ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT, 485BPOS, 1996-04-30

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
485BPOS, 1996-04-30

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996

FILE NO. 33-24228
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 11 /X/

AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 12 /X/

------------------------

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
(EXACT NAME OF REGISTRANT)

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(NAME OF DEPOSITOR)

MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
ONE ALLSTATE DRIVE
P.O. BOX 9095
FARMINGVILLE, NEW YORK 11738

(516) 451-5170

(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
GREGOR B. MCCURDY, ESQUIRE CHRISTINE A. EDWARDS, ESQUIRE
ROUTIER AND JOHNSON, P.C. DEAN WITTER REYNOLDS INC.
1700 K STREET, N.W. SUITE 1003 TWO WORLD TRADE CENTER
WASHINGTON, D.C. 20006 NEW YORK, NEW YORK 10048
</TABLE>

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STATEMENT PURSUANT TO RULE 24F-2

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby states that, pursuant to paragraph(b)(1), it filed its Rule
24f-2 Notice for the fiscal year ending December 31, 1995 on February 28, 1996.

------------------------

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

___ immediately upon filing pursuant to paragraph (b) of Rule 485

_X_ on May 1, 1996 pursuant to paragraph (b) of Rule 485

___ 60 days after filing pursuant to paragraph (a) of Rule 485
___ on (Date) pursuant to paragraph (a)(i) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(ii) of Rule 485

IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

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CROSS REFERENCE SHEET

Showing Location in Part A (Prospectus) and Part B of Registration Statement of
Information Required by Form N-4

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<CAPTION>
ITEM OF FORM N-4
PROSPECTUS CAPTION
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<S> <C> <C> <C> <C>
1. Cover Page.......................................................... Cover Page
2. Definitions......................................................... Glossary
3. Synopsis............................................................ Introduction; Summary of Separate Account
Expenses
4. Condensed Financials
(a) Chart....................................................
Condensed Financial Statements
(b) MM Yield.................................................
N/A
(c) Performance..............................................
Performance Data
(d) Location of Others.......................................
Financial Statements
5. General
(a) Depositor................................................
Allstate Life Insurance Co. of New York
(b) Registrant...............................................
The Variable Account
(c) Portfolio Company........................................
Dean Witter Variable Investment Series
(d) Fund Prospectus..........................................
Dean Witter Variable Investment Series
(e) Voting Rights............................................
Voting Rights
(f) Administrators...........................................
Charges & Other Deductions -- Contract
Maintenance Charge
6. Deductions & Expenses............................................... Charges & Other Deductions
(a) General..................................................
Charges & Other Deductions
(b) Sales Load %.............................................
Surrender Charge
(c) Special Purchase Plans...................................
N/A
(d) Commissions..............................................
Sales Commission
(e) Expenses -- Registrant...................................
Variable Account Expenses
(f) Fund Expenses............................................
Dean Witter Variable Investment Series
Expenses
(g) Organizational Expenses..................................
N/A
7. Contracts
(a) Persons with Rights......................................
The Contracts; Benefits; Income Payments;
Voting Rights; Assignments; Beneficiaries;
Contract Owners
(b) (i) Allocation of Purchase Payments............... Allocation of Purchase Payments
(ii) Transfers..................................... Transfers
(iii) Exchanges..................................... N/A
(c) Changes..................................................
Modification
(d) Inquiries................................................
Customer Inquiries
8. Annuity Period...................................................... Income Payments
(a) Material Factors.........................................
Amount of Variable Annuity Income Payments
(b) Dates....................................................
Income Starting Date
(c) Frequency, duration & level..............................
Amount of Variable Annuity Income Payments
(d) AIR......................................................
Amount of Variable Annuity Income Payments
(e) Minimum..................................................
Amount of Variable Annuity Income Payments
(f) -- Change Options........................................
Transfers
-- Transfer..............................................
Transfers
9. Death Benefit....................................................... Death Benefits
</TABLE>
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<TABLE>
<CAPTION>
ITEM OF FORM N-4
PROSPECTUS CAPTION
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<S> <C> <C> <C> <C>
10. Purchases & Contract Value
(a) Purchases................................................
Purchase of the Contract. Crediting of
Purchase Payments
(b) Valuation................................................
Value of Variable Account Accumulation Units
(c) Daily Calculation........................................
Value of Variable Account Accumulation Units;
Allocation of Purchase Payments
(d) Underwriter..............................................
Dean Witter Reynolds Inc.
11. Redemptions
(a) -- By Owners.............................................
Surrender and Withdrawals
(b) -- By Annuitant..........................................
Annuity Options
(c) Texas ORP................................................
N/A
(d) Lapse....................................................
N/A
(e) Free Look................................................
Introduction
12. Taxes............................................................... Federal Tax Matters
13. Legal Proceedings................................................... N/A
14. SAI Contents........................................................ SAI; Table of Contents
15. Cover Page.......................................................... Cover Page
16. Table of Contents................................................... Table of Contents
17. General Information & History
(a) Depositor's Name.........................................
Allstate Life Insurance Company of New York
(b) Assets of Sub-Account....................................
The Variable Account
(c) Control of Depositor.....................................
Allstate Life Insurance Company of New York
18. Services
(a) Fees & Expenses of Registrant............................
Contract Maintenance Charge
(b) Management Contracts.....................................
Contract Maintenance Charge; Sales Commissions
(c) Custodian................................................
SAI; Safekeeping of the Variable Account's
Assets
Independent Public Accountant............................
SAI; Experts
(d) Assets of Registrant.....................................
SAI; Safekeeping of the Variable Account
Assets
(e) Affiliated Persons.......................................
N/A
(f) Principal Underwriter....................................
Dean Witter Reynolds Inc.
19. Purchase of Securities Being Offered
(a) Offering.................................................
SAI; Purchase of Contracts
(b) Sales load...............................................
SAI; Sales Commissions
20. Underwriters
(a) Principal Underwriter....................................
SAI; Dean Witter Reynolds Inc.
(b) Continuous offering......................................
SAI; Purchase of Contracts
(c) Commissions..............................................
SAI; Sales Commissions; Dean Witter Reynolds
Inc.
(d) Unaffiliated Underwriters................................
N/A
21. Calculation of Performance Data..................................... SAI; Performance Data
22. Annuity Payments.................................................... SAI; Income Payments
23. Financial Statements
(a) Financial Statements of Registrant.......................
SAI; Allstate Life of New York Variable
Annuity Account Financial Statement
(b) Financial Statements of Depositor........................
SAI; Allstate Life Insurance Company of New
York Financial Statments
24a. Financial Statements................................................ Part C. Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM OF FORM N-4
PROSPECTUS CAPTION
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<S> <C> <C> <C> <C>
24b. Exhibits............................................................ Part C. Exhibits
25. Directors and Officers.............................................. Part C. Directors & Officers of Depositor
26. Persons Controlled By or Under Common Control
with Depositor or Registrant........................................ Part C. Persons Controlled by or Under Common
Control with Depositor or Registrant
27. Number of Contract Owners........................................... Part C. Number of Contract Owners
28. Indemnification..................................................... Part C. Indemnification
29a. Relationship of Principal Underwriter to Other
Investment Companies................................................ Part C. Relationship of Principal Underwriter
to Other Investment Companies
29b. Principal Underwriters.............................................. Part C. Principal Underwriters
29c. Compensation of Underwriter......................................... Part C. Compensation of Dean Witter
30. Location of Accounts and Records.................................... Part C. Location of Accounts and Records
31. Management Services................................................. Part C. Management Services
32. Undertakings........................................................ Part C. Undertakings
</TABLE>
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ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
FARMINGVILLE, NEW YORK 11738

INDIVIDUAL VARIABLE ANNUITY CONTRACTS

DISTRIBUTED BY

DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
-------------------

This Prospectus describes the Flexible Premium Deferred Variable Annuity
Contract ("Contract") offered by Allstate Life Insurance Company of New York
("Company") an indirect wholly owned subsidiary of Allstate Insurance Company.
Dean Witter Reynolds Inc. ("Dean Witter") is the principal underwriter and
distributor of the Contracts.

The Contract has the flexibility to allow you to shape an annuity to fit
your particular needs. It is primarily designed to aid you in long-term
financial planning and can be used for retirement planning regardless of whether
the plan qualifies for special federal income tax treatment.

This Prospectus is a concise statement of the relevant information about the
Allstate Life of New York Variable Annuity Account ("Variable Account") which
you should know before making a decision to purchase the Contract. This
Prospectus generally describes only the variable portion of the Contract. For a
brief summary of the fixed portion of the Contract, see "The Fixed Account" on
page 22.

The Company has prepared and filed a Statement of Additional Information
dated May 1, 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 below. For your convenience, an
order form for the Statement of Additional Information may be found on page 28
of this Prospectus. Before ordering, you may wish to review the Table of
Contents of the Statement of Additional Information on page 27 of this
Prospectus. The Statement of Additional Information has been incorporated by
reference into this Prospectus.

ANNUITY SERVICES OFFICE:

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
P.O. BOX 9095
FARMINGVILLE, NEW YORK 11738

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED
OR PRECEDED BY A CURRENT PROSPECTUS FOR THE
DEAN WITTER VARIABLE INVESTMENT SERIES

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 DATE OF THIS PROSPECTUS IS MAY 1, 1996.

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THE CONTRACTS ARE AVAILABLE ONLY IN NEW YORK.

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.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
GLOSSARY........................................... 3
INTRODUCTION....................................... 5
SUMMARY OF SEPARATE ACCOUNT EXPENSES............... 8
CONDENSED FINANCIAL INFORMATION.................... 10
PERFORMANCE DATA................................... 12
FINANCIAL STATEMENTS............................... 12
ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK AND THE VARIABLE ACCOUNT................. 13
Allstate Life Insurance Company of New York.... 13
Dean Witter Reynolds Inc....................... 13
The Variable Account........................... 13
The Dean Witter Variable Investment
Series........................................ 13
THE CONTRACTS...................................... 16
Purchase of the Contracts...................... 16
Crediting of the Purchase Payments............. 16
Allocation of Purchase Payments................ 16
Value of Variable Account Accumulation Units... 16
Transfers...................................... 17
Surrender and Withdrawals...................... 17
Default........................................ 18
CHARGES AND OTHER DEDUCTIONS....................... 18
Deductions from Purchase Payments.............. 18
Contract Maintenance Charge.................... 18
Mortality and Expense Risk Charge.............. 18
Surrender Charge............................... 19
Taxes.......................................... 20
Dean Witter Variable Investment Series ("Fund")
Expenses...................................... 20
BENEFITS UNDER THE CONTRACT........................ 20
Death Benefits Prior to the Income Starting
Date.......................................... 20
Death Benefits After the Income Starting
Date.......................................... 20

INCOME PAYMENTS.................................... 20
Income Starting Date........................... 20
Amount of Variable Annuity Income Payments..... 21
Annuity Options................................ 21
THE FIXED ACCOUNT.................................. 22
General Description............................ 22
Transfers, Surrender, and Withdrawals.......... 23
GENERAL MATTERS.................................... 23
Owner.......................................... 23
Beneficiary.................................... 23
Delay of Payments.............................. 23
Assignments.................................... 24
Modification................................... 24
Customer Inquiries............................. 24
FEDERAL TAX MATTERS................................ 24
Introduction................................... 24
Taxation of Annuities in General............... 24
Tax Deferral................................. 24
Non-Natural Owners........................... 24
Diversification Requirements................. 24
Investor Control............................. 24
Taxation of Partial and Full Withdrawals..... 25
Taxation of Annuity Payments................. 25
Taxation of Annuity Death Benefits........... 25
Penalty Tax on Premature Distributions....... 25
Aggregation of Annuity Contracts............. 25
Tax Qualified Contracts........................ 25
Restrictions Under 403(b) Plans.............. 26
Income Tax Withholding......................... 26
VOTING RIGHTS...................................... 26
SALES COMMISSION................................... 26
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF
CONTENTS.......................................... 27
ORDER FORM......................................... 28
</TABLE>

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GLOSSARY

ACCUMULATION UNIT--An accounting unit used to calculate the Contract Value
prior to the Income Starting Date. Each Sub-Account of the Variable Account has
its own distinct Accumulation Unit value.

AGE--Age on last birthday.

ANNUITANT--A person whose life determines the duration of the annuity
payments involving life contingencies. "Annuitant" may include a Joint
Annuitant, if named prior to January 19, 1985.

ANNUITANT'S BENEFICIARY--The person(s) designated in the Contract who will
receive the Death Benefit when the Annuitant is not an Owner, the Owner is a
natural person, and the Annuitant dies prior to the Income Starting Date. An
irrevocable Annuitant's Beneficiary is an Annuitant's Beneficiary whose written
consent is required before you may change the Annuitant's Beneficiary, make the
Annuitant an Owner, or make an assignment.*

ANNUITY UNIT--An accounting unit used to calculate Variable Annuity
payments. Each Sub-Account has a distinct Annuity Unit value.

AUTOMATIC ADDITIONS--Additional Purchase Payments of $25 or more which are
made automatically from the Owner's bank account or Dean Witter Active
Assets-TM- Account.

AUTOMATIC INCOME--Partial withdrawals of $100 or more may be taken
automatically from the Contract Value and sent to the Owner or deposited to the
Owner's bank account or Dean Witter Active Assets-TM- Account.

BENEFICIARY--The person to whom benefits will be paid upon the earlier of
the Owner's or Annuitant's death, including any contingent beneficiary. In the
event a Beneficiary is not named, the Company will treat the Owner or the estate
of the Owner as the Beneficiary. Under the revised Contract (see footnote
below), the Beneficiary may be either the Owner's Beneficiary or the Annuitant's
Beneficiary.*

COMPANY--The issuer of the Contract, Allstate Life Insurance Company of New
York, which is an indirect wholly-owned subsidiary of Allstate Insurance
Company.

CONTINGENT ANNUITANT--The person who will become the Annuitant, if the
Annuitant dies prior to the Income Starting Date. A Contingent Annuitant must be
named prior to the death of the Annuitant or the Income Starting Date, whichever
occurs first.*

CONTINGENT OWNER--The person who will become Owner of the Contract upon the
death of the Owner so long as the Annuitant, if applicable, is still living.*

CONTRACT--The Flexible Premium Deferred Variable Annuity Contract that is
described in this Prospectus.

CONTRACT ANNIVERSARY--An anniversary of the date that the Contract was
issued to the Owner.*

CONTRACT VALUE--The sum of the value of all Accumulation Units for the
Variable Account plus the value in the Fixed Account.

CONTRACT YEAR--The year commencing on either the issue date or a Contract
Anniversary.

DATE OF DEATH--The date that an Owner and/or Annuitant dies causing a Death
Benefit to be due.*

DEATH BENEFIT--The amount payable to the Beneficiary on the death of the
Annuitant so long as no Contingent Annuitant is living, and so long as the death
occurs on or before the date the IRS required distribution must be made or the
Income Starting Date, whichever is earlier.

DOLLAR COST AVERAGING--A method to transfer $100 or more of the Contract
Value in the Money Market Sub-Account automatically to the other Sub-Accounts on
a monthly basis.

DUE PROOF OF DEATH--One of the following:

a) a copy of a certified death certificate, or

b) a copy of a certified decree of a court of competent jurisdiction as
to the finding of death, or

c) any other proof satisfactory to the Company.

FIXED ACCOUNT--All of the assets of the Company that are not in separate
accounts.

FIXED ANNUITY--An annuity with payments having a guaranteed amount.

FREE WITHDRAWAL AMOUNT--A portion of the Contract Value which may be
withdrawn without incurring a Surrender Charge, i.e., 10% of all Purchase
Payments made at least one year before the date of withdrawal.

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INCOME PAYMENTS--A series of periodic annuity payments made by the Company
to the Owner or Beneficiary.

INCOME STARTING DATE--The date Income Payments are to begin under the
Contract.

INVESTMENT ALTERNATIVE--The Fixed Account and the eleven Sub-Accounts of the
Variable Account constitute the twelve Investment Alternatives.

JOINT ANNUITANT--The person along with the Annuitant, whose life determines
the duration of annuity payments under a joint and last survivor annuity.

NET INVESTMENT FACTOR--The factor for a particular Sub-Account used to
determine the value of an Accumulation Unit and Annuity Unit in any Valuation
Period.

NON-QUALIFIED CONTRACTS--Contracts that do not qualify for special federal
income tax treatment.

OWNER--The person designated as the Owner in the Contract or as subsequently
changed. If a Contract is jointly owned, rights and privileges under the
Contract must be exercised jointly by each Owner. If a Contract has been
absolutely assigned, the assignee is the Owner. A collateral assignee is not an
Owner.

OWNER'S BENEFICIARY--The person(s) designated in the Contract who, after the
death of all Owners, may elect to receive the Death Benefit or continue the
Contract as described in "Benefits Under the Contract" on page 20. An
irrevocable Owner's Beneficiary is an Owner's Beneficiary whose consent is
required before you may change the Owner's Beneficiary, add an Owner, or make an
assignment.*

PORTFOLIOS--The mutual fund portfolios of The Dean Witter Variable
Investment Series. The Dean Witter Variable Investment Series has eleven
separate Portfolios: the Money Market Portfolio, the Quality Income Plus
Portfolio, the High Yield Portfolio, the Utilities Portfolio, the Dividend
Growth Portfolio, the Capital Growth Portfolio, the Global Dividend Growth
Portfolio, the European Growth Portfolio, the Pacific Growth Portfolio, the
Equity Portfolio and the Strategist Portfolio.

PURCHASE PAYMENTS--The premiums paid by the Owner to the Company.

QUALIFIED CONTRACTS--Contracts issued under plans that qualify for special
federal income tax treatment.

REQUIRED MINIMUM DISTRIBUTION--For Qualified Contracts, withdrawals equal to
the IRS Required Minimum Distribution may be taken from the Cash Value and sent
to the Owner or deposited in the Owner's bank account or Dean Witter Active
Assets-TM- Account.

SUB-ACCOUNT--A sub-division of the Variable Account. Each Sub-Account
invests exclusively in shares of a specified Portfolio.

SURRENDER CHARGE--The charge that may be assessed by the Company on full or
partial withdrawals of the Contract Value in excess of the Free Withdrawal
Amount.

VALUATION DATE--Each day that the New York Stock Exchange is open for
business and any other day in which there is sufficient degree of trading in the
Variable Account's portfolio securities that the value of Accumulation or
Annuity Units might be materially affected by changes in the value of the
portfolio securities. The Valuation Date does not include weekends and such
other 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 business of each Valuation Date and ending at the close of
business of the next succeeding Valuation Date.

VARIABLE ACCOUNT--Allstate Life of New York Variable Annuity Account, a
separate investment account established by the Company to receive and invest the
Purchase Payments paid under the Contracts.

VARIABLE ANNUITY--An annuity with payments that have no predetermined or
guaranteed dollar amounts. The payments will vary in amount depending upon the
investment experience of one or more of the Portfolios.

*The Company revised the Contract on March 1, 1990. These designations have been
modified in the revised Contract for clarification.

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INTRODUCTION
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1. WHAT IS THE PURPOSE OF THE CONTRACT?

The Contract seeks to allow you to accumulate funds and to receive Income
Payments when desired, at rates which depend upon the return achieved from the
types of investment chosen. THERE IS NO ASSURANCE THAT THIS GOAL WILL BE
ACHIEVED. In attempting to achieve this goal, the Owner can allocate Purchase
Payments to one or more of the Variable Account Portfolios or the Fixed Account.

Because Contract Values and Income Payments depend on the investment
experience of the selected Portfolios, the Owner bears the entire investment
risk for amounts allocated to the Variable Account. See "Value of Variable
Account Accumulation Units," pg. 16 and "Income Payments," pg. 20.

2. WHAT TYPES OF INVESTMENTS UNDERLIE THE VARIABLE ACCOUNT?

The Variable Account invests exclusively in shares of the Dean Witter
Variable Investment Series (the "Fund"), a mutual fund managed by Dean Witter
InterCapital Inc., a wholly owned subsidiary of Dean Witter Reynolds Inc. The
Fund has eleven Portfolios: the Money Market Portfolio, the Quality Income Plus
Portfolio, the High Yield Portfolio, the Utilities Portfolio, the Dividend
Growth Portfolio, the Capital Growth Portfolio, the Global Dividend Growth
Portfolio, the European Growth Portfolio, the Pacific Growth Portfolio, the
Equity Portfolio, and the Strategist Portfolio. The assets of each Portfolio are
held separately from the other Portfolios and each has distinct investment
objectives and policies which are described in the accompanying Prospectus for
the Fund.

3. HOW DO I PURCHASE A CONTRACT?

The Company has discontinued the offering of new Contracts. Additional
Purchase Payments to existing Contracts are accepted by the Company.

Automatic Additions allow you to systematically build toward your long-term
financial plan on a monthly basis by making subsequent Purchase Payments from
your bank account or your Dean Witter Active Assets-TM- Account. Subsequent
Purchase Payments must be $25 or more and may be made at any time prior to the
Income Starting Date.

The Company may limit the total Purchase Payments in any year to three times
the Purchase Payments made during the first Contract Year. See "Purchase of the
Contracts," pg. 16 and "Crediting of Purchase Payments," pg. 16.

4. HOW DO I ALLOCATE PURCHASE PAYMENTS?

On your application, you will allocate your Purchase Payment among the
Sub-Accounts or the Sub-Accounts and the Fixed Account. All allocations must be
in whole percents from 0% to 100% and must total 100%. Allocations may be
changed by notifying the Company in writing. See "Allocation of Purchase
Payments," pg. 16.

5. CAN I TRANSFER AMOUNTS AMONG THE SUB-ACCOUNTS?

Transfers can be made among the eleven Sub-Accounts and the Fixed Account
without charge. Transfers must be at least $100 or the entire amount in the
Investment Alternative whichever is less.

Dollar Cost Averaging automatically moves funds from the Money Market
Sub-Account on a monthly basis to other Sub-Accounts of your choice.

Certain transfers may be restricted. See "Transfers," pg. 17.

6. CAN I GET MY MONEY IF I NEED IT?

All or part of the Contract Value can be withdrawn before the earliest of
the last surviving Annuitant's death, the Income Starting Date, or the death

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of any Owner. Partial withdrawals may also be taken automatically through
monthly Automatic Income withdrawals.

No Surrender Charges will be deducted from the first withdrawal in a
Contract Year on amounts up to the Free Withdrawal Amount. (Free Withdrawal
Amounts are not subject to Surrender Charges but may be subject to tax or
penalty imposed by the Internal Revenue Service.) Amounts withdrawn in excess of
the Free Withdrawal Amount may be subject to a Surrender Charge of 0% to 6%
depending on how long the withdrawn Purchase Payments have been invested in the
Contract. THE COMPANY GUARANTEES THAT THE AGGREGATE SURRENDER CHARGES WILL NEVER
EXCEED 7% OF THE PURCHASE PAYMENTS.

For Non-Qualified Contracts, i.e. Contracts not qualifying for special tax
treatment, a penalty tax may be imposed on withdrawals. Federal and State income
tax may be withheld from withdrawal and surrender amounts. Qualified Contracts
may also have certain restrictions and penalties on withdrawals. See "Surrender
and Withdrawals," pg. 17 and "Taxation of Annuities in General," pg. 24.

7. WHAT ARE THE CHARGES AND DEDUCTIONS UNDER THE CONTRACT?

To allow you to invest the entire Purchase Payment, the Company currently
does not deduct sales charges at the time of investment. Annually, however, the
Company deducts $30 for maintaining the Contract ("Contract Maintenance
Charge"). THIS AMOUNT IS GUARANTEED NOT TO INCREASE. See "Contract Maintenance
Charge," pg. 18, for how and when this charge is deducted.
The Company deducts a daily charge equal on an annual basis to 1.0% of the
Contract's daily net assets of the Variable Account and will reflect this charge
in the net interest rate credited to amounts in the Fixed Account allocable to
the Contracts in order to cover mortality and expense risks. See "Mortality and
Expense Risk Charge," pg. 18.

Additional deductions may be made for certain taxes. The Company reserves
the right to deduct state premium taxes when money is withdrawn from the
Contract or when Income Payments under an Annuity Option begin. The Company
reserves the right to deduct such taxes from Purchase Payments at the time such
taxes are incurred. Currently no deductions are made because New York does not
charge premium taxes on annuities. In addition, no deductions are currently
being made for capital gains tax reserve.

8. WHAT ANNUITY OPTIONS ARE AVAILABLE UNDER THE CONTRACT?

The Owner may receive Income Payments on a completely variable basis, a
completely fixed basis, or a variable and fixed basis. The Owner has some
flexibility in choosing when Income Payments begin. Payments must begin by the
later of the month following the Annuitant's 85th birthday or the 10th Contract
Anniversary. See "Income Payments," pg. 20 and "Income Starting Date," pg. 20.

Three Annuity Options are listed in the Contract: (1) payments for life of
the Annuitant, but with 120 monthly payments guaranteed; (2) payments for a
specified period; and (3) payments for the life of the Annuitant and Joint
Annuitant. Other options may be available at the Company's discretion; however,
Surrender Charges may apply if Income Payments are made for a specified period
of less than 120 months. See "Annuity Options," pg. 21.

Federal tax law may limit the availability of Annuity Options.

9. DOES THE CONTRACT PAY ANY GUARANTEED DEATH BENEFITS?

Death benefits will be paid to the Beneficiary if the Owner(s) or the
Annuitant(s) (and no Contingent Annuitant is still living) die before the Income
Starting Date. The Death Benefit will be the greater of (1) the sum of all
Purchase Payment(s) less any amounts

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deducted in connection with partial withdrawals, including any Surrender
Charges, or (2) the Contract Value. Death benefits after the Income Starting
Date, if any, will depend on the Annuity Option chosen.

The Beneficiary has 180 days from the date of death of the Annuitant(s) or
Owner to either elect an Annuity Option or to take a lump sum payment. See
"Benefits Under the Contract" pg. 20.

10. ARE THERE ANY SHORT-TERM CANCELLATION RIGHTS?

Owners may cancel a Contract anytime within ten days after receipt of the
Contract and receive a full refund of Purchase Payments allocated to the Fixed
Account. Subject to the requirements of any tax-qualified plan, 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.

11. DOES THE OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?

The Owner can instruct the Company how to vote shares of any eligible
Portfolio attributable to the Contract. See "Voting Rights," pg. 26.

* * *
This Prospectus describes only the variable aspects of the Contract, except
where fixed aspects are specifically mentioned. See pg. 22 for a brief summary
of the Fixed Account.

7
<PAGE>
SUMMARY OF SEPARATE ACCOUNT EXPENSES
- --------------------------------------------------------------------------------

The following fee table illustrates all expenses and fees that the Owners
will incur. The expenses and fees set forth in the table are based on charges
under the Contracts and on the expenses of the underlying Fund for the fiscal
year ended December 31, 1995.

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 AMOUNT SURRENDERED)*
</TABLE>

<TABLE>
<CAPTION>
APPLICABLE
SALES
CHARGE
ELAPSED TIME SINCE PURCHASE PAYMENT BEING WITHDRAWN WAS MADE PERCENTAGE
-----------
<S> <C>
Less than 1 year.................................................................................................... 6%
1 year, but less than 2 years....................................................................................... 5%
2 years, but less than 3 years...................................................................................... 4%
3 years, but less than 4 years...................................................................................... 3%
4 years, but less than 5 years...................................................................................... 2%
5 years, but less than 6 years...................................................................................... 1%
6 years or more..................................................................................................... 0%
</TABLE>

<TABLE>
<S> <C>
Exchange Fee.............................................................................. None
Annual Contract Fee....................................................................... $30
</TABLE>

SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)

<TABLE>
<CAPTION>
DIVIDEND
MONEY MARKET QUALITY INCOME HIGH YIELD UTILITIES GROWTH
SUB- PLUS SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Mortality and Expense Risk Charges:............. 1% 1% 1% 1% 1%
Total Separate Account Annual Expenses:......... 1% 1% 1% 1% 1%

<CAPTION>
GLOBAL
CAPITAL GROWTH DIVIDEND EUROPEAN GROWTH
SUB- GROWTH SUB- SUB- PACIFIC GROWTH EQUITY SUB-
ACCOUNT ACCOUNT ACCOUNT SUB- ACCOUNT ACCOUNT
-------------- -------------- --------------- -------------- --------------
<S> <C>
Mortality and Expense Risk Charges:............. 1% 1% 1% 1% 1%
Total Separate Account Annual Expenses:......... 1% 1% 1% 1% 1%

STRATEGIST SUB-
ACCOUNT
---------------
Mortality and Expense Risk Charges:............. 1%
Total Separate Account Annual Expenses:......... 1%
</TABLE>

DEAN WITTER VARIABLE INVESTMENT SERIES ("FUND") EXPENSES (AS A PERCENTAGE OF
FUND AVERAGE NET
ASSETS)

<TABLE>
<CAPTION>
QUALITY DIVIDEND CAPITAL
MONEY MARKET INCOME PLUS HIGH YIELD UTILITIES GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees:......................... .50% .50%(1) .50% .65%(2) .59%(3) .65%
Other Expenses:.......................... .03% .040% .04% .03% .02% .09%
Total Fund Annual Expenses:.............. .53% .540% .540% .68% .61% .74%

<CAPTION>
GLOBAL
DIVIDEND EUROPEAN PACIFIC
GROWTH GROWTH GROWTH EQUITY STRATEGIST
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Management Fees:......................... .75% 1.00% 1.00% .50%(4) .50%
Other Expenses:.......................... .13% .17% .44% .04% .02%
Total Fund Annual Expenses:.............. .88% 1.17% 1.44% .54% .52%
</TABLE>

(1) This percentage is applicable to Portfolio net assets of up to $500 million.
For net assets which exceed $500 million, the management fee will be 0.45%.

(2) This percentage is applicable to Portfolio net assets of up to $500 million.
For net assets which exceed $500 million, the management fee will be 0.55%.

(3) The management fee will be 0.625% for net assets under $500 million. For net
assets which exceed $500 million, but do not exceed $1 billion, the
management fee will be 0.50% and for net assets that exceed $1 billion, the
management fee will be 0.475%.

(4) This percentage is applicable to Portfolio net assets of up to $1 billion.
For net assets which exceed $1 billion, the management fee will be 0.475%.

*There are no Contingent Deferred Sales Charges on the first withdrawal of each
Contract Year on amounts up to the Free Withdrawal Amount.

8
<PAGE>
EXAMPLE

You (the Owner) would pay the following expenses on a $1,000 investment,
assuming a 5% annual return under the following circumstances:

If you surrender your Contract at the end of the applicable time period (or
if you annuitize for a specified period of less than 120 months):

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS
----------- ----------- -----------
<S> <C> <C> <C>
Money Market Sub-Account................................................................... $ 63 $ 81 $ 98
Quality Income Plus Sub-Account............................................................ $ 63 $ 81 $ 99
High Yield Sub-Account..................................................................... $ 63 $ 81 $ 99
Utilities Sub-Account...................................................................... $ 65 $ 85 $ 106
Dividend Growth Sub-Account................................................................ $ 64 $ 83 $ 102
Equity Sub-Account......................................................................... $ 63 $ 81 $ 99
Strategist Sub-Account..................................................................... $ 63 $ 81 $ 98
Capital Growth Sub-Account................................................................. $ 65 $ 87 $ 109
European Growth Sub-Account................................................................ $ 69 $ 100 $ 131
Pacific Growth Sub-Account................................................................. $ 72 $ 108 $ 145
Global Dividend Growth Sub-Account......................................................... $ 66 $ 91 $ 116

<CAPTION>
10 YEARS
-----------
<S> <C>
Money Market Sub-Account................................................................... $ 190
Quality Income Plus Sub-Account............................................................ $ 191
High Yield Sub-Account..................................................................... $ 191
Utilities Sub-Account...................................................................... $ 206
Dividend Growth Sub-Account................................................................ $ 199
Equity Sub-Account......................................................................... $ 191
Strategist Sub-Account..................................................................... $ 189
Capital Growth Sub-Account................................................................. $ 213
European Growth Sub-Account................................................................ $ 258
Pacific Growth Sub-Account................................................................. $ 286
Global Dividend Growth Sub-Account......................................................... $ 228
</TABLE>

If you do not surrender 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>
1 YEAR 3 YEARS 5 YEARS
----------- ----------- -----------
<S> <C> <C> <C>
Money Market Sub-Account................................................................... $ 16 $ 51 $ 87
Quality Income Plus Sub-Account............................................................ $ 16 $ 51 $ 88
High Yield Sub-Account..................................................................... $ 16 $ 51 $ 88
Utilities Sub-Account...................................................................... $ 18 $ 55 $ 95
Dividend Growth Sub-Account................................................................ $ 17 $ 53 $ 92
Equity Sub-Account......................................................................... $ 16 $ 51 $ 88
Strategist Sub-Account..................................................................... $ 16 $ 50 $ 87
Capital Growth Sub-Account................................................................. $ 19 $ 57 $ 98
European Growth Sub-Account................................................................ $ 23 $ 71 $ 121
Pacific Growth Sub-Account................................................................. $ 26 $ 79 $ 135
Global Dividend Growth Sub-Account......................................................... $ 20 $ 62 $ 106

The above example should not be considered a representation of past or
future expense or performance. Actual expenses of a Sub-Account may be greater
or lesser than those shown.

*Early Withdrawal Charges may be deducted from the Cash Value before it is
applied to an income plan with a specified period of less than 120 months.

9
<PAGE>
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------

ACCUMULATION UNIT VALUES AND NUMBER
OF ACCUMULATION UNITS OUTSTANDING FOR
EACH SUB-ACCOUNT*

<TABLE>
<CAPTION>
FOR THE PERIODS ENDING DECEMBER 31,
----------------------------------------------------------------
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 13.628 $ 14.532 $ 15.530 $ 16.260 $ 16.651 $ 16.940
Accumulation Unit Value, End of Period................. $ 14.532 $ 15.530 $ 16.260 $ 16.651 $ 16.940 $ 17.411
Number of Units Outstanding, End of Period............. 7,963 76,431 157,103 121,052 85,420 89,195
HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 17.977 $ 14.993 $ 10.864 $ 17.064 $ 20.008 $ 24.609
Accumulation Unit Value, End of Period................. $ 14.993 $ 10.864 $ 17.064 $ 20.008 $ 24.609 $ 23.759
Number of Units Outstanding, End of Period............. 571 632 1,818 2,252 2,748 3,157
EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 16.368 $ 18.580 $ 17.728 $ 27.916 $ 27.681 $ 32.807
Accumulation Unit Value, End of Period................. $ 18.580 $ 17.728 $ 27.916 $ 27.681 $ 32.807 $ 30.885
Number of Units Outstanding, End of Period............. 15,551 15,033 19,279 26,610 28,032 23,571
QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 10.843 $ 12.097 $ 12.798 $ 15.016 $ 16.096 $ 18.010
Accumulation Unit Value, End of Period................. $ 12.097 $ 12.798 $ 15.016 $ 16.096 $ 18.010 $ 16.648
Number of Units Outstanding, End of Period............. 3,462 48,198 134,798 151,095 150,179 95,868
STRATEGIST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 11.324 $ 12.284 $ 12.351 $ 15.684 $ 16.651 $ 18.199
Accumulation Unit Value, End of Period................. $ 12.284 $ 12.351 $ 15.684 $ 16.651 $ 18.199 $ 18.728
Number of Units Outstanding, End of Period............. 56,148 94,204 113,342 138,065 153,920 160,992
UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... -- $ 10.000 $ 10.365 $ 12.372 $ 13.797 $ 15.804
Accumulation Unit Value, End of Period................. -- $ 10.365 $ 12.372 $ 13.797 $ 15.804 $ 14.235
Number of Units Outstanding, End of Period............. -- 130,055 211,125 205,071 204,333 168,808
DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... -- $ 10.000 $ 9.143 $ 11.564 $ 12.383 $ 14.019
Accumulation Unit Value, End of Period................. -- $ 9.143 $ 11.564 $ 12.383 $ 14.019 $ 13.425
Number of Units Outstanding, End of Period............. -- 231,500 321,598 348,132 350,305 330,200
CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... -- -- $ 10.000 $ 12.735 $ 12.814 $ 11.799
Accumulation Unit Value, End of Period................. -- -- $ 12.735 $ 12.814 $ 11.799 $ 11.533
Number of Units Outstanding, End of Period............. -- -- 51,643 58,830 55,497 50,378

1995
---------
<S> <C>
MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 17.411
Accumulation Unit Value, End of Period................. $ 18.215
Number of Units Outstanding, End of Period............. 85,667
HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 23.759
Accumulation Unit Value, End of Period................. $ 27.055
Number of Units Outstanding, End of Period............. 6,184
EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 30.885
Accumulation Unit Value, End of Period................. $ 43.585
Number of Units Outstanding, End of Period............. 24,927
QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 16.648
Accumulation Unit Value, End of Period................. $ 20.498
Number of Units Outstanding, End of Period............. 87,651
STRATEGIST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 18.728
Accumulation Unit Value, End of Period................. $ 20.284
Number of Units Outstanding, End of Period............. 137,461
UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 14.235
Accumulation Unit Value, End of Period................. $ 18.132
Number of Units Outstanding, End of Period............. 143,537
DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 13.425
Accumulation Unit Value, End of Period................. $ 18.128
Number of Units Outstanding, End of Period............. 316,921
CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 11.533
Accumulation Unit Value, End of Period................. $ 15.177
Number of Units Outstanding, End of Period............. 48,100
</TABLE>

10
<PAGE>
ACCUMULATION UNIT VALUES AND NUMBER
OF ACCUMULATION UNITS OUTSTANDING FOR
EACH SUB-ACCOUNT* (CONTINUED)

1995
---------
<S> <C>
EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 15.484
Accumulation Unit Value, End of Period................. $ 19.299
Number of Units Outstanding, End of Period............. 19,230
GLOBAL DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 9.942
Accumulation Unit Value, End of Period................. $ 12.012
Number of Units Outstanding, End of Period............. 34,628
PACIFIC GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period........... $ 9.248
Accumulation Unit Value, End of Period................. $ 9.682
Number of Units Outstanding, End of Period............. 26,915
</TABLE>

*The Money Market, High Yield, Equity, Quality Income Plus and Strategist
Sub-Accounts commenced operations on March 1, 1989. The Utilities and Dividend
Growth Sub-Accounts commenced operations on March 1, 1990. The Capital Growth
and European Growth Sub-Accounts commenced operations on March 1, 1991. The
Global Dividend Growth and Pacific Growth Sub-Accounts commenced operations on
February 23, 1994.

11
<PAGE>
PERFORMANCE DATA
- --------------------------------------------------------------------------------

From time to time the Variable Account may publish advertisements containing
performance data relating to its Sub-Accounts. The performance data for the
Sub-Accounts (other than for the Money Market Sub-Account) will always be
accompanied by total return quotations for the most recent one, five and ten
year periods, or for a period from inception to date if the Sub-Account has not
been available for one of the prescribed periods. The total return quotations
for each period will be the average annual rates of return required for an
initial Purchase Payment of $1,000 to equal the amount Owners would receive on a
withdrawal of the Purchase Payment, after reflection of all recurring and
non-recurring charges.

Performance figures used by the Variable Account are based on actual
historical performance of its Sub-Accounts for specified periods, and the
figures are not intended to indicate future performance. More detailed
information on the computation is set forth in the Statement of Additional
Information.

FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

The financial statements of the Allstate Life of New York Variable Annuity
Account and Allstate Life Insurance Company of New York may be found in the

Statement of Additional Information, which is incorporated by reference into
this Prospectus and which is available upon request (see Order Form on pg. 28).

12
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
- --------------------------------------------------------------------------------

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

The Company is the issuer of the Contract. Incorporated in 1967 as a stock
life insurance company under the laws of New York, from 1967 to 1978 the Company
was known as "Financial Life Insurance Company" and from 1978 to 1984 the
Company was known as "PM Life Insurance Company". The Company sells annuities
and individual 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 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"). In June 1995, Sears, Roebuck and Co. ("Sears") distributed in a
tax-free dividend to its stockholders its remaining 80.3% ownership in the
Corporation. As a result of the distribution, Sears no longer has an ownership
interest in the Corporation.

DEAN WITTER REYNOLDS INC.

Dean Witter Reynolds Inc. ("Dean Witter") is the principal underwriter of
the Contract. Dean Witter is a wholly owned subsidiary of Dean Witter, Discover
& Co. ("Dean Witter Discover"). Dean Witter is located at Two World Trade
Center, New York, New York. Dean Witter is a member of the New York Stock
Exchange and the National Association of Securities Dealers, Inc.

Dean Witter's wholly owned subsidiary, Dean Witter InterCapital, Inc.
("InterCapital"), is the investment manager of the Dean Witter Variable
Investment Series. InterCapital is registered with the Securities and Exchange
Commission as an investment adviser. As compensation for investment management,
the Fund pays InterCapital a monthly advisory fee. These expenses are more fully
described in the Fund's Prospectus attached to this Prospectus.

THE VARIABLE ACCOUNT

Established on June 26, 1987, the Variable Account is a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, but 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 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, 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 Variable Account has been divided into eleven Sub-Accounts, each of
which invests solely in its corresponding Portfolio of the Dean Witter Variable
Investment Series. Additional Sub-Accounts may be added at the discretion of the
Company.

THE DEAN WITTER VARIABLE INVESTMENT SERIES

The Variable Account will invest exclusively in the Dean Witter Variable
Investment Series (the "Fund"). Shares of the Fund are also offered to other
separate accounts of the Company or life insurance companies affiliated with the
Company which fund variable annuity and variable life contracts. Shares of the
Fund may also be offered to separate accounts of certain non-affiliated life
insurance companies which fund variable life insurance contracts. It is
conceivable that in the future it may become disadvantageous for both variable
life and variable annuity contract separate accounts to invest in the

13
<PAGE>
same underlying Fund. Although neither the Company nor the Fund currently
foresees any such disadvantage, the Fund's Board of Trustees intends to monitor
events in order to identify any material irreconcilable conflict between the
interests of variable annuity contract owners and variable life contract owners
and to determine what action, if any, should be taken in response thereto.

Investors in the High Yield Portfolio should carefully consider the relative
risks of investing in annuities, which are commonly known as junk bonds. Bonds
of this type are considered to be speculative with regard to the payment of
interest and return of principal. Investors in the High Yield Portfolio should
also be cognizant of the fact that such securities are not generally meant for
short-term investing and should assess the risks associated with an investment
in the High Yield Portfolio.

Shares of the Portfolio of the Fund 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.

The Fund has eleven portfolios: the Money Market Portfolio, the Quality
Income Plus Portfolio, the High Yield Portfolio, the Utilities Portfolio, the
Dividend Growth Portfolio, the Capital Growth Portfolio, the Global Dividend
Growth Portfolio, the European Growth Portfolio, the Pacific Growth Portfolio,
the Equity Portfolio and the Strategist Portfolio. Each Portfolio has different
investment objectives and policies and operates as a separate investment fund.

The Money Market Portfolio seeks high current income, preservation of
capital, and liquidity by investing in certain money market instruments,
principally U.S. government securities, bank obligations, and high grade
commercial paper.

The Quality Income Plus Portfolio seeks, as its primary objective, to earn a
high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective, by investing
primarily in debt securities issued by the U.S. Government, its agencies and
instrumentalities, including zero coupon securities and in fixed-income
securities rated A or higher by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("Standard & Poor's") or non-rated securities of
comparable quality, and by writing covered call and put options against such
securities.

The High Yield Portfolio seeks, as its primary objective, to earn a high
level of current income by investing in a professionally managed diversified
portfolio consisting principally of fixed-income securities rated Baa or lower
by Moody's or BBB or lower by Standard & Poor's or non-rated securities of
comparable quality, which are commonly known as "junk bonds", and, as a
secondary objective, capital appreciation when consistent with its primary
objective.

The Utilities Portfolio seeks to provide current income and long-term growth
of income and capital by investing primarily in equity and fixed-income
securities of companies engaged in the public utilities industry.

The Dividend Growth Portfolio seeks to provide reasonable current income and
long-term growth of income and capital by investing primarily in common stock of
companies with a record of paying dividends and the potential for increasing
dividends.

The Capital Growth Portfolio seeks to provide long-term capital growth by
investing principally in common stocks.

The Global Dividend Growth Portfolio seeks to provide reasonable current
income and long-term growth of income and capital by investing primarily in
common stock of companies, issued by issuers worldwide, with a record of paying
dividends and the potential for increasing dividends.

The European Growth Portfolio seeks to maximize the capital appreciation of
its investments by investing primarily in securities issued by issuers located
in Europe.

The Pacific Growth Portfolio seeks to maximize the capital appreciation of
its investments by investing primarily in securities issued by issuers located
in Asia, Australia and New Zealand.

The Equity Portfolio seeks, as its primary objective, growth of capital
through investments in common stock of companies believed by the Investment
Manager to

14
<PAGE>
have potential for superior growth and, as a secondary objective, income when
consistent with its primary objective.

The Strategist Portfolio seeks a high total investment return through a
fully managed investment policy utilizing equity securities, fixed-income
securities rated Baa or higher by Moody's or BBB or higher by Standard & Poor's
(or non-rated securities of comparable quality), and money market securities,
the writing of covered options on such securities and the collateralized sale of
stock index options.

All dividends and capital gains distributions from the Portfolios are
automatically reinvested in shares of the distributing Portfolio at their net
asset value.

THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ATTAIN THEIR
RESPECTIVE STATED OBJECTIVES. Additional information concerning the investment
objectives and policies of the Portfolios can be found in the current Prospectus
for the Fund accompanying this Prospectus.

THE PROSPECTUS OF THE FUND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO A PARTICULAR PORTFOLIO.

15
<PAGE>
THE CONTRACTS
- --------------------------------------------------------------------------------

PURCHASE OF THE CONTRACTS

The Company has discontinued the offering of new Contracts. Additional
Purchase Payments to existing Contracts are accepted by the Company. All
subsequent Purchase Payments must be $25 or more and may be made at any time
prior to the Income Starting Date. Additional Purchase Payments may also be made
from your bank account or your Dean Witter Active Assets-TM- Account through
Automatic Additions. Please consult with your Dean Witter Account Executive for
detailed information about Automatic Additions.

The Company reserves the right to limit Purchase Payments in any Contract
Year to three times the initial Purchase Payment made in the first year.

CREDITING OF PURCHASE PAYMENTS

A Purchase Payment accompanied by a duly completed application will be
credited to the Contract within two business days of receipt by the Company at
its Farmingville, New York home office. If an application is not duly completed,
the Company will credit the Purchase Payments to the Contract within five
business days or return it at that time unless the applicant specifically
consents to the Company holding the Purchase Payment until the application is
complete. The Company reserves the right to reject any application. Subsequent
Purchase Payments will be credited to the Contract at the close of the Valuation
Period during which the Purchase Payment is received.

ALLOCATION OF PURCHASE PAYMENTS

On the application the Owner instructs the Company how to allocate the
Purchase Payment among the twelve Investment Alternatives. Purchase Payments may
be allocated in whole percents, from 0% to 100%, to any Investment Alternative
so long as the total allocation equals 100%. Unless the Owner notifies the
Company otherwise, subsequent Purchase Payments are allocated according to the
instructions in the application.

Each Purchase Payment will be credited to the Contract as Variable Account
Accumulation Units equal to the amount of Purchase Payment allocated to each
Sub-Account divided by the Accumulation Unit value for that Sub-Account next
computed after the Purchase Payment is credited to the Contract. 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
Portfolio (see "Value of Variable Account Accumulation Units," pg. 16).

For a brief summary of how Purchase Payments allocated to the Fixed Account
are credited to the Contract, see "The Fixed Account" on pg. 22.

VALUE OF VARIABLE ACCOUNT ACCUMULATION UNITS

The Accumulation Units in each Sub-Account of the Variable Account are
valued separately. The value of Accumulation Units may change each Valuation
Period according to the investment performance of the shares purchased by each
Sub-Account and the deduction of certain expenses and charges.

A Valuation Period is the period between successive Valuation Dates. It
begins at the close of business of each Valuation Date and ends at the close of
business of the next succeeding Valuation Date. A Valuation Date is each day
that the New York Stock Exchange is open for business and any other day in which
there is a sufficient degree of trading in the Variable Account's portfolio
securities that the value of Accumulation or Annuity Units might be materially
affected by changes in the value of the portfolio securities. Valuation dates do
not include such Federal and non-Federal holidays as are observed by the New
York Stock Exchange. The New York Stock Exchange currently observes the
following holidays: New Year's Day (January 1); President's Day (the third
Monday in February); Good Friday (the Friday before Easter); Memorial Day (the
last Monday in May); Independence Day (July 4); Labor Day (the first Monday in
September); Thanksgiving Day (the fourth Thursday in November); and Christmas
Day (December 25).

16
<PAGE>
The value of an Accumulation Unit in a 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 is a number
representing the change on successive Valuation Dates in value of Sub-Account
assets due to investment income, realized or unrealized capital gains or loss,
deductions for taxes, if any, and deductions for the Mortality and Expense Risk
Charge.

TRANSFERS

The Owner may transfer funds among the twelve Investment Alternatives
without charge. THE COMPANY GUARANTEES THAT NO CHARGE WILL EVER BE IMPOSED FOR
TRANSFERS. Transfers must be at least $100 or the total amount in the Investment
Alternative, whichever is less.

Currently transfers out of any Sub-Account before the Income Starting Date
may be made at any time. The Company reserves the right to restrict such
transfers before the Income Starting Date to once every 30 days after the
Contract is issued. However, the Company will notify Owners at least 30 days
prior to restricting transfers.

After the Income Starting Date, transfers among Sub-Accounts of the Variable
Account, or from the Variable Account to the Fixed Account may be made only once
every six months and may not be made during the first six months following the
Income Starting Date.

Generally, transfer requests must be in writing, on a form provided by the
Company. Transfers may also be made pursuant to telephone instructions if the
Owner completes a telephone authorization form provided by the Company.
Telephone transfer requests will be accepted by the Company if received at (516)
752-5306 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 reserves the right to
restrict or withdraw the telephone transfer privilege upon at least 30 days
notice to owners.

Transfers may also be made automatically through Dollar Cost Averaging prior
to the Income Starting Date. Dollar Cost Averaging permits the Owner to transfer
a specified amount every month from the Money Market Sub-Account to any other
Sub-Account. Transfers made through Dollar Cost Averaging must be $100 or more.
Dollar Cost Averaging cannot be used to transfer amounts to the Fixed Account.
Please consult with your Dean Witter Account Executive for detailed information
about Dollar Cost Averaging.

Transfers from Sub-Accounts of the Variable Account will be made based on
the Accumulation Unit values next computed after the Company receives the
transfer request at its home office.

For transfers from the Fixed Account, see pg. 23.

SURRENDER AND WITHDRAWALS

The Owner may withdraw all or part of the Contract Value at any time prior
to the earliest of the death of the Annuitant (and any Joint Annuitant), death
of any Owner or the Income Starting 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, less any Surrender Charges, Contract Maintenance
Charges or any remaining charge for premium taxes, if applicable. 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," pg. 23. For withdrawals from the Fixed Account, see pg. 23.

The minimum partial withdrawal is $500. If the Contract Value is less than
$100, or if the Contract Value after a partial withdrawal would be less than
$500, then the Company will treat the request as one for a total surrender of
the Contract and the entire Contract Value, less any applicable charges and
premium taxes, will be paid out.

17
<PAGE>
Partial withdrawals may also be taken automatically through monthly
Automatic Income withdrawals. Automatic Income withdrawals of $100 or more may
be requested at any time prior to the Income Starting Date. Please consult with
your Dean Witter Account Executive for detailed information about Automatic
Income withdrawals.

For Qualified Contracts, the Company will, at the request of the Owner,
automatically calculate and withdraw the IRS Required Minimum Distribution.
Please consult with your Dean Witter Account Executive for detailed information
about the Required Minimum Distribution program.

Withdrawals and surrenders may be subject to income tax and a 10% tax
penalty. This tax and penalty is explained in "Federal Tax Matters" on pg. 24.

The full Contract Maintenance Charge will be deducted at the time of total
surrender should the surrender occur on any date other than a Contract
Anniversary. The total amount paid at surrender may be more or less than the
total Purchase Payments due to prior withdrawals, any deductions including
Surrender Charges, and investment performance.
To complete the partial withdrawals, the Company will cancel Accumulation
Units in an amount equal to the withdrawal and any applicable Surrender 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.

DEFAULT

So long as the Contract Value is not reduced to zero or a withdrawal does
not reduce it to less than $500, the Contract will stay in force until the
Income Starting Date even if no Purchase Payments are made after the first
Purchase Payment.

CHARGES AND OTHER DEDUCTIONS
- --------------------------------------------------------------------------------

DEDUCTIONS FROM PURCHASE PAYMENTS

No deductions are currently made from Purchase Payments. Therefore the full
amount of every Purchase Payment is invested in the Investment Alternative(s) to
increase the potential for investment gain.

CONTRACT MAINTENANCE CHARGE

A Contract Maintenance Charge of $30 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 INCREASE OVER THE LIFE OF THE CONTRACT. Maintenance costs include but
are not limited to expenses incurred in billing and collecting Purchase
Payments; keeping records; processing death benefit claims and cash surrenders;
policy changes and 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, the Contract Maintenance Charge will be
deducted from the Investment Alternatives in the same proportion that the
Owner's interest in each bears to the total Contract Value. After the Income
Starting Date, a pro rata share of the annual Contract Maintenance Charge will
be deducted from each Income Payment. For example, 1/12 of the $30 or $2.50 will
be deducted if there are twelve Income Payments during the Contract Year. The
Contract Maintenance Charge will be deducted from the amount paid on a total
surrender.

Prior to October 4, 1993, Vantage Computer Systems, Inc. was under contract
with the Company to provide Contract recordkeeping services. As of October 4,
1993, the Company provides all Contract recordkeeping services.

MORTALITY AND EXPENSE RISK CHARGE

A Mortality and Expense Risk Charge will be deducted daily at a rate equal
on an annual basis to 1.0% of the daily net assets in the Variable Account and
the

18
<PAGE>
assets in the Fixed Account attributable to the Contracts. THE COMPANY
GUARANTEES THAT THE AMOUNT OF THIS CHARGE WILL NOT INCREASE OVER THE LIFE OF THE
CONTRACT. 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.

The mortality risk arises from the Company's guarantee to cover all death
benefits and to make Income Payments in accordance with the annuity tables,
thus, relieving the Annuitants of the risk of outliving funds accumulated for
retirement.

The expense risk arises from the possibility that the Contract Maintenance
Charge, which is guaranteed not to increase, will be insufficient to cover
actual administrative expenses.

SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)

The Owner may withdraw the Contract Value at any time before the earliest of
the Income Starting Date, the death of the Owner, or the Annuitant's or any
Joint Annuitant's death.

There are no Surrender Charges on the first withdrawal of each Contract Year
on amounts up to the Free Withdrawal Amount. The Free Withdrawal Amount is 10%
of the amount of Purchase Payments, excluding those made less than one year
before the date of withdrawal. The maximum portion of the Free Withdrawal Amount
which may be withdrawn from the Fixed Account is limited to the proportion that
your value in the Fixed Account bears to your Contract Value. Amounts
surrendered in excess of the Free Withdrawal Amount may be subject to a
Surrender Charge. Free Withdrawal Amounts not withdrawn in a Contract Year do
not increase the Free Withdrawal Amount in later Contract Years. Surrender
Charges, if applicable, will be deducted from the amount paid. Free Withdrawal
Amounts are not subject to Surrender Charges, but may be subject to tax or
penalty imposed by the Internal Revenue Service.

In certain cases, distributions required by federal tax law may be subject
to a Surrender Charge (see the Statement of Additional Information for "IRS
Required Distribution at Death Rules"). Income Payments under Annuity Options
with a specified period of less than 120 months may be subject to a Surrender
Charge.

Free Withdrawals and other partial withdrawals will be allocated on a first
in, first out basis to Purchase Payments. For purposes of calculating the amount
of the Surrender Charge, Purchase Payments shall include any earnings
attributable to those payments.

A Surrender Charge will be applied to amounts withdrawn in excess of a Free
Withdrawal Amount, as set forth below:

<TABLE>
<S> <C>
APPLICABLE
ELAPSED TIME SINCE SURRENDER
PURCHASE PAYMENT BEING CHARGE
WITHDRAWN WAS MADE PERCENTAGE
-----------
Less than 1 year............................ 6%
1 year, but less than 2 years............... 5%
2 years, but less than 3 years.............. 4%
3 years, but less than 4 years.............. 3%
4 years, but less than 5 years.............. 2%
5 years, but less than 6 years.............. 1%
6 years or more............................. 0%
</TABLE>

The cumulative total of all Surrender Charges is guaranteed never to exceed
7% of an Owner's actual Purchase Payments.

Surrender 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 Surrender Charges will cover
all distribution expenses in connection with the Contract.

Federal and state income tax may be withheld from withdrawal and surrender
amounts. Certain surrenders may also be subject to a federal tax penalty. See
"Federal Tax Matters," pg. 24.

19
<PAGE>
TAXES
The Company reserves the right to deduct state premium taxes or other taxes
relative to the Contract (collectively referred to as "premium taxes") (1) at
the Income Starting Date, or (2) when a partial surrender in excess of the Free
Withdrawal Amount occurs (in which case a pro rata portion of the premium taxes
would be deducted from the amount paid), or (3) when a total surrender occurs,
or (4) from the Purchase Payments. Currently no deductions are made because New
York does not charge premium taxes on annuities.

DEAN WITTER VARIABLE INVESTMENT SERIES ("FUND") EXPENSES

A complete description of the expenses and deductions from the Portfolios
are found in the Fund's Prospectus which is attached to this Prospectus.

BENEFITS UNDER THE CONTRACT
- --------------------------------------------------------------------------------

DEATH BENEFITS PRIOR TO THE INCOME STARTING DATE

If any Owner or Annuitant dies prior to the Income Starting Date, and a
Death Benefit is elected, it will be paid to the Beneficiary. If a Contingent
Annuitant survives the Annuitant or Joint Annuitant, no Death Benefit will be
paid unless the Contingent Annuitant dies before the earlier of the Income
Starting Date or the day on which the Contract Value must be distributed under
the IRS Required Distribution Rules (see below). The Death Benefit will be the
greater of: (a) the sum of all Purchase Payments less any amounts deducted in
connection with partial withdrawals, including any Surrender Charges; or (b) the
Contract Value.

The Company will not pay any Death Benefit until it receives Due Proof of
Death. Generally, the Beneficiary may elect an Annuity Option or a lump sum
payment within 180 days after the Company receives Due Proof of Death. If no
election is received within 180 days, a lump sum will be paid automatically.

The value of the Death Benefit will be determined at the end of the
Valuation Period during which the Company receives the later of Due Proof of
Death and an election for either a lump sum payment or an Annuity Option.

DEATH BENEFITS AFTER THE INCOME STARTING DATE

If any Owner, who is not the Annuitant, dies after the Income Starting Date,
payments will continue to be made under the particular income plan. The
Beneficiary will be the recipient of any such payments.

If the Annuitant and Joint Annuitant, if applicable, die after the Income
Starting Date, the Company will pay the Death Benefit, if any, contained in the
particular Annuity Option elected.

INCOME PAYMENTS
- --------------------------------------------------------------------------------

INCOME STARTING DATE

The Income Starting Date is the day that Income Payments will start under
the Contract. The Owner may change the Income Starting Date at any time by
notifying the Company in writing of the change at least 30 days before the
current Income Starting Date. The Income Starting Date must be (a) at least a
month after the Issue Date; (b) the first day of a calendar month; and (c) no
later than the first day of the calendar month after the Annuitant reaches age
85, or the 10th anniversary date, if later.

Unless the Owner notifies the Company in writing otherwise, the Income
Starting Date will be: for Non-

20
<PAGE>
Qualified Contracts the later of the first day of the calendar month after the
Annuitant reaches age 85 or the 10th anniversary date; for Qualified Contracts,
April 1 of the calendar year following the year in which the Annuitant reaches
age 70 1/2.

AMOUNT OF VARIABLE ANNUITY INCOME PAYMENTS

The amount of Variable Annuity Income Payments depends upon the investment
experience of the Portfolios selected by the Owner, premium taxes, if
applicable, the age and sex of the Annuitant(s), and the Annuity Option chosen.
The Company guarantees that the Income Payments will not be affected by (1)
actual mortality experience and (2) amount of the Company's administration
expenses.
The Contracts offered by this Prospectus contain life annuity 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 may be used. Accordingly, if the
Contract is to be used in connection with an employment-related retirement or
benefit plan, consideration should be given, in consultation with legal counsel,
to the impact of NORRIS on any such plan before making any contributions under
these Contracts.

The Income Payments may be more or less than the total Purchase Payments
made because (a) Variable Annuity Income Payments vary with the investment
results of the underlying Portfolios; (b) the Owner bears the investment risk
with respect to all amounts allocated to the Variable Account; (c) Annuitants
may die before the actuarially expected Date of Death, and (d) Surrender Charges
may be applicable. As such, the amount of Income Payments cannot be predicted.

The duration of the Annuity Option may affect the dollar amounts of each
Income Payment. For example, if an Annuity Option guaranteed for life is chosen,
the Income Payments may be greater or less than Income Payments under an Annuity
Option for a specified period depending on the life expectancy of the Annuitant.

If the actual net investment experience is less than the assumed investment
rate, then the dollar amount of the annuity payments will decrease. The dollar
amount of the annuity payments will stay level if the net investment experience
equals the assumed investment rate and the dollar amount of the annuity payment
will increase if the net investment experience exceeds the assumed investment
rate. For purposes of the Variable Annuity Income Payments, the assumed
investment rate is 4%.

If the Contract Value to be applied to an Annuity Option is less than
$2,000, or if the monthly payments determined under the Annuity Option are less
than $20, the Company may pay the Contract Value in a lump sum or change the
payment frequency to an interval which results in Income Payments of at least
$20.

ANNUITY OPTIONS

The Owner may elect a completely Fixed Annuity, a completely Variable
Annuity or a combination Fixed and Variable Annuity. Up to 30 days before the
Income Starting Date, the Owner may change the Annuity Option or request any
other form of annuity agreeable to both the Company and the Owner. Subsequent
changes will not be permitted. If an Annuity Option is chosen which depends on
the Annuitant or Joint Annuitant's life, proof of age will be required before
Income Payments begin. Premium taxes, if applicable, may be assessed. The
Annuity Options include:

ANNUITY OPTION 1--LIFE WITH PAYMENTS GUARANTEED FOR 120 MONTHS

Monthly payments will be made for as long as the Annuitant lives. If the
Annuitant dies before 120 monthly payments have been made, the remainder of the
120 guaranteed monthly payments will be paid to the Owner, or if deceased, to
the surviving Beneficiary.

ANNUITY OPTION 2--JOINT AND LAST SURVIVOR

Monthly payments beginning on the Income Starting Date will be made for as
long as either the Annuitant or Joint Annuitant is living. It is possible under
this option that only one monthly payment will be made if the Annuitant and
Joint Annuitant both die before the second payment is made, or only two monthly
payments will be made if they both die before the third payment, and so forth.

21
<PAGE>
ANNUITY OPTION 3--PAYMENTS FOR A SPECIFIED PERIOD

Monthly payments beginning on the Income Starting Date will be made for any
specified period of at least 120 months. A Surrender Charge may apply if the
specified period is less than 120 months. Payments under this option do not
depend on the continuation of the Annuitant's life. The Mortality and Expense
Risk Charge is deducted from the Variable Account even though the Company does
not bear any mortality risk. If Annuity Option 3 is chosen, and the proceeds are
derived from the Variable Account, the Owner or beneficiary may surrender the
Contract at any time by notifying the Company in writing.

In the event that an Annuity Option is not selected, the Company will make
Income Payments in accordance with Annuity Option 1. At the Company's
discretion, other Annuity Options may be available upon request. The Company
currently uses sex-distinct annuity tables. However, the Company reserves the
right to use annuity tables which do not distinguish on the basis of sex.

THE FIXED ACCOUNT
- --------------------------------------------------------------------------------

CONTRIBUTIONS UNDER THE FIXED PORTION OF THE ANNUITY CONTRACT AND TRANSFERS
TO THE FIXED PORTION BECOME PART OF THE GENERAL ACCOUNT OF THE COMPANY, WHICH
SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. BECAUSE OF EXEMPTIVE AND
EXCLUSIONARY PROVISIONS, INTERESTS IN THE GENERAL ACCOUNT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT"), NOR IS THE GENERAL
ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS
THEREIN ARE GENERALLY SUBJECT TO THE PROVISIONS OF THE 1933 OR 1940 ACTS AND THE
COMPANY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS WHICH RELATE TO
THE FIXED PORTION. DISCLOSURES REGARDING THE FIXED PORTION OF THE ANNUITY
CONTRACT AND THE GENERAL ACCOUNT, HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY
APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY
AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.

GENERAL DESCRIPTION

The Fixed Account is made up of all of the general assets of the Company,
other than those in the Variable Account and any other segregated asset account.
Instead of the Owner bearing the investment risk as is the case for amounts in
the Variable Account, the Company bears the full investment risk for all amounts
in the Fixed Account. The Company has sole discretion to invest the assets of
the Fixed Account, subject to applicable law. The Company guarantees that the
amounts allocated to the Fixed Account will be credited interest at a net
effective rate of at least 4.0% per year. Currently, the amount of investment
income in excess of 4.0% allocated to contracts participating in the Fixed
Account will vary periodically in the sole discretion of the Company. Any
interest held in the Fixed Account does not entitle an Owner to share in the
investment experience of the Fixed Account.

The Company has revised the Fixed Account. Money deposited in the revised
Fixed Account earns interest at the current rate in effect at the time of
allocation or transfer until the first renewal date. The first renewal date is
January 1 following the date of allocation or transfer into the revised Fixed
Account. Subsequent renewal dates will be on anniversaries of the first renewal
date. On or about each renewal date, the Company will notify the Owner of the
interest rate(s) for the calendar year then starting. This interest rate will be
guaranteed by the Company for the calendar year and will not be less than 4%.
The Company may declare more than one interest rate for different monies based
upon the date of allocation or transfer to the revised Fixed Account.

ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF
THE GUARANTEED RATE OF 4.0% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION
OF THE COMPANY.

22
<PAGE>
TRANSFERS, SURRENDERS, AND WITHDRAWALS

Amounts may be transferred from the Sub-Accounts of the Variable Account to
the Fixed Account, and prior to the Income Starting Date amounts may also be
transferred from the Fixed Account to Sub-Accounts of the Variable Account. No
charge will ever be imposed for such transfers.

Prior to the Income Starting Date, amounts may not be transferred from the
Variable Account to the Fixed Account until thirty days after the Issue Date and
may be transferred thereafter only once every thirty days. However, amounts
invested in the Fixed Account prior to the date that the revised Fixed Account
became available may not be transferred from the Fixed Account until six months
after the Issue Date and those amounts may be transferred only once every six
months. The maximum amount which may be transferred from the revised Fixed
Account to the Variable Account is limited to 25% of the value in the revised
Fixed Account as of Decem-

ber 31 of the prior calendar year (except with respect to amounts which were
allocated to the Fixed Account prior to the date of availability).

If the first renewal interest rate is less than the current rate that was in
effect at the time money was allocated or transferred to the revised Fixed
Account, the transfer restriction for that money will be waived during the
60-day period following the first renewal date. After the Income Starting Date
no transfers may be made from the Fixed Account. Transfers from the Variable
Account to the Fixed Account may not be made for six months after the Income
Starting Date and may be made thereafter only once every six months. The Company
reserves the right to waive restrictions on transfers that are contained in the
Contract.

Surrenders and withdrawals from the Fixed Account may be delayed for up to
six months. After the Income Starting Date, no surrender or withdrawals may be
made from the Fixed Account.

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.

Generally, an Owner who is not a natural person is required to include in
income each year any increase in the Contract Value.

BENEFICIARY
The Beneficiary can mean either the Owner's Beneficiary or the Annuitant's
Beneficiary, but not both at the same time. Subject to the terms of any existing
assignment or the rights of any irrevocable Beneficiary, the Owner may change
the Beneficiary while the Annuitant is living 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, the rights of any
Beneficiary predeceasing the Annuitant will revert to the Owner or the Owner's
estate. Multiple Beneficiaries may be named. Unless otherwise provided in the
Beneficiary designation, if more than one Beneficiary survives the Annuitant,
the surviving Beneficiaries will share equally in any amounts due.

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 security holders.

For payment or transfers from the Fixed Account, see pg. 23.

23
<PAGE>
ASSIGNMENTS
The Contract may be assigned prior to the Income Starting Date and during
the Annuitant's or, if applicable, Joint Annuitants lifetime, subject to the
rights of any irrevocable Beneficiary. Any assignment will not be binding until
received in writing by the Company. The Company will not be responsible for
deciding if any assignment may result in income tax liability to the owner.

No Beneficiary may assign benefits under the Contract until they are due
and, to the extent permitted by law, payments are not subject to the debts of
any Beneficiary or to any judicial process for payment of the Beneficiary's
debts.

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 required by the Code or by any other applicable law in order to continue
treatment of the Contract as an annuity.

CUSTOMER INQUIRIES
The Owner or any persons interested in the Contract may make inquiries
regarding the Contract by calling or writing their Dean Witter Account
Executive.

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 ("Treasury")
regulations and (3) the Company, instead of the annuity Owner, is considered the
Owner of the Variable Account assets for federal income tax purposes.

NON-NATURAL OWNERS

As a general rule, annuity Contracts owned by nonnatural persons 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.

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 Contract 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 Fund or its investments, the Company expects the Fund to meet
the diversification requirements.

INVESTOR CONTROL

In connection with the issuance of the regulations on the adequate
diversification standards, 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

24
<PAGE>
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. 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 Contract Owner from being considered the federal tax owner of the
assets of the Variable Account.

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. 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 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.
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.

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; or (4) made under an immediate annuity. Similar rules apply for
distributions under certain Qualified Contracts. Please see the Statement of
Additional Information for a discussion of other situations in which the penalty
tax may not apply.

AGGREGATION OF ANNUITY CONTRACTS

All Non-Qualified 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

25
<PAGE>
(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 the account of hardship
(earnings on salary reduction contributions may not be distributed on the
account of hardship).

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.

VOTING RIGHTS
- --------------------------------------------------------------------------------

The Owner or any one 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. The Company will solicit and cast each vote according to the
procedures set up by the Fund 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.

Before the Income Starting Date, the Owner holds the voting interest in the
Sub-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 Portfolio.)

After the Income Starting Date, the person receiving Income Payments has the
voting interest. After the Income Starting 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 Portfolio.

SALES COMMISSION
- --------------------------------------------------------------------------------

The Company may pay a maximum sales commission of 5.75% of Purchase Payments
made to Dean Witter Reynolds Inc., the principal underwriter of the Contracts.

26
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

<TABLE>
<S> <C>
PAGE
-----
Introduction.......................................................................... 3
Allstate Life Insurance Company of New York....................................... 3
Dean Witter Reynolds Inc.......................................................... 3
Additions, Deletions or Substitutions of Investments.............................. 3
Reinvestment...................................................................... 3
The Contract.......................................................................... 4
Value of Variable Account Accumulation Units...................................... 4
Performance Data.................................................................. 4
Transfers......................................................................... 5
Tax-Free Exchanges (1035 Exchanges, Rollovers and Transfers)...................... 5
General Matters....................................................................... 5
Incontestability.................................................................. 5
Settlements....................................................................... 5
Safekeeping of the Variable Account's Assets...................................... 6
Experts........................................................................... 6
Legal Matters..................................................................... 6
Federal Tax Matters................................................................... 6
Introduction...................................................................... 6
Taxation of Allstate Life Insurance Company of New York........................... 6
Exceptions to the Non-Natural Owner Rule.......................................... 7
Penalty Tax on Premature Distributions............................................ 7
IRS Required Distribution at Death Rules.......................................... 7
Qualified Plans................................................................... 7
Types of Qualified Plans.......................................................... 8
Individual Retirement Annuities............................................... 8
Simplified Employee Pension Plans............................................. 8
Tax Sheltered Annuities....................................................... 8
Corporate & Self-Employed & Pensions & Profit Savings Plans................... 8
State & Local Government & Tax-Exempt Organization Deferred Compensation
Plans........................................................................ 8
Voting Rights......................................................................... 8
Sales Commissions..................................................................... 9
Financial Statements.................................................................. F-1
</TABLE>

27
<PAGE>

(This Page Left Intentionally Blank)

28
<PAGE>
ORDER FORM

/ / Please send me a copy of the most recent Statement of Additional Information
for the Allstate Life of New York Variable Annuity Account.

<TABLE>
<S> <C>
(Date) (Name)
(Street Address)
(City) (State) (Zip
Code)
</TABLE>

Send to: Allstate Life Insurance Company of New York
P.O. Box 9095
Farmingville, New York 11738

Attn: Annuity Services

29
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
OF
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
HUNTINGTON STATION
NEW YORK 11746

INDIVIDUAL VARIABLE ANNUITY CONTRACTS
DISTRIBUTED BY
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
-------------------

This Statement of Additional Information supplements the information in the
Prospectus for the Flexible Premium Deferred Variable Annuity Contract
("Contract") offered by Allstate Life Insurance Company of New York ("Company"),
an indirect wholly-owned subsidiary of Allstate Insurance Company. The Contract
is primarily designed to aid individuals in long-term financial planning and it
can be used for retirement planning regardless of whether the plan qualifies for
special federal income tax treatment.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.

You may obtain a copy of the Prospectus from Dean Witter Reynolds Inc.
("Dean Witter"), the principal underwriter and distributor of the Contract, by
calling or writing Dean Witter at the address listed above.

The Prospectus, dated May 1, 1996, has been filed with the United States
Securities and Exchange Commission.

DATED MAY 1, 1996

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Introduction...................................... 3
Allstate Life Insurance Company of New York..... 3
Dean Witter Reynolds Inc........................ 3
Additions, Deletions or Substitutions of
Investment..................................... 3
Reinvestment.................................... 3
The Contract...................................... 4
Value of Variable Account Accumulation Units.... 4
Performance Data................................ 4
Transfers....................................... 5
Tax-free Exchanges (1035 Exchanges, Rollovers
and Transfers)................................. 5
General Matters................................... 5
Incontestability................................ 5
Settlements..................................... 5
Safekeeping of the Variable Account's Assets.... 6
Experts......................................... 6
Legal Matters................................... 6

<CAPTION>
PAGE
-----
<S> <C>
Federal Tax Matters............................... 6
Introduction.................................... 6
Taxation of Allstate Life Insurance Company of
New York....................................... 6
Exceptions to the Non-Natural Owner Rule........ 7
Penalty Tax on Premature Distributions.......... 7
IRS Required Distribution at Death Rules........ 7
Qualified Plans................................... 7
Types of Qualified Plans.......................... 8
Individual Retirement Annuities................. 8
Simplified Employee Pension Plans............... 8
Tax Sheltered Annuities......................... 8
Corporate & Self-Employed & Pension & Profit
Savings Plan................................... 8
State & Local Government & Tax-Exempt
Organization Deferred Compensation Plans....... 8
Voting Rights..................................... 8
Sales Commissions................................. 9
Financial Statements.............................. F-1
</TABLE>

2
<PAGE>
INTRODUCTION
- --------------------------------------------------------------------------------

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

Incorporated in 1967 as a life insurance company under the laws of the State
of New York, the Allstate Life Insurance Company of New York ("Company") has
done business since 1984 as "Allstate Life Insurance Company of New York." From
1967 to 1978 the Company was known as "Financial Life Insurance Company" and
from 1978 to 1984 the Company was known as "PM Life Insurance Company." All of
its products -- annuities and individual life insurance -- have been approved by
the State of New York.

DEAN WITTER REYNOLDS INC.

Dean Witter Reynolds Inc. ("Dean Witter") is the principal underwriter and
distributor of the Contracts. Dean Witter is a wholly-owned subsidiary of Dean
Witter, Discover & Co. ("Dean Witter Discover"). Dean Witter is located at Two
World Trade Center, New York, New York. Dean Witter is a member of the New York
Stock Exchange and the National Association of Securities Dealers, Inc.

In accordance with the Underwriting and General Agent's Agreements between
Dean Witter and the Company, Dean Witter offers for sale and sells the
Contracts, prepares sales or promotional literature and prints and distributes
the Prospectuses to prospective purchasers.

ADDITIONS DELETIONS OR SUBSTITUTIONS OF INVESTMENTS

The Company retains the right, subject to any applicable law, to make
additions to, deletions from or substitutions for the Portfolio shares held by
any Sub-Account of the Variable Account. The Company reserves the right to
eliminate the shares of any of the Portfolios and to substitute shares of
another Portfolio of the Fund, or of another open-end, registered investment
company, if the shares of the Portfolio are no longer available for investment,
or if, in the Company's judgment, investment in any Portfolio would

become inappropriate in view of the purposes of the Variable Account.
Substitutions of shares attributable to an Owner's interest in a Sub-Account
will not be made until the Owner has been notified of the change, and until the
Securities and Exchange Commission has approved the change, to the extent such
notification and approval is required by the Investment Company Act of 1940.
Nothing contained in this Statement of Additional Information shall prevent the
Variable Account from purchasing other securities for other series or classes of
contracts, or from effecting a conversion between series or classes of contracts
on the basis of requests made by Owners.

The Company may also establish additional Sub-Accounts of the Variable
Account. Each additional Sub-Account would purchase shares in a new Portfolio of
the Fund or in another mutual fund. New Sub-Accounts may be established when, in
the sole discretion of the Company, marketing needs or investment conditions
warrant. Any new Sub-Accounts will be made available to existing Contract Owners
on a basis to be determined by the Company. The Company may also eliminate one
or more Sub-Accounts if, in its sole discretion, marketing, tax or investment
conditions so warrant.

In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in the Contract as may be necessary
or appropriate to reflect such substitution or change. If deemed to be in the
best interests of persons having voting rights under the policies, the Variable
Account may be operated as a management company under the Investment Company Act
of 1940 or it may be deregistered under such Act in the event such registration
is no longer required.

REINVESTMENT

All dividends and capital gains distributions from the Portfolios are
automatically reinvested in shares of the distributing Portfolio at their net
asset value.

3
<PAGE>
THE CONTRACT
- --------------------------------------------------------------------------------

VALUE OF VARIABLE ACCOUNT ACCUMULATION UNITS

The value of Variable Account Accumulation Units will vary in accordance
with investment experience of the Portfolio in which the Sub-Account invests.
The number of such Accumulation Units credited to a Contract will not, however,
change as a result of any fluctuations in the value of the Accumulation Unit.

The Accumulation Units in each Sub-Account of the Variable Account are
valued separately. The value of Accumulation Units in any Valuation Period will
depend upon the investment performance of the shares purchased by each
Sub-Account in a particular Portfolio.

The value of an Accumulation Unit in a Sub-Account for any Valuation Period
equals the value of such a 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 each Sub-Account for any
Valuation Period is determined by dividing (A) by (B) and subtracting (C),
where:

(A) is the sum of:

(1) the net asset value per share of the Portfolio(s) underlying the
Sub-Account determined at the end of the current valuation period; plus,

(2) the per share amount of any dividend or capital gain distributions
made by the Portfolio(s) underlying the Sub-Account during the current
Valuation Period.

(B) is the net asset value per share of the Portfolio(s) underlying the
Sub-Account determined as of the end of the immediately proceeding valuation
period.

(C) is the annualized Mortality and Expense Risk Charge divided by 365 and
then multiplied by the number of calendar days in the current Valuation Period.

PERFORMANCE DATA

A Sub-Account's "average annual total return" represents an annualization of
the Sub-Account's total return over a particular period and is computed by
finding the annual percentage rate which will result in the ending redeemable
value of a hypothetical $1,000 Purchase Payment made at the beginning of a one,
five or ten year period, or for a period from the date of commencement of the
Sub-Account's operations, if shorter than any of the foregoing. The formula for
computing the average annual total return involves a percentage obtained by
dividing the ending redeemable value, including deductions for any Surrender
Charges or Contract Maintenance Charges imposed on the Contracts by the Variable
Account, by the initial hypothetical $1,000 Purchase Payment, taking the "n"th
root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.

The Surrender Charges assessed on this redemption were computed as follows.
For Contracts that have passed their first Contract Anniversary, the Free
Withdrawal Amount is not assessed a Surrender Charge. The Surrender Charge
schedule specifies one rate for less than one year and another rate for one
year, but less than two years, and another rate for two years, but less than
three years, and so on until six years or more. For a one year total return
calculation the second rate (i.e., one year, but less than two years) is
assessed. The Contract Maintenance Charge ($30 per contract) used in the total
return calculation is normally prorated using the following method: The total
amount of annual contract fees

4
<PAGE>

collected during the year is divided by the total average net assets of all the
Sub-Accounts. The resulting percentage is then multiplied by the initial
hypothetical $1,000 Purchase Payment.

In addition, the Variable Account may advertise the total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculations may or may not reflect the
deductions of some or all of the charges which may be imposed on the Contracts
by the Variable Account which, if reflected, would reduce the performance
quoted. The formula for computing such total return quotations involves a
percent unit change calculation. This calculation is the Accumulation Unit value
at the end of the defined period divided by the Accumulation Unit value at the
beginning of such period minus 1. The periods included in such advertisements
may include, among others, "year-to-date" (prior calendar year end to the day of
the advertisement); "the year to most recent quarter" (prior calendar year end
to the end of the most recent quarter); "the prior calendar year"; and
"Inception (commencement of the Sub-Account's operation) to Date" (day of the
advertisement).

The Variable Account may also advertise the performance of the Sub-Accounts
relative to certain performance rankings and indexes compiled by independent
organizations.

Performance figures used by the Variable Account will be based on actual
historical performance of its Sub-Accounts for specified periods, and the
figures are not intended to indicate future performance.

TRANSFERS

Currently the Company is not enforcing certain restrictions on transfers
and, therefore, prior to the Income Starting Date amounts may be transferred out
of Sub-Accounts of the Variable Account at any time. The restrictions in the
Contracts, which could be enforced in the future, provide that transfers among
Sub-Accounts of the Variable Account, or from the Variable Account to the Fixed
Account, may not be made for the first 30 days after the Contract is issued and
thereafter such transfers may occur only once every 30 days. The Company
reserves the right to enforce these restrictions in the future. However, the
Company will notify Owners at least 30 days prior to enforcing these
restrictions.

TAX-FREE EXCHANGES (SECTION 1035)

The Company accepts Purchase Payments which are the proceeds of a Contract
in a transaction qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code. Except as required by federal law in calculating the
basis of the Contract, the Company does not differentiate between Section 1035
Purchase Payments and non-1035 Purchase Payments.

The Company also accepts "rollovers" from Contracts qualifying as
tax-sheltered annuities (TSAs), individual retirement annuities or accounts,
(IRAs), or any other qualified contract which is eligible to "rollover" into an
IRA. The Company differentiates between Non-Qualified Contracts and TSAs and
IRAs to the extent necessary to comply with federal tax laws. For example, the
Company restricts the assignment, transfer or pledge of TSAs and IRAs so the
Contracts will continue to qualify for special tax treatment.

GENERAL MATTERS
- --------------------------------------------------------------------------------

INCONTESTABILITY

The Contract will not be contested after it is issued.

SETTLEMENTS

The Contract must be returned to the Company prior to any settlement. Due
proof of the Owner's or

5
<PAGE>
Annuitant's (and any Joint Annuitant's) death must be received prior to
settlement of a death claim.

SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS

The Company holds title to the assets of the Variable Account. The assets
are kept physically segregated and held separate and apart from the Company's
general corporate assets. Records are maintained of all purchases and
redemptions of the Portfolio shares held by each of the Sub-Accounts.

The Dean Witter Variable Investment Series ("Fund") does not issue
certificates and, therefore, the Company holds the Account's assets in open
account in lieu of stock certificates. See the Fund's Prospectus for a more
complete description of the Fund's custodian.

EXPERTS

The financial statements of the Variable Account and the financial
statements and financial statement schedules of the Company appearing in this
Statement of Additional Information (which is incorporated by reference in the
prospectus of Northbrook Variable Annuity Account of Northbrook Life Insurance
Company) have been audited by Deloitte & Touche LLP, Two Prudential Plaza, 180
N. Stetson Avenue, Chicago, Illinois, independent auditors, as stated in their
reports appearing herein and are included in reliance upon the reports of such
Firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

Certain legal matters relating to the federal securities laws applicable to
the issue and sale of the Contracts have been passed upon by Routier and
Johnson, P.C., of Washington, D.C..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 Allstate Life Insurance Company of New
York.

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 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

The Company is taxed as a life insurance company under Part I of Subchapter
L of the Internal Revenue Code. The following discussion assumes that the
Company is taxed as a life insurance company under Part I of Subchapter L. Since
the Variable Account is not an entity separate from the Company, and its
operations form a part of the Company, it will not be taxed separately as a
"regulated Investment Company" under Subchapter M of the Code. Investment income
and realized capital gains are automatically applied to increase reserves under
the contract. Under existing federal income tax law, the Company believes that
the Variable Account investment income and realized net capital gains will not
be taxed to the extent that such income and gains are applied to increase the
reserves under the contract.

Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account, and therefore the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the Company

6
<PAGE>
being taxed on income or gains attributable to the Variable Account, then the
Company may impose a charge against the Variable Account (with respect to some
or all contracts) in order to set aside provisions to pay such taxes.

EXCEPTIONS TO THE NON-NATURAL OWNER RULE

There are several exceptions to the general rule that contracts held by a
non-natural owner are not treated as annuity contracts for federal income tax
purposes. Contracts will generally be treated as held by a natural person if the
nominal owner is a trust or other entity which holds the contract as agent for a
natural person. However, this special exception will not apply in the case of an
employer who is the nominal owner of an annuity contract under a non-qualified
deferred compensation arrangement for its employees. Other exceptions to the
non-natural owner rule are: (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent; (2) certain qualified contracts; (3)
contracts purchased by employers upon the termination of certain qualified
plans; (4) certain contracts used in connection with structured settlement
agreements, and (5) contracts purchased with a single premium when the annuity
starting date is no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity period.

PENALTY TAX ON PREMATURE DISTRIBUTIONS

There is a 10% penalty tax on the taxable amount of any payment received
from a non-qualified annuity contract unless: (1) made after the owner reaches
59 1/2; (2) attributable to the owner's disability; (3) attributable to
investment before August 14, 1982, including earnings on pre-August 14, 1982
investment; (4) made from certain qualified contracts; (5) made after the death
of the owner; (6) made under an immediate annuity contract; (7) made from an
annuity purchased and held by an employer upon the termination of a qualified
retirement plan; (8) made under a qualified funding asset; (9) made as part of a
series of substantially equal periodic payments (not less frequently than
annually) for the life of or life expectancy of the owner or the joint lives of
joint life expectancies of the owner and designated beneficiary. Similar rules
apply in the case of qualified contracts.

IRS REQUIRED DISTRIBUTION AT DEATH RULES

In order to be considered an annuity contract for federal income tax
purposes, an annuity contract must provide: (1) if any owner dies on or after
the annuity start date but before the entire interest in the contract has been
distributed, the remaining portion of such interest must be distributed at least
as rapidly as under the method of distribution being used as of the date of the
owner's death; (2) if any owner dies prior to the annuity start date, the entire
interest in the contract will be distributed within five years after the date of
the owner's death. These requirements are satisfied if any portion of the
owner's interest which is payable to (or for the benefit of) a designated
beneficiary is distributed over the life of such beneficiary (or over a period
not extending beyond the life expectancy of the beneficiary) and the
distributions begin within one year of the owner's death. If the owner's
designated beneficiary is the surviving spouse of the owner, the contract may be
continued with the surviving spouse as the new owner. If the owner of the
contract is a non-natural person, then the annuitant will be treated as the
owner for purposes of applying the distribution at death rules. In addition, a
change in the annuitant on a contract owned by a non-natural person will be
treated as the death of the owner.

QUALIFIED PLANS

This annuity contract may be used with several types of qualified plans. The
tax rules applicable to participants in such qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Adverse tax
consequences may result from excess contributions, premature distributions,
distributions that do not conform to specified commencement and minimum
distribution rules, excess distributions and in other circumstances. Owners and
participants under the plan and annuitants and

7
<PAGE>
beneficiaries under the contract may be subject to the terms and conditions of
the plan regardless of the terms of the contract.

TYPES OF QUALIFIED PLANS

INDIVIDUAL RETIREMENT ANNUITIES

Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity.
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a
tax-deferred basis into an Individual Retirement Annuity.

SIMPLIFIED EMPLOYEE PENSION PLANS

Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees using the employees' individual retirement
annuities if certain criteria are met. Under these plans the employer may,
within specified limits, make deductible contributions on behalf of the
employees to their individual retirement annuities.

TAX SHELTERED ANNUITIES

Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. An annuity contract used for a Section 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 in the case of hardship (earnings on salary reduction contributions
may not be distributed for hardship).

CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS

Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of tax favored retirement plans for employees. The Self-
Employed Individuals Retirement Act of 1962, as amended, (commonly referred to
as "H.R. 10" or "Keogh") permits self-employed individuals to establish tax
favored retirement plans for themselves and their employees. Such retirement
plans may permit the purchase of annuity contracts in order to provide benefits
under the plans.

STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION DEFERRED COMPENSATION
PLANS

Section 457 of the Code permits employees of state and local governments and
tax-exempt organizations to defer a portion of their compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. Generally, under the non-natural owner rules, such contracts
are not treated as annuity contracts for federal income tax purposes.

VOTING RIGHTS
- --------------------------------------------------------------------------------

The number of votes which a person has the right to instruct will be
calculated separately for each Sub-Account. That number will be determined by
applying his/her percentage interest, if any, in a particular Sub-Account to the
total number of votes attributable to the Sub-Account.

The number of votes of the Portfolio which an Owner has a right to instruct
will be determined as of the date coincident with the date established by that
Portfolio for determining shareholders eligible to vote at the meeting of the
Fund. Voting instructions will be

8
<PAGE>
solicited by written communication prior to such meeting in accordance with
procedures established by the Fund.

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.

Each person having a voting interest in a Sub-Account will receive proxy
material, reports and other materials relating to the appropriate Portfolio.

SALES COMMISSIONS
- --------------------------------------------------------------------------------

Currently, the Company does not deduct sales commissions from Purchase
Payments, so that the Owner may realize full potential for growth of the
investment. The Company pays Dean Witter for its underwriting and general
agent's services a sales commission of up to 5.75% of the Purchase Payments.
These commissions are intended to cover Dean Witter's expenses in distributing
and selling the Contracts.

Under the Underwriting Agreement and Managing General Agent's Agreement
between Dean Witter and the Company, Dean Witter is responsible for paying costs
and expenses associated with licensing its agent's, paying agent's commissions,
printing, mailing and distributing the Prospectus to prospective purchasers; and
preparing, printing and distributing sales literature. In the event the
commissions fail to adequately compensate Dean Witter for these expenses, Dean
Witter will pay these expenses from its own funds.

9
<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 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>

See notes to financial statements.

F-3
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
UNREALIZED
ADDITIONAL NET 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-4
<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-5
<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).

The Company utilizes various modeling techniques in managing the
relationship between assets and liabilities. 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. 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 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, particularly those supporting long-term structured
settlement annuity obligations, may be reinvested at substantially lower
interest rates than those which prevailed when the funds were previously
invested. The Company employs strategies to minimize 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

F-6
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

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

F-7
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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.

F-8
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

F-9
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

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.

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.

F-10
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. RELATED PARTY TRANSACTIONS (CONTINUED)
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.

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.

F-11
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

5. INCOME TAXES (CONTINUED)
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 Company has not established a valuation reserve as it is more likely
than not that the Company will produce sufficient taxable income in the future
to realize the deferred tax asset.

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,

F-12
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

5. INCOME TAXES (CONTINUED)
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.

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 --------------------- FAIR
DECEMBER 31, 1995 COST GAINS LOSSES 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
------------ ---------- --------- ------------
------------ ---------- --------- ------------

GROSS UNREALIZED
AMORTIZED --------------------- FAIR
DECEMBER 31, 1994 COST GAINS LOSSES 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>

F-13
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

6. INVESTMENTS (CONTINUED)
SCHEDULED MATURITIES

The scheduled maturities for fixed income securities at December 31, 1995
are as follows:

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST 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 FAIR UNREALIZED NET
COST 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>

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>

F-14
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

6. INVESTMENTS (CONTINUED)
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>

F-15
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

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.

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.

F-16
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

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>

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.

F-17
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

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>
AT DECEMBER 31, 1995 CARRYING 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

AT DECEMBER 31, 1994 CARRYING 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.

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

F-18
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

7. FINANCIAL INSTRUMENTS (CONTINUED)
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>
AT DECEMBER 31, 1995 CARRYING VALUE FAIR 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

AT DECEMBER 31, 1994 CARRYING VALUE FAIR 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

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.

F-19
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

7. FINANCIAL INSTRUMENTS (CONTINUED)
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.

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.

F-20
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

8. BENEFIT PLANS (CONTINUED)
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.

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>

F-21
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

9. STATUTORY FINANCIAL INFORMATION (CONTINUED)

<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-22
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
GROSS AMOUNT CEDED NET 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
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
GROSS AMOUNT CEDED NET 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
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

YEAR ENDED DECEMBER 31, 1993

<TABLE>
<CAPTION>
GROSS AMOUNT CEDED NET 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>

F-23
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTION 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-24
<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK:

We have audited the accompanying Statement of Net Assets of Allstate Life of
New York Variable Annuity Account (the "Account") as of December 31, 1995, and
the related Statements of Operations for the year then ended and Changes in Net
Assets for each of the two years in the period ended December 31, 1995 of the
Money Market, High Yield, Equity, Quality Income Plus, Strategist, Dividend
Growth, Utilities, European Growth, Capital Growth, Global Dividend Growth and
Pacific Growth portfolios that comprise the Account. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements 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. Our procedures included
confirmation of securities owned at December 31, 1995. 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 the Account as of December 31, 1995, and the
results of its operations for the year then ended and the changes in its net
assets for each of the two years in the period ended December 31, 1995 of each
of the portfolios comprising the Account, in conformity with generally accepted
accounting principles.

/s/ Deloitte & Touche LLP
Chicago, Illinois
March 1, 1996

F-25
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF NET ASSETS
DECEMBER 31, 1995

($ and shares in thousands)

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in the Dean Witter Variable Investment Series:
Money Market Portfolio
1,574 shares (cost $1,574)....................................................... $ 1,574
High Yield Portfolio
26 shares (cost $169)............................................................ 166
Equity Portfolio
40 shares (cost $776)............................................................ 1,088
Quality Income Plus Portfolio
163 shares (cost $1,630)......................................................... 1,788
Strategist Portfolio
224 shares (cost $2,616)......................................................... 2,789
Dividend Growth Portfolio
369 shares (cost $3,981)......................................................... 5,746
Utilities Portfolio
177 shares (cost $1,942)......................................................... 2,604
European Growth Portfolio
22 shares (cost $269)............................................................ 379
Capital Growth Portfolio
48 shares (cost $539)............................................................ 730
Global Dividend Growth Portfolio
36 shares (cost $369)............................................................ 416
Pacific Growth Portfolio
27 shares (cost $256)............................................................ 260
---------
Total assets................................................................... 17,540

LIABILITIES
Payable to Allstate Life Insurance Company of New York --
accrued contract maintenance charges............................................... 6
---------
Net assets..................................................................... $ 17,534
---------
---------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-26
<PAGE>
(This page has been left blank intentionally.)

F-27
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
MONEY QUALITY DIVIDEND
MARKET HIGH YIELD EQUITY INCOME PLUS STRATEGIST GROWTH
($ in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 87 $ 14 $ 10 $ 107 $ 263 $ 242
Less charges from Allstate Life
of New York:
Mortality and expense risk..... (16) (1) (9) (17) (29) (51)
----- --- ----- ----- ----- -----------
Net investment income (loss)..... 71 13 1 90 234 191
----- --- ----- ----- ----- -----------
REALIZED AND UNREALIZED GAINS AND
LOSSES ON INVESTMENTS:
Realized gains and losses from
sales of investments:
Proceeds from sales............ 532 6 196 180 649 623
Cost of investments sold....... (532) (6) (144) (173) (618) (475)
----- --- ----- ----- ----- -----------
Net realized gains and losses.... -- -- 52 7 31 148
----- --- ----- ----- ----- -----------
Change in unrealized gains and
losses.......................... -- -- 270 247 (36) 1,186
----- --- ----- ----- ----- -----------
Net gains and losses on
investments..................... -- -- 322 254 (5) 1,334
----- --- ----- ----- ----- -----------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS................. $ 71 $ 13 $ 323 $ 344 $ 229 $ 1,525
----- --- ----- ----- ----- -----------
----- --- ----- ----- ----- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-28
<PAGE>

<TABLE>
<CAPTION>
GLOBAL
EUROPEAN CAPITAL DIVIDEND PACIFIC
UTILITIES GROWTH GROWTH GROWTH GROWTH
($ in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 109 $ 16 $ 3 $ 9 $ 2 $ 862
Less charges from Allstate Life
of New York:
Mortality and expense risk..... (25) (3) (6) (3) (2) (162)
----- ----- ----- --- --- ---------
Net investment income (loss)..... 84 13 (3) 6 -- 700
----- ----- ----- --- --- ---------
REALIZED AND UNREALIZED GAINS AND
LOSSES ON INVESTMENTS:
Realized gains and losses from
sales of investments:
Proceeds from sales............ 502 127 71 66 27 2,979
Cost of investments sold....... (410) (99) (62) (66) (27) (2,612)
----- ----- ----- --- --- ---------
Net realized gains and losses.... 92 28 9 -- -- 367
----- ----- ----- --- --- ---------
Change in unrealized gains and
losses.......................... 431 39 169 56 12 2,374
----- ----- ----- --- --- ---------
Net gains and losses on
investments..................... 523 67 178 56 12 2,741
----- ----- ----- --- --- ---------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS................. $ 607 $ 80 $ 175 $ 62 $ 12 $ 3,441
----- ----- ----- --- --- ---------
----- ----- ----- --- --- ---------
</TABLE>

F-29
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
MONEY QUALITY DIVIDEND
($ and units in thousands, MARKET HIGH YIELD EQUITY INCOME PLUS STRATEGIST GROWTH
except value per unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss)..... $ 71 $ 13 $ 1 $ 90 $ 234 $ 191
Net realized gains and losses.... 52 7 31 148
Net change in unrealized gains
and losses...................... 270 247 (36) 1,186
----------- ----------- ----------- ----------- ----------- -----------
71 13 323 344 229 1,525
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Deposits......................... 6 7 132 27
Benefit payments................. (26) (47)
Payments on termination.......... (227) (2) (147) (111) (148) (317)
Contract maintenance charges..... (1) (1) (1) (1) (4)
Transfers among portfolios and
with the Fixed Account, net..... 197 80 178 (41) (439) 127
----------- ----------- ----------- ----------- ----------- -----------
(51) 78 37 (153) (456) (214)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net
assets............................ 20 91 360 191 (227) 1,311
Net assets, beginning of period.... 1,553 75 728 1,596 3,015 4,433
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of period.......... $ 1,573 $ 166 $ 1,088 $ 1,787 $ 2,788 $ 5,744
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE PER UNIT, END OF
PERIOD............................ $ 18.22 $ 27.06 $ 43.59 $ 20.50 $ 20.28 $ 18.13
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
UNITS OUTSTANDING, END OF PERIOD... 86 6 25 88 137 317
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-30
<PAGE>

<TABLE>
<CAPTION>
EUROPEAN CAPITAL GLOBAL PACIFIC
($ and units in thousands, UTILITIES GROWTH GROWTH DIVIDEND GROWTH
except value per unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
--------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss)..... $ 84 $ 13 $ (3) $ 6 $ $ 700
Net realized gains and losses.... 92 28 9 367
Net change in unrealized gains
and losses...................... 431 39 169 56 12 2,374
--------- ----------- ----------- ----------- ----------- ---------
607 80 175 62 12 3,441
--------- ----------- ----------- ----------- ----------- ---------
FROM CAPITAL TRANSACTIONS:
Deposits......................... 1 4 18 10 205
Benefit payments................. (32) (24) (129)
Payments on termination.......... (268) (11) (19) (3) (1,253)
Contract maintenance charges..... (2) (10)
Transfers among portfolios and
with the Fixed Account, net..... (105) (89) (11) 79 25 1
--------- ----------- ----------- ----------- ----------- ---------
(407) (99) (26) 70 35 (1,186)
--------- ----------- ----------- ----------- ----------- ---------
Increase (decrease) in net
assets............................ 200 (19) 149 132 47 2,255
Net assets, beginning of period.... 2,403 398 581 284 213 15,279
--------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period.......... $ 2,603 $ 379 $ 730 $ 416 $ 260 $ 17,534
--------- ----------- ----------- ----------- ----------- ---------
--------- ----------- ----------- ----------- ----------- ---------
NET ASSET VALUE PER UNIT, END OF
PERIOD............................ $ 18.13 $ 19.30 $ 15.18 $ 12.01 $ 9.68
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
UNITS OUTSTANDING, END OF PERIOD... 144 19 48 35 27
--------- ----------- ----------- ----------- -----------
--------- ----------- ----------- ----------- -----------
</TABLE>

F-31
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
QUALITY
MONEY INCOME DIVIDEND
($ and units in thousands, except MARKET HIGH YIELD EQUITY PLUS STRATEGIST GROWTH
value per unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income............ $ 40 $ 7 $ 68 $ 177 $ 137 $ 96
Net realized gains and losses.... 10 (34) 46 68
Net change in unrealized gains
and losses...................... (11) (133) (348) (97) (376)
----------- ----------- ----------- --------- ----------- -----------
40 (4) (55) (205) 86 (212)
----------- ----------- ----------- --------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Deposits......................... 41 3 5 29 81
Benefit payments................. (6)
Payments on termination.......... (156) (107) (160) (430) (141)
Contract maintenance charges..... (1) (1) (1) (2) (4)
Transfers among the portfolios
and with the Fixed Account,
net............................. 182 11 (32) (748) 531 (195)
----------- ----------- ----------- --------- ----------- -----------
66 11 (137) (904) 128 (265)
----------- ----------- ----------- --------- ----------- -----------
Increase (decrease) in net
assets............................ 106 7 (192) (1,109) 214 (477)
Net assets, beginning of period.... 1,447 68 920 2,705 2,801 4,910
----------- ----------- ----------- --------- ----------- -----------
Net assets, end of period.......... $ 1,553 $ 75 $ 728 $ 1,596 $ 3,015 $ 4,433
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
NET ASSET VALUE PER UNIT, END OF
PERIOD............................ $ 17.41 $ 23.76 $ 30.88 $ 16.65 $ 18.73 $ 13.43
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
OUTSTANDING UNITS, END OF PERIOD... 89 3 24 96 161 330
----------- ----------- ----------- --------- ----------- -----------
----------- ----------- ----------- --------- ----------- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-32
<PAGE>

<TABLE>
<CAPTION>
GLOBAL
EUROPEAN CAPITAL DIVIDEND PACIFIC
($ and units in thousands, except UTILITIES GROWTH GROWTH GROWTH GROWTH
value per unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income............ $ 109 $ 13 $ 1 $ 1 $ $ 649
Net realized gains and losses.... 85 10 3 188
Net change in unrealized gains
and losses...................... (500) 4 (19) (9) (9) (1,498)
----------- ----------- ----------- ----- ----- ---------
(306) 27 (15) (8) (9) (661)
----------- ----------- ----------- ----- ----- ---------
FROM CAPITAL TRANSACTIONS:
Deposits......................... 2 7 23 18 209
Benefit payments................. (1) (1) (8)
Payments on termination.......... (187) (1) (1,182)
Contract maintenance charges..... (2) (11)
Transfers among the portfolios
and with the Fixed Account,
net............................. (333) 99 (58) 269 204 (70)
----------- ----------- ----------- ----- ----- ---------
(521) 105 (59) 292 222 (1,062)
----------- ----------- ----------- ----- ----- ---------
Increase (decrease) in net
assets............................ (827) 132 (74) 284 213 (1,723)
Net assets, beginning of period.... 3,230 266 655 17,002
----------- ----------- ----------- ----- ----- ---------
Net assets, end of period.......... $ 2,403 $ 398 $ 581 $ 284 $ 213 $ 15,279
----------- ----------- ----------- ----- ----- ---------
----------- ----------- ----------- ----- ----- ---------
NET ASSET VALUE PER UNIT, END OF
PERIOD............................ $ 14.24 $ 15.48 $ 11.53 $ 9.94 $ 9.25
----------- ----------- ----------- ----- -----
----------- ----------- ----------- ----- -----
OUTSTANDING UNITS, END OF PERIOD... 169 26 50 29 23
----------- ----------- ----------- ----- -----
----------- ----------- ----------- ----- -----
</TABLE>

F-33
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 1995

1. ORGANIZATION

Allstate Life of New York Variable Annuity Account (the "Account"), a unit
investment trust registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, is a separate account of Allstate Life
Insurance Company of New York ("ALNY"), which is wholly owned by a wholly-owned
subsidiary ("Parent") of Allstate Insurance Company ("Allstate"), which is
wholly owned by The Allstate Corporation (the "Corporation").

ALNY writes certain annuity contracts, the proceeds of which are invested at
the discretion of the contractholder. Contractholders primarily invest in units
of the portfolios comprising the Account but may also invest in the general
account of ALNY ("Fixed Account"). The Account, in turn, invests solely in
shares of the portfolios of the Dean Witter Variable Investment Series ("Fund").
ALNY provides administrative and insurance services to the Account for a fee.

Dean Witter Reynolds, Inc. ("Dean Witter") is the sole distributor of ALNY's
flexible premium deferred variable annuity contracts and certain single and
flexible premium annuities and is the investment manager of the Fund. Dean
Witter receives investment management fees from the Fund.

Effective September 1, 1995, the name of the Managed Assets Portfolio of the
Fund changed to the Strategist Portfolio. While certain of the investment
policies of the portfolio have changed, the overall investment strategy has
remained the same.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

VALUATION OF INVESTMENTS

Investments consist of shares in the portfolios of the Fund, and are stated
at fair value based on quoted market prices.

INVESTMENT INCOME

Investment income consists of dividends declared by the portfolios of the
Fund, and is recognized on the date of record.

REALIZED GAINS AND LOSSES

Realized gains and losses on the sale of shares by the Account are computed
on a weighted average cost ("cost") basis.

FEDERAL INCOME TAXES

Net investment income and realized gains and losses on investments of the
Account are reported to contractholders generally upon distribution.
Accordingly, no provision for income taxes has been recorded.

3. MORTALITY AND EXPENSE CHARGES AND CONTRACT MAINTENANCE CHARGES

ALNY assumes mortality and expense risks related to the operations of the
Account and deducts charges daily at a rate, on an annual basis, equal to 1.0%
of the daily net assets of the Account. ALNY guarantees that the amount of this
charge will not increase over the life of the contract.

F-34
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
TWO YEARS ENDED DECEMBER 31, 1995

3. MORTALITY AND EXPENSE CHARGES AND CONTRACT MAINTENANCE CHARGES (CONTINUED)

For each year or portion of a year a contract is in effect, ALNY deducts a
fixed annual contract maintenance charge of $30 as reimbursement for expenses
related to the maintenance of each contract and the Account. The amount of this
charge is guaranteed not to increase over the life of the contract.

F-35
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
TWO YEARS ENDED DECEMBER 31, 1995

4. UNITS ISSUED AND REDEEMED

Units issued and redeemed by the Account during 1995 were as follows:

<TABLE>
<CAPTION>
MONEY QUALITY
MARKET HIGH YIELD EQUITY INCOME PLUS STRATEGIST
(units in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
UNITS OUTSTANDING, DECEMBER 31,
1994.............................. 89 3 24 96 161
Unit activity during 1995:
Issued........................... 26 3 6 0 9
Redeemed......................... (29) 0 (5) (8) (33)
--- --- --- --- ---
UNITS OUTSTANDING, DECEMBER 31,
1995.............................. 86 6 25 88 137
--- --- --- --- ---
--- --- --- --- ---
</TABLE>

UNITS REDEEMED INCLUDES UNITS DEDUCTED FOR ACCRUED CONTRACT MAINTENANCE CHARGES.

F-36
<PAGE>

4. UNITS ISSUED AND REDEEMED (CONTINUED)

<TABLE>
<CAPTION>
GLOBAL
DIVIDEND EUROPEAN CAPITAL DIVIDEND PACIFIC
GROWTH UTILITIES GROWTH GROWTH GROWTH GROWTH
(units in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
UNITS OUTSTANDING, DECEMBER 31,
1994.............................. 330 169 26 50 29 23
Unit activity during 1995:
Issued........................... 25 4 1 2 12 6
Redeemed......................... (38) (29) (8) (4) (6) (2)
--- --- --- --- --- ---
UNITS OUTSTANDING, DECEMBER 31,
1995.............................. 317 144 19 48 35 27
--- --- --- --- --- ---
--- --- --- --- --- ---
</TABLE>

F-37
<PAGE>

PART C

OTHER INFORMATION

24A. FINANCIAL STATEMENTS

PART B: Allstate Life Insurance Company of New York Financial Schedules
and Allstate Life Insurance Company of New York Variable Annuity Account
Financial Schedules

24B. EXHIBITS

The following exhibits:

The following exhibits, which were previously filed with Registrant's
Registration Statement dated September 12, 1988, correspond to those required by
paragraph (b) of item 24 as to exhibits in Form N-4:

(1) Resolution of the Board of Directors of Allstate Life Insurance
Company of New York authorizing establishment of the Variable Annuity
Account II

(2) Not Applicable

(3) (a) Distribution Agreement
(b) Managing General Agent's Agreement

(4) Form of Contract**

(5) Form of application for a Contract

(6) (a) Certificate of Incorporation of Allstate Life Insurance
Company of New York
(b) By-laws of Allstate Life Insurance Company of New York

(7) Not applicable

(8) Participation Agreement*

(9) Opinion of Robert S. Seiler, Senior Vice President, Secretary and
General Counsel of Allstate Life Insurance Company of New York

(10) (a) Consent of Accountants*
(b) Consent of Attorneys

(11) Not applicable

(12) Not applicable

(13) Performance Data*

(99) Powers of Attorney*

_________________________
* Filed herewith.

** Previously filed in Form N-4 Registration Statement No. 33-35445 dated
July 12, 1995.

<PAGE>

25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal Position and Office With Depositor
Business Address of the Trust
- ---------------- ------------

Louis G. Lower, II* Chairman of the Board of Directors and President
Michael J. Velotta* Director, Vice President, Secretary and
General Counsel
Peter H. Heckman* Director and Vice President
James J. Brazda** Director and Chief Administrative Officer
Marcia D. Alazraki* Director
Joseph F. Carlino* Director
Michael J. Donoghue* Director
Cleveland Johnson, Jr.* Director
Phillip E. Lawson* Director
Joseph P. McFadden* Director
John R. Raben, Jr.* Director
Sally A. Slacke* Director
Theodore A. Schnell* Director and Assistant Vice President
Gerard F. McDermott** Director
Timothy H. Plohg* Director and Vice President
Barry S. Paul* Assistant Vice President and Controller
James P. Zils* Treasurer
Casey J. Sylla* Chief Investment Officer
Mark A. Bishop* Assistant Treasurer
Barbara S. Brown* Assistant Treasurer
David M. Crew* Assistant Treasurer
Dorothy E. Even* Assistant Vice President
Anthony D. Frook* Assistant Treasurer
Judith P. Greffin* Assistant Vice President
Stephanie L. Holowach* Assistant Treasurer
Peter S. Horos* Assistant Treasurer
Thomas C. Jensen* Assistant Treasurer
Robert T. Jostes* Assistant Treasurer
Margarita E. Kellen* Assistant Vice President
Emma M. Kalaidjian* Assistant Secretary
Paul N. Kierig* Assistant Secretary and Assistant General Counsel
Kenneth S. Klimala* Assistant Treasurer
Steven M. Laude* Assistant Treasurer
Mary J. McGinn* Assistant Secretary
Robert N. Roeters* Assistant Vice President
Mark D. Senkpiel* Assistant Treasurer
C. Nelson Strom* Assistant Vice President and Corporate Actuary
Kevin R. Slawin Assistant Treasurer
William F. Wein* Assistant Treasurer
Patricia W. Wilson* Assistant Vice President

* Principal business address is 3100 Sanders Road, Northbrook, Illinois
60062.
** Principal business address is P.O. Box 9095, Farmingville, New York 11738.

26. Persons Controlled by or Under Common Control with Depositor or Registrant
See 10-K Commission File # 1-11840, The Allstate Corporation.

27. NUMBER OF CONTRACT OWNERS

As of December 31, 1995 there were in force 26 qualified and 330
non-qualified contracts. The Registrant began operations on March 1, 1989.

28. INDEMNIFICATION

The Managing General Agent's Agreement (Exhibit 3(b)) has a provision in
which Allstate Life Insurance Company of New York agrees to indemnify Dean
Witter Reynolds as Underwriter for certain damages and expenses that may be
caused by actions, statements or omissions by Allstate Life Insurance Company of
New York. The Agreement to Purchase Shares contains a similar provision in
paragraph 16 of Exhibit 12.

<PAGE>

Insofar as indemnification for liability arising out of 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 payment by the registrant of expenses incurred by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit, or proceeding) is asserted 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 Act and will be governed by the final adjudication of such
issue.

29a. RELATIONSHIP OF PRINCIPAL UNDERWRITER TO OTHER INVESTMENT COMPANIES
Dean Witter Distributors Inc. is the principal underwriter for the following
investment companies:

Dean Witter Liquid Asset Fund Inc.
Dean Witter Tax-Free Daily Income Trust
Dean Witter California Tax-Free Daily Income Trust
Dean Witter Retirement Series
Dean Witter Dividend Growth Securities Inc.
Dean Witter Natural Resource Development Securities Inc.
Dean Witter World Wide Investment Trust
Dean Witter Capital Growth Securities
Dean Witter Convertible Securities Trust
Active Assets Tax-Free Trust
Active Assets Money Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
Dean Witter Short-Term Bond Fund
Dean Witter Mid-Cap Growth Fund
Dean Witter U.S. Government Securities Trust
Dean Witter High Yield Securities Inc.
Dean Witter New York Tax-Free Income Fund
Dean Witter Tax-Exempt Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter Managed Assets Trust
Dean Witter Limited Term Municipal Trust
Dean Witter World Wide Income Trust
Dean Witter Utilities Fund
Dean Witter Strategist Fund
Dean Witter New York Municipal Money Market Trust
Dean Witter Intermediate Income Securities
Prime Income Trust
Dean Witter European Growth Fund Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter Precious Metals and Minerals Trust
Dean Witter Pacific Growth Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Federal Securities Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
Dean Witter American Value Fund
Dean Witter U.S. Government Money Market Trust
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Premium Income Trust
Dean Witter Value-Added Market Series
Dean Witter Global Utilities Fund
Dean Witter High Income Securities
Dean Witter National Municipal Trust
Dean Witter International SmallCap Fund
Dean Witter Global Asset Allocation Fund
Dean Witter Balanced Income Fund
Dean Witter Balanced Growth Fund
Dean Witter Hawaii Municipal Trust
Dean Witter Capital Appreciation Fund
Dean Witter Intermediate Term U. S. Treasury Trust
Dean Witter Information Fund
Dean Witter Japan Fund
TCW/DW Core Equity Trust
TCW/DW North American Government Income Trust
TCW/DW Latin American Growth Fund
TCW/DW Income and Growth Fund
TCW/DW Small Cap Growth Fund
TCW/DW Balanced Fund
TCW/DW Mid-Cap Equity Fund
TCW/DW Total Return Trust

<PAGE>

29b. PRINCIPAL UNDERWRITER

Name and Principal Business Positions and Offices
Address of Each Such Person with Underwriter
- -------------------------------------------------------------------------------
DEAN WITTER REYNOLDS INC. UNDERWRITER
("DEAN WITTER")

Philip J. Purcell Chairman, Chief Executive Officer
and Director

Richard M. DeMartini President and Chief Operating Officer,
Dean Witter Capital and Director

James F. Higgins President and Chief Operating Officer,
Dean Witter Financial and Director

Stephin R. Miller Senior Executive Vice President and
Director

Raymond J. Drop Executive Vice President

Robert J. Dwyer Executive Vice President, National
Sales Director and Director

Christine A. Edwards Executive Vice President, Secretary,
General Counsel and Director

Charles A. Fiumefreddo Executive Vice President
and Director

Frederick J. Fromme Executive Vice President

Alfred J. Golden Executive Vice President

E. Davisson Hardman, Jr. Executive Vice President

Mitchell M. Merin Executive Vice President, Chief
Administrative Officer and Director

Laurence E. Mollner Executive Vice President

Jeremiah A. Mullins Executive Vice President

Richard F. Powers III Executive Vice President and Director

John H. Schaefer Executive Vice President

Thomas C. Schneider Executive Vice President, Chief
Financial Officer and Director

Robert B. Sculthorpe Executive Vice President

William B. Smith Executive Vice President and Director

Samuel H. Wolcott III Executive Vice President

Anthony Basile Senior Vice President and Corporate
Services Director

Ronald T. Carman Senior Vice President, Associate
General Counsel and Assistant Secretary

Michael T. Cunningham Senior Vice President

Mary E. Curran Senior Vice President

David Diaz Senior Vice President

Raymond P. Douglas Senior Vice President

Paul J. Dubow Senior Vice President

Michael T. Gregg Senior Vice President and Deputy
General Counsel

Erick R. Holt Senior Vice President and Assistant
Secretary

Sirendra Kumar Senior Vice President and Treasurer

George R. Ross Senior Vice President

Robert P. Sears Senior Vice President

Joseph G. Siniscalchi Senior Vice President and Controller,
Dean Witter Financial

Michael H. Stone Senior Vice President

Laurence Volpe Senior Vice President and Controller,
Dean Witter Reynolds Inc. and Dean
Witter Capital

Lorena J. Kern Senior Vice President

Kelly McNamara Senior Vice President and Director of
Governmental Affairs

Michael D. Browne Assistant Secretary

Marilyn Cranney Assistant Secretary

Sheldon Curtis Assistant Secretary

Sabrina Hurley Assistant Secretary

Barbara B. Kiley Assistant Secretary

Linda Butler Assistant Secretary

The principal address of Dean Witter is Two World Trade Center,
New York, New York 10048.

<PAGE>

29c. COMPENSATION OF DEAN WITTER

The following commissions and other compensation were received by each
principal underwriter, directly or indirectly, from the Registrant during the
Registrant's last fiscal year:

(1) (2) (3) (4) (5)
Net Compensation
Underwriting or
Discounts Redemption
Name of and or Brokerage
Principal Commissions Annuitization Commissions Compensation
- --------- ----------- ------------- ----------- ------------

Dean Witter $16,853
Reynolds Inc.

30. LOCATION OF ACCOUNTS AND RECORDS

James J. Brazda
Allstate Life Insurance Company of New York
P.O. Box 9095
Farmingville, New York 11738

31. MANAGEMENT SERVICES

None

32. UNDERTAKINGS

The Registrant promises to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted. Registrant furthermore agrees to include either as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a statement of Additional Information or a post
card or similar written communication affixed to or included in the Prospectus
that the applicant can remove to send for a Statement of Additional Information.
Finally the Registrant agrees to deliver any Statement of Additional Information
and any Financial Statements required to be made available under this Form N-4
promptly upon written or oral request.

33. REPRESENTATIONS PURSUANT TO SECTION 403(b) OF THE INTERNAL REVENUE CODE

The Company represents that it is relying upon a November 28, 1988
Securities and Exchange Commission no-action letter issued to the American
Council of Life Insurance ("ACLI") and that the provisions of paragraphs 1-4 of
the no-action letter have been complied with.

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the registrant, Allstate Life of New York Variable Annuity
Account, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Registration Statement and 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,
in the Township of Northfield, and State of Illinois on the 26th day of
April, 1996.

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(DEPOSITOR)

(SEAL)
Attest /s/ PAUL N. KIERIG By: /s/ MICHAEL J. VELOTTA
--------------------------------- ------------------------------
Paul N. Kierig Michael J. Velotta
Assistant Secretary and Vice President, Secretary and
Assistant General Counsel General Counsel

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Registration Statement has been signed
below by the following Directors and Officers of Allstate Life Insurance
Company of New York on this 26th day of April, 1996.

*/LOUIS G. LOWER, II Chairman of the Board of Directors and President
- -------------------- (Principal Executive Officer)
Louis G. Lower, II

/s/MICHAEL J. VELOTTA
- ---------------------- Director, Vice President, Secretary and
Michael J. Velotta General Counsel

*/PETER H. HECKMAN Director and Vice President
- ------------------
Peter H. Heckman

*/JAMES J. BRAZDA Director and Chief Administrative Officer
- -----------------
James J. Brazda

*/MARCIA D. ALAZRAKI Director
- --------------------
Marcia D. Alazraki

*/JOSEPH F. CARLINO Director
- -------------------
Joseph F. Carlino

*/MICHAEL J. DONOGHUE Director
- ---------------------
Michael J. Donoghue

*/CLEVELAND JOHNSON, JR. Director
- ------------------------
Cleveland Johnson, Jr.

*/PHILLIP E. LAWSON Director
- -------------------
Phillip E. Lawson

*/JOSEPH MCFADDEN Director
- -----------------
Joseph McFadden

*/JOHN R. RABEN, JR. Director
- --------------------
John R. Raben, Jr.

*/SALLY A. SLACKE Director
- -----------------
Sally A. Slacke

**/THEODORE A. SCHNELL Director and Assistant Vice President
- ----------------------
Theodore A. Schnell

**/GERARD F. MCDERMOTT Director
- ----------------------
Gerard F. McDermott

**/TIMOTHY H. PLOHG Director and Vice President
- -------------------
Timothy H. Plohg

**/BARRY S. PAUL Assistant Vice President and Controller
- -------------
Barry S. Paul

**/JAMES P. ZILS Treasurer
- ----------------
James P. Zils

**/CASEY J. SYLLA Chief Investment Officer
- -----------------
Casey J. Silla

*/ By Michael J. Velotta pursuant to Power of Attorney Previously filed.
**/By Michael J. Velotta pursuant to Power of Attorney filed herewith.

<PAGE>

PARTICIPATION AGR. C66086

PARTICIPATION AGREEMENT

THIS AGREEMENT, made and entered into this the 17th day of April, 1996, by and
between each of NORTHBROOK LIFE INSURANCE COMPANY, ALLSTATE LIFE INSURANCE
COMPANY OF NEW YORK and GLENBROOK LIFE AND ANNUITY COMPANY (hereinafter
collectively the "Companies" and individually the "Company"), each on its own
behalf and on behalf of each of the segregated asset accounts of the Company set
forth in Schedule A hereto, as such Schedule A may be amended from time to time,
(hereinafter the "Accounts") and DEAN WITTER VARIABLE INVESTMENT SERIES, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts, (hereinafter the "Trust") and DEAN WITTER DISTRIBUTORS INC.
(hereinafter the "Distributor").

WHEREAS, the Trust is engaged in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and has filed its registration statement
with the Securities and Exchange Commission, (hereinafter "S.E.C."), which
declared such registration statement effective on October 5, 1983;

WHEREAS, the Distributor is registered as a broker-dealer with the S.E.C.
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD");

WHEREAS, the Trust is available to act as the investment vehicle for separate
accounts established for variable annuity contracts and variable life insurance
contracts offered or to be offered by insurance companies which have entered
into participation agreements with the Trust and the Distributor (hereinafter
"Participating Insurance Companies");

WHEREAS, the Trust has obtained an order from the S.E.C., dated November 23,
1994 (File No. 812-9128), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order");

WHEREAS, the Trust is presently comprised of eleven Portfolios designated as
the Money Market Portfolio, the Quality Income Plus Portfolio, the High Yield
Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the Capital
Growth Portfolio, the Global Dividend Growth Portfolio, the European Growth
Portfolio, the Pacific Growth Portfolio, the Equity Portfolio and the Strategist
Portfolio, and other Portfolios may be subsequently established by the Trust
(hereinafter the "Portfolios");

WHEREAS, the Portfolios of the Trust offered by the Trust to the Companies and
the Accounts are set forth on Schedule A attached hereto;

WHEREAS, the Companies will issue certain variable annuity and/or variable
life insurance contracts (hereinafter the "Contracts") which, if required by
applicable law, will be registered under the Securities Act of 1933, as amended,
(hereinafter the "1933 Act");

WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the applicable
Company, to set aside and invest assets attributable to the Contracts that are
allocated to the Accounts (the Contracts and the Accounts covered by this
Agreement, and each corresponding Portfolio covered by this Agreement in which
the Accounts invest, are specified in Schedule A attached hereto as such
Schedule A may be amended from time to time);

WHEREAS, the Companies have registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);

<PAGE>

WHEREAS, to the extent permitted by applicable insurance laws and regulations,
each Company intends by purchasing shares of the Portfolios on behalf of the
Accounts to fund the Contracts and the Distributor is authorized to sell such
shares to the Companies for the benefit of the Accounts at net asset value
without the imposition of any charges;

NOW, THEREFORE, in consideration of their mutual promises, each Company, the
Trust and the Distributor agree as follows:

1. Purchase of Shares. In accordance with the Trust's and the Distributor's
Distribution Agreement dated June 30, 1993, as amended as of March 15, 1995,
(the "Distribution Agreement"), the Company agrees to purchase and redeem the
Trust shares of each Portfolio offered by the then current prospectus of the
Trust (hereinafter the "Prospectus") included in the Trust's registration
statement (hereinafter "the Registration Statement") most recently filed from
time to time with the S.E.C. and effective under the 1933 Act and the 1940 Act
or as the Prospectus may be amended or supplemented and filed with the S.E.C.
pursuant to the 1933 Act. The Portfolios to be offered to each Account are set
forth on Schedule A attached hereto.

2. Sale of Shares. The Distributor agrees to sell shares of the Trust to the
Company for allocation to the Account as orders from the Company are received at
the next determined net asset value per share after receipt by the Trust or its
designee of the order for shares of the Trust, of the applicable Portfolio
determined as set forth in the Prospectus.

3. Redemption of Shares. At the Company's request, the Trust agrees to redeem
for cash without charge, any full or fractional shares of the Trust held by the
Company, executing such requests on a daily basis at the net asset value of
applicable Portfolio computed after receipt of the redemption request provided,
however, that the Trust reserves the right to suspend the right of redemption or
to postpone the date of payment upon redemption of the shares of any Portfolio
under the circumstances and for the period of time specified in the Prospectus.

4. Availability of Shares. Subject to Sections 3(c) and 4(b) of the
Distribution Agreement, the terms of which are incorporated herein by reference,
the Trust agrees to make its shares available indefinitely for purchase by the
Company.

5. Payment of Shares. The Company shall pay for Trust shares within five days
after it places the order for Trust shares. The Trust reserves the right to
delay issuing or transferring Trust shares and/or to delay accruing or declaring
dividends in accordance with any policy set forth in its then current prospectus
with respect to such shares until any payment check has cleared. If the Trust or
the Distributor does not receive payment within the five days period, the Trust
may, without notice, cancel the order and require the Company to reimburse the
Trust promptly for any loss the Trust suffered by reason of the Company failing
to timely pay for its shares.

6. Fee for Shares. The Company shall purchase and redeem shares in the Trust
at net asset value and the Company shall not pay any commission, dealers fee or
other fee to the Distributor or any other broker dealer.

7. Trust's Registration Statement and Prospectus. The Trust shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares and, at its own expense, shall provide the Company with as many copies of
its current prospectus as the Company may reasonably request.

8. Investment of Assets. The Trust agrees to invest its assets in accordance
with Section 817(h) of the Internal Revenue Code and Treasury Regulation
1.817-5, as amended from time to time, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity contracts and
any amendments or other modifications to such Section or Regulations.

9. Administration of Contracts. The Company shall be responsible for
administering the Contracts and keeping records on the Contracts.

<PAGE>

10. Stockholder Information. The Trust shall furnish the Company copies of its
proxy material, reports to stockholders and other communication to stockholders
in such quantity as the Company shall reasonably require for distributing to
owners or participants under the Contracts. The Company will distribute these
materials to such owners or participants as required.

11. Voting. (a) To the extent required by law, the Company shall vote Trust
shares in accordance with instructions received from contract owners. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the Trust's shares in its own right, it
may elect to do so. The Company shall vote shares of a Portfolio for which no
instructions have been received in the same proportion as the vote of
shareholders of such Portfolio from which instructions have been received.
Neither the Company nor persons under its control shall recommend action in
connection with solicitation of proxies for Trust shares allocated to the
Account. The Company shall also vote shares it owns that are not attributable to
contract owners in the same proportion. Participating Insurance Companies shall
be responsible for assuring that each of their separate accounts participating
in the Trust calculates voting privileges in a manner consistent with other
Participating Insurance Companies.

(b) The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular the Trust will either provide for annual
meetings or comply with Section 16(c) of the 1940 Act (although the Trust is not
one of the trusts described in Section 16(c) of that Act) as well as with
Section 16(a) and, if and when applicable, 16(b). Further, the Trust will act in
accordance with the S.E.C.'s interpretation of the requirements of Section 16(a)
with respect to periodic elections of trustees and with whatever rules the
S.E.C. may promulgate with respect thereto.

12. Company Approval. The Trust and the Distributor agree that the approval of
the Company will be required prior to the Trust and the Distributor entering
into any new agreements to sell shares of the Trust to other Participating
Companies.

13. Trust's Warranty. The Trust represents and warrants that Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with all applicable federal and state
laws.

14. Company's Warranty. Each of Northbrook Life Insurance Company and
Glenbrook Life and Annuity Company represents and warrants that it is an
insurance company duly organized and in good standing under Illinois law and
that it has legally and validly established the Accounts under Section 245.21 of
the Illinois Insurance Code. Allstate Life Insurance Company of New York
represents and warrants that it is an insurance company duly organized and in
good standing under New York law and that it has legally and validly established
the Accounts under Section 424.40 of the New York Insurance Laws. The Company
represents that it has registered the Accounts as unit investment trusts in
accordance with the provisions of the 1940 Act, unless exempt therefrom, to
serve as segregated investment accounts for certain Contracts. The Company
further represents and warrants that the Contracts will be registered under the
1933 Act, unless exempt therefrom, and the Contracts will be issued and sold in
compliance with all applicable Federal and State laws.

15. Distributor's Warranty. The Distributor represents and warrants that it is
a member in good standing of the NASD and is registered as a broker-dealer with
the S.E.C. under the 1934 Act. The Distributor further represents that it will
sell and distribute the shares in accordance with the 1933, 1934 and 1940 Acts
and will not make any representations concerning the Account except those
contained in the then current registration statement or related prospectus and
any sales literature approved by the Trust. For purposes of this paragraph,
Section 6 of the Distribution Agreement is incorporated in this Agreement.

16. Termination of Agreement. The parties may terminate this Agreement as
follows:

(1)(a) at the option of the Company or the Trust or the Distributor upon 90
days' written notice to the other party;

<PAGE>

(b) at the option of the Company if, for any reason, except for those
specified in Sections 3(c) and 4(b) of the Distribution Agreement, Trust
shares are not available to meet the requirements of the Contracts as
determined by the Company; or

(c) at the option of the Trust upon the NASD, the S.E.C., the Illinois
Insurance Commissioner, the New York Insurance Commissioner or any other
regulatory body instituting legal proceedings against the Company
regarding its duties under this Agreement.

(2) This Agreement shall automatically terminate in the event of its
assignment.

17. Company's Indemnification Agreement. (a) The Company agrees to indemnify
and hold harmless the Trust or Distributor and each of their Directors or
Trustees who is not an "interested person" of the Trust, as defined in the 1940
Act (collectively the "Indemnified Parties" for purposes of this paragraph 17)
against any losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses or actions to
which such Indemnified Parties may become subject, under the Federal securities
laws or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements arise as a result of any
failure by the Company to provide the services and furnish the materials under
terms of this Agreement or which arise from erroneous instructions by the
Company to the Distributor concerning the particular Portfolio or Portfolios
whose shares are to be allocated to the Account. This indemnity agreement is in
addition to any liability which the Company may otherwise have. Provided,
however, that in no case is the indemnity of the Company in favor of the
Distributor deemed to protect the Distributor against any liability to the Trust
or its shareholders to which the Distributor would otherwise be subject by
reason of its bad faith, wilful misfeasance or negligence in the performance of
its duties or by reason of reckless disregard of its obligations and duties
under this Agreement.

(b) The Company will reimburse the Indemnified Parties for any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending of any such loss, claim, damage, liability or action.

(c) Promptly after receipt by any of the Indemnified Parties of notice of the
commencement of any action, or the making of any claim for which indemnity may
apply under this paragraph, the Indemnified Parties will, if a claim thereof is
to be made against the Trust, notify the Company of the commencement thereof;
but the omission so to notify the Company will not relieve the Company from any
liability which it may have to the Indemnified Parties otherwise than under this
Agreement. In case any such action is brought against the Indemnified Parties,
and the Company is notified of the commencement thereof, the Company will be
entitled to participate therein and to assume the defense thereof, with counsel
satisfactory to the party named in the action, and after notice from the Company
to such party of the Company's election to assume the defense thereof, the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.

18. Trust and Distributor Indemnification Agreements. (a) The Trust and
Distributor each agree to indemnify and hold harmless the Company and each of
its Directors who is not an "interested person" of the Company, as defined in
the 1940 Act (collectively the "Company's Indemnified Parties" for purposes of
this paragraph 18) against any losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) or expenses or
actions to which such Indemnified Parties may become subject, under the Federal
securities laws or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements:

(i) arise as a result of any failure by the Trust or Distributor to
provide the services and furnish the materials under the terms of this
Agreement; or

(ii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in registration statement
or prospectus or sales literature of the Trust (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that this Agreement to indemnify shall not

<PAGE>

apply as to the Company's Indemnified Parties if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust or Distributor by or on behalf of the Company for
use in the registration statement or prospectus for the Trust or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or

(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or the Distributor in
this Agreement or arise out of or result from any other material breach of
this Agreement by the Trust or the Distributor, including a failure,
whether unintentional or in good faith or otherwise, to comply with the
requirements specified in paragraph 8 of this Agreement.

(b) The Trust represents and warrants that the Trust will at all times invest
its assets in such a manner as to ensure that the Contracts will be treated as
an annuity under the Internal Revenue Code and the regulations thereunder.
Without limiting the scope of the foregoing, the Trust will at all times comply
with Section 817(h) of the Code and Treas. Reg. Sec. 1.817-5, as amended from
time to time, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity contracts and any amendments
or other modifications to such section or Regulations.

(c) Trust shares will not be sold to any person or entity that would result in
the Contracts not being treated as annuity contracts in accordance with the
statutes and regulations referred to in the preceding paragraph.

(d) The Trust and the Distributor will reimburse the Company for any legal or
other expenses reasonably incurred by the Company's Indemnified Parties in
connection with investigating or defending of any such loss, claim, damage,
liability or action.

(e) Promptly after receipt by any of the Company's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this paragraph, the Company's Indemnified Parties
will, if a claim in respect thereof is to be made against the Company, notify
the Trust or the Distributor of commencement thereof; but the omission so to
notify the Trust or the Distributor will not relieve the Trust or the
Distributor from any liability which it may have to the Company's Indemnified
Parties otherwise than under this Agreement. In case any such action is brought
against the Company's Indemnified Parties, and the Trust or the Distributor is
notified of the commencement thereof, the Trust or the Distributor will be
entitled to participate therein and to assume the defense thereof, with counsel
satisfactory to the party named in the action, and after notice from the Trust
or the Distributor to such party of the Trust's or the Distributor's election to
assume the defense thereof, the Trust or the Distributor will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.

19. Indemnification of Trust by or of Distributor. For purposes of this
Agreement, the Trust and the Distributor shall indemnify each other according to
the terms of the Distribution Agreement the terms of which are incorporated by
reference.

20. Potential Conflicts. (a) The Trustees of the Trust will monitor the
operations of the Trust for the existence of any material irreconcilable
conflict between the interests of the contract owners of all separate accounts
investing in the Trust. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable Federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (iii) an administrative or judicial decision
in any relevant proceeding; (iv) the manner in which the investments of any
Portfolio are being managed; (v) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (vi) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.

<PAGE>

(b) The Company will report any potential or existing conflicts of which it is
aware to the Trustees of the Trust. The Company will assist the Trustees in
carrying out their responsibilities under the Shared Funding Exemptive Order, by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Trustees whenever contract owner voting
instructions are disregarded.

(c) If it is determined by a majority of the Trustees, or a majority of the
Trustees who are not parties to this Agreement or interested persons of any such
party and who have no direct or indirect financial interest in this Agreement or
any agreement related thereto (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Company shall, at its expense and to the
extent reasonably practicable (as determined by a majority of the Independent
Trustees), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (i) withdrawing the
assets allocable to the affected Account from the Trust or any Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question whether
such segregation should be implemented to a vote of all affected contract owners
and, as appropriate, segregating the assets of variable annuity contract owners
invested in the Account from those of any other appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the contract owners the option of making such a
change; and (ii) establishing a new registered management investment company or
managed separate account.

(d) If a material irreconcilable conflict arises because of a decision by the
Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the Account's investment
in the Trust and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Trustees. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this provision is being
implemented, and until the end of that six month period the Distributor and
Trust shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.

(e) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six months after the
Trustees inform the Company in writing that they have determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the Independent Trustees. Until the end of the foregoing six month period, the
Distributor and Trust shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Trust.

(f) For purposes of sections (c) through (f) of this paragraph, a majority of
the Independent Trustees shall determine whether any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Trust be
required to establish a new funding medium for the Contracts. The Company shall
not be required by section (c) to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination, provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the Independent Trustees.

(g) If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and

<PAGE>

conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such Rules are applicable; and (b) paragraphs 11(a), 11(b), 20(a), 20(b),
20(c), 20(d), 20(e) and 20(f) of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such paragraphs
are contained in such Rule(s) as so amended or adopted.

21. Duration of this Agreement. This Agreement shall remain in force until
April 30, 1997 and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Trustees of the
Trust, or by the vote of a majority of the outstanding voting securities of the
Trust, cast in person or by proxy. This Agreement also may be terminated in
accordance with paragraph 16 hereof.

The terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person", when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.

22. Amendments of this Agreement. This Agreement may be amended by the parties
only if such amendment is specifically approved by (i) the Trustees of the
Trust, or by the vote of a majority of outstanding voting securities of the
Trust, and (ii) a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party and who have no direct or
indirect financial interest in this Agreement or in any agreement related
thereto, cast in person at a meeting called for the purpose of voting on such
approval.

23. Governing Law. This Agreement shall be construed in accordance with the
law of the State of Illinois and the applicable provisions of the 1933, 1934 and
1940 Acts and the rules and regulations and rulings thereunder including such
exemptions from those statutes, rules and regulations as the S.E.C. may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
To the extent the applicable law of the State of Illinois, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise the remainder of the
Agreement shall not be affected thereby.

24. Personal Liability. The Declaration of Trust establishing Dean Witter
Variable Investment Series, dated February 24, 1983, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Dean
Witter Variable Investment Series refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent of Dean Witter Variable Investment
Series shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of said Dean Witter Variable Investment Series,
but the Trust Estate only shall be liable.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of April 17, 1996.

Companies:

NORTHBROOK LIFE INSURANCE COMPANY

By:
-----------------------------------
ATTEST:
- ---------------------------------------------------------------------

ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK

By:
-----------------------------------
ATTEST:
- ---------------------------------------------------------------------

GLENBROOK LIFE AND ANNUITY COMPANY

By:
-----------------------------------
ATTEST:
- ---------------------------------------------------------------------
Trust:

DEAN WITTER VARIABLE INVESTMENT
SERIES

By:
-----------------------------------
ATTEST:
- ---------------------------------------------------------------------

Distributor:

DEAN WITTER DISTRIBUTORS INC.

By:
-----------------------------------
ATTEST:
- ---------------------------------------------------------------------

<PAGE>

As of April 17, 1996

SCHEDULE A
ACCOUNTS AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT

NAME OF SEPARATE ACCOUNT AND
NAME OF DATE ESTABLISHED BY BOARD OF FUND PORTFOLIOS
APPLICABLE
INSURANCE COMPANY DIRECTORS TO CONTRACTS
- ------------- ------------ ---------------

Northbrook Variable Annuity
Northbrook Life Insurance Company Account (February 14, 1983) All
- ----------------------------- -------------------------- -----------------------
Northbrook Variable Annuity
Account II (May 18, 1990)
- -------------------------------- -----------------------
Northbrook Variable Annuity
Account III (April 8, 1996)
- -------------------------------- -----------------------
Northbrook Life Variable Life
Separate Account A (January
15, 1996)
- -------------------------------- ----------------------- -----------------------
Allstate Life of New York
Allstate Life Insurance Company Variable Annuity Account
of New York (June 26, 1987) All
- -------------------------------- ----------------------- -----------------------
Allstate Life of New York
Variable Annuity Account II
(June 28, 1990)
- -------------------------------- ----------------------- -----------------------
Glenbrook Life Multi-Manager
Variable Account (January 15,
Glenbrook Life and Annuity Company 1996) All
- -------------------------------- ----------------------- -----------------------
Glenbrook Life Variable Life Dividend Growth Portfolio European
Separate Account A (January Growth Portfolio Quality Income Plus
15, 1996) Portfolio Utilities Portfolio
- -------------------------------- ----------------------- -----------------------

<PAGE>

Exhibit (10)(a)

Consent of Accountants

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 11 to Registration
Statement No. 33-24228 on Form N-4, of our report dated March 1, 1996
accompanying the financial statements of Allstate Life of New York Variable
Annuity Account, and our report dated March 1, 1996 accompanying the financial
statements and financial statement schedules of Allstate Life Insurance Company
of New York contained in the Statement of Additional Information (which is
incorporated by reference in the Prospectus of Allstate Life of New York
Variable Annuity Account of Allstate Life Insurance Company of New York) which
is part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Statement of Additional Information.

/s/ Deloitte & Touche LLP

Chicago, Illinois

April 25, 1996

<PAGE>

EXHIBIT 13

VARIABLE ANNUITY 1 -- NEW YORK
FEE TABLE WORKSHEET

<TABLE>
<S> <C> <C> <C> <C>
Initial deposit 1000 Surrender Charge Schedule
Contract fee 30 End of Year SC
Assets -- beginning of year (in thousands) 15279 1 5%
Assets -- end of year (in thousands) 17540 2 4%
Average assets 16409.5 3 3%
Contract fees collected ($) 11349.07 4 2%
Contract fee per $1000 0.69161583229227 5 1%
Interest assumption 5.00% 6 0%
Free -AV(1)/Prem(2) 2 7 0%
Free amount 10% 8 0%
9 0%
10 0%

Separate account expenses
M&E and Admin 1.00%

Portfolio expenses

Management Other
Fees Expenses
Capital Growth 0.65% 0.09%
Dividend Growth 0.59% 0.02%
Equity 0.50% 0.04%
European Growth 1.00% 0.17%
Global Dividend Growth 0.75% 0.13%
High Yield 0.50% 0.04%
Money Market 0.50% 0.03%
Pacific Growth 1.00% 0.44%
Quality Income Plus 0.50% 0.04%
Strategist 0.50% 0.02%
Utilities 0.65% 0.03%
</TABLE>

<PAGE>

EXHIBIT 99

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK VARIABLE ANNUITY ACCOUNT CONTRACT

Know all men by these presents that Theodore A. Schnell 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 him in any and all capacities, to sign any registration statements and
amendments thereto for the Allstate Life Insurance Company of New York Variable
Annuity Account 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.