............................................................ 7
Incontestability.......................................................... 7
Settlements............................................................... 7
Safekeeping of the Variable Account's Assets.............................. 7
FEDERAL TAX MATTERS........................................................ 7
Introduction.............................................................. 7
Taxation of Allstate Life Insurance Company of New York................... 8
Exceptions to the Non-Natural Owner Rule.................................. 8
IRS Required Distribution at Death Rules.................................. 8
Qualified Plans........................................................... 9
Types of Qualified Plans.................................................. 9
VARIABLE ACCOUNT FINANCIAL STATEMENTS...................................... 11
</TABLE>
B-1
<PAGE>
ORDER FORM
Please send me a copy of the most recent Statement of Additional Information
for the Allstate Life of New York Separate Account A.
- ---------------------- ------------------------------------------------------
(Date) (Name)
------------------------------------------------------
(Street Address)
------------------------------------------------------
(City) (State) (Zip
Code)
Send to:
Allstate Life Insurance Company of New York
Post Office Box 9075
Farmingville, New York 11738-9075
Attention: VA Customer Service Unit
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
--------------------------------------------
Pursuant to Item 511 of Regulation S-K, the Registrant hereby
represents that the following expenses totaling $31,324.14 will be
incurred or are anticipated to be incurred in connection with the
issuance and distribution of the securities to be registered:
registration fees - $1724.14; cost of printing and engraving -
$9,000.00 (approximate); legal fees - $4,000.00 (approximate);
accounting fees - 6,500.00 (approximate) and collating and mailing
fees - $10,000.00 (approximate).
ITEM 14. Indemnification of Directors and Officers.
------------------------------------------
The By-Laws of Allstate Life Insurance Company of New York
("Registrant") which are incorporated herein by reference as Exhibit
(3), provide that Registrant will indemnify its officers and directors
for certain damages and expenses that may be incurred in the
performance of their duty to Registrant. No indemnification is
provided, however, when such person is adjudged to be liable for
negligence or misconduct in the performance of his or her duty, unless
indemnification is deemed appropriate by the court upon application.
ITEM 15. Recent Sales of Unregistered Securities.
----------------------------------------
Not applicable.
ITEM 16. Exhibits and Financial Statement Schedules.
-------------------------------------------
Exhibit No. Description
----------- -----------
(1) Form of Underwriting Agreement*
(2) None
(3)(i) Certificate of Incorporation*
(ii) By-Laws*
(4) Allstate Life Insurance Company of New York
Flexible Premium Deferred Variable Annuity Contract*
(5) Opinion of General Counsel re: Legality
(6) None
(7) None
(8) None
(9) None
(10) None
(11) None
(12) None
(13) None
(14) None
(15) None
(16) None
(21) None
(23)(i) Consent of Independent Public Accountants
(ii) Consent of Attorneys
(24) Powers of Attorney
(25) None
(26) None
(27) Financial Data Schedule
(28) None
<PAGE>
* Filed contemporaneously herewith in Registrant's N-4 Registration Statement
(33-65381).
<PAGE>
ITEM 17. Undertakings.
-------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit ore proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, (the "Act"),
the registrant, Allstate Life Insurance Company of New York, has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the Township of Northfield, State of Illinois, on the 20th day of September,
1996.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(SEAL)
Attest /s/ BRENDA D. SNEED By: /s/ MICHAEL J. VELOTTA
------------------------ -----------------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary Vice President, Secretary and
General Counsel
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed below by the following Directors and
Officers of Allstate Life Insurance Company of New York on this 20th day of
September, 1996.
*/LOUIS G. LOWER, II Chairman of the Board and President
- -------------------- (Principal Executive Officer)
Louis G. Lower, II
/s/ MICHAEL J. VELOTTA Director, Vice President, Secretary and
- ---------------------- General Counsel
Michael J. Velotta
*/SHARMAINE M. MILLER Director and Chief Administrative Officer
- ---------------------
Sharmaine M. Miller
*/PETER H. HECKMAN Vice President
- ------------------
Peter H. Heckman
*/KAREN C. GARDNER Vice President
- ------------------
Karen C. Gardner
*/THOMAS A. MCAVITY, JR. Vice President
- -----------------------
Thomas A. McAvity, Jr.
*/TIMOTHY H. PLOHG
- ------------------ Director and Vice President
Timothy H. Plohg
*/KEVIN R. SLAWIN Director and Vice President
- -----------------
Kevin R. Slawin
*/MARCIA D. ALAZRAKI Director
- --------------------
Marcia D. Alazraki
<PAGE>
*/JOSEPH F. CARLINO Director
- -------------------
Joseph F. Carlino
*/CLEVELAND JOHNSON, JR. Director
- ------------------------
Cleveland Johnson, Jr.
*/PHILLIP E. LAWSON Director
- -------------------
Phillip E. Lawson
*/GERARD F. McDERMOTT Director
- ---------------------
Gerard F. McDermott
*/JOSEPH P. McFADDEN Director
- --------------------
Joseph P. McFadden
*/JOHN R. RABEN, JR. Director
- --------------------
John R. Raben, Jr.
*/SALLY A. SLACKE Director
- -----------------
Sally A. Slacke
*/THEODORE A. SCHNELL Director
- ----------------------
Theodore A. Schnell
*/JAMES P. ZILS Treasurer
- ---------------
James P. Zils
*/CASEY J. SYLLA Chief Investment Officer
- ----------------
Casey J. Sylla
*/BARRY S. PAUL Assistant Vice President and Controller
- ---------------
Barry S. Paul
*/ By Michael J. Velotta, pursuant to Power of Attorney
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed herewith:
(1) Underwriting Agreement*
(2) None
(3)(i) Certificate of Incorporation*
(ii) By-Laws*
(4) Allstate Life Insurance Company of New York
Flexible Premium Deferred Variable Annuity Contract*
(5) Opinion of General Counsel re: Legality
(6) None
(7) None
(8) None
(9) None
(10) None
(11) None
(12) None
(13) None
(14) None
(15) None
(16) None
(21) None
(22) None
(23)(i) Consent of Independent Certified Public Accountants
(ii) Consent of Attorneys
(24) Powers of Attorney
(25) None
(26) None
(27) Financial Date Schedule
(28) None
* Filed contemporaneously herewith in Registrant's N-4 Registration
Statement (33-65381).
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, J5D
Northbrook, Illinois 60062
Direct Dial Number 847.402.2400
Facsimile 847.402.4371
Michael J. Velotta
Vice President, Secretary
and General Counsel
September 13, 1996
TO: ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NORTHBROOK, ILLINOIS 60062
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-65355
With reference to the Registration Statement on Form S-1 filed by Allstate
Life Insurance Company of New York with the Securities and Exchange Commission
covering the Flexible Premium Deferred Variable Annuity Contracts ("Contracts"),
I have examined such documents and such law as I have considered necessary and
appropriate, and on the basis of such examination, it is my opinion that:
1. Allstate Life Insurance Company of New York is duly organized and existing
under the laws of the State of New York and has been duly authorized to do
business and to issue the Contracts by the Director of Insurance of the
State of New York.
2. The Contracts covered by the above Registration Statement have been or will
be approved and authorized by the Director of Insurance of the State of New
York and when issued will be valid, legal and binding obligations of
Allstate Life Insurance Company of New York.
I hereby consent to the filing of this opinion as an exhibit to the above
referenced Registration Statement and to the use of my name under the caption
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.
Sincerely,
/s/ MICHAEL J. VELOTTA
-------------------------
Michael J. Velotta
Vice President, Secretary
and General Counsel
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement No. 33-65355 of Allstate Life Insurance Company of New York on Form
S-1 of our report dated March 1, 1996 relating to the financial statements and
financial statement schedules of Allstate Life Insurance Company of New York,
appearing in the Prospectus, which is a part of such Registration Statement, and
to the reference to us under the heading "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
September 20, 1996
<PAGE>
[LETTERHEAD OF SUTHERLAND, ASBILL & BRENNAN]
September 6, 1996
Allstate Life Insurance Company
of New York
3100 Sanders Road
Northbrook, IL 60062
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the prospectus filed as part of Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 33-65355) filed by Allstate Life
Insurance Company of New York for certain annuity contracts with fixed
accumulation features. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ Stephen E. Roth
-------------------
Stephen E. Roth
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
MARKET VALUE ADJUSTED ANNUITY CONTRACT
Know all men by these presents that Casey J. Sylla, whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorneys-in-fact, with power of substitution, and his in any
and all capacities, to sign any Form S-1 registration statements and amendments
thereto for the Allstate Life of New York Market Value Adjusted Annuity
Contract and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
9/18/96
-------------------------------
Date
/s/ CASEY J. SYLLA
-------------------------------
Casey J. Sylla
Chief Investment Officer
Allstate Life Insurance Company
of New York
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
MARKET VALUE ADJUSTED ANNUITY CONTRACT
Know all men by these presents that Thomas A. McAvity, Jr., whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and his in any and all capacities, to sign any Form S-1 registration statements
and amendments thereto for the Allstate Life of New York market Value Adjusted
Annuity Contract and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
September 18, 1996
--------------------------
Date
/s/ THOMAS A. MCAVITY, JR.
--------------------------
Thomas A. McAvity, Jr.
Vice President
Allstate Life Insurance Company
of New York
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
MARKET VALUE ADJUSTED ANNUITY CONTRACT
Know all men by these presents that Kevin R. Slawin, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and his in any and all capacities, to sign any Form S-1 registration statements
and amendments thereto for the Allstate Life of New York market Value Adjusted
Annuity Contract and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
9/18/96
------------------------------------
Date
/s/ KEVIN R. SLAWIN
------------------------------------
Kevin R. Slawin
Vice President and Director
Allstate Life Insurance Company
of New York
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
MARKET VALUE ADJUSTED ANNUITY CONTRACT
Know all men by these presents that Sharmaine M. Miller, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, her attorneys-in-fact, with power of substitution,
and her in any and all capacities, to sign any Form S-1 registration statements
and amendments thereto for the Allstate Life of New York market Value Adjusted
Annuity Contract and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
September 16, 1996
-----------------------
Date
/s/ SHARMAINE M. MILLER
-----------------------
Sharmaine M. Miller
Chief Administrative Officer
and Director
Allstate Life Insurance Company
of New York
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
MARKET VALUE ADJUSTED ANNUITY CONTRACT
Know all men by these presents that Karen C. Gardner, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, her attorneys-in-fact, with power of substitution,
and her in any and all capacities, to sign any Form S-1 registration statements
and amendments thereto for the Allstate Life of New York Market Value Adjusted
Annuity Contract and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Sept. 18, 1996
-------------------------------
Date
/s/ KAREN C. GARDNER
-------------------------------
Karen C. Gardner
Vice President
Allstate Life Insurance Company
of New York
<TABLE> <S> <C>
<PAGE>
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<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
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