FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 33-47245
33-65355
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(Exact name of registrant as specified in its charter)
NEW YORK 35-2608394
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Allstate Drive
Farmingville, New York 11738
(Address of principal executive offices)(Zip Code)
800/256-9392
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes../X/.. No
Indicate the number of shares of each of the issuer's classes of common
stock, as of June 30, 1998; there were 80,000 shares of common capital stock
outstanding, par value $25 per share all of which shares are held by Allstate
Life Insurance Company.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Statements of Financial Position
June 30, 1998(Unaudited) and December 31, 1997.................. 3
Statements of Operations
Three Months Ended June 30, 1998 and and June 30, 1997 and
Six Months Ended June 30, 1998 and June 30, 1997 (Unaudited).... 4
Statements of Cash Flows
Six Months Ended June 30, 1998 and
June 30, 1997 (Unaudited)................................. 5
Notes to Financial Statements................................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 9
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK*..................................................N/A
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS..................................................14
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS*........................N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A
Item 5. OTHER INFORMATION..................................................14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................14
SIGNATURE PAGE...............................................................15
*Omitted pursuant to General Instruction H(2) of Form 10-Q.
-2-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
June 30, December 31,
($ in thousands) 1998 1997
-------------------- ---------------------
(Unaudited)
<S> <C> <C>
ASSETS
Investments
Fixed income securities, at fair value (amortized cost
$1,555,273 and $1,510,110) $1,841,260 $1,756,257
Mortgage loans 133,654 114,627
Policy loans 28,450 27,600
Short-term 70,678 9,513
---------- ----------
Total investments 2,074,042 1,907,997
Deferred acquisition costs 75,581 71,946
Accrued investment income 21,641 21,725
Reinsurance recoverables 1,939 1,726
Cash 612 393
Other assets 12,402 6,167
Separate Accounts 346,605 308,595
---------- ----------
Total assets $2,532,822 $2,318,549
========== ==========
LIABILITIES
Reserve for life-contingent contract benefits $1,146,870 $1,084,409
Contractholder funds 648,565 607,474
Income taxes payable 8,287 1,419
Deferred income taxes 19,237 16,990
Other liabilities and accrued expenses 51,862 10,985
Net payable to affiliates 2,496 5,267
Separate Accounts 346,605 308,595
---------- ----------
Total liabilities 2,223,922 2,035,139
---------- ----------
Commitments and Contingent Liabilities (Note 4)
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
Retained income 187,126 171,144
Accumulated other comprehensive income:
Unrealized net capital gains 73,987 64,479
---------- ----------
Total accumulated other comprehensive income 73,987 64,479
---------- ----------
Total shareholder's equity 308,900 283,410
---------- ----------
Total liabilities and shareholder's equity $2,532,822 $2,318,549
========== ==========
</TABLE>
See notes to financial statements.
-3-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------------------- -----------------------------------
($ in thousands) 1998 1997 1998 1997
---------------- --------------- ---------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Premiums (net of reinsurance
ceded of $848 and $691) $ 24,670 $ 26,146 $ 43,253 $ 46,807
Contract charges 8,331 7,114 16,419 13,982
Net investment income 33,691 31,042 66,260 61,242
Realized capital gains and losses 2,873 (26) 4,104 (75)
--------- --------- --------- ----------
69,565 64,276 130,036 121,956
--------- --------- --------- ----------
COSTS AND EXPENSES
Contract benefits (net of reinsurance
recoveries of $359 and $298) 47,561 47,899 88,821 89,865
Amortization of deferred acquisition
costs 2,120 1,849 4,205 3,819
Operating costs and expenses 6,154 5,430 12,165 10,256
--------- --------- --------- ----------
55,835 55,178 105,191 103,940
--------- --------- --------- ----------
INCOME FROM OPERATIONS
BEFORE INCOME TAX EXPENSE 13,730 9,098 24,845 18,016
INCOME TAX EXPENSE 4,884 3,246 8,863 6,455
--------- --------- --------- ----------
NET INCOME $ 8,846 $ 5,852 $ 15,982 $ 11,561
========= ========= ========= ==========
</TABLE>
See notes to financial statements.
-4-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------------------------
1998 1997
--------------------- ---------------------
($ in thousands) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 15,982 $ 11,561
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, amortization and other non-cash items (17,177) (15,086)
Realized capital gains and losses (4,104) 75
Interest credited to contractholder funds 27,813 16,382
Increase in reserve for life-contingent contract
benefits and contractholder funds 23,270 35,476
Increase in deferred policy acquisition costs (4,205) (4,153)
Change in accrued investment income 84 (1,207)
Change in deferred income taxes 7,367 (283)
Change in other operating assets and
liabilities (8,572) 14,100
-------- ---------
Net cash provided by operating activities 40,458 56,865
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities 53,721 11,455
Investment collections
Fixed income securities 78,609 61,096
Mortgage loans 2,824 1,204
Investment purchases
Fixed income securities (157,249) (139,472)
Mortgage loans (21,794) (15,500)
Change in short-term investments, net (22,867) 16,776
Change in policy loans, net (850) (868)
-------- ---------
Net cash used in investing activities (67,606) (65,309)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 60,743 39,434
Contractholder fund withdrawals (33,376) (24,681)
-------- ---------
Net cash provided by financing activities 27,367 14,753
-------- ---------
NET INCREASE IN CASH 219 6,309
CASH AT BEGINNING OF PERIOD 393 1,027
-------- ---------
CASH AT END OF PERIOD $ 612 $ 7,336
======== =========
</TABLE>
See notes to financial statements.
-5-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Allstate Life Insurance Company of New York (the "Company") is wholly
owned by a wholly owned subsidiary of Allstate Insurance Company, a wholly
owned subsidiary of The Allstate Corporation.
The financial statements and notes as of June 30, 1998 and for the
three-month and six-month periods ended June 30, 1998 and 1997 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. These
financial statements and notes 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 10-K for 1997. The
results of operations for the interim periods should not be considered
indicative of results to be expected for the full year.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" under the
guidance of SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125." As a result of this adoption, the
Company has recorded an asset and corresponding liability representing the
collateral received in connection with the Company's securities lending
program. The cash collateral received is recorded in short-term investments
with the offsetting liability being reflected in other liabilities in the
statements of financial position. In accordance with SFAS No. 127, the
statements of financial position for prior periods have not been restated.
Effective January 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." Comprehensive Income is a measurement of
certain changes in shareholder's equity that result from transactions and
other economic events other than transactions with shareholders. For the
Company, these consist of changes in unrealized gains and losses on the
investment portfolio, adjusted for deferred acquisition costs and reserves
for life insurance policy benefits. These amounts, presented as other
comprehensive income, net of related taxes, are added to net income which
results in comprehensive income. The cumulative amount of these changes is
reported in the statements of financial position as accumulated other
comprehensive income. The required disclosures are presented in Note 2.
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." The SOP provides guidance on
accounting for the costs of computer software developed or obtained for
internal use. Specifically, certain external, payroll and payroll related
costs should be capitalized during the application development stage of a
software development project and depreciated over the computer software's
useful life. The Company has adopted the SOP effective January 1, 1998.
2. Comprehensive Income
The components of other comprehensive income on a pretax and after-tax
basis are as follows:
-6-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
-------------------------------------------------------------------------------------
($ in thousands) 1998 1997
-------------------------------------- ---------------------------------------------
Income Income
tax After- tax After-
Pretax effect tax Pretax effect tax
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unrealized capital gains and losses:
Unrealized holding gains
(losses) arising during
the period $ 45,402 $ (15,890) $29,512 $ 62,202 $ (21,772) $ 40,430
Adjustments to unrealized capital
gains and losses arising during
the period:
Deferred acquisition (313) 110 (203) (441) 155 (286)
costs
Reserves for life insur-
ance policy benefits (34,575) 12,101 (22,474) (42,130) 14,746 (27,384)
--------- ---------- -------- ----------- ---------- -----------
Net unrealized holding
gains (losses) arising
during the period 10,514 (3,679) 6,835 19,631 (6,871) 12,760
--------- ---------- -------- ----------- ---------- -----------
Less: reclassification adjust-
ment for realized net
capital gains included in
net income (75) 27 (48) (185) 65 (120)
--------- ---------- -------- ----------- ---------- -----------
Other comprehensive income $ 10,589 $ (3,706) $ 6,883 $ 19,816 $ (6,936) $ 12,880
========= ========== -------- =========== ========== -----------
Net income 8,846 5,852
-------- -----------
Comprehensive income $ 15,729 $ 18,732
======== ===========
</TABLE>
-7-
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------------------------------------------------------------------
($ in thousands) 1998 1997
-------------------------------------- ---------------------------------------------
Income Income
tax After- tax After-
Pretax effect tax Pretax effect tax
------ ------ ------ ------ ------ ------
Unrealized capital gains and losses:
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains
(losses) arising during
the period $ 41,507 $ (14,528) $ 26,979 $ (13,263) $ 4,641 $ (8,622)
Adjustments to unrealized capital
gains and losses arising
during the period:
Deferred acquisition (571) 200 (371) 84 (29) 55
costs
Reserves for life insur-
ance policy benefits (25,102) 8,786 (16,316) 8,070 (2,824) 5,246
-------- ---------- --------- ---------- ---------- -----------
Net unrealized holding
gains (losses) arising
during the period 15,834 (5,542) 10,292 (5,109) 1,788 (3,321)
--------- ---------- --------- ----------- ---------- -----------
Less: reclassification adjust-
ment for realized net
capital gains included in
net income 1,206 (422) 784 (182) 64 (118)
--------- ---------- --------- ----------- ---------- -----------
Other comprehensive income $ 14,628 $ (5,120) $ 9,508 $ (4,927) $ 1,724 $ (3,203)
========= ========== --------- ========== ========== -----------
Net income 15,982 11,561
--------- -----------
Comprehensive income $ 25,490 $ 8,358
========= ===========
</TABLE>
4. Regulation and Legal Proceedings
The Company's business is subject to the effects of a changing social,
economic and regulatory environment. Public and regulatory initiatives have
varied and have included 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 rates and benefits. The ultimate changes and eventual
effects, if any, of these initiatives are uncertain.
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. In the opinion of management, the ultimate
liability, if any, arising from such pending or threatened litigation is
not expected to have a material effect on the results of operations,
liquidity or financial position of the Company.
-8-
<PAGE>
Allstate Life Insurance Company of New York
Management's Discussion and Analysis
of Financial Condition and Results of Operations
The following discussion 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
financial statements and notes thereto found under Part I. Item 1 contained
herein and the financial statements and notes thereto found under Part II. Item
8, with the discussion and analysis found under Part II. Item 7 of the Allstate
Life Insurance Company of New York Annual Report on Form 10-K for 1997.
The Company, which is wholly owned by a wholly owned subsidiary of Allstate
Insurance Company ("AIC"), a subsidiary of The Allstate Corporation (the
"Corporation"), markets a broad line of life insurance and annuity products in
the state of New York. Life insurance includes traditional products such as
whole life and term life insurance, as well as universal life and other
interest-sensitive life products. Annuities include deferred annuities, such as
variable annuities and fixed rate single and flexible premium annuities, and
immediate annuities such as structured settlement annuities. The Company
distributes its products using a combination of Allstate agents (which include
life specialists), banks, independent agents, brokers and direct response
marketing.
FINANCIAL HIGHLIGHTS
($ in thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------------------- ------------------------------------
1998 1997 1998 1997
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Statutory premiums
and deposits $ 70,434 $ 57,552 $ 128,560 $ 103,764
=========== ============ ============ ===========
Investments $ 2,074,042 $ 1,703,824 $ 2,074,042 $ 1,703,824
Separate Account assets 346,605 290,425 346,605 290,425
----------- ------------ ------------ -----------
Investments including
Separate Account assets $ 2,420,647 $ 1,994,249 $ 2,420,647 $ 1,994,249
=========== ============ ============ ===========
Premiums and contract charges $ 33,001 $ 33,260 $ 59,672 $ 60,789
Net investment income 33,691 31,042 66,260 61,242
Contract benefits 47,561 47,899 88,821 89,865
Operating costs and expenses 7,862 7,279 15,946 14,075
----------- ------------ ------------ -----------
Income from operations 11,269 9,124 21,165 18,091
Income tax expense on
operations 4,023 3,255 7,575 6,481
----------- ------------ ------------ -----------
Operating income 7,246 5,869 13,590 11,610
Net realized capital gains
and losses, after-tax (1) 1,600 (17) 2,392 (49)
----------- ------------ ------------ -----------
Net income $ 8,846 $ 5,852 $ 15,982 $ 11,561
=========== ============ ============ ===========
</TABLE>
(1) Net of the effect of the related amortization of deferred policy
acquisitions costs in 1998.
-9-
<PAGE>
Allstate Life Insurance Company of New York
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Premiums, deposits, contract charges and contract benefits
Statutory premiums and deposits, which include premiums and deposits for
all products, increased 22.4% in the second quarter and 23.9% for the first six
months of 1998 compared with the same periods last year. Increased sales of
fixed annuities, variable annuities and life insurance policies were partially
offset by reduced sales of structured settlement annuities.
Premiums and contract charges under generally accepted accounting
principles ("GAAP") decreased slightly in the second quarter and first six
months of 1998 from the comparable 1997 periods. Under GAAP, revenues exclude
deposits on most annuity contracts and premiums on universal life insurance
policies and will vary with the mix of products sold during the period. In 1998,
increased revenues from universal life and fixed annuity products were more than
offset by lower sales of life-contingent structured settlement annuities.
Operating income
Pretax net investment income increased 8.5% and 8.2% in the second quarter
and the first six months of 1998, respectively, from the comparable 1997
periods, primarily due to higher investment balances partially offset by lower
investment yields. Investments, excluding Separate Account assets and unrealized
gains on fixed income securities, grew by 7.6%. The overall portfolio yield
declined slightly, as proceeds from calls and maturities as well as positive
cash flows from operating activities were invested in securities yielding less
than the average portfolio rate. In relatively low interest rate environments,
funds from maturing investments may be reinvested at lower interest rates than
those which prevailed when the funds were previously invested.
Operating costs and expenses increased 8.0% in the second quarter and 13.3%
in the first half of 1998 from the comparable 1997 periods as a result of
increased policy administration costs due to growth in the number of customer
policies and contracts, and increased general expenses.
Operating income increased 23.5% during the second quarter and 17.1% during
the first six months of 1998 compared with the same periods in 1997, as income
generated from new and existing life insurance and structured settlement annuity
business was partially offset by increased operating costs and expenses.
Realized capital gains and losses
Net realized capital gains, after-tax, increased to $1.6 million in the
second quarter and $2.4 million for the first six months of 1998, primarily due
to gains arising from the receipt of prepayments of fixed income securities.
-10-
<PAGE>
Allstate Life Insurance Company of New York
Management's Discussion and Analysis
of Financial Condition and Results of Operations
INVESTMENTS
The composition of the investment portfolio at June 30, 1998, at financial
statement carrying values, is presented in the table below.
Percent
($ in thousands) to total
--------
Fixed income securities (1) $ 1,841,260 88.8%
Mortgage loans 133,654 6.4
Policy loans 28,450 1.4
Short-term 70,678 3.4
------------------ ------
Total $ 2,074,042 100.0%
================== ======
(1) Fixed income securities are carried at fair value. Amortized cost for these
securities was $1,555,273.
Total investments increased to $2.07 billion at June 30, 1998 from $1.91
billion at December 31, 1997. The increase in investments is primarily due to
amounts invested from positive cash flows generated from operations, an increase
in unrealized net capital gains on fixed income securities and the addition to
short-term investments of $38.3 million of collateral in connection with a
change in accounting treatment for securities lending programs. At June 30,
1998, unrealized net capital gains on the fixed income securities portfolio were
$286.0 million compared to $246.1 million at December 31, 1997.
Fixed income securities
The Company's fixed income securities portfolio consists of
privately-placed securities, U.S. government bonds, publicly traded corporate
bonds, mortgage-backed securities, asset-backed securities and municipal bonds.
The Company generally holds its fixed income securities for the long term, but
has classified all of these securities as available for sale to allow maximum
flexibility in portfolio management.
At June 30, 1998, substantially all of the Company's fixed income
securities portfolio is rated investment grade, which is defined by the Company
as a security having a National Association of Insurance Commissioners rating of
1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company internal
rating.
Short-term investments
The Company's short-term investment portfolio was $70.7 million and $9.5
million at June 30, 1998 and December 31, 1997, respectively. The Company
invests available cash balances in taxable short-term securities having a final
maturity date or redemption date of one year or less. Included in short-term
investments is $38.3 million at June 30, 1998 of collateral in connection with
securities lending programs.
-11-
<PAGE>
Allstate Life Insurance Company of New York
Management's Discussion and Analysis
of Financial Condition and Results of Operations
SEPARATE ACCOUNTS
Separate Account assets and liabilities increased 12.3% from $308.6 million
at December 31, 1997 to $346.6 million at June 30, 1998 due primarily to
favorable investment performance of the Separate Account investment portfolios
and sales of flexible premium deferred variable annuity contracts, partially
offset by variable annuity contract surrenders and withdrawals.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company's principal sources of funds are collections of principal and
interest from the investment portfolio and the receipt of premiums and deposits.
The primary uses of these funds are to purchase investments and pay policyholder
claims, benefits, contract maturities and surrenders, and operating costs.
The maturity structure of the Company's fixed income securities, which
represent 88.8% of the Company's total investments, is managed to meet the
anticipated cash flow requirements of the underlying liabilities. A portion of
the Company's product portfolio, primarily fixed deferred annuity and universal
life insurance products, is subject to discretionary surrender and withdrawal by
contractholders. Management believes its assets are sufficiently liquid to meet
future obligations to its life and annuity contractholders under various
interest rate scenarios.
YEAR 2000
The Company is heavily dependent upon complex computer systems for all
phases of its operations, including customer service, insurance processing, risk
analysis, reserve valuation and investment processing. Since many of the
Company's older computer software programs recognize only the last two digits of
the year in any date, some software may fail to operate properly in or after the
year 1999, if the software is not reprogrammed, remediated or replaced ("Year
2000 Issue"). The Company believes that many of its counterparties and suppliers
also have Year 2000 Issues which could affect the Company. In 1995, the
Corporation commenced a plan intended to mitigate and/or prevent the adverse
effects of Year 2000 Issues. These strategies include normal development and
enhancement of new and existing systems, upgrades to operating systems already
covered by maintenance agreements and modifications to existing systems to make
them Year 2000 compliant. The plan also includes the Company actively working
with its major external counterparties and suppliers to assess their compliance
efforts and the Company's exposure to them. The Company is in the process of
developing a contingency plan that will address possibly adverse scenarios. The
Company presently believes that it will resolve the Year 2000 Issue in a timely
manner, and the financial impact will not materially affect its results of
operations, liquidity or financial position. The Company is working closely with
its business partners, counterparties and suppliers in an effort to bring
communications, facilities, software and systems into Year 2000 compliance. Year
2000 costs are expensed as incurred.
-12-
<PAGE>
Allstate Life Insurance Company of New York
Management's Discussion and Analysis
of Financial Condition and Results of Operations
PENDING ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131 redefines how
segments are determined and requires additional segment disclosures for both
annual and quarterly reporting. Under this statement, segments are determined
using the "management approach" for financial statement reporting. The
management approach is based on the way an enterprise makes operating decisions
and assesses performance of its businesses. The Company is currently reviewing
the requirements of this Statement and has not determined the impact on its
current reporting. The requirements of this statement will be adopted effective
December 31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 replaces existing
pronouncements and practices with a single, integrated accounting framework for
derivatives and hedging activities. The requirements of the Statement are
effective for fiscal years beginning after June 15, 1999. Earlier application of
this Statement is encouraged but is only permitted as of the beginning of any
fiscal quarter after issuance. The Company is currently reviewing the
requirements of this Statement and the feasibility of early adoption.
In December 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments." The SOP provides guidance concerning when to
recognize a liability for insurance-related assessments and how those
liabilities should be measured. Specifically, insurance-related assessments
should be recognized as liabilities when all of the following criteria have been
met: 1) an assessment has been imposed or it is probable that an assessment will
be imposed, 2) the event obligating an entity to pay an assessment has occurred
and 3) the amount of the assessment can be reasonably estimated. The
requirements of this standard are expected to be adopted in 1999 and are not
expected to have a material impact on the results of operations, cash flows or
financial position of the Company.
FORWARD-LOOKING STATEMENTS
The statements contained in this Management's Discussion and Analysis that
are not historical information are forward-looking statements that are based on
management's estimates, assumptions and projections. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor under The Securities Act of
1933 and The Securities Exchange Act of 1934 for forward-looking statements.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and its Board of Directors know of no material legal
proceedings pending to which the Company is a party or which would
materially affect the Company. 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.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
(2) None
(3)(i) Articles of Incorporation*
(ii) By-laws*
(4) Allstate Life Insurance Company of New York Single Premium Deferred
Annuity Contract** Allstate Life Insurance Company of New York
Flexible Premium Deferred Annuity Contract*
(10) None
(11) None
(15) None
(18) None
(19) None
(22) None
(23)(a) Consent of Independent Public Accountants***
(b) Consent of Attorneys****
(24) None
(27) Financial Data Schedule
(99) None
(b) Reports on 8-K
No reports on Form 8-K were filed during the second quarter of 1998.
* Previously filed in Form N-4 Registration Statement No. 33-65381 dated June
28, 1996 and incorporated by reference.
** Previously filed in Form S-1 Registration Statement No. 33-47245 dated May 4,
1995 and incorporated by reference.
*** Previously filed in Form S-1 Registration Statement No. 33-47245 dated May
1, 1997 and Form S-1 Registration Statement No. 33-65355 dated April 1, 1997 and
incorporated by reference.
**** Previously filed Form S-1 Registration Statement No. 33-47245 dated
November 13, 1992 abd Form S-1 Registration Statement No.33-65355 dated
September 20,1996 and incorporated by reference.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 14th day of August 1998.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
-------------------------------------------
(Registrant)
/s/ LOUIS G. LOWER, II CHAIRMAN OF THE BOARD OF DIRECTORS
- ------------------------ AND CHIEF EXECUTIVE OFFICER
LOUIS G. LOWER, II (Principal Executive Officer)
/s/ KEITH A. HAUSCHILDT ASSISTANT VICE PRESIDENT AND CONTROLLER
- ------------------------ (Chief Accounting Officer)
KEITH A. HAUSCHILDT
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STATEMENTS OF FINANCIAL POSITION AT JUNE 30, 1998; STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997 AND SIX MONTHS ENDED
JUNE 30, 1998 AND JUNE 30, 1997; AND STATEMENTS OF CASH FLOWS SIX MONTHS
ENDED JUNE 30, 1998.
</LEGEND>
<CIK> 0000839759
<NAME> ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 1,841,260
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 133,654
<REAL-ESTATE> 0
<TOTAL-INVEST> 2,074,042
<CASH> 612
<RECOVER-REINSURE> 1,939
<DEFERRED-ACQUISITION> 75,581
<TOTAL-ASSETS> 2,532,822
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 1,146,870
<POLICY-HOLDER-FUNDS> 648,565
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,000
<OTHER-SE> 306,870
<TOTAL-LIABILITY-AND-EQUITY> 2,532,822
43,253
<INVESTMENT-INCOME> 66,260
<INVESTMENT-GAINS> 4,104
<OTHER-INCOME> 16,419
<BENEFITS> 88,821
<UNDERWRITING-AMORTIZATION> 4,205
<UNDERWRITING-OTHER> 12,165
<INCOME-PRETAX> 24,845
<INCOME-TAX> 8,863
<INCOME-CONTINUING> 15,982
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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</TABLE>
